UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2011
PROVECTUS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in charter)
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Nevada
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0-9410
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90-0031917
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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7327 Oak Ridge Hwy., Knoxville, Tennessee 37931
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(Address of Principal Executive Offices)
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(866) 594-5999
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(Registrant’s Telephone Number, Including Area Code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On January 12, 2011, the Company filed a Form 8-K to alert investors about a potential restatement of its quarterly reports on Form 10-Q for the first three quarters of 2010. On March 14, 2011, the Board of Directors, serving in its role as the audit committee, of Provectus Pharmaceuticals, Inc. (the “Company”), after consultation with and upon recommendation from management of the Company, concluded that its unaudited financial statements for the first three quarters of 2010 cannot be relied upon. Accordingly, investors should no longer rely upon the Company’s previously filed financial statements for the first three quarters of 2010.
The errors involve our accounting treatment of 5,291,654 warrants issued in March 2010 and 1,350,000 warrants issued in April 2010. The warrants were classified as equity in the unaudited financial statements for the first three quarters of 2010. The warrants should have been classified as liabilities pursuant to Accounting Standards Codification 815-40-15 "Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock" ("ASC 815") and subsequent changes in fair value recorded in earnings.
The Company became aware of the error during the course of responding to comments to the Company's Form 10-K for the year ended December 31, 2009 and its Form 10-Q for the quarter ended September 30, 2010 received from the SEC. The warrants contain certain anti-dilution provisions pursuant to which future issuances or deemed issuances of equity, in certain circumstances as defined in the agreement, without consideration or for consideration per share less than the applicable exercise price in effect immediately prior to such issue, will result in the exercise price of the warrants being reduced to the consideration per share received by the Company for such deemed issue. The Company has determined that the warrants should be classified as liabilities in accordance with ASC 815 due to the anti-dilution provisions contained in the warrants.
The Company will present the impact of the restatement on its previously issued 2010 quarterly financial statements in its annual report on Form 10-K for the year ended December 31, 2010, which the Company expects to file with the SEC on March 16, 2011.
The application of ASC 815 to the warrants will not impact the Company’s overall cash position or cash-based expense for any of the quarterly periods previously reported. The estimated necessary adjustments to the Company's consolidated balance sheets and statements of operations are summarized in the tables below. The Company determined its quantitative valuation of the warrants using a Monte-Carlo Simulation model. Management of the Company believes the Monte-Carlo Simulation model is appropriate because it is a dynamic model which accommodates variable inputs.
The Company also determined that its redeemable preferred stock should be reclassified outstide of permanent stockholders' equity. The impact of the application of ASC 815 and the reclassification of redeemable preferred stock on the Company's previously filed unaudited quarterly financial statements is set forth below:
Consolidated Balance Sheet
as of March 31, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total current liabilities
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$ | 527,930 | $ | - | $ | 527,930 | ||||||
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Long-term warrant liability
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- | 4,286,240 | 4,286,240 | |||||||||
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Total liabilities
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527,930 | 4,286,240 | 4,814,170 | |||||||||
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Paid-in capital
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88,650,285 | (3,651,241 | ) | 84,999,044 | ||||||||
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Deficit accumulated during the development stage
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(70,665,938 | ) | (634,999 | ) | (71,300,937 | ) | ||||||
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Total Stockholders' Equity
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18,067,721 | (12,258,527 | ) | 5,809,194 | ||||||||
| Redeemable Preferred Stock | - | 7,972,287 | 7,972,287 | |||||||||
Consolidated Statement of Operations
for the Three Months Ended March 31, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total operating loss
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$ | 2,868,067 | $ | - | $ | 2,868,067 | ||||||
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Loss on change in fair value of warrant liability
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- | (634,999 | ) | (634,999 | ) | |||||||
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Net loss
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2,868,017 | 634,999 | 3,503,016 | |||||||||
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Dividends on preferred stock
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8,357,584 | (385,341 | ) | 7,972,243 | ||||||||
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Net loss applicable to common shareholders
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11,225,601 | 249,658 | 11,475,259 | |||||||||
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Basic and diluted loss per common share
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0.16 | 0.17 | ||||||||||
Consolidated Balance Sheet
as of June 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total current liabilities
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$ | 782,694 | $ | - | $ | 782,694 | ||||||
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Long-term warrant liability
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- | 3,187,994 | 3,187,994 | |||||||||
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Total liabilities
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782,694 | 3,187,994 | 3,970,688 | |||||||||
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Paid-in capital
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94,695,032 | (4,690,741 | ) | 90,004,291 | ||||||||
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Deficit accumulated during the development stage
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(76,187,498 | ) | 1,502,747 | (74,684,751 | ) | |||||||
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Total Stockholders' Equity
