ITEM
1. FINANCIAL STATEMENTS.
PROVECTUS
BIOPHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
349,771
|
|
|
$
|
97,231
|
|
Short-term receivables - legal fees, settlement and other, net
|
|
|
4,388
|
|
|
|
3,930
|
|
Prepaid expenses
|
|
|
274,962
|
|
|
|
322,518
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
629,121
|
|
|
|
423,679
|
|
|
|
|
|
|
|
|
|
|
Equipment and furnishings, less accumulated depreciation as of March 31, 2021 and December
31, 2020: $81,529 and $78,313, respectively
|
|
|
41,485
|
|
|
|
44,701
|
|
Operating lease right-of-use asset
|
|
|
100,815
|
|
|
|
120,821
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
771,421
|
|
|
$
|
589,201
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable - trade
|
|
$
|
945,670
|
|
|
$
|
956,860
|
|
Accrued interest
|
|
|
3,127,531
|
|
|
|
2,774,968
|
|
Accrued interest – related parties
|
|
|
1,901,893
|
|
|
|
1,766,493
|
|
Current portion of notes payable
|
|
|
199,208
|
|
|
|
236,228
|
|
Convertible notes payable
|
|
|
17,847,000
|
|
|
|
16,622,000
|
|
Convertible notes payable – related parties
|
|
|
6,745,000
|
|
|
|
6,770,000
|
|
Other accrued expenses
|
|
|
1,512,920
|
|
|
|
1,500,782
|
|
Current portion of operating lease liability
|
|
|
85,678
|
|
|
|
84,383
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
32,364,900
|
|
|
|
30,711,714
|
|
|
|
|
|
|
|
|
|
|
Non-current portion of notes payable
|
|
|
-
|
|
|
|
39,061
|
|
|
|
|
|
|
|
|
|
|
Non-current portion of operating lease liability
|
|
|
22,391
|
|
|
|
44,783
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
32,387,291
|
|
|
|
30,795,558
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficiency:
|
|
|
|
|
|
|
|
|
Preferred stock; par value $0.001 per share; 25,000,000 shares authorized; Series B Convertible Preferred Stock; 240,000 shares designated; 100 shares issued and outstanding at March 31, 2021 and December 31, 2020; aggregate liquidation preference of $3,500 at March 31, 2021 and December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 403,557,037 and 398,807,037 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
|
|
|
403,558
|
|
|
|
398,808
|
|
Additional paid-in capital
|
|
|
210,178,197
|
|
|
|
209,923,347
|
|
Accumulated other comprehensive loss
|
|
|
(33,260
|
)
|
|
|
(34,097
|
)
|
Accumulated deficit
|
|
|
(242,164,365
|
)
|
|
|
(240,494,415
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Deficiency
|
|
|
(31,615,870
|
)
|
|
|
(30,206,357
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficiency
|
|
$
|
771,421
|
|
|
$
|
589,201
|
|
See
accompanying notes to condensed consolidated financial statements.
PROVECTUS
BIOPHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
655,144
|
|
|
$
|
909,446
|
|
General and administrative
|
|
|
525,532
|
|
|
|
538,794
|
|
Total Operating Expenses
|
|
|
1,180,676
|
|
|
|
1,448,240
|
|
|
|
|
|
|
|
|
|
|
Total Operating Loss
|
|
|
(1,180,676
|
)
|
|
|
(1,448,240
|
)
|
Other Income/(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development tax credit
|
|
|
-
|
|
|
|
26,251
|
|
Investment and interest income
|
|
|
1
|
|
|
|
79
|
|
Interest expense
|
|
|
(489,275
|
)
|
|
|
(405,151
|
)
|
Total Other Expense
|
|
|
(489,274
|
)
|
|
|
(378,821
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,669,950
|
)
|
|
$
|
(1,827,061
|
)
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss Per Common Share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding - Basic and Diluted
|
|
|
402,184,815
|
|
|
|
390,557,607
|
|
See
accompanying notes to condensed consolidated financial statements.
PROVECTUS
BIOPHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,669,950
|
)
|
|
$
|
(1,827,061
|
)
|
Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
837
|
|
|
|
(9,027
|
)
|
Total Comprehensive Loss
|
|
$
|
(1,669,113
|
)
|
|
$
|
(1,836,088
|
)
|
See
accompanying notes to condensed consolidated financial statements.
