Q4 2026 PetVivo Holdings Inc Earnings Call
Speaker #1: Good afternoon, everyone. Thank you for joining us today to discuss our results for our fiscal year 2026 ended March 31, 2026. Before we begin, I'd like to direct your attention to the forward-looking statements slide displayed on your screen.
Speaker #1: Throughout today's call, we may discuss the company's future plans, expectations, objectives, anticipated results, and other forward-looking statements. Please take a moment to review the information on this slide.
Speaker #1: I will also provide the company's complete safe harbor statement at the conclusion of today's call. Hosting the call today is our Chief Executive Officer, John Lai, and our Chief Financial Officer, Gary Lowenthal, as well as myself, John Dolan, Padvivo's Chief Business Development Officer and General Counsel.
Speaker #1: 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.
Speaker #1: Before we begin, I'd like to remind everyone that the call is being recorded in order to make it available for replay later today. The replay link will be available in the Investor Relations section at our website, at padvivo.com.
Speaker #1: Now, turning to our results for the fiscal year. Our fiscal 2026 represented another year of rapid transformation, IP and product development, and platform commercialization.
Speaker #1: We continued to focus our corporate resources and unique IP on the greatest opportunities in our marketplace. The many exciting new opportunities we have been pursuing over the past year have required extraordinary attention and capital deployment to ensure their effective deployment and market acceptance.
Speaker #1: We remain razor-focused on our primary objective, which is the pursuit of creating strong, high-margin, reoccurring revenue streams with this to support the highest valuation of our company for the benefit of our stakeholders.
Speaker #1: The strong clinical validation and increasing market adoption of our flagship product, Spring, with Ossio Cushion Technology, has brought us far along in our journey.
Speaker #1: Over the course of the past year, it has set the stage for the launch of new technologies and products for both animal and human.
Speaker #1: That promise to exceed even Spring's original great potential. The year was highlighted by tremendous progress with new strategic alliances and collaborations with new key partners.
Speaker #1: This includes digital Landia, an agentic AI solutions, with whom we have an exclusive 10-year white-label licensing agreement for their breakthrough next-generation agentic pet technology.
Speaker #1: This unique and innovative technology features specialized diagnostic AI agents that are protected by proprietary IP and five patent-pending innovations. Among this technology's multiple capabilities, it addresses many of the critical challenges facing today's veterinarian practices and the industry at large.
Speaker #1: This includes especially skyrocketing client acquisition costs and the challenges in capturing the fast-growing demographic of the Gen Z pet parents. Based on this new partnership, we publicly launched a beta program of our new Padvivo AI veterinary practice platform that is exclusively powered by the agentic pet technology.
Speaker #1: Padvivo AI is a new AI-powered software as a service platform for veterinarians that we believe is the first of its kind on the market.
Speaker #1: As such, we believe it provides us a strong first-mover advantage with the unique benefits and capabilities it provides veterinarian clinics. It employs automated AI-powered engagement that intelligently converts the potential customer leads it generates into paying veterinary customers.
Speaker #1: An initial select group of veterinarian practices which we have engaged under a beta program have been providing us tremendous positive feedback and impressive results.
Speaker #1: Padvivo AI has demonstrated remarkable 50 to 90 percent reduction in veterinary customer acquisition costs, lowering it from the 80 to 400 dollars that is typically spent on each new customer target down to less than 43 dollars.
Speaker #1: This AI-powered solution complements our medical device offerings, which we market to a network of thousands of veterinary clinics across North America and Europe. We see it creating new inroads for the adoption of our Spring medical device and other therapeutic offerings.
Speaker #1: Perhaps most importantly, Padvivo AI also creates a new reoccurring revenue stream with very high 80 to 90 percent gross margins, along with low capex, scalability.
Speaker #1: The final training of its AI engine is currently underway using real-world scenarios in our beta users, with the official commercial launch expected within the next few months.
Speaker #1: Veterinarians can request a free demo of this solution on our newly launched Padvivo AI website and experience firsthand how the power of this technology can transform their practice.
Speaker #1: In support of the launch of Padvivo AI, earlier this year, digital Landia published a comprehensive technical white paper documenting the agentic pet AI framework that underpins this technology.
Speaker #1: The paper validates the technical foundation underlying this new B2B platform and it provides veterinary professionals, investors, and industry stakeholders with a detailed view into the multi-agent artificial intelligence architecture that enables its transformative clinical and economic benefits.
Speaker #1: Based on the conclusions of this report, we expect our Padvivo AI solution to rival the adoption of other mainstream AI applications and, as I mentioned, we also expect it to create new visibility for our brands, particularly Spring, with Ossio Cushion Technology, and several new solutions in our product pipeline.
Speaker #1: For our part, we launched an online video explainer that can walk you through the two-part ecosystem of Padvivo AI. It shows how Padvivo AI intelligently connects pet parents with veterinary practices looking for new clients.
