PetVivo (PETV) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company reported a net loss of $1.97 million and decreased assets, raising substantial doubt about its going concern status Condensed Consolidated Balance Sheets Total assets decreased to $5.72 million due to a decline in cash, while stockholders' equity fell to $4.25 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,378,668 | $6,106,827 | | Total Current Assets | $5,069,038 | $6,755,400 | | Total Assets | $5,723,557 | $7,427,332 | | Total Current Liabilities | $1,220,632 | $1,173,486 | | Total Liabilities | $1,471,032 | $1,440,610 | | Total Stockholders' Equity | $4,252,525 | $5,986,722 | Condensed Consolidated Statements of Operations Revenue grew to $58,174 post-product launch, but surging operating expenses drove a net loss of $1.97 million Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenues | $58,174 | $4,145 | | Gross Profit (Loss) | $5,154 | ($906) | | Total Operating Expenses | $1,971,247 | $517,613 | | Operating Loss | ($1,966,093) | ($518,519) | | Net Loss | ($1,965,428) | ($490,629) | | Net Loss Per Share | ($0.20) | ($0.07) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased significantly to $1.70 million, reducing the company's quarter-end cash balance to $4.38 million Cash Flow Summary (Unaudited) | Activity | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($1,701,699) | ($255,861) | | Net Cash Used in Investing Activities | ($24,897) | ($6,063) | | Net Cash (Used in) Provided by Financing Activities | ($1,563) | $381,430 | | Net (Decrease) Increase in Cash | ($1,728,159) | $119,506 | | Cash at End of Period | $4,378,668 | $143,084 | Notes to Consolidated Financial Statements The notes disclose a going concern warning due to a $65.1 million accumulated deficit, details on stock compensation, and a legal dispute - The company is in the business of licensing and commercializing medical devices and biomaterials for animals, with its headquarters in Minneapolis, Minnesota[24] - The company incurred a net loss of $1,965,428 for the quarter and has an accumulated deficit of $65,091,849 as of June 30, 2022, raising substantial doubt about its ability to continue as a going concern[79] - Total stock-based compensation expense for the three months ended June 30, 2022, was $231,231, a significant increase from $55,674 in the same period of 2021[98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue growth from its Spryng™ product, rising expenses, and a going concern risk with a seven-month cash runway - The company is an emerging biomedical device company focused on commercializing innovative medical devices for animals, with its lead product being Spryng™ for managing lameness and osteoarthritis in dogs and horses[99] - On June 17, 2022, the company entered into an exclusive two-year distribution agreement with MWI Veterinary Supply Co. to market and sell Spryng™ in the United States[112] - The company's working capital was $3,848,406 at June 30, 2022, which management believes is sufficient to fund operations for the next seven months but will require additional capital thereafter[126][135] Results of Operations Revenue grew to $58,174 from the Spryng™ launch, but higher sales, marketing, and G&A costs widened the net loss to $1.97 million Quarterly Operational Results Comparison | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Revenues | $58,174 | $4,145 | | Sales and Marketing Expenses | $656,569 | $49,731 | | General and Administrative Expenses | $1,243,022 | $330,945 | | Research and Development Expenses | $71,656 | $136,937 | | Net Loss | ($1,965,428) | ($490,629) | - The increase in net loss was primarily driven by costs to support the launch of Spryng™ and incremental public company costs incurred in the quarter[124] Liquidity and Capital Resources The company holds $4.38 million in cash and $3.85 million in working capital, sufficient for seven months before requiring new financing - The company closed an underwritten public offering on August 13, 2021, with net proceeds of approximately $9,781,000[125] - As of June 30, 2022, the company had $4,378,668 in cash and cash equivalents and working capital of $3,848,406[126] - The company will need to raise additional capital in the future to support its efforts to commercialize Spryng™ and fund ongoing operations[127] Qualitative and Quantitative Disclosures About Market Risk The company is exempt from providing market risk disclosures as it qualifies as a "smaller reporting company" - As a "smaller reporting company," the company is exempt from providing disclosures about market risk[142] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of the end of the reporting period - Management concluded that the company's disclosure controls and procedures were not effective as of the end of the reporting period[144] - No significant changes were made to internal controls over financial reporting during the first quarter of fiscal year 2023[145] PART II. OTHER INFORMATION Legal Proceedings The company is in a legal dispute with its former CTO over an alleged breach of contract, which it believes is without merit - The company has received correspondence from an attorney for Dr. David Masters, former CTO, alleging breach of a settlement and consulting agreement[76] - The company believes the claims are without merit and does not anticipate a material impact on its financial position or results of operations[76][147] Risk Factors This report refers investors to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The report refers to the risk factors discussed in the company's 2022 10-K Report, stating they could materially affect the business[149] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity was sold, and the use of proceeds from the August 2021 public offering remains materially unchanged - There were no unregistered sales of equity securities in the quarter[150] - The company completed a Public Offering on August 13, 2021, raising net proceeds of approximately $9,781,000[152] - A portion of the proceeds was used for debt repayment of $101,400, with no material change in the intended use of remaining proceeds[153][154] Exhibits This section lists filed exhibits, including a new distribution agreement with MWI Veterinary Supply Co and officer certifications - A Distribution Services Agreement dated June 17, 2022, between the company and MWI Veterinary Supply Co, Inc was filed as an exhibit[160] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 were also filed[160]