UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549




**FORM
      10-KSB**


(Mark
      One)





xAnnual
      Report Pursuant
      to Section 13 or 15(d) of the Securities Exchange


Act
      of
      1934





For
      the
      fiscal year ended December 31, 2005; OR





o 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 incorporation or
                organization)
            (I.R.S.
                Employer 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 is not
      required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.
      o


**Note
      -**Checking the box above will not relieve any registrant required to
      file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
      obligations under those Sections.




Check
      whether the issuer: (1) filed all
      reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 xNo o


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




Indicate
      by check mark whether the
      registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
      Yes o No x




The
      issuer’s revenues for the most recent fiscal year were $6,536.





The
      aggregate market value of the
      voting and non-voting common equity held by non-affiliates of the registrant
      as
      of February 13, 2006, was $31,212,267 (computed on the basis of $0.88 per
      share).





The
      number of shares outstanding of the issuer's stock, $0.001 par value per share,
      as of February 13, 2006 was 35,468,485.





Documents
      incorporated by reference in Part III hereof: Proxy Statement for 2006 Annual
      Meeting of Stockholders.





Transitional
      Small Business Disclosure Format (check one): Yes o No x



















**Table
      of
      Contents                                         Page**


****


**Part I**
              1Item 1.     Description of Business
              7History
              7Description of Business
              8Intellectual Property
              14Competition
              16Federal Regulation of Therapeutic Products
              16Personnel
              19Available Information
              20Item 1A.Risk
                FactorsItem 1B.Unresolved SEC CommentsItem 2.     Description of
                Property
              20Item 3.     Legal Proceedings
              20Item 4.     Submission of Matters to a
                Vote of Security  Holders
              20**Part II**
              21Item 5.     Market for Common Equitiy and
                  Related Stockholders Matter
              21Item 6.     Managment's Discussion
                and Analysis or Plan of Operation
              22Plan of Operation
              23Item 7.     Financial Statements
              25Forward-Looking Statements
              25Item 8.     Changes in and Disagreements
                  with Accountants on Accounting and Financial
                  Disclosures.
              25Item 8A.  Controls and Procedures
              25Item 8B.  Other Information
              25**Part III**Item 9.     Directors, Executive
                Officers, Promoters and Control Persons; Compliance with Section16(a)
                of
                the Exchange Act
              26Item 10.   Executive Compensation
              26Item 11.   Security Ownerhsip of Certain Beneficial
                  Owners and Management and Related
                  Transactions
              26Item 12.   Certain Relationships and Related
                  Transactions
              27Item 13.   Exhibits
              27Item 14.   Principal Accountant Fees and
                Services
              27Signatures
              28





1


**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;"





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.




2




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;





3


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. We now intend to
      license this product to a third party with experience in the institutional
      sales
      market.




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 online sales of the antibacterial hand spray. During 2005, most
      of
      our sales were generated from customers accessing our website for Pure-ific
      and
      making purchases online. We now intend to license the Pure-ific product and
      sell the underlying assets.









A
      number
      of dermatological conditions, including acne and other blemishes 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 acne and other blemishes. 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
      less safe, more expensive alternatives. All of these products are in the
      pre-clinical or clinical trial stage.




4




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 the use of Xantryl with 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 have decided to prioritize further clinical
      development of Xantryl for treatment of psoriasis and eczema rather than AK
      at
      this time since the market is much larger for psoriasis and
      eczema.











5


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 worked 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 FDA in 2004 setting the
      stage for two Phase 1 clinical trials; namely, treating metastatic melanoma
      and
      recurrent breast carcinoma. We started both of these Phase 1 clinical
      trials in 2005.





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 expanding
      clinical studies of direct injection of Provecta into breast tumors while
      conducting Phase 1 clinical studies of our indication for Provecta in recurrent
      breast carcinoma.







6





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








7




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 maximizing shareholder value and advancing our corporate
      objectives in conjunction with our OTC product licensure, our current product
      development and maintaining our intellectual property portfolio.




Production





We
      have determined that the most efficient use of our capital in further developing
      our OTC products is to license the products and sell the underlying assets
      for
      upfront consideration.





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
      have commenced limited sales of Pure-ific, our antibacterial hand spray. We
      sold
      small amounts of this product during 2004 and 2005. 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 through licensure and
      partnership arrangements, and through potential merger and acquisition
      candidates.





In
      addition to developing and selling products ourselves on a limited basis, 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:




**U.S. Patent No.**
            **Title**
            **Issue Date**
            **Expiration Date**5,829,448
            Method
                for improved selectivity in
                photo-activation
                  of molecular agents
            November
              3, 1998
            October
              30, 20165,832,931
            Method
              for improved selectivity in photo-activation and detection of
              molecular
                diagnostic agents
            November
              10, 1998
            October
              30, 20165,998,597
            Method
              for improved selectivity in photo-activation of molecular agents
            December
              7, 1999
            October
              30, 2016


6,042,603
            Method
              for improved selectivity in
              photo-activation
                of molecular agents
            March
              28, 2000
            October
              30, 20166,331,286
            Methods
              for high energy phototherapeutics
            December
              18, 2001
            December
              21, 20186,451,597
            Method
              for enhanced protein stabilization and for production of cell lines
              useful
              for production of such stabilized proteins
            September
              17, 2002
            April
              6, 20206,468,777
            Method
              for enhanced protein stabilization and for production of cell lines
              useful
              for production of such stabilized proteins
            October
              22, 2002
            April
              6, 20206,493,570
            Method
              for improved imaging and photodynamic therapy
            December
              10, 2002
            December
              10, 20196,495,360
            Method
              for enhanced protein stabilization
              and
                for production of cell lines useful
              for
                production of such stabilized proteins
            December
              17, 2002
            April
              6, 20206,519,076
            Methods
              and apparatus for optical imaging
            February
              11, 2003
            October
              30, 20166,525,862
            Methods
              and apparatus for optical imaging
            February
              25, 2003
            October
              30, 20166,541,223
            Method
              for enhanced protein stabilization and for production of cell lines
              useful
              for production of such stabilized proteins
            April
              1, 2003
            April
              6, 20206,986,740
            Ultrasound
              contrast using halogenated xanthenes
            January
              17, 2006
            TBD6,991,771
            Improved
              intracorporeal medicaments for High energy phototherapeutic treatment
              of
              disease
            January
              31, 2006
            TBD







8


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. This Material Transfer Agreement is still in effect
        through 2005. 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.


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


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 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.







10




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


Personnel





Executive
      Officers





As
      of
      March 29, 2006, our executive officers are:





H.
      Craig
      Dees, Ph.D., 54, 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., 48, 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., 43, 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, 46, 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 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.








12


Employees





We
      currently employ five 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
        1A. Risk Factors.**
 
 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 2005 and 2004, but we do not
        expect to generate sufficient revenues to enable us to be profitable for
        several
        calendar quarters unless we sell and/or license our technologies. We must
        raise
        substantial additional funds beyond 2006 in order to fully implement our
        integrated business plan, including execution of the next phases in clinical
        development of our pharmaceutical products. 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 unless
        we
        are acquired by another Company. We intend to proceed as rapidly as possible
        with the asset sale and licensure 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 beyond 2006 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 in
        2007.
 
 As
        of December 31, 2005, we had $878,941 in convertible debt, net of a debt
        discount of $1,064,895 and $65,055 of accrued interest on our balance sheet,
        consisting of $1,475,000 in principal and $61,408 in accrued but unpaid interest
        owed to holders of our convertible debentures due on March 30, 2007 and $468,836
        in principal and $3,647 in accrued interest owed to holders of our convertible
        debentures due on November 26, 2006. Because of the convertible nature of
        the
        debt owed 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
        beyond 2006, 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.
  13
    We
        must
        raise additional capital from external sources to execute our business plan
        beyond 2006. We plan to issue debt securities, capital stock, or a combination
        of these securities, if necessary depending on licensure and asset sale
        discussions. 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 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 sold through a combination of asset sale and licensure in the
        marketplace or that we will have adequate capital to further develop these
        products, if necessary, which are an important factor in the future success
        of
        our business.
 
 We
        recently have focused on marketing Pure-ific, one of our OTC products, on
        a
        limited basis to establish proof of concept. We have recognized minimal revenue
        from this product, as the sales of this product has not been material. In
        order
        for this product, and our other OTC products, to become commercially successful,
        unless we license and/or sell the underlying assets, we must increase
        significantly our distribution of them. Increasing distribution of our 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
   14
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
     15
  
  
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  16
    
  
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
  
    
  17
   
 
 
 
 
 
 
 
 
 
  
    
  
 
   18
  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 s tock
        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 pennies 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
        1B. Unresolved Staff Comments**.
 
 None.


**Item
      2. Description of Property**.





We
      currently lease approximately 6,000 square feet of space outside of Knoxville,
      Tennessee for our corporate office and operations. Our monthly rental charge
      for
      these offices is approximately $4,000 per month, and the lease is renewed on
      an
      annual 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, 2005, we did not submit any matters to
      a
      vote of our stockholders.










19





**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, 2004:












**High**
            
            **Low**2004First
              Quarter (January 1 to March 31)
            
            $
            1.70
            
            $
            0.80Second
              Quarter (April 1 to June 30)
            
            $
            1.51
            
            $
            0.85Third
              Quarter (July 1 to September 30)
            
            $
            1.68
            
            $
            0.52Fourth
              Quarter (October 1 to December 31)
            
            $
            0.82
            
            $
            0.472005First
              Quarter (January 1 to March 31)
            
            $
            1.25
            
            $
            0.64Second
              Quarter (April 1 to June 30)
            
            $
            0.85
            
            $
            0.52Third
              Quarter (July 1 to September 30)
            
            $
            0.99
            
            $
            0.60Fourth
              Quarter (October 1 to December 31)
            
            $
            1.14
            
            $
            0.77






The
      closing price for our common stock on February 13, 2006 was $0.88. 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
      February 13, 2006, we had 1,888 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 quarter ended December 31, 2005, 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 as follows:





During
      the three months ended December 31, 2005, the Company completed a private
      placement transaction with 62 accredited investors pursuant to which the Company
      sold 10,065,605 shares of common stock at a purchase price of $0.75 per share
      of
      which 5,126,019 are committed to be issued at December 31, 2005, for an
      aggregate purchase price of $7,549,202. In connection with the sale of common
      stock, the Company also issued warrants to the investors to purchase up to
      12,582,009 shares of common stock at an exercise price of $0.935 per share.
      The
      Company paid $959,540, issued 46,667 shares of common stock at a fair market
      value of $46,467, issued 30,550 warrants, and committed to issue 950,461 shares
      of common stock at a fair market value of $894,593 to a syndicate led by Network
      1 Financial Securities, Inc. as placement agent for this transaction which
      is
      accrued at December 31, 2005. The cash and common stock costs have been off-set
      against the proceeds received. 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 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.





