# PetVivo Holdings, Inc.: Form 10-Q for the period ended Dec 31, 2023

- Company: [PetVivo Holdings, Inc.](/companies/petv.md) (CIK 1512922)
- Form: 10-Q
- Filed: 2024-02-12
- Accepted by EDGAR: Feb 12, 2024, 21:25 ET
- Period: 2023-12-31
- Accession: 0001493152-24-005908
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1512922/000149315224005908/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1512922/000149315224005908/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-10-01 to 2023-12-31 | $595.9k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-04-01 to 2023-12-31 | $920.4k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-10-01 to 2023-12-31 | $183.1k | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-04-01 to 2023-12-31 | $406.3k | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-10-01 to 2023-12-31 | $412.8k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-04-01 to 2023-12-31 | $514.2k | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-10-01 to 2023-12-31 | $231.1k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-04-01 to 2023-12-31 | $695.2k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-10-01 to 2023-12-31 | −$2.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-04-01 to 2023-12-31 | −$8.0m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-10-01 to 2023-12-31 | −$1.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-04-01 to 2023-12-31 | −$8.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-10-01 to 2023-12-31 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-04-01 to 2023-12-31 | −$0.64 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-10-01 to 2023-12-31 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-04-01 to 2023-12-31 | −$0.64 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-10-01 to 2023-12-31 | 14,271,530 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-04-01 to 2023-12-31 | 12,976,851 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-04-01 to 2023-12-31 | −$5.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-04-01 to 2023-12-31 | $279.8k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-12-31 | $80.1k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-12-31 | $1.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-12-31 | $3.6m | us-gaap:Assets |
| Current liabilities | at 2023-12-31 | $1.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-12-31 | $2.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-12-31 | $895.1k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,529 characters.

### GENERAL

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. A portfolio of twenty-two 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.

The Company was incorporated in March 2009 under Nevada law under a different name. The Company operates as one segment from its corporate headquarters in Edina, Minnesota.

### CURRENT BUSINESS OPERATIONS

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 cats, 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.

The Company’s initial product, Spryng™ with OsteCushion™ Technology, and its pipeline products are derived from proprietary biomaterials that simulate a body’s 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 building-block 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.

Spryng™, is a veterinary medical device designed to integrate with the synovial fluid before adsorbing onto the synovial membrane and subsequently being integrated into the subsynovial tissue. Such action assists in the management of lameness and other joint related afflictions, such as osteoarthritis, in horses and companion animals. Spryng™ 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 promote restoration of proper joint mechanics. 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 and mammalian tissue. These particles show an effectiveness in promoting restoration of proper joint mechanics by incorporating with the joint’s synovial fluid and ultimately adsorbing onto the synovial lining wherein they integrate with the subsynovial tissue.

Osteoarthritis, 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 21 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™ administered 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™ is an optimal solution to safely improve joint function in animals for several reasons:

- Spryng™ addresses the underlying problems which relate to deterioration of cartilage causing bones to contact each other and a lack of synovial fluid. Spryng™ provides biocompatible lubricious, viscosolid microparticles to the joint, which adsorbs onto the synovial membrane and subsequently integrates into the subsynovial tissue to promote restoration of proper joint mechanics.
- Spryng™ 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 syringe of Spryng™ is approximately $600 to $900 and typically lasts for at least 12 months when injected into a joint.

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™ 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 the standard of care for canine and equine lameness related to or due to synovial joint issues.

We commenced sales of Spryng™ in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of Spryng™ 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 Spryng™.

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, Spryng™ 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 Spryng™ within the Territory to established accounts, which include: (a) customers who have purchased Spryng™ 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 Spryng™. All customers must be licensed veterinary practices.

In December 2023, the Company and MWI agreed to change the Distribution Agreement from an exclusive distribution agreement to a non-exclusive distribution agreement, effective as of January 1, 2024. This is consistent with the Company’s strategy to create multiple sales channels for its products. In December 2023, the Company entered into a non-exclusive distribution agreement with Covetrus North America, LLC (“Covetrus Distribution Agreement”), to market, distribute and sell the Company’s products in the United States, including the District of Colombia. The Covetrus Distribution Agreement has an initial term of one year, which will be automatically renewed, unless either party provides notice of non-renewal at least thirty 30 days prior to the expiration of the term.

Spryng™ 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. The Company completed a safety and efficacy study in rabbits in 2007 and tolerance studies in dogs and cats in 2023. Since 2007, more than 5,000 horses, dogs and cats 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 began two canine clinical studies with Ethos Veterinary Health, the first beginning in May of 2022 with 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 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 also 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.

### RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our 2023 10-K Report and the condensed consolidated financial statements and related notes in Item 1, Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2023 10-K Report under the heading “Risk Factors,” as updated and supplemented by risks described in other SEC filings. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

We are a smaller reporting company and have incurred substantial losses in connection with our operations. We will need substantial capital to pursue our current plans to commercialize our initial product, Spryng™.

