# PetVivo Holdings, Inc.: Form 10-K for the period ended Mar 31, 2023 - Company: [PetVivo Holdings, Inc.](/companies/petv.md) (CIK 1512922) - Form: 10-K - Filed: 2023-06-29 - Accepted by EDGAR: Jun 29, 2023, 20:00 ET - Period: 2023-03-31 - Accession: 0001493152-23-022907 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1512922/000149315223022907/form10-k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1512922/000149315223022907/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2023-03-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2022-04-01 to 2023-03-31 | $917.2k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 12 months, 2022-04-01 to 2023-03-31 | $526.8k | us-gaap:CostOfGoodsAndServicesSold | | Gross profit | 12 months, 2022-04-01 to 2023-03-31 | $390.3k | us-gaap:GrossProfit | | Research and development | 12 months, 2022-04-01 to 2023-03-31 | $690.6k | us-gaap:ResearchAndDevelopmentExpense | | Operating income | 12 months, 2022-04-01 to 2023-03-31 | −$8.7m | us-gaap:OperatingIncomeLoss | | Net income | 12 months, 2022-04-01 to 2023-03-31 | −$8.7m | us-gaap:NetIncomeLoss | | Basic EPS | 12 months, 2022-04-01 to 2023-03-31 | −$0.85 | us-gaap:EarningsPerShareBasic | | Operating cash flow | 12 months, 2022-04-01 to 2023-03-31 | −$6.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2022-04-01 to 2023-03-31 | $423.9k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Cash and equivalents | at 2023-03-31 | $475.3k | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2023-03-31 | $1.4m | us-gaap:AssetsCurrent | | Total assets | at 2023-03-31 | $2.4m | us-gaap:Assets | | Current liabilities | at 2023-03-31 | $1.5m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2023-03-31 | $1.7m | us-gaap:Liabilities | | Shareholders' equity | at 2023-03-31 | $725.0k | us-gaap:StockholdersEquity | ## Business As filed, 46,336 characters. ### Overview PetVivo Holdings, Inc. (the “Company,” “PetVivo,” “we” or “us) is an emerging biomedical device company focused on the manufacturing, commercialization, and licensing of innovative medical devices and therapeutics for animals. The Company has a pipeline of products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses, in the second quarter of its fiscal year ended March 31, 2022. In August 2021, we received net proceeds of approximately $9.7 million in a registered public offering (“Public Offering”) of 2.5 million units at a public offering price of $4.50 per unit. Each unit consisted of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $5.625 per share. The shares of common stock and warrants were transferable separately immediately upon issuance. In connection with the Public Offering, the Company’s common stock and warrants were registered under Section 12(b) of the Exchange Act and began trading on The Nasdaq Capital Market, LLC (“Nasdaq”) under the symbols “PETV” and “PETVW,” respectively. The Company was incorporated in March 2009 under Nevada law. The Company operates from its corporate headquarters in Edina, Minnesota. For further information, see Note 1*, Organization and Description*, in the notes to consolidated financial statements in Part II, Item 8. ### Business Description The Company is primarily engaged in the business of commercializing and licensing products in the veterinary market to treat and/or manage afflictions of companion animals such as dogs and horses. Most of our technology was developed for human biomedical applications, and we intend to leverage the investments already expended in their development to commercialize treatments for horses and companion animals in a capital and time-efficient way. Many of the Company’s products are derived from proprietary biomaterials that simulate a body’s cellular tissue by virtue of their reliance upon natural protein and carbohydrate compositions which incorporate such “tissue building blocks” as collagen, elastin, and proteoglycans such as heparin. Since these are naturally-occurring in the body, we believe they have an enhanced biocompatibility with living tissues compared to synthetic biomaterials such as those based upon alpha-hydroxy polymers (e.g PLA, PLGA, and the like), polyacrylamides, and other “natural” biomaterials that may lack the multiple proteins incorporated into our biomaterials. These proprietary protein-based biomaterials are similar to the body’s tissue thus allowing integration and tissue repair in long-term implantation in certain applications. Our initial product, Spryng™ with OsteoCushion™ technology is a veterinary medical device designed to help reinforce and/or augment articular cartilage tissue for the management of lameness and other joint-related afflictions, such as osteoarthritis, in horses and companion animals. Spryng™ with OsteoCushion™ technology is an intra-articular injectable product of biocompatible and insoluble particles that are slippery, wet-permeable, durable, and resilient to enhance the force cushioning function of the synovial fluid and cartilage. The particles mimic natural cartilage in composition, structure, and hydration. Multiple joints can be treated simultaneously. Our particles are comprised of collagen, elastin, and heparin, similar components found in natural cartilage. These particles show an effectiveness to reinforce and/or augment the cartilage, which enhances the functionality of the joint (e.g. provide cushion or shock-absorbing features to the joint and to provide joint lubricity). Osteoarthritis (“OA”), a common inflammatory joint disease in both dogs and horses, is a chronic, progressive, degenerative joint disease that is caused by a loss of synovial fluid and/or the deterioration of joint cartilage. Osteoarthritis affects approximately 14 million dogs and 1 million horses in the $11 billion companion animal veterinary care and product sales market. Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in treating osteoarthritis in dogs, horses, and other pets. As there is no cure for osteoarthritis, current solutions treat symptoms, but do not manage the cause. The current treatment for osteoarthritis in dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (or “NSAIDs”) which are approved to alleviate pain and inflammation but present the potential for side effects relating to gastrointestinal, kidney, and liver damage and do not halt or slow joint degeneration. The Company offers an alternative to traditional treatments that only address the symptoms of the affliction. Spryng™ with OsteoCushion™ technology addresses the affliction, loss of synovial fluid and/or the deterioration of joint cartilage, rather than treating just the symptoms and, to the best of our knowledge, has elicited minimal adverse side effects in dogs and horses. Spryng™ with OsteoCushion™ technology-treated dogs and horses have shown an increase in activity even after they no longer are receiving pain medication or other treatments. Other treatments for osteoarthritis include steroid and/or hyaluronic acid injections, which are used for treating pain, inflammation and/or joint lubrication, but can be slow acting and/or short lasting. We believe Spryng™ with OsteoCushion™ technology is an optimal solution to safely improve joint function in animals for several reasons: - Spryng™ with OsteoCushion™ technology addresses the underlying problems which relate to the deterioration of cartilage causing bones to contact each other and a lack of synovial fluid. Spryng™ with OsteoCushion™ technology provides a biocompatible lubricious cushion to the joint, which establishes a barrier between the bones, thereby protecting the remaining cartilage and bone. - Spryng™ with OsteoCushion™ technology is easily administered with the standard intra-articular injection technique. Multiple joints can be treated simultaneously. - Case studies indicate many dogs and horses have long-lasting multi-month improvement in lameness after having been treated with Spryng™. - After receiving a Spryng™ injection, many canines are able to discontinue the use of NSAID’s, eliminating the risk of negative side effects. - Spryng™ is an effective and economical solution for treating osteoarthritis. A single injection of Spryng™ is approximately $600 to $900 per joint and typically lasts for at least 12 months. Historically, drug sales represent up to 30% of revenues at a typical veterinary practice (Veterinary Practice News). Revenues and margins at veterinary practices are being eroded because online, big-box, and traditional pharmacies have recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace lost prescription revenues with safe and effective products. Spryng™ with OsteoCushion™ technology is a veterinarian-administered medical device that should expand practice revenues and margins. We believe that the increased revenues and margins provided by Spryng™ will accelerate its adoption rate and propel it forward as a standard of care for canine and equine lameness related to or due to synovial joint issues. Spryng™ with OsteoCushion™ technology is classified as a veterinary medical device under the United States Food and Drug Administration (“FDA”) rules and pre-market approval is not required by the FDA. Spryng™ completed a safety and efficacy study in rabbits in 2007. Since that time, more than 2,000 horses and dogs have been treated with Spryng™. We entered into a clinical trial services agreement with Colorado State University on November 5, 2020. We expect this university clinical study to be completed in March 2024. Additionally, the Company successfully completed an equine tolerance study in March 2022 and began two canine clinical studies with Ethos Veterinary Health, the first beginning in May of 2022 with anticipated completion in October 2023, and the second beginning in June of 2023 with an expected completion in October 2024. We anticipate these and other studies that we plan to initiate will be primarily used to expand our distribution outlets since the large international and national distributors generally require a third-party university study and other third-party studies prior to including a product in their catalog of products. We commenced sales of SpryngTM in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of SpryngTM in the United States through our distribution relationship with MWI Veterinary Supply Co. (“Distributor” or “MWI”) and the use of sales reps, clinical studies, and market awareness to educate and inform key opinion leaders on the benefits of SpryngTM. We entered into a Distribution Services Agreement (“Distribution Agreement”) with MWI on June 17, 2022. Pursuant to the Agreement, we appointed MWI to distribute, advertise, promote, market, supply, and sell the Company’s lead product, SpryngTM on an exclusive basis for two (2) years within the United States (the “Territory”), transitioning to a non-exclusive basis thereafter; provided however that the Company shall extend the exclusivity for an additional one (1) year if MWI achieves certain performance targets agreed upon by the parties. The Company can continue to sell SpryngTM within the Territory to established accounts, which include: (a) customers who have purchased SpryngTM from the Company prior to the date of the Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and (d) customers that order via the internet who are not directly solicited by MWI