20




**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 is assured due to our financing completed
      in December, 2005. At the current rate of expenditures, we will not need to
      raise additional capital until late 2007.





We
      have implemented our integrated business plan, including execution of the
      current and next phases in clinical development of our pharmaceutical products
      and continued execution of research programs for new research initiatives.





We
      intend
      to proceed as rapidly as possible with the asset sale and licensure of our
      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 medical
      device and biotech intellectual property portfolio. Although we believe that
      there is a reasonable basis for our expectation that we will become profitable
      due to the asset sale and licensure of our OTC products, 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 five employees during
      the
      immediate future, but we have added additional consultants and anticipate adding
      employees in the next 12 months. Our current plans also include minimal
      purchases of new property, plant and equipment, and increased research and
      development for additional clinical trials.







21





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 2006 we plan to build on that
      foundation to increase shareholder value through careful control of
      expenditures, preparation for the asset sale and licensure of our OTC products,
      medical device and biotech technologies, and issuance of equity only when it
      makes sense to the Company and primarily for purposes of attracting strategic
      investors.





In
      the short term, we intend to develop our business by selling the OTC assets
      and
      licensing our existing OTC products, principally Pure-Stick, GloveAid and
      Pure-ific. We will also sell and/or license our medical device and biotech
      technologies. In the longer term, we expect to continue the process of
      developing, testing, and obtaining the clearance and ultimately approval of
      the
      U. S. Food and Drug Administration for prescription drugs in particular.
      Additionally, we have restarted 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.





Comparison
      of the Years Ended December 31, 2005 and 2004.





Revenues.
      OTC Product Revenue decreased by $13,176 in 2005 to $5,552 from $18,728 in
      2004.
      The decrease in OTC Product Revenue resulted primarily from lower sales of
      Pure-ific in retail stores because we discontinued our proof of concept program
      with major distributors and retailers. OTC Product Revenue continues due to
      online sales. Medical Device Revenue decreased by $12,141 in 2005 to $984 from
      $13,125 in 2004. The decrease in Medical Device Revenue resulted primarily
      due
      to a large beta unit sale in the 2004 that was not repeated in 2005, partially
      offset by sales of three smaller devices in 2005.





Research
      and development. The Company has completed the planning phase for the major
      research and development projects anticipated in the next 12 months. The
      Company’s Phase 1 metastatic melanoma and breast carcinoma clinical trials are
      expected to be completed in early to mid 2006 for less than $1,000,000 in the
      aggregate. At that time the planning phase for the expected Phase 2 trials
      will
      be completed, which cost approximately $1,000,000 in the aggregate. The
      Company’s Phase 2 psoriasis trial is expected to commence in mid to late 2006
      and will cost approximately $1,500,000 over 12 to 24 months. The Company’s Phase
      1 liver cancer trial is expected to cost less than $500,000 in total, and is
      expected to commence in mid 2006. Research and development costs comprising
      the total of $2,044,391 for 2005 included depreciation expense of $1,708,
      consulting of $805,915, lab supplies of $111,504, insurance of $120,493, legal
      of $208,368, payroll of $747,197, and rent and utilities of $49,206. The
      research and development costs are higher for 2005 because the Company has
      initiated two Phase 1 clinical trials under the aegis of the Food & Drug
      Administration (FDA). 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.





General
      and administrative. General and administrative expenses increased by $1,308,493
      in 2005 to $2,999,334 from $1,690,841 in 2004. The increase resulted primarily
      from higher consulting and payroll expenses for general corporate purposes.
      $733,269 of this increase was from consulting and $390,571 was from payroll
      expenses.





CASH
      FLOW





As
      of February 13, 2006, we held approximately $6,600,000 in cash. At our current
      cash expenditure rate, this amount will be sufficient to meet our needs. We
      have
      been increasing our expenditure rate by accelerating some of our research
      programs for new research initiatives; in addition, we are seeking to improve
      our cash flow through the asset sale and licensure of our OTC products. However,
      we cannot assure you that we will be successful in selling the OTC assets and
      licensing our existing OTC products. Moreover, even if we are successful in
      improving our current cash flow position, we nonetheless plan to require
      additional funds to meet our long-term needs in 2007 and beyond. We anticipate
      these funds will come from the proceeds of private placements, the exercise
      of
      existing warrants outstanding, or public offerings of debt or equity
      securities.





22


CAPITAL
      RESOURCES





As
      noted above, our present cash flow is currently sufficient to meet our
      short-term operating needs. Excess cash will be used to finance the current
      and
      next phases in clinical development of our pharmaceutical products. We
      anticipate that any required funds for our operating and development needs
      beyond 2006 will come from the proceeds of private placements, the exercise
      of
      existing warrants outstanding, 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





In
      November 2004, the FASB issued Statement of Financial Accounting Standards
      No. 151, *Inventory Costs, an amendment of ARB No. 43,
      Chapter 4.*The purpose of this statement is to clarify the accounting
      of abnormal amounts of idle facility expense, freight, handling costs and waste
      material. ARB No. 43 stated that under some circumstances these costs may
      be so abnormal that they are required to be treated as current period costs.
      SFAS 151 requires that these costs be treated, as current period costs
      regardless if they meet the criteria of “so abnormal.” In addition, the
      statement requires that allocation of fixed production overheads to the costs
      of
      conversion be based on the normal capacity of the production facilities. The
      provision of this Statement shall be effective for inventory costs incurred
      during fiscal years beginning after June 15, 2005. The adoption of SFAS 151
      is not expected to have a material impact on the Company’s results of operations
      or financial position.




In
      December 2004, the FASB issued SFAS No. 153, *Exchanges of
      Nonmonetary Assets, an amendment of APB Opinion No. 29.*SFAS 153 is
      effective for nonmonetary asset exchanges occurring in fiscal periods beginning
      after June 15, 2005, with earlier application permitted. The adoption of
      SFAS 153 is not expected to have a material impact on the Company’s results of
      operations or financial position.




In
      December 2004, the FASB issued SFAS No. 123(R), *Share-Based
      Payments (revised 2004)*. This statement eliminates the option to apply the
      intrinsic value measurement provisions of APB Board Opinion No. 25,
*Accounting for Stock Issued to Employees*, to stock compensation awards
      issued to employees. Rather, the Statement requires companies to measure the
      cost of employee services received in exchange for an award of equity
      instruments based on the grant date fair value of the award. That cost will
      be
      recognized over the period during which an employee is required to provide
      services in exchange for the award — the requisite service period (usually the
      vesting period). In March 2005, the SEC staff expressed their views with
      respect to SFAS No. 123(R) in Staff Accounting Bulletin No. 107,
*Share-Based Payment*, (SAB 107). SAB 107 provides guidance on valuing
      options. SFAS 123(R) will be effective for the Company’s fiscal year beginning
      January 1, 2006. The Company is currently evaluating the impact of the
      adoption of this statement on its financial statements.




In
      March 2005, the FASB issued FASB Interpretation No. 47, *Accounting
      for Conditional Asset Retirement Obligations*, (FIN 47).   FIN 47
      is an interpretation of SFAS No. 143, *Asset Retirement
      Obligations*, which was issued in June 2001. FIN 47 was issued to address
      diverse accounting practices that have developed with regard to the timing
      of
      liability recognition for legal obligations associated with the retirement
      of a
      tangible long-lived asset in which the timing and/or method of settlement are
      conditional on a future event that may or may not be within the control of
      the
      entity. According to FIN 47, uncertainty about the timing and/or method of
      settlement of a conditional asset retirement obligation should be factored
      into
      the measurement of the liability when sufficient information exists. FIN 47
      also
      clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation. FIN 47 is effective
      no later than December 31, 2005 for the Company. The adoption of FIN
      47 is not expected to have a material impact on the Company’s results of
      operations or financial position.




In
      May 2005, the FASB issued SFAS
      No. 154, *Accounting Changes and Error Corrections,*a replacement
      of APB Opinion No. 20 and Statement No. 3. SFAS 154 changes the
      requirements for the accounting and reporting of a change in accounting
      principle. SFAS 154 applies to all voluntary changes in accounting principle
      as
      well as to changes required by an accounting pronouncement that does not include
      specific transition provisions. SFAS 154 is effective for accounting changes
      and
      corrections of errors made in fiscal years beginning after December 15,
      2005. The adoption of SFAS 154 is not expected to have a material impact on
      the
      Company’s results of operations or financial position.




In
      September
      2005, the Emerging Issues Task Force (EITF) ratified Issue No. 05-8, "Income
      Tax
      Consequences of Issuing Convertible Debt with a Beneficial Conversion Feature."
      When a company issues convertible debt with a beneficial conversion feature,
      the
      debt is bifurcated into a liability component and an equity component in
      accordance with EITF Issues No. 98-5, "Accounting for Convertible Securities
      with Beneficial Conversion Features or Contingently Adjustable Conversion
      Ratios" and No. 00-27, "Application of Issue No. 98-5 to Certain Convertible
      Instruments." The equity component is measured at the intrinsic value of the
      beneficial conversion feature on the commitment date. For income tax purposes,
      all of the proceeds are recorded as a liability and nothing is recorded in
      shareholders' equity. The issues are whether the issuance of convertible debt
      with a beneficial conversion feature results in a basis difference and, if
      so,
      whether that basis difference is a temporary difference under FASB Statement
      No.
      109, *Accounting for Income Taxes.*The adoption of EITF 05-8 is not
      expected to have a material impact on the Company’s results of operations or
      financial position. However, we do expect the adoption of EITF 05-8 to
      result in a material change to our income tax disclosures.





23


**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-1Consolidated
              Balance Sheets as of December 31, 2005and
              December 31, 2004
            F-2Consolidated
              Statements of Operations for the yearsended
              December 31, 2005 and 2004
            F-3Consolidated
              Statements of Shareholders' Equity forthe
              years ended December 31, 2005 and 2004
            F-4Consolidated
              Statements of Cash Flows for the yearended
              December 31, 2005 and 2004
            F-5Notes 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.





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





None.





**Item
      8A. Controls and Procedures**









(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.





**Item
      8B. Other Information.**







24
 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 29, 2006 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 June 22, 2006, 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 five
      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 June 22,
      2006, 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 andRelated
      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 June 22,
      2006, which will be filed with the SEC pursuant to Regulation 14A under the
      Exchange Act.







