PROVECTUS BIOPHARMACEUTICALS, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to our results of operations and our financial condition together with our consolidated subsidiaries. This discussion and analysis should be read in conjunction with the accompanying unaudited condensed financial statements and our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 28, 2024 (“2023 Form 10-K”), which includes additional information about our critical accounting policies and practices and risk factors. Historical results and percentage relationships set forth in the consolidated statement of operations, including trends which might appear, are not necessarily indicative of future operations. Clinical Development and Drug Discovery The Company’s small molecule HX medical science platform, which comprises different drug candidates and non-clinical formulations made from pharmaceutical-grade RBS using different concentrations and delivered by different routes of administration specific to each disease and/or disease indication, includes: Clinical Development Programs ● Oncology: Intratumoral (“ITU”) formulation PV-10 ® (“ITU PV-10”) has undergone and is undergoing multiple, monotherapy and combination therapy, early- to late-stage clinical trials, expanded access programs (“EAPs”) for groups of and individual patients, and/or quality of life (“QOL”) study at multiple clinical sites in Australia, Europe, and the U.S. for the treatments of Stage III and IV melanoma and different types of liver cancers. ITU PV-10 has undergone clinical monotherapy and combination therapy mechanism of action and mechanism of immune response study for melanoma, metastatic uveal melanoma, and metastatic neuroendocrine tumors at Moffitt Cancer Center (“Moffitt”) in Tampa, Florida, The Queen Elizabeth Hospital in Adelaide, Australia, and MD Anderson Cancer Center in Houston, Texas. ● Dermatology: Topical (“TOP”) formulation PH-10 ® (“TOP PH-10”) has undergone multiple mid-stage, monotherapy clinical trials for the treatments of psoriasis and atopic dermatitis at different clinical sites in the U.S. TOP PH-10 has undergone clinical monotherapy mechanism of action and mechanism of immune response study for psoriasis at The Rockefeller University in New York, New York (“TRU”). Different formulations have undergone non-clinical combination therapy study for psoriasis and are undergoing non-clinical monotherapy study for skin inflammation at TRU. ● Ophthalmology: The Company believes that clinical monotherapy proof-of-concept (“POC”) of TOP administration of non-pharmaceutical grade rose bengal for the treatment of infectious keratitis has been shown by clinicians and researchers at the University of Miami’s Bascom Palmer Eye Institute (“BPEI”) in Miami, Florida, who are now collaborating with the Company to evaluate the potential use of our pharmaceutical-grade RBS. TOP PV-305 has undergone non-clinical monotherapy study for diseases and disorders of the eye, such as infectious keratitis, at BPEI. 17 Non-clinical Proof-of-Concept In Vivo Programs ● Oncology: ITU PV-10 has undergone non-clinical monotherapy and combination therapy study for the treatment of pancreatic cancer and human papillomavirus-positive and negative head and neck squamous cell carcinoma at Moffitt. ITU PV-10 has undergone non-clinical monotherapy study for the treatment of penile squamous cell carcinoma at an academic medical center. ITU PV-10 has undergone non-clinical monotherapy and combination therapy study for the treatment of relapsed and refractory pediatric solid tumor cancers at the University of Calgary’s Cumming School of Medicine in Calgary, Canada (“UCal”). The Company believes that the UCal researchers have achieved in vivo monotherapy POC of ITU administration. Oral (“PO”) formulations are undergoing non-clinical monotherapy study for high-risk and refractory adult solid tumor cancers at UCal. The Company believes that the UCal researchers and the Company have both achieved in vivo monotherapy POC of PO administration, that the Company has achieved in vivo monotherapy POC of PO administration in both prophylactic and therapeutic settings, and that the Company has achieved in vivo monotherapy POC of intravenous (“IV”) administration. ● Hematology: PO formulations have undergone non-clinical monotherapy study for the treatment of refractory and relapsed pediatric and other blood cancers, including leukemias, at UCal. The Company believes that the UCal researchers have achieved in vivo monotherapy POC of PO administration. ● Wound Healing: Different formulations are undergoing