PetVivo (PETV) - 2025 Q4 - Annual Report

Part I Business PetVivo Holdings, Inc. is an emerging biomedical device company focused on innovative medical devices and therapeutics for animals, particularly companion animals like dogs and horses Overview and Business Description PetVivo is a biomedical device company commercializing and licensing medical products for animals, with a pipeline of 18 products protected by patents and trade secrets - The company's lead product is Spryng with OsteoCushion Technology, an intraarticular injection for managing lameness and osteoarthritis in dogs and horses[18] - Spryng is designed to provide a bio-integrative scaffold in the joint, mimicking natural cartilage to restore proper joint mechanics and improve biomechanics[23] - Osteoarthritis affects an estimated 14 million dogs and 1 million horses in the U.S. Current treatments like NSAIDs manage symptoms but have potential side effects and do not halt joint degeneration, a gap Spryng aims to fill[24][25] Commercialization and Distribution The company began selling Spryng in Q2 of fiscal 2022, initially with MWI and Covetrus, both agreements later terminated, and now partners with Vedco and Clipper - The company commenced sales of Spryng in the second quarter of fiscal 2022[28] - In March 2025, the company mutually terminated its non-exclusive distribution agreement with MWI. In February 2025, it also terminated its agreement with Covetrus North America, LLC[30] - In December 2024, PetVivo entered into new wholesale distribution partnerships with Vedco Inc. and Clipper Distributing, LLC[31] Product Pipeline and Clinical Development PetVivo has a pipeline of 17 additional therapeutic devices for veterinary and human use and is conducting multiple clinical studies to support its products, including a recently licensed Platelet-Rich Plasma (PRP) product - The company has a pipeline of 17 other therapeutic devices for veterinary and human applications, in addition to its commercialized Spryng product[34] - In February 2025, the Company signed an exclusive licensing agreement with VetStem, Inc. to market and sell their Precise PRP (Platelet-Rich Plasma) product for canine and equine use, with revenues anticipated in fiscal year 2026[35] Veterinary Product Pipeline Status | Product | Indication | Species | Commercial Launch | | :--- | :--- | :--- | :--- | | VD-01 | Osteoarthritis (Spryng) | Canine | Q2 2022 | | VD-02 | Osteoarthritis (Spryng) | Equine | Q2 2022 | | VD-03 | Digital Cushion Lameness | Equine & Bovine | Q2 2022 | | VD-06 | Osteoarthritis (Spryng) | Feline | Q1 2024 | Intellectual Property The company's intellectual property portfolio includes six issued U.S. patents, two pending patent applications, four international patents, and six documented trade secrets - The company holds six issued U.S. patents and has two pending applications, along with four patents in Canada and the EU[42] - PetVivo relies on six documented trade secrets covering ingredient compositions, production techniques, and quality control procedures[45] - The company owns two U.S. federally registered trademarks: Spryng® and OsteoCushion®[49] Regulation Spryng® is classified as a veterinary medical device in the U.S., not requiring pre-market FDA approval, but future human-use products will face extensive regulatory scrutiny - In the U.S., the FDA does not require pre-market approval (510(k) or PMA) for devices used in veterinary medicine, such as Spryng®[86] - Future human-use medical devices will be subject to comprehensive FDA regulation, likely requiring either a 510(k) submission to demonstrate substantial equivalence to a predicate device or a more stringent Pre-Market Approval (PMA) application with extensive clinical data[78][79] Risk Factors The company faces significant risks, including substantial financial losses, delisting from Nasdaq, heavy dependence on its single commercial product, and concentrated stock ownership - The company has a history of substantial losses, with a net loss of approximately $8.0 million for the year ended March 31, 2025, and an accumulated deficit of $90.8 million[95] - As of March 31, 2025, the company had only $228 thousand in cash, sufficient for only one month of operations, highlighting a critical need for additional financing[96] - The company's common stock and warrants were delisted from The Nasdaq Capital Market and now trade on the OTCQB market[94] - The business is substantially dependent on the success of its lead product, Spryng®, and faces significant competition from major industry players like Zoetis, Merck, and Elanco[99][100] - As of June 1, 2025, officers and directors beneficially own or control approximately 27% of the company's outstanding common stock, concentrating control[122] Cybersecurity PetVivo has established policies and processes for managing cybersecurity risks, overseen by the Board and managed by the CFO, with no material incidents reported to date - The company has established processes for assessing and managing cybersecurity threats, which are integrated into its overall risk management system[137] - The Board of Directors, assisted by the Audit Committee, oversees cybersecurity risk, with the CFO and a management committee responsible for day-to-day management[145][146] - The company has not experienced any cybersecurity incidents that have been determined to be material[144] Properties The company leases three facilities in Edina, Minnesota, for