25








**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 June 22,
      2006, 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 June 22,
      2006, which will be filed with the SEC pursuant to Regulation 14A under the
      Exchange Act.








26








**Signatures**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this annual report on Form 10-KSB for the year ended December 31, 2005 to be
      signed on its behalf by the undersigned, thereunto duly
      authorized.





**PROVECTUS
                PHARMACEUTICALS, INC.**Date: March
                29, 2006
              By:
              /s/ H.
                Craig DeesH.
                Craig Dees, Ph.D.Title: 
                Chief Executive Officer









/s/ H.
              Craig Dees
            
            
            /s/ Peter
              R. CulpepperName: 
                H. Craig Dees, Ph.D.Title:  Chief Executive Officer (principal
                executive officer) and Chairmain of the  Board
              Date: 
                March 29, 2006
            
            
            Name:  Peter R. Culpepper
              Title:  Chief Financial Officer (principal financial officer and
                principalaccounting officer)Date:  March 29,
              2006











/s/ Timothy
                C. Scott
              
              
              /s/ Eric
                A. WachterName: 
                Timothy C. Scott, Ph.D.Title:  President and
                DirectorDate:  March 29, 2006
              
              
              Name: 
                Eric A. WachterTitle:  Vice President - Pharmaceuticals and
                DirectorDate:  March 29,
                2006








/s/ Stuart
                FuchsName: 
                  Stuart FuchsTitle:  DirectorDate: 
                  March 29, 2006





























28





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, 2005
      and
      2004 and the related consolidated statements of operations, stockholders'
      equity, and cash flows for the period from January 17, 2002 (inception) to
      December 31, 2005 and for each of the two years in the period ended December
      31,
      2005. 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
      financial 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, 2005 and 2004, and the results of its operations and its
      cash flows for the period from January 17, 2002 (inception) to December 31,
      2005
      and for each of the two years in the period ended December 31, 2005 in
      conformity with accounting principles generally accepted in the United States
      of
      America.








/s/BDO
      Seidman, LLP


--------------------


Chicago,
      Illinois


March
      10,
      2006



















F-1


**PROVECTUS
      PHARMACEUTICALS, INC.**


**(A
      Development-Stage Company)**





**CONSOLIDATED
      BALANCE SHEETS**





December
                31,
              2005
            
            December
                31,
              2004AssetsCurrent
                AssetsCash
                and cash equivalents
            
            $
            6,878,990
            
            $
            10,774Prepaid
                expenses and other current assets
            
            
            67,962
            
            
            114,724Prepaid
                consulting expense
            
            
            -
            
            
            205,427Prepaid
                commitment fee, net of amortization of $38,326 in 2004
            
            
            -
            
            
            272,540Total
                Current Assets
            
            
            6,946,952
            
            
            603,465Equipment
                and Furnishings, less accumulated depreciation of
              $368,279
                and $366,571
            
            
            12,287
            
            
            -Patents,
                net of amortization of $2,091,657 and $1,420,537
            
            
            9,623,788
            
            
            10,294,908Deferred
                loan costs, net of amortization of $247,802 and $35,922
            
            
            709,092
            
            
            270,578Other
                assets
            
            
            27,000
            
            
            27,000$
            17,319,119
            
            $
            11,195,951Liabilities
                and Stockholders’ EquityCurrent
                LiabilitiesAccounts
                payable - trade
            
            $
            90,124
            
            $
            154,214Accrued
                compensation
            
            
            179,170
            
            
            156,377Accrued
                common stock costs
            
            
            964,676
            
            
            -Accrued
                consulting expense
            
            
            692,512
            
            
            -Other
                accrued expenses
            
            
            61,500
            
            
            6,240Accrued
                interest
            
            
            65,055
            
            
            43,670March
                2005 convertible debt, net of debt discount of $884,848 in
                2005
            
            
            221,401
            
            
            -November
                2005 convertible debt, net of debt discount of $134,008 in
                2005
            
            
            334,828
            
            
            -Gryffindor
                convertible debt, net of debt discount of $95,157 in 2004
            
            
            -
            
            
            1,090,802Total
                Current Liabilities
            
            
            2,609,266
            
            
            1,451,303Loan
                From Stockholder
            
            
            -
            
            
            149,000Cornell
                convertible debt, net of debt discount of $316,053 in 2004
            
            
            -
            
            
            433,947March
                2005 convertible debt, net of debt discount of $46,039 in
                2005
            
            
            322,712
            
            
            -Stockholders’
                EquityCommon
                stock; par value $.001 per share; 100,000,000 shares
              authorized;
                27,822,977 and 16,133,876 shares issued and
              outstanding,
                respectively
            
            
            27,823
            
            
            16,134Paid-in
                capital
            
            
            40,689,144
            
            
            23,711,540Deficit
                accumulated during the development stage
            
            
            (26,329,826
            )
            
            (14,565,973
            )Total
                Stockholders’ Equity
            
            
            14,387,141
            
            
            9,161,701$
            17,319,119
            
            $
            11,195,951







See
      accompanying notes to financial statements.





F-2





**PROVECTUS
      PHARMACEUTICALS, INC.**


**(A
      Development-Stage Company)**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




**Year
                Ended**
              **December
                31, 2005**
            
            **Year
                Ended**
              **December
                31, 2004**
            
            **Cumulative
                Amounts from January 17, 2002 (Inception) Through**
              **December
                31, 2005****Revenues**OTC
                Product Revenue
            
            $
            5,552
            
            $
            18,728
            
            $
            24,280Medical
                Device Revenue
            
            
            984
            
            
            13,125
            
            
            14,109**Total
                revenues**
            
            
            6,536
            
            
            31,853
            
            
            38,389**Cost
                of Sales**
            
            
            3,560
            
            
            10,781
            
            
            14,341**Gross
                Profit**
            
            
            2,976
            
            
            21,072
            
            
            24,048**Operating
                Expenses**Research
                and
                development
            
            $
            2,044,391
            
            $
            1,291,817
            
            $
            4,111,846General
                and
                administrative
            
            
            2,999,334
            
            
            1,690,841
            
            
            13,195,371Amortization
            
            
            671,120
            
            
            671,120
            
            
            2,091,657Total
                operating loss
            
            
            (5,711,869
            )
            
            (3,632,706
            )
            
            (19,374,826
            )Gain
                on sale of fixed assets
            
            
            **-**
            
            
            -
            
            
            55,000Loss
                on extinguishment of debt
            
            
            (724,455
            )
            
            (101,412
            )
            
            (825,867
            )Net
                interest expense
            
            
            (5,327,529
            )
            
            (610,407
            )
            
            (6,184,133
            )**Net
                Loss**
            
            $
            (11,763,853
            )
            $
            (4,344,525
            )
            $
            (26,329,826
            )**Basic
                and Diluted Loss Per Common**
              **Share**
            
            $
            (0.62
            )
            $
            (0.31
            )**Weighted
                Average Number of**
              **Common
                Shares**
              **Outstanding
                -**
              **Basic
                and
                Diluted**
            
            
            18,825,670
            
            
            14,122,559




See
      accompanying notes to financial statements.











F-3


**PROVECTUS
      PHARMACEUTICALS, INC.**


**(A
      Development-Stage Company)**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY**




Common
      Stock


**Number**
                **of 
                  Shares**
              
              **Par
                  Value**
              
              **Paid-in**
                **Capital**
              
              **Accumulated**
                **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
              
              
              -
              
              
              25,000Issuance
                of stock to employees
              
              
              510,000
              
              
              510
              
              
              931,490
              
              
              -
              
              
              932,000Issuance
                of stock for services
              
              
              120,000
              
              
              120
              
              
              359,880
              
              
              -
              
              
              360,000Net
                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
              )
              $
              802Shares
                issued in reverse merger
              
              
              265,763
              
              
              266
              
              
              (3,911
              )
              
              -
              
              
              (3,645
              )Issuance
                of
                stock for services
              
              
              1,900,000
              
              
              1,900
              
              
              5,142,100
              
              
              -
              
              
              5,144,000Purchase
                and
                retirement of stock
              
              
              (400,000
              )
              
              (400
              )
              
              (47,600
              )
              
              -
              
              
              (48,000
              )Stock
                issued for acquisition of ValleyPharmaceuticals
              
              
              500,007
              
              
              500
              
              
              12,225,820
              
              
              -
              
              
              12,226,320Exercise
                of
                warrants
              
              
              452,919
              
              
              453
              
              
              -
              
              
              -
              
              
              453Warrants
                issued
                in connection withconvertible
                debt
              
              
              -
              
              
              -
              
              
              126,587
              
              
              -
              
              
              126,587Stock
                and warrants issued for acquisitionof
                Pure-ific
              
              
              25,000
              
              
              25
              
              
              26,975
              
              
              -
              
              
              27,000Net
                  loss
                  for the period from April 23, 2002(date
                  of
                reverse merger) to December31,
                  2002
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,749,937
              )
              
              (5,749,937
              )Balance,
                at December 31, 2002
              
              $
              9,423,689
              
              $
              9,424
              
              $
              18,780,291
              
              $
              (7,066,135
              )
              $
              11,723,580Issuance
                of
                stock for services
              
              
              764,000
              
              
              764
              
              
              239,036
              
              
              -
              
              
              239,800Issuance
                of
                warrants for services
              
              
              -
              
              
              -
              
              
              145,479
              
              
              -
              
              
              145,479Stock
                to be issued for services
              
              
              -
              
              
              -
              
              
              281,500
              
              
              -
              
              
              281,500Employee
                compensation from stock options
              
              
              -
              
              
              -
              
              
              34,659
              
              
              -
              
              
              34,659Issuance
                of
                stock pursuant to Regulation S
              
              
              679,820
              
              
              680
              
              
              379,667
              
              
              -
              
              
              380,347Beneficial
                conversion related to convertible debt
              
              
              -
              
              
              -
              
              
              601,000
              
              
              -
              
              
              601,000Net
                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
              )
              $
              10,251,052Issuance
                of
                stock for services
              
              
              733,872
              
              
              734
              
              
              449,190
              
              
              -
              
              
              449,923Issuance
                of
                warrants for services
              
              
              -
              
              
              -
              
              
              495,480
              
              
              -
              
              
              495,480Exercise
                of
                warrants
              
              
              132,608
              
              
              133
              
              
              4,867
              
              
              -
              
              
              5,000Employee
                compensation from stock options
              
              
              -
              
              
              -
              
              
              15,612
              
              
              -
              
              
              15,612Issuance
                of
                stock pursuant to Regulation
              
              
              2,469,723
              
              
              2,469
              
              
              790,668
              
              
              -
              
              
              793,137Issuance
                of
                stock pursuant to Regulation D
              