to purchase SpryngTM. All customers must be licensed veterinary practices. We manufacture our products in an ISO 7 certified clean room manufacturing facility in Minneapolis using our patented and scalable self-assembly production process, which minimizes the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. A second ISO cleanroom facility is expected to be operational later this year. We believe that having two manufacturing facilities will help us minimize supply risks, allow for continued scaling of our production capacity, and expand our research and development facilities. We have a pipeline of therapeutic devices for both veterinary and human clinical applications. Some such devices may be regulated by the FDA or other equivalent regulatory agencies, including but not limited to the Center for Veterinary Medicine (“CVM”). We anticipate growing our product pipeline through the acquisition or in-licensing of additional proprietary products from human medical device companies specifically for use in pets. In addition to commercializing our own products in strategic market sectors and in view of the Company’s vast proprietary product pipeline, the Company may establish strategic out-licensing partnerships to provide secondary revenues. ### Product Pipeline Below is a listing of applications of our technology that we plan to commercialize or out-license to strategic partners: ### Dermal Filler Our biomaterials are constructed from purified water, protein, and carbohydrate, tailored to simulate different body tissues that biologically integrate (bio-integration). Our biomaterials can be manufactured and used as a dermal filler for wrinkle treatment by injection. These formed, gel particles fill, integrate, and rejuvenate dermal skin tissue to remove the wrinkle. This product was taken through an FDA clinical trial under the name CosmetaLife®, see the results here: www.clinicaltrials.gov (NCT00414544). ### Cardiovascular Devices Our blood-compatible biomaterial, which allows blood contact and bio-integrative processes to occur without clotting, platelet attachment, or thrombogenesis, is used to repair cardiovascular tissue. VasoGraft®, a blood vessel graft made from VasoCover™ material, is designed to mimic natural blood vessel tissue in almost every respect, including the components used. ### Drug Delivery Unique fabrication techniques allow us to homogeneously distribute the drug in milligram to nanogram amounts, resulting in optimum performance and manufacturing capabilities for a variety of delivery methods, such as coatings, injectables, implantables, or transmucosal delivery. The first planned transmucosal product has been optimized and tested with peptide drugs with better efficacy than oral dosing via swallowing. ### Orthopedic Devices Another of our materials can be used in a variety of shapes for orthopedic and dental applications. The first products, OrthoGelic™ and OrthoMetic™, will be aimed at difficult-to-heal, non-union broken bones, by using particles to fill the empty space. The orthopedic biomaterial, made to mimic the structural components of bone, can allow integration and healing to fill in the break and exclude non-bone tissue infiltration. ### Intellectual Property Our intellectual property (“IP”) portfolio is comprised of patents, patent applications, trademarks, and trade secrets. We have issued ten United States Patents. In addition to the United States patent portfolio, we also have nine patents granted in key markets around the world including Canada, Australia, and countries within the European Union. We believe we have developed a broad and deep patent portfolio around our biomaterials and manufacturing processes in addition to the application of these biomaterials for use as medical devices, medical device coatings, and pharmaceutical delivery devices. The Company secures other technological know-how by trade secret law and also possesses several trademarks that are either registered or protected pursuant to trademark common law. United States Patents: - **10,967,104 –** Encapsulated or Coated Stent Systems - **10,850,006 –** Protein Biomaterials and Bioacervates and Methods of Making and Using Thereof - **10,744,236** - Protein Biomaterial and Biocoacervate Vessel Graft Systems and Methods of Making and Using Thereof - **10,016,534 –** Protein Biomaterial and Biocoacervate Vessel Graft Systems and Methods of Making and Using Thereof - **9,999,705 –** Protein Biomaterials and Bioacervates and Methods of Making and Using Thereof - **9,107,937 –** Wound Treatments with Crosslinked Protein Amorphous Biomaterials - **8,623,393 –** Biomatrix Structural Containment and Fixation Systems and Methods of Use Thereof - **8,529,939 –** Mucoadhesive Drug Delivery Devices and Methods of Making and Using Thereof - **8,465,537 –** Encapsulated or Coated Stent Systems - **8,153,591 –** Protein Biomaterials and Biocoacervates and Methods of Making and Using Thereof We have been granted nine foreign patents in certain jurisdictions. We have seven patent applications pending in the U.S. and certain foreign jurisdictions. To maximize the strength and value of our patent portfolio, many of the claims use the transitional term “comprising”, which is synonymous with “including” This use of transitional language is inclusive or open-ended and does not exclude additional, unrecited elements or method steps. Our patents also include method claims covering many of the applications and uses of the biomaterials as medical devices and drug delivery systems. We believe our intellectual property portfolio strongly protects our proprietary technology, including the composition of raw elements used to produce our formulations, the fabricated biomaterials, and their application in end products, thereby making our material and devices much more attractive to industry partners. We will seek to protect our products and technologies through a combination of patents, regulatory exclusivity, and proprietary know-how. Our goal is to obtain, maintain and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in other countries. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current compounds and any future compounds developed. We also strenuously protect our proprietary information and proprietary technology through a combination of contractual arrangements, trade secrets, and patents, both in the United States and abroad. However, even patent protection may not always afford us complete protection against competitors who seek to circumvent our patents. We depend upon the skills, knowledge, and experience of our scientific and technical personnel, including those of our company, as well as that of our advisors, consultants, and other contractors, none of which is patentable. To help protect our proprietary know-how, which may not be patentable, and inventions for which patents may be difficult to obtain or enforce, we rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we generally require all of our employees, consultants, advisors, and other contractors to enter into confidentiality agreements that prohibit disclosure of confidential information and, where applicable, require disclosure and assignment of ownership to us of the ideas, developments, discoveries, and inventions important to our business. ### Companion Animal Market Over the last several decades, we believe the animal health market and industry has become a strong component in the overall U.S. economy and is more resistant to economic cycles. The veterinary sector is an attractive area to participate in the growth of the broader healthcare industry without reimbursement risk. The American Pet Products Association (APPA) 2021-2022 National Pet Owners Survey indicates that $123.6 billion was spent on pets in the U. S. in 2021. Vet care and product sales constitute about $34.3 billion of the market. The growth in the U.S. companion animal market has been continuing to increase due to the increase in the number of pet-owning households. The APPA 2021-2022 National Pet Owners Survey indicates U.S. pet ownership reached record levels in 2022. Specifically, 70% of all U.S. households owned a pet in 2022. That’s 90.5 million pet-owning households, up from 84.6 million in 2018. In 2022, dogs and cats were the most popular pet species, owned by 69% and 45% of U.S. households, respectively. APPA also reported that there were 69.0 million dogs and 45.3 million cats in the U.S. APPA reported that 3.5% of U.S. households owned horses in 2022. According to the American Horse Council, the total number of horses owned by U.S. households was 7.2 million. ### Osteoarthritis Market Osteoarthritis, the most common inflammatory joint disease in both dogs and horses, is a progressive condition that is caused by a deterioration of joint cartilage. Over time, the joint cartilage deterioration creates joint stiffness from mechanical stress resulting in inflammation, pain, and loss of range of motion, which may be referred to as lameness. Osteoarthritis joint stiffness and lameness worsen with time from gradual cartilage degeneration and an ongoing loss of protective cushion and lubricity (i.e., loss of slippery padding). As there is no cure for osteoarthritis, the various treatment methods are focused on managing the related symptoms of pain and inflammation. Veterinarians recommend several treatments depending on the severity of the disease, including a combination of rest, weight loss, physical rehabilitation, and a regimen of pain and anti-inflammatory drugs (NSAIDs). NSAIDs are used to alleviate the pain and inflammation caused by OA, but long-term NSAID use causes gastric problems. Moreover, NSAIDs do not treat the cartilage degeneration issue to halt or slow progression of the OA condition. The Morris Animal Foundation estimates that OA affects approximately 14 million adult dogs in the U.S. and owners consistently report it as a top concern. ### Horse Osteoarthritis (Lameness) Equine osteoarthritis is the most common cause of lameness in horses. Equine OA is expensive to manage, with estimated annual costs as high as $10,000-15,000 per horse to diagnose, treat, and medicate, researchers found in one study as referenced in the Horse – Equine Monthly. As noted previously, the American Horse Council reported the total number of horses owned by U.S. households was 7.2 million. According to an annual National Equine Health Survey conducted in collaboration with the British Equine Veterinary Association in 2016, 26% of horses suffered from lameness. As referenced in the Horse–Equine Monthly, studies show 60% of all lameness issues are related to OA. Based on the above assumptions we calculate that there are approximately 1.1 million horses suffering from OA. ### Distribution Most U.S. veterinarians buy a majority of their equipment and supplies from a preferred distributor. More than 75% of veterinarians name Covetrus North America/Butler Schein Animal Health, Inc., Patterson Veterinary, MWI, Midwest Veterinary Supply, Inc., or Victor Medical Company as their preferred distributor. Combined, these top-tier distributors sell more than 85%, by revenue, of the products sold to companion animal veterinarians in the U.S. Covetrus, Patterson, and MWI are recognized by manufacturers, distributors, and veterinarians as the pre-eminent national