Speaker #1: If you haven't yet watched it, we are very much we very much encourage you to do so, as it will help you understand why we are so excited about this new offering.
Speaker #1: Regarding other key partners, we continue to advance our partnership with Austin, Texas-based veterinary growth partners. BGP is a management services organization which helps veterinary practices improve their efficiency and profitability with management and marketing tools consulting and the introduction of new vendor relationships.
Speaker #1: BGP is committed to actively promoting our Spring with Ossio Cushion Technology to its expansive member network of clinic members across the US. We've been focused on product training of the veterinarians in their network, and we're planning to introduce our new Padvivo AI practice management platform to their clinic membership following this training period for Spring.
Speaker #1: During the last quarter of our fiscal year, we completed the majority of the tasks of stage B of our three-part R&D program with Piezo Biomembrane.
Speaker #1: At the spin-off from the University of been advancing its patented biodegradable piezoelectric materials for implantable and regenerative applications. The revolutionary functional biomaterials are designed to promote regeneration, restoration, and/or remodeling of damaged or injured tissue and bone in animals and humans.
Speaker #1: Stage A determined that a respective products could be combined into a single offering and particularly one that demonstrates enhanced piezoelectric activity with this activity potentially providing therapeutic benefits to animals and humans.
Speaker #1: Stage B determined that combined offering could be produced at scale and it provided preliminary indications of safety for administration in animals. Soon with the commitment of Stage C, we will definitively determine safety and efficacy.
Speaker #1: We plan to also pursue FDA clearance for a number of products incorporating the piezoelectric materials in our biomaterial found in Spring, which mimics the extracellular matrix of animals and humans.
Speaker #1: Of course, this study and product development process will proceed more quickly given last week's announcement of the acquisition of piezo biomembrane. As a newly wholly-owned subsidiary of Padvivo, PBM will continue to focus on the development, commercialization, licensing, and management of next-generation biomaterials regenerative and restorative therapeutic technologies and related intellectual property.
Speaker #1: PBM brings to us an advanced technology platform with a multitude of valuable assets, including proprietary know-how, licensed intellectual property rights, patents and patent applications, trade secrets, as well as biomaterials, formulations, regulatory assets, manufacturing information, development materials, and clinical information.
Speaker #1: All of this supports our development of functional biomaterials, medical devices, and other beneficial therapeutic applications for animal and human health. The PBM acquisition represents a transformative step in our long-term growth strategy that includes the development of multiple medical device and therapeutic products for both animal and human applications.
Speaker #1: By combining PBM's scientific innovations with our existing product development capabilities, commercialization expertise, regulatory expertise, and public company infrastructure, we expect our combination to accelerate the advancement of technologies that will serve as the foundation for numerous future products and strategic opportunities.
Speaker #1: The combined platform also creates new opportunities for securing government and private development grants and research collaborations, as well as R&D tax credit programs with the pursuit of many such opportunities already underway.
Speaker #1: I should note that the completion of the acquisition is subject to customary closing conditions including completion of due diligence, satisfaction of specified closing obligations, and completion of certain financing activities currently underway and advancing smoothly.
Speaker #1: Now, before we get into more of the other exciting recent developments, and our outlook for the rest of the year, I would like to turn the call over to our chief financial officer, Gary Lowenthal, who will take us through the financial details for the quarter and year.
Speaker #1: Gary?
Speaker #2: Thank you, John, and good afternoon, everyone. Thank you for joining us today to discuss the results of our fiscal year-ended, March 31st, 2026. Revenues for the year increased 1% to $1.14 million.
Speaker #2: Revenues for the period consisted of sales of Spring and Precise PRP products. With sales through our distributor network totaling $886,000 and direct sales to veterinary clinics totaling $255,000.
Speaker #2: This compares to the previous year where sales consisted entirely of Spring with distributor sales totaling $956,000 and veterinary clinic sales at $176,000. We should note that in the third quarter of fiscal 2025, we had a special promotion with our distributors and vet clinics for our Spring product, which was not repeated in the third quarter of fiscal 2026.
Speaker #2: We believe this led to proportionally lower sales of Spring during the year. We also believe the lower Spring sales were also due to customers opting to use Precise PRP alone and not in conjunction with Spring, with this despite the benefits of using these together.
Speaker #2: Our renewed efforts to better educate our customers on the benefits of Spring combined with the expansion of our sales force with better sales abilities over recent months.
Speaker #2: As restored greatest sales of Spring. And we expect this improvement to continue over future quarters. Growth profit for fiscal year ending 2026 totals $754,700 or 66.1% of revenues.
Speaker #2: It decreased from $994,900 or 87.8% of revenues in the previous year. The decrease was due to the low gross margin associated with sales of our Precise PRP product line per our license agreement with VetStem.