              
              1,930,164
              
              
              1,930
              
              
              1,286,930
              
              
              -
              
              
              1,288,861Beneficial
                conversion related to convertible debt
              
              
              -
              
              
              -
              
              
              360,256
              
              
              -
              
              
              360,256Issuance
                of
                convertible debt with warrants
              
              
              -
              
              
              -
              
              
              105,250
              
              
              -
              
              
              105,250Repurchase
                of
                beneficial conversionfeature
              
              
              -
              
              
              -
              
              
              (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
              )
              $
              9,161,701Issuance
                  of
                  stock for services
              
              
              226,733
              
              
              227
              
              
              152,058
              
              
              -
              
              
              152,285Issuance
                  of
                  stock for interest payable
              
              
              263,721
              
              
              264
              
              
              195,767
              
              
              -
              
              
              196,031Issuance
                  of
                  warrants for services
              
              
              -
              
              
              -
              
              
              1,534,405
              
              
              -
              
              
              1,534,405Issuance
                  of
                  warrants for contractual obligations
              
              
              -
              
              
              -
              
              
              985,010
              
              
              -
              
              
              985,010Exercise
                  of
                  warrants and stock options
              
              
              1,571,849
              
              
              1,572
              
              
              1,438,223
              
              
              -
              
              
              1,439,795Employee
                  compensation from stock options
              
              
              -
              
              
              -
              
              
              15,752
              
              
              -
              
              
              15,752Issuance
                  of
                  stock pursuant to Regulation D
              
              
              6,221,257
              
              
              6,221
              
              
              6,506,955
              
              
              -
              
              
              6,513,176Debt
                  conversion to common stock
              
              
              3,405,541
              
              
              3,405
              
              
              3,045,957
              
              
              -
              
              
              3,049,362Issuance
                  of
                  warrants with convertible debt
              
              
              -
              
              
              -
              
              
              1,574,900
              
              
              -
              
              
              1,574,900Beneficial
                  conversion related to convertible debt
              
              
              -
              
              
              -
              
              
              1,633,176
              
              
              -
              
              
              1,633,176Beneficial
                  conversion related to interest expense
              
              
              -
              
              
              -
              
              
              39,529
              
              
              -
              
              
              39,529Repurchase
                  of
                  beneficial conversion feature
              
              
              -
              
              
              -
              
              
              (144,128
              )
              
              -
              
              
              (144,128
              )Net
                  loss for the year ended 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              (11,763,853
              )
              
              (11,763,853
              )Balance,
                  at December 31, 2005
              
              
              27,822,977
              
              $
              27,823
              
              $
              40,689,144
              
              $
              (26,329,826
              )
              $
              14,387,141


See
      accompanying notes to financial statements.


F-4


PROVECTUS
      PHARMACEUTICALS, INC.


(A
      Development-Stage Company)


CONSOLIDATED
      STATEMENTS OF CASH FLOW







**Year
                  Ended**
                **December
                  31, 2005**
              
              **Year
                  Ended**
                **December
                  31, 2004**
              
              ******Cumulative**
                **Amounts
                  from**
                **January
                  17, 2002**
                **(Inception)
                  through December 31, 2005**Cash
                  Flows From Operating ActivitiesNet
                  loss
              
              $
              (11,763,853
              )
              $
              (4,344,525
              )
              $
              (26,329,826
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activitiesDepreciation
              
              
              1,708
              
              
              121,811
              
              
              391,280Amortization
                  of
                  patents
              
              
              671,120
              
              
              671,120
              
              
              2,091,657Amortization
                  of
                  original issue discount
              
              
              2,293,251
              
              
              360,663
              
              
              2,780,826Amortization
                  of
                  commitment fee
              
              
              272,540
              
              
              38,326
              
              
              310,866Amortization
                  of
                  prepaid consultant expense
              
              
              274,337
              
              
              606,888
              
              
              1,127,187Amortization
                  of
                  deferred loan costs
              
              
              1,411,970
              
              
              120,953
              
              
              1,552,492Loss
                  on
                  extinguishment of debt
              
              
              724,455
              
              
              101,412
              
              
              825,867Loss
                  on
                  exercise of warrants
              
              
              236,146
              
              
              -
              
              
              236,146Beneficial
                  conversion of convertible interest
              
              
              39,529
              
              
              -
              
              
              39,529Convertible
                  interest
              
              
              266,504
              
              
              -
              
              
              266,504Compensation
                  through issuance of stock options
              
              
              15,752
              
              
              15,612
              
              
              66,023Compensation
                  through issuance of stock
              
              
              -
              
              
              -
              
              
              932,000Issuance
                  of
                  stock for services
              
              
              388,373
              
              
              76,558
              
              
              5,968,931Issuance
                  of
                  warrants for services
              
              
              318,704
              
              
              22,481
              
              
              341,185Issuance
                  of
                  warrants for contractual obligations
              
              
              985,010
              
              
              -
              
              
              985,010Gain
                  on
                  sale of equipment
              
              
              -
              
              
              -
              
              
              (55,000
              )(Increase)
                  decrease in assetsPrepaid
                  expenses and other current assets
              
              
              46,762
              
              
              (15,919
              )
              
              (67,962
              )Increase
                  (decrease) in liabilitiesAccounts
                  payable
              
              
              (64,090
              )
              
              53,574
              
              
              86,479Accrued
                  expenses
              
              
              98,196
              
              
              (143,783
              )
              
              464,483Net
                  cash used in operating activities
              
              
              (3,783,586
              )
              
              (2,314,829
              )
              
              (7,986,323
              )Cash
                  Flows From Investing ActivitiesProceeds
                  from
                  sale of fixed asset
              
              
              -
              
              
              -
              
              
              180,000Capital
                  expenditures
              
              
              (13,995
              )
              
              (396
              )
              
              (17,692
              )Net
                  cash (used in) provided by investing activities
              
              
              (13,995
              )
              
              (396
              )
              
              162,308Cash
                  Flows From Financing ActivitiesNet
                  proceeds from loans from stockholder
              
              
              25,000
              
              
              -
              
              
              174,000Proceeds
                  from
                  convertible debt
              
              
              4,430,836
              
              
              750,000
              
              
              6,706,795Net
                  proceeds from sale of common stock
              
              
              7,477,853
              
              
              2,169,873
              
              
              9,965,198Proceeds
                  from
                  exercise of warrants and stock options
              
              
              1,203,649
              
              
              5,000
              
              
              1,209,102Cash
                  paid to retire convertible debt
              
              
              (1,885,959
              )
              
              (500,000
              )
              
              (2,385,959
              )Cash
                  paid for deferred loan costs
              
              
              (515,582
              )
              
              (162,500
              )
              
              (747,612
              )Premium
                  paid on extinguishments of debt
              
              
              (70,000
              )
              
              (100,519
              )
              
              (170,519
              )Purchase
                  and
                  retirement of common stock
              
              
              -
              
              
              -
              
              
              (48,000
              )Net
                  cash provided by financing activities
              
              
              10,665,797
              
              
              2,161,854
              
              
              14,703,005






F-5








**Year
                Ended**
              **December
                31, 2005**
            
            **Year
                Ended**
              **December
                31, 2004**
            
            ******Cumulative**
              **Amounts
                from**
              **January
                17, 2002**
              **(Inception)
                through December 31, 2005**Net
                Change in Cash and cash equivalents
            
            $6,868,216
            
            $(153,371)
            
            $6,878,990Cash
                and cash equivalents, at beginning of period
            
            $
            10,774
            
            $
            164,145
            
            $
            -Cash
                and cash equivalents, at end of period
            
            $
            6,878,990
            
            $
            10,774
            
            $
            6,878,990**Supplemental
                Disclosure of Cash Flow Information**December
                31, 2005Interest
                paid
                of $127,444**Supplemental
                Disclosure of Noncash Investing and Financing
                Activities**


Year
      ended December 31, 2005





1.
      Issuance of warrants in exchange for prepaid services of $68,910


2.
      Shareholder debt of $174,000 and accrued interest of $24,528 converted to common
      stock of $198,528


3.
      Debt
      converted to common stock of $2,537,000


4.
      Payment of accrued interest through the issuance of stock of $196,031 and stock
      committed to be issued of $61,408


5.
      Beneficial conversion on convertible debt of $1,633,176


6.
      Discount on convertible debt with warrants of $1,574,900


7.
      Warrants issued for deferred loan costs of $1,215,700


8.
      Accrual of $964,676 for stock committed to be issued for stock issuance
      costs


9.
      Stock
      committed to be issued for deferred loan costs of $345,645


10.
      Stock
      committed to be issued for consulting expense of $304,998





Year
      ended December 31, 2004


1.
      Issuance of stock in exchange for prepaid services of $62,499


2.
      Issuance of warrants in exchange for prepaid services of $329,000


3.
      Issuance of stock in exchange for standby equity commitment of
      $310,866


4.
      Discount on convertible debt with warrants of $105,250


5.
      Deferred loan costs through the issuance of warrants of $144,000


6.
      Beneficial conversion on convertible debt of $360,256


7.
      Conversion of accrued interest of $160,000 to convertible debt













See
      accompanying notes to financial statement.











F-6


**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, and certain forms of cancer including recurrent breast carcinoma,
      metastatic melanoma, and liver cancer. The Company intends to license its laser
      device and biotech technology. Through a previous acquisition, the Company
      also
      intends to further develop, if necessary, and license or sell the underlying
      assets of its over-the-counter pharmaceuticals. To date the Company has no
      material revenues.





Principles
      of Consolidation





Intercompany
      balances and transactions have been eliminated in consolidation.





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.





Cash
      and cash equivalents





The
      Company considers all highly liquid investments purchased with a maturity of
      three months or less to be cash equivalents.





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.










F-7


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, 2005 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.





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.




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 accounts for income taxes under the liability method in accordance
      with
      Statement of Financial Accounting Standards No. 109 (“SFAS No. 109”),
“Accounting for Income Taxes.” Under this method, deferred income tax assets and
      liabilities are determined based on differences between financial reporting
      and
      tax bases of assets and liabilities and are measured using the enacted tax
      rates
      and laws that will be in effect when the differences are expected to reverse.
      A
      valuation allowance is established if it is more likely than not that all,
      or
      some portion, of deferred income tax assets will not be realized. The Company
      has recorded a full valuation allowance to reduce its net deferred income tax
      assets to zero. In the event the Company were to determine that it would be
      able
      to realize some or all its deferred income tax assets in the future, an
      adjustment to the deferred income tax asset would increase income in the period
      such determination was made.