non-clinical monotherapy study for the healing of full-thickness cutaneous wounds. The Company believes that in vivo monotherapy POC of TOP administration of non-pharmaceutical grade rose bengal for the treatment of this indication has been shown by researchers at the University of Texas Medical Branch in Galveston, Texas, who are now collaborating with the Company to use our pharmaceutical-grade RBS. ● Animal Health: Different formulations are undergoing non-clinical monotherapy study for the treatment of canine soft tissue sarcomas at the University of Tennessee’s College of Veterinary Medicine in Knoxville, Tennessee. The Company believes that it has achieved monotherapy POC of ITU administration in canines. Non-clinical Early Drug Discovery (In Vitro) Programs ● Immune vaccine adjuvant: Different formulations have undergone and are undergoing non-clinical study as a vaccine adjuvant to enhance T cell responses for anti-viral and anti-cancer vaccines. ● Infectious Diseases: PO and intranasal (“IN”) formulations have undergone and are undergoing non-clinical monotherapy study for the treatment of SARS-CoV-2 at UCal, another Canadian academic research center, the University of Tennessee Health Science Center (“UTHSC”) in Memphis, Tennessee, and a U.S. contract research organization. Different formulations have undergone non-clinical monotherapy and combination therapy study for the treatment of gram-positive and gram-negative bacterial infections (including multi-drug resistant strains) and have undergone non-clinical monotherapy study for the treatment of oral bacterial infections at UTHSC. Different formulations have undergone non-clinical monotherapy study for the treatment of fungal infections at UTHSC. ● Tissue Regeneration and Repair : Different formulations have undergone non-clinical monotherapy study for vertebrate development, wound healing, and tissue regrowth at the University of Nevada, Las Vegas in Las Vegas, Nevada. ● Proprietary: Different formulations are undergoing non-clinical study for a proprietary disease at an academic medical center. 18 Business Strategy The Company is selectively continuing ongoing and planning to initiate new monotherapy and combination therapy ITU PV-10 clinical trials in melanoma and liver cancer indications to generate more and/or new clinical data and appropriately utilizing clinical data from historical ITU PV-10 trials, EAPs, and/or QOL study of these oncology indications. Our goals are to pursue drug approval pathways and/or co-development relationships with commercial pharmaceutical companies for ITU PV-10 based on these indications and data. The Company is developing a systemically administered formulation of pharmaceutical-grade RBS for the treatment of cancer. Our goals, when this work is complete, are to file an investigational new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”), take an initial systemic drug candidate into an early-stage clinic trial for an initial oncology or hematology indication, and/or pursue a co-development collaboration or out-license arrangement for this route of administration and disease area. The Company is developing different formulations of pharmaceutical-grade RBS using different concentrations and different routes of administration (e.g., PO, IV, IN) for other disease areas by endeavoring to show non-clinical activity and lack of toxicity. Our goals, when each task of this work is completed, are to file an IND with the FDA, take an initial drug candidate into an early-stage clinic trial for an initial indication, and/or pursue a co-development collaboration or out-license arrangement for the respective disease area and route of administration. The Company is endeavoring to fully elucidate the traits and characteristics of the RBS molecule using different academic medical centers under sponsored research and testing agreements. Our goal is to gain and communicate additional knowledge of the RBS molecule’s targeting, mechanism, signaling, immune response, and other features that are common to and/or different from each disease area and indication under research. The Company is doing rigorous, chemical analytical comparisons of non-pharmaceutical grades of rose bengal from specialty chemical suppliers against the Company’s pharmaceutical-grade RBS. Our goal is to demonstrate the proprietary nature of the Company’s pharmaceutical-grade RBS and that our pharmaceutical-grade RBS meets the necessary uniformity and purity requirements for commercial pharmaceutical use. 19 RBS API and Drug Candidate Manufacturing Our pharmaceutical-grade