United States Securities And Exchange Commission
                              Washington, DC 20549
--------------------------------------------------------------------------------
                                   FORM 10-KSB


(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934

    For the fiscal year ended December 31, 2004; OR

[ ] Transition  Report  Pursuant  to Section  13 or 15(d) of the  Securities
    Exchange Act of 1934

          For the transition period from __________ to _______________
                         Commission file number: 0-9410

                         Provectus Pharmaceuticals, Inc.
                 (Name of Small Business Issuer in Its Charter)

           Nevada                                            90-0031917
------------------------------                   -------------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                        Identification Number)

7327 Oak Ridge Highway, Suite A, Knoxville, Tennessee            37931
-----------------------------------------------------     -------------------
 (Address of Principal Executive Offices)                        (Zip Code)

                                  865/769-4011
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:
                                      None
--------------------------------------------------------------------------------
                                (Title of Class)

         Securities registered under Section 12(g) of the Exchange Act:
                    Common shares, par value $.001 per share
--------------------------------------------------------------------------------
                                (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [_]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The issuer's  revenues for the most recent  fiscal year were  $21,072.  The
aggregate  market  value of the  voting and  non-voting  common  equity  held by
non-affiliates of the registrant as of March 17, 2005, was $15,947,003 (computed
on the basis of $0.97 per share).

     The number of shares outstanding of the issuer's stock, $0.001 par value
per share, as of March 17, 2005 was 16,440,209.

     Documents incorporated by reference in Part III hereof: Proxy Statement for
2005 Annual Meeting of Stockholders

     Transitional Small Business Disclosure Format (check one): Yes [_] No [X]

<PAGE>

                         Provectus Pharmaceuticals, Inc.
                          Annual Report on Form 10-KSB

                                Table of Contents

                                                                            Page
                                                                            ----
Part I........................................................................1
     Item 1.    Description of Business.......................................1
         History..............................................................1
         Description Of Business..............................................1
         Intellectual Property................................................7
         Competition..........................................................9
         Federal Regulation of Therapeutic Products...........................9
         Personnel...........................................................12
         Available Information...............................................13
     Item 2.    Description of Property......................................13
     Item 3.    Legal Proceedings............................................13
     Item 4.    Submission of Matters to a Vote of Security Holders..........13
Part II......................................................................14
     Item 5.    Market for Common Equity and Related Stockholder Matters.....14
     Item 6.    Management's Discussion and Analysis or Plan of Operation....16
         Plan of Operation...................................................17
     Item 7.    Financial Statements.........................................18
         Forward-Looking Statements..........................................18
         Risk Factors........................................................18
     Item 8.    Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure.....................................25
     Item 8A.   Controls and Procedures......................................25
Part III.....................................................................26
     Item 9.    Directors, Executive Officers, Promoters and Control
                Persons; Compliance with Section 16(a) of the Exchange Act...26
     Item 10.   Executive Compensation.......................................26
     Item 11.   Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters...................26
     Item 12.   Certain Relationships and Related Transactions...............27
     Item 13.   Exhibits.....................................................27
     Item 14.   Principal Accountant Fees and Services.......................27
Signatures...................................................................28



<PAGE>
                                     PART I

Item 1.  Description of Business.

     History

     Provectus    Pharmaceuticals,    Inc.,   formerly   known   as   "Provectus
Pharmaceutical, Inc." and "SPM Group, Inc.," was incorporated under Colorado law
on  May  1,  1978.   SPM  Group  ceased   operations  in  1991,   and  became  a
development-stage  company  effective  January 1, 1992,  with the new  corporate
purpose  of  seeking  out  acquisitions  of  properties,  businesses,  or merger
candidates,  without  limitation as to the nature of the business  operations or
geographic location of the acquisition candidate.

     On April 1, 2002, SPM Group changed its name to "Provectus  Pharmaceutical,
Inc." and  reincorporated  in  Nevada  in  preparation  for a  transaction  with
Provectus Pharmaceuticals,  Inc., a privately-held Tennessee corporation,  which
we refer to as "PPI." On April 23, 2002, an Agreement and Plan of Reorganization
between Provectus  Pharmaceutical and PPI was approved by the written consent of
a majority of the outstanding shares of Provectus  Pharmaceutical.  As a result,
holders  of  6,680,000  shares  of  common  stock  of  Provectus  Pharmaceutical
exchanged their shares for all of the issued and  outstanding  shares of PPI. As
part of the acquisition, Provectus Pharmaceutical changed its name to "Provectus
Pharmaceuticals,  Inc." and PPI became a wholly owned  subsidiary  of Provectus.
For accounting purposes, we treat this transaction as a recapitalization of PPI.

     On  November  19,  2002,  we  acquired  Valley  Pharmaceuticals,   Inc.,  a
privately-held  Tennessee  corporation  formerly  known as  Photogen,  Inc.,  by
merging  our  subsidiary  PPI with and into  Valley  and  naming  the  surviving
corporation  "Xantech  Pharmaceuticals,  Inc." Valley had minimal operations and
had no revenues prior to the transaction with the Company.  By acquiring Valley,
we acquired our most  important  intellectual  property,  including  issued U.S.
patents and patentable inventions, with which we intend to develop:

     o    prescription  drugs,   medical  and  other  devices  (including  laser
          devices) and over-the-counter pharmaceutical products in the fields of
          dermatology and oncology; and

     o    technologies  for  the  preparation  of  human  and  animal  vaccines,
          diagnosis  of   infectious   diseases  and  enhanced   production   of
          genetically engineered drugs.

     Prior to the acquisition of Valley,  we were considered to be, and continue
to be, in the  development  stage and had not  generated  any revenues  from the
assets we acquired.

     On December 5, 2002,  we acquired  the assets of Pure-ific  L.L.C.,  a Utah
limited  liability  company,  and created a wholly owned  subsidiary,  Pure-ific
Corporation,  to operate that business. We acquired the product formulations for
Pure-ific personal sanitizing sprays, along with the "Pure-ific" trademarks.  We
intend to continue  product  development  and begin to market a line of personal
sanitizing  sprays and related  products  to be sold over the counter  under the
"Pure-ific" brand name.

Description Of Business

Overview

     Provectus, and its five wholly owned subsidiaries:

     o    Xantech Pharmaceuticals, Inc.

     o    Pure-ific Corporation

     o    Provectus Biotech, Inc.

     o    Provectus Devicetech, Inc.

     o    Provectus Pharmatech, Inc.

(which we refer to as our subsidiaries) develop,  license and market and plan to
sell products in three sectors of the healthcare industry:

     o    Over-the-counter  products,  which we refer to in this  report as "OTC
          products;"

                                        1
<PAGE>
     o    Prescription drugs; and

     o    Medical device systems

     We manage Provectus and our subsidiaries on an integrated basis and when we
refer to "we" or "us" or "the Company" in this Annual Report on Form 10-KSB,  we
refer  to all six  corporations  considered  as a  single  unit.  Our  principal
executive  offices are located at 7327 Oak Ridge  Highway,  Suite A,  Knoxville,
Tennessee 37931, telephone 865/769-4011.

     Through  discovery  and  use of  state-of-the-art  scientific  and  medical
technologies,  the  founders of our  pharmaceutical  business  have  developed a
portfolio of patented,  patentable,  and proprietary  technologies  that support
multiple  products in the  prescription  drug,  medical  device and OTC products
categories  (including  patented  technologies for: (a) treatment of cancer; (b)
novel therapeutic  medical devices;  (c) enhancing  contrast in medical imaging;
(d) improving signal  processing during  biomedical  imaging;  and (e) enhancing
production of biotechnology  products). Our prescription drug products encompass
the  areas of  dermatology  and  oncology  and  involve  several  types of small
molecule-based  drugs.  Our  medical  device  systems  include  therapeutic  and
cosmetic  lasers,  while our OTC products  address markets  primarily  involving
skincare  applications.  Because our  prescription  drug  candidates and medical
device systems are in the early stages of  development,  they are not yet on the
market  and  there is no  assurance  that  they  will  advance  to the  point of
commercialization.

     Our first commercially available products are directed into the OTC market,
as these  products pose minimal or no regulatory  compliance  barriers to market
introduction.  For example,  the active  pharmaceutical  ingredient (API) in our
ethical products is already approved for other medical uses by the FDA and has a
long history of safety for use in humans.  This use of known APIs for novel uses
and in novel  formulations  minimizes  potential  adverse concerns from the FDA,
since  considerable  safety data on the API is  available  (either in the public
domain or via  license or other  agreements  with  third  parties  holding  such
information). In similar fashion, our OTC products are based on established APIs
and, when possible, utilize formulations (such as aerosol or cream formulations)
that have an established precedent.  (For more information on compliance issues,
see "Federal  Regulation of Therapeutic  Products"  below.) In this fashion,  we
believe that we can diminish the risk of regulatory bars to the  introduction of
safe,  consumer-friendly  products  and  minimize  the  time  required  to begin
generating revenues from product sales. At the same time, we continue to develop
higher-margin  prescription  pharmaceuticals  and  medical  devices,  which have
longer development and regulatory approval cycles.

Over-the-Counter Pharmaceuticals

     Our OTC products are designed to be safer and more specific than  competing
products. Our technologies offer practical solutions for a number of intractable
maladies,  using  ingredients that have limited or no side effects compared with
existing products.  To develop our OTC products, we typically use compounds with
potent  antibacterial  and  antifungal  activity as building  blocks and combine
these building  blocks with  anti-inflammatory  and  moisture-absorbing  agents.
Products  with these  properties  can be used for treatment of a large number of
skin afflictions, including:

     o    hand irritation associated with use of disposable gloves
     o    eczema
     o    mild to moderate acne

     Where appropriate,  we have filed or will file patent applications and will
seek other intellectual  property  protection to protect our unique formulations
for relevant applications.

GloveAid

     Personnel in many  occupations  and industries  now use  disposable  gloves
daily in the performance of their jobs, including:

     o    Airport security personnel;
     o    Food handling and preparation personnel;

                                        2
<PAGE>

     o    Sanitation workers;
     o    Postal and package delivery handlers and sorters;
     o    Laboratory researchers;
     o    Health care workers such as hospital and blood bank personnel; and
     o    Police, fire and emergency response personnel.

     Accompanying the increased use of disposable gloves is a mounting incidence
of chronic skin irritation.  To address this market, we have developed GloveAid,
a hand cream with both antiperspirant and antibacterial  properties, to increase
the comfort of users' hands during and after the wearing of  disposable  gloves.
During 2003, we ran a pilot scale run at the manufacturer of GloveAid.

     The  chronic  skin  irritation  that   accompanies  the  long-term  use  of
disposable  gloves has been  characterized as an  allergic-like  reaction to the
glove  materials.  Currently,  physicians treat the condition using steroids and
other  immunosuppressive  therapies.  To avoid possible  regulatory bars, we are
marketing  GloveAid as a means to increase  users'  comfort,  not as a long-term
therapy for  treatment of chronic skin  irritation.  However,  as we obtain data
regarding  people  who  have  existing  chronic  skin  irritation,  we may  seek
regulatory  approval  of  GloveAid  to permit  us to market it as a therapy  for
chronic skin problems associated with wearing of disposable gloves. If we decide
to obtain this  regulatory  approval,  we anticipate that our projected sales of
GloveAid would increase significantly. Obtaining this approval would require the
completion of glove  viability tests required by the United States Food and Drug
Administration,  which we refer to as the  "FDA,"  and  responding  to the FDA's
comments  relating to these tests.  We estimate  regulatory  approval would cost
approximately  $300,000  and  would  take  from  two to three  years to  obtain.

Pure-ific

     Our Pure-ific line of products includes two quick-drying sprays,  Pure-ific
and  Pure-ific  Kids,  that  immediately  kill up to  99.9% of germs on skin and
prevent regrowth for 6 hours. We have determined the  effectiveness of Pure-ific
based on our  internal  testing and testing  performed  by Paratus  Laboratories
H.B., an independent research lab. Pure-ific products help prevent the spread of
germs and thus  complement  our other OTC products  designed to treat  irritated
skin or skin conditions such as acne,  eczema,  dandruff and fungal  infections.
Our  Pure-ific  sprays  have  been  designed  with  convenience  in mind and are
targeted  towards mothers,  travelers,  and anyone concerned about the spread of
sickness-causing  germs.  During 2003 and 2004, we identified  and engaged sales
and brokerage forces for Pure-ific.  We emphasized  getting sales in independent
pharmacies  and mass (chain store)  markets.  The supply chain for Pure-ific was
established  with the  ability  to  support  large-scale  sales  and a  starting
inventory  was  manufactured  and  stored  in a  contract  warehouse/fulfillment
center. In addition,  a website for Pure-ific was developed with the ability for
supporting  on-line sales of the antibacterial hand spray. We intend to continue
developing our distribution  network for these products and expect to expand the
Pure-ific product line to include additional applications.

Dermatology

     A number of dermatological  conditions,  including  psoriasis,  eczema, and
acne, result from a superficial  infection which triggers an overwhelming immune
response. We anticipate developing OTC products similar to the GloveAid line for
the treatment of mild to moderate cases of psoriasis, eczema, and acne. Wherever
possible, we intend to formulate these products to minimize or avoid significant
regulatory bars that might adversely impact time to market.

Prescription Drugs

     We are  developing  a number of  prescription  drugs  which we expect  will
provide minimally  invasive treatment of chronic severe skin afflictions such as
psoriasis,  eczema, and acne; and several life-threatening cancers such as those
of the liver,  breast and  prostate.  We believe that our products will be safer
and more  specific than  currently  existing  products.  Use of topical or other
direct delivery formulations allows these potent products to be conveniently and
effectively  delivered only to diseased  tissues,  thereby enhancing both safety
and  effectiveness.  The ease of use and superior  performance of these products
may eventually lead to extension into OTC applications currently serviced by

                                       3
<PAGE>

less  safe,  more  expensive  alternatives.  All of  these  products  are in the
pre-clinical or clinical trial stage.

Dermatology

     Our most  advanced  prescription  drug  candidate  for treatment of topical
diseases on the skin is Xantryl,  a topical gel. PV-10, the active ingredient in
Xantryl, is "photoactive": it reacts to light of certain wavelengths, increasing
its therapeutic  effects.  PV-10 also concentrates in diseased or damaged tissue
but quickly  dissipates  from healthy  tissue.  By  developing a  "photodynamic"
treatment regimen (one which combines a photoactive substance with activation by
a source emitting a particular  wavelength of light) around these two properties
of PV-10, we can deliver a higher  therapeutic effect at lower dosages of active
ingredient,  thus minimizing  potential side effects  including damage to nearby
healthy  tissues.  PV-10  is  especially  responsive  to green  light,  which is
strongly  absorbed by the skin and thus only  penetrates  the body to a depth of
about three to five  millimeters.  For this reason,  we have  developed  Xantryl
combined with  green-light  activation  for topical use in surface  applications
where serious  damage could result if medicinal  effects were to occur in deeper
tissues.

     Acute  psoriasis.  Psoriasis  is a  common  chronic  disorder  of the  skin
characterized  by dry  scaling  patches,  called  "plaques,"  for which  current
treatments  are few and those that are available have  potentially  serious side
effects.  According to Roenigk and Maibach  (Psoriasis,  Third  Edition,  1998),
there are approximately five million people in the United States who suffer from
psoriasis,  with an estimated  160,000 to 250,000 new psoriasis cases each year.
There is no known cure for the disease at this time.  According  to the National
Psoriasis  Foundation,  the majority of psoriasis sufferers,  those with mild to
moderate cases,  are treated with topical steroids that can have unpleasant side
effects;  none of the other  treatments  for moderate  cases of  psoriasis  have
proven completely  effective.  The 25-30% of psoriasis  patients who suffer from
more severe cases  generally are treated with more  intensive  drug therapies or
PUVA, a  light-based  therapy that  combines the drug  Psoralen with exposure to
ultraviolet  A light.  While PUVA is one of the more  effective  treatments,  it
increases a patient's risk of skin cancer.

     We  believe  that  Xantryl  activated  with green  light  offers a superior
treatment for acute psoriasis because it selectively treats diseased tissue with
negligible potential for side effects in healthy tissue;  moreover,  the therapy
has shown promise in comprehensive  Phase 1 clinical trials.  The objective of a
Phase 1 clinical  trial is to  determine if there are safety  concerns  with the
therapy.  In these studies,  involving  more than 50 test subjects,  Xantryl was
applied topically to psoriatic plaques and then illuminated with green light. In
our first study, a single-dose  treatment yielded an average reduction in plaque
thickness  of 59%  after 30  days,  with  further  response  noted at the  final
follow-up examination 90 days later. Further, no pain, significant side effects,
or evidence of  "rebound"  (increased  severity of a psoriatic  plaque after the
initial  reduction in thickness) were observed in any treated areas. This degree
of positive  therapeutic  response is  comparable  to that  achieved with potent
steroids  and other  anti-inflammatory  agents,  but without  the  serious  side
effects  associated  with such agents.  We are  continuing the required Food and
Drug  Administration  reporting to support the active  Investigational  New Drug
application  for Xantryl's  Phase 2 clinical  trials on psoriasis.  The required
reporting  includes the publication of results regarding the multiple  treatment
scenario  of the active  ingredient  in  Xantryl.  We expect to conduct  Phase 2
studies  in the near  future,  in which we expect to assess  the  potential  for
remission of the disease using a regimen of weekly  treatments  similar to those
used for PUVA.

     Actinic   Keratosis.   According  to  Schwartz  and  Stoll   (Fitzpatrick's
Dermatology in General Medicine,  1999), actinic keratosis, or "AK" (also called
solar  keratosis or senile  keratosis),  is the most common  pre-cancerous  skin
lesion  among  fair-skinned  people  and is  estimated  to  occur in over 50% of
elderly fair-skinned  persons living in sunny climates.  These experts note that
nearly half of the  approximately  five million cases of skin cancer in the U.S.
may have begun as AK.  The  standard  treatments  for AK  (primarily  comprising
excision,  cryotherapy,  and  ablation  with topical  5-fluorouracil)  are often
painful and frequently  yield  unacceptable  cosmetic  outcomes due to scarring.
Building on our experience with psoriasis,  we are assessing use of Xantryl with

                                       4
<PAGE>

green-light  activation as a possible improvement in treatment of early and more
advanced  stages of AK. We  completed an initial  Phase 1 clinical  trial of the
therapy  for this  indication  in 2001  with the  predecessor  company  that was
acquired in 2002. This study, involving 24 subjects, examined the safety profile
of a single treatment using topical Xantryl with green light photoactivation; no
significant safety concerns were identified.  We are assessing the data from the
study as a possible basis for further clinical development of Xantryl for AK.

     Severe  Acne.  According to Berson et al.  (Cutis.  72 (2003)  5-13),  acne
vulgaris affects approximately 17 million individuals in the U.S., causing pain,
disfigurement,  and social  isolation.  Moderate to severe  forms of the disease
have proven responsive to several photodynamic  regimens, and we anticipate that
Xantryl  can be used as an advanced  treatment  for this  disease.  Pre-clinical
studies  show that the active  ingredient  in  Xantryl  readily  kills  bacteria
associated  with acne.  This  finding,  coupled with our clinical  experience in
psoriasis and actinic keratosis, suggests that therapy with Xantryl will exhibit
no significant  side effects and will afford  improved  performance  relative to
other therapeutic  alternatives.  If correct, this would be a major advance over
currently available products for severe acne.

     As  noted  above,  we  are  researching  multiple  uses  for  Xantryl  with
green-light activation. Multiple-indication use by a common pool of physicians -
dermatologists,  in this  case - should  reduce  market  resistance  to this new
therapy.

Oncology

     Oncology is another  major  market  where our planned  products  may afford
competitive advantage compared to currently available options. We are developing
Provecta,  a sterile injectible form of PV-10, for direct injection into tumors.
Because PV-10 is retained in diseased or damaged  tissue but quickly  dissipates
from healthy tissue,  we believe we can develop therapies that confine treatment
to cancerous tissue and reduce collateral impact on healthy tissue.  During 2003
and 2004, we have been working toward completion of the extensive scientific and
medical  materials  necessary  for  filing  an  Investigational  New Drug  (IND)
application  for Provecta in  anticipation  of beginning Phase 1 clinical trials
for breast and liver  cancer.  This IND was filed and cleared by the RDA in 2004
and sets the stage for Phase 1 clinical trials.