PROVECTUS
BIOPHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
(Unaudited)
|
|
FOR THE THREE MONTHS ENDED MARCH 31, 2021
|
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
Series B
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Loss
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2021
|
|
|
100
|
|
|
$
|
-
|
|
|
|
398,807,037
|
|
|
$
|
398,808
|
|
|
$
|
209,923,347
|
|
|
$
|
(34,097
|
)
|
|
$
|
(240,494,415
|
)
|
|
$
|
(30,206,357
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued upon exercise of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
4,500,000
|
|
|
|
4,500
|
|
|
|
235,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
239,850
|
|
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
250
|
|
|
|
19,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,669,950
|
)
|
|
|
(1,669,950
|
)
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
837
|
|
|
|
-
|
|
|
|
837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021
|
|
|
100
|
|
|
$
|
-
|
|
|
|
403,557,037
|
|
|
$
|
403,558
|
|
|
$
|
210,178,197
|
|
|
$
|
(33,260
|
)
|
|
$
|
(242,164,365
|
)
|
|
$
|
(31,615,870
|
)
|
|
|
FOR THE THREE MONTHS ENDED MARCH 31, 2020
|
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
Series B
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Loss
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2020
|
|
|
100
|
|
|
$
|
-
|
|
|
|
389,889,475
|
|
|
$
|
389,889
|
|
|
$
|
209,378,835
|
|
|
$
|
(24,008
|
)
|
|
$
|
(233,816,828
|
)
|
|
$
|
(24,072,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued upon exercise of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
800,000
|
|
|
|
800
|
|
|
|
41,840
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,640
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,827,061
|
)
|
|
|
(1,827,061
|
)
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,027
|
)
|
|
|
-
|
|
|
|
(9,027
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020
|
|
|
100
|
|
|
$
|
-
|
|
|
|
390,689,475
|
|
|
$
|
390,689
|
|
|
$
|
209,420,675
|
|
|
$
|
(33,035
|
)
|
|
$
|
(235,643,889
|
)
|
|
$
|
(25,865,560
|
)
|
See
accompanying notes to condensed consolidated financial statements.
PROVECTUS
BIOPHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,669,950
|
)
|
|
$
|
(1,827,061
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
19,750
|
|
|
|
-
|
|
Noncash lease expense
|
|
|
20,006
|
|
|
|
17,961
|
|
Depreciation
|
|
|
3,216
|
|
|
|
3,523
|
|
Amortization of patents
|
|
|
-
|
|
|
|
167,780
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Short term receivables
|
|
|
(515
|
)
|
|
|
(27,728
|
)
|
Prepaid expenses
|
|
|
45,822
|
|
|
|
109,888
|
|
Accounts payable - trade
|
|
|
(10,927
|
)
|
|
|
456,437
|
|
Other accrued expenses
|
|
|
12,252
|
|
|
|
(2,795
|
)
|
Operating lease liability
|
|
|
(21,096
|
)
|
|
|
(19,478
|
)
|
Accrued interest expense
|
|
|
487,962
|
|
|
|
405,151
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used In Operating Activities
|
|
|
(1,113,480
|
)
|
|
|
(716,322
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible notes payable
|
|
|
1,200,000
|
|
|
|
200,000
|
|
Proceeds from issuance of convertible notes payable - related parties
|
|
|
-
|
|
|
|
100,000
|
|
Repayment of short-term note payable
|
|
|
(74,417
|
)
|
|
|
-
|
|
Proceeds from exercise of warrants
|
|
|
239,850
|
|
|
|
42,640
|
|
Net Cash Provided By Financing Activities
|
|
|
1,365,433
|
|
|
|
342,640
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash
|
|
|
587
|
|
|
|
(3,285
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash and Cash Equivalents
|
|
|
252,540
|
|
|
|
(376,967
|
)
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning of Period
|
|
|
97,231
|
|
|
|
590,706
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period
|
|
$
|
349,771
|
|
|
$
|
213,739
|
|
See
accompanying notes to condensed consolidated financial statements.
PROVECTUS
BIOPHARMACEUTICALS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
Business Organization, Nature of Operations and Basis of Presentation
Provectus
Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or the “Company”),
is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases, with the aim of maximizing
the curative impact of these medicines and achieving immunity from treated disease. These investigational drugs are based on an
entire, wholly owned, family of small molecules called halogenated xanthenes (“HXs”). Our lead HX molecule
is named rose bengal disodium (“RBD”).
|
●
|
Oncology:
PV-10®, an investigational cancer immunotherapy administered by intralesional
(“IL”) injection and an injectable formulation of cGMP RBD, is undergoing
clinical study for adult solid tumor cancers, such as melanoma and gastrointestinal (“GI”)
tumors (including hepatocellular carcinoma (“HCC”), colorectal cancer metastatic
to the liver (“mCRC”), neuroendocrine tumors (“NET”) metastatic
to the liver (“mNET”), and uveal melanoma metastatic to the liver (“mUM”),
among others). Orphan drug designation (“ODD”) status was granted
to PV-10 by the U.S. Food and Drug Administration (the “FDA”) for metastatic
melanoma in 2006, HCC in 2011, and ocular melanoma (including uveal melanoma) in 2019.
Oral
formulations of cGMP RBD are also undergoing preclinical study as prophylactic and therapeutic treatments for high-risk and refractory
adult solid tumor cancers, such as head and neck, breast, colorectal, and testicular cancers.
|
|
|
|
|
●
|
Pediatric
Oncology: IL PV-10 is also undergoing preclinical study for pediatric solid tumor cancers (including neuroblastoma, Ewing
sarcoma, rhabdomyosarcoma, and osteosarcoma). ODD status was granted to PV-10 by the FDA for neuroblastoma in 2018.
|
|
|
|
|
●
|
Hematology:
Oral formulations of cGMP RBD are undergoing preclinical study for refractory and relapsed pediatric blood cancers
(including leukemias).
|
|
|
|
|
●
|
Virology:
Systemically-administered formulations of cGMP RBD are undergoing preclinical study for the novel strain of coronavirus
(“CoV”): severe acute respiratory syndrome (“SARS”) CoV 2 (“SARS-CoV-2”).
|
|
|
|
|
●
|
Microbiology:
Different formulations of cGMP RBD are undergoing preclinical study as potential treatments for multi-drug resistant (“MDR”)
bacteria, such as gram-positive and gram-negative.
|
|
|
|
|
●
|
Ophthalmology:
Topical formulations of cGMP RBD are undergoing preclinical study as potential treatments for diseases of the eye, such as infectious
keratitis.
|
|
|
|
|
●
|
Dermatology:
PH-10®, an investigational immuno-dermatology agent administered as a topical gel and formulation of cGMP
RBD, is undergoing monotherapy clinical study and preclinical study of combination therapy with approved drugs for
inflammatory dermatoses (including psoriasis and atopic dermatitis).
|
To
date, the Company has not generated any revenues or profits from planned principal operations. The Company’s activities are subject
to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription
drug candidates.