RBS resulted from the Company’s innovation of a proprietary, patented, commercial-scale process to synthesize and utilize the RBS molecule into a viable active pharmaceutical ingredient (“API”) for commercial pharmaceutical use; the development of unique chemistry, manufacturing, and control (“CMC”) specifications for API and drug candidate manufacturing processes; the production and multi-year stability testing of multiple API and drug candidate lots; the comprehensive documentation of lot composition and reproducibility; and the review and acceptance of CMC data from these lots by seven different national drug regulatory agencies for use in a prior, multi-country, multi-center Phase 3 randomized control trial of the Company. The Company’s API and drug candidate manufacturing processes employ Quality-by-Design principles, current good manufacturing practice (“cGMP”) regulations, and the guidelines of The International Council for Harmonization (ICH) of Technical Requirements for Pharmaceuticals for Human Use. These processes utilize controls that eliminate the formation of historical impurities and avoid the introduction of potentially hazardous impurities that the Company believes may have been and could be present in uncontrolled and unreported amounts in non-pharmaceutical grades of rose bengal. The Company’s processes of synthesizing the RBS molecule into pharmaceutical-grade RBS and manufacturing RBS API and ITU PV-10 drug candidate, the processes’ CMC specifications, and the CMC data from the production of stability lots of API and drug candidate have been reviewed by multiple national drug regulatory agencies prior to granting clinical trial authorizations for the Company to commence a historical Phase 3 study of ITU PV-10 for the treatment of locally advanced cutaneous melanoma, including the U.S. FDA, Germany’s Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM), Australia’s Therapeutic Goods Administration (TGA) under a clinical trial notification, France’s Agence Nationale de Sécurité du Médicament et des Produits de Santé (ANSM), Italy’s Agenzia Italiana del Farmaco (AIFA), Mexico’s Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS), and Argentina’s Administración Nacional de Medicamentos, Alimentos y Tecnología Médica (ANMAT). RBS Non-proprietary Name The RBS name for the Company’s pharmaceutical-grade API was selected by and passed the review of the World Health Organization (“WHO”) Expert Advisory Panel on the International Pharmacopoeia and Pharmaceutical Preparations after the Company applied for the non-proprietary name in the third quarter of 2020 and reached the status of recommended International Non-proprietary Names (“INN”). INN Recommended List 88, which includes the RBS name, was published with the No. 3 issue of the WHO Drug Information, Volume 36 in the fourth quarter of 2022. 20 Non-Pharmaceutical Grades of Rose Bengal Commercial-Grade This material may be purchased from specialty chemical suppliers in the U.S. and from other parts of the world; however, the Company believes that the material itself is almost exclusively made in China and India under non-cGMP conditions. Commercial grade rose bengal appears to have reported purity that may vary between approximately 80% and 95%, and that may contain substantial amounts of unreported impurities and/or gross contaminants. Commercial grade rose bengal is typically used by researchers unaffiliated with the Company for non-clinical study of the rose bengal molecule for potential biomedical therapeutic applications. We believe that commercial grade rose bengal is still manufactured using the historical process (or a variant thereof) that was developed by the synthetic molecule’s original Swiss creator Rudolph Gnehm in 1881. Some manufacturers may, however, apply purification techniques that the Company believes still result in materials that may possess questionable purity and contaminants and may also be subject to substantial lot-to-lot manufacturing variability. Diagnostic-Grade The Company coined this phrase to describe non-approved rose bengal that is used as an ingredient in historical or current ophthalmic solutions and strips, has been historically or is presently compounded by pharmacists for ophthalmic use, and has been or is in other non-ophthalmic diagnostic tests such as the rose bengal test in human brucellosis. We presume, but have not yet confirmed, that diagnostic-grade rose bengal is derived from commercial-grade rose bengal that may have undergone a form of purification and/or may have been compounded under cGMP regulations