Earnings Call Transcript - PETV Q1 2026

John F. Dolan, Chief Business Development Officer and General Counsel

Good afternoon, everyone. Thank you for joining us today to discuss our results for our fiscal first quarter 2026, which ended on June 30, 2025. Hosting the call today is our Chief Executive Officer, John Lai; our Chief Financial Officer, Garry Lowenthal; and myself, John Dolan, PetVivo's Chief Business Development Officer and General Counsel. Following our remarks, we'll open the call to your questions. Then before we conclude today's call, I will provide some important cautions regarding the forward-looking statements made during the call. I'd like to remind everyone that today's call is being recorded in order to make it available for replay. The replay instructions can be found in today's press release, which is available in the Investor Relations section of our website. Now turning to our results for the quarter. Our growth momentum continued into the first quarter as we continue to expand the use of our lead animal osteoarthritis veterinary medical device Spryng with OsteoCushion technology. We also advanced the development and use of technologies we've gained from new major partnerships that we formed earlier this year. They have provided innovative technologies that involve diagnostics and medical treatments, which have been transformative for our platform and for the veterinarians and pet owners that we serve. Since the introduction of Spryng in late 2021, this flagship product has now been used by more than 1,000 veterinary clinics across all 50 states. And with the recent addition of our first distributor in Mexico, we can include several new international clinics as well. Mexico is a very attractive market for animal health solutions, especially given that the country's veterinary healthcare market is expected to grow at a compounded annual growth rate of 11% to reach $2.4 billion by 2031. Personal horse ownership is deeply intertwined with Mexican culture and tradition, which makes the Mexican marketplace exceptionally ideal for us. As those sales begin to ramp up in Mexico, our U.S. national distributor network increased their sales by 192% compared to a year ago, reaching $198,000 or 67% of total revenue. The growth in distributor sales, combined with the expansion of our in-house sales force and product offerings drove a 140% increase in total revenue for the quarter, reaching nearly $300,000, making it one of our best quarters yet. This performance also reflects the success of our marketing efforts, which remain strongly focused on the large equine market as we further expand into the larger and faster-growing companion animal market. The growth also reflects the success of the several new highly experienced territory managers we have deployed nationwide over the past year, as well as the addition of a new team of professional sales representatives and technical service veterinarians we've engaged to support them. Together, they have been developing relationships with the nation's leading veterinary clinics, veterinary corporate entities, consolidators, and distributors to support future sales. Now before we get into some more of the other exciting and recent developments and our outlook for the remainder of the year, I would like to turn the call over to our CFO, Garry Lowenthal, to take us through the financial details for the quarter. Garry?

Garry N. Lowenthal, Chief Financial Officer

Thanks, John, and good afternoon. Thank you for joining us today to discuss our first fiscal quarter of 2026 results that ended on June 30. As John Dolan mentioned, we had a great quarter with revenues of $298,000, representing a 141% increase over the same quarter last year. This growth was driven by several factors, including a 192% increase in contributions from our expanded North American distributor network, which reached $198,000 or 67% of total revenue. Our in-house sales force and the addition of product offerings, such as PrecisePRP, an animal health product administered alongside Spryng, also contributed to this revenue increase. Our gross profit was $187,000, or 63% of revenues, reflecting a 69% rise from $111,000 a year ago. The gross margin decreased due to the new PrecisePRP product as we expanded our offerings and adjusted our sales mix. Operating expenses decreased by 9% to $2 million from $2.2 million in the prior year, a reduction achieved through a company-wide cost reduction and restructuring program that began in the last fiscal year and continued into this quarter. This, along with increased sales, led to a 10% decrease in our operating loss compared to the same quarter last year, reducing it to $1.8 million. We also reduced general and administrative expenses by 14% while enhancing operational efficiency. Our net loss for common stockholders was $2.3 million, or a loss of $0.09 per share, which is a 15% improvement from a net loss of $2 million, or $0.11 per share, a year ago. Net cash used in operating activities rose to $1.6 million from $1.5 million in the same period last year, mainly due to one-time lease termination expenses and increased purchases for our new PrecisePRP product line. On the balance sheet, our available cash on June 30 was $3.3 million, up from $220,000 on March 31, 2025. This increase was largely due to net proceeds of $4.7 million raised through financing activities in the last 90 days of the quarter. Total liabilities decreased by $1.2 million or 39% this quarter, falling to $3.1 million from $5.1 million in the same quarter last year. The reduction in liabilities included an $860,000 decrease in lease liabilities due to the termination of our 10-year lease for our second manufacturing facility, as well as the extinguishment of derivative liabilities related to modified convertible notes. We have successfully uplisted to the OTCQX Best Market from the QB. To qualify for the OTCQX, companies must adhere to stringent financial standards, follow best corporate governance practices, and comply with relevant securities laws. We believe this uplisting demonstrates our commitment to transparency, strong governance, and long-term value for our stockholders. Additionally, trading on the OTCQX will improve our visibility in the investment community and offer greater liquidity and accessibility for investors as we pursue our strategic growth initiatives. This concludes our financial summary for the year. John Dolan?