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18,600,056 | (13,369,878 | ) | 5,230,178 | ||||||||
| Redeemable Preferred Stock | - | 10,181,884 | 10,181,884 | |||||||||
Consolidated Statement of Operations
for the Three Months Ended June 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total operating loss
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$ | 5,521,828 | $ | - | $ | 5,521,828 | ||||||
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Gain on change in fair value of warrant liability
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- | 2,137,746 | 2,137,746 | |||||||||
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Net loss
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5,521,560 | (2,137,746 | ) | 3,383,814 | ||||||||
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Dividends on preferred stock
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2,590,033 | (345,641 | ) | 2,244,392 | ||||||||
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Net loss applicable to common shareholders
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8,111,593 | (2,483,387 | ) | 5,628,206 | ||||||||
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Basic and diluted loss per common share
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0.10 | 0.07 | ||||||||||
Consolidated Statement of Operations
for the Six Months Ended June 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total operating loss
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$ | 8,389,895 | $ | - | $ | 8,389,895 | ||||||
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Gain on change in fair value of warrant liability
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- | 1,502,747 | 1,502,747 | |||||||||
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Net loss
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8,389,577 | (1,502,747 | ) | 6,886,830 | ||||||||
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Dividends on preferred stock
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10,947,617 | (730,982 | ) | 10,216,635 | ||||||||
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Net loss applicable to common shareholders
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19,337,194 | (2,233,729 | ) | 17,103,465 | ||||||||
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Basic and diluted loss per common share
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0.26 | 0.23 | ||||||||||
Consolidated Balance Sheet
as of September 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total current liabilities
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$ | 1,022,866 | $ | - | $ | 1,022,866 | ||||||
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Long-term warrant liability
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- | 2,656,662 | 2,656,662 | |||||||||
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Total liabilities
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1,022,866 | 2,656,662 | 3,679,528 | |||||||||
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Paid-in capital
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99,065,638 | (4,690,741 | ) | 94,374,897 | ||||||||
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Deficit accumulated during the development stage
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(83,626,706 | ) | 2,034,079 | (81,592,627 | ) | |||||||
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Total Stockholders' Equity
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15,532,646 | (8,353,143 | ) | 7,179,503 | ||||||||
| Redeemable Preferred Stock | - | 5,696,481 | 5,696,481 | |||||||||
Consolidated Statement of Operations
for the Three Months Ended September 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total operating loss
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$ | 7,439,800 | $ | - | $ | 7,439,800 | ||||||
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Gain on change in fair value of warrant liability
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- | 531,332 | 531,332 | |||||||||
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Net loss
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7,439,208 | (531,332 | ) | 6,907,876 | ||||||||
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Dividends on preferred stock
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111,484 | - | 111,484 | |||||||||
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Net loss applicable to common shareholders
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7,550,692 | (531,332 | ) | 7,019,360 | ||||||||
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Basic and diluted loss per common share
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0.09 | 0.09 | ||||||||||
Consolidated Statement of Operations
for the Nine Months Ended September 30, 2010
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As Previously Reported
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Adjustments
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As Restated
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Total operating loss
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$ | 15,829,695 | $ | - | $ | 15,829,695 | ||||||
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Gain on change in fair value of warrant liability
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- | 2,034,079 | 2,034,079 | |||||||||
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Net loss
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15,828,785 | (2,034,079 | ) | 13,794,706 | ||||||||
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Dividends on preferred stock
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11,059,101 | (730,982 | ) | 10,328,119 | ||||||||
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Net loss applicable to common shareholders
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26,887,886 | (2,765,061 | ) | 24,122,825 | ||||||||
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Basic and diluted loss per common share
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0.35 | 0.32 | ||||||||||
The Company’s management and the Board of Directors, serving in its role as the audit committee, discussed the matters disclosed in this Form 8-K with the Company’s independent registered public accounting firm.
Forward-Looking Statements
Certain statements in this current report on Form 8-K are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements include statements about the public offering of common stock described herein. For such statements, the Company claims the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from the Company’s expectations. Factors that could cause actual results to differ materially from those stated or implied by the Company’s forward-looking statements are disclosed in its filings with the Commission. These forward-looking statements represent the Company’s judgment as of the time of this report. The Company disclaims any intent or obligation to update these forward-looking statements, other than as may be required under applicable law.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 16, 2011
PROVECTUS PHARMACEUTICALS, INC.
By: /s/ Peter R. Culpepper
Peter R. Culpepper
Chief Financial Officer and Chief Operating Officer