PetVivo (US:PETV)2023-11-14 20:15PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements show cash decreased to $55 thousand, total assets rose to $4.1 million, and net losses widened to $3.7 million for Q3 and $6.6 million for the six-month period Consolidated Balance Sheets As of September 30, 2023, total assets increased to $4.06 million, total liabilities rose to $3.07 million, and stockholders' equity reached $989 thousand Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | September 30, 2023 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | 55,254 | 475,314 | | Total Current Assets | 2,015,826 | 1,423,980 | | Total Assets | 4,061,737 | 2,438,952 | | Total Current Liabilities | 1,915,309 | 1,453,680 | | Total Liabilities | 3,073,058 | 1,713,927 | | Total Stockholders' Equity | 988,679 | 725,025 | Consolidated Statements of Operations Revenues for Q3 2023 were $207 thousand with a net loss of $3.66 million, while six-month revenues were $325 thousand with a $6.55 million net loss Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | Six Months Ended Sep 30, 2023 ($) | Six Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenues | 207,366 | 223,280 | 324,549 | 281,454 | | Gross Profit | 66,453 | 75,121 | 101,367 | 80,275 | | Operating Loss | (2,944,343) | (2,119,568) | (5,837,920) | (4,085,661) | | Net Loss | (3,661,153) | (2,111,589) | (6,554,730) | (4,077,017) | | Net Loss Per Share | (0.28) | (0.21) | (0.53) | (0.41) | Consolidated Statements of Cash Flows Net cash used in operating activities was $4.6 million for the six months ended September 30, 2023, offset by $4.28 million from financing activities, resulting in a $420 thousand cash decrease Cash Flow Summary for the Six Months Ended September 30 (Unaudited) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | (4,604,962) | (3,749,581) | | Net Cash Used in Investing Activities | (93,618) | (83,566) | | Net Cash Provided by Financing Activities | 4,278,520 | 63,413 | | Net Decrease in Cash | (420,060) | (3,769,734) | | Cash at End of Period | 55,254 | 2,337,093 | Notes to Financial Statements Notes detail accounting policies, Spryng™ product commercialization, revenue concentration, substantial doubt about going concern, equity issuances, and a legal settlement - The company's lead product is Spryng™ with OsteoCushion™ Technology, an intraarticular injection for managing lameness in dogs and horses, which began commercialization in September 202123 - Revenue from the distribution agreement with MWI Veterinary Supply Co. accounted for 69% of total revenues for the three months ended September 30, 202344 - The company settled a legal dispute with former employee David Masters for $180 thousand in September 2023, which was recorded as a settlement expense84 - Due to recurring net losses ($6.6 million for the six months ended Sep 30, 2023) and negative operating cash flow ($4.6 million), there is substantial doubt about the Company's ability to continue as a going concern86 - In July 2023, the company issued $550 thousand in convertible debentures, which were subsequently converted into 385,000 shares of common stock and 385,000 warrants in August 2023, resulting in a loss on extinguishment of debt of $534 thousand959697 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Spryng™ commercialization, mixed revenue, increased operating expenses, and critical liquidity concerns, emphasizing the need for additional capital and the 'going concern' issue - The company is focused on the commercialization of its lead product, Spryng™, an injectable medical device for managing lameness and osteoarthritis in dogs and horses113 - The company is conducting clinical studies with Colorado State University and Ethos Veterinary Health to support the distribution and adoption of Spryng™, with expected completion dates in 2024123 - The company has a distribution agreement with MWI Veterinary Supply Co. which is a key part of its commercialization strategy for Spryng™ in the United States121122 - The company's financial statements include a 'going concern' paragraph, indicating substantial doubt about its ability to continue operations without raising additional capital155156 Results of Operations Revenues showed mixed results, decreasing in Q3 but increasing over six months, while net losses significantly widened due to increased operating expenses and one-time charges Comparison of Results for the Three Months Ended September 30 | Metric | 2023 ($) | 2022 ($) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 207,366 | 223,280 | -7.1% | | Operating Expenses | 3,010,796 | 2,194,689 | +37.2% | | Operating Loss | (2,944,343) | (2,119,568) | +38.9% | | Net Loss | (3,661,153) | (2,111,589) | +73.4% | Comparison of Results for the Six Months Ended September 30 | Metric | 2023 ($) | 2022 ($) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 324,549 | 281,454 | +15.3% | | Operating Expenses | 5,939,287 | 4,165,936 | +42.6% | | Operating Loss | (5,837,920) | (4,085,661) | +42.9% | | Net Loss | (6,554,730) | (4,077,017) | +60.8% | - The increase in operating expenses was primarily due to higher costs for sales and marketing, general and administrative functions (including compensation, legal, and consulting fees), and R&D related to clinical studies for the Spryng™ product launch132133134 - Other expense of $717 thousand in Q3 2023 was driven by a $534 thousand loss on extinguishment of debt and a $180 thousand legal settlement payment13684 Liquidity and Capital Resources The company faces precarious liquidity with $55 thousand cash and $101 thousand working capital, requiring significant additional capital to sustain operations Liquidity Position as of September 30, 2023 | Metric | Amount ($) | | :--- | :--- | | Cash and cash equivalents | 55,254 | | Current Assets | 2,015,826 | | Current Liabilities | 1,915,309 | | Working Capital | 100,517 | - The company used $4.6 million in cash for operating activities during the six months ended September 30, 2023, primarily due to its net loss148 - Management believes existing cash, supplemented by $1.07 million raised post-quarter end, will only fund operations for the next two months, necessitating further capital raises147 Qualitative and Quantitative Disclosures About Market Risk This disclosure is not required for the company as a smaller reporting entity - As a smaller reporting company, PetVivo Holdings, Inc. is not required to provide this disclosure161 Controls and Procedures Disclosure controls and procedures were deemed effective by management, with no significant changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023162 - No significant changes were made to the internal control over financial reporting during the second quarter of fiscal year 2024163 PART II. OTHER INFORMATION Legal Proceedings A legal dispute with a former employee regarding compensation claims was resolved through a mediated settlement for $180 thousand - A dispute with former employee David Masters over claims for over $2 million in compensation was resolved via a mediated settlement83 - In September 2023, the company executed the final agreement and recorded a settlement expense of $180 thousand, which was paid in October 202384 Risk Factors The company faces a significant risk of Nasdaq delisting due to failing to meet the $2.5 million minimum stockholders' equity requirement - The company is at risk of being delisted from the Nasdaq Capital Market for failing to meet the minimum stockholders' equity requirement of $2.5 million167 - As of September 30, 2023, the company's stockholders' equity was below the required threshold, and it may receive a delisting notice from Nasdaq167 Unregistered Sales of Equity Securities and Use of Proceeds The company issued various unregistered equity securities during the quarter, including common stock to consultants, the CEO, and service providers, and shares from cashless warrant exercises - Issued an aggregate of 49,998 shares of restricted common stock to a consultant for services rendered in July, August, and September 2023168 - Issued 20,200 shares of restricted common stock to its CEO in lieu of cash compensation for July and August 2023169 - Issued 299,500 shares to various service providers for consulting services valued at $641 thousand171 - Issued a total of 34,678 shares of common stock pursuant to cashless exercises of warrants171172 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None174 Mine Safety Disclosure This section is not required for the company - Not required175 Other information The company reported no other information for this period - None176 Exhibits This section lists exhibits filed with the quarterly report, including an ATM Sales Agreement, a Confidential Settlement and Mutual Release Agreement, and various certifications