     Liver  Cancer.  The current  standard of care for liver  cancer is ablative
therapy  (which  seeks to reduce a tumor by  poisoning,  freezing,  heating,  or
irradiating  it)  using  either a  localized  injection  of  ethanol  (alcohol),
cryosurgery,  radiofrequency  ablation,  or ionizing  radiation  such as X-rays.
Where  effective,  these therapies have many side effects;  selecting  therapies
with  fewer  side  effects  tends to  reduce  overall  effectiveness.  Combined,
ablative therapies have a five-year survival rate of 33% - meaning that only 33%
of those liver cancer  patients whose cancers are treated using these  therapies
survive for five years after their initial diagnoses. In pre-clinical studies we
have found that direct  injection of Provecta into liver tumors quickly  ablates
treated  tumors,  and can  trigger  an  anti-tumor  immune  response  leading to
eradication of residual tumor tissue and distant tumors.  Because of the natural
regenerative  properties  of the liver and the  highly  localized  nature of the
treatment,  this approach appears to produce no significant side effects.  Based
on these  encouraging  preclinical  results,  we are  assessing  strategies  for
initiation of clinical trials of Provecta for treatment of liver cancer.

     Breast Cancer.  Breast cancer afflicts over 200,000 U.S. citizens annually,
leading to over  40,000  deaths.  Surgical  resection,  chemotherapy,  radiation
therapy, and immunotherapy  comprise the standard treatments for the majority of
cases,  resulting  in serious  side  effects  that in many cases are  permanent.
Moreover,  current  treatments are relatively  ineffective  against  metastases,
which in many cases are the eventual  cause of patient  mortality.  Pre-clinical
studies  using  human  breast  tumors  implanted  in mice have shown that direct
injection of Provecta into these tumors ablates the tumors,  and, as in the case
of liver  tumors,  may elicit an  anti-tumor  immune  response  that  eradicates
distant  metastases.  Since  fine-needle  biopsy  is  a  routine  procedure  for
diagnosis of breast cancer, and since the needle used to conduct the biopsy also
could be used to direct an  injection  of  Provecta  into the  tumor,  localized
destruction of suspected tumors through direct injection of Provecta clearly has
the potential of becoming a primary  treatment.  We are  evaluating  options for
initiating  clinical studies of direct injection of Provecta into breast tumors,
and expect to formulate final plans based on results from clinical studies of

                                       5
<PAGE>
our indication for Provecta in liver cancer.

     Prostate Cancer. Cancer of the prostate afflicts approximately 190,000 U.S.
men annually,  leading to over 30,000 deaths.  As with breast  cancer,  surgical
resection,  chemotherapy,  radiation  therapy,  and  immunotherapy  comprise the
standard  treatments  for the  majority  of cases,  and can  result in  serious,
permanent  side  effects.  We believe  that direct  injection  of Provecta  into
prostate tumors may selectively ablate such tumors, and, as in the case of liver
and breast  tumors,  may also elicit an anti-tumor  immune  response  capable of
eradicating  distant  metastases.   Since  trans-urethral   ultrasound,   guided
fine-needle biopsy and immunotherapy, along with brachytherapy implantation, are
becoming  routine  procedures for diagnosis and treatment of these  cancers,  we
believe that localized  destruction of suspected tumors through direct injection
of  Provecta  can become a primary  treatment.  We are  evaluating  options  for
initiating  clinical  studies of direct  injection  of  Provecta  into  prostate
tumors,  and expect to  formulate  final  plans based on results  from  clinical
studies of our  indications  for  Provecta in the  treatment of liver and breast
cancer.

Medical Devices

We are developing medical devices to address two major markets:
     o    cosmetic treatments,  such as reduction of wrinkles and elimination of
          spider veins and other cosmetic blemishes; and
     o    therapeutic   uses,   including   photoactivation   of  Xantryl  other
          prescription  drugs  and  non-surgical  destruction  of  certain  skin
          cancers.

     We expect to develop medical devices through  partnerships with third-party
device manufacturers or, if appropriate opportunities arise, through acquisition
of one or more device manufacturers.

     Photoactivation.  Our clinical tests of Xantryl for dermatology have, up to
the present,  utilized a number of commercially  available lasers for activation
of the drug. This approach has several  advantages,  including the leveraging of
an extensive base of installed devices present  throughout the pool of potential
physician-adopters  for  Xantryl;  access to such a base could play an  integral
role in early market capture.  However, since the use of such lasers, which were
designed  for  occasional  use in other  types  of  dermatologic  treatment,  is
potentially  too  cumbersome  and  costly  for  routine  treatment  of the large
population of patients with psoriasis, we have begun investigating potential use
of other types of  photoactivation  hardware,  such as light booths.  The use of
such booths is consistent with current care standards in the dermatology  field,
and may provide a cost-effective  means for addressing the needs of patients and
physicians  alike.  We anticipate  that such  photoactivation  hardware would be
developed,   manufactured,  and  supported  in  conjunction  with  one  or  more
third-party device manufacturer.

     Melanoma.  A high priority in our medical  devices field is the development
of a  laser-based  product for  treatment  of  melanoma.  We continue to conduct
extensive research on ocular melanoma at the Massachusetts Eye and Ear Infirmary
(a teaching  affiliate of Harvard  Medical  School) using a new laser  treatment
that may offer significant  advantage over current treatment  options.  A single
quick  non-invasive  treatment  of  ocular  melanoma  tumors  in a rabbit  model
resulted  in  elimination  of over 90% of  tumors,  and may  afford  significant
advantage over invasive alternatives, such as surgical excision, enucleation, or
radiotherapy implantation. Ocular melanoma is rare, with approximately 2,000 new
cases annually in the U.S.  However,  we believed that our extremely  successful
results  could be  extrapolated  to treatment of primary  melanomas of the skin,
which have an incidence of over 52,000 new cases  annually in the U.S. and a 13%
five-year survival rate after metastasis of the tumor. We have performed similar
laser  treatments  on  large  (averaging   approximately  3  millimeters  thick)
cutaneous  melanoma  tumors  implanted in mice,  and have been able to eradicate
over 90% of these pigmented skin tumors with a single  treatment.  Moreover,  we
have shown that this treatment stimulates an anti-tumor immune response that may
lead to  improved  outcome  at both the  treatment  site and at sites of distant
metastasis.  From these results, we believe that a device for laser treatment of
primary  melanomas  of the skin and eye is nearly  ready for human  studies.  We
anticipate partnering with a medical device manufacturer to bring it to market

                                        6
<PAGE>

in  reliance on a 510(k)  notification.  For more  information  about the 510(k)
notification process, see "Federal Regulation of Therapeutic Products" below.

Research and Development

     We continue to actively  develop projects that are product directed and are
attempting to conserve available capital and achieve full  capitalization of our
company  through equity and convertible  debt  offerings,  generation of product
revenues,  and other means. All ongoing research and development  activities are
directed  toward  supporting  our OTC  product  launches,  our  current  product
development and maintaining our intellectual property portfolio.

Production

     We have  determined that the most efficient use of our capital in producing
OTC products is to contract production with experienced entities having previous
success in economically  producing such products.  We have ongoing relationships
with two OTC product manufacturers,  EXAL, Inc. and 220 Laboratories,  Inc., and
several other OTC service vendors that will manufacture,  package, warehouse and
ship  our OTC  products.  We do not  have  written  agreements  with  any of our
manufacturers or vendors.

Sales

     Our first commercially available products are directed into the OTC market,
as these  products pose minimal or no regulatory  compliance  barriers to market
introduction.  In this  fashion,  we believe  that we can  diminish  the risk of
regulatory  bars to the  introduction of products and minimize the time required
to begin  generating  revenues from product sales. At the same time, we continue
to develop higher-margin prescription pharmaceuticals and medical devices, which
have longer development and regulatory approval cycles.

     We are commencing limited sales of Pure-ific, our antibacterial hand spray.
We sold small  amounts of this  product  during 2004.  We will  continue to seek
additional  markets for our  products  through  existing  distributorships  that
market  and  distribute  medical  products,  ethical  pharmaceuticals,  and  OTC
products for the professional and consumer marketplaces.

     In  addition  to  developing  and  selling  products   ourselves,   we  are
negotiating  actively  with a number of potential  licensees  for several of our
intellectual properties, including patents and related technologies. To date, we
have not yet entered  into any  licensing  agreements;  however,  we  anticipate
consummating one or more such licenses in the future.

Intellectual Property

Patents

     We  hold a  number  of  U.S.  patents  covering  the  technologies  we have
developed  and are  continuing  to develop for the  production  of  prescription
drugs,  medical devices and OTC  pharmaceuticals,  including those identified in
the following table:

<TABLE>
<CAPTION>

      U.S. Patent No.     Title                                          Issue Date             Expiration Date
      ---------------     -----                                          ----------             ---------------
         <S>              <C>                                           <C>                    <C>

         5,829,448        Method for improved selectivity in            November 3, 1998       October 30, 2016
                          photo-activation of molecular agents

         5,832,931        Method for improved selectivity in            November 10, 1998      October 30, 2016
                          photo-activation and detection of
                          molecular diagnostic agents

         5,998,597        Method for improved selectivity in            December 7, 1999       October 30, 2016
                          photo-activation of molecular agents
</TABLE>

                                        7
<PAGE>
<TABLE>
<CAPTION>

      U.S. Patent No.     Title                                          Issue Date            Expiration Date
      ---------------     -----                                          ----------            ---------------
         <S>              <C>                                           <C>                    <C>

         6,042,603        Method for improved selectivity in            March 28, 2000         October 30, 2016
                          photo-activation of molecular agents

         6,331,286        Methods for high energy phototherapeutics     December 18, 2001      December 21, 2018

         6,451,597        Method for enhanced protein stabilization     September 17, 2002     April 6, 2020
                          and for production of cell lines useful
                          for production of such stabilized proteins

         6,468,777        Method for enhanced protein stabilization     October 22, 2002       April 6, 2020
                          and for production of cell lines useful
                          for production of such stabilized proteins

         6,493,570        Method for improved imaging and               December 10, 2002      December 10, 2019
                          photodynamic therapy

         6,495,360        Method for enhanced protein stabilization     December 17, 2002      April 6, 2020
                          and for production of cell lines useful
                          for production of such stabilized proteins

         6,519,076        Methods and apparatus for optical imaging     February 11, 2003      October 30, 2016

         6,525,862        Methods and apparatus for optical imaging     February 25, 2003      October 30, 2016

         6,541,223        Method for enhanced protein stabilization     April 1, 2003          April 6, 2020
                          and for production of cell lines useful
                          for production of such stabilized proteins
</TABLE>

     We continue to pursue patent applications on numerous other developments we
believe to be  patentable.  We consider our issued  patents,  our pending patent
applications and any patentable  inventions which we may develop to be extremely
valuable assets of our business.

Trademarks

     We own  the  following  trademarks  used  in  this  document:  Xantryl(TM),
Provecta(TM),  GloveAid(TM),  and  Pure-ific(TM)  (including  Pure-ific(TM)  and
Pure-ific(TM)  Kids).  We  also  own  the  registered  trademark   PulseView(R).
Trademark  rights are  perpetual  provided  that we continue to keep the mark in
use. We  consider  these  marks,  and the  associated  name  recognition,  to be
valuable to our business.

Material Transfer Agreement

     We have entered  into a Material  Transfer  Agreement  dated as of July 31,
2003  with  Schering-Plough  Animal  Health  Corporation,  which  we refer to as
"SPAH",  the animal-health  subsidiary of Schering-Plough  Corporation,  a major
international  pharmaceutical company. We refer to this agreement in this report
as the "Material Transfer Agreement." Under the Material Transfer Agreement,  we
will  provide SPAH with access to some of our  patented  technologies  to permit
SPAH to evaluate those  technologies for use in animal-health  applications.  If
SPAH determines that it can commercialize  our  technologies,  then the Material
Transfer  Agreement  obligates  us and SPAH to enter  into a  license  agreement
providing for us to license those  technologies to SPAH in exchange for progress
payments upon the achievement of goals. The Material  Transfer  Agreement covers
four U.S.  patents that cover  biological  material  manufacturing  technologies
(i.e., biotech related). The Material Transfer Agreement continues indefinitely,
unless SPAH  terminates  it by giving us notice or  determines  that it does not
wish to secure from us a license for our  technologies.  The  Material  Transfer
Agreement  can also be  terminated  by either of us in the event the other party
breaches  the  agreement  and does not cure the breach  within 30 days of notice
from the other party. We can give you no assurance that SPAH will determine that
it can  commercialize  our  technologies  or that the goals  required  for us to
obtain progress payments from SPAH will be achieved.

                                        8

<PAGE>

Competition

     In  general,   the  pharmaceutical   industry  is  intensely   competitive,
characterized  by rapid  advances  in  products  and  technology.  A  number  of
companies have developed and continue to develop products that address the areas
we have targeted.  Some of these  companies are major  pharmaceutical  companies
that are  international  in scope and very large in size, while others are niche
players that may be less familiar but have been  successful in one or more areas
we  are  targeting.   Existing  or  future  pharmaceutical,   device,  or  other
competitors  may develop  products  that  accomplish  similar  functions  to our
technologies  in  ways  that  are  less  expensive,  receive  faster  regulatory
approval,  or receive greater market  acceptance than our products.  Many of our
competitors  have been in existence for  considerably  longer than we have, have
greater capital resources, broader internal structure for research, development,
manufacturing  and  marketing,  and are in many  ways  further  along  in  their
respective product cycles.

     At present,  our most direct  competitors  are smaller  companies  that are
exploiting  niches similar to ours. In the field of  photodynamic  therapy,  one
competitor,  QLT,  Inc.,  has  received  FDA  approval  for  use  of  its  agent
Photofrin(R) for treatment of several niche cancer indications, and has a second
product,  Visudyne(R),  approved  for  treatment  of  certain  forms of  macular
degeneration.  Another  competitor  in this field,  Dusa  Pharmaceuticals,  Inc.
recently   received  FDA  approval  of  its  photodynamic   product   Levulan(R)
Kerastik(R)  for treatment of actinic  keratosis.  We believe that QLT and Dusa,
among  other  competitors,  have  established  a  working  commercial  model  in
dermatology  and  oncology,  and that we can benefit from this model by offering
products  that,  when compared to our  competitors'  products,  afford  superior
safety and performance,  greatly reduced side effects, improved ease of use, and
lower cost, compared to those of our competitors.

     While it is possible  that  eventually  we may compete  directly with major
pharmaceutical  companies,  we believe it is more likely that we will enter into
joint  development,   marketing,  or  other  licensure  arrangements  with  such
competitors.

     We also have a number of market areas in common with  traditional  skincare
cosmetics companies,  but in contrast to these companies, our products are based
on unique,  proprietary formulations and approaches. For example, we are unaware
of any products in our  targeted  OTC  skincare  markets that our similar to our
GloveAid and Pure-ific products. Further, proprietary protection of our products
may help limit or prevent  market  erosion  until our  patents  expire.  Federal
Regulation of Therapeutic Products

     All of the prescription drugs and medical devices we currently  contemplate
developing  will  require  approval by the FDA prior to sales  within the United
States and by  comparable  foreign  agencies  prior to sales  outside the United
States.   The  FDA  and  comparable   regulatory   agencies  impose  substantial
requirements on the manufacturing  and marketing of pharmaceutical  products and
medical devices.  These agencies and other entities extensively regulate,  among
other   things,   research   and   development   activities   and  the  testing,
manufacturing, quality control, safety, effectiveness, labeling, storage, record
keeping, approval,  advertising and promotion of our proposed products. While we
attempt to minimize and avoid  significant  regulatory bars when formulating our
products,   some  degree  of  regulation  from  these  regulatory   agencies  is
unavoidable.  Some  of  the  things  we do to  attempt  to  minimize  and  avoid
significant regulatory bars include the following:

     o    Using chemicals and combinations already allowed by the FDA;

     o    Carefully  making  product  performance  claims  to avoid the need for
          regulatory approval;

     o    Using  drugs that have been  previously  approved  by the FDA and that
          have a long history of safe use;

     o    Using chemical compounds with known safety profiles; and

                                       9
<PAGE>

     o    In many cases, developing OTC products which face less regulation than
          prescription pharmaceutical products.

     The  regulatory  process  required  by the FDA,  through  which our drug or
device products must pass successfully  before they may be marketed in the U.S.,
generally involves the following:

     o    Preclinical laboratory and animal testing;

     o    Submission  of  an  application  that  must  become  effective  before
          clinical trials may begin;

     o    Adequate and well-controlled human clinical trials to establish the
          safety and efficacy of the product for its intended indication; and

     o    FDA approval of the  application to market a given product for a given
          indication.

     For   pharmaceutical   products,   preclinical  tests  include   laboratory
evaluation of the product, its chemistry,  formulation and stability, as well as
animal studies to assess the potential safety and efficacy of the product. Where
appropriate  (for example,  for human disease  indications for which there exist
inadequate animal models), we will attempt to obtain preliminary data concerning
safety and efficacy of proposed  products using  carefully  designed human pilot
studies.  We will require  sponsored  work to be conducted  in  compliance  with
pertinent  local and  international  regulatory  requirements,  including  those
providing for  Institutional  Review Board approval,  national  governing agency
approval and patient informed consent,  using protocols  consistent with ethical
principles  stated in the  Declaration  of  Helsinki  and other  internationally
recognized  standards.  We expect any pilot studies to be conducted  outside the
United States;  but if any are conducted in the United States,  they will comply
with applicable FDA regulations.  Data obtained through pilot studies will allow
us  to  make  more  informed  decisions   concerning   possible  expansion  into
traditional FDA-regulated clinical trials.

     If the FDA is satisfied with the results and data from  preclinical  tests,
it will authorize human clinical  trials.  Human clinical  trials  typically are
conducted in three sequential phases which may overlap. Each of the three phases
involves   testing  and  study  of  specific  aspects  of  the  effects  of  the
pharmaceutical  on  human  subjects,   including  testing  for  safety,   dosage
tolerance, side effects,  absorption,  metabolism,  distribution,  excretion and
clinical efficacy.

     Phase  1  clinical   trials   include  the  initial   introduction   of  an
investigational  new drug into humans.  These studies are closely  monitored and
may be  conducted in patients,  but are usually  conducted in healthy  volunteer
subjects.   These   studies  are  designed  to  determine   the   metabolic  and
pharmacologic  actions of the drug in humans,  the side effects  associated with
increasing  doses,  and, if possible,  to gain early evidence on  effectiveness.
While  the FDA can  cause us to end  clinical  trials at any phase due to safety
concerns, Phase 1 clinical trials are primarily concerned with safety issues. We
also attempt to obtain sufficient information about the drug's  pharmacokinetics
and  pharmacological  effects during Phase 1 clinical trial to permit the design
of well-controlled, scientifically valid, Phase 2 studies.

     Phase  1  studies  also   evaluate  drug   metabolism,   structure-activity
relationships,  and the  mechanism  of  action in  humans.  These  studies  also
determine  which  investigational  drugs are used as  research  tools to explore
biological phenomena or disease processes. The total number of subjects included
in Phase 1 studies varies with the drug, but is generally in the range of twenty
to eighty.

     Phase 2 clinical  trials  include  the early  controlled  clinical  studies
conducted to obtain some preliminary data on the effectiveness of the drug for a
particular  indication or indications in patients with the disease or condition.
This phase of testing also helps  determine the common  short-term  side effects
and  risks   associated   with  the  drug.   Phase  2  studies   are   typically
well-controlled,  closely monitored,  and conducted in a relatively small number
of patients, usually involving several hundred people.

     Phase 3 studies are expanded controlled and uncontrolled trials. They are

                                      10
<PAGE>

performed after preliminary  evidence  suggesting  effectiveness of the drug has
been obtained in Phase 2, and are intended to gather the additional  information
about   effectiveness  and  safety  that  is  needed  to  evaluate  the  overall
benefit-risk  relationship of the drug. Phase 3 studies also provide an adequate
basis for extrapolating  the results to the general  population and transmitting
that  information in the physician  labeling.  Phase 3 studies  usually  include
several hundred to several thousand people.

