$PVCT.OB: Hey Shorty, Come Out, Come Out, Where Ever You Are...

Short interest as at October 15, reported today, was 1,230,229 shares -- up 28% from the September 28 reporting period (959,298), which was up 48% from the September 14 period (650,550), which was up 34% from the August 31 period (486,559). I hope, in a few paragraphs, you will understand why I am framing the short interest this way. See the graph below.

I there there has been a historical "structural short" (i.e., closer to the beginning of the measurement period) of about 400K, give or take, resulting from or necessary for market making activities. The float of the company increased, from about 97MM (12/31/10) shares to 115MM shares (6/30/12) over this time, an increase of about 20%. The structural short figure should have increased in some similar proportion, which I will estimate at 480K.

Management tells shareholders it watches short interest very closely, utilizing a variety of tools including (i) various reports from Provectus' transfer agent, (ii) the SHO list (the Threshold Security List), (iii) FINRA-reported short interest, (iv) DTCC reports and, periodically (v) market intelligence consultants. While they cannot track intra-period period shorting, other than from trade, price and volume behavior, management says it has a very good handle on inter-period shorting when it occurs (i.e., I think they know who's shorting the stock and holding the short when it occurs).

Why has short interest increased since the end of August? Note: The "IPO" supplemental prospectus was made available on September 4.

If you agree with me my assertion of some amount of market maker structural shorting or short interest, an amount equal to or about the amount of short interest at the end of August (i.e., 480K shares), then "active" short of one reason or another should be:

• 164K shares as at 9/14,
• 472K shares as at 9/28, and
• 744K shares as at 10/15.

When asked about short interest as at 9/28 (959K shares), management replied they had a good handle on the reason(s) for this increase -- 472K above the structural short threshold -- but needed 1 (10/15) or 2 (10/31) reporting periods to confirm their expectation(s).

One reporting period has come and gone, and short interest has increased to 744K above the structural short threshold. This represents 270K above the reason(s) management thinks to be the cause(s) of the 9/28 increase.

The "IPO" was terminated on 10/17, with a heavy volume day on 10/18 very likely involving some inter- and intra-period short covering, but we will not have a better perspective until the 10/31 reporting period. There likely will be more, as time moves on and the market understands the company does not need money save to commence pivotal, key and other clinical trial work.

There is a market adage that "dumb money" buys and sells in the morning, and "smart money" buys and sells at the end of the day. Take yesterday, for example. Was yesterday's end-of-day pop short covering? The lack of price action for most or much of the day, combined with the pop at the end, puts into perspective the supposed disgruntled shareholder buyout "rumor." More rumors over the next few days, eh?

I think we will get some additional short covering, but I am not sure how much. If management is right about their thought(s), then true outstanding (or unclosed) shorting is perhaps a few hundred thousand shares (i.e., 270K). If management is incorrect in their initial assertion(s), true shorting probably is much higher (i.e., 744K). Either way, those amounts should be enough to move the share price a few to 10 cents or so.

The 10/31 reporting period will publish on November 9.