by a pharmacist, academic medical researcher, or commercial entity. Here too, the Company believes that purification may not sufficiently improve the amounts and accuracy of rose bengal purity and lot contents and may not adequately reduce or eliminate lot-to-lot manufacturing variability. Chemical Analytical Comparison In the first quarter of 2022, the Company began work with a U.S. contract development and manufacturing organization to assess rigorously and methodically three lots of commercial-grade rose bengal, one each from three different specialty chemical suppliers, and compare these non-pharmaceutical grade materials with the Company’s pharmaceutical-grade RBS. This chemical analytical work was substantially completed by the end of the third quarter of 2022. The Company believes that the preliminary results of these analyses indicate that all three lots of commercial grade rose bengal had rose bengal purity that was drastically different from what was represented on their respective certificates of analysis (“CofAs”), and that one of the three lots contained gross contaminants that were not represented on its CofA. Potential Barriers to Entry The Company believes that the Company’s proprietary, patented, pharmaceutical-grade RBS possesses several competitive advantages over non-pharmaceutical-grades of rose bengal that researchers, clinicians, and academic, business, and/or governmental competitors have used, are using, and/or may attempt to use for potential biomedical applications. The Company believes that non-pharmaceutical-grades of rose bengal may suffer from the uncontrolled presence of substance-related impurities and/or gross contaminants, substantial lot-to-lot manufacturing variability, inaccurately reported and/or misrepresented purity and contents, and the lack of reproducible, consistent, and fulsome CMC specifications and documentation. The Company believes that historical and potentially hazardous impurities and other manufacturing and handling issues facing non-pharmaceutical grades of rose bengal may pose significant scientific, technological, and economic challenges to overcome and validate for compliance with modern drug regulatory standards. 21 Components of Operating Results Grant Revenue Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as unearned grant revenue and recognized as grant revenue when qualifying costs are incurred. Research and Development Expenses A large component of our total operating expenses is the Company’s investment in research and development activities, including the clinical development of our product candidates. Research and development expenses represent costs incurred to conduct research and undertake clinical trials to develop our drug candidates. These expenses consist primarily of: ● Costs of conducting clinical trials, including amounts paid to clinical centers, clinical research organizations and consultants, among others; ● Salaries and related expenses for personnel, including stock-based compensation expense; ● Other outside service costs including cost of contract manufacturing; ● The costs of supplies and reagents; and, ● Occupancy and depreciation charges. We expense research and development costs as incurred. Research and development activities are central to our business model. We expect our research and development expenses to increase in the future as we advance our existing product candidates through clinical trials and pursue their regulatory approval. Undertaking clinical development and pursuing regulatory approval are both costly and time-consuming activities. As a result of known and unknown uncertainties, we are unable to determine the duration and completion costs of our research and development activities, or if, when, and to what extent we will generate revenue from any subsequent commercialization and sale of our drug candidates. General and Administrative Expenses General and administrative expense consists primarily of salaries, stock-based compensation expense and other related costs for personnel in executive, finance, accounting, business development, legal, information technology and corporate communication functions. Other costs include facility costs not otherwise included in research and development expense, insurance, and professional fees for legal, patent and accounting services. 