### RESULTS OF OPERATIONS

|  | For the Three Months Ended December 31, 2023 | 2022 | For the Nine Months Ended December 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $595,891 | $510,109 | $920,440 | $791,563 |
| Cost of Sales | 183,087 | 223,687 | 406,270 | 424,866 |
| Operating Expenses | 2,546,428 | 2,605,240 | 8,485,714 | 6,771,176 |
| Other Income (Expense) | 383,776 | 7,200 | (333,034) | 15,844 |
| Net Loss | $(1,749,848) | $(2,311,618) | $(8,304,578) | $(6,388,635) |
| Net loss per share - basic and diluted | $(0.12) | $(0.23) | $(0.64) | $(0.64) |

### For The Three Months Ended December 31, 2023 Compared to The Three Months Ended December 31, 2022

***Total Revenues***. Revenues were $595,891 and $510,109 for three months ended December 31, 2023 and 2022, respectively. Revenues in the three months ended December 31, 2023 consist of sales of our Spryng™ product to MWI Veterinary Supply Co. (MWI) of $439,922, Covetrus of $106,074 and to veterinary clinics in the amount of $49,265. In the three months ended December 31, 2022, our revenues of $510,109 consisted of sales of our Spryng™ product to MWI of $456,502 and to veterinary clinics in the amount of $53,607 of sales to veterinary clinics.

***Cost of Sales***. Cost of sales were $183,087 and $223,687 for the three months ended December 31, 2023 and 2022, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs.

***Operating Expenses***. Operating expenses were $2,546,428 and $2,605,240 for the three months ended December 31, 2023 and 2022, respectively. Operating expenses consisted of general and administrative, sales and marketing and research and development expenses.

General and administrative expenses were $1,282,787 and $1,309,534 for the three months ended December 31, 2023 and 2022, respectively. General and administrative expenses include compensation and benefits, contracted services, legal and consulting fees, stock issued for services and stock compensation expenses.

Sales and marketing expenses were $1,032,575 and $1,047,549 for the three months ended December 31, 2023 and 2022, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the continuing launch of our Spryng™ product.

Research and development expenses were $231,066 and $248,157 for the three months ended December 31, 2023 and 2022, respectively. The decrease was related to the increase in revenues and lower cost of sales as compared to the prior year.

***Operating Loss***. As a result of the foregoing, our operating loss was $2,133,624 and $2,318,818 for the three months ended December 31, 2023 and 2022, respectively. The decrease was related to the increase in revenues and lower cost of sales as compared to the prior year.

***Other Income.*** Other income was $383,776 for the three months ended December 31, 2023 as compared to other income of $7,200 for the three months ended December 31, 2022. Other income in 2023 consisted primarily of the extinguishment of payables. Other income in 2022 consisted of net interest income.

***Net Loss***. Our net loss for the three months ended December 31, 2023 was $1,749,848 or ($0.12) per share as compared to a net loss of $2,311,618 or ($0.23) per share for the three months ended December 31, 2022. The decrease was related to the write-off of old vendor payables. The weighted average number of shares outstanding was 14,271,530 compared to 10,098,658 for the three months ended December 31, 2023 and 2022, respectively.

### For The Nine Months Ended December 31, 2023 Compared to The Nine Months Ended December 31, 2022

***Revenues***. Revenues were $920,440 for the nine months ended December 31, 2023 compared to revenues of $791,563 in the nine months ended December 31, 2022. Revenues in the nine months ended December 31, 2023 consisted of sales of our Spryng™ product MWI of $595,891, Covetrus of $106,074 and to veterinary clinics in the amount of $196,419. In the nine months ended December 31, 2022, our revenues of $791,563 consisted of sales of our Spryng™ product to MWI of $574,766 and to veterinary clinics in the amount of $191,797 of sales to veterinary clinics.

***Cost of Sales***. Cost of sales was $406,270 and $424,866 for the nine months ended December 31, 2023 and 2022, respectively. Cost of sales includes product costs related to the sale of products and labor and overhead costs.

***Operating Expenses***. Operating expenses were $8,485,714 and $6,771,176 for the nine months ended December 31, 2023 and 2022, respectively. Operating expenses consisted of general and administrative, sales and marketing, and research and development expenses.

General and administrative expenses were $4,737,374 and $3,738,876 for the nine months ended December 31, 2023 and 2022, respectively. G&A expenses include compensation and benefits, contracted services, consulting fees, stock compensation and incremental public company costs. The increase in G&A expenses was related to compensation and benefits, legal and consulting fees, stock issued for services and stock compensation.

Sales and marketing expenses were $3,053,184 and $2,572,103 for the nine months ended December 31, 2023 and 2022, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the launch of our Spryng™ product. The increase in sales and marketing expenses was due to the launch and commercialization of Spryng™.

Research and development expenses were $695,156 and $460,197 for the nine months ended December 31, 2023 and 2022, respectively. The increase in R&D expenses was costs related to clinical studies and compensation.