     Applicable  medical  devices  can be cleared  for  commercial  distribution
through  a  notification  to the FDA  under  Section  510(k)  of the  applicable
statute.  The 510(k) notification must demonstrate to the FDA that the device is
as safe and effective  and  substantially  equivalent  to a legally  marketed or
classified device that is currently in interstate commerce. Such devices may not
require detailed testing. Certain high-risk devices that sustain human life, are
of  substantial  importance  in preventing  impairment of human health,  or that
present a  potential  unreasonable  risk of illness or injury,  are subject to a
more  comprehensive  FDA  approval  process  initiated  by  filing  a  premarket
approval,  also  known as a "PMA,"  application  (for  devices)  or  accelerated
approval (for drugs).

     We have established a core clinical  development team and have been working
with  outside  FDA  consultants  to  assist  us in  developing  product-specific
development and approval strategies,  preparing the required submittals, guiding
us through the regulatory  process,  and providing  input to the design and site
selection of human clinical  studies.  Historically,  obtaining FDA approval for
photodynamic  therapies has been a challenge.  Wherever  possible,  we intend to
utilize lasers or other activating systems that have been previously approved by
the FDA to mitigate the risk that our therapies will not be approved by the FDA.
The FDA has considerable experience with lasers by virtue of having reviewed and
acted upon many  510(k)  and  premarket  approval  filings  submitted  to it for
various photodynamic and non-photodynamic therapy laser applications,  including
a large number of cosmetic laser treatment systems used by dermatologists.

     The testing and approval process requires  substantial  time,  effort,  and
financial resources, and we may not obtain FDA approval on a timely basis, if at
all.  Success in  preclinical  or  early-stage  clinical  trials does not assure
success in later stage  clinical  trials.  The FDA or the  research  institution
sponsoring  the trials may suspend  clinical  trials or may not permit trials to
advance  from one phase to another at any time on various  grounds,  including a
finding  that the  subjects or  patients  are being  exposed to an  unacceptable
health risk. Once issued,  the FDA may withdraw a product  approval if we do not
comply with pertinent regulatory requirements and standards or if problems occur
after the product  reaches the market.  If the FDA grants approval of a product,
the approval may impose limitations,  including limits on the indicated uses for
which we may market a  product.  In  addition,  the FDA may  require  additional
testing and surveillance  programs to monitor the safety and/or effectiveness of
approved products that have been commercialized, and the agency has the power to
prevent or limit  further  marketing of a product  based on the results of these
post-marketing programs. Further, later discovery of previously unknown problems
with a  product  may  result  in  restrictions  on the  product,  including  its
withdrawal from the market.

     Marketing our products abroad will require similar regulatory  approvals by
equivalent  national  authorities  and is subject to similar risks.  To expedite
development,  we may pursue  some or all of our  initial  clinical  testing  and
approval  activities  outside  the United  States,  and in  particular  in those
nations  where  our  products  may  have  substantial   medical  and  commercial
relevance.  In some such cases any resulting products may be brought to the U.S.
after  substantial  offshore  experience  is gained.  Accordingly,  we intend to
pursue any such development in a manner  consistent with U.S.  standards so that
the  resultant  development  data is  maximally  applicable  for  potential  FDA
approval.

     OTC products are subject to  regulation  by the FDA and similar  regulatory
agencies but the regulations  relating to these products are much less stringent
than those relating to prescription drugs and medical devices.  The types of OTC
products  developed  and sold by us only require that we follow  cosmetic  rules
relating to labeling and the claims that we make about our product.  The process
for obtaining  approval of prescription drugs with the FDA does not apply to the
OTC products which we sell. The FDA can, however, require us to stop selling our
product if we fail to comply with the rules applicable to our OTC products.

                                       11
<PAGE>
Personnel

Executive Officers

     As of March 17, 2005, our executive officers are:

     H. Craig Dees, Ph.D., 53, Chief Executive  Officer.  Dr. Dees has served as
our Chief  Executive  Officer and as a member of our Board of Directors since we
acquired PPI on April 23, 2002.  Before  joining us, from 1997 to 2002 he served
as  senior  member  of the  management  team  of  Photogen  Technologies,  Inc.,
including serving as a member of the Board of Directors of Photogen from 1997 to
2000.  Prior to joining  Photogen,  Dr. Dees served as a Group Leader at the Oak
Ridge National Laboratory (ORNL), and as a senior member of the management teams
of LipoGen Inc., a medical  diagnostic  company  which used genetic  engineering
technologies to manufacture and distribute diagnostic assay kits for auto-immune
diseases,  and  TechAmerica  Group  Inc.,  now a part  of  Boehringer  Ingelheim
Vetmedica,  Inc., the U.S. animal health subsidiary of Boehringer Ingelhem GmbH,
an international  chemical and pharmaceutical  company headquartered in Germany.
He has developed numerous products in a broad range of areas,  including ethical
vaccines,  human  diagnostics,  cosmetics and OTC  pharmaceuticals,  and has set
several regulatory precedents in licensing and developing  biotechnology-derived
products.  For example,  Dr. Dees developed and commercialized the world's first
live viral vaccine  produced by recombinant  DNA  technologies  and licensed the
first recombinant antigen human diagnostic assay using a FDA Class II licensure.
While at  TechAmerica  he developed  and obtained USDA approval for the first in
vitro assay for releasing  "killed" viral  vaccines.  Dr. Dees also has licensed
successfully a number of proprietary  cosmetic products and formulated strategic
planning  for  developing  cosmetic  companies.  He earned a Ph.D.  in Molecular
Virology from the University of Wisconsin - Madison in 1984.

     Timothy  C.  Scott,  Ph.D.,  47,  President.  Dr.  Scott has  served as our
President  and as a member of our Board of  Directors  since we acquired  PPI on
April 23,  2002.  Prior to joining us, Dr.  Scott was as a senior  member of the
Photogen  management  team from 1997 to 2002,  including  serving as  Photogen's
Chief  Operating  Officer from 1999 to 2002, as a director of Photogen from 1997
to 2000, and as interim CEO for a period in 2000.  Before joining  Photogen,  he
served as senior  management  of Genase LLC, a  developer  of enzymes for fabric
treatment,  and held senior research and management positions at ORNL. Dr. Scott
has been involved in developing numerous high-tech  innovations in a broad range
of areas, including separations science, biotechnology, biomedical, and advanced
materials.  He has licensed  several of his  innovations  to the oil and gas and
biotechnology  industries.  As Director of the Bioprocessing R&D Center at ORNL,
Dr.  Scott  achieved  a  national  presence  in the  area  of  use  of  advanced
biotechnology  for the production of energy,  fuels, and chemicals.  He earned a
Ph.D.  in Chemical  Engineering  from the  University  of Wisconsin - Madison in
1985.

     Eric A. Wachter,  Ph.D., 42, Vice President - Pharmaceuticals.  Dr. Wachter
has served as our Vice President - Pharmaceuticals  and as a member of our Board
of Directors since we acquired PPI on April 23, 2002.  Prior to joining us, from
1997  to  2002 he was a  senior  member  of the  management  team  of  Photogen,
including serving as Secretary and a director of Photogen since 1997 and as Vice
President and Secretary and a director of Photogen since 1999.  Prior to joining
Photogen,  Dr.  Wachter  served as a senior  research  staff  member  with ORNL.
Starting during his affiliation with Photogen,  Dr. Wachter has been extensively
involved in pre-clinical development and clinical testing of pharmaceuticals and
medical device systems,  as well as with coordination and filing of patents.  He
earned a Ph.D. in Chemistry from the University of Wisconsin - Madison in 1988.

     Peter R. Culpepper,  CPA, MBA, 45, Chief Financial  Officer.  Mr. Culpepper
was  appointed  to  serve as our  Chief  Financial  Officer  in  February  2004.
Previously,  Mr. Culpepper served as Chief Financial Officer for Felix Culpepper
International,  Inc. from 2001 to 2004; was a Registered Representative with AXA
Advisors,  LLC from 2002 to 2003;  has served as Chief  Accounting  Officer  and
Corporate  Controller for Neptec,  Inc. from 2000 to 2001; has served in various
Senior  Director  positions with  Metromedia  Affiliated  Companies from 1998 to
2000; has served in various Senior Director and other  financial  positions with
Paging Network, Inc. from 1993 to 1998; and has served in a variety of financial
roles in public  accounting  and industry from 1982 to 1993. He earned an MBA in
Finance from the University of Maryland - College Park in 1992. He earned an

                                       12

<PAGE>
undergraduate  degree  from the  College  of  William  and Mary -  Williamsburg,
Virginia in 1982. He is a licensed Certified Public Accountant in both Tennessee
and Maryland and is a faculty member with the University of Phoenix.

Employees

     We currently employ four persons, all of whom are full-time employees.

Available Information

     Provectus   Pharmaceuticals,   Inc.   is  subject   to  the   informational
requirements of the Securities Exchange Act of 1934, as amended,  which we refer
to as the  "Exchange  Act." To comply  with those  requirements,  we file annual
reports,  quarterly  reports,  periodic reports and other reports and statements
with the Securities and Exchange Commission, which we refer to as the "SEC." You
may read and copy any  materials  that we file with the SEC at the SEC's  Public
Reference  Room, at 450 Fifth Street,  N.W.,  Washington,  D.C.  20549.  You can
obtain  information on the operation of the Public Reference Room by calling the
SEC at  1-800-SEC-0330.  In  addition,  the SEC  maintains  an Internet  site at
http://www.sec.gov,  from which you can access electronic copies of materials we
file with the SEC.

     Our  Internet  address  is  http://www.pvct.com.  We have  made  available,
through a link to the SEC's Web site, electronic copies of the materials we file
with the SEC (including our annual reports on Form 10-KSB, our quarterly reports
on Form 10-QSB, our current reports on Form 8-K, the Section 16 reports filed by
our executive  officers,  directors and 10% shareholders and amendments to those
reports).  To receive paper copies of our SEC  materials,  please  contact us by
U.S. mail, telephone, facsimile or electronic mail at the following address:

                         Provectus Pharmaceuticals, Inc.
                         Attention: President
                         7327 Oak Ridge Highway, Suite A
                         Knoxville, TN 37931
                         Telephone: 865/769-4011
                         Facsimile: 865/769-4013
                         Electronic mail: info@pvct.com

Item 2. Description of Property.

     We currently  lease  approximately  4,000  square feet of space  outside of
Knoxville, Tennessee for our corporate office and operations. Our monthly rental
charge for these  offices is  approximately  $2,800 per month,  and the lease is
renewed on a month-to-month  basis. We believe that these offices  generally are
adequate for our needs currently and in the immediate future.

Item 3. Legal Proceedings.

     From time to time, we are party to  litigation  or other legal  proceedings
that we  consider  to be a part  of the  ordinary  course  of our  business.  At
present,  we are not involved in any legal  proceedings  nor are we party to any
pending  claims that we believe could  reasonably be expected to have a material
adverse effect on our business, financial condition, or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders.

     During the three  months ended  December  31,  2004,  we did not submit any
matters to a vote of our stockholders.

                                       13


<PAGE>
                                     Part II

Item 5. Market for Common Equity and Related Stockholder Matters.

Market Information and Holders

     Quotations  for our common  stock are  reported on the OTC  Bulletin  Board
under the symbol  "PVCT." The  following  table sets forth the range of high and
low bid information for the periods indicated since January 1, 2002:


<TABLE>
<CAPTION>

                                                                         High                 Low
                                                                         ----                 ---
         <S>                                                            <C>                 <C>
         2003
         First Quarter (January 1 to March 31)                           $0.60              $0.26
         Second Quarter (April 1 to June 30)                             $1.01              $0.21
         Third Quarter (July 1 to September 30)                          $0.60              $0.20
         Fourth Quarter (October 1 to December 31)                       $2.00              $0.22

         2004
         First Quarter (January 1 to March 31)                           $1.70              $0.80
         Second Quarter (April 1 to June 30)                             $1.51              $0.85
         Third Quarter (July 1 to September 30)                          $1.68              $0.52
         Fourth Quarter (October 1 to December 31)                       $0.82              $0.47
</TABLE>

     The closing  price for our common  stock on March 17, 2005 was $0.97.  High
and low quotation  information  was obtained  from data provided by Yahoo!  Inc.
Quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commission, and may not reflect actual transactions.

     As of March 17,  2005,  we had 1,822  shareholders  of record of our common
stock.

Dividend Policy

     We have never declared or paid any cash dividends on our capital stock.  We
currently  plan to retain  future  earnings,  if any,  to finance the growth and
development of our business and do not  anticipate  paying any cash dividends in
the  foreseeable  future.  We may incur  indebtedness  in the  future  which may
prohibit or effectively  restrict the payment of dividends,  although we have no
current plans to do so. Any future  determination  to pay cash dividends will be
at the discretion of our board of directors.

Recent Sales of Unregistered Securities

     During the year ended  December  31, 2004,  we did not sell any  securities
which were not registered under the Securities Act of 1933, as amended, which we
refer to as the  "Securities  Act,"  except on November  16,  2004,  the Company
completed a private placement transaction with 14 accredited investors, pursuant
to which we sold 530,166 shares of our common stock at a purchase price of $0.75
per share,  for an aggregate  purchase price of $397,625  pursuant to Securities
Purchase  Agreements  with each  investor.  In  connection  with the sale of the
common  stock,  we also issued  warrants  (the  "Warrants")  to the investors to
purchase up to 795,249  shares of our common stock at an exercise price of $1.00
per share. We paid $39764 to Venture  Catalyst,  LLC as placement agent for this
transaction.  We believe  that this  offering  was exempt from the  registration
requirements of the Securities Act of 1933, as amended (the "Securities Act") by
reason of Rule 506

                                       14

<PAGE>

of Regulation D and Section 4(2) of the Securities Act, based upon the fact that
the offer and issuance of the common stock and warrants  satisfied all the terms
and  conditions  of Rules 501 and 502 of the  Securities  Act, the investors are
financially  sophisticated and had access to complete information  concerning us
and  acquired  the  securities  for  investment  and  not  with  a  view  to the
distribution thereof. Proceeds will be used for general corporate purposes.

Pursuant to an agreement dated November 26, 2004 between us and  Gryffindor,  we
issued Gryffindor a Second Amended and Restated Senior Secured  Convertible Note
dated  November  26, 2004 in the amended  principal  amount of  $1,185,959.  The
amended note bears interest at 8% per annum,  payable  quarterly in arrears,  is
due and  payable in full on  November  26,  2005,  and amends and  restated  the
amended note in its entirety. As with the prior notes, our obligations under the
amended  note are secured by a first  priority  security  interest in all of our
assets,  including  the assets held by our Xantech and  Pure-ific  subsidiaries.
Subject to certain  exceptions,  the amended note is convertible  into shares of
our common stock beginning on the November 26, 2004; the principal amount of the
note  is  convertible  at the  rate  of one  share  of  common  stock  for  each
$0.73655655  of principal  converted,  while accrued but unpaid  interest on the
note is  convertible  at the rate of one share of common stock for each $0.55 of
accrued  but  unpaid  interest  converted.   We  relied  on  an  exemption  from
registration  pursuant  to  Section  4(2) of the  Securities  Act,  based on the
issuance of the amended  note,  and the  issuance of the shares of common  stock
issuable upon  conversion of the amended note, to a limited number of purchasers
in a transaction not involving any general solicitation or general advertising.

Item 6. Management's Discussion and Analysis or Plan of Operation.

     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 consolidated  financial  statements and notes thereto included  elsewhere in
this  Annual  Report  on  Form  10-KSB.   Historical   results  and   percentage
relationships  set forth in the statement of operations,  including trends which
might appear, are not necessarily indicative of future operations.

CAPITAL STRUCTURE

     Our ability to continue as a going  concern has become  reasonably  assured
due to our financing in June,  July,  and November  2004, as well as March 2005.
However,  our ongoing  operations  continue to be dependent  upon our ability to
raise capital.

     We plan to implement our integrated  business plan,  including execution of
the next phases in clinical development of our pharmaceutical  products and full
resumption of research programs for new research initiatives.

     We intend to proceed as rapidly as  possible  with the  development  of OTC
products that can be sold with a minimum of regulatory  compliance  and with the
further  development  of  revenue  sources  through  licensing  of our  existing
intellectual property portfolio.  Although we believe that there is a reasonable
basis for our  expectation  that we will become  profitable due to revenues from
OTC product  sales,  we cannot  assure you that we will be able to  achieve,  or
maintain, a level of profitability sufficient to meet our operating expenses.

     Our current  plans include  continuing  to operate with our four  employees
during the immediate future,  but we anticipate adding some part-time  employees
during the next year.  Our current plans also include  minimal  purchases of new
property,   plant  and  equipment,  and  significantly  increased  research  and
development.

                                       15
<PAGE>

PLAN OF OPERATION

     With  the  reorganization  of  Provectus  and PPI and the  acquisition  and
integration  into the  company  of Valley  and  Pure-ific,  we  believe  we have
obtained a unique combination of OTC products and core intellectual  properties.
This  combination  represents the  foundation  for an operating  company that we
believe will provide both  profitability and long-term growth. In 2005,  through
careful control of expenditures,  increasing sales of OTC products, and issuance
of debt and equity, we plan to build on that foundation to increase  shareholder
value.

     In the  short  term,  we intend  to  develop  our  business  by  marketing,
manufacturing,  and distributing our existing OTC products, principally GloveAid
and  Pure-ific.  In the  longer  term,  we expect to  continue  the  process  of
developing,  testing  and  obtaining  the  approval  of the U. S.  Food and Drug
Administration  of  prescription  drugs and medical  devices.  Additionally,  we
intend to restart our research programs that will identify additional conditions
that our intellectual  properties may be used to treat and additional treatments
for those and other conditions.

     We are in the  planning  phase  for  the  major  research  and  development
projects, and therefore do not have estimated completion dates, completion costs
and  capital  requirements  for these  projects.  The reason we do not have this
information  available is because we have not  completed  our planning  process.
Since there is no defined  schedule for completing these  development  projects,
there are no defined consequences if they are not completed timely. Research and
development   costs  comprising  the  total  of  $1,291,817  for  2004  included
depreciation  expense  of  $121,811,  consulting  of  $493,305,  lab  expense of
$10,958,  insurance  of $74,059,  legal  expense of  $127,775,  office and other
expense of $3,751, payroll of $431,068, rent and utilities of $20,533, and taxes
and fees of $8,557.  The research and  development  costs  comprising a total of
$724,924  for  2003  included  depreciation  expense  of  $218,082  ($10,233  of
depreciation expense is recorded in general and  administrative),  consulting of
$49,198,  lab  expense  of  $12,800,  insurance  of  $10,153,  legal  expense of
$130,271,  office and other  expense of $2,008,  payroll of  $252,042,  rent and
utilities of $38,057, and taxes and fees of $12,313.

                                      -16-
<PAGE>

CASH FLOW

     As of March 30, 2005,  we held  approximately  $1,600,000 in cash in escrow
for our  benefit.  We  anticipate  these funds will be released  from the escrow
shortly. At our current cash expenditure rate, this amount will be sufficient to
meet our needs for the forseeable  future. We already have begun to increase our
expenditure rate by accelerating  some of our research programs for new research
initiatives;  in addition, we are seeking to improve our cash flow by increasing
sales of OTC products.  However, we cannot assure you that we will be successful
in increasing  sales of OTC  products.  Moreover,  even if we are  successful in
improving our current cash flow position, we nonetheless will require additional
funds to meet our long-term  needs. We anticipate these funds will come from the
proceeds of private placements or public offerings of debt or equity securities.

CAPITAL RESOURCES

     As noted above,  our present cash flow is currently  sufficient to meet our
short-term  operating  needs for  initial  production  and  distribution  of OTC
products in order to achieve meaningful sales volumes.  Excess cash will be used
to  finance  the next  phases  in  clinical  development  of our  pharmaceutical
products  and  resumption  of our  currently  suspended  research  programs.  We
anticipate  that the  majority of the funds for our  operating  and  development
needs in 2005  will come  from the  proceeds  of  private  placements  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  shareholders.  For  further  information  on  funding
sources,  please  see the notes to our  financial  statements  included  in this
report.