companion animal veterinary supply distributors in the US. There are no other distributors that provide equivalent levels of service to manufacturers and regularly visit veterinarians in as wide a geographic area as Covetrus, Patterson or MWI. Midwest and Victor are large, regional distributors. The above data in this paragraph was sourced from File No. 101 0023 at the U.S. Federal Trade Commission. We commenced sales of SpryngTM in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of SpryngTM in the United States through our distribution relationship with MWI and the use of sales reps, clinical studies, and market awareness to educate and inform key opinion leaders on the benefits of SpryngTM. We entered into a Distribution Agreement with MWI on June 17, 2022. Pursuant to the Distribution Agreement, we appointed MWI to distribute, advertise, promote, market, supply, and sell the Company’s lead product, SpryngTM on an exclusive basis for two (2) years within the Territory, transitioning to a non-exclusive basis thereafter; provided however that the Company shall extend the exclusivity for an additional one (1) year if MWI achieves certain performance targets agreed upon by the parties. The Company can continue to sell SpryngTM within the Territory to established accounts, which include: (a) customers who have purchased SpryngTM from the Company prior to the date of the Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and (d) customers that order via the internet who are not directly solicited by MWI to purchase SpryngTM. All customers must be licensed veterinary practices. ### Orthopedic Joint Treatments A treatment for joint pain, which is made of injected, protein-based, biocompatible particles. In vivo studies indicate that the biocompatible particle device can easily be combined with synovial fluid in a rabbit knee to form a joint cushion, buffering the adjacent bones/cartilage where no damage was caused to the cartilage from replacing the synovial fluid. The particles show an effectiveness to augment and reinforce the tissue, cartilage, ligaments and/or bone and/or enhance the functionality of the joint (e.g. reinforce deteriorated components present in the joint to provide cushion or shock-absorbing features to the joint and to provide joint lubricity). AppTec Laboratories accomplished a gel-particle rabbit study. In short, New Zealand white rabbits (6) were injected in both stifle joints (knees) to fill but not extend the synovial space (~0.5 cc GDP/site). Rabbits were tested every other day for abnormal clinical signs including range of motion and joint observations until sacrifice. Behavioral testing revealed no abnormal scores for range of motion, withdrawal response, or joint observations (all animals were 100% normal). At one week and at four weeks the animals were sacrificed. AppTec pathologists evaluated knee joint histology. The reported cartilage surfaces of the femoral and tibia condyles and the menisci were grossly and histologically 100% normal for all animals and test sites. The test particles were found in all of the injection sites. The test particle did not cause changes in the articular cartilage of the femur or tibia when injected into the stifle joint of rabbits. The test article and control rabbit knees were not different for either 1 or 4-week time points for all histological measurements. In conclusion, the particles do not cause inflammation or damage to the knee joint and will stick to exposed tissues and biologically integrate with those tissues. The particles were not found to stick to articular cartilage in any sample. ### Regenerative Characteristics The particle devices for joint injections have been extensively studied for a broad range of applications including the treatment of wrinkles as dermal filler. Here is an overview of the pre-clinical and clinical studies completed for CosmetaLife, which is the name used for the particle device when it was used as a dermal filler. CosmetaLife is an easy-to-inject, water-protein-based dermal filler that not only fills nasolabial wrinkle depressions but also helps rejuvenate the dermal tissues, counteracting damage that causes wrinkles. The dermal cells are attracted to the CosmetaLife gel-particles, attach to them, and then slowly replace them with natural dermal material (extracellular matrix). The natural biological replacement process of CosmetaLife to collagen is estimated to take 6-12 months. CosmetaLife clinical trial on nasolabial folds supports this estimate. CosmetaLife injections allow the body to create a more natural dermal structure in and around every particle. Enhancing the natural process of dermal tissue construction with CosmetaLife allows for long-term dermal contouring, corrections, and rejuvenation with little to no adverse side effects noted in clinical trials. ### Particle Device Clinical Studies The Company has conducted several biocompatibility animal studies. In the implantation study, no abnormal clinical signs were noted for any of the rabbits. The results of the sensitization study in guinea pigs showed a sensitization response equivalent to the negative controls. A Food and Drug Administration (FDA approved pivotal human clinical trial for an investigational device exemption (IDE) for CosmetaLife began in late 2006. The clinical trial was a randomized, double-blind, parallel assignment, multi-center comparison of the safety and efficacy of CosmetaLife versus Restylane® (Control) for the correction of nasolabial folds. One hundred seventy-one patients were skin tested and 145 were treated at six trial sites. The number of study exits after treatment totaled four subjects. This clinical trial was reported and published at www.clinicaltrials.gov (NCT00414544). The feedback from physician investigators was positive with respect to CosmetaLife injection qualities, cosmetic appearance, and its feel to the touch. During the first three to four months of the study, CosmetaLife showed no decrease in efficacy, as compared to Restylane which showed an 11 percent decrease in efficacy. The FDA/IDE approved human clinical trial for the CosmetaLife product through twelve months was found to be the same as compared to control hyaluronic acid product, Restylane (for each interval the consensus of the blinded subjects tested preferred CosmetaLife or showed no preference at 3, 6, 9 and 12 months). We use existing, scalable processes to reduce the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. We are able to scale the manufacturing process having made batches in up to 2.0-kilogram quantities to near GMP (Good Manufacturing Practices) standards. ### Particles Safety Study Patients injected with CosmetaLife were found to have no or mild inflammatory, irritation, or immunogenic responses. These results suggest the particles are biocompatible because it closely matches the skin structure, composition, and moisture content. The no-to-low immunogenic responses are attributed to the tight cross-linking of the CosmetaLife matrix, which prevents immunogenic progenitor cells from producing antibodies to the matrix. In the clinical trial, the incidence of possible reaction to a skin test was 2.55 percent, with only one subject showing a reaction to a second test or 0.6%, (1 out of 171). We also have a study report by AppTec, Inc., our Contract Research Organization, that CosmetaLife did not produce an antibody response during the clinical trial further supporting our belief that it is safe to use. CosmetaLife is composed of materials that approximately meet the Generally Regarded As Safe (GRAS) requirements of the FDA. CosmetaLife contains materials from certified bovine and porcine tissue sources that do not harbor prior disease or Biovine Spongiform Encephalopathy (“BSE”). Additionally, steps in the manufacturing process have been validated for deactivating all viruses. Extrusion force testing and the clinical trial usage both demonstrate the consistent and easy injection of CosmetaLife. Twenty-five month stability testing shows that CosmetaLife is stable at room temperature conditions. Moreover, CosmetaLife has been shown to be stable at 40 °C (104 °F) conditions for at least 3 months. ### Competition The development and commercialization of new animal health medicines is highly competitive, and we expect considerable competition from major pharmaceutical, biotechnology, and specialty animal health medicines companies. As a result, there are, and likely will continue to be, extensive research and substantial financial resources invested in the discovery and development of new animal health medicines. Our potential competitors include large animal health companies, such as Zoetis, Inc.; Merck Animal Health, the animal health division of Merck & Co., Inc.; Merial, the animal health division of Sanofi S.A.; Elanco, the animal health division of Eli Lilly and Company; Bayer Animal Health, the animal health division of Bayer AG; NAH, the animal health division of Novartis AG; Boehringer Ingelheim Animal Health, the animal health division of Boehringer Ingelheim GmbH; Virbac Group; Ceva Animal Health; Vetoquinol and Dechra Pharmaceuticals PLC. We are also aware of several smaller early stage animal health companies, such as Kindred Bio, Aratana Therapeutics Inc. (recently acquired by Elanco), NextVet, and VetDC that are developing products for use in the pet therapeutics market. ### Regulation –Veterinary and Human Use Our lead product, Spryng™, and other medical devices that we may manufacture for both veterinary and human applications, are or will be subject to regulation by numerous regulatory bodies, including the FDA and comparable international regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of medical devices. Medical devices are generally subject to varying levels of regulatory control depending on whether they are for use in humans or animals. #### Veterinary Use The Federal Food, Drug, and Cosmetic Act (“FDCA”) and FDA regulations establish the system for the regulation of medical devices intended for animal use in the United States. Our lead product, Spryng™, is subject to these regulations, as well as other applicable federal, state, and local laws and regulations. The FDA has regulatory oversight over devices intended for animal use and can take appropriate regulatory action if an animal device is misbranded or adulterated. The FDA does not require submission of a 510(k), PMA, or any other pre-market approvals for the medical devices intended for use with animals. Device manufacturers who exclusively manufacture or distribute veterinary devices are not required to register their establishments or to list veterinary devices. They also are exempt from post-marketing reporting. It is the responsibility of the manufacturer or distributor of these products to assure that these animal devices are safe, effective, and properly labeled. The FDA recommends manufacturers and/or distributors of veterinary medical devices request a review of their product labeling and promotional literature to ensure compliance with the FDCA. This recommendation also applies to devices marketed in another country or imported into the U.S. #### Human Use The FDA establishes a comprehensive system for the regulation of medical devices intended for human use. If we begin marketing and developing