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements and should be reviewed in conjunction with the Company’s audited consolidated financial
statements included in the Company’s Form 10-K for the year ended December 31, 2020 filed with the SEC on March 2, 2021. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2021.
SARS-CoV-2
was reportedly first identified in late-2019 and subsequently declared a global pandemic by the World Health Organization on March 11,
2020. As a result of the SARS-CoV-2 pandemic, many companies have experienced disruptions of their operations and the markets they serve.
The Company has taken several temporary precautionary measures intended to help ensure the well-being of its employees and contractors
and to minimize business disruption. The Company considered the impact of SARS-CoV-2 pandemic on its business and operational assumptions
and estimates, and determined there were no material adverse impacts on the Company’s results of operations and financial position
at March 31, 2021.
The
full extent of the SARS-CoV-2 pandemic impacts on the Company’s operations and financial condition is uncertain. The Company has
experienced slower than normal enrollment and treatment of patients, and a prolonged SARS-CoV-2 pandemic could have a material adverse
impact on the Company’s business and financial results, including the timing and ability of the Company to raise capital, initiate
and/or complete current and/or future preclinical studies and/or clinical trials; disrupt the Company’s regulatory activities;
and/or have other adverse effects on the Company’s clinical development.
2.
Liquidity and Going Concern
The
Company’s cash and cash equivalents were $349,771 at March 31, 2021. The Company continues to incur significant
operating losses. Management expects that significant on-going operating expenditures will be necessary to successfully implement the
Company’s business plan and develop and market its products. These circumstances raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements
are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s
ability to develop PV-10, PH-10, and/or any other halogenated xanthene-based drug products, and to raise additional capital.
The
Company plans to access capital resources through possible public or private equity offerings, including the 2020 Financing (as defined
in Note 4), exchange offers, debt financings, corporate collaborations or other means. In addition, the Company continues to explore
opportunities to strategically monetize its lead drug candidates, PV-10 and PH-10, through potential co-development and licensing transactions,
although there can be no assurance that the Company will be successful with such plans. The Company has historically been able to raise
capital through equity offerings, although no assurance can be provided that it will continue to be successful in the future. If the
Company is unable to raise sufficient capital through the 2020 Financing or otherwise, it will not be able to pay its obligations as
they become due.
During the three months ended March 31, 2021,
warrant holders exercised warrants to purchase an aggregate of 4,500,000 shares of common stock at a price of $0.0533 per share. In connection
with these exercises, the Company received aggregate cash proceeds of $239,850.
The
primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, the Company
cannot assure that it will be successful in co-developing, licensing, and/or commercializing PV-10, PH-10, and/or any other halogenated
xanthene-based drug candidate developed by the Company, or entering into any financial transaction. Moreover, even if the Company is
successful in improving its current cash flow position, the Company nonetheless plans to seek additional funds to meet its long-term
requirements in 2021 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement
transactions, including the 2020 Financing, the exercise of existing warrants and outstanding stock options, or public offerings of debt
or equity securities. While the Company believes that it has a reasonable basis for its expectation that it will be able to raise additional
funds, the Company cannot provide assurance that it will be able to complete additional financing in a timely manner. In addition, any
such financing may result in significant dilution to stockholders.
3.
Critical Accounting Policies
Since
the date, the Company’s December 31, 2020 consolidated financial statements were issued in its 2020 Annual Report,
there have been no material changes to the Company’s significant accounting policies, except as disclosed below.
Recently
Adopted Accounting Standards
In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 simplify
the accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification (“ASC”)
Topic 740, Income Taxes. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740
by clarifying and amending existing guidance. ASU 2019-12 will be effective for the Company’s fiscal year beginning after December
15, 2020, with early adoption permitted. An entity that elects to early adopt the amendments in an interim period should reflect any
adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption
must adopt all the amendments in the same period. The Company adopted ASU 2019-12 on January 1, 2021 and there was no material impact
on the Company’s financial statements or disclosures.
4.
Convertible Notes Payable
2020
Financing
On
December 31, 2019, the Board approved a Definitive Financing Term Sheet (the “2020 Term Sheet”), which sets forth the terms
under which the Company will use its best efforts to arrange for financing of a maximum of $20,000,000 (the “2020 Financing”).
The 2020 Financing will be in the form of secured convertible loans from investors that will be evidenced by convertible promissory notes
(the “2020 Notes”). The 2020 Term Sheet is similar to the 2017 Term Sheet. Subject to the terms and conditions of the 2020
Term Sheet, the Company will use its best efforts to arrange for the 2020 Financing, which amounts will be obtained in several tranches.