***Operating Loss***. As a result of the foregoing, our operating loss was $7,971,544 and $6,404,479 for the nine months ended December 31, 2023 and 2022, respectively. The increase in our operating loss, was related to the costs to support the launch of Spryng™, stock issued for services and stock compensation.

***Other (Expense) Income.*** Other expense was $333,034 for the nine months ended December 31, 2023 as compared to other income of $15,844 for the nine months ended December 31, 2022, respectively. Other expense in 2023 consisted of a loss on extinguishment of debt of $534,366, the settlement payment and interest expense partially offset by the extinguishment of payables of 385,874. Other income in 2022 consisted of interest income.

***Net Loss***. Our net loss for the nine months ended December 31, 2023 was $8,304,578 or ($0.64) per share as compared to a net loss of $6,388,635 or ($0.64) per share for the nine months ended December 31, 2022. The weighted average number of shares outstanding was 12,976,851 compared to 10,047,040 for the nine months ended December 31, 2023 and 2022, respectively.

### LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2023, our current assets were $1,492,884, including $80,085 in cash and cash equivalents. In comparison, our current liabilities as of that date were $1,662,120 including $1,336,111 of accounts payable and accrued expenses. Our working capital deficit as of December 31, 2023 was $169,236.

The Company has continued to realize losses from operations. As a result of the proceeds of $1,248,000 from the sale of common stock in February 2024 from a private offering and our accounts receivable balance of $518,686 at December 31, 2023, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements for at least the next two months. 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 $5,895,484 of net cash in operating activities for the nine months ended December 31, 2023. This cash used in operating activities was primarily attributable to our net loss of $8,304,578 and the extinguishment of payables of $385,874 partially offset by stock-based compensation expense of $1,537,437, loss on extinguishment of debt of $534,366, consulting services paid in stock of $339,641 and stock issued for investor relations services of $289,913.

*Net Cash Used in Investing Activities –* We used $279,802 of net cash in investing activities for the nine months ended December 31, 2023, consisting of costs capitalized for manufacturing and computer equipment.

*Net Cash Provided by Financing Activities –* We provided net cash in financing activities of $5,780,057 for the nine months ended December 31, 2023, consisting of $5,115,130 from the sale of common stock and warrants, $550,000 from the sale of convertible debentures and proceeds from a note payable of $120,000 partially offset by $5,073 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 December 31, 2023, the Company’s inventory had a carrying value of $467,467 which consisted of $102,177 of finished goods, $20,289 of work in process, and $345,001 in raw materials.

At March 31, 2023, the Company’s inventory had a carrying value of $370,283 which consisted of $13,159 of finished goods, $53,398 of work in process, and $303,726 in raw materials.

### MATERIAL COMMITMENTS

### Notes Payable

As of December 31, 2023, we are obligated to pay notes and accrued interest in the amount of $144,776.

### OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2023, and as of the date of this Quarterly 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. Our working capital deficit at December 31, 2023 was $169,236.

We have continued to realize losses from operations. 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.

### CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance with generally accepted accounting standards in the United States of America. Our significant accounting policies are described in Note 1 to our consolidated financial statements attached hereto.

### 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.

All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.

## Controls and procedures

As filed, 1,197 characters.

### DISCLOSURE CONTROLS AND PROCEDURES

### Evaluation of disclosure controls and procedures.

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.

### Changes in internal control over financial reporting.

There were no significant changes in our internal control over financial reporting in the third quarter of our fiscal year ending March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,992 characters.

*The following information updates, and should be read in conjunction with, the risk factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2023 ( “10-K”) which we filed with the Securities and Exchange Commission on March 17, 2023. Any of the risk factors contained in this Quarterly Report on Form 10-Q and the 10-K could materially affect our business, financial condition or future results, and such risk factors may not be the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. We do not undertake to update any of the “forward-looking” statements or to announce the results of any revisions to these “forward-looking” statements except as required by*

***The Company’s failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of its securities.***

Our common stock and warrants are currently listed for trading on Nasdaq. On November 17, 2023, the Company received a letter from Nasdaq stating that the Company no longer meets the minimum $2.5 million stockholders’ equity requirement as of September 30, 2023, and that the continued listing of its securities is no longer warranted. Pursuant to Nasdaq Rules, the Company filed an appeal of this decision and the hearing date has been set for February 13, 2024. There can be no assurances that the Company will successfully appeal the delisting determination and receive an extension of time to demonstrate compliance with the Nasdaq stockholder equity rules. If the Company’s securities are delisted from Nasdaq, it would likely have a negative effect on the price of the Company’s common stock and may impair a stockholder’s ability to sell or purchase shares of our common stock. In addition, delisting could impair our ability to raise additional capital.

Filed Feb 12, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-005908. Last ingested by Listed: Oct 24, 2026, 15:12 ET. No prices; not investment advice.