Recent Accounting Pronouncements

On December 16, 2004, the Financial  Accounting  Standards Board issued SFAS No.
123 (revised 2004), "Shared-Based Payment," which is a revision of SFAS No. 123.
SFAS No. 123(R)  supersedes APB Opinion No. 25,  "Accounting for Stock Issued to
Employees," and amends SFAS No. 95,  "Statement of Cash Flows."  Generally,  the
approach in SFAS No.  123(R) is similar to the  approach  described  in SFAS No.
123.  However,  SFAS No. 123(R) requires all share-based  payments to employees,
including  grants of employee  stock  options,  to be  recognized  in the income
statement  based on their fair values.  This revised  standard will be effective
for us beginning with the third quarter in 2005.

As  permitted by SFAS No. 123, the Company  currently  accounts for  share-based
payments  to  employees  using  APB 25  intrinsic  value  method  and,  as such,
generally   recognizes  no   compensation   cost  for  Employee  stock  options.
Accordingly,  the adoption of SFAS No.  123(R)'s  fair value method will have an
impact  on the  result  of  operations,  although  it will have no impact on the
overall financial position.  The impact of the modified  prospective adoption of
SFAS No.  123(R)  cannot be  estimated  at this time  because it will  depend on
levels of share-based  payments granted in the future.  However, had the Company
adopted SFAS No. 123(R) in prior periods, the impact of that standard would have
approximated  the impact of SFAS 123 as described in the disclosure of pro forma
net income and earnings per share.

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs: an amendment
of ARB No. 43,  Chapter 4," to clarify the  accounting  for abnormal  amounts of
idle facility expense, freight, handling costs and wasted material. SFAS No. 151
is effective for inventory  costs incurred  during fiscal years  beginning after
June 15, 2005. The Company does not believe the provisions of SFAS No. 151, when
applied,  will have a material  impact on the  finanical  position or results of
operations.


                                       17
<PAGE>

Item 7. Financial Statements.

     Our consolidated financial statements,  together with the report thereon of
BDO Seidman  LLP,  independent  accountants,  are set forth on the pages of this
Annual Report on Form 10-KSB indicated below.
                                                                        Page
                                                                        ----
     Report of Independent Registered Public Accounting Firm             F-1
     Consolidated  Balance  Sheets as of December 31, 2004
     and December 31, 2003                                               F-2
     Consolidated  Statements of Operations for the years
     ended December 31, 2004 and 2003                                    F-3
     Consolidated Statements of Shareholders' Equity for
     the years ended December 31, 2004 and 2003                          F-4
     Consolidated  Statements of Cash Flows for the year
     ended December 31, 2004 and 2003                                    F-5
     Notes to Consolidated Financial Statements                          F-7

     Forward-Looking Statements

     This  Annual  Report on Form  10-KSB  contains  forward-looking  statements
regarding,  among other things, our anticipated financial and operating results.
Forward-looking   statements  reflect  our  management's   current  assumptions,
beliefs,  and expectations.  Words such as "anticipate,"  "believe,  "estimate,"
"expect,"  "intend,"  "plan," and similar  expressions  are intended to identify
forward-looking statements.  While we believe that the expectations reflected in
our  forward-looking  statements are  reasonable,  we can give no assurance that
such expectations will prove correct.  Forward-looking statements are subject to
risks and uncertainties that could cause our actual results to differ materially
from the future results, performance, or achievements expressed in or implied by
any  forward-looking   statement  we  make.  Some  of  the  relevant  risks  and
uncertainties  that could cause our actual performance to differ materially from
the  forward-looking  statements  contained in this report are  discussed  below
under the heading  "Risk  Factors" and  elsewhere in this Annual  Report on Form
10-KSB.  We caution  investors  that these  discussions  of important  risks and
uncertainties are not exclusive,  and our business may be subject to other risks
and uncertainties which are not detailed there.

     Investors are cautioned not to place undue reliance on our  forward-looking
statements.  We make  forward-looking  statements  as of the date on which  this
Annual  Report on Form 10-KSB is filed with the SEC, and we assume no obligation
to update the  forward-looking  statements  after the date  hereof  whether as a
result of new information or events, changed circumstances, or otherwise, except
as required by law.

     Risk Factors

     Our business is subject to various risks,  including those described below.
You should carefully consider these risk factors, together with all of the other
information  included in this Annual  Report on Form 10-KSB.  Any of these risks
could materially adversely affect our business,  operating results and financial
condition:

Our technologies are in early stages of development.  We have generated  minimal
initial  revenues  from sales and  operations  in 2004,  but we do not expect to
generate  sufficient revenues to enable us to be profitable for several calendar
quarters.  We require  additional  funding to continue  initial  production  and
distribution of OTC products in order to achieve  meaningful  sales volumes.  In
addition, we must raise substantial additional funds in order to fully

                                       18
<PAGE>

implement our integrated  business plan,  including execution of the next phases
in  clinical  development  of our  pharmaceutical  products  and  resumption  of
research  programs  currently  suspended.  We estimate that our existing capital
resources will be sufficient to fund our current and planned operations.

     Ultimately,  we must achieve profitable operations if we are to be a viable
entity.  We intend to proceed as rapidly as possible with the development of OTC
products that can be sold with a minimum of regulatory  compliance  and with the
development of revenue  sources through  licensing of our existing  intellectual
property  portfolio.  We  cannot  assure  you  that we  will  be  able to  raise
sufficient  capital  to  sustain  operations  before  we  can  commence  revenue
generation  or  that  we  will be able  to  achieve,  or  maintain,  a level  of
profitability  sufficient to meet our operating expenses.

     Because  of our  limited  operations  and the  fact  that we are  currently
generating  limited revenue,  we may be unable to pay our debts when they become
due.

     As of December 31, 2004, we had  $2,084,959 in debt, net of a debt discount
of $411,210 and $43,671 of accrued interest on our balance sheet,  consisting of
$1,185,959  in  principal  and $9,224 in accrued  but  unpaid  interest  owed to
Gryffindor  pursuant to the Note;  $750,000 in principal  and $19,011 in accrued
interest owed to the holders of our debentures  which has been  authorized to be
paid on March 30, 2005 and $149,000 in principal and $15,436 in accrued interest
owed to Dr. Wachter. The amounts due to Gryffindor are due in November 2005, the
amounts due in equal  installments  to the holders of our  debentures are due in
July and  October  2007,  and the  amounts  due to Dr.  Wachter are due in 2009.
Because  of the  convertible  nature of the debt owed to  Gryffindor  and to the
holders of the convertible debentures, we may not have to repay this debt if the
debt is converted  into shares of our common stock.  However,  we can not assure
you that this debt will be converted  into common stock and we may have to repay
this indebtedness.  Our ability to satisfy our current debt service  obligations
and any  additional  obligations  we might  incur  will  depend  upon our future
financial and operating  performance,  which,  in turn, is subject to prevailing
economic  conditions  and  financial,  business,  competitive,  legislative  and
regulatory  factors,  many of which are beyond our control. We cannot assure you
that our operating  results,  cash flow and capital resources will be sufficient
for payment of our debt service and other obligations in the future.

     We will need  additional  capital to conduct our operations and develop our
products, and our ability to obtain the necessary funding is uncertain.

     We estimate that our existing capital  resources will be sufficient to fund
our current and planned operations;  however, we may need additional capital. We
have based  this  estimate  on  assumptions  that may prove to be wrong,  and we
cannot assure that estimates and assumptions will remain unchanged. For example,
we are  currently  assuming  that  we  will  continue  to  operate  without  any
significant staff or other resources expansion.  We intend to acquire additional
funding through public or private equity  financings or other financing  sources
that may be available.  Additional  financing may not be available on acceptable
terms, or at all. As discussed in more detail below, additional equity financing
could result in significant dilution to shareholders. Further, in the event that
additional funds are obtained  through  licensing or other  arrangements,  these
arrangements  may require us to relinquish  rights to some of our  technologies,
product  candidates  or  products  that we would  otherwise  seek to develop and
commercialize  ourselves.  If  sufficient  capital is not  available,  we may be
required to delay, reduce the scope of or eliminate one or more of our programs,
any of which  could  have a material  adverse  effect on our  business,  and may
impair the value of our patents and other intangible assets.

     Existing shareholders may face dilution from our financing efforts.

                                       19
<PAGE>

     We must raise  additional  capital  from  external  sources to execute  our
business plan. We plan to issue debt securities, capital stock, or a combination
of these securities.  We may not be able to sell these securities,  particularly
under current market conditions. Even if we are successful in finding buyers for
our  securities,  the buyers could demand high  interest  rates or require us to
agree to onerous  operating  covenants,  which could in turn harm our ability to
operate our business by reducing  our cash flow and  restricting  our  operating
activities.  If we were to sell our  capital  stock,  we might be forced to sell
shares at a depressed market price,  which could result in substantial  dilution
to our existing  shareholders.  In addition,  any shares of capital stock we may
issue may have  rights,  privileges,  and  preferences  superior to those of our
common shareholders.

     The prescription  drug and medical device products in our internal pipeline
are  at an  early  stage  of  development,  and  they  may  fail  in  subsequent
development or commercialization.

     We are  continuing  to pursue  clinical  development  of our most  advanced
pharmaceutical  drug products,  Xantryl and Provecta,  for use as treatments for
specific  conditions.  These products and other  pharmaceutical drug and medical
device  products  that we are  currently  developing  will  require  significant
additional research,  formulation and manufacture development,  and pre-clinical
and   extensive   clinical   testing   prior   to   regulatory   licensure   and
commercialization.  Pre-clinical and clinical studies of our pharmaceutical drug
and medical device products under development may not demonstrate the safety and
efficacy   necessary  to  obtain  regulatory   approvals.   Pharmaceutical   and
biotechnology  companies have suffered significant setbacks in advanced clinical
trials,   even  after   experiencing   promising   results  in  earlier  trials.
Pharmaceutical  drug and medical device  products that appear to be promising at
early stages of development may not reach the market or be marketed successfully
for a number of reasons, including the following:

          o    a product may be found to be ineffective or have harmful side
               effects during subsequent pre-clinical testing or clinical
               trials;
          o    a product may fail to receive necessary regulatory clearance;
          o    a product may be too difficult to manufacture on a large scale;
          o    a product may be too expensive to manufacture or market;
          o    a product may not achieve broad market acceptance;
          o    others may hold  proprietary  rights that will  prevent a product
               from being marketed; or
          o    others may market equivalent or superior products.

     We do not  expect  any  pharmaceutical  drug  products  or  medical  device
products we are  developing  to be  commercially  available for at least several
years,  if at all.  Our  research  and  product  development  efforts may not be
successfully  completed  and may not result in any  successfully  commercialized
products.  Further, after commercial introduction of a new product, discovery of
problems  through  adverse event  reporting  could result in restrictions on the
product,  including  withdrawal from the market and, in certain cases,  civil or
criminal penalties.

     Our OTC  products are at an early stage of  introduction,  and we cannot be
sure that they will be widely  accepted in the  marketplace or that we will have
adequate  capital to market and distribute these products which are an important
factor in the future success of our business.

     We recently have begun marketing GloveAid and Pure-ific,  our first two OTC
products,  on a limited basis.  We have  recognized  minimal  revenue from these
products,  as the sales of these products have not been  material.  In order for
these products to become commercially successful, we must increase significantly
our distribution of them. Increasing distribution of these products requires, in
turn,  that we or  distributors  representing  us  increase  marketing  of these
products. In view of our limited financial resources, we may be unable to afford

                                       20
<PAGE>
increases  in our  marketing  of our OTC  products  sufficient  to  improve  our
distribution  of our  products.  Even if we can and do increase our marketing of
our OTC products,  we cannot give you any  assurances  that we can  successfully
increase our distribution of our products.

     If we do begin  increasing our  distribution  of our OTC products,  we must
increase  our  production  of these  products in order to fill our  distribution
channels.  Increased production will require additional financial resources that
we do not have at present. Additionally, we may succeed in increasing production
without  succeeding  in  increasing  sales,  which could  leave us with  excess,
possibly unsaleable, inventory.

     If we are unable to  successfully  introduce,  market and distribute  these
products,  our business,  financial  condition,  results of operations  and cash
flows could be materially adversely affected.

     Competition   in  the   prescription   drug,   medical   device   and   OTC
pharmaceuticals  markets  is  intense,  and we may be unable to  succeed  if our
competitors have more funding or better marketing.

     The pharmaceutical and biotechnology  industries are intensely competitive.
Other  pharmaceutical  and  biotechnology  companies and research  organizations
currently  engage in or have in the past engaged in research  efforts related to
treatment of dermatological conditions or cancers of the skin, liver and breast,
which could lead to the  development of products or therapies that could compete
directly with the prescription drug, medical device and OTC products that we are
seeking to develop and market.

     Many companies are also  developing  alternative  therapies to treat cancer
and dermatological conditions and, in this regard, are out competitors.  Many of
the pharmaceutical  companies  developing and marketing these competing products
have significantly greater financial resources and expertise than we do in:

          o    research and development;

          o    manufacturing;

          o    preclinical and clinical testing;

          o    obtaining regulatory approvals; and

          o    marketing.

     Smaller   companies   may  also  prove  to  be   significant   competitors,
particularly  through  collaborative  arrangements  with  large and  established
companies.  Academic  institutions,  government  agencies  and other  public and
private research organizations also may conduct research, seek patent protection
and establish collaborative arrangements for research,  clinical development and
marketing of products similar to ours. These companies and institutions  compete
with  us  in  recruiting  and  retaining  qualified  scientific  and  management
personnel as well as in acquiring technologies complementary to our programs.

     In  addition to the above  factors,  we expect to face  competition  in the
following areas:

          o    product efficacy and safety;

          o    the timing and scope of regulatory consents;

          o    availability of resources;

          o    reimbursement coverage;

          o    price; and

          o    patent position,  including potentially dominant patent positions
               of others.

     As a result of the foregoing, our competitors may develop more effective or
more affordable products or achieve earlier product commercialization than we
do.

                                       21

<PAGE>

Product  Competition.  Additionally,  since our currently  marketed products are
generally  established and commonly sold,  they are subject to competition  from
products with similar qualities.

     Our OTC product Pure-ific competes in the market with other hand sanitizing
products, including in particular, the following hand sanitizers:

          o    Purell (manufactured by GOJO Industries),

          o    Avagard D (manufactured by 3M) and

          o    a large number of generic and private-label  equivalents to these
               market leaders.

     Our OTC product  GloveAid  represents  a new product  category  that has no
direct  competitors;  however,  other types of  products,  such as  AloeTouch(R)
disposable gloves  (manufactured by Medline  Industries)  target the same market
niche.

     Since our  prescription  products  Provecta  and Xantryl  have not yet been
approved by the FDA or introduced to the  marketplace,  we cannot  estimate what
competition  these products might face when they are finally  introduced,  if at
all.  We  cannot  assure  you that  these  products  will  not face  significant
competition for other prescription drugs and generic equivalents.

     If we are  unable to secure or enforce  patent  rights,  trademarks,  trade
secrets or other intellectual property our business could be harmed.

     We may not be  successful  in securing or  maintaining  proprietary  patent
protection for our products or products and  technologies we develop or license.
In addition,  our competitors may develop products similar to ours using methods
and  technologies  that  are  beyond  the  scope  of our  intellectual  property
protection, which could reduce our anticipated sales. While some of our products
have proprietary patent protection,  a challenge to these patents can be subject
to  expensive  litigation.   Litigation  concerning  patents,   other  forms  of
intellectual property and proprietary technology is becoming more widespread and
can be protracted and expensive and can distract  management and other personnel
from performing their duties for us.

     We also  rely upon  trade  secrets,  unpatented  proprietary  know-how  and
continuing  technological innovation in order to develop a competitive position.
We cannot assure you that others will not  independently  develop  substantially
equivalent proprietary technology and techniques or otherwise gain access to our
trade  secrets  and  technology,  or that we can  adequately  protect  our trade
secrets and technology.

     If we are  unable to secure or enforce  patent  rights,  trademarks,  trade
secrets or other  intellectual  property,  our  business,  financial  condition,
results of operations and cash flows could be materially adversely affected.  If
we  infringe  on the  intellectual  property of others,  our  business  could be
harmed.

     We could be sued for infringing patents or other intellectual property that
purportedly cover products and/or methods of using such products held by persons
other than us. Litigation  arising from an alleged  infringement could result in
removal  from the  market,  or a  substantial  delay in, or  prevention  of, the
introduction of our products,  any of which could have a material adverse effect
on our business, financial condition, or results of operations and cash flows.

     If we do  not  update  and  enhance  our  technologies,  they  will  become
obsolete.

     The pharmaceutical  market is characterized by rapid technological  change,
and our future success will depend on our ability to conduct successful research
in our fields of  expertise,  to discover new  technologies  as a result of that
research,  to develop products based on our  technologies,  and to commercialize
those products. While we believe that are current technology is adequate for our

                                       22

<PAGE>

present needs, if we fail to stay at the forefront of technological development,
we will be unable to compete effectively.  Our competitors are using substantial
resources  to  develop  new  pharmaceutical  technologies  and to  commercialize
products  based on those  technologies.  Accordingly,  our  technologies  may be
rendered  obsolete by advances in existing  technologies  or the  development of
different technologies by one or more of our current or future competitors.

     If we lose  any of our key  personnel,  we may be  unable  to  successfully
execute our business plan.

     Our business is presently managed by four key employees:

          o    H. Craig Dees, Ph.D., our Chief Executive Officer;
          o    Timothy C. Scott, Ph.D., our President;
          o    Eric A. Wachter, Ph.D. our Vice President - Pharmaceuticals; and
          o    Peter R. Culpepper, CPA, our Chief Financial Officer.

     In  addition  to  their  responsibilities  for  management  of our  overall
business strategy, Drs. Dees, Scott and Wachter are our chief researchers in the
fields in which we are  developing  and planning to develop  prescription  drug,
medical device and OTC products.  Also, as of December 31, 2004, we owe $156,377
in accrued but unpaid  compensation  to our employees.  The loss of any of these
key employees could have a material  adverse effect on our  operations,  and our
ability to execute our business plan might be negatively impacted.  Any of these
key employees may leave their employment with us if they choose to do so, and we
cannot assure you that we would be able to hire similarly  qualified  executives
if any of our key employees should choose to leave.

     Because  we have  only  four  employees,  our  management  may be unable to
successfully manage our business.

     In order to  successfully  execute our business plan,  our management  must
succeed in all of the following critical areas:

          o    Researching  diseases  and  possible  therapies  in the  areas of
               dermatology and skin care, oncology, and biotechnology;
          o    Developing  prescription  drug,  medical  device and OTC products
               based on our research;
          o    Marketing and selling developed products;
          o    Obtaining  additional  capital to finance research,  development,
               production and marketing of our products; and
          o    Managing our business as it grows.

     As discussed above, we currently have only four employees,  all of whom are
full-time  employees.  The  greatest  burden of  succeeding  in the above  areas
therefore falls on Drs. Dees, Scott, Wachter, and Mr. Culpepper. Focusing on any
one of these areas may divert  their  attention  from our other areas of concern
and could affect our ability to manage other aspects of our business.  We cannot
assure you that our management will be able to succeed in all of these areas or,
even if we do so succeed,  that our business will be successful as a result.  We
anticipate  adding a part-time  regulatory  affairs  officer,  a  part-time  lab
technician and a part-time  office  manager within the next year.  While we have
not  historically  had  difficulty in attracting  employees,  our small size and
limited  operating  history may make it  difficult  for us to attract and retain
employees in the future which could further divert  management's  attention from
the operation of our business.

     Our  common  stock  price  can be  volatile  because  of  several  factors,
including a limited public float.

     During the  twelve-month  period ended December 31, 2004, the sale price of
our common stock fluctuated from $1.70 to $0.47 per share. We believe that our

                                       23

<PAGE>
common stock is subject to wide price fluctuations because of several factors,
including:

          o    absence meaningful earnings and external financing,
          o    a relatively  thin  trading  market for our common  stock,  which
               causes  trades  of small  blocks  of stock to have a  significant
               impact on our stock price,
          o    general  volatility of the stock markets and the market prices of
               other publicly traded companies, and
          o    investor sentiment regarding equity markets generally,  including
               public  perception  of corporate  ethics and  governance  and the
               accuracy and transparency of financial reporting.