John F. Dolan, Chief Business Development Officer and General Counsel

Thank you, Garry. The growth for the quarter demonstrated the success of our overall strategy for driving greater adoption of Spryng, as well as increasing the awareness and acceptance of PrecisePRP for the treatment of osteoarthritis in animals. PrecisePRP is a proprietary and revolutionary allogeneic platelet plasma product or PRP, designed for horses and dogs that was developed by VetStem. PetVivo has the exclusive rights to commercialize PrecisePRP in the United States. PrecisePRP is a first-in-class, off-the-shelf PRP product for use by veterinarians. It is a leuco-reduced allogeneic cooled freeze-dried PRP that provides a species-specific source of concentrated platelets in plasma for intra-articular administration. Unlike other PRP mechanical kits currently on the market, PrecisePRP does not require a blood draw or a centrifuge, thereby making it a truly off-the-shelf product that is easy and convenient to administer. Perhaps even more important is the uniformity and consistency that PrecisePRP guarantees. Each vial of PrecisePRP contains a consistent dose of 4 billion platelets per vial at a concentration of 500,000 platelets per microliter, and is leuco-reduced with less than 1,500 white blood cells per microliter. We have begun to sell this breakthrough regenerative product under a new exclusive licensing and supply agreement with VetStem that we signed last quarter. The commercialization of Spryng and PrecisePRP has received very favorable reports from veterinarians regarding the ease of use for each of these products and their effectiveness in the management of osteoarthritis in horses and companion animals. We've also continued to focus on expanding awareness of the benefits of both of these innovative products among key decision-makers. In July, we exhibited at the Texas Equine Veterinary Association 2025 Summer CE Symposium, which was held in Marble Falls, Texas. We have also attended other smaller industry events during the quarter. At these events, we demonstrate the research-backed benefits of Spryng to veterinarians, including leading sports medicine and rehabilitation experts in the veterinary industry. We will have the opportunity again at the upcoming 2025 Fetch, Kansas City Veterinary Conference to be held starting August 22 at the Kansas City Convention Center in Kansas City, Missouri. At this conference, we will be exhibiting jointly with VetStem. We will be presenting our Spryng with OsteoCushion technology as an intra-articular injectable veterinary medical device, consisting of sterilized extracellular matrix micro particles. Together with VetStem, we will also be exhibiting the PrecisePRP technology and how it can work alongside Spryng. Such conferences allow us to discuss firsthand the benefits of administering Spryng and/or PrecisePRP to horses and companion animals. We can provide the many anecdotal reports as well as present clinical study results for Spryng that have been obtained by leading independent investigators. From these events, we usually gain a better understanding of our target market and the types of veterinarians we should be more focused upon. This includes vets who specialize in sports medicine, rehabilitation and/or pain management, as well as surgery. Regarding additional studies, we have continued to accumulate data from a new canine elbow pilot study being conducted by Orthobiologic Innovations, a leader in R&D and regenerative and sports medicine. The study is being led by two prominent veterinarians, Sherman and Debra Canapp, and we expect it to be completed before the end of the calendar year. Studies like this canine elbow study, as well as other completed studies related to the management of stifle, cranial cruciate ligament disease and hip osteoarthritis, continue to play a crucial role in our sales and distribution strategy. Veterinarians, as well as large national and international distributors, generally want to review university or independently conducted research before adding a new product like ours to their treatment regimens or distribution catalogs. Our internal sales team and outside distributors have been using our several documented studies in their commercialization effort for Spryng, including related veterinarian training. Also during the quarter, we've been advancing our strategic alliance with Digital Landia, a pioneer in agentic AI solutions. Our collaboration with Digital Landia centers on their pet artificial intelligence technology, a revolutionary technology that deciphers animal behavior and communication through real-time analysis of vocalizations, body language and physiological signals captured via smartphone cameras. Given how it accomplishes this with an amazing 97% accuracy, Digital Landia's agentic AI represents a paradigm shift in how we understand pets and their physical health. By aligning our clinically proven therapies with this AI technology, we believe PetVivo is uniquely positioned at the intersection of AI innovation and veterinary care. We anticipate pet AI to rival mainstream AI applications in terms of adoption rates and thereby create tremendous visibility for our brands, particularly Spryng and PrecisePRP. This AI technology is currently being integrated with our veterinary products to create a first-of-its-kind global pet care ecosystem. Beta testing is underway and advancing well, and we anticipate the official commercial launch to take place in our third quarter of this year. In June, we announced the strategic collaboration with Commonwealth Markets, a syndicated ownership group who was behind the 2023 Kentucky Derby winner Mage and the 2022 Dubai World Champion named Country Grammer. Our partnership with Commonwealth has been centered on the clinical use and promotion of Spryng with OsteoCushion technology and PrecisePRP. As part of our collaboration, Commonwealth has integrated Spryng and PrecisePRP into the care protocols of several of their top-tier thoroughbred stables. In this environment, they are using these technologies as both a preventative measure and/or a management solution to promote joint health and extend performance longevity. It is also being used to support recovery after high-impact training and racing. In addition to this clinical implementation, we are exploring co-branded content, educational initiatives, and industry outreach to elevate awareness around joint wellness and to support the broader adoption of Spryng and PrecisePRP across the equine health community. This unique partnership with Commonwealth, a recognized leader at the highest level of the sport marks a major advancement for both Spryng and PrecisePRP. Their championship-caliber horses and progressive approach to wellness makes them the ideal partner to showcase the benefits of these revolutionary restorative technologies. By combining our clinical experience and commercial capabilities with Commonwealth's equine industry knowledge and vast network, we can provide veterinarians with cutting-edge effective solutions that enhance recovery and long-term soundness in competitive horses. Also, during the first fiscal quarter, we established a strategic partnership with PiezoBioMembrane, a pioneer in biodegradable piezoelectric materials for use in implantable applications. Through our collaboration, we are looking to advance the research and development of revolutionary functional biomaterials that can promote regeneration, restoration, and/or remodeling of damaged or injured tissue and bone in both animals and humans. We are currently nearing completion of Phase I of our three-phase joint research and development project, which is designed to determine if materials from our mutual products can be combined into a single offering to provide therapeutic benefits to animals and humans. Altogether, our latest new technologies have created an exciting future for PetVivo, which we believe will be transformative not only for veterinarians and the patients they serve but potentially for humans as well. The advancement of our innovative technologies, Spryng and PrecisePRP is creating an exciting new future for PetVivo, one that we believe will be transformative not only for us but also for veterinarians and their many precious patients. We expect to see continued strong sales momentum and market penetration for the duration of fiscal 2026 and beyond. In fact, we have never been in a better position to accelerate our growth and expand across high-growth markets. The U.S. animal health market is expected to double to $11.3 billion by 2030, such massive growth is rare for such an already large industry, and it provides us amazing tailwinds. As we continue to grow and expand, we remain committed to advancing the best in pet health solutions and ensuring our products reach more veterinary professionals and pet owners. And this will drive greater value for our stakeholders. Now I'd like to turn the call over to our CEO, John Lai, who will host our question-and-answer session. John?