The proceeds from the 2020 Financing will be used to fund the Company’s clinical development program, as currently constituted
and envisioned, and to fund the Company’s general and administrative expenses.
Pursuant
to the 2020 Term Sheet, the 2020 Notes (defined below) will convert into shares of the Company’s Series D Preferred Stock on or
before June 20, 2021, subject to certain exceptions. As of December 31, 2019, and through the date of filing, the Series D Preferred
Stock had not been designated by the Board.
The
2020 Financing will be in the form of a secured convertible loan (the “2nd Loan”) from the Investors (the
“2nd Loan Investors”) that will be evidenced by convertible promissory notes (individually, a “2020
Note” and collectively, the “2020 Notes”) subordinate to the 2017 Notes in right of payment and to the security interests
granted to holders of the 2017 Notes. In addition to customary provisions, the 2020 Notes contains the following provisions:
(i)
It will be secured by a second priority security interest on the Company’s IP subordinate to the first priority security interest
of the 2017 Notes;
(ii)
The 2nd Loan will bear interest at the rate of eight percent (8%) per annum on the outstanding principal amount of the 2nd
Loan that has been funded to the Company;
(iii)
In the event there is a change of control of the Company’s Board, the term of the 2020 Notes will be accelerated and all amounts
due under the 2020 Notes will be immediately due and payable, plus interest at the rate of eight percent (8%) per annum, plus a penalty
in the amount equal to ten times (10x) the outstanding principal amount of the 2nd Loan that has been funded to the Company;
(iv)
The outstanding principal amount and interest payable under the 2nd Loan will become convertible at the sole discretion of
the 2nd Loan Investors into shares of the Company’s Series D Preferred Stock, a series of preferred stock to be designated
by the Board, at a price per share equal to $2.8620; and
(v)
Notwithstanding (iv) above, the principal amount of the 2020 Notes and the interest payable under the 2nd Loan will automatically
convert into shares of the Company’s Series D Preferred Stock at a price per share equal to $2.8620 effective on June 20, 2021
subject to certain exceptions.
Upon
conversion of the 2nd Loan, the 2nd Loan Investors will release their second lien on the IP. 2nd Loan
Investors in the 2020 Financing will hold Series D Preferred Stock pari passu with the Series D Preferred Stock of 1st
Loan Investors in the 2017 Financing.
Since
financing was launched and through March 31, 2021, the Company had received aggregate loans of $4,525,000 in connection with the
2020 Financing.
The
Series D Preferred Stock
As
of March 31, 2021, and through the date of filing, the Series D Preferred Stock had not been designated by the Board. Per the terms of
the notes issued in connection with the 2017 and 2020 Financings, if the Company has not designated the Series D Preferred Stock or if
an insufficient number of Series D Preferred shares exist upon a conversion by a note holder, then the outstanding loans will continue
to accrue interest at a rate of 8% per annum until which time the Company has designated a sufficient number of Series D Preferred shares.
As a result, the Company did not analyze the notes for a potential beneficial conversion feature as the definition of a firm commitment
has not been met since the notes were not convertible as of their respective dates of issuance or as of March 31, 2021.
Convertible
Notes Payable – Related Parties
During
the three months ended March 31, 2021, the Company did not enter into any additional related party 2020 Notes. As of March 31, 2021
and December 31, 2020, the Company had borrowed $100,000 under these notes.
Convertible
Notes Payable – Non-Related Parties
During
the three months ended March 31, 2021, the Company entered into additional non-related party 2020 Notes in the aggregate principal amount
of $1,200,000. As of March 31, 2021 and December 31, 2020, the Company had borrowed $4,425,000 and $3,225,000, respectively,
under these notes.
5.
Notes Payable
The
Company obtained short-term financing from AFCO Insurance Premium Finance for our commercial insurance policies. As of March 31,
2021 and December 31, 2020, the balance of the note payable was $136,708 and $212,790, respectively.
6.
Related Party Transactions
During
the three months ended March 31, 2021 and March 31, 2020, the Company paid Mr. Bruce Horowitz (Capital Strategists) consulting
fees of $84,800 and $52,400, respectively, for services rendered. Accrued director fees for Mr. Horowitz as of March 31, 2021 and December
31, 2020 were $18,750 and $75,000, respectively. Mr. Horowitz serves as both COO and a Director.
See
Note 4 and Note 7 for details of other related party transactions.
Director fees during the three months ended March
31, 2021 and March 31, 2020 were $96,250 and $96,250, respectively. Accrued directors’ fees as of March 31, 2021 and December 31,
2020 were $1,271,839 and $1,175,589, respectively.
7.
Short-term Receivables
The
following table summarizes the receivables at March 31, 2021 and December 31, 2020:
|
|
March 31, 2021
|
|
|
|
Tax Credit
|
|
|
Legal Fees
|
|
|
Settlement
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provectus Australia Tax Credit
|
|
$
|
4,388
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,388
|
|
Gross receivable
|
|
|
-
|
|
|
|
455,500
|
|
|
|
1,649,043
|
|
|
|
2,104,543
|
|
Reserve for uncollectibility
|
|
|
-
|
|
|
|
(455,500
|
)
|
|
|
(1,649,043
|
)
|
|
|
(2,104,543
|
)
|
Net receivable
|
|
$
|
4,388
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,388
|
|
|
|
December 31, 2020
|
|
|
|
Tax Credit
|
|
|
Legal Fees
|
|
|
Settlement
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provectus Australia Tax Credit
|
|
$
|
3,930
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,930
|
|
Gross receivable
|
|
|
-
|
|
|
|
455,500
|
|
|
|
1,649,043
|
|
|
|
2,104,543
|
|
Reserve for uncollectibility
|
|
|
-
|
|
|
|
(455,500
|
)
|
|
|
(1,649,043
|
)
|
|
|
(2,104,543
|
)
|
Net receivable
|
|
$
|
3,930
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,930
|
|
8.