     Financings  that may be available  to us under  current  market  conditions
frequently  involve  sales at prices  below the prices at which our common stock
trades  on the  Over  the  Counter  Electronic  Bulletin  Board,  as well as the
issuance of warrants or  convertible  debt that require  exercise or  conversion
prices that are  calculated in the future at a discount to the then market price
of our common stock.

     Any agreement to sell, or convert debt or equity  securities  into,  common
stock at a future date and at a price  based on the then  current  market  price
will provide an  incentive  to the investor or third  parties to sell the common
stock short to  decrease  the price and  increase  the number of shares they may
receive in a future  purchase,  whether  directly from us or in the market.  For
example,  the initial  conversion rate of the debentures issued during the third
and  fourth  quarters  of 2004 is equal to the  lower of (i) 80% of the  average
market  price of our common  stock for the five (5)  trading  days ending on the
effective  date of the  exercise  to convert  or (ii)  $1.88 per  share.  If the
average market price of our common stock is so low that it causes the conversion
rate on the debentures to fall below  approximately  $0.73, and if the debenture
holders enforce this provision of our agreement with them, we will have to issue
more shares to the debenture  holders upon  conversion of the debentures and the
anti-dilutive provisions contained in our agreements with Gryffindor will become
operative.  If  these  anti-dilutive  provisions  become  operative,  we  may be
required to issue a significant  number of shares of common stock to Gryffindor.
We will not receive any additional  proceeds from Gryffindor for the issuance of
these shares of common stock.  Other  financings  that we may obtain may contain
similar provisions, and the existence of anti-dilutive provisions in some of our
existing financings may make it more difficult for us to obtain financing in the
future. These types of transactions which cause the issuance of our common stock
in  connection  with the  exercise or  conversion  of  securities  may result in
substantial dilution to the remaining holders of our common stock.

     Financings  that may be  available  to us  frequently  involve high selling
costs.

     Because of our limited operating history, low market  capitalization,  thin
trading volume and other factors, we have historically had to pay high costs to

                                       24

<PAGE>

obtain financing and expect to continue to be required to pay high costs for any
future  financings in which we may participate.  For example,  our past sales of
shares and our sale of the debentures have involved the payment of finder's fees
or placement  agent's fees.  These types of fees are typically  higher for small
companies  like us. Payment of fees of this type reduces the amount of cash that
we receive from a financing  transaction  and makes it more  difficult for us to
obtain the amount of financing that need to maintain and expand our operations.

     It is our general policy to retain any earnings for use in our operation.

     We have never  declared  or paid cash  dividends  on our common  stock.  We
currently  intend to retain all of our future  earnings,  if any, for use in our
business and therefore do not anticipate paying any cash dividends on our common
stock in the foreseeable future.

     Our stock price is below $5.00 per share and is treated as a "Penny  Stock"
which places restrictions on broker-dealers recommending the stock for purchase.

     Our common stock is defined as "penny stock" under the Exchange Act and its
rules.  The SEC has adopted  regulations  that define  "penny  stock" to include
common  stock that has a market  price of less than $5.00 per share,  subject to
certain exceptions. These rules include the following requirements:

          o    broker-dealers   must  deliver,   prior  to  the   transaction  a
               disclosure  schedule  prepared  by the SEC  relating to the penny
               stock market;

          o    broker-dealers  must  disclose  the  commissions  payable  to the
               broker-dealer and its registered representative;

          o    broker-dealers   must  disclose   current   quotations   for  the
               securities;

          o    if a broker-dealer is the sole  market-maker,  the  broker-dealer
               must disclose this fact and the  broker-dealers  presumed control
               over the market; and

          o    a   broker-dealer   must  furnish  its  customers   with  monthly
               statements  disclosing  recent  price  information  for all penny
               stocks  held in the  customer's  account and  information  on the
               limited market in penny stocks.


     Additional sales practice  requirements are imposed on  broker-dealers  who
sell penny stocks to persons other than  established  customers  and  accredited
investors.  For  these  types of  transactions,  the  broker-dealer  must make a
special  suitability  determination for the purchaser and must have received the
purchaser's  written  consent to the  transaction  prior to sale.  If our common
stock remains subject to these penny stock rules these  disclosure  requirements
may have the effect of reducing the level of trading  activity in the  secondary
market for our common stock. As a result, fewer broker-dealers may be willing to
make a market in our stock,  which could affect a shareholder's  ability to sell
their shares.

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

     None.

Item 8A. Controls and Procedures

     (a)  Evaluation of Disclosure Controls and Procedures.  Our chief executive
          officer and chief financial officer have evaluated the effectiveness

                                       25

<PAGE>

          of  the  design  and  operation  of  our   "disclosure   controls  and
          procedures"  (as that  term is  defined  in Rule  13a-14(c)  under the
          Exchange Act) as of the last day of the period  covered by this Annual
          Report on Form 10-KSB.  Based on that evaluation,  the chief executive
          officer and chief financial officer have concluded that our disclosure
          controls  and   procedures  are  effective.

     (b)  Changes  in  Internal  Controls.  There was no change in our  internal
          control over  financial  reporting  identified in connection  with the
          evaluation during our fourth fiscal quarter that materially  affected,
          or is reasonably  likely to materially  affect,  our internal  control
          over financial reporting.

                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

     Except as set forth  below,  the  information  called for by this item with
respect to our executive officers as of March 30, 2005 is furnished in Part I of
this report under the heading  "Personnel--Executive  Officers." The information
called for by this item, to the extent it relates to our directors or to certain
filing  obligations  of our directors and executive  officers  under the federal
securities laws, is incorporated  herein by reference to the Proxy Statement for
our Annual  Meeting of  Stockholders  to be held on May 19, 2005,  which will be
filed with the SEC  pursuant to  Regulation  14A under the Exchange  Act.

Audit Committee Financial Expert

     We do not currently have an "audit committee  financial expert," as defined
under the rules of the SEC. Because the board of directors consists of only four
members and our operations  remain  amenable to oversight by a limited number of
directors,  the board has not delegated any of its functions to committees.  The
entire board of directors acts as our audit committee as permitted under Section
3(a)(58)(B) of the Exchange Act. We believe that all of the members of our board
are qualified to serve as the committee and have the experience and knowledge to
perform the duties  required of the  committee.  We do not have any  independent
directors who would qualify as an audit committee  financial expert, as defined.
We believe that it has been, and may continue to be, impractical to recruit such
a director unless and until we are significantly larger.

Code of Ethics

     We have not  adopted a formal Code of Ethics.  Since our  company  only has
four employees,  we expect those employees to adhere to high standards of ethics
without the need for a formal policy.

Item 10. Executive Compensation.

     The information called for by this item is incorporated herein by reference
to the Proxy  Statement for our Annual Meeting of Stockholders to be held on May
19, 2005,  which will be filed with the SEC pursuant to Regulation 14A under the
Exchange Act.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters.

     The information called for by this item is incorporated herein by reference
to the Proxy  Statement for our Annual Meeting of Stockholders to be held on May
19, 2005,  which will be filed with the SEC pursuant to Regulation 14A under the
Exchange Act.

                                       26
<PAGE>

Item 12. Certain Relationships and Related Transactions.

     The information called for by this item is incorporated herein by reference
to the Proxy  Statement for our Annual Meeting of Stockholders to be held on May
19, 2005,  which will be filed with the SEC pursuant to Regulation 14A under the
Exchange Act.

Item 13. Exhibits

     Exhibits required by Item 601 of Regulation S-B are incorporated  herein by
     reference  and are listed on the attached  Exhibit  Index,  which begins on
     page X-1 of this Annual Report on Form 10-KSB.

Item 14.  Principal Accountant Fees and Services.

     The information called for by this item is incorporated herein by reference
to the Proxy  Statement for our Annual Meeting of Stockholders to be held on May
19, 2005,  which will be filed with the SEC pursuant to Regulation 14A under the
Exchange Act.

                                       27

<PAGE>

                                   Signatures

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this annual report on From 10-KSB for the year ended December 31, 2004 to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                      Provectus Pharmaceuticals, Inc.

                                      By: /s/ H. Craig Dees
                                          --------------------------------------
                                          H. Craig Dees, Ph.D. Chief Executive
                                          Officer
Date:    March 30, 2005


<TABLE>
<CAPTION>
                   Signature                                        Title                           Date
                   ---------                                        -----                           -----
<S>                                              <C>                                           <C>


/s/  H. Craig Dees
--------------------------------------------     Chief Executive Officer (principal            March 30, 2005
H. Craig Dees, Ph.D.                             executive officer) and Chairman of the
                                                 Board

/s/  Peter R. Culpepper
--------------------------------------------     Chief Financial Officer (principal financial  March 30, 2005
Peter R. Culpepper, CPA                          officer and principal accounting officer)


/s/  Timothy C. Scott
--------------------------------------------
Timothy C. Scott, Ph.D.                          President and Director                        March 30, 2005


/s/  Eric A. Wachter
--------------------------------------------     Vice President - Pharmaceuticals and          March 30, 2005
Eric A. Wachter, Ph.D.                           Director


/s/  Stuart Fuchs
--------------------------------------------     Director                                      March 30, 2005
Stuart Fuchs


</TABLE>

















                                       28


<PAGE>
 Report of Independent Registered Public Accounting Firm



 Board of Directors
 Provectus Pharmaceuticals, Inc.
 Knoxville, Tennessee

We have  audited  the  accompanying  consolidated  balance  sheets of  Provectus
Pharmaceuticals,  Inc., a development  stage company as of December 31, 2004 and
2003  and the  related  consolidated  statements  of  operations,  stockholders'
equity,  and cash flows for the period  from  January 17,  2002  (inception)  to
December 31, 2004 and for each of the two years in the period ended December 31,
2004.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
finanical reporting.  Our audits included consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial  position  of  Provectus
Pharmaceuticals,  Inc.  at December  31,  2004 and 2003,  and the results of its
operations  and its cash flows for the period from January 17, 2002  (inception)
to December 31, 2004 and for each of the two years in the period ended  December
31, 2004 in conformity  with  accounting  principles  generally  accepted in the
United States of America.


/s/BDO Seidman, LLP
--------------------
Chicago, Illinois
February 11, 2005




                                      F-1

<PAGE>

                         Provectus Pharmaceuticals, Inc.
                          (A Development-Stage Company)

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                December 31,         December 31,
                                                                                      2004                 2003
---------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                <C>
Assets
Current Assets
     Cash                                                                  $        10,774    $         164,145
     Stock subscription receivable                                                       -               87,875
     Inventory                                                                      94,142               72,578
     Prepaid expenses and other current assets                                      20,582               26,227
     Prepaid consulting expense                                                    205,427              420,817
     Prepaid commitment fee, net of amortization of $38,326                        272,540                    -
---------------------------------------------------------------------------------------------------------------
Total Current Assets                                                               603,465              771,642
---------------------------------------------------------------------------------------------------------------
Equipment and Furnishings, less accumulated depreciation of
     $366,571 and $244,760                                                               -              121,415
Patents, net of amortization of $1,420,537 and $749,417                         10,294,908           10,966,028
Deferred loan costs, net of amortization of $35,922 and $19,569                    270,578              150,961
Other Assets                                                                        27,000               27,000
---------------------------------------------------------------------------------------------------------------
                                                                           $    11,195,951    $      12,037,046
---------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities
     Accounts payable - trade                                              $       154,214    $         100,640
     Accrued compensation                                                          156,377              352,500
     Accrued expenses                                                                6,240               57,549
     Accrued interest                                                               43,670              100,021
     Short-term convertible debt, net of debt discount of $-0- and
        $442,623                                                                         -               57,377
     Gryffindor convertible debt, net of debt discount of $95,157 and
        $57,052                                                                  1,090,802              968,907
---------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                        1,451,303            1,636,994
---------------------------------------------------------------------------------------------------------------
Loan From Stockholder                                                              149,000              149,000
---------------------------------------------------------------------------------------------------------------
Cornell convertible debt, net of debt discount of $316,053 and $-0-                433,947                    -
---------------------------------------------------------------------------------------------------------------
Stockholders' Equity
     Common stock; par value $.001 per share; 100,000,000 shares authorized;
         16,133,876 and 10,867,509 shares issued and
         outstanding, respectively                                                  16,134               10,868
     Paid-in capital                                                            23,711,540           20,461,632
     Deficit accumulated during the development stage                          (14,565,973)         (10,221,448)
---------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                       9,161,701           10,251,052
---------------------------------------------------------------------------------------------------------------
                                                                           $    11,195,951    $      12,037,046
---------------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to financial statements.


                                      F-2
<PAGE>


                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                                       Cumulative
                                                                                                        Amounts from
                                                                                                         January 17,
                                                                                                            2002
                                                                                                         (Inception)
                                                                     Year Ended       Year Ended           Through
                                                                     December 31,     December 31,       December 31,
                                                                        2004            2003                 2004
--------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                <C>               <C>
Revenues
     OTC Product Revenue                                            $    18,728        $        -        $    18,728
     Medical Device Revenue                                              13,125                 -             13,125
--------------------------------------------------------------------------------------------------------------------
Total revenues                                                           31,853                 -             31,853

Cost of Sales                                                            10,781                 -             10,781
---------------------------------------------------------------------------------------------------------------------
Gross Profit                                                             21,072                 -             21,072

Operating Expenses
     Research and development                                         1,291,817           724,924          2,067,455
     General and administrative                                       1,690,841         1,582,250         10,196,037
     Amortization                                                       671,120           671,120          1,420,537
---------------------------------------------------------------------------------------------------------------------
Total operating loss                                                 (3,632,706)       (2,978,294)       (13,662,957)

Gain on sale of equipment                                                     -            55,000             55,000

Net loss on extinguishment of debt                                    ( 101,412)                -           (101,412)

Interest expense                                                       (610,407)         (232,019)          (856,604)
---------------------------------------------------------------------------------------------------------------------

Net Loss Applicable to Common
     Stockholders                                                  $ (4,344,525)      $(3,155,313)      $(14,565,973)
---------------------------------------------------------------------------------------------------------------------
Basic and Diluted Loss Per
     Common Share                                                         (0.31)            (0.33)
---------------------------------------------------------------------------------------------------------------------
Weighted Average Number of
         Common Shares
         Outstanding -
         Basic and Diluted                                           14,122,559         9,706,064
---------------------------------------------------------------------------------------------------------------------
</TABLE>

               See accompanying notes to financial statements.


                                      F-3


<PAGE>

<TABLE>
<CAPTION>

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

--------------------------------------------------------------------------------
                                                        Common Stock
                                             -----------------------------------
<S>                                            <C>            <C>             <C>             <C>               <C>
                                                    Number                           Paid-in        Accumulated
                                                  of Shares        Par Value         Capital          Deficit         Total
                                             --------------------------------------------------------------------------------------
Balance, at January 17, 2002                            -     $          -    $          -    $           -     $          -

     Issuance to founding shareholders          6,000,000            6,000          (6,000)               -                -
     Sale of stock                                 50,000               50          24,950                -           25,000
     Issuance of stock to employees               510,000              510         931,490                -          932,000
     Issuance of stock for services               120,000              120         359,880                -          360,000
     Net loss for the period from January 17,
         2002 (inception) to April 23, 2002
         (date of reverse merger)                       -                -               -       (1,316,198)      (1,316,198)
                                             -------------    -------------   --------------  ---------------   -------------

Balance, at April 23, 2002                      6,680,000            6,680       1,310,320       (1,316,198)             802

     Shares issued in reverse merger              265,763              266          (3,911)               -           (3,645)
     Issuance of stock for services             1,900,000            1,900       5,142,100                -        5,144,000
     Purchase and retirement of stock            (400,000)            (400)        (47,600)               -          (48,000)
     Stock issued for acquisition of Valley
         Pharmaceuticals                          500,007              500      12,225,820                -       12,226,320
     Exercise of warrants                         452,919              453               -                -              453
     Warrants issued in connection with
         convertible debt                               -                -         126,587                -          126,587
     Stock and warrants issued for acquisition
         of Pure-ific                              25,000               25          26,975                -           27,000
     Net loss for the period from April 23, 2002
         (date of reverse merger) to December
         31, 2002                                       -                -               -       (5,749,937)      (5,749,937)
                                             -------------    -------------   --------------  ---------------   -------------

Balance, at December 31, 2002                   9,423,689            9,424      18,780,291       (7,066,135)      11,723,580

     Issuance of stock for services               764,000              764         239,036                -          239,800
     Issuance of warrants for services                  -                -         145,479                -          145,479
     Stock to be issued for services                    -                -         281,500                -          281,500
     Employee compensation from stock options           -                -          34,659                -           34,659
     Issuance of stock pursuant to Regulation S   679,820              680         379,667                -          380,347
     Beneficial conversion related to
         convertible debt                                                          601,000                           601,000
     Net loss for the year ended
         December 31, 2003                              -                -               -       (3,155,313)      (3,155,313)
                                             -------------    -------------   ------------    ---------------   -------------
Balance, at December 31, 2003                  10,867,509     $     10,868    $ 20,461,632    $ (10,221,448)    $ 10,251,052

     Issuance of stock for services               733,872              734          449,190                -         449,923
     Issuance of warrants for services                  -                -          495,480                -         495,480
     Exercise of warrants                         132,608              133            4,867                -           5,000
     Employee compensation from stock options           -                -           15,612                -          15,612
     Issuance of stock pursuant to Regulation S 2,469,723            2,469          790,668                -         793,137
     Issuance of stock pursuant to Regulation D 1,930,164            1,930        1,286,930                -       1,288,861
     Beneficial conversion related to
         convertible debt                               -                -          360,256                -         360,256
     Issuance of convertible debt with warrants         -                -          105,250                -         105,250
     Repurchase of beneficial conversion
         feature                                        -                -         (258,345)               -        (258,345)
     Net loss for the year ended
            December 31, 2004                           -                -                -       (4,344,525)     (4,344,525)
-----------------------------------------------------------------------------------------------------------------------------
Balance, at December 31, 2004                  16,133,876    $      16,134    $  23,711,540   $  (14,565,973)   $  9,161,701
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to financial statements.

                                      F-4

<PAGE>
                         PROVECTUS PHARMACEUTICALS, INC.
                          (A Development-Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                                                          Cumulative
                                                                                                          Amounts from
                                                                                                       January 17, 2002
                                                                                                         (Inception)
                                                                   Year Ended         Year Ended           through
                                                                   December 31,      December 31,        December 31,
                                                                      2004               2003                2004
------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                    <C>
Cash Flows From Operating Activities
     Net loss                                               $       (4,344,525)   $      (3,155,313)     $  (14,565,973)
     Adjustments to reconcile net loss to
         net cash used in operating activities
         Depreciation                                                  121,811              228,315             389,572
         Amortization of patents                                       671,120              671,120           1,420,537
         Amortization of original issue discount                       360,663              120,669             487,575
         Amortization of commitment fee                                 38,326                    -              38,326
         Amortization of prepaid consultant expense                    606,888              245,962             852,850
         Amortization of deferred loan costs                           120,953               19,569             140,522
         Loss on extinguishment of debt                                101,412                    -             101,412
         Compensation through issuance of stock options                 15,612               34,659              50,271
         Compensation through issuance of stock                              -                    -             932,000
         Issuance of stock for services                                 76,558                    -           5,580,558
         Issuance of warrants for services                              22,481                    -              22,481
         Gain on sale of fixed asset                                         -              (55,000)            (55,000)
         Increase (decrease) in assets
              Prepaid expenses                                           5,645                9,254             (20,582)
              Inventory                                                (21,564)             (72,578)            (94,142)
         Increase (decrease) in liabilities
              Accounts payable                                          53,574                1,766             150,569
              Accrued expenses                                        (143,783)             432,289             366,287
------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                               (2,314,829)          (1,519,288)         (4,202,737)
------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
     Proceeds from sale of fixed asset                                       -              180,000             180,000
     Capital expenditures                                                 (396)              (3,301)             (3,697)
------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities                       (396)             176,699             176,303
------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
     Proceeds from loans from stockholder                                    -               40,000             149,000
     Proceeds from convertible debt                                    750,000              525,959           2,275,959
     Proceeds from sale of common stock                              2,169,873              292,472           2,487,345
     Proceeds from exercise of warrants                                  5,000                    -               5,453
     Cash paid to retire convertible debt                             (500,000)                   -            (500,000)
     Cash paid for deferred loan costs                                (162,500)             (69,530)           (232,030)
     Premium paid on extinquishment of debt                           (100,519)                   -            (100,519)
     Purchase and retirement of common stock                                 -                    -             (48,000)
------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                            2,161,854              788,901           4,037,208
------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-5

<PAGE>

<TABLE>
<CAPTION>
                                                                                                  Cumulative
                                                                                                 Amounts from
                                                                                                January 17, 2002
                                                                                                  (Inception)
                                                        Year Ended             Year Ended           through
                                                       December 31,           December 31,        December 31,
                                                          2004                   2003                2004
----------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>                 <C>

Net Change in Cash                                   $         (153,371)   $        (553,688)  $          10,774

Cash, at beginning of period                         $          164,145    $         717,833   $               -
----------------------------------------------------------------------------------------------------------------

Cash, at end of period                               $           10,774    $         164,145   $          10,774
----------------------------------------------------------------------------------------------------------------
</TABLE>

Supplemental Disclosure of Noncash Investing and
Financing Activities

     December 31, 2004
        Issuance of stock for prepaid services
of $62,499
        Issuance of warrants for prepaid services
of $329,000
        Issuance of stock in exchange for
standby equity commitment of $310,866
        Discount on convertible debt with warrants
of $105,250
        Deferred loan costs through the issuance
of warrants of $144,000
        Beneficial conversion on convertible debt
of $360,256
        Conversion of accrued interest of $160,000
to convertible debt

     December 31, 2003
        Issuance or commitment to issue stock and
warrants for prepaid services of $666,779
        Stock subscription receivable recorded of
$87,875
        Discount on convertible debt with warrants
of $500,000
        Deferred loan costs through the issuance
of warrants of $101,000


                  See accompanying notes to financial statement.