John Lai, Chief Executive Officer

Thank you, John. Now we would like to open up the call for Q&A and comments. Operator, could you please provide the callers with instructions on how to ask questions.

Operator, Operator

Thank you, John. Now we would like to open up the call for Q&A and comments. Could you please provide the callers with instructions on how to ask questions?

John Lai, Chief Executive Officer

Well, if we don't have any questions, this concludes our call, but I will turn it over to John Dolan who has some information to share.

John F. Dolan, Chief Business Development Officer and General Counsel

Thank you, John. Now before we conclude today's call, I would like to provide the company's safe harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the company's future revenue, future plans, objectives, expectations, and events, assumptions and estimates. Forward-looking statements can be identified by the use of words or phrases usually containing the words believe, estimate, project, intend, expect, should, will or similar expressions. Statements that are not historical facts are based on the company's current expectations, beliefs, assumptions, estimates, forecasts, and projections for its business and the industry and markets related to its business. Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties, and assumptions, which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, various risks as detailed in the company's periodic report filings with the U.S. Securities and Exchange Commission. For more information about risks and uncertainties associated with the company's business, please refer to the management's discussions and analysis of financial conditions or results of operations and Risk Factors sections of the company's SEC filings, including, but not limited to, our annual report on the Form 10-K and quarterly reports for Form 10-Q. Any forward-looking statements made during the conference call speak as of today's date. The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions, or circumstances of which any forward-looking statements are based, except as required by law. I would like to remind everyone that this call will be available for replay starting later this evening or by tomorrow morning. Please refer to today's earnings release for dial and replay instructions available via the company's website at www.petvivo.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.