22 Results of Operations Comparison of the Three Months Ended June 30, 2024 and June 30, 2023 Overview Grant revenue was $254,991 for the three months ended June 30, 2024, an increase of $93,149 or 57.6% compared to the three months ended June 30, 2023. Total operating expenses were $1,049,845 for the three months ended June 30, 2024, an increase of $87,800 or 9.1% compared to the three months ended June 30, 2023. The increase was driven primarily by (i) increased payroll and taxes for the addition of two officers, (ii) higher clinical trial costs related to study closure, partially offset by (iii) lower directors’ fees and professional fees due to the resignation of Bruce Horowitz, our former Chief Operating Officer, (iv) lower legal costs related to patents, and (v) lower insurance costs. Net loss for the three months ended June 30, 2024 was $846,848, an increase of $11,786 or 1.4% compared to the three months ended June 30, 2023. For the Three Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Grant Revenue $ 254,991 $ 161,842 $ 93,149 57.6 % Operating Expenses: Research and development 472,927 434,214 38,713 8.9 % General and administrative 576,918 527,831 49,087 9.3 % Total Operating Expenses 1,049,845 962,045 87,800 9.1 % Total Operating Loss (794,854 ) (800,203 ) 5,349 0.7 % Other Income/(Expense): Research and development tax credit 9,301 15,965 (6,664 ) 41.7 % Interest expense (61,295 ) (50,824 ) (10,471 ) -20.6 % Total Other Expense, Net (51,994 ) (34,859 ) (17,135 ) -49.2 % Net Loss $ (846,848 ) $ (835,062 ) $ (11,786 ) -1.4 % Grant Revenue For the three months ended June 30, 2024 and June 30, 2023, there was $254,991 and $161,842, respectively, of grant revenue recognized related to qualifying expenses that were incurred and included within research and development expenses on the condensed consolidated statements of operations. Research and Development Expenses Research and development expenses were $472,927 for the three months ended June 30, 2024, an increase of $38,713 or 8.9% compared to $434,214 for the three months ended June 30, 2023. The increase was primarily due to (i) higher clinical trial costs associated with study closure, and (ii) increased insurance costs. The following table summarizes research and development expenses for the three months ended June 30, 2024 and 2023. For the Three Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Operating Expenses: Research and development: Clinical trial and research expenses $ 339,441 $ 309,284 $ 30,157 9.8 % Depreciation/amortization 1,765 2,043 (278 ) -13.6 % Insurance 57,540 49,356 8,184 16.6 % Payroll and taxes 65,513 65,083 430 0.7 % Rent and utilities 8,668 8,448 220 2.6 % Total research and development $ 472,927 $ 434,214 $ 38,713 8.9 % 23 General and Administrative Expenses General and administrative expenses were $576,918 for the three months ended June 30, 2024, an increase of $49,087 or 9.3% compared to $527,831 for the three months ended June 30, 2023. The increase was primarily due to (i) increased payroll and taxes for the addition of two new officers, and (ii) increased other general and administrative costs, partially offset by (iii) lower directors’ fees and professional fees due to the resignation of Bruce Horowitz, our prior Chief Operating Officer, (iv) lower insurance costs, and (v) lower legal costs related to patents. The following table summarizes general and administrative expenses for the three months ended June 30, 2024 and 2023. For the Three Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Operating Expenses: General and administrative: Depreciation $ 465 $ 188 $ 277 147.3 % Directors’ fees 77,500 96,250 (18,750 ) -19.5 % Insurance 41,684 52,465 (10,781 ) -20.5 % Legal and litigation 136,660 147,525 (10,865 ) -7.4 % Other general and administrative cost 26,636 23,990 2,646 11.0 % Payroll and taxes 170,772 63,594 107,178 168.5 % Professional fees 117,992 138,975 (20,983 ) -15.1 % Rent and utilities 4,846 4,844 2 0.0 % Foreign currency transactions 363 - 363 100.0 % Total general and administrative $ 576,918 $ 527,831 $ 49,087 9.3 % Other Expense, Net Interest expense increased by $10,471 or 20.6% from $50,824 for the three months ended June 30, 2023 to $61,295 for the three months ended June 30, 2024. The increase was mainly due to the interest expense costs incurred in connection with the higher notes payable and convertible debt balances. Research and development tax credit in Australia decreased by $6,664 or 41.7% from $15,965 for the three months ended June 30, 2023 to $9,301 for the three months ended June 30, 2024. The decrease was mainly due to no active clinical trials currently in Australia. Comparison of the Six Months Ended June 30, 2024 and June 30, 2023 Overview Grant revenue was $493,063 for the six months ended June 30, 2024, an increase of $126,196 or 34.4% compared to the six months ended June 30, 2023. Total operating expenses were $1,735,182 for the six months ended June 30, 2024, a decrease of $214,101 or 11.0% compared to the six months ended June 30, 2023. The decrease was driven primarily by (i) reduced directors’ fees and professional fees due to the resignation of Bruce Horowitz, our former Chief Operating Officer, partially offset by (ii) higher clinical trial costs related to study closure, (iii) increased payroll and taxes due to the addition of two new officers, (iv) higher legal costs related to patents and general corporate counsel, and (v) higher other general and administrative cost. Net loss for the six months ended June 30, 2024 was $1,350,890, a decrease of $311,626 or 18.7% compared to the six months ended June 30, 2023. For the Six Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Grant Revenue $ 493,063 $ 366,867 $ 126,196 34.4 % Operating Expenses: Research and development 1,028,462 982,607 45,855 4.7 % General and administrative 706,720 966,676 (259,956 ) -26.9 % Total Operating Expenses 1,735,182 1,949,283 (214,101 ) -11.0 % Total Operating Loss (1,242,119 ) (1,582,416 ) (340,297 ) -21.5 % Other Income/(Expense): Research and development tax credit 9,301 15,965 (6,664 ) -41.7 % Interest expense (118,072 ) (96,065 ) (22,007 ) -22.9 % Total Other Expense, Net (108,771 ) (80,100 ) (28,671 ) -35.8 % Net Loss $ (1,350,890 ) $ (1,662,516 ) $ 311,626 -18.7 % Grant Revenue For the six months ended June 30, 2024 and June 30, 2023, there was $493,063 and $366,867, respectively, of grant revenue recognized related to qualifying expenses that were incurred and included within research and development expenses on the condensed consolidated statements of operations. Research and Development Expenses Research and development expenses were $1,028,462 for the six months ended June 30, 2024, an increase of $45,855 or 4.7% compared to $982,607 for the six months ended June 30, 2023. The increase was primarily due to (i) higher clinical trial costs associated with study closure, and (ii) higher payroll and taxes. The following table summarizes research and development expenses for the six months ended June 30, 2024 and 2023. For the Six Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Operating Expenses: Research and development: Clinical trial and research expenses 758,821 715,879 $ 42,942 6.0 % Depreciation/amortization 3,530 3,530 - 0.0 % Insurance 115,087 114,656 431 0.4 % Payroll and taxes 133,795 131,089 2,706 2.1 % Rent and utilities 17,229 17,453 (224 ) -1.3 % Total research and development $ 1,028,462 $ 982,607 $ 45,855 4.7 % 24 General and Administrative Expenses General and administrative expenses were $706,720 for the six months ended June 30, 2024, a decrease of $259,956 or 26.9% compared to $966,676 for the six months ended June 30, 2023. The decrease was primarily due to (i) lower directors’ fees and professional fees due to the resignation of Bruce Horowitz, our prior Chief Operating Officer partially offset by (ii) higher legal fees related to patents and corporate matters pertaining to the 2024 proxy statement and officer’s resignation, (iii) higher payroll and taxes due to addition of two new officers, and (iv) higher other general and administrative costs due to a refund received in 2023 for employee retention. The following table summarizes general and administrative expenses for the six months ended June 30, 2024 and 2023. For the Six Months Ended June 30, 2024 2023 Increase/(Decrease) % Change Operating Expenses: General and administrative: Depreciation $ 931 $ 931 $ - 0.0 % Directors’ fees (276,250 ) 192,500 (468,750 ) -243.5 % Insurance 87,263 89,088 (1,825 ) -2.0 % Legal and litigation 313,480 207,597 105,883 51.0 % Other general and administrative cost 41,347 12,910 28,437 220.3 % Payroll and taxes 235,621 128,433 107,188 83.5 % Professional fees 294,122 325,502 (31,380 ) -9.6 % Rent and utilities 9,697 9,715 (18 ) -0.2 % Foreign currency transactions 509 - 509 100.0 % Total general and administrative $ 706,720 $ 966,676 $ (259,956 ) -26.9 % Other Expense, Net Interest expense increased by $22,007 or 22.9% from $96,065 for the six months ended June 30, 2023 to $118,072 for the six months ended June 30, 2024. The increase was mainly due to the interest expense costs incurred in connection with the higher notes payable and convertible debt balances. Research and development tax credit in Australia decreased by $6,664 or 41.7% from $15,965 for the six months ended June 30, 2023 to $9,301 for the six months ended June 30, 