medical devices for use in humans, our future products would be subject to these regulations, as well as other federal, state, and local laws and regulations. The FDA is responsible for the overall enforcement of quality, regulatory, and statutory requirements governing the use of medical devices in humans. The FDA classifies medical devices into one of three classes — Class I, Class II, or Class III — depending on their level of risk and the types of controls that are necessary to assure device safety and effectiveness. The class assignment determines the type of premarketing submission or application, if any, that will be required before marketing in the U.S. We expect that our future products for humans would be in Class II or Class III. We would need to obtain specific permission from the FDA to distribute a new device in the United States and we expect that some form of marketing authorization will be necessary for our devices. Marketing authorization is generally sought and obtained in one of two ways. The first process requires that a pre-market notification (510(k) Submission) be made to the FDA to demonstrate that the device is as safe and effective as, or “substantially equivalent” to, a legally-marketed device that is not subject to pre-market approval (“PMA”). A legally-marketed device is a device that (i) was legally marketed prior to May 28, 1976, (ii) has been reclassified from Class III to Class II or I, or (iii) has been found to be substantially equivalent to another legally-marketed device following a 510(k) Submission. The legally-marketed device to which equivalence is drawn is known as the “predicate” device. Applicants must submit descriptive data and, when necessary, performance data to establish that the device is substantially equivalent to a predicate device. In some instances, data from human clinical studies must also be submitted in support of a 510(k) Submission. If so, this data must be collected in a manner that conforms with specific requirements in accordance with federal regulations including the IDE and Human Subjects Protections or “Good Clinical Practice” regulations. After the 510(k) application is submitted, the applicant cannot market the device unless FDA issues “510(k) clearance” deeming the device substantially equivalent. After an applicant has obtained clearance, the changes to existing devices covered by a 510(k) Submission that do not significantly affect safety or effectiveness can generally be made without additional 510(k) Submissions, but evaluation of whether a new 510(k) is needed is a complex regulatory issue, and changes must be evaluated on an ongoing basis to determine whether a proposed change triggers the need for a new 510(k), or even PMA. The 510(k) clearance pathway is not available for all devices: whether it is a suitable path to market depends on several factors, including regulatory classifications, the intended use of the device, and technical and risk-related issues for the device. The second, more rigorous, process requires that an application for PMA be made to the FDA to demonstrate that the device is safe and effective for its intended use as manufactured. This approval process applies to most Class III devices. A PMA submission includes data regarding design, materials, bench and animal testing, and human clinical data for the medical device. Again, clinical trials are subject to extensive FDA regulation. Following completion of clinical trials and submission of a PMA, the FDA will authorize commercial distribution if it determines there is reasonable assurance that the medical device is safe and effective for its intended purpose. This determination is based on the benefit outweighing the risk for the population intended to be treated with the device. This process is much more detailed, time-consuming, and expensive than the 510(k) process. Also, FDA may impose a variety of conditions on the approval of a PMA. Both before and after a device for the U.S. market is commercially released, we would have ongoing responsibilities under FDA regulations. The FDA reviews design and manufacturing practices, labeling and record keeping, and manufacturers’ required reports of adverse experiences and other information to identify potential problems with marketed medical devices. We would also be subject to periodic inspection by the FDA for compliance with the FDA’s quality system regulations, which govern the methods used in, and the facilities and controls used for, the design, manufacture, packaging, and servicing of all finished medical devices intended for human use. In addition, the FDA and other U.S. regulatory bodies (including the Federal Trade Commission, the Office of the Inspector General of the Department of Health and Human Services, the Department of Justice (DOJ), and various state Attorneys General) monitor the manner in which we promote and advertise our products. Although physicians are permitted to use their medical judgment to employ medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting products for such “off-label” uses and can only market our products for cleared or approved uses. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health, order a recall, repair, replacement, or refund of such devices, detain or seize adulterated or misbranded medical devices, or ban such medical devices. The FDA may also impose operating restrictions, enjoin and/or restrain certain conduct resulting in violations of applicable law pertaining to medical devices, including a hold on approving new devices until issues are resolved to its satisfaction, and assess civil or criminal penalties against our officers, employees, or us. The FDA may also recommend prosecution to the DOJ. Conduct giving rise to civil or criminal penalties may also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by our conduct. The delivery of our devices in the U.S. for human use would be subject to regulation by the U.S. Department of Health and Human Services and comparable state agencies responsible for reimbursement and regulation of healthcare items and services. U.S. laws and regulations are imposed primarily in connection with the Medicare and Medicaid programs, as well as the government’s interest in regulating the quality and cost of health care. Federal healthcare laws apply when we or customers submit claims for items or services that are reimbursed under Medicare, Medicaid, or other federally-funded healthcare programs. The principal federal laws include: (1) the False Claims Act which prohibits the submission of false or otherwise improper claims for payment to a federally-funded health care program; (2) the Anti-Kickback Statute which prohibits offers to pay or receive remuneration of any kind for the purpose of inducing or rewarding referrals of items or services reimbursable by a Federal health care program; (3) the Stark law which prohibits physicians from referring Medicare or Medicaid patients to a provider that bills these programs for the provision of certain designated health services if the physician (or a member of the physician’s immediate family) has a financial relationship with that provider; and (4) health care fraud statutes that prohibit false statements and improper claims to any third-party payer. There are often similar state false claims, anti-kickback, and anti-self-referral and insurance laws that apply to state-funded Medicaid and other health care programs and private third-party payers. In addition, the U.S. Foreign Corrupt Practices Act can be used to prosecute companies in the U.S. for arrangements with physicians, or other parties outside the U.S. if the physician or party is a government official of another country and the arrangement violates the law of that country. The laws that are applicable to us are subject to change, and subject to evolving interpretations. If a governmental authority were to conclude that we are not in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and civil penalties including substantial fines and damages, and exclusion from participation as a supplier of product to beneficiaries covered by Medicare or Medicaid. ### International Sales At the present time, we are not selling any products outside the United States. If we were to commence sales internationally, we would set up a marketing and compliance program dedicated to our international sales. The process of obtaining clearance to market products in countries outside the United States is costly and time-consuming. Countries around the world have recently adopted more stringent regulatory requirements, which are expected to add to the delays and uncertainties associated with selling Spryng™ or other new products internationally, as well as the clinical and regulatory costs of supporting these products. In addition, regulations regarding the development, manufacture, and sale of medical devices are subject to future change. We cannot predict what impact, if any, those changes might have on our business. If we begin selling our products internationally, failure to comply with these regulatory requirements could have a material adverse effect on our business, financial condition, and results of operations. ### Research and Development The Company is currently pursuing advancements in the composition methods of manufacture and use for its proprietary biomaterials. It is anticipated that within the next twelve months the Company will pursue additional third-party studies related to the use of Spryng™ for the treatment of osteoarthritis in canine and equine patients. The Company also anticipates that resources will be expended to advance and improve the manufacturing systems for Spryng™ that will increase product volume and overall efficiency. Finally, the Company anticipates that research and testing will be conducted in the next eighteen months involving the existing Spryng™ formulation and other variations to identify and determine the next commercial product(s) that may be administered to the digital cushion of horses for the treatment of navicular disease. ### Employees and Human Capital As of June 29, 2023, we have 25 employees. We also engage outside consultants to assist with research and development, clinical development and regulatory matters, investor relations, operations, and other functions from time to time. The Company believes that its success depends on the ability to attract, develop, and retain key personnel. It also believes that the skills, experience, and industry knowledge of its employees significantly benefit its operations and performance. The Company believes that it offers competitive compensation and other means of attracting and retaining key personnel. None of our employees are represented by a labor union and we believe that our relationships with our employees are good. ### Insurance We currently maintain a “life science” commercial insurance policy with coverage in the amount of $5 million for our products and operations. The policy has been designed for those engaged in the life science business. We may face claims in excess of the limits of such insurance. As well, claims made against us may fall outside of our coverage. The policy is a “claims made” policy. Thus, our coverage must be maintained at the time a claim is made for us to be entitled to seek coverage from the issuer of the policy for such claims. ### Available Information We make available, free of charge and through our Internet website at www.petvivo.