                                      F-6

<PAGE>


                         Provectus Pharmaceuticals, Inc.
                          (A Development Stage Company)


                   Notes to Consolidated Financial Statements




1.   Organization and Significant Accounting Policies

     Nature of Operations

     Provectus  Pharmaceuticals,   Inc.(together  with  its  subsidiaries,   the
     "Company")is a development-stage biopharmaceutical company that is focusing
     on developing  minimally  invasive  products for the treatment of psoriasis
     and other topical diseases,  cancer,  and certain laser device  technology.
     Through a previous  acquisition,  the  Company  also  intends  to  develop,
     manufacture, and distribute over-the-counter  pharmaceuticals.  To date the
     Company has no material revenues.

     Principles of Consolidation

     Intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.

                                       F-7


<PAGE>
     Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Inventory

     Inventory, consisting principally of finished goods, is stated at the lower
     of cost or market. Cost is determined using a first-in, first-out method.

     Deferred Loan Costs and Debt Discounts

     The costs related to the issuance of the convertible debt, including lender
     fees, legal fees, due diligence  costs,  escrow agent fees and commissions,
     have been recorded as deferred loan costs and are being  amortized over the
     term of the loan using the effective  interest  method.  Additionally,  the
     Company  recorded  debt  discounts   related  to  warrants  and  beneficial
     conversion  features issued in connection with the debt. Debt discounts are
     being  amortized  over the term of the loan  using the  effective  interest
     method.

     Equipment and Furnishings

     Equipment  and  furnishings  acquired  through  the  acquisition  of Valley
     Pharmaceuticals,  Inc. (Note 2) have been stated at carry over basis. Other
     equipment and furnishings are stated at cost.  Depreciation of equipment is
     provided for using the straight-line method over the estimated useful lives
     of the assets.  Computers and  laboratory  equipment are being  depreciated
     over five years,  furniture and fixtures are being  depreciated  over seven
     years.

     Long-Lived Assets

     The  Company  reviews  the  carrying  values of its  long-lived  assets for
     possible impairment whenever an event or change in circumstances  indicates
     that  the  carrying  amount  of the  assets  may  not be  recoverable.  Any
     long-lived  assets  held for  disposal  are  reported at the lower of their
     carrying amounts or fair value less cost to sell.

     Patent Costs

     Internal  patent  costs  are  expensed  in  the  period  incurred.  Patents
     purchased  are  capitalized  and amortized  over the remaining  life of the
     patent.

     Patents at December  31, 2004 were  acquired as a result of the merger with
     Valley Pharmaceuticals, Inc. ("Valley") (Note 2). The majority shareholders
     of  Provectus  also  owned all of the shares of Valley  and  therefore  the
     assets  acquired from Valley were  recorded at their carry over basis.  The
     patents are being amortized over the remaining lives of the patents,  which
     range from 12-16 years.  Annual  amortization of the patents is expected to
     be approximately $671,000 per year for the next five years.

     Research and Development

     Research and  development  costs are charged to expense when  incurred.  An
     allocation of payroll  expenses was made based on a percentage  estimate of
     time spent.  The  research and  development  costs  include the  following:
     consulting  -  IT,  depreciation,   lab  equipment  repair,  lab  supplies,
     insurance,  legal - patents,  office supplies,  payroll expenses,  rental -
     building,  repairs,  software,  taxes and fees,  and  utilities.

     Income Taxes

     The Company recognizes deferred tax assets and liabilities for the expected
     future tax consequences of temporary  differences between the tax basis and
     financial  reporting  basis of certain  assets and  liabilities  based upon
     currently  enacted tax rates expected to be in effect when such amounts are
     realized or settled.

     Since  inception  of the  Company on January  17,  2002,  the  Company  has
     generated tax net operating losses of approximately $5.9 million,  expiring
     in 2022  through  2024.  The Company has not recorded an income tax benefit
     for the net operating losses as the Company is in the development stage and
     realization of the losses is not considered more likely than not. An income
     tax valuation  allowance has been provided for the losses realized to date.

                                      F-8
<PAGE>

     The   amortization  of  patents,   noncash  stock   compensation   and  the
     amortization  of debt discounts  related to beneficial  conversions are not
     deductible  for tax  purposes.  In addition,  the Company may have acquired
     certain net operating losses in its acquisition of Valley  Pharmaceuticals,
     Inc. (Note 2).  However,  the amount of these net operating  losses has not
     been determined and even if recorded the amount would be fully reserved.

     Basic and Diluted Loss Per Common Share

     Basic and diluted  loss per common  share and diluted loss per common share
     is computed based on the weighted Per Common Share average number of common
     shares  outstanding.  Loss per share  excludes  the  impact of  outstanding
     options, warrants, and convertible debt as they are antidilutive. Potential
     common  shares  excluded  from the  calculation  at  December  31, 2004 are
     1,725,000  options,  4,092,393  warrants and 3,176,368 shares issuable upon
     the conversion of convertible debt and accrued interest.  Additionally, the
     Company is committed to issue 10,000 warrants.

     Financial Instruments

     The carrying amounts reported in the consolidated  balance sheets for cash,
     accounts payable and accrued expenses approximate fair value because of the
     short-term nature of these amounts.  The Company believes the fair value of
     its fixed-rate borrowings approximates the market value.

     Stock Based Compensation

     The Company has adopted the  disclosure-only  provisions  of  Statement  of
     Financial  Accounting  Standards  No.  123,  "Accounting  for  Stock  Based
     Compensation"  (SFAS No. 123), but applies the intrinsic value method where
     compensation  expense,  if any, is recorded as the  difference  between the
     exercise price and the market price, as set forth in Accounting  Principles
     Board Opinion No. 25 for stock options  granted to employees and directors.
     Options granted to  non-employees  are accounted for under SAS 123. SAS 123
     requires options to be accounted for based on their fair value.

     In 2003,  the  Company  issued  stock  options  to  employees  in which the
     exercise  price was less than the market price on the date of grant.  These
     options  vest over three  years and  accordingly,  $15,612  and  $34,659 of
     expense  was  recorded  for the year  ended  December  31,  2004 and  2003,
     respectively.

                                      F-9

<PAGE>

     For stock options  granted to employees  during 2004 and 2003,  the Company
     has estimated the fair value of each option granted using the Black-Scholes
     option pricing model with the following assumptions:


                                                             2004         2003
                                                           --------     --------
         Weighted average fair value per options granted   $ 1.10       $  0.60*
         Significant assumptions (weighted average)
             Risk-free interest rate at grant date            2.0%         2.0%
             Expected stock price volatility                  150%         150%
             Expected option life (years)                      10           10

          * The  weighted  average  fair  value for both the  options  less than
          market  price at date of grant and  options  equal to market  price at
          date of grant was $0.60.

     If the Company had elected to recognize  compensation  expense based on the
     fair value at the grant dates,  consistent  with the method  prescribed  by
     SFAS No. 123,  net loss per share would have been  changed to the pro forma
     amount indicated below:



                                                Year Ended         Year Ended
                                               December 31,       December 31,
                                                     2004                 2003
                                              ---------------    ---------------
  Net loss, as reported                       $    (4,344,525)   $  (3,155,313)
  Add stock-based employee compensation
      expense included in reported net loss            15,612           34,659
  Less total stock-based employee compensation
      expense determined under the fair
      value based method for all awards              (698,125)        (132,663)
                                              ----------------   ---------------
  Pro forma net loss                          $    (5,027,038)   $  (3,253,317)
                                              ================   ===============
  Basic and diluted loss per common share,
       as reported                            $         (0.31)   $       (0.33)

  Basic and diluted loss per common share,
       pro forma                              $         (0.36)   $       (0.34)




                                      F-10

<PAGE>

     Recent Accounting Pronouncements

          On December 16, 2004, the Financial  Accounting Standards Board issued
          SFAS  No.  123  (revised  2004),  "Shared-Based  Payment,"  which is a
          revision of SFAS No. 123. SFAS No. 123(R)  supersedes  APB Opinion No.
          25,  "Accounting  for Stock Issued to Employees,"  and amends SFAS No.
          95,  "Statement  of Cash Flows."  Generally,  the approach in SFAS No.
          123(R) is similar to the approach  described in SFAS No. 123. However,
          SFAS No.  123(R)  requires  all  share-based  payments  to  employees,
          including  grants of employee stock  options,  to be recognized in the
          income  statement  based on their fair values.  This revised  standard
          will be effective for us beginning with the third quarter in 2005.

          As  permitted  by SFAS No. 123,  the Company  currently  accounts  for
          share-based  payments to employees using APB 25 intrinsic value method
          and, as such,  generally  recognizes no compensation cost for employee
          stock  options.  Accordingly,  the adoption of SFAS No.  123(R)'s fair
          value method will have an impact on the result of operations, although
          it will have no impact on the overall financial  position.  The impact
          of the  modified  prospective  adoption of SFAS No.  123(R)  cannot be
          estimated at this time because it will depend on levels of share-based
          payments granted in the future.  However, had the Company adopted SFAS
          No. 123(R) in prior  periods,  the impact of that standard  would have
          approximated  the impact of SFAS 123 as described in the disclosure of
          pro forma net income and earnings per share.

          In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs: an
          amendment  of ARB No. 43,  Chapter 4," to clarify the  accounting  for
          abnormal amounts of idle facility expense, freight, handling costs and
          waster  material.  SFAS  No.  151 is  effective  for  inventory  costs
          incurred  during  fiscal  years  beginning  after June 15,  2005.  The
          Company does not believe the provisions of SFAS No. 151, when applied,
          will have a material  impact on the  financial  position or results of
          operations.

          Revenue Recognition

          The Company recognizes  revenue when product is shipped.  When advance
          payments are received, these payments are recorded as deferred revenue
          and recognized when the product is shipped.

          Reclassifications

          Certain  2003 amounts  have been  reclassified  to conform to the 2004
          presentation.

2.   Recapitalization and Merger.

     On April 23, 2002, Provectus Pharmaceutical, Inc., a Nevada corporation and
     a Merger "blank check" public company, acquired Provectus  Pharmaceuticals,
     Inc., a privately held Tennessee  corporation ("PPI"), by issuing 6,680,000
     shares of common stock of Provectus  Pharmaceutical  to the stockholders of
     PPI in exchange for all of the issued and  outstanding  shares of PPI, as a
     result of which  Provectus  Pharmaceutical  changed  its name to  Provectus
     Pharmaceuticals,  Inc.  (the  "Company")  and PPI  became  a  wholly  owned
     subsidiary of the Company. Prior to the transaction, PPI had no significant
     operations and had not generated any revenues.

     For financial reporting purposes, the transaction has been reflected in the
     accompanying  financial  statements  as a  recapitalization  of PPI and the
     financial  statements reflect the historical  financial  information of PPI
     which was  incorporated  on January 17,  2002.  Therefore,  for  accounting
     purposes,  the  shares  recorded  as issued in the  reverse  merger are the
     265,763 shares owned by Provectus Pharmaceuticals,  Inc. shareholders prior
     to the reverse merger.

     The   issuance  of   6,680,000   shares  of  common   stock  of   Provectus
     Pharmaceutical,  Inc. to the stockholders of PPI in exchange for all of the
     issued  and  outstanding  shares  of PPI was  done in  anticipation  of PPI
     acquiring  Valley  Pharmaceuticals,   Inc,  which  owned  the  intellectual
     property to be used in the Company's operations.

     On November 19, 2002, the Company  acquired  Valley  Pharmeceuticals,  Inc,
     ("Valley") a privately-held  Tennessee  corporation by merging PPI with and
     into Valley and naming the surviving company Xantech Pharmaceuticals,  Inc.
     Valley had no  significant  operations  and had not generated any revenues.
     Valley was formed to hold certain  intangible assets which were transferred
     from an entity  which was  majority  owned by the  shareholders  of Valley.
     Those  shareholders  gave up their shares of the other  company in exchange
     for the  intangible  assets in a non-pro  rata  split off.  The  intangible
     assets were valued  based on the market  price of the stock given up in the
     split-off. The shareholders of Valley also owned the majority of the shares
     of the Company at the time of the  transaction.  The Company issued 500,007
     shares of stock in exchange  for the net assets of Valley which were valued
     at  $12,226,320  and included  patents of  $11,715,445  and  equipment  and
     furnishings of $510,875.

                                      F-11


<PAGE>

3.   Equity Transactions

     (a)  During 2002, the Company issued  2,020,000 shares of stock in exchange
          for consulting services.  These services were valued based on the fair
          market value of the stock exchanged which resulted in consulting costs
          charged to operations of $5,504,000.

     (b)  During 2002,  the Company  issued 510,000 shares of stock to employees
          in exchange for services rendered. These services were valued based on
          the fair  market  value  of the  stock  exchanged  which  resulted  in
          compensation costs charged to operations of $932,000.

     (c)  In February 2002, the Company sold 50,000 shares of stock to a related
          party in exchange for proceeds of $25,000.

     (d)  In June 2002,  the Company  issued a warrant to a  consultant  for the
          purchase  of 100,000  shares at $2.29 per share.  The  warrant is only
          exercisable  upon the  successful  introduction  of the  Company  to a
          designated pharmaceutical company. The warrant was forfeited in 2004.

     (e)  In October 2002, the Company purchased 400,000  outstanding  shares of
          stock  from one  shareholder  for  $48,000.  These  shares  were  then
          retired.

     (f)  On December 5, 2002,  the Company  purchased  the assets of  Pure-ific
          L.L.C, a Utah limited  liability  company,  and created a wholly owned
          subsidiary  called  Pure-ific  Corporation,  to operate the  Pure-ific
          business which consists of product formulations for Pure-ific personal
          sanitizing sprays, along with the Pure-ific trademarks.  The assets of
          Pure-ific  were acquired  through the issuance of 25,000 shares of the
          Company's  stock with a fair market value of $0.50 and the issuance of
          various warrants.  These warrants included warrants to purchase 10,000
          shares of the Company's  stock at an exercise  price of $0.50 issuable
          on the first,  second and third  anniversary dates of the acquisition.
          Accordingly,  the fair  market  value of these  warrants  of  $14,500,
          determined using the Black-Scholes  option pricing model, was recorded
          as  additional  purchase  price for the  acquisition  of the Pure-ific
          assets.  In 2004, 20,000 warrants were issued for the first and second
          anniversary dates. 10,000 of these warrants were exercised in 2004. In
          addition,  warrants to purchase  80,000 shares of stock at an exercise
          price of $0.50 will be issued upon the  achievement  of certain  sales
          targets of the Pure-ific product.  At December 31, 2004 and 2003, none
          of these  targets  have been met and  accordingly,  no costs have been
          recorded.

     (g)  In 2003,  the Company issued 764,000 shares to consultants in exchange
          for services  rendered,  consisting of 29,000 shares issued in January
          valued at $11,600,  35,000  shares  issued in March valued at $11,200,
          and 700,000 shares issued in October valued at $217,000. The value for
          these  shares was based on the market value of the shares  issued.  As
          all of these amounts represented  payments for services to be provided
          in the future and the shares were fully vested and non-forfeitable,  a
          prepaid  consulting  expense  was  recorded  in 2003 of  which  $0 and
          $144,667  remained  as of December  31,  2004 and 2003,  respectively.
          Consulting  costs  charged to  operations  were  $144,667  in 2004 and
          $95,133 in 2003.

     (h)  In November and December 2003, the Company  committed to issue 341,606
          shares to  consultants  in exchange for services  rendered.  The total
          value for these  shares  was  $281,500  which was based on the  market
          value of the shares issued. The shares were issued in January 2004. As
          these amounts represented  payments for services to be provided in the
          future and the shares were fully vested and non-forfeitable, a prepaid
          consulting  expense  was  recorded  in 2003 of which  $0 and  $231,983
          remained as of December  31, 2004 and 2003,  respectively.  Consulting
          costs charged to operations were $231,983 in 2004 and $49,517 in 2003.

                                      F-12

<PAGE>

     (i)  The  Company  applies  the  recognition  provisions  of SFAS No.  123,
          "Accounting  for  Stock-Based  Compensation,"  in accounting for stock
          options and warrants  issued to  nonemployees.  In January  2003,  the
          Company issued 25,000 warrants to a consultant for services  rendered.
          In February 2003, the Company issued 360,000 warrants to a consultant,
          180,000 of which were fully vested and non-forfeitable at the issuance
          and  180,000  of  which  were  cancelled  in  August  2003  due to the
          termination of the consulting contract. In September 2003, the Company
          issued  200,000  warrants to two  consultants in exchange for services
          rendered. In November 2003, the Company issued 100,000 warrants to one
          consultant in exchange for services rendered. As the fair market value
          of these  services was not readily  determinable,  these services were
          valued  based  on  the  fair  market  value,   determined   using  the
          Black-Scholes option-pricing model. Fair market value for the warrants
          issued in 2003 ranged from $0.20 to $0.24 and totalled  $145,479..  As
          these amounts represented  payments for services to be provided in the
          future and the  warrants  were fully  vested  and  non-forfeitable,  a
          prepaid  consulting  expense  was  recorded  in 2003 of  which  $0 and
          $44,167  remained  as of  December  31,  2004 and 2003,  respectively.
          Consulting  costs  charged  to  operations  were  $44,167  in 2004 and
          $101,312 in 2003.

          In May 2004,  the Company  issued 20,000  warrants to  consultants  in
          exchange for services rendered. Consulting costs charged to operations
          were $18,800.  In August 2004, the Company issued 350,000  warrants to
          consultants in exchange for services  valued at $329,000.  At December
          31, 2004, $123,375 of these costs have been charged to operations with
          the remaining  $205,427 recorded as prepaid  consulting  expense as it
          represents   payments  for  future   services  and  the  warrants  are
          fully-vested and non-forfeitable. In December 2004, the Company issued
          10,000  warrants to  consultants  in exchange for  services  valued at
          $3,680.  Fair market value for the warrants issued in 2004 ranged from
          $0.37 to $0.94.

          (j) In December  2003,  the Company  commenced an offering for sale of
          restricted common stock. As of December 31, 2003, the Company had sold
          874,871  shares at an average  gross  price of $1.18 per share.  As of
          December 31,  2003,  the Company had received net proceeds of $292,472
          and  recorded a stock  subscription  receivable  of $87,875  for stock
          subscriptions  prior to  December  31,  2003  for  which  payment  was
          received  subsequent  to  December  31,  2003.  The  transaction  is a
          Regulation S offering to foreign  investors as defined by Regulation S
          of the Securities  Act. The restricted  shares cannot be traded for 12
          months.  After the first 12 months, sales of the shares are subject to
          restrictions  under rule 144 for an additional  year.  The Company has
          engaged a placement agent to assist the offering. Costs related to the
          placement  agent of  $651,771  have  been  off-set  against  the gross
          proceeds  of  $1,032,118  and  therefore  are  reflected  as a  direct
          reduction  of equity at  December  31,  2003.  At December  31,  2003,
          195,051  shares had not yet been  issued.  These shares were issued in
          the first quarter of 2004.