office, lab, warehouse, and production space, which management deems adequate for current needs - The company leases approximately 3,600 sq. ft. of office, lab, and warehouse space expiring in November 2026[149] - An additional 2,400 sq. ft. of office space is leased, with the lease expiring in March 2027[150] - A new lease for 14,073 sq. ft. of production and warehouse space commenced on April 1, 2023, and will terminate on June 30, 2033[151] Legal Proceedings The company may be involved in ordinary course legal proceedings but does not anticipate any to have a material adverse effect - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition[153] Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock trades on the OTCQB market, has 258 stockholders of record, has never paid cash dividends, and has issued various unregistered securities to raise capital - The Company's common stock is traded on the OTCQB Nasdaq Capital Market under the symbol 'PETV'[156] - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[157] Equity Compensation Plan Information as of March 31, 2025 | Plan category | Number of securities to be issued upon exercise | Weighted average exercise price | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Plans approved by shareholders | 1,140,933 | $2.58 | 822,605 | | Plans not approved by shareholders | 562,817 | $2.00 | — | Management's Discussion and Analysis of Financial Condition and Results of Operation For fiscal year 2025, revenues increased to $1.13 million, operating expenses decreased to $9.1 million, and the net loss improved to $8.4 million, though the auditor expressed going concern doubt, which management believes is mitigated by recent financing Results of Operation (FY 2025 vs. FY 2024) In fiscal 2025, revenues grew by 17% to $1.13 million, total operating expenses fell to $9.1 million, resulting in a net loss of ($8.40 million), an improvement from ($11.0 million) in fiscal 2024 Fiscal Year Financial Comparison (2025 vs. 2024) | Metric | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Revenues | $1,132,533 | $968,706 | | Total Cost of Sales | $137,677 | $101,823 | | Total Operating Expenses | $9,050,575 | $11,488,223 | | Net Loss | ($8,399,166) | ($10,955,295) | | Net Loss Per Share | ($0.41) | ($0.78) | - Revenue increased primarily due to sales to new distributors Vedco and Clipper, and sales of the PrecisePRP product licensed from VetStem[191] - Operating expenses decreased mainly due to lower legal expenses, reduced investor relations consulting fees, termination of an expensive marketing agency relationship, and reduced trade show participation[193][194][195] Liquidity and Capital Resources As of March 31, 2025, the company had a working capital deficit of $320,709 and $87,403 in cash, but a recent $5 million Series B Preferred Offering is expected to provide sufficient cash for at least the next three months - The company entered into a $5 million Series B Preferred Offering subscription agreement on March 26, 2025, receiving $600 thousand by fiscal year-end and the remaining $4.4 million in May and June 2025[199] - Management believes it has sufficient cash to meet operating and capital requirements for at least the next three months following the recent financing, but will need to raise additional capital in the future[200] FY 2025 Cash Flow Summary | Cash Flow Activity | Amount | | :--- | :--- | | Net Cash Used in Operating Activities | ($4.52 million) | | Net Cash Used in Investing Activities | ($1.06 million) | | Net Cash Provided by Financing Activities | $5.73 million | Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were not effective as of March 31, 2025, due to a material weakness related to derivative liabilities and warrant discounts - Management concluded that the company's disclosure controls and procedures were not effective as of the end of the period[217] - A material weakness was identified due to a material audit adjustment for derivative liabilities and warrant discounts with convertible notes[221] - Due to the material weakness, management concluded that its internal control over financial reporting (ICFR) was not effective as of March 31, 2025[221][222] Part III Directors, Executive Officers, and Corporate Governance This section provides biographies for executive officers and the eight-member Board of Directors, which includes a majority of independent directors and has established Audit, Compensation, and Nominating committees, along with a Code of Ethics - The Board of Directors has six independent members, constituting a majority, in compliance with Nasdaq rules[241] - The company has an Audit Committee, Compensation Committee, and Nominating Committee, all composed of independent directors[243] - A Code of Ethics has been adopted that applies to the board, executive officers, and employees[244] Executive Compensation This section details compensation for Named Executive Officers, including CEO John Lai ($493,279) and CFO Garry Lowenthal ($491,170) for fiscal 2025, and notes executive changes including the termination of the COO Summary Compensation Table (Fiscal 2025) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Comp ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | John Lai, CEO and President | 2025 | $166,667 | $25 thousand | $297,700 | $3,912 | $493,279 | | Garry Lowenthal, CFO | 2025 | $200 thousand | $25 thousand | $257,950 | $8,220 | $491,170 | | Randall Meyer, COO | 2025 | $153,750 | — | — | $13,008 | $166,758 | - Garry Lowenthal was appointed CFO on March 8, 2024, with an annual salary of $200 thousand[281] - Randall Meyer's position as Chief Operating Officer was eliminated, and his employment was terminated on January 31, 2025[282] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of July 10, 2025, the company had 24,388,731 shares outstanding, with directors and executive officers owning 14.74% and two external shareholders owning over 5% Beneficial Ownership as of July 10, 2025 | Name of Beneficial Owner | Beneficial Ownership (%) | | :--- | :--- | | John Lai (CEO) | 7.12% | | All Directors and Executive Officers as a Group (9 Persons) | 14.74% | | Alan Sarroff | 23.13% | | Stanley Cruden | 9.93% | Certain Relationships and Related Transactions and Director Independence This section details a $180 thousand settlement with former employee David Masters and a prior escrow agreement with CEO John Lai for share release - The company settled threatened litigation with former employee and director David Masters for a one-time payment of $180 thousand[291][292] - A prior escrow agreement with CEO John Lai resulted in the release of 254,018 shares to him in August 2021 after the company met specific financing and Nasdaq listing conditions[293] Principal Accounting Fees and Services The company's principal accountants were Stephano Slack LLC for FY2025 and Assurance Dimensions for FY2024, with audit fees of $47 thousand and $34,486 respectively, and all services pre-approved by the Audit Committee Audit Fees by Fiscal Year | Fiscal Year | Principal Accountant | Audit Fees | | :--- | :--- | :--- | | 2025 | Stephano Slack LLC | $47,000 | | 2024 | Assurance Dimensions | $34,486 | - The Audit Committee's policy is to pre-approve all audit and permissible non-audit services, and 100% of all services were pre-approved in fiscal 2025 and 2024[300] Part IV Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate documents, employment agreements, and required certifications from executive officers - Lists key corporate documents, including employment agreements for executive officers, the 2020 Equity Compensation Plan, and distribution services agreements[304][306] - Includes required certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act[306] Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm The report includes opinions from two independent auditors, both expressing substantial doubt about the company's ability to continue as a going concern due to recurring negative cash flows, net losses, and a significant accumulated deficit - The auditor for the fiscal year 2025, Stephano Slack LLC, expressed substantial doubt about the Company's ability to continue as a going concern due to negative cash flows from operations[317] - The auditor for the fiscal year 2024, Assurance Dimensions, also expressed substantial doubt about the Company's ability to continue as a going concern due to recurring losses and an accumulated deficit[325] Consolidated Financial Statements The consolidated financial statements show a net loss of ($8.40 million) in FY2025, an improvement from ($11.0 million) in FY2024, with total assets increasing to $9.34 million and total liabilities to $5.12 million Consolidated Balance Sheets (as of March 31) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Assets | | | | Total Current Assets | $5,610 | $1,042 | | Total Assets | $9,339 | $3,115 | | Liabilities & Equity | | | | Total Current Liabilities | $4,317 | $1,412 | | Total Liabilities | $5,120 | $2,429 | | Total Stockholders' Equity | $4,219 | $686 | Consolidated Statements of Operations (for the Year Ended March 31) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $1,133 | $969 | | Gross Profit | $995 | $867 | | Total Operating Expenses | $9,051 | $11,488 | | Operating Loss | ($8,056) | ($10,621) | | Net Loss | ($8,399) | ($10,955) | | Net Loss Per Share | ($0.41) | ($0.78) | Consolidated Statements of Cash Flows (for the Year Ended March 31) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($5,322) | ($7,420) | | Net Cash Used in Investing Activities | ($563) | ($309) | | Net Cash Provided by Financing Activities | $6,026 | $7,341 | | Net increase (decrease) in Cash | $140 | ($388) | | Cash at End of the Year | $228 | $87 | Notes to Consolidated Financial Statements The notes detail revenue concentration, accounting for convertible notes and derivative liabilities, stock-based compensation, lease obligations, going concern uncertainty, and a $44.3 million net operating loss carryforward, with subsequent financing events - For FY2025, revenue from key distributors was: MWI (38%), Vedco (26%), Clipper (17%), and Covetrus (4%)[361][363][365][366] - The company entered into a five-year exclusive licensing agreement with VetStem, Inc. in February 2025 for a total fee of $2 million, paid with cash, stock, and future payments[385] - As of March 31, 2025, the company had total convertible notes payable of $1.77 million. Certain notes contained embedded conversion features that were bifurcated and accounted for as derivative liabilities with a fair value of $448,089[397][399] - The company has a net operating loss carryforward of approximately $44.3 million as of March 31, 2025, but a full valuation allowance has been recorded against the resulting deferred tax asset[454] - Subsequent to year-end, in May and June 2025, the company received the remaining $4.4 million from its Series B Preferred Stock financing[464]