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to any such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). Reports filed with the SEC also may be viewed at www.sec.gov. We include our website throughout this report for reference only. The information contained on or connected to our website is not incorporated by reference into this report. ## Risk factors As filed, 36,907 characters. *An investment in our common stock and warrants involves a high degree of risk. You should carefully consider the following described risks together with all other information included in this prospectus before making an investment decision with regard to this offering. If one or more of the following risks occurs, our business, financial condition, and results of operations could be materially harmed, which most likely would result in a decline in the trading price of our common stock and warrants and investors losing part or even all of their investment.* ### Risks Relating to Our Financial Condition ***We have incurred substantial losses to date and could continue to incur such losses.*** We have incurred substantial losses since commencing our current business. For the year ended March 31, 2023, we lost approximately $8.7 million and had an accumulated deficit of approximately $71.8 million. Our revenues were $917,162 and $115,586 in fiscal 2023 and 2022, respectively. In order to achieve and sustain future revenues, we must succeed in our current efforts to commercialize Spryng™ for the treatment of dogs and horses suffering from osteoarthritis. That will require us to produce our products effectively in commercial quantities, establish adequate sales and marketing systems, conduct clinical trials and tests which show the safety and efficacy of Spryng™ in dogs and horses and gain significant support from veterinarians in the use of our products. We expect to continue to incur losses until such time, if ever, as we succeed in significantly increasing our revenues and cash flow beyond what is necessary to fund our ongoing operations and pay our obligations as they become due. We may never generate revenues sufficient to become profitable or to sustain profitability. ***If we are unable to obtain sufficient funding, we may have to reduce materially or even discontinue our business.*** As of March 31, 2023, we have cash or cash equivalents of $475,000. In April 2023, the Company raised approximately $2,094,000 in net proceeds from a registered direct offering after deducting offering expenses of $25,305, and placement fees of $63,456. We anticipate that these proceeds will be adequate to satisfy our operational and capital requirements through July 2023. We will need to seek additional financing beyond this three-month period to continue our operations. We also most likely will require additional financing to develop additional new products or to expand into foreign markets. Accordingly, our ability to commercialize Spryng™ and other products will be dependent on our receipt of the net proceeds from our future financings. Along with establishing effective production, marketing, sales, and distribution of Spryng™ and other products, we believe that our future capital requirements depend upon many factors with some of them beyond our control, including our ability to establish an adequate base of veterinarian clinics using our products, costs in obtaining patents and any required regulatory approvals for future products, costs of any future target animal studies, costs related to new product development, costs of finished product inventory, expenses to attract and retain skilled personnel as needed, costs related to being a listed public company, and the costs of any future acquisitions of existing companies or IP technologies. There is no assurance that future additional capital will be available to us as needed, or if available upon terms acceptable to us. ### Risks Relating to Our Business and Industry ***We have a limited operating history upon which to base an evaluation of our business prospects.*** We were incorporated in March 2009 and have a limited operating history upon which to base an evaluation of our business prospects. We did not begin generating notable revenues from the sale of Spryng™ until the second quarter of fiscal 2023. Our limited operating history makes an evaluation of our business and prospects very difficult. Our prospects must be considered speculative, especially considering the risks, expenses, and difficulties frequently encountered in the establishment of an early-stage company. Our ability to operate our business successfully remains unknown and untested. If we cannot commercialize our products effectively, or are significantly delayed or limited in doing so, our business and operations will be harmed substantially, and we may even need to cease operations. ***We are substantially dependent upon the success of Spryng™ and any failure of Spryng™ to achieve market acceptance would harm us significantly.*** We have one lead product, Spryng™, which is in commercial production. Our future prospects rely heavily on the successful marketing of this product. In addition to establishing effective production, marketing, sales, distribution and training for the use of Spryng™, we believe its successful commercialization will depend on other material factors including our ability to educate and convince veterinarians and pet owners about the benefits, safety and effectiveness of Spryng™, the occurrence and severity of any side effects to pets from use of our products, maintaining regulatory compliance and effective quality control for our products, our ability to maintain and enforce our patents and other intellectual property rights, any increased manufacturing costs from third-party contractors or suppliers, and the availability, cost and effectiveness of treatments offered by competitors. ***Our lead product, Spryng™, will face significant competition in our industry, and our failure to compete effectively may prevent us from achieving any significant market penetration.*** The development and commercialization of animal care products is highly competitive, including significant competition from major pharmaceutical, biotechnology, and specialty animal health medical companies. Our competitors include Zoetis, Inc.; Merck Animal Health, the animal health division of Merck & Co., Inc.; Merial, the animal health division of Sanofi, S.A.; Elanco, the animal health division of Eli Lilly and Company; Bayer Animal Health, the animal health division of Bayer AG; Novartis Animal Health, the animal health division of Novartis AG; Boehringer Ingelheim Animal Health; Virbac Group; Ceva Animal Health; Vetaquinol; and Dechra Pharmaceuticals PLC. There also are several smaller-stage animal health companies that have recently emerged in our industry and are developing therapeutic products that may compete with Spryng™, including Kindred Bio, Aratana Therapeutics, Next Vet, and VetDC. Since we are an early-stage company with limited operations and financing, virtually all our competitors have substantially more financial, technical and personnel resources than us. Most of them also have established brands and substantial experience in the development, production, regulation, and commercialization of animal health care products. Regarding our development of any new products or technology, we also compete with academic institutions, governmental agencies and private organizations that conduct research in the field of animal health medicines. We expect that competition in our industry is based on several factors including primarily product reliability and effectiveness, product pricing, product branding, adequate patent and other IP protection, safety of use, and product availability. Although for the foreseeable future, our efforts and financial resources will continue to focus on successfully commercializing Spryng™, our future business strategy plan includes the identification of additional animal care products we may license, acquire, or develop, and then commercializing such products into a branded product portfolio along with Spryng™. Even if we successfully license, acquire or develop such animal care products from our proprietary technology, or acquire any such new products, we may still fail to commercialize them successfully for various reasons, including competitors offering alternative products which are more effective than ours, our discovery of third-party IP rights already covering the products, harmful side effects caused to animals by the products, inability to produce products in commercial quantities at an acceptable cost, or the products not being accepted by veterinarians and pet owners as being safe or effective. If we fail to successfully obtain and commercialize future new animal care products, our business and prospects may be harmed substantially. ***We will rely on third parties to conduct studies of our current and new products, and if these third parties do not successfully perform their contracted commitments effectively or substantially fail to meet expected study deadlines, we could be delayed from effectively commercializing our future products.*** We have entered into clinical trial services agreements with Colorado State University and Ethos Veterinary Health. In the future, we may engage other educational institutions with a veterinary medical curriculum to conduct studies of Spryng™ and other products to be introduced by us. We expect to have limited control over the timing and resources that such third parties will devote to the studies. Although we must rely on third parties to conduct our studies, we remain responsible for ensuring any of our studies are conducted in compliance with protocols, regulations, and standards set by industry regulatory authorities and commonly referred to as current good clinical practices (“cGCPs”) and good laboratory practices (“GLPs”). These required clinical and laboratory practices include many items regarding the conducting, monitoring, recording, and reporting the results of target animal studies to ensure that the data and results of these studies are objective and scientifically credible and accurate. ***Our success is highly dependent on the clinical advancement of our products and adverse results in clinical trials and other studies could prevent us from effectively commercializing our future products*** There can be no assurance that clinical trials or studies of Spryng™ and our other products will demonstrate the safety and efficacy of such products in a statistically significant manner. Failure to show efficacy or adverse results in clinical trials or studies could significantly harm our business. While some clinical trials and studies of our product candidates may show indications of safety and efficacy, there can be no assurance that these results will be confirmed in subsequent clinical trials or studies or provide a sufficient basis for regulatory approval, if required. In addition, side effects observed in clinical trials or studies, or other side effects that appear in later clinical trials or studies, may adversely affect our or our distributors’ ability to market and commercialize our products. ***Our operations rely on third parties to produce our raw materials to produce our products.