          In 2004, the Company sold 2,274,672 shares of restricted  common stock
          under this offering of which 1,672,439 shares were issued in the first
          quarter  2004 and  602,233  were  issued in the second  quarter  2004.
          Shares were sold  during  2004 at an average  gross price of $1.05 per
          share with net proceeds of $793,137.  Costs  related to the  placement
          agent for proceeds  received in 2004 of  $1,588,627  have been off-set
          against gross proceeds of $2,381,764.

          (k) In January 2004,  the Company issued 10,000 shares to a consultant
          in  exchange  for  services  rendered.  Consulting  costs  charged  to
          operations were $11,500. In March 2004, the Company committed to issue
          36,764 shares to  consultants  in exchange for services.  These shares
          were recorded as a prepaid  consulting expense and were fully amotized
          at December 31, 2004.  Consulting  costs  charged to  operations  were
          $62,500.  These 36,764 shares,  along with 75,000 shares  committed in
          2003 were issued in August  2004.  The 75,000  shares  committed to be
          issued  in 2003 were the  result of a  cashless  exercise  of  200,000
          warrants in 2003,  which were not issued as of December 31,  2003.  In
          August 2004,  the Company also issued 15,000 shares to a consultant in
          exchange for services rendered. Consulting costs charged to operations
          were $25,200. In September 2004, the Company issued 16,666 shares to a
          consultant in exchange for services rendered. Consulting costs charged
          to operations were $11,666. In October 2004, the Company issued 16,666
          shares to a consultant in exchange for services  rendered.  Consulting
          costs  charged to  operations  were  $13,666.  In November  2004,  the
          Company  issued 16,666 shares to a consultant in exchange for services
          rendered.  Consulting  costs  charged to operations  were $11,000.  In
          December  2004,  the Company  issued 7,500  shares to a consultant  in
          exchange for services rendered. Consulting costs charged to operations
          were $3,525.

                                      F-13
<PAGE>

     (l)  On June 25,  2004,  the  Company  entered  into an  agreement  to sell
          1,333,333 shares of common stock at a purchase price of $.75 per share
          for an aggregate purchase price of $1,000,000.  Payments were received
          in four  installments,  the last of which was on August 9, 2004. Stock
          issuance costs  included  66,665 shares of stock valued at $86,666 and
          cash costs of $69,000.  The cash costs have been  off-set  against the
          lproceeds  received.  received.  In  conjunction  with the sale of the
          common stock, the Company issued  1,333,333  warrants with an exercise
          price  of  $1.00  and a  termination  date of  three  years  from  the
          installment  payment  dates.  In  addition,  the Company has given the
          investors an option to purchase  1,333,333  shares of additional stock
          including  the  attachment  of  warrants  under the same  terms as the
          original agreement. This option expired February 8, 2005.

     (m)  Pursuant to a Standby  Equity  Distribution  Agreement  ("SEDA") dated
          July 28, 2004 between the Company and Cornell Capital  Partners,  L.P.
          ("Cornell"),  the Company  may,  at its  discretion,  issue  shares of
          common  stock to  Cornell  at any time  until  June  28,  2006.  As of
          December  31, 2004 there were no shares  issued  pursuant to the SEDA.
          The facility is subject to having in effect a  registration  statement
          covering  the shares.  A  registration  statement  covering  2,023,552
          shares  was  declared   effective  by  the   Securities  and  Exchange
          Commission on November 16, 2004. The maximum  aggregate  amount of the
          equity placements pursuant to the SEDA is $20 million, and the Company
          may draw down up to $1 million  per month.  Pursuant  to the SEDA,  on
          July 28, 2004,  the Company  issued  190,084 shares of common stock to
          Cornell  and  7,920  shares of common  stock to  Newbridge  Securities
          Corporation  as commitment  shares.  These 198,004 shares had a FMV of
          $310,866  on July 28, 2004 which is being  amortized  over the term of
          the commitment period which is one year from the date of registration.
          At December 31, 2004, $38,326 has been amortized.

     (n)  On  November  16,  2004,  the Company  completed  a private  placement
          transaction  with 14  accredited  investors,  pursuant  to  which  the
          Company  sold 530,166  shares of common  stock at a purchase  price of
          $0.75 per share,  for an  aggregate  purchase  price of  $397,625.  In
          connection with the sale of the common stock,  the Company also issued
          warrants to the  investors  to  purchase  up to 795,249  shares of our
          common stock at an exercise price of $1.00 per share. The Company paid
          $39,764  and  issued  198,812  warrants  to Venture  Catalyst,  LLC as
          placement agent for this transaction. The cash costs have been off-set
          against the proceeds received

4.   Stock Incentive Plan

The Company maintains one long-term  incentive  compensation plan, the Provectus
Pharmaceuticals,  Inc. 2002 Stock Plan, which provides for the issuance of up to
3,000,000 shares of common stock pursuant to stock options,  stock  appreciation
rights,  stock purchase rights and long-term  performance  awards granted to key
employees and directors of and consultants to the Company.

                                      F-14

<PAGE>

Options  granted  under  the 2002  Stock  Plan may be  either  "incentive  stock
options"  within the  meaning of Section  422 of the  Internal  Revenue  Code or
options which are not incentive stock options. The stock options are exercisable
over a period  determined  by the Board of Directors  (through its  Compensation
Committee),  but  generally  no  longer  than 10 years  after  the date they are
granted.

     On March 1, 2004, the Company issued  1,200,000 stock options to employees.
     The options vest over three years with 225,000  options vesting on the date
     of  grant.  The  exercise  price  is the fair  market  price on the date of
     issuance, and all options were outstanding at December 31, 2004.

     On May 27, 2004,  the Company  issued 100,000 stock options to the Board of
     Directors.  The  options  vested  immediately  on the  date of  grant.  The
     exercise  price is the fair market price on the date of  issuance,  and all
     options were outstanding at December 31, 2004.

     On June 28, 2004,  the Company issued 100,000 stock options to an employee.
     The options vest over four years with 25,000 options vesting on the date of
     grant. The exercise price is the fair market price on the date of issuance,
     and all options were outstanding at December 31, 2004.

The following table summarizes the options granted, exercised and outstanding as
of December  31, 2003 and 2004,  respectively.  There were no options  issued in
2002.
<TABLE>
<CAPTION>
                                                                                    Exercise          Weighted
                                                               Shares              Price Per           Average
                                                                                       Share          Exercise
                                                                                                         Price
                                                            ---------          -------------          --------
<S>                                                         <C>                <C>                       <C>
Outstanding at January 1, 2003                                      -                      -                 -
Granted *                                                     452,000          $0.26 - $0.60             $0.38
Exercised                                                           -                      -                 -
Forfeited                                                     (95,750)         $0.26 - $0.32             $0.30
                                                            ---------          -------------          --------
Outstanding at December 31, 2003                              356,250          $0.26 - $0.60             $0.40
                                                            =========          =============          ========
Options exercisable at
    December 31, 2003                                         187,500          $0.26 - $0.60             $0.47
                                                            =========          =============          ========
Outstanding at January 1, 2004                                356,250          $0.26 - $0.60             $0.40
Granted                                                     1,400,000          $0.95 - $1.25             $1.10
Exercised                                                           -                      -                 -
Forfeited                                                     (31,250)         $0.26 - $0.32             $0.30
                                                            ---------          -------------          --------
Outstanding at December 31, 2004                            1,725,000          $0.32 - $1.25             $0.97
                                                            =========          =============          ========
Options exercisable at
    December 31, 2004                                         562,500          $0.32 - $1.25             $0.84
                                                            =========          =============          ========
</TABLE>

* Includes  352,000  options  granted at less than market  price with a weighted
average  exercise price of $0.31 and 100,000 options granted at a price equal to
market price with a weighted average exercise price of $0.60.

The following table summarizes  information  about stock options  outstanding at
December 31, 2004.
<TABLE>
<CAPTION>
                                  Options Outstanding                 Options Exercisable
                       ----------------------------------------  ----------------------------
                                         Weighted
                           Number         Average      Weighted        Number         Weighted
                       Outstanding at   Remaining      Average     Exercisable at     Average
                        December 31,    Contractual    Exercise      December 31,     Exercise
        Exercise Price     2004           Life          Price           2004           Price
        -------------- -------------    ----------     --------     -------------     --------
              <S>          <C>          <C>               <C>           <C>             <C>
              $0.32          225,000    8.58 years         0.32         112,500          0.32
              $0.60          100,000    8.58 years         0.60         100,000          0.60
              $1.10        1,200,000    9.17 years         1.10         225,000          1.10
              $0.95          100,000    9.42 years         0.95         100,000          0.95
              $1.25          100,000    9.50 years         1.25          25,000          1.25
        -------------- -------------    ----------     --------     -------------     --------
                           1,725,000    9.00 years        $0.97         562,500         $0.84
                       =============    ==========     ========     =============     ========
</TABLE>

                                      F-15


<PAGE>


     The  following  table  summarizes  the  warrants  granted,   exercised  and
outstanding as of December 31, 2003 and 2004, respectively.
<TABLE>
<CAPTION>
                                                                                             Weighted
                                                                            Exercise          Average
                                                                            Price Per        Exercise
                                                   Warrants                  Warrant           Price
                                                  ---------               -------------      --------
<S>                                               <C>                     <C>                   <C>

Outstanding at January 1, 2003                      100,000                       $2.29         $2.29
Granted                                           1,285,000               $0.25 - $1.25         $0.78
Exercised                                          (200,000)                      $0.75         $0.75
Forfeited                                          (180,000)              $0.25 - $0.50         $0.37
                                                  ---------               -------------      --------
Outstanding at December 31, 2003                  1,005,000               $0.25 - $2.29         $1.01
                                                  =========               =============      ========
Warrants exercisable at
    December 31, 2003                               905,000               $0.25 - $1.25         $0.87
                                                  =========               =============      ========

Outstanding at January 1, 2004                    1,005,000               $0.25 - $2.29         $1.01
Granted                                           3,402,393               $0.50 - $1.00         $0.99
Exercised                                          (190,000)              $0.25 - $0.50         $0.37
Forfeited                                          (125,000)              $0.75 - $2.29         $1.98
                                                  ---------               -------------      --------
Outstanding at December 31, 2004                  4,092,393               $0.50 - $1.25         $0.99
                                                  =========               =============      ========
Warrants exercisable at
    December 31, 2004                             4,092,393               $0.50 - $1.25         $0.99
                                                  =========               =============      ========
</TABLE>
Warrants  exercised  include a cashless exercise of 200,000 warrants in exchange
for  75,000  shares in 2003 and a  cashless  exercise  of  180,000  warrants  in
exchange  for 122,608  shares in 2004.  At  December  31, 2004 there were 10,000
warrants committed but not issued.

The following table summarizes information about warrants outstanding at
December 31, 2004.

<TABLE>
<CAPTION>
                               Warrants Outstanding                      Warrants Exercisable
                   ---------------------------------------------    -----------------------------
                                         Weighted
                          Number          Average      Weighted         Number           Weighted
                      Outstanding at     Remaining      Average      Exercisable at       Average
                        December 31,   Contractual     Exercise      December 31,        Exercise
  Exercise Price           2004             Life        Price            2004             Price
-------------------   --------------   -----------     --------     ---------------      --------
              <S>          <C>                <C>         <C>             <C>               <C>

              $0.50           10,000          1.92        $0.50              10,000         $0.50
              $0.75          189,525          3.42        $0.75             189,525         $0.75
              $0.94           20,000          2.25        $0.94              20,000         $0.94
              $1.00        3,772,868          3.48        $1.00           3,772,868         $1.00
              $1.25          100,000          1.92        $1.25             100,000         $1.25
-------------------   --------------   -----------     --------     ---------------      --------

                           4,092,393          3.43        $0.99           4,092,393         $0.99
                      ==============   ===========     ========     ===============      ========
</TABLE>


5.   Convertible Debt.

     (a) Pursuant to a Convertible  Secured Promissory Note and Warrant Purchase
     Agreement  dated November 26, 2002 (the "Purchase  Agreement")  between the
     Company and  Gryffindor  Capital  Partners I,  L.L.C.,  a Delaware  limited
     liability  company  ("Gryffindor"),  Gryffindor  purchased the Company's $1
     million  Convertible  Secured  Promissory Note dated November 26, 2002 (the
     "Note").  The Note bears  interest at 8% per annum,  payable  quarterly  in
     arrears, and is due and payable in

                                      F-16
<PAGE>
     full on  November  26,  2004.  Subject to certain  exceptions,  the Note is
     convertible  into shares of the Company's common stock on or after November
     26, 2003,  at which time the  principal  amount of the Note is  convertible
     into common  stock at the rate of one share for each $0.737 of principal so
     converted and any accrued but unpaid interest on the Note is convertible at
     the rate of one share for each $0.55 of  accrued  but  unpaid  interest  so
     converted.

     The Company's  obligations  under the Note are secured by a first  priority
     security  interest in all of the  Company's  assets,  including the capital
     stock of the Company's  wholly owned  subsidiary  Xantech  Pharmaceuticals,
     Inc.,  a Tennessee  corporation  ("Xantech").  In addition,  the  Company's
     obligations  to  Gryffindor  are  guaranteed  by  Xantech,   and  Xantech's
     guarantee  is  secured  by a first  priority  security  interest  in all of
     Xantech's assets.

     Pursuant to the Purchase  Agreement,  the Company also issued to Gryffindor
     and to another individual Common Stock Purchase Warrants dated November 26,
     2002  (the  "Warrants"),  entitling  these  parties  to  purchase,  in  the
     aggregate,  up to 452,919  shares of common  stock at a price of $0.001 per
     share.  Simultaneously with the completion of the transactions described in
     the Purchase Agreement,  the Warrants were exercised in their entirety. The
     $1,000,000 in proceeds received in 2002 was allocated between the long-term
     debt and the  warrants on a pro-rata  basis.  The value of the warrants was
     determined  using a Black-Scholes  option pricing model. The allocated fair
     value of these  warrants was $126,587 and was recorded as a discount on the
     related  debt and is being  amortized  over the life of the debt  using the
     effective  interest  method.  Amortization of $57,052 and $63,292 have been
     recorded as additional  interest  expense as of December 31, 2004 and 2003,
     respectively.

     In 2003,  an  additional  $25,959  was added to the 2002  convertible  debt
     outstanding.

     Pursuant to an  agreement  dated  November 26, 2004 between the Company and
     Gryffindor,  the Company  issued  Gryffindor a Second  Amended and Restated
     Senior  Secured  Convertible  Note dated  November  26, 2004 in the amended
     principal  amount of $1,185,959  which included the original note principal
     plus accrued  interest.  The second  amended note bears  interest at 8% per
     annum, payable quarterly in arrears, is due and payable in full on November
     26, 2005, and amends and restates the amended note in its entirety.

     Subject to certain  exceptions,  the Note is convertible into shares of the
     Company's  common stock on or after  November  26, 2004,  at which time the
     principal  amount of the Note is convertible  into common stock at the rate
     of one share for each $0.737 of principal so converted  and any accrued but
     unpaid  interest  on the Note is  convertible  at the rate of one share for
     each $0.55 of accrued but unpaid interest so converted.

     The Company issued  warrants to Gryffindor to purchase up to 525,000 shares
     of the  Company's  common stock at an exercise  price of $1.00 per share in
     satisfaction  of issuing  Gryffindor the Second Amended and Restated Senior
     Secured  Convertible  Note  dated  November  26,  2004.  The value of these
     warrants  was  determined  to be  $105,250  using a  Black-Scholes  option-
     pricing  model and was  recorded as a discount  on the related  debt and is
     being  amortized  over the life of the debt  using the  effective  interest
     method.  Amortization  of $10,093 has been recorded as additional  interest
     expense as of December 31, 2004.

     (b) On November 19, 2003, the Company completed a short-term unsecured debt
     financing in the aggregate  amount of $500,000.  The notes bear interest of
     8% and were due in full on November  19, 2004.  The notes were  convertible
     into common  shares at a  conversion  rate equal to the lower of (i) 75% of
     the average market price for the 20 trading days ending on the 20th trading
     day subsequent to the effective  date or (ii) $0.75 per share.  Pursuant to
     the note  agreements,  the Company  also issued  warrants to purchase up to
     500,000 shares of the Company's  common stock at an exercise price of $1.00
     per share. The warrants expire November 19, 2005.

     The  $500,000  proceeds  received  was  allocated  between the debt and the
     warrants on a pro-rata  basis.  The value of the  warrants  was  determined
     using a Black-Scholes option-pricing model. The allocated fair value of

                                      F-17

<PAGE>

     these  warrants  was $241,655 and was recorded as a discount to the related
     debt. In addition,  the conversion price was lower than the market value of
     the Company's common stock on the date of issue. As a result, an additional
     discount of $258,345 was recorded for this beneficial  conversion  feature.
     The combined debt discount of $500,000 was being amortized over the life of
     the debt using the effective  interest method.

     In conjunction  with the debt  financing,  the Company  issued  warrants to
     purchase up to 100,000 shares of the Company's  common stock at an exercise
     price of $1.25 per share in  satisfaction  of a finder's  fee. The value of
     these  warrants  was  determined  to  be  $101,000  using  a  Black-Scholes
     option-pricing model. In addition, the Company incurred debt issuance costs
     of  $69,530  which  were  payable in cash.  Total  debt  issuance  costs of
     $170,530 were recorded as an asset and amortized over the term of the debt.

     In 2004, in conjunction with the June 25, 2004 transaction (Note 3(1)), the
     Company entered into a redemption  agreement for its $500,000 of short-term
     convertible debt. Payments on the convertible debt corresponded to payments
     recelived  from the sale of  common  stock.  As a result,  the  unamortized
     portion of the debt discount at the date of  extinguishment of $193,308 and
     the unamortized portion of the deferred loan costs of $65,930 were recorded
     as a loss on extinguishment of debt. In addition to principal payments, the
     redemption  payments  included  accrued  interest and a premium  payment of
     $100,519.   This   premium   payment  has  been   recorded  as  a  loss  on
     extinguishement.  As part of this  redemption,  the Company has repurchased
     the beneficial conversion feature amount of $258,345 in 2004.  Amortization
     of the debt discount up to the date of redemption  was $249,316 and $57,377
     for the  years  ended  2004 and  2003,  respectively  and  amortization  of
     deferred  loans costs up to the date of  redemption  was $85,031 and 19,569
     for the years ended December 31, 2004 and 2003, respectively. These amounts
     were recorded as additional interest expense.

     (c) On July 28,  2004,  the Company  entered  into an agreement to issue 8%
     convertible  debentures  to Cornell in the amount of $375,000  which is due
     together  with  interest  on July 28,  2007.  This debt has a  subordinated
     security interest in the assets of the Company. The Company issued a second
     secured  convertible  debenture  on  October  7,  2004  which  has the same
     conversion  terms as the  prior  debenture  and was  issued on the date the
     Company  filed a  registration  statement  for the shares  underlying  both
     debentures. This is due together with interest on October 7, 2007 and has a
     subordinated security interest in the assets of the Company. The debentures
     are convertible  into common stock at a price per share equal to the lesser
     of (a) an amount equal to 120% of the closing Volume Weighed  Average Price
     (VWAP) of the common stock as of the Closing  Date ($1.88 on Closing  Date)
     or (b) an amount  equal to 80% of the lowest  daily  VWAP of the  Company's
     common stock during the 5 trading days immediately preceding the conversion
     date. There was a floor conversion price of $.75 until December 1, 2004.

     Emerging  Issues  Task  Force  Issue  98-5,   "Accounting  for  Convertible
     Securities with Beneficial  Conversion Features or Contingently  Adjustable
     Conversion  Ratios"  ("EITF  98-5")  requires the issuer to assume that the
     holder  will  not  convert  the  instrument  until  the  time  of the  most
     beneficial conversion. EITF 98-5 also requires that if the conversion terms
     are based on an unknown future amount, which is the case in item (b) above,
     the calculation should be performed using the commitment date which in this
     case is July 28, 2004 and October 7, 2004,  respectively.  As a result, the
     beneficial  conversion  amount was  computed  using 80% of the lowest  fair
     market  value for the stock for the five days  preceding  July 28, 2004 and
     October 7, 2004,  respectively,  which resulted in a beneficial  conversion
     amount of $254,006 and $106,250,  respectively.  The beneficial  conversion
     amount is being  amortized  over the term of the debt which is three years.
     At December 31, 2004, $44,203 has been amortized.