Stockholders’ Deficiency
Common
Stock
During
the three months ended March 31, 2021, the Company issued an aggregate of 250,000 shares of immediately vested restricted common stock
with a grant date value of $19,750 for services. See also Note 11 – Subsequent Events.
Warrants
During
the three months ended March 31, 2021, warrant holders exercised warrants to purchase an aggregate of 4,500,000 shares of common stock
at a price of $0.0533 per share. In connection with these exercises, the Company received aggregate cash proceeds of $239,850. See also
Note 11 – Subsequent Events.
9.
Leases
The
Company currently leases 4,500 square feet of corporate office space in Knoxville, Tennessee through an operating lease agreement for
a term of five years ending on June 30, 2022. Payments are approximately $7,900 per month.
Total
operating lease expense for the three months ended March 31, 2021 was $24,762, of which, $16,508 was included within research and development
and $8,254 was included within general and administrative expenses on the condensed consolidated statement of operations. Total operating
lease expense for the three months ended March 31, 2020 was $21,302, of which, $14,201 was included within research and development and
$7,101 was included within general and administrative expenses on the condensed consolidated statement of operations.
As
of March 31, 2021, the Company had no leases that were classified as a financing lease. As of March 31, 2021, the Company did not have
additional operating and financing leases that have not yet commenced.
A
summary of the Company’s right-of-use assets and liabilities is as follows:
|
|
For The Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
Operating cash flows used in operating leases
|
|
$
|
23,831
|
|
|
$
|
22,441
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
1.25 Years
|
|
|
|
2.25 Years
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
8.0
|
%
|
|
|
8.0
|
%
|
Future
minimum payments under the Company’s non-cancellable lease obligations as of March 31, 2021 were as follows:
Years
|
|
Amount
|
|
|
|
|
|
2021
|
|
|
69,579
|
|
2022
|
|
|
46,687
|
|
Total future minimum lease payments
|
|
|
116,266
|
|
Less: amount representing imputed interest
|
|
|
(8,196
|
)
|
Total
|
|
$
|
108,070
|
|
10.
Commitments, Contingencies and Litigation
The
Company may, from time to time, be involved in litigation arising in the ordinary course of business or which may be expected
to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company,
would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
11.
Subsequent Events
Common
Stock
Subsequent
to March 31, 2021, the Company issued an aggregate of 25,000 shares of immediately vested restricted common stock to a strategic advisory
board member.
Warrants
Subsequent
to March 31, 2021, the Company issued three-year immediately vested warrants to purchase an aggregate of 25,000 shares of common stock
with an exercise price of $0.2862 per share to a strategic advisory board member.
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, 2020 filed with the SEC on March 2, 2021 (“2020 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.
Overview
Provectus
is a clinical-stage biotechnology company developing immunotherapy medicines based on an entire, wholly owned, family of
small molecules called HXs. The Company’s lead HX molecule is proprietary cGMP RBD. IL PV-10, a cancer immunotherapy and
injectable formulation of cGMP RBD, can induce immunogenic cell death (“ICD”), and is undergoing clinical study for
adult solid tumor cancers, such as melanoma and GI tumors (e.g., HCC, mCRC, mNET, mUM), and preclinical study for pediatric solid
tumor cancers (e.g., neuroblastoma, Ewing sarcoma, rhabdomyosarcoma, osteosarcoma). Topically-administered PH-10, an immune-modulatory
agent and formulation of cGMP RBD, is undergoing clinical study for inflammatory dermatoses (e.g., psoriasis, atopic dermatitis).
New formulations of and routes of administration for cGMP RBD are being investigated for hematology (e.g., acute myeloid leukemia,
acute monocytic leukemia), virology (e.g., SARS-CoV-2), oncology (e.g., high-risk and refractory adult solid tumor cancers), microbiology
(e.g., MDR bacteria), and ophthalmology (e.g., infectious keratitis).
The
SARS-CoV-2 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions,
which could impact our ability to raise additional funds and may also impact the volatility of our stock price and trading in our stock.
Moreover, the pandemic has also significantly impacted economies worldwide, which could result in adverse effects on our business and
operations. We cannot be certain what the overall impact of the SARS-CoV-2 pandemic will be on our business. It has the potential to
adversely affect our business, financial condition, results of operations, and prospects. We have taken several temporary precautionary
measures intended to help ensure the well-being of our employees and contractors and to minimize disruption to our business. We considered
the impact of SARS-CoV-2 pandemic on our business and operational assumptions and estimates, and determined there were no material adverse
impacts on our results of operations and financial position at March 31, 2021.
Our
Science and Technology
Oncology.