*** We rely on independent third parties to produce the raw materials (e.g. collagen, elastin, and heparin) that we use to produce our Spryng™ products. As such, we are dependent upon their services and will not be in a position to control their operations as we might if we directly produced these raw materials. While we believe the raw materials used to manufacture Spryng™ products are readily available and can be obtained from multiple reliable sources on a timely basis, circumstances outside our control may impair our ability to have an adequate supply of raw materials to produce our Spryng™ products. ***If we experience the rapid commercial growth of Spryng™, we may not be able to manage such growth effectively.*** We contemplate rapid growth for our business as we bring our Spryng™ product to new customers and anticipate that this will place significant demands on our management and our operational and financial resources. Our organizational structure will become more complex as we add additional personnel, and we would likely require more financial and staff resources to support and continue our growth. If we are unable to manage our growth effectively, our business, financial condition, and results of operations may be materially harmed. ***Our Distribution Agreement with MWI is important to our business and if we were to lose our Distribution Agreement it would adversely affect our revenues and profitability.*** We entered into a Distribution Agreement with MWI in June 2022. Our Distribution Agreement with MWI is important to our business. We generated 69% of our total revenues from Spryng™ products sold under the Distribution Agreement in the fiscal year ended March 31, 2023. If we were to lose our Distribution Agreement, it would have an adverse effect on our revenues and net income. ***If our current sales and marketing program is insufficient or inadequate to support the current introduction of our Spryng™ product, we may not be able to sell this product in quantities to become commercially successful.*** We commenced sales of Spryng™ in the second quarter of fiscal 2022 and plan to increase our commercialization efforts for Spryng™ in the United States through our direct sales to veterinarians and our distributorship relationship with MWI. There are significant risks involved in our building and managing an effective sales and marketing program, including our ability to manage and support our distribution relationship with MWI, our ability to hire, adequately train, maintain, and motivate qualified sales representatives for direct sales and to support our sales to MWI, to generate sufficient sales leads and other contacts, and establish effective product distribution channels. Any failure or substantial delay in the development of our internal sales and marketing program and distribution capabilities would adversely impact our business and financial condition. ***Our business will depend significantly on the sufficiency and effectiveness of our marketing and product promotional programs and incentives.*** Due to the highly competitive nature of our industry, we must effectively and efficiently promote and market our products through the Internet, television and print advertising, social media, and through trade promotions and other incentives to sustain and improve our competitive position in our market. Moreover, from time to time we may have to change our marketing strategies and spending allocations based on responses from our veterinarian customers and pet owners. If our marketing, advertising, and trade promotions are not successful to create and sustain consistent revenue growth or fail to respond to marketing strategy changes in our industry, our business, financial condition, and results of operations may be adversely affected. ### Any damage to our reputation or our brand may materially harm our business. Developing, maintaining, and expanding our reputation and brand with veterinarians, pet owners, and others will be critical to our success. Our brand may suffer if our marketing plans or product initiatives are unsuccessful. The importance of our brand and demand for our products may decrease if competitors offer products with benefits similar to or as effective as our products and at lower costs to consumers. Although we maintain procedures to ensure the quality, safety and integrity of our products and their production processes, we may be unable to detect or prevent product and/or ingredient quality issues such as contamination or deviations from our established procedures. If any of our products cause injury to animals, we may incur material expenses for product recalls, and may be subject to product liability claims, which could damage our reputation and brand substantially. ***If we fail to attract and retain qualified management and key scientific personnel, we may be unable to successfully commercialize our current products or develop new products effectively.*** Our success will significantly be dependent upon our current management and key scientific technicians, and also on our ability to attract, retain and motivate future management and employees. We are highly dependent upon our current management and technology personnel, and the loss of the services of any of them could delay or prevent the successful commercialization or development of current or future products. Competition to obtain qualified personnel in the animal health field is intense due to the limited number of individuals possessing the skills and experience required by our industry. We may not be able to attract or retain qualified personnel as needed on acceptable terms, or at all, which would harm our business and operations. ***Natural disasters and other events beyond our control could materially adversely affect us.*** Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics (including the ongoing Coronavirus (COVID-19) epidemic) and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers, and could decrease demand for our services. ### Risks Relating to Manufacturing ***We may not be able to manage our manufacturing and supply chain effectively, which would harm our results of operations.*** We must accurately forecast demand for our products in order to have adequate product inventory available to fill customer orders timely. Our forecasts will be based on multiple assumptions that may cause our estimates to be inaccurate, and thus affect our ability to ensure adequate manufacturing capability to satisfy product demand. Any material delay in our ability to obtain timely product inventories from our manufacturing facility and our ingredient suppliers could prevent us from satisfying increased consumer demand for our products, resulting in material harm to our brand and business. In addition, we will need to continuously monitor our inventory and product mix against forecasted demand to avoid having inadequate product inventory or having too much product inventory on hand. If we are unable to manage our supply chain effectively, our operating costs may increase materially. ### Risks Relating to our Intellectual Property ***Failure to protect our intellectual property could harm our competitive position or cause us to incur significant expenses and personnel resources to enforce our rights.*** Our success will depend significantly upon our ability to protect our intellectual property (“IP”) rights, including patents, trademarks, trade secrets, and process know-how, which valuable assets support our brand and the perception of our products. We rely on patent, trademark, trade secret, and other intellectual property laws, as well as non-disclosure and confidentiality agreements to protect our intellectual property. Our non-disclosure and confidentiality agreements may not always effectively prevent disclosure of our proprietary IP rights, and may not provide an adequate remedy in the event of an unauthorized disclosure of such information, which could harm our competitive position. We also may need to engage in costly litigation to enforce or protect our patent or other proprietary IP rights, or to determine the validity and scope of proprietary rights of others. Any such litigation could require us to expend significant financial resources and also divert the efforts and attention of our management and other personnel from our ongoing business operations. If we fail to protect our intellectual property, our business, brand, financial condition, and results of operations may be materially harmed. ***We may be subject to intellectual property infringement claims, which could result in substantial damages and diversion of the efforts and attention of our management.*** We must respect prevailing third-party intellectual property, and the procedures and steps we take to prevent our misappropriation, infringement, or other violation of the intellectual property of others may not be successful. If third parties assert infringement claims against us, our suppliers, or veterinarians using our products and technology, we could be required to expend substantial financial and personnel resources to respond to and litigate or settle any such third-party claims. Although we believe our patents, manufacturing processes and products do not infringe in any material respect on the intellectual property rights of other parties, we could be found to infringe on such proprietary rights of others. Any claims that our products, processes, or technology infringe on third-party rights, regardless of their merit or resolution could be very costly to us and also materially divert the efforts and attention of our management and technical personnel. Any adverse outcome to us from one or more such claims against us could, among other things, require us to pay substantial damages, to cease the sale of our products, to discontinue our use of any infringing processes or technology, to expend substantial resources to develop non-infringing products or technology, or to license technology from the infringed party. If one or more of such adverse outcomes occur, our ability to compete could be affected significantly and our business, financial condition and results of operations could be harmed substantially. ### Risks Relating to Regulation ***We may be unable to obtain required regulatory approvals for future products timely or at all, and the denial or substantial delay of any such approval could delay materially or even prevent our efforts to commercialize new products, which could adversely impact our ability to generate future revenues.