     In conjunction  with the debt  financing,  the Company  issued  warrants to
     purchse up to 150,000  shares of the Company's  common stock at an exercise
     price of $1.00 per share in  satisfaction  of a finder's  fee. The value of
     these  warrants  was  determined  to  be  $144,000  using  a  Black-Scholes
     option-pricing model. In addition, the Company incurred debt issuance costs
     of  $162,500  which were  payable in cash.  Total  debt  issuance  costs of
     $306,500 were recorded as an asset and are being amortized over the term of
     the  debt.  Amortization  of  deferred  loan  costs  of  $35,922  has  been
     recognized as of December 31, 2004.

6.   Loan From Shareholder

     During  2002,  a  shareholder  who is also an  employee  and  member of the
     Company's board of directors, loaned the Company $109,000. During 2003, the
     same shareholder loaned the Company an additional $40,000.  Interest on the
     loan is 5%, compounded  monthly.  Principal is due on December 31, 2009 and
     interest  is payable  quarterly  in  arrears  beginning  on June 30,  2003.
     Accrued  interest  was $15,434  and $7,431 at  December  31, 2004 and 2003,
     respectively.  Interest  expense was $8,003 and $7,431 at December 31, 2004
     and 2003, respectively.

                                      F-18
<PAGE>

7.   Subsequent Events

     As of March 30, 2005,  the Company  held net  proceeds of $2.65  million in
debt financing in escrow for the Company's  benefit via a convertible  debenture
placed  with an  investor  group led by DC  Opportunity  Fund Ltd.  The  Company
anticipates  that the proceeds  will be released  from escrow  shortly.  The new
debenture  instruments are convertible to common stock at a fixed price of $0.75
per share.  As an  additional  consideration,  the new  debenture  holders  will
receive  five-year  warrants to purchase  4.5 million  shares of Company  common
stock at an  exercise  price of $1.06 per share and 175 day  warrants,  after an
effective  registration of the underlying shares, to purchase 3.2 million shares
of Company common stock at an exercise price of $1.01 per share.

     On March 30,  2005,  the Company  authorized  retirement  of existing  $.65
million  convertible  debt  instrument  wilth  Cornell  Capital  Partners.   The
debenture  instrument  had been  reduced  from the $.75  million  balance  as of
December 31, 2004.

                                      F-19

<PAGE>

                                  EXHIBIT INDEX

 Exhibit No.                       Description
------------                       -----------

2.1*      Agreement  and Plan of  Reorganization  dated  April 23,  2002,  among
          Provectus  Pharmaceutical,  Inc., a Nevada corporation  ("Provectus"),
          Provectus Pharmaceuticals,  Inc., a Tennessee corporation ("PPI"), and
          the  stockholders of PPI identified  therein,  incorporated  herein by
          reference to Exhibit 99 to the  Company's  Current  Report on Form 8-K
          dated April 23, 2002, as filed with the SEC on April 24, 2002.

2.2*      Agreement  and Plan of  Reorganization  dated as of November  15, 2002
          among the  Company,  PPI,  Valley  Pharmaceuticals,  Inc., a Tennessee
          corporation  formerly known as Photogen,  Inc., H. Craig Dees,  Ph.D.,
          Dees Family Foundation, Walter Fisher, Ph.D., Fisher Family Investment
          Limited  Partnership,  Walt Fisher 1998 Charitable Remainder Unitrust,
          Timothy C. Scott, Ph.D., Scott Family Investment Limited  Partnership,
          John T. Smolik, Smolik Family LLP, Eric A. Wachter, Ph.D., and Eric A.
          Wachter 1998 Charitable  Remainder  Unitrust,  incorporated  herein by
          reference to Exhibit 2.1 to the Company's  Current  Report on Form 8-K
          dated November 19, 2002, as filed with the SEC on November 27, 2002.

2.3*      Asset Purchase  Agreement dated as of December 5, 2002 among Pure-ific
          Corporation, a Nevada corporation ("Pure-ific"),  Pure-ific, L.L.C., a
          Utah  limited  liability  company,  and Avid Amiri and Daniel  Urmann,
          incorporated  herein by  reference  to  Exhibit  2.1 to the  Company's
          Current  Report on Form 8-K dated  December 5, 2002, as filed with the
          SEC on December 20, 2002.

2.4*      Stock  Purchase  Agreement  dated as of  December  5,  2002  among the
          Company,  Pure-ific,  and Avid Amiri and Daniel  Urmann,  incorporated
          herein by reference to Exhibit 2.2 to the Company's  Current Report on
          Form 8-K dated December 5, 2002, as filed with the SEC on December 20,
          2002.

3.1       Restated Articles of Incorporation of Provectus,  incorporated  herein
          by reference to Exhibit 3.1 to the Company's  Quarterly Report on Form
          10-QSB for the fiscal  quarter  ended June 30, 2003, as filed with the
          SEC on August 14, 2003.

3.2       Bylaws of Provectus,  incorporated  herein by reference to Exhibit 3.2
          to the  Company's  Quarterly  Report  on Form  10-QSB  for the  fiscal
          quarter ended March 31, 2003, as filed with the SEC on May 9, 2003.

4.1       Specimen certificate for the common shares, $.001 par value per share,
          of Provectus  Pharmaceuticals,  Inc., incorporated herein by reference
          to Exhibit 4.1 to the  Company's  Annual Report on Form 10-KSB for the
          fiscal year ended  December 31,  2002,  as filed with the SEC on April
          15, 2003.

4.2.1+    Convertible  Secured  Promissory Note and Warrant  Purchase  Agreement
          dated as of  November  26, 2002  between  the  Company and  Gryffindor
          Capital  Partners I, L.L.C.  ("Gryffindor"), incorporated   herein  by
          reference,  incorporated  herein  by  reference  to Exhibit 4.1 to the
          Company's Current Report on Form 8-K dated November 26, 2002, as filed
          with the SEC on December 10, 2002.

4.2.2     Letter  Agreement  dated  January  31,  2003  between  the Company and
          Gryffindor,   incorporated  by  reference  to  Exhibit  4.2.2  to  the
          Company's  Quarterly Report on Form 10-QSB for the quarter ended March
          31, 2003, as filed with the SEC on May 9, 2003.

4.3       Amended  and  Restated  Convertible  Secured  Promissory  Note  of the
          Company dated  January 31, 2003,  issued to  Gryffindor,  incorporated
          herein by reference to Exhibit 4.3 to the Company's  Quarterly  Report
          on Form 10-QSB dated March 31,  2003,  as filed with the SEC on May 9,
          2003.

4.4       Common Stock  Purchase  Warrant  dated  November  26, 2002,  issued to
          Gryffindor,  incorporated  herein by  reference  to Exhibit 4.3 to the
          Company's Current Report on Form 8-K dated November 26, 2002, as filed
          with the SEC on December 10, 2002.

4.5       Common Stock  Purchase  Warrant  dated  November  26, 2002,  issued to
          Stuart Fuchs,  incorporated  herein by reference to Exhibit 4.4 to the
          Company's Current Report on Form 8-K dated November 26, 2002, as filed
          with the SEC on December 10, 2002.

                                       X-1
<PAGE>
4.6       Stock  Pledge  Agreement  dated as of November  26,  2002  between the
          Company  and  Gryffindor, incorporated  herein by reference to Exhibit
          4.5  to  the  Company's Current  Report on Form 8-K dated November 26,
          2002, as filed with the SEC on December 10, 2002.

4.7       Guaranty dated November 26, 2002 from Xantech Pharmaceuticals, Inc., a
          Tennessee  corporation  and a wholly  owned  subsidiary  of  Provectus
          ("Xantech"),  to  Gryffindor,  incorporated  herein  by  reference  to
          Exhibit 4.6 to the Company's Current Report on Form 8-K dated November
          26, 2002, as filed with the SEC on December 10, 2002.

4.8       Form  of  Security  Agreement  between  the  Company  and  Gryffindor,
          incorporated  herein by  reference  to  Exhibit  4.7 to the  Company's
          Current  Report on Form 8-K dated November 26, 2002, as filed with the
          SEC on December 10, 2002.

4.9       Form of Patent and License Security  Agreement between the Company and
          Gryffindor,  incorporated  herein by  reference  to Exhibit 4.8 to the
          Company's Current Report on Form 8-K dated November 26, 2002, as filed
          with the SEC on December 10, 2002.

4.10      Form of Trademark Collateral Assignment and Security Agreement between
          the  Company  and  Gryffindor,  incorporated  herein by  reference  to
          Exhibit 4.9 to the Company's Current Report on Form 8-K dated November
          26, 2002, as filed with the SEC on December 10, 2002.

4.11      Form  of  Copyright   Security   Agreement  between  the  Company  and
          Gryffindor,  incorporated  herein by  reference to Exhibit 4.10 to the
          Company's Current Report on Form 8-K dated November 26, 2002, as filed
          with the SEC on December 10, 2002.

4.12      Registration  Rights  Agreement  dated as of November 26, 2002 between
          the  Company  and  Gryffindor,  incorporated  herein by  reference  to
          Exhibit  4.11  to the  Company's  Current  Report  on Form  8-K  dated
          November 26, 2002, as filed with the SEC on December 10, 2002.

4.13      Shareholders' Agreement dated as of November 26, 2002 among Provectus,
          Gryffindor,  H. Craig  Dees,  Ph.D.,  Dees Family  Foundation,  Walter
          Fisher,  Ph.D.,  Fisher Family Investment  Limited  Partnership,  Walt
          Fisher 1998 Charitable  Remainder  Unitrust,  Timothy C. Scott, Ph.D.,
          Scott Family Investment Limited  Partnership,  John T. Smolik,  Smolik
          Family  LLP,  Eric  A.  Wachter,  Ph.D.,  and  Eric  A.  Wachter  1998
          Charitable  Remainder  Unitrust,  incorporated  herein by reference to
          Exhibit  4.12  to the  Company's  Current  Report  on Form  8-K  dated
          November 26, 2002, as filed with the SEC on December 10, 2002.

4.14      Warrant Agreement dated as of December 5, 2002 among Provectus, Avid
          Amiri and Daniel Urmann, incorporated herein by reference to Exhibit
          4.1 to the Company's Current Report on Form 8-K dated December 5,
          2002, as filed with the SEC on December 20, 2002.

4.15      Form  of  Warrant   issuable   pursuant  to  the  Warrant   Agreement,
          incorporated  herein by  reference  to  Exhibit  4.2 to the  Company's
          Current  Report on Form 8-K dated  December 5, 2002, as filed with the
          SEC on December 20, 2002.

4.16      Promissory Note of the Company dated December 31, 2002, issued to Eric
          A.  Wachter,  incorporated  herein by reference to Exhibit 4.16 to the
          Company's  Annual  Report on Form  10-KSB  for the  fiscal  year ended
          December 31, 2002, as filed with the SEC on April 15, 2003.

4.17      Common  Share  Purchase  Warrant  dated  January 29,  2003,  issued to
          Investor-Gate.com, incorporated herein by reference to Exhibit 4.17 to
          the  Company's  Quarterly Report on Form 10-QSB for the fiscal quarter
          ended March 31, 2003, as filed with the SEC on May 9, 2003.

4.18      Form of 8% Convertible  Debenture  incorporated herein by reference to
          Annex I to Exhibit  10.16 to the Company's  Registration  Statement on
          Form S-2, as filed with the SEC on February 12, 2004.

4.19      Form of  Warrant  incorporated  herein  by  reference  to  Annex IV to
          Exhibit 10.16 to the Company's  Registration Statement on Form S-2, as
          filed with the SEC on February 12, 2004.

4.20      Registration  Rights  Agreement  dated as of November  19, 2003 by and
          among the Company and the  investors  named  therein  incorporated  by
          reference to Annex IV to Exhibit 10.16 to the  Company's  Registration
          Statement on Form S-2, as filed with the SEC on February 12, 2004.

                                       X-2
<PAGE>

4.21      Registration  Rights  Agreement  dated as of  September 4, 2003 by and
          among  the  Company  and  Bruce A.  Cosgrove  and  George  F.  Martin,
          incorporated  herein by  reference  to  Exhibit  4.4 to the  Company's
          Registration  Statement on Form S-2, as filed with the SEC on February
          12, 2004.

4.22      Form of Warrant issued to selling  shareholders  other than holders of
          8% Convertible Debentures, incorporated herein by reference to Exhibit
          4.5 to the Company's Registration Statement on Form S-2, as filed with
          the SEC on February 12, 2004.

4.23      Registration  Rights  Agreement  dated as of December  26, 2003 by and
          between the Company and The Research Foundation of State University of
          New York,  incorporated  herein by  reference  to  Exhibit  4.6 to the
          Company's Registration Statement on Form S-2, as filed with the SEC on
          February 12, 2004.

10.1      Consultant Compensation Agreement dated April 23, 2002 among Provectus
          and Russell Ratliff,  Justeene Blankenship,  Michael L. Labertew,  and
          Phillip Baker, incorporated herein by reference to Exhibit 99.1 to the
          Company's   Registration  Statement  on  Form  S-8  (Registration  No.
          333-86896), as filed with the SEC on April 24, 2002.

10.2**    Provectus Pharmaceuticals,  Inc. Amended and Restated 2002 Stock Plan,
          incorporated  herein by  reference  to Exhibit  10.2 to the  Company's
          Quarterly  Report on Form 10QSB for the fiscal  quarter ended June 30,
          2003, as filed with the SEC on August 14, 2003.

10.3      Consulting  Agreement  dated  August 15, 2002  between  Provectus  and
          Numark  Capital   Corporation   ("Numark"),   incorporated  herein  by
          reference  to  Exhibit  10.3 to the  Company's  Annual  Report on Form
          10-KSB for the fiscal year ended  December 31, 2002, as filed with the
          SEC on April 15, 2004.

10.4      Consulting  Agreement  dated  August 28, 2002  between  Provectus  and
          Robert S. Arndt,  incorporated  herein by  reference to Exhibit 4.1 to
          the Company's  Registration  Statement on Form S-8  (Registration  No.
          333-99639), as filed with the SEC on September 17, 2002.

10.5      Consulting  Agreement  dated  August 28, 2002  between  Provectus  and
          Nunzio Valerie,  Jr.,  incorporated herein by reference to Exhibit 4.2
          to the Company's  Registration Statement on Form S-8 (Registration No.
          333-99639), as filed with the SEC on September 17, 2002.

10.6      Letter Agreement dated June 7, 2002 between Provectus and Nace Pharma,
          LLC, incorporated herein by reference to Exhibit 10.6 to the Company's
          Annual  Report  on  Form 10-KSB for the fiscal year ended December 31,
          2002, as filed with the SEC on April 15, 2003..

10.7      Letter  Agreement  dated August  29,2002  between  Provectus  and Nace
          Resources,  Inc.,  incorporated herein by reference to Exhibit 10.7 to
          the  Company's  Annual Report on Form 10-KSB for the fiscal year ended
          December 31, 2002, as filed with the SEC on April 15, 2004.

10.8      Confidentiality, Inventions and Non-competition Agreement between the
          Company and H. Craig Dees, incorporated herein by reference to Exhibit
          10.8 to the Company's Annual Report on Form 10-KSB for the fiscal year
          ended December 31, 2002, as filed with the SEC on April 15, 2004.

10.9      Confidentiality,  Inventions and Non-competition Agreement between the
          Company and  Timothy C. Scott,  incorporated  herein by  reference  to
          Exhibit  10.9 to the  Company's  Annual  Report on Form 10-KSB for the
          fiscal year ended  December 31,  2002,  as filed with the SEC on April
          15, 2004.

10.10     Confidentiality,  Inventions and Non-competition Agreement between the
          Company  and Eric A.  Wachter,  incorporated  herein by  reference  to
          Exhibit  10.10 to the  Company's  Annual Report on Form 10-KSB for the
          fiscal year ended  December 31,  2002,  as filed with the SEC on April
          15, 2004.

10.11.1   Letter  Agreement  dated  January  8, 2003  between  the  Company  and
          Investor  -  Gate.com,  incorporated  herein by  reference  to Exhibit
          10.11.1  to the  Company's  Quarterly  Report on Form  10-QSB  for the
          fiscal  quarter  ended March 31, 2003, as filed with the SEC on May 9,
          2003.

                                       X-3
<PAGE>

10.11.2   Termination  Letter  dated  February  28,  2003  from the  Company  to
          Investor-Gate.com, incorporated herein by reference to Exhibit 10.11.2
          to the  Company's  Quarterly  Report  on Form  10-QSB  for the  fiscal
          quarter ended March 31, 2003, as filed with the SEC on May 9, 2003.

10.12     Letter Agreement dated February 20, 2003 between the Company and SGI,
          incorporated herein by reference to Exhibit 10.12 to the Company's
          Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31,
          2003, as filed with the SEC on May 9, 2003.

10.13     Letter  Agreement  dated  March  27,  2003  between  the  Company  and
          Josephberg  Grosz & Co.,  Inc.,  incorporated  herein by  reference to
          Exhibit 10.13 to the Company's Quarterly Report on Form 10-QSB for the
          fiscal  quarter  ended March 31, 2003, as filed with the SEC on May 9,
          2003.

10.14     Settlement  Agreement  dated as of June 16,  2003 among  Kelly  Adams,
          Justeene   Blankenship,   Nicholas  Julian,   and  pacific  Management
          Services,  Inc.;  and  Provectus and Xantech,  incorporated  herein by
          reference to Exhibit 10.14 to the Company's Current Report on Form 8-K
          dated June 16, 2003, as filed with the SEC on June 26, 2003.

10.15     Material  Transfer  Agreement  dated  as  of  July  31,  2003  between
          Schering-Plough Animal Health Corporation and Provectus,  incorporated
          herein by reference to Exhibit 10.15 to the Company's Quarterly Report
          on Form 10-QSB for the fiscal  quarter  ended June 30, 2003,  as filed
          with the SEC on August 14, 2003.

10.16     Securities  Purchase  Agreement  dated as of November  19, 2003 by and
          among the Company and the lenders named therein,  incorporated  herein
          by reference to Exhibit 10.16 to the Company's  Registration Statement
          on Form S-2, as filed with the SEC on February 12, 2004

10.17     Securities  Purchase  Agreement  dated  June 25, 2004 by and among the
          Company and A.I. International Corporate Holdings, Ltd. and Castlerigg
          Master  Investments,  Ltd.,  incorporated  herein  by reference to the
          Company's  Registration  Statement  on Form S-2, as filed with the SEC
          on October 7, 2004

10.18     Standby  Equity  Distribution  dated  July  28, 2004  by and among the
          Company  and  Cornell  Capital  Partners, LP,  incorporated  herein by
          reference  to  the  Company's  Registration  Statement on Form S-2, as
          filed with the SEC on October 7, 2004

10.19     Securities  Purchase  Agreement  dated  July 28, 2004 by and among the
          Company  and  Cornell  Capital  Partners, LP,  incorporated  herein by
          reference   to   the Company's  Registration Statement on Form S-2, as
          filed with the SEC on October 7, 2004

10.20+    Second  Amended  and  Restated  Senior Secured Convertible Note by and
          between the Company and Gryffindor Capital Partners I, L.L.C.

21.1+     List of Subsidiaries.

23.1+     Consent of BDO Seidman, LLP.

31.1+     Certification  of  CEO pursuant to Rules 13a - 14(a) of the Securities
          Exchange Act of 1934.

31.2+     Certification  of  CFO  pursuant  to Rules 13a-14(a) of the Securities
          Exchange Act of 1934.

32+       Certification Pursuant to 18 U.S.C. ss. 1350.
--------------------------

     *    The  Company  agrees by this filing to  supplementally  furnish to the
          SEC, upon  request,  a copy of the exhibits  and/or  schedules to this
          agreement.
     **   Management compensation contract or plan.
     +    Filed herewith.

                                       X-4


<PAGE>