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, 2005 are 4,973,484 options
      26,811,958 warrants and 2,609,438 shares issuable upon the conversion of
      convertible debt and accrued interest. Included in the weighted average number
      of shares outstanding are 7,284,506 common shares committed to be issued but
      not
      outstanding at December 31, 2005.





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.




F-8





Stock
      Based Compensation





The
      Company has adopted the disclosure-only provisions of Statement of Financial
      Accounting Standards No. 148, "Accounting for Stock Based Compensation -
      Transition and Disclosure" (SFAS No. 148), an amendment of FASB Statement 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, $15,752 and $15,612 of expense was recorded for the
      year
      ended December 31, 2005 and 2004, respectively.





For
      stock
      options granted to employees during 2005 and 2004, the Company has estimated
      the
      fair value of each option granted using the Black-Scholes option pricing model
      with the following assumptions:











**2005**
            **2004**Weighted
              average fair value per options granted
            $
                0.66
            $1.10Significant
              assumptions (weighted average)Risk-free
              interest rate at grant date
            4.0%
            2.0%Expected
              stock price volatility
            130%
            150%Expected
                option life (years)
            10
            10







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**
              **December
                31,**
              **2005**
            
            **Year
                Ended**
              **December
                31,**
              **2004**Net
              loss, as reported
            
            $
            (11,763,853
            )
            $
            (4,344,525
            )Add
              stock-based employee compensation
              expense
                included in reported net loss
            
            
            15,752
            
            
            15,612Less
              total stock-based employee compensationexpense
              determined under the fairvalue
              based method for all awards
            
            
            (791,111
            )
            
            (698,125
            )Pro
              forma net loss
            
            $
            (12,539,212
            )
            $
            (5,027,038
            )Basic
              and diluted loss per common share,as
              reported
            
            $
            (0.62
            )
            $
            (0.31
            )Basic
              and diluted loss per common share,pro
              forma
            
            $
            (0.67
            )
            $
            (0.36
            )







Reclassifications





Certain
      2004 amounts have been reclassified to conform to the 2005
      presentation.













F-9


Recent
      Accounting Pronouncements





In
      November 2004, the FASB issued Statement of Financial Accounting Standards
      No. 151, *Inventory Costs, an amendment of ARB No. 43,
      Chapter 4.*The purpose of this statement is to clarify the accounting
      of abnormal amounts of idle facility expense, freight, handling costs and waste
      material. ARB No. 43 stated that under some circumstances these costs may
      be so abnormal that they are required to be treated as current period costs.
      SFAS 151 requires that these costs be treated, as current period costs
      regardless if they meet the criteria of “so abnormal.” In addition, the
      statement requires that allocation of fixed production overheads to the costs
      of
      conversion be based on the normal capacity of the production facilities. The
      provision of this Statement shall be effective for inventory costs incurred
      during fiscal years beginning after June 15, 2005. The adoption of SFAS 151
      is not expected to have a material impact on the Company’s results of operations
      or financial position.





In
      December 2004, the FASB issued SFAS No. 153, *Exchanges of
      Nonmonetary Assets, an amendment of APB Opinion No. 29.*SFAS 153 is
      effective for nonmonetary asset exchanges occurring in fiscal periods beginning
      after June 15, 2005, with earlier application permitted. The adoption of
      SFAS 153 is not expected to have a material impact on the Company’s results of
      operations or financial position.





In
      December 2004, the FASB issued SFAS No. 123(R), *Share-Based
      Payments (revised 2004)*. This statement eliminates the option to apply the
      intrinsic value measurement provisions of APB Board Opinion No. 25,
*Accounting for Stock Issued to Employees*, to stock compensation awards
      issued to employees. Rather, the Statement requires companies to measure the
      cost of employee services received in exchange for an award of equity
      instruments based on the grant date fair value of the award. That cost will
      be
      recognized over the period during which an employee is required to provide
      services in exchange for the award — the requisite service period (usually the
      vesting period). In March 2005, the SEC staff expressed their views with
      respect to SFAS No. 123(R) in Staff Accounting Bulletin No. 107,
*Share-Based Payment*, (SAB 107). SAB 107 provides guidance on valuing
      options. SFAS 123(R) will be effective for the Company’s fiscal year beginning
      January 1, 2006. The Company is currently evaluating the impact of the
      adoption of this statement on its financial statements.





In
      March 2005, the FASB issued FASB Interpretation No. 47, *Accounting
      for Conditional Asset Retirement Obligations*, (FIN 47).   FIN 47
      is an interpretation of SFAS No. 143, *Asset Retirement
      Obligations*, which was issued in June 2001. FIN 47 was issued to address
      diverse accounting practices that have developed with regard to the timing
      of
      liability recognition for legal obligations associated with the retirement
      of a
      tangible long-lived asset in which the timing and/or method of settlement are
      conditional on a future event that may or may not be within the control of
      the
      entity. According to FIN 47, uncertainty about the timing and/or method of
      settlement of a conditional asset retirement obligation should be factored
      into
      the measurement of the liability when sufficient information exists. FIN 47
      also
      clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation. FIN 47 is effective
      no later than December 31, 2005 for the Company. The adoption of FIN
      47 is not expected to have a material impact on the Company’s results of
      operations or financial position.





In
      May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
      Corrections, a replacement of APB Opinion No. 20 and Statement No. 3.
      SFAS 154 changes the requirements for the accounting and reporting of a change
      in accounting principle. SFAS 154 applies to all voluntary changes in accounting
      principle as well as to changes required by an accounting pronouncement that
      does not include specific transition provisions. SFAS 154 is effective for
      accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. The adoption of SFAS 154 is not expected to have a
      material impact on the Company’s results of operations or financial
      position.




In
      September 2005, the Emerging Issues Task Force (EITF) ratified Issue No. 05-8,
      "Income Tax Consequences of Issuing Convertible Debt with a Beneficial
      Conversion Feature." When a company issues convertible debt with a beneficial
      conversion feature, the debt is bifurcated into a liability component and an
      equity component in accordance with EITF Issues No. 98-5, "Accounting for
      Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios" and No. 00-27, "Application of Issue No. 98-5
      to
      Certain Convertible Instruments." The equity component is measured at the
      intrinsic value of the beneficial conversion feature on the commitment date.
      For
      income tax purposes, all of the proceeds are recorded as a liability and nothing
      is recorded in shareholders' equity. The issues are whether the issuance of
      convertible debt with a beneficial conversion feature results in a basis
      difference and, if so, whether that basis difference is a temporary difference
      under FASB Statement No. 109, Accounting for Income Taxes. The adoption of
      EITF
      05-8 is not expected to have a material impact on the Company’s results of
      operations or financial position. However, we do expect the adoption of
      EITF 05-8 to result in a material change to our income tax
      disclosures.




F-10





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 Pharmaceuticals, 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.





3.
      Commitments





The
      Company leases office and laboratory space in Knoxville, Tennessee, on an annual
      basis, renewable for one year at the option of the Company. The Company is
      committed to pay a total of $12,000 in lease payments over three months, which
      is the remainder of its current lease term at December 31, 2005. The Company
      plans to renew the lease at the end of the current lease term. Rent expense
      was
      approximately $45,000 and $31,000 in 2005 and 2004, respectively.











F-11


4.
      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 2005, 10,000 warrants were issued for the third
      anniversary date. 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, 2005 and 2004, 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
      which was fully amortized as of December 31, 2004. Consulting costs charged
      to operations in 2004 were $144,667.





(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 which was
      fully amortized as of December 31, 2004. Consulting costs charged to
      operations in 2004 were $231,983.




F-12


(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 totaled $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 which was
      fully amortized as of December 31, 2004. Consulting costs charged to operations
      in 2004 were $44,167.





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.





In
      January 2005, the Company issued 16,000 warrants to consultants in exchange
      for
      services rendered. Consulting costs charged to operations were $6,944. In
      February 2005, the Company issued 13,000 warrants to consultants in exchange
      for
      services rendered. Consulting costs charged to operations were $13,130. In
      March
      2005, the Company issued 100,000 warrants to consultants in exchange for
      services rendered. Consulting costs charged to operations were $68,910. In
      April
      2005, the Company issued 410,000 warrants to consultants in exchange for
      services rendered. Consulting costs charged to operations were $195,900. In
      May
      2005, the Company issued 25,000 warrants to consultants in exchange for services
      rendered. Consulting costs charged to operations were $9,250. In December 2005,
      the Company issued 33,583 warrants to consultants in exchange for services.
      Consulting costs charged to operations were $24,571. The fair market value
      for the warrants issued in 2005 ranged from $0.37 to $1.01.





(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 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.




F-13





(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 amortized 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.





In
      January 2005, the Company issued 7,500 shares to consultants in exchange for
      services rendered. Consulting costs charged to operations were $4,950. In
      February 2005, the Company issued 7,500 shares to consultants in exchange for
      services. Consulting costs charged to operations were $7,574. In April 2005,
      the
      Company issued 190,733 shares to consultants in exchange for services.
      Consulting costs charged to operations were $127,791. In May 2005, the Company
      issued 21,000 shares to consultants in exchange for services. Consulting costs
      charged to operations were $11,970. At December 31, 2005 the Company
      committed to issue 332,911 shares to consultants in exchange for services
      rendered in December, 2005. Consulting costs charged to operations were
      $305,606.





(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 proceeds
      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, 2005 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 was being amortized over
      the
      term of the commitment period which was one year from the date of registration.
      The full amount was amortized as of December 31, 2005 with $310,866 and $38,326
      amortized in 2005 and 2004, respectively.







F-14


(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.





During
      the three months ended March 31, 2005, the Company completed a private placement
      transaction with 8 accredited investors, which were registered effective June
      20, 2005, pursuant to which the Company sold 214,666 shares of common stock
      at a
      purchase price of $0.75 per share, for an aggregate purchase price of $161,000.
      In connection with the sale of common stock, the Company also issued warrants
      to
      the investors to purchase up to 322,000 shares of common stock at an exercise
      price of $1.00 per share. The Company paid $16,100 and issued 80,500 warrants
      to
      Venture Catalyst, LLC as placement agent for this transaction. The cash costs
      have been off-set against the proceeds received.





During
      the three months ended June 30, 2005, the Company completed a private placement
      transaction with 4 accredited investors, which were registered effective June
      20, 2005, pursuant to which the Company sold 230,333 shares of common stock
      at a
      purchase price of $0.75 per share, for an aggregate purchase price of $172,750.
      In connection with the sale of common stock, the Company also issued warrants
      to
      the investors to purchase up to 325,500 shares of common stock at an exercise
      price of $1.00 per share. The Company paid $16,275 and issued 81,375 warrants
      to
      Venture Catalyst, LLC as placement agent for this transaction. The cash costs
      have been off-set against the proceeds received.