IL PV-10 drug product is Provectus’ cGMP injectable formulation of the Company’s pharmaceutical-grade (cGMP) RBD (4,5,6,7-tetrachloro-2’,4’,5’,7’-tetraiodofluorescein
disodium salt) drug substance. RBD selectively accumulates in the lysosomes of cancer cells. Cancer cells, particularly advanced cancer
cells, are very dependent on effective lysosomal functioning (Piao et al., Ann N Y Acad Sci 2016). Cancer progression and metastasis
are associated with lysosomal compartment changes (Nishimura et al., Pathol Oncol Res 1998; Gocheva et al., Genes Dev 2006),
which are closely correlated with, among other things, invasive growth, angiogenesis, and drug resistance (Fahrenbacher et al., Cancer
Res 2005).
Lysosomes
are the central organelles for intracellular degradation of biological macromolecules and organelles. Discovered by Christian de Duve,
M.D. in 1955, lysosomes have been linked with a number of biological processes like cell death, inflammasome activation, and immune response.
In 1959, Dr. de Duve described lysosomes as “suicide bags,” because their rupture led to cell death and tissue autolysis.
Lysosomes have been shown to play a role in each of the primary pathways of cell death, which are apoptosis, autophagy, and necrosis.
He was awarded the Nobel Prize in 1974 for discovering and characterizing lysosomes.
Provectus
showed that RBD selectively accumulates in the lysosomes of cancer cells and disrupts them, causing the cancer cells to die. RBD has
also been shown by Provectus and independent researchers to trigger each major, distinct form of lysosomal cell death; that is, apoptosis,
autophagy, and necrosis.
RBD’s
lysosomal targeting comprises:
|
●
|
Transiting
the plasmalemma (i.e., the cell membrane) of cancer cells. RBD penetrates the cell membrane of cancerous cells which normally protects
the cancer cell from its surrounding environment. RBD, however, is excluded from normal cells;
|
|
|
|
|
●
|
Accumulating
in the lysosomes of cancer cells. As noted above, the physicochemical properties of lysosomes trap RBD;
|
|
|
|
|
●
|
Triggering
the release of lysosomal contents. Acute autolysis can occur within 60 minutes. Early preclinical work by Provectus on RBD’s
lysosomal targeting showed identical responses in different disease models, such as Hepa1-6 murine hepatocellular carcinoma, HTB-133
human breast carcinoma, and H96Ar human multi-drug resistant small cell lung carcinoma;
|
|
|
|
|
●
|
Inducing
the rapid cell death of cancer cells. Early trypan blue exclusion work by Provectus confirmed cell death within hours; and,
|
|
|
|
|
●
|
Intracellular
pH consistency with the release of acidic lysosomal contents. Early seminaphthorhodafluor-1 (“SNARF-1”) staining work
by Provectus confirmed lower intracellular pH upon exposure to RBD.
|
Hematology.
In primary cells and cell lines derived from pediatric leukemia patients, RBD may lead to stimulator of interferon genes (“STING”)
dimerization and the release of interferon gamma, indicating a potential immune activation mechanism of RBD. Heat shock proteins, which
chaperone misfolded or abnormally-folded proteins, associated with STING dimerization in RBD-treated cells, indicating a mechanism that
may lead to enhanced STING activation following RBD-specific treatment.
Virology.
The Company’s work in this disease area to identify drug activity and elucidate mechanism(s) of action is ongoing.
Microbiology.
The Company’s work in this disease area to identify drug activity and elucidate mechanism(s) of action is ongoing.
Ophthalmology.
The Company’s work in this disease area to identify drug activity is ongoing.
Dermatology.
For psoriasis, pathways significantly improved by monotherapy PH-10 drug product treatment include published psoriasis
transcriptomes and cellular responses mediated by IL-17, IL-22, and interferons. Clinical work has shown that more than 500 disease-related
genes were down-regulated after four weeks of application and a wide-range of central psoriasis-related genes, including IL-23,
IL-17, IL-22, S100A7, IL-19, IL-36, and CXCL1, were normalized (i.e., treated lesional skin had values in the same range as baseline
non-lesional skin).
Our
Drug Development Strategy
Oncology.
The Company’s strategy is to (i) demonstrate the independent action of single-agent IL PV-10; that is, safety and activity
in T cell and non-T cell inflamed tumor types, in high and low tumor mutation burden tumor types, and in other tumor type categories,
such as gene mutations, (ii) demonstrate the coordinated induction of multiple immune signaling pathways (i.e., functional ICD), (Snyder
et al., Sci Immunol 2019) by IL PV-10 treatment, (iii) demonstrate the functional T cell response generated by IL PV-10 treatment,
and (iv) contrast and compare IL PV-10 treatment (i.e., safety, activity, and induced immune response) with that of immune checkpoint
blockade (“CB”) and other drug classes in single-agent and IL PV-10-based combination therapy settings.
This
strategy may quicken the advancement of single-agent IL PV-10 along a pathway-to-approval in solid tumor cancer indications
where there is high unmet need, limited activity from other therapies, and the opportunity to display the immune response
from IL PV-10 treatment, such as mNET (NCT02693067). This strategy may also permit the Company to develop and advance a
cancer combination therapy involving one or more CB and/or other drug classes along a pathway-to-approval in a disease
indication where there is high unmet need, limited activity from standard of care (“SOC”) treatment, and the
opportunity to display how IL PV-10 augments clinical response to existing or emerging SOCs, such as mUM (i.e., combination
therapy with an anti-CTLA-4 agent and an anti-PD-1 agent) (NCT00986661).