2024. The decrease was mainly due to no active clinical trials currently in Australia. Liquidity and Capital Resources The Company’s cash and restricted cash were $589,283 at June 30, 2024 which includes $559,702 of restricted cash resulting from a grant received from the State of Tennessee, compared to $1,026,799 at December 31, 2023, which included $950,223 of restricted cash. The Company’s working capital deficit was $7,569,256 and $7,652,098 as of June 30, 2024 and December 31, 2023, respectively. We have continuing net losses and negative cash flows from operating activities. In addition, we have an accumulated deficit of $254,041,299 as of June 30, 2024. These conditions raise substantial doubt about our ability to continue as a going concern for a period within one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. The condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain additional financing as may be required to fund current operations. As of June 30, 2024, cash required for our current liabilities included approximately $4,760,347 for accounts payable and other accrued expenses (including operating lease liabilities) and a $109,862 note payable related to our short-term financing of our commercial insurance policies. Also, if not converted prior to maturity, convertible debt in the amount of $2,888,000 plus accrued interest will mature one year from the date of the notes. The Company intends to meet these cash requirements from its current cash balance and from future financing. Management’s plans include selling our equity securities and obtaining other financing, including the issuance of 2024 unsecured convertible notes (the “2024 Financing”), to fund our capital requirements and on-going operations; however, there can be no assurance that the Company will be successful in these efforts. Significant funds will be needed to continue and complete our ongoing and planned clinical trials. 25 Access to Capital Management plans to access capital resources through possible public or private equity offerings, including the 2024 Financing, equity financings, debt financings, corporate collaborations, or other means. If we are unable to raise sufficient capital, we will not be able to pay our obligations as they become due. The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, there can be no assurance that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing our prescription drug candidates. Moreover, even if we are successful in improving our current cash flow position, we nonetheless plan to seek additional funds to meet our current and long-term requirements in 2024 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, the exercise of outstanding stock options, or public offerings of debt or equity securities. While we believe that we have a reasonable basis for our expectation that we will be able to raise additional funds, there can be no assurance that we will be able to obtain funds on commercially acceptable terms, or complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders. Critical Accounting Estimates We prepare our condensed consolidated financial statements in accordance with U.S. GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as special purpose entities (“SPEs”). Available Information Our website is located at www.provectusbio.com. We make available free of charge through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC as we do. The website is http://www.sec.gov. The Company also intends to use press releases, the Company’s website and certain social media accounts as a means of disclosing information and observations about the Company and its business, and for complying with the Company’s disclosure obligations under Regulation FD: the Provectus Substack account (provectus.substack.com), the @ProvectusBio X account (twitter.com/provectusbio), and the Company’s LinkedIn account (linkedin.com/company/provectus-biopharmaceuticals). The information and observations that the Company posts through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following the Company’s press releases, SEC filings, and website. The social media channels that the Company intends to use as a means of disclosing the information described above may be updated from time to time. The contents of the websites provided above are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K or in any other report or document we file with the SEC. Further, our references to the URLs for these websites are intended to be inactive textual references only. 26 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.