During
      the three months ended September 30, 2005, the Company completed a private
      placement transaction with 12 accredited investors pursuant to which the Company
      sold 899,338 shares of common stock at a purchase price of $0.75 per share
      of
      which 109,333 are committed to be issued at December 31, 2005, for an aggregate
      purchase price of $674,500. In connection with the sale of common stock, the
      Company also issued warrants to the investors to purchase up to 1,124,167 shares
      of common stock at an exercise price of $0.935 per share. The Company paid
      $87,685 and committed to issue 79,000 shares of common stock at a fair market
      value of $70,083 to Network 1 Financial Securities, Inc. as placement agent
      for
      this transaction which is accrued at December 31, 2005. The cash and common
      stock costs have been off-set against the proceeds received.





During
      the three months ended December 31, 2005, the Company completed a private
      placement transaction with 62 accredited investors pursuant to which the Company
      sold 10,065,605 shares of common stock at a purchase price of $0.75 per share
      of
      which 5,126,019 are committed to be issued at December 31, 2005, for an
      aggregate purchase price of $7,549,202. In connection with the sale of common
      stock, the Company also issued warrants to the investors to purchase up to
      12,582,009 shares of common stock at an exercise price of $0.935 per share.
      The
      Company paid $959,540, issued 46,667 shares of common stock at a fair market
      value of $46,467, issued 30,550 warrants, and committed to issue 950,461 shares
      of common stock at a fair market value of $894,593 to a syndicate led by Network
      1 Financial Securities, Inc. as placement agent for this transaction which
      is
      accrued at December 31, 2005. The cash and common stock costs have been off-set
      against the proceeds received.




(o) 
      The Company issued 175,000 warrants each month from March 2005 to November
      2005
      resulting in total warrants of 1,575,000 to Gryffindor Capital Partners I,
      L.L.C. pursuant to the terms of the Second Amended and Restated Note dated
      November 26, 2004. Total interest costs charged to operations were $985,010.










F-15











5.
      Stock
      Incentive Plan and Warrants





The
      Company maintains one long-term incentive compensation plan, the Provectus
      Pharmaceuticals, Inc. 2002 Stock Plan, which provides for the issuance of up
      to
      5,000,000 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.





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 1,173,484
      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, 2005.
      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, 2005.





On
      January 7, 2005, the Company issued 1,200,000 stock options to employees. The
      options vest over four years with no 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, 2005. On May 19, 2005, 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, 2005. On May 25,
      2005, the Company issued 1,200,000 stock options to employees. The options
      vest
      over three years with no options vesting on the date of grant. The exercise
      price is $0.75 which is greater than the fair market price on the date of
      issuance, and all options were outstanding at December 31, 2005. On December
      9,
      2005, the Company issued 775,000 stock options to employees. The options vest
      over three years with no 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, 2005. During 2005 an employee of the Company
      exercised 26,516 options at an exercise price of $1.10 per share of common
      stock
      for $29,167.





The
      following table summarizes the options granted, exercised and outstanding as
      of
      December 31, 2004 and 2005, respectively. There were no options issued in
      2002.




**Shares**
            
            **Exercise**
              **Price
                Per**
              **Share**
            
            **Weighted**
              **Average**
              **Exercise
                Price**Outstanding
              at January 1, 2004
            
            
            356,250
            
            $
            0.26
                - 0.60
            
            $
            0.40Granted
            
            
            1,400,000
            
            $
            0.95
              - 1.25
            
            $
            1.10Exercised
            
            
            -
            
            
            -
            
            
            -Forfeited
            
            
            (31,250
            )
            $
            0.26
              - 0.32
            
            $
            0.30Outstanding
              at December 31, 2004
            
            
            1,725,000
            
            $
            0.32
              - 1.25
            
            $
            0.97Options
              exercisable at
              December
                31, 2004
            
            
            562,500
            
            $$
            0.32
              - 1.25
            
            $
            0.84Outstanding
              at January 1, 2005
            
            
            1,725,000
            
            $
            0.32
              - $1.25
            
            $
            0.97Granted
            
            
            3,275,000
            
            $
            0.64
              - $0.94
            
            $
            0.75Exercised
            
            
            (26,516
            )
            $
            1.10
            
            $
            $1.10Forfeited
            
            
            -
            
            
            -
            
            
            -Outstanding
              at December 31, 2005
            
            
            4,973,484
            
            $
            0.32
              - $1.25
            
            $
            0.83Options
              exercisable at December 31, 2005
            
            
            1,017,234
            
            $
            0.32
              - $1.25
            
            $
            0.88








F-16


The
      following table summarizes information about stock options outstanding at
      December 31, 2005.






**Exercise Price**
            **Number**
              **Outstanding
                at**
              **Decem****ber
                31, 2005**
            **Weighted**
              **Average**
              **Remaining**
              **Contractual
                Life**
            **Weighted**
              **Average**
              **Exercise
                Price**
            **Number**
              **Exercisable
                at**
              **December
                31, 2005**
            **Weighted**
              **Average**
                **Exercise
                  Price**$0.32
            225,000
            7.58
                years
            $0.32
            168,750
            $0.32$0.60
            100,000
            7.58
                years
            $0.60
            100,000
            $0.60$1.10
            1,173,484
            8.17
                years
            $1.10
            498,484
            $1.10$0.95
            100,000
            8.42
                years
            $0.95
            100,000
            $0.95$1.25
            100,000
            8.50
                years
            $1.25
            50,000
            $1.25$0.64
            1,200,000
            9.00
                years
            $0.64
            -
            $0.64$0.75
            1,300,000
            9.42
                years
            $0.75
            100,000
            $0.75$0.94
            775,000
            9.92
                years
            $0.94
            -
            $0.944,973,484
            8.94
                years
            $0.83
            1,017,234
            $0.88






The
      following table summarizes the warrants granted, exercised and outstanding
      as of
      December 31, 2004 and 2005, respectively.






**Warrants**
            
            **Exercise**
              **Price
                Per**
              **Warrant**
            
            **Weighted**
              **Average**
              **Exercise
                Price**Outstanding
              at January 1, 2004
            
            
            1,005,000
            
            $
            0.25
              - $2.29
            
            $
            1.01Granted
            
            
            3,402,393
            
            $
            0.50
              - $1.00
            
            $
            0.99Exercised
            
            
            (190,000)
            )
            $
            0.25
              - $0.50
            
            $
            0.37Forfeited
            
            
            (125,000)
            )
            $
            0.75
              - $2.29
            
            $
            1.98Outstanding
              at December 31, 2004
            
            
            4,092,393
            
            $
            0.50
              - $1.25
            
            $
            0.99Warrants
                exercisable at
              December 31, 2004
            
            
            4,092,393
            
            $
            0.50
              - $1.25
            
            $
            0.99Outstanding
              at January 1, 2005
            
            
            4,092,393
            
            $
            0.50
              - $1.25
            
            $
            0.99Granted
            
            
            26,179,565
            
            $
            0.50
              - $1.25
            
            $
            0.95Exercised
            
            
            (1,545,333)
            )
            $
            0.75
              - $1.00
            
            $
            0.76Forfeited
            
            
            (1,894,667)
            )
            $
            0.90
              - $1.00
            
            $
            0.92Outstanding
              at December 31, 2005
            
            
            26,831,958
            
            $
            0.50
              - $1.25
            
            $
            0.96Warrants
                exercisable at
              December
                31, 2005
            
            
            26,831,958
            
            $
            0.50
              - $1.25
            
            $
            0.96






Warrants
      exercised include a cashless exercise of 180,000 warrants in exchange for
      122,608 shares in 2004.





The
      following table summarizes information about warrants outstanding at December
      31, 2005.





Warrants Outstanding and Exercisable




**Exercise
                Price**
            **Number
                Outstanding**
              **and
                Exercisable at**
              **Decem****ber
                31, 2005**
            **Weighted**
              **Average**
              **Remaining**
              **Contractual
                Life**
            **Weighted**
              **Average**
              **Exercise
                Price**$0.50
            20,000
            1.42
            $0.50$0.75
            414,275
            2.70
            $0.75$0.935
            18,270,640
            4.77
            $0.935$0.94
            20,000
            1.25
            $0.94$0.98
            500,000
            4.23
            $0.98$1.00
            6,382,000
            3.34
            $1.00$1.23
            450,000
            4.25
            $1.23$1.25
            775,000
            4.11
            $1.2526,831,958
            4.35
            $0.96










F-17






6.
      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 was due and payable
      in full on November 26, 2004. Subject to certain exceptions, the Note was
      convertible into shares of the Company's common stock on or after November
      26,
      2003, at which time the principal amount of the Note was 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 was 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 was being amortized over the
      life
      of the debt using the effective interest method. Amortization of $57,052 has
      been recorded as additional interest expense in 2004.





In
      2003,
      an additional $25,959 of principal 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, was 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 $95,157 and
      $10,093 has been recorded as additional interest expense as of December 31,
      2005
      and 2004, respectively.





As
      of
      December 31, 2005, the Company recorded additional interest expense of $36,945
      related to the beneficial conversion feature of the interest on the Gryffindor
      convertible debt.





On
      November 26, 2005 the Company entered into a redemption agreement with
      Gryffindor to pay $1,185,959 of the Gryffindor convertible debt and accrued
      interest of $94,877. Also on November 26, 2005 the Company issued a legal
      assignment attached to and made a part of that certain Second Amended and
      Restated Senior Secured Convertible Note dated November 26, 2004 in the original
      principal amount of $1,185,959 together with interest of $94,877 paid to the
      order of 8 investors dated November 26, 2005 for a total of $1,280,836. The
      Company subsequently entered into debt conversion agreements with 7 of the
      investors for an aggregate of $812,000 of convertible debt which was converted
      into 1,101,764 shares of common stock at $0.737 per share. As of December
      31, 2005, the Company had $468,836 in principal and $3,647 in accrued interest
      owed to holders of our convertible debentures due on November 26, 2006. At
      December 31, 2005, the Company recorded additional interest expense of $2,584
      related to the beneficial conversion feature of the interest on the November
      2005 convertible debt. The $1,280,836 in principal was issued when the
      conversion price was lower than the market value of the Company's common stock
      on the date of issue. As a result, a discount of $404,932 was recorded for
      this
      beneficial conversion feature. The debt discount of $404,932 is being amortized
      over the life of the debt using the effective interest method. At December
      31,
      2005, $270,924 of the debt discount has been amortized which includes $256,711
      of the unamortized portion of the debt discount related to the debt which was
      converted.