*** Based on our determination that our Spryng™ products are a device for the treatment of animals rather than being a pharmaceutical product, we believe we are not required to obtain regulatory approval to produce and market them for their current intended uses. However, we have not received confirmation from any regulatory authority that our determination is correct. The production, marketing, and sale of any future products for the treatment of animals based on our proprietary technology may require us to obtain regulatory approval from the Center for Veterinarian Medicine (“CVM”), a branch of the FDA, and/or the USDA, and also certain state regulatory authorities. Any substantial delay or inability to obtain required regulatory approvals for any new products developed by us could substantially delay or even prevent their commercialization, which would materially adversely impact our business and prospects. Moreover, at such future time that we commence business internationally, our products will need to obtain regulatory approval for labeling, marketing, and sale in foreign countries from authorities such as the European Commission (“EU”) or the European Medicine Agency (“EMA”). Any substantial delay or inability to obtain any necessary foreign regulatory approvals for our products could harm our business and prospects materially. ### Risks Relating to our Information Technology ***A failure of one or more key information technology systems, networks, or processes may harm our ability to conduct our business effectively.*** The effective operation of our business and operations will depend significantly on our information technology and computer systems. We will rely on these systems to effectively manage our sales and marketing, accounting and financial, and legal and compliance functions, new product development efforts, research and development data, communications, supply chain and product distribution, order entry and fulfillment, and other business processes. Any material failure of our information technology systems to perform satisfactorily, or their damage or interruption from circumstances beyond our control such as power outages or natural disasters, could disrupt our business materially and result in transaction errors, processing inefficiencies, and even the loss of sales and customers., causing our business and results of operations to suffer materially. ### Risks Relating to Our Company ***If we fail to comply with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.*** Our common stock and warrants are currently listed for trading on Nasdaq. On February 17, 2023, we received Notice from Nasdaq stating that the Company no longer complies with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing. Pursuant to this letter, we were required to submit a plan of compliance to Nasdaq on or before April 3, 2023, which requirement was met. On May 2, 2023, Nasdaq sent us a letter advising us that it has extended our compliance date until August 16, 2023. If we are unable to satisfy Nasdaq’s continued listing requirements, including, the minimum stockholders’ equity requirement of $2.5 million on or before August 16, 2023, our common stock and publicly traded warrants may be delisted from Nasdaq. Any delisting action would have a material adverse effect on our business. ### Ownership and control of our Company is concentrated in our management. As of June 1, 2023, our officers and directors beneficially own or control approximately 27% of our outstanding shares of common stock. This concentrated ownership and control by our management could adversely affect the status and perception of our common stock and/or warrants. In addition, any material sales of common stock by our management, or even the perception that such sales will occur, could cause a material decline in the trading price of our common stock and/or warrants. Due to this ownership concentration, our management has the ability to influence all matters requiring stockholder approval including the election of all directors, the approval of mergers or acquisitions, and other significant corporate transactions. Any person acquiring our common stock most likely will have no effective voice in the management of our Company. This ownership concentration also could delay or prevent a change of control of the Company, which could deprive our stockholders from receiving a premium for their common shares. ***The market price of our common stock is highly volatile because of several factors, including a limited public float.*** The market price of our common stock has been volatile in the past and the market price of our common stock and our warrants is likely to be highly volatile in the future. You may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility. Other factors that could cause such volatility may include, among other things: - actual or anticipated fluctuations in our operating results; - the absence of securities analysts covering us and distributing research and recommendations about us; - we may have a low trading volume for a number of reasons, including that a large portion of our stock is closely held; - overall stock market fluctuations; - announcements concerning our business or those of our competitors; - actual or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms; - conditions or trends in the industry; - litigation; - changes in market valuations of other similar companies; - future sales of common stock; - departure of key personnel or failure to hire key personnel; and - general market conditions. 19 Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock and/or warrants, regardless of our actual operating performance. ***Our common stock has in the past been a “penny stock” under SEC rules, and if our common stock is deemed to be a “penny stock,” it will be more difficult to resell our securities.*** In the past, our common stock was a “penny stock” under applicable Securities and Exchange Commission (“SEC”) rules (generally defined as non-exchange traded stock with a per-share price below $5.00). While our common stock is currently not considered a “penny stock,” if we do not continue to satisfy the requirements to be exempt from the “penny stock” rules, it will be more difficult to resell our securities. “Penny stock” rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction. Legal remedies available to an investor in “penny stocks” may include the following: - If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or state securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. - If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock or our warrants and may affect your ability to resell our common stock and our warrants. Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments. For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance that our common stock will not be classified as a “penny stock” in the future. ***We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”, which relate to maintaining effective internal control over financial reporting, and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.*** Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers, an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or Chief Financial Officer determines that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected. ***We do not anticipate paying any dividends on our common stock for the foreseeable future.*** We have not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future. We anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and expected future growth. ***The elimination of monetary liability against our directors and executive officers under Nevada law and the existence of indemnification rights held by them granted by our Bylaws could result in substantial expenditures by us.*** Our Articles of Incorporation eliminate the personal liability of our directors and officers to the Company and its stockholders for damages for breach of fiduciary duty to the maximum extent permissible under Nevada law. In addition, our Bylaws provide that we are obligated to indemnify our directors or officers to the fullest extent authorized by Nevada law for costs or damages incurred by them involving legal proceedings brought against them relating to their positions with the Company. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against our directors or officers. ***Our Articles of Incorporation, Bylaws, and Nevada law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.*** Our Articles of Incorporation, Bylaws, and Nevada law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 20,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights, and sinking fund provisions. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management. Provisions of our Articles of Incorporation, Bylaws, and Nevada law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our Articles of Incorporation and Bylaws and Nevada law, as applicable, among other things: - provide the board of directors with the ability to alter the Bylaws without stockholder approval; - advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings; and - provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum. ## Properties As filed, 1,344 characters. We do not own any real estate. We lease approximately 3,600 square feet of office, laboratory, and warehouse space at 5251 Edina Industrial Blvd., Edina, Minnesota. This lease will expire in November 2026. In January 2022, we leased an additional 2,400 square feet of office space near the location above. This lease will expire in March 2027. Refer to Note 9. *Commitments and Contingencies*, in the Notes to Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report, for further information regarding our leases. On January 10, 2023, the Company entered into a new lease agreement for 14,073 square feet of production and warehouse space with a commencement date of April 1, 2023, which is when the control and right of use for this lease asset took place. The initial monthly base rent is $8,420 and has annual increases of 2.5%. The Company is also responsible for its proportional share of common space expenses, property taxes, and building insurance. The lease will terminate on June 30, 2033, and the Company has a renewal option for a period of five years. The Company believes that the current facilities are suitable and adequate to meet the Company’s current needs and that suitable additional space will be available as and when needed on acceptable terms. ## Legal proceedings As filed, 571 characters. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business, the resolution of which we do not anticipate would have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations. Refer to Note 9. *Commitments and Contingencies – Legal Proceedings*, in the Notes to Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report, for further information regarding potential legal proceedings. ## Management's discussion and analysis As filed, 15,826 characters. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “RISK FACTORS.” We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this Annual Report on Form 10-K. We are a smaller reporting company and have incurred substantial losses in connection with our operations. We will need substantial capital to pursue our commercialization plans of our lead product Spryng™,, to finance our clinical trials and to fund working capital and general corporate purposes. The report of independent registered public accounting firm accompanying our March 31, 2023 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring losses from operations, and our working capital is insufficient to fund our operations for the next 12 months. These factors raise substantial doubt about our ability to continue as a going concern. ### RESULTS OF OPERATIONS | | For Fiscal Year Ended March 31, 2023 | 2022 | | --- | ---: | ---: | | Revenues | $917,162 | $115,586 | | Cost of Sales | 526,817 | 201,154 | | Total Operating Expenses | 9,123,797 | 4,970,960 | | Total Other Income | 15,844 | 41,533 | | Net Loss | (8,717,608) | (5,014,995) | | Net loss per share - basic and diluted | $(.85) | $(.57) | ### For The Fiscal Year Ended March 31, 2023 (“fiscal 2023”) Compared to The Year Ended March 31, 2022 (“fiscal 2022”) ***Total Revenues***. Revenues were $917,162 in fiscal 2023 compared to $115,586 for fiscal 2022. Revenues in fiscal 2023 consisted of sales of our Spryng™ products to our Distributor of $636,345 and to veterinary clinics in the amount of $280,817. In the twelve months ended March 31, 2022, our revenues of $115,586 consisted of sales to veterinary clinics. The increase in our revenues in the twelve months ended March 31, 2023 is due to sales to our Distributor pursuant to our Distribution Agreement and increased sales to veterinary clinics. ***Total Cost of Sales***. Cost of sales was $526,817 in fiscal 2023 compared to $201,154 for fiscal 2022. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs. The increase in cost of sales in fiscal 2023 is due to the increased sales to our Distributor pursuant to our Distribution Agreement and increased sales to veterinary clinics. ***Operating Expenses***. Operating expenses increased to $9,123,797 in fiscal 2023 compared to $4,970,960 in fiscal 2022. Operating expenses consisted of general and administrative (“G&A”), sales and marketing, and research and development expenses. The increase is primarily due to increased G&A expenses and sales and marketing expenses related to the sale of our Spryng™ products. General and administrative expenses were $5,022,943 and $3,148,494 in fiscal 2023 and 2022, respectively. General and administrative expenses include compensation and benefits, contracted services, consulting fees, stock compensation, and incremental public company costs. Sales and marketing expenses were $3,410,277 and $1,347,585 in fiscal 2023 and 2022, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the launch of our Spryng™ products. Research and development (“R&D”) expenses were $690,577 and $474,881 in fiscal 2023 and 2022, respectively. The increase was related to clinical studies and efforts to support the launch of Spryng™. ***Operating Loss***. As a result of the foregoing, our operating loss was $8,733,452 and $5,056,528 in fiscal 2023 and 2022, respectively. The increase was related to the costs to support the launch of Spryng™ and the incremental public company costs. ***Other Income.*** Other income was $15,844 in fiscal 2023 as compared to $41,533 in fiscal 2022. Other income in fiscal 2023 consisted of net interest income of $15,844. Other income in fiscal 2022 consisted of the forgiveness of PPP Loan of $31,680 and net interest income of $9,853. ***Net Loss***. Our net loss in fiscal 2023 was $8,717,608 or ($0.85 per share) as compared to a net loss of $5,014,995 or ($0.57) per share in fiscal 2022. The weighted average number of shares outstanding was 10,222,994 compared to 8,760,877 for fiscal 2023 and 2022, respectively. ### LIQUIDITY AND CAPITAL RESOURCES On August 13, 2021, we closed an underwriting public offering of 2,500,000 units, at a price of $4.50 per unit. Net proceeds from the Public Offering were approximately $9,781,000, net of commissions and expenses of the offering. As of March 31, 2023, our current assets were $1,423,980 including $475,314 in cash and cash equivalents. In comparison, our current liabilities as of that date were $1,453,680 including $1,368,595 of accounts payable and accrued expenses. Our working capital deficit as of March 31, 2023 was $29,700. The Company has continued to realize losses from operations. However, as a result of our recent registered direct offering in which we raised net proceeds of approximately $2,094,000 in April 2023, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements through July 2023. We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan. *Net Cash Used in Operating Activities –* We used $6,794,483 of net cash in operating activities in fiscal 2023. This cash used in operating activities was primarily attributable to our net loss of $8,717,608, an increase in inventory of $271,970, an increase in accounts receivable of $84,093, and an increase in prepaid expenses and other current assets of $66,450 partially offset by an increase in accounts payable and accrued expenses of $260,836, stock compensation expense of $1,462,768, and investor relations services paid in stock of $507,600. *Net Cash Used in Investing Activities –* We used $423,934 of net cash in investing activities in fiscal 2023 consisting entirely of the purchase of equipment. *Net Cash Provided by Financing Activities –* During fiscal 2023, we were provided with net cash of $1,586,904 from financing activities consisting of $1,593,303 in stock and warrants sale, which were offset by $6,399 in repayments of note payable. ### Inventory Inventories are stated at cost, subject to the lower of cost or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. We regularly review inventory quantities on hand through an inventory count. At March 31, 2023, the Company’s inventory had a carrying value of $370,283 and is broken down into $13,159 of finished goods, $53,398 of work in process and $303,726 in raw material. At March 31, 2022, the Company’s inventory had a carrying value of $98,313 and was broken down into $11,889 of finished goods, $22,960 of work in process and $63,464 in raw material inventory. ### CAPITAL EXPENDITURE REQUIREMENTS Our material cash requirements are primarily comprised of: (i) marketing and manufacturing costs to support the commercialization of Spryng™, (ii) procurement of raw materials necessary to maintain and scale up the sale of Spryng™, (iii) capital expenditures to complete the buildout for our Edina manufacturing and warehouse facility, (iv) lease payments for our office, warehouse, and manufacturing space, (v) employee compensation and benefits, and (vi) clinical trial costs. The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the number of available cash flows, which could include reducing expenditures for marketing, clinical, and product development activities. As of March 31, 2023, we had future operating lease commitments for building, vehicles, and computer and office equipment totaling approximately $326,545 over the remainder of our leases, of which approximately $86,390 is due over the next 12 months. ### Note Payable and Accrued Interest As of March 31, 2023, we are obligated on notes and accrued interest of $27,351 ### OFF-BALANCE SHEET ARRANGEMENTS As of March 31, 2023, and as of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. ### GOING CONCERN The report of independent registered public accounting firm accompanying our March 31, 2023 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. In August 2021, we raised approximately $9,781,000 from the sale of units in a Public Offering. Our working capital deficit at March 31, 2023 was $29,700. On April 17, 2023, the Company sold 793,585 shares of its common stock in a registered direct offering at a purchase price of $2.75 per share, with the first and second closings on April 17 and 20, 2023, respectively. Net proceeds from the offering were approximately $2,094,000, after deducing offering expenses of $25,305 and fees of $63,456. We believe this working capital is sufficient to fund operations through July 2023. (See Liquidity and Capital Resources above). Management continues to evaluate additional funding alternatives and currently seeks to raise additional funds through the issuance of equity or debt securities, through arrangements with strategic partners or through obtaining credit from financial institutions. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. If we are unable to raise additional capital moving forward, our ability to operate in the normal course and continue to invest in our business operations may be materially and adversely impacted and we may be forced to scale back operations or divest some or all of our assets. As a result of the above, in connection with our assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that our liquidity condition raises substantial doubt about our ability to continue as a going concern through twelve months from the date these consolidated financial statements are available to be issued. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern. ### CRITICAL ACCOUNTING POLICIES We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Our significant accounting policies are described in Note 1 to our consolidated financial statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the consolidated financial statements. ### RECENTLY ISSUED ACCOUNTING STANDARDS The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements and plans to adopt this standard in the first fiscal quarter of 2024. All other newly issued, but not yet effective, accounting pronouncements have been deemed either immaterial or not applicable. ## Controls and procedures As filed, 4,611 characters. We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective. ### Management’s annual report on internal control over financial reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP) and includes those policies and procedures that: - Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; - Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and - Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (revised 2013). This assessment included an evaluation of the design and procedures of our internal control over financial reporting. Based on our assessment, our management concluded that as of March 31, 2023, our internal control over financial reporting was effective. As a smaller reporting company, the Company is not required to include in this Annual Report on Form 10-K a report on the effectiveness of its internal control over financial reporting by the Company’s independent registered public accounting firm. ### Changes in internal control over financial reporting In fiscal 2022, we concluded our internal control over financial reporting was not effective related to: (i) deficiencies in segregation of duties, (ii) deficiencies in staffing of our financial accounting department, and (iii) limited checks and balances. We took steps to remedy these matters in fiscal 2023 and the quarter ended March 31, 2023. We added a full-time controller in March 2022 to increase the size of our accounting staff to address the concern that we do not effectively segregate certain accounting duties and have adequate staffing, which we believe resolved these material weaknesses in our internal control over financial reporting. By adding a full-time controller, we were also able to address the material weakness relating to limited checks and balances in approving purchases, payroll, disbursements, and other finance functions. In addition, we converted to a new accounting system, which will greatly assist our staff in recording accounting transactions in a timely manner, and implementing new procedures designed to improve user access rights, security, and financial reporting. Filed Jun 29, 2023. Source: SEC EDGAR, the filing index for accession 0001493152-23-022907. Last ingested by Listed: Oct 24, 2026, 15:12 ET. No prices; not investment advice.