Hematology.
The Company and research collaborators are undertaking preclinical work on a potential, systemically-administered, cGMP RBD leukemia
treatment and/or cancer vaccine for pediatric patients.
Virology.
The Company and research collaborators are undertaking preclinical work on a potential, systemically-administered, cGMP RBD therapy
for SARS-CoV-2 and other classes of enveloped and non-enveloped viruses.
Microbiology.
The Company and research collaborators are undertaking preclinical work on cGMP RBD therapy for MDR bacteria.
Ophthalmology.
The Company and clinical and research collaborators are undertaking preclinical work on potential, topically-administered, cGMP RBD
therapy for the treatment of infectious keratitis.
Dermatology.
The Company’s strategy is to (i) demonstrate 12-week single-agent administration proof-of-concept (“POC”) for topical
PH-10 that includes (a) a preclinical safety study of extended 12-week administration (compared to, previously, four weeks), (b) a clinical
mechanism of action study in atopic dermatitis, which would be a “book-end” trial to the already completed clinical mechanism
study in psoriasis, (c) Phase 2 randomized controlled trials of topical PH-10 for the treatment of psoriasis and atopic dermatitis that
may potentially utilize SOC comparators, and (d) end-of-Phase 2 meetings with the FDA upon the completion of the abovementioned Phase
2 trials, and (ii) expand POC topical PH-10 treatment to include dermatology combination therapy. Our goal for this POC work is to achieve
Phase 3 trial-ready status for topical PH-10 in both psoriasis and atopic dermatitis.
Components
of Operating Results
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 product 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.
|
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 product 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.
Results
of Operations
Comparison
of the Three Months Ended March 31, 2021 and March 31, 2020
Overview
Total
operating expenses were $1,180,676 for the three months ended March 31, 2021, a decrease of $267,564 or 18.5% compared to the three months
ended March 31, 2020. The decrease was driven primarily by our continued transformation and process improvement efforts within the Company
along with slower recruitment and treatment in clinical trials due to the effects of SARS-CoV-2. Net loss for the three months ended
March 31, 2021 was $1,669,950, a decrease of $157,111 or 8.6% which was primarily attributable to lower costs incurred in connection
with our preclinical and clinical trial programs and general and administrative costs.
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Increase/
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
655,144
|
|
|
$
|
909,446
|
|
|
$
|
(254,302
|
)
|
|
|
-28.0
|
%
|
General and administrative
|
|
|
525,532
|
|
|
|
538,794
|
|
|
|
(13,262
|
)
|
|
|
-2.5
|
%
|
Total Operating Expenses
|
|
|
1,180,676
|
|
|
|
1,448,240
|
|
|
|
(267,564
|
)
|
|
|
-18.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Loss
|
|
|
(1,180,676
|
)
|
|
|
(1,448,240
|
)
|
|
|
(267,564
|
)
|
|
|
18.5
|
%
|
Other Income/(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development tax credit
|
|
|
-
|
|
|
|
26,251
|
|
|
|
(26,251
|
)
|
|
|
-100.0
|
%
|
Investment and interest income
|
|
|
1
|
|
|
|
79
|
|
|
|
(78
|
)
|
|
|
-98.7
|
%
|
Interest expense
|
|
|
(489,275
|
)
|
|
|
(405,151
|
)
|
|
|
(84,124
|
)
|
|
|
20.8
|
%
|
Total Other Expense, Net
|
|
|
(489,274
|
)
|
|
|
(378,821
|
)
|
|
|
(110,453
|
)
|
|
|
29.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,669,950
|
)
|
|
$
|
(1,827,061
|
)
|
|
$
|
(157,111
|
)
|
|
|
8.6
|
%
|
Research
and Development Expenses
Research
and development expenses were $655,144 for the three months ended March 31, 2021, a decrease of $254,302 or 28.0% compared
to $909,466 for the three months ended March 31, 2020. The decrease was primarily due to (i) reduced cost on clinical trials due
to slower recruitment and treatment in clinical trials due to the effects of SARS-CoV-2, (ii) lower amortization due to patents
being fully amortized, and (iii) a decrease in insurance expense.
The
following table summarizes our research and development expenses incurred during the three months ended March 31, 2021 and March 31,
2020:
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Increase/
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical trial and research expenses
|
|
$
|
511,580
|
|
|
$
|
584,057
|
|
|
$
|
(72,477
|
)
|
|
|
-12.4
|
%
|
Depreciation/amortization
|
|
|
2,162
|
|
|
|
169,942
|
|
|
|
(167,780
|
)
|
|
|
-98.7
|
%
|
Insurance
|
|
|
51,388
|
|
|
|
73,592
|
|
|
|
(22,204
|
)
|
|
|
-30.2
|
%
|
Payroll and taxes
|
|
|
72,334
|
|
|
|
66,479
|
|
|
|
5,855
|
|
|
|
8.8
|
%
|
Rent and utilities
|
|
|
17,680
|
|
|
|
15,376
|
|
|
|
2,304
|
|
|
|
15.0
|
%
|
Total research and development
|
|
$
|
655,144
|
|
|
$
|
909,446
|
|
|
$
|
(254,302
|
)
|
|
|
-28.0
|
%
|
General
and Administrative Expenses
General
and administrative expenses were $525,532 for the three months ended March 31, 2021, a decrease of $13,262 or 2.5% compared to
$538,794 for the three months ended March 31, 2020. The decrease was primarily due to (i) lower professional fees, offset by (ii) higher
legal fees, (iii) an increase in payroll and related taxes due to addition of employee, and (vi) higher other general and administrative
cost.