F-18





At
      December 31, 2005, the November 2005 convertible debentures totaled $334,828,
      net of debt discount of $134,008. The entire principal, net of debt discount,
      was recorded as a current liability.





In
      conjunction with the November 26, 2005 financing, the Company incurred debt
      issuance costs consisting of cash of $128,082, 356,335 shares of common stock
      valued at $345,645 and 1,000,000 warrants valued at $789,000. The warrants
      are
      exercisable over 5 years, have an exercise price of $1.00, a fair market value
      of $0.79 and were valued using the Black-Scholes option-pricing model. The
      total
      debt issuance costs of $1,262,727 were recorded as an asset and amortized over
      the term of the debt. At December 31, 2005, $835,294 of the debt issuance costs
      have been amortized which includes $800,520 related to the debt that was
      converted as of December 31, 2005. The 356,335 shares of common stock were
      not
      issued as of December 31, 2005 and therefore have been recorded as an accrued
      liability at December 31, 2005.





(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. During 2005, 52,000 of the warrants
      were exercised and the remaining warrants expired on 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 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 term 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 4(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  received 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 for the year ended December 31, 2004
      and amortization of deferred loans costs up to the date of redemption was
      $85,031 for the year ended December 31, 2004. 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 was due together with
      interest on July 28, 2007. This debt had a subordinated security interest in
      the
      assets of the Company. The Company issued a second secured convertible debenture
      on October 7, 2004 which had 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 was due together with interest on
      October 7, 2007 and had a subordinated security interest in the assets of the
      Company. The debentures  were 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.








F-19




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 had been amortized.





In
      conjunction with the debt financing, the Company issued warrants to purchase
      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 debt issuance
      costs of $35,922 had been recognized as of December 31, 2004.





In
      February 2005, the Company entered into a redemption agreement with Cornell
      Capital Partners to pay $50,000 of the Cornell convertible debt. As a result,
      the unamortized portion of the debt discount of $27,715 and deferred loan costs
      of $20,702, which related to this amount at the date of extinguishments, were
      recorded as a loss on extinguishment of debt. The Company also paid a $5,000
      prepayment penalty which has been recorded as loss on extinguishment of debt.
      As
      part of this redemption, the Company has repurchased the beneficial conversion
      feature related to the redeemed amount of $16,449.




In
      March
      2005, the Company entered into a debt conversion agreement with Cornell Capital
      Partners for $50,000 of its convertible debt which was converted into 66,667
      shares of common stock at $0.75 per share. As a result of this conversion,
      the
      unamortized portion of the debt discount of $24,890 and deferred loan costs
      of
      $18,779, which related to this amount at the date of conversion, have been
      recorded as additional interest expense.




In
      April
      2005, the Company entered into a redemption agreement with Cornell Capital
      Partners to pay $650,000 of the Cornell convertible debt. As a result, the
      unamortized portion of the debt discount of $233,425 and deferred loan costs
      of
      $205,741, which related to this amount at the date of extinguishments, were
      recorded as a loss on extinguishment of debt. The Company also paid a $65,000
      prepayment penalty which has been recorded as loss on extinguishment of debt.
      As
      part of this redemption, the Company has repurchased the beneficial conversion
      feature related to the redeemed amount of $127,679.





At
      December 31, 2005, there was no amount outstanding related to the Cornell
      debt.




(d)
      In
      March 2005, the Company entered into agreements to issue Senior Convertible
      Debentures to 2 accredited investors with Network 1 Financial Securities, Inc.
      in the aggregate amount of $450,000. This debt has a security interest in the
      assets of the Company, a maturity date of March 30, 2007, and is convertible
      into shares of the Company's common stock at a per share conversion price of
      $0.75. In April 2005, the Company entered into agreements to issue Senior
      Convertible Debentures to 5 accredited investors in the aggregate amount of
      $2,700,000. This debt has a security interest in the assets of the Company,
      a
      maturity date of March 30, 2007, and is convertible into shares of the Company's
      common stock at a per share conversion price of $0.75.




The
        Company shall be obligated to pay the principal of the Senior Convertible
        Debentures in installments as follows: Twelve (12) equal monthly payments
        of
        principal (the “Monthly Amount”) plus, to the extent not otherwise paid, accrued
        but unpaid interest plus any other obligations of the Company to the Investor
        under this Debenture, the Purchase Agreement, or the Registration Rights
        Agreement, or otherwise. The first such installment payment shall be due
        and
        payable on March 30, 2006, and subsequent installments shall be due and payable
        on the thirtieth (30th) day of each succeeding month thereafter (each a “Payment
        Date”) until the Company’s obligations under this Debenture is satisfied in
        full. The Company shall have the option to pay all or any portion of any
        Monthly
        Amount in newly issued, fully paid and nonassessable shares of Common Stock,
        with each share of Common Stock having a value equal to (i) eighty-five percent
        (85%) multiplied by (ii) the Market Price as of the third (3rd) Trading Day
        immediately preceding the Payment Date (the “Payment Calculation Date”).




Interest
        at the greater of (i) the prime rate (adjust monthly), plus 4% and (ii) 8%
        is
        due on a quarterly basis. At the time the interest is payable, upon certain
        conditions, the Company has the option to pay all or any portion of accrued
        interest in either cash or shares of the Company's common stock valued at
        85%
        multiplied by the market price as of the third trading date immediately
        preceding the interest payment date.




F-20





The
      Company may prepay the Senior Convertible Debentures in full by paying the
      holders the greater of (i) 125% multiplied by the sum of the total outstanding
      principal, plus accrued and unpaid interest, plus default interest, if any
      or
      (ii) the highest number of shares of common stock issuable upon conversion
      of
      the total amount calculated pursuant to (i) multiplied by the highest market
      price for the common stock during the period beginning on the date until
      prepayment.




On
      or
      after any event or series of events which constitutes a fundamental change,
      the
      holder may, in its sole discretion, require the Company to purchase the
      debentures, from time to time, in whole or in part, at a purchase price equal
      to
      110% multiplied by the sum of the total outstanding principal, plus accrued
      and
      unpaid interest, plus any other obligations otherwise due under the debenture.
      Under the senior convertible debentures, fundamental change means (i) any person
      becomes a beneficial owner of securities representing 50% or more of the (a)
      outstanding shares of common stock or (b) the combined voting power of the
      then
      outstanding securities; (ii) a merger or consolidation whereby the voting
      securities outstanding immediately prior thereto fail to continue to represent
      at least 50% of the combined voting power of the voting securities immediately
      after such merger or consolidation; (iii) the sale or other disposition of
      all
      or substantially all or the Company's assets; (iv) a change in the composition
      of the Board within two years which results in fewer than a majority of
      directors are directors as of the date of the debenture; (v) the dissolution
      or
      liquidation of the Company; or (vi) any transaction or series of transactions
      that has the substantial effect of any of the foregoing.




The
      Purchasers of the $3,150,000 in Senior Convertible Debentures also purchased
      Class A Warrants and Class B Warrants under the Securities Purchase Agreement.
      Class A Warrants are exercisable at any time between March 10, 2005 through
      and
      including March 30, 2010 depending on the particular Purchaser. Class B Warrants
      were exercisable for a period through and including 175 days after an effective
      registration of the common stock underlying the warrants, which began June
      20,
      2005 and ended December 12, 2005. The range of the per share exercise price
      of a
      Class A Warrant is $0.93 to $0.99 and the range of the per share exercise price
      of the Class B Warrant was $0.8925 to $0.945.




The
      Purchasers of the Senior Convertible Debentures received a total of 4,200,000
      Class A Warrants and a total of 2,940,000 Class B Warrants. 1,493,333 of the
      Class B Warrants were exercised in December, 2005 for proceeds of $1,122,481.
      The warrant holders were given an incentive to exercise their warrants due
      to
      the lowering of the exercise price to $0.75. Interest expense of $236,147 was
      recorded to recognize expense related to this conversion incentive. The
      remaining Class B Warrants were forfeited in December, 2005 at the expiration
      of
      their exercise period.




The
      $3,150,000 proceeds received in March and April 2005 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 these warrants was $1,574,900 and was recorded as a discount to the related
      debt. In addition, the conversion prices were lower than the market value of
      the
      Company's common stock on the date of issue. As a result, an additional discount
      of $1,228,244 was recorded for this beneficial conversion feature. The combined
      debt discount of $2,803,144 is being amortized over the life of the debt using
      the effective interest method.




In
      June
      2005, the Company entered into a debt conversion agreement with one of the
      April
      accredited investors for $150,000 of its convertible debt which was converted
      into 200,000 shares of common stock at $0.75 per share, and $2,833 of accrued
      interest was converted into 3,777 shares of common stock at $0.75 per share.
      In
      July 2005, the Company entered into a debt conversion agreement with two of
      the
      April accredited investors for an aggregate of $350,000 of convertible debt
      which was converted into 466,666 shares of common stock at $0.75 per share.
      In
      September 2005, the Company entered into a debt conversion agreement with one
      of
      the March accredited investors for $400,000 of its convertible debt which was
      converted into 533,333 shares of common stock at $0.75 per share. In October
      2005, the Company entered into a debt conversion agreement with two of the
      March
      accredited investors for an aggregate of $100,000 of convertible debt which
      was
      converted into 133,334 shares of common stock at $0.75 per share. In
      November 2005, the Company entered into a debt conversion agreement with three
      of the April accredited investors for an aggregate of $675,000 of convertible
      debt which was converted into 900,000 shares of common stock at $0.75 per
      share.




At
      December 31, 2005, $1,872,257 of the total debt discount has been amortized
      which includes $1,454,679 of the unamortized portion of the debt discount
      related to the converted debt at the time of the debt
      conversions.




At
      December 31, 2005, the Senior Convertible Debentures totaled $544,113, net
      of
      debt discount of $930,887. Of this total, $221,401 was recorded as a current
      liability, net of debt discount of $884,848 and $322,712 was recorded as a
      long-term liability, net of debt discount of $46,039.





In
      conjunction with the financing, the Company incurred debt issuance costs
      consisting of $387,500 in cash and 980,000 of warrants valued at $426,700.
      The
      warrants are exercisable over 5 years, have exercise prices ranging from $0.98
      -
      $1.23, fair market values ranging from $0.42 - $0.44 and were valued using
      the
      Black-Scholes option pricing model. The total debt issuance costs of $814,200
      were recorded as an asset and amortized over the term of the debt. At December
      31, 2005, $532,541 of the debt issuance costs have been amortized which includes
      $413,109 related to the debt that was converted as of December 31,
      2005.





The
      Company chose to pay the quarterly interest due at June 30, 2005, September
      30,
      2005 and December 31, 2005 in common stock instead of cash. As a result, accrued
      interest at June 30, 2005 of $78,904 was paid in 165,766 shares of common stock
      resulting in additional interest expense of $28,843. 159,780 shares were issued
      July 11, 2005 and the remaining 5,986 shares were issued November 7, 2005.
      The
      accrued interest due September 30, 2005 of $72,985 was converted into 97,955
      shares of common stock resulting in additional interest expense of $15,299.
      66,667 of these shares were issued on September 30, 2005 and the remaining
      31,288 shares were issued October 20, 2005. The interest due December 31, 2005
      of $50,486 was converted into 65,742 shares of common stock resulting in
      additional interest expense of $10,922. The 65,742 shares were not issued as
      of
      December 31, 2005 and have been recorded in accrued liabilities at December
      31,
      2005.





7.
      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. During 2005, the same shareholder loaned
      the
      Company an additional $25,000. 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 $-0- and $15,434
      at December 31, 2005 and 2004, respectively. Interest expense was $16,525
      and $8,003 at December 31, 2005 and 2004, respectively.





In
      December 2005, the Company approved a request from the shareholder to exchange
      the total loan amount of $174,000 plus accrued interest of $24,529 for 264,705
      shares of common stock at $0.75 per share which are committed to be issued
      at
      December 31, 2005. In connection with this transaction which was based on the
      same terms as the private placement conducted at the same time, the Company
      also
      issued warrants to the shareholder to purchase up to 330,881 shares of common
      stock at an exercise price of $0.935 per share.





The
      value
      of the stock and warrants received by the shareholder was $311,000 greater
      than
      the face value of the debt and accrued interest. The $311,000 is a loss on
      extinguishment of debt.




F-21


8.
      Income
      Taxes





Reconciliations
      between the statutory federal income tax rate and the Company’s effective rate
      were as follow:





Years
                Ended December
            
            2005
            
            2004Amount%
            
            
            
            Amount%Federal
                statutory rate
            
            $
            (3,894,000
            )
            
            (34.0
            )%
            $
            (1,477,000
            )
            
            (34.0
            )%Adjustment
                to valuation allowance
            
            
            3,184,000
            
            
            27.8
            %
            
            1,217,000
            
            
            28.0
            %Non-deductible
                financing costs
            
            
            475,000
            
            
            4.1
            %
            
            38,000
            
            
            1.0
            %Amortization
                of patents
            
            
            228,000
            
            
            2.0
            %
            
            228,000
            
            
            5.0
            %Other
            
            
            7,000
            
            
            0.1
            %
            
            (6,000
            )
            
            0.0
            %Actual
                tax benefit
            
            $
            -
            
            
            -
            %
            $
            -
            
            
            -
            %








The
      components of the Company’s deferred income tax assets, pursuant to SFAS No.
      109, are summarized as follow:








December
                31,
            
            
            2005
            
            
            2004Deferred
                tax assetsNet
                operating loss carryforwards
            
            $
            4,126,000
            
            $
            2,104,000Warrants
                for services
            
            
            1,169,000
            
            
            7,000Deferred
                tax asset before valuation allowance
            
            
            5,295,000
            
            
            2,111,000Valuation
                allowance
            
            
            (5,295,000
            )
            
            (2,111,000
            )Net
                deferred tax assets
            
            $
            -
            
            $
            -





SFAS
      No.
      109 required a valuation allowance against deferred tax assets if, based on
      the
      weight of available evidence, it is more likely than not that some or all of
      the
      deferred tax assets may not be realized. The Company is in the development
      stage
      and realization of the deferred tax assets is not considered more likely than
      not. As a result, the Company has recorded a valuation allowance for entire
      deferred tax asset.





Since
      inception of the Company on January 17, 2002, the Company has generated tax
      net
      operating losses of approximately $12.1 million, expiring in 2022 through 2025.
      The tax loss carryforwards of the Company may be subject to limitation by
      Section 382 of the Internal Revenue Code with respect to the amount utilizable
      each year. This limitation reduces the Company’s ability to utilize net
      operating loss carryforwards. The amount of the limitation has not been
      quantified by the Company. 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.




9.
      Subsequent Events





In
      January 2006, the Company entered into a debt conversion agreement with one
      of
      its April 2005 accredited investors for $250,000 of convertible debt which
      was
      converted into 333,333 shares of common stock at $0.75 per share.





In
      March
      2006, the Company entered into debt conversion agreements with two of its April
      2005 accredited investors for a total of $500,000 of convertible debt which
      was
      converted into 666,667 shares of common stock at $0.75 per share.













F-22


**EXHIBIT
      INDEX**






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 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.
 
 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, 002, as filed with the SEC
        on
        December 10, 2002.
 
 F-23
 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.
 
 F-24
 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.
 
 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.
 
 F-25
 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.
 
 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. , incorporated herein by reference
        to
        Exhibit 10.20 to the Company's Annual Report on Form 10-KSB for the fiscal
        year
        ended December 31, 2004, as filed with the SEC on March 31, 2005.
 
 10.21**+  Executive
        Employment Agreement by and between the Company and H. Craig Dees, Ph.D,
        dated
        January 4, 2005.
 
 10.22**+  Executive Employment Agreement by and between the Company and Eric Wachter,
        Ph.D, dated January 4, 2005
 
 10.23**+  Executive
        Employment Agreement by and between the Company and Timothy C. Scott, Ph.D,
        dated January 4, 2005
 
 10.24**+  Executive
        Employment Agreement by and between the Company and Peter Culpepper dated
        January 4, 2005
 
 F-26
 10.25  Form
        of
        Secured Convertible Debenture related to the Securities Purchase Agreement,
        incorporated herein by reference to the Company's Registration Statement
        on Form
        S-2, as filed with the SEC on May 16, 2005.
 
 10.26  Form
        of
        Class A Warrant related to the Securities Purchase Agreement incorporated
        herein
        by reference to the Company's Registration Statement on Form S-2, as filed
        with
        the SEC on May 16, 2005.
 
 10.27  Form
        of
        Class B Warrant related to the Securities Purchase Agreement incorporated
        herein
        by reference to the Company's Registration Statement on Form S-2, as filed
        with
        the SEC on May 16, 2005.
 
 10.28  Registration
        Rights Agreement dated as of March 30, 2005 by and among the Company and
        the
        initial investors named therein related to the Securities Purchase Agreement,
        incorporated herein by reference to the Company's Registration Statement
        on Form
        S-2, as filed with the SEC on May 16, 2005.
 
 10.29  Common
        Stock Purchase Warrant dated November 26, 2004 issued to Gryffindor Capital
        Partners I, L.L.C., incorporated herein by reference to the Company's
        Registration Statement on Form S-2, as filed with the SEC on May 16, 2005.
 
 10.30  Advisory
        Agreement with Duncan Capital Group, LLC dated March 1, 2005, incorporated
        herein by reference to the Company's Registration Statement on Form S-2,
        as
        filed with the SEC on May 16, 2005.
  10.31  Form
        of
        Warrant issued to Duncan Capital Group, LLC designees, incorporated herein
        by
        reference to the Company's Registration Statement on Form S-2, as filed with
        the
        SEC on May 16, 2005.
 
 10.32  Finders
        Fee Agreement with Centre Capital Advisors, LLC incorporated herein by reference
        to Exhibit 4.12 to the Company's 10-QSB for the quarter ended March 31, 2005,
        as
        filed with the SEC on May 16, 2005.
 
 10.33  Form
        of
        Warrant issued to Centre Capital Advisors, LLC incorporated herein by reference
        by Exhibit 4.13 to the Company's 10-QSB for the quarter ended March 31, 2005,
        as
        filed with the SEC on May 16, 2005.
 
 10.34  General
        Fee Agreement with Venture Catalyst, LLC dated May 3, 2004, incorporated
        herein
        by reference to the Company's Registration Statement on Form S-2/A, as filed
        with the SEC on June 14, 2005.
  10.35  Consulting
        Agreement with Venture Catalyst, LLC dated December 8, 2004, incorporated
        herein
        by reference to the Company's Registration Statement on Form S-2/A, as filed
        with the SEC on June 14, 2005.
  10.36  Consulting
        Agreement with Venture Catalyst, LLC dated April 1, 2005, incorporated herein
        by
        reference to the Company's Registration Statement on Form S-2/A, as filed
        with
        the SEC on June 14, 2005.
  10.37  Form
        of
        Warrant issued to Kevin Richardson, incorporated herein by reference to the
        Company's Registration Statement on Form S-2/A, as filed with the SEC on
        June
        14, 2005.
 
 10.38  Securities
        Purchase Agreement dated as of March 30, 2005 by and among the Company and
        the
        buyers named therein ("Securities Purchase Agreement"), incorporated herein
        by
        reference to the Company's Registration Statement on Form S-2, as filed with
        the
        SEC on May 16, 2005.
 
 10.39  Amendment
        No. 1 to Transaction Documents with Gryffindor Capital Partners I, L.L.C.
        dated
        November 26, 2004, incorporated herein by reference to the Company's
        Registration Statement on Form S-2, as filed with the SEC on May 16,
        2005.
 
 10.40  Advisory
        Agreement with Hunter Wise Securities, LLC dated January 19, 2005, incorporated
        herein by reference to Exhibit 4.14 of the Company's 10-QSB for the quarter
        ended March 31, 2005, as filed with the SEC on May 16, 2005.
 
 10.41  Form
        of
        Warrant issued to Hunter Wise Securities, LLC and Daniel J. McCory, incorporated
        herein by reference to Exhibit 4.15 of the Company's 10-QSB for the quarter
        ended March 31, 2005, as filed with the SEC on May 16, 2005.
  F-27




10.42
        Financial Advisory and Investment Banking Agreement with Network 1
      Financial Securities dated August 15, 2004, incorporated herein by reference
      to
      the Company's Registration Statement on Form S-2, as filed with the SEC on
      May
      16, 2005.




10.43  
      Form of Warrant issued to Damon D. Testaverde and Network 1 Financial
      Securities, Inc., incorporated herein by reference to the Company's Registration
      Statement on Form S-2, as filed with the SEC on May 16, 2005.  21.1 +  
List
        of
        Subsidiaries




23.1 Consent
      of
      Independent Registered Public Accounting Firm




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




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




32.1+
      Certification Pursuant to 18 U.S.C. ss.
      1350.








+
      Filed
      herewith.