The
following table summarizes our general and administrative expenses incurred during the three months ended March 31, 2021 and March 31,
2020:
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Increase/
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
1,054
|
|
|
$
|
1,361
|
|
|
$
|
(307
|
)
|
|
|
-22.6
|
%
|
Directors fees
|
|
|
96,250
|
|
|
|
96,250
|
|
|
|
-
|
|
|
|
0.0
|
%
|
Insurance
|
|
|
43,566
|
|
|
|
41,866
|
|
|
|
1,700
|
|
|
|
4.1
|
%
|
Legal and litigation
|
|
|
132,015
|
|
|
|
88,062
|
|
|
|
43,953
|
|
|
|
49.9
|
%
|
Other general and administrative cost
|
|
|
31,005
|
|
|
|
17,007
|
|
|
|
13,998
|
|
|
|
82.3
|
%
|
Payroll and taxes
|
|
|
46,060
|
|
|
|
35,486
|
|
|
|
10,574
|
|
|
|
29.8
|
%
|
Professional fees
|
|
|
165,716
|
|
|
|
250,011
|
|
|
|
(84,295
|
)
|
|
|
-33.7
|
%
|
Rent and utilities
|
|
|
8,726
|
|
|
|
7,660
|
|
|
|
1,066
|
|
|
|
13.9
|
%
|
Foreign currency translation
|
|
|
1,140
|
|
|
|
1,091
|
|
|
|
49
|
|
|
|
4.5
|
%
|
Total general and administrative
|
|
$
|
525,532
|
|
|
$
|
538,794
|
|
|
$
|
(13,262
|
)
|
|
|
-2.5
|
%
|
Other
Income/(Expense)
Interest
expense increased by $84,124 from $405,151 for the three months ended March 31, 2020 to $489,275 for the three months ended March 31,
2021. The increase was due to the increased number of convertible notes payable outstanding relating to the PRH Notes.
Liquidity
and Capital Resources
Our
cash and cash equivalents were $349,771 at March 31, 2021, compared to $97,231 at December 31, 2020. 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. We have continuing net losses and negative
cash flows from operating activities. In addition, we have an accumulated deficit of $242,164,365 as of March 31, 2021. 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. 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.
During
the three months ended March 31, 2021, the Company entered into additional non-related party 2020 Notes in the aggregate principal amount
of $1,200,000.
During
the three months ended March 31, 2021, warrant holders exercised warrants to purchase an aggregate of 4,500,000 shares of common stock
at an exercise price of $0.0533 per share. In connection with these exercises, the Company received aggregate cash proceeds of $239,850.
Management’s
plans include selling our equity securities and obtaining other financing to fund our capital requirement and on-going operations, including
the 2020 Financing; however, there can be no assurance we will be successful in these efforts. The condensed consolidated financial statements
do not include any adjustment that might be necessary if we are unable to continue as a going concern. Significant funds will be needed
to continue and complete our ongoing and planned clinical trials.
The
SARS-CoV-2 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions,
which could impact our ability to raise additional funds and may also impact the volatility of our stock price and trading in our stock.
Moreover, the pandemic has also significantly impacted economies worldwide, which could result in adverse effects on our business and
operations. We cannot be certain what the overall impact of the SARS-CoV-2 pandemic will be on our business. It has the potential to
adversely affect our business, financial condition, results of operations, and prospects. The Company has experienced slower than normal
enrollment and treatment of patients, and a prolonged SARS-CoV-2 pandemic could have a material adverse impact on the Company’s
business and financial results, including the timing and ability of the Company to raise capital, initiate and/or complete current and/or
future preclinical studies and/or clinical trials; disrupt the Company’s regulatory activities; and/or have other adverse effects
on the Company’s clinical development. We have taken several temporary precautionary measures intended to help ensure the well-being
of our employees and contractors and to minimize disruption to our business. We considered the impact of SARS-CoV-2 pandemic on our business
and operational assumptions and estimates, and determined there were no material adverse impacts on our results of operations and financial
position at March 31, 2021.
Access
to Capital
Management
plans to access capital resources through possible public or private equity offerings, including the 2020 Financing, exchange offers,
debt financings, corporate collaborations or other means. If we are unable to raise sufficient capital through the 2020 Financing or
otherwise, 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, we cannot assure
you that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing
our prescription drug product 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 2021 and beyond. We anticipate that these funds will
otherwise come from the proceeds of private placement transactions, including the 2020 Financing, the exercise of existing warrants and
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, we cannot assure you that we will be able to complete additional financing
in a timely manner. In addition, any such financing may result in significant dilution to stockholders.
Critical
Accounting Policies
For
a description of our critical accounting policies, see Note 3 – Critical Accounting Policies in Part 1, Item 1 of this Quarterly
Report on Form 10-Q.
Recently
Issued Accounting Standards
Recently
issued accounting standards are included in Note 3 – Critical Accounting Policies in Part 1, Item 1 of this Quarterly Report on
Form 10-Q.
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”).