Speaker #2: However, we were able to maintain fairly good overall high gross margin despite the lower margin associated with Precise PRP and the greater proportion of this lower margin product in our sales mix.
Speaker #2: In addition to lower than expected market acceptance of the price Precise PRP products, the low gross margins associated with the PRP product is one of the primary reasons we decided to renegotiate our VetStem partnership in evaluate the long-term viability of selling PRP under the current licensing arrangement with VetStem.
Speaker #2: We have since entered negotiations for a transition agreement with VetStem, which is currently underway. Meanwhile, we anticipate higher gross margin going forward with our sales force and distributors now focused on generating greater sales of Spring with higher gross margins exceeding 90%.
Speaker #2: Total operating expenses in fiscal 2026 increased 8% to $9.8 million. The increase was primarily due to a loss and impairment for the Precise PRP product line.
Speaker #2: Specifically, the increase in operating expense was primarily due to a 16% increase in sales and marketing expense to $3.1 million. With this related to commercialization of the Precise PRP product line.
Speaker #2: This increase was offset by a 10% reduction of general and administrative costs and the 11% reduction in research and development expense. We also took a $1 million impairment expense for the Precise PRP product the product line due to the lower than expected market acceptance.
Speaker #2: Also due to the increased sales and marketing expense, and the $1 million impairment expense, our operating loss increased 8.5% to $9.1 million. This increase contributed to a net loss for the fiscal year ending 2026 totaling $10.5 million or 38 cents per share as compared to a net loss of 8.4 million or 41 cents per share in the prior year.
Speaker #2: That's negative 41% or 41 cents. The net loss was also due to the increase in other expenses that included unrealized loss on change in derivative liabilities, loss on disposal of assets, amortization of debt discount and interest expense under convertible notes.
Speaker #2: Net cash used in operating activities during the year totals $6.1 million as compared to $5.3 million in fiscal ending 2025. The increase in cash used in operating activities was primarily due to an increase in inventory ramp-up of the Precise PRP product line, as well as an increase in stock-based compensation expense and a $1 million loss on the impairment related to the license agreement with VetStem.
Speaker #2: This was partially offset by a decrease of accounts payable and accrued expenses of $649,000 compared to last year the same period, $271,000. Now, let's turn to our balance sheet.
Speaker #2: Our current assets total $1.8 million at March 31st, 2026. In substantially reduced to $1.4 million from $4.3 million at the end of the prior year, a decrease of 68%.
Speaker #2: We also had an 80% decrease in total liabilities from $5.1 million in the previous fiscal year to only $1.4 million in the year ending March 31st, 2026.
Speaker #2: This significant improvement was due to the conversion of $1.6 million of convertible debt a $798,000 reduction in our long-term lease obligations due to a lease termination a $274,000 reduction of our accounts payables due to settlement payments with trade vendors a $495,000 reduction in accrued expenses and the extinguishment of $448,000 in our derivative liabilities.
Speaker #2: Our accounts payable decreased 33% from $821,100 at the end of the prior year to less than $547,400 at March 31st, 2026. This highlights the strongest balance sheet we've had in many, many years.
Speaker #2: In the final quarter of fiscal 2026, we raised additional capital from the exercise of warrants and the sale of equity securities bringing in net proceeds of $877,500.
Speaker #2: This brought our working capital to $482,600 as of March 31st, 2026. Now, this completes our financial review for the year. John,
Speaker #1: Thank you, Gary. Throughout fiscal 2026, Spring continued to receive favorable reports from veterinarians, especially regarding its ease of use and effectiveness in the management of osteoarthritis in horses and companion animals.
Speaker #1: Our diligent efforts also resulted in health Canada, the federal agency responsible for regulating health products and protecting public health, officially recognizing pet vivos Spring with osteocushion technology as a veterinary medical device, which has initiated our efforts for commercialization in Canada.
Speaker #1: This important regulatory milestone expands our international commercial opportunities and reflects the quality and safety of our innovative technology. We believe this regulatory acknowledgement will lead to making Spring with osteocushion technology available in Canada as a veterinarian administered intra-articular injectable veterinary medical device intended to support joint health and aid in the management of lameness and other joint-related afflictions in animals.
Speaker #1: As what we believe is the first such recognition by an international regulatory body of a veterinary hydrogel medical device, this action represents a major milestone in our global commercialization strategy.
Speaker #1: It is also effectively created a new large international market opportunity for us and is paved the way for the commercial rollout of Spring in Canada, which we are preparing to launch near the end of July.
Speaker #1: Preparation has included developing the proper product labeling for Canada, including a version translated into French for certain Canadian customers, we've also been developing a distributor network in Canada, like we have in the United States, which we believe with little investment.
Speaker #1: We see the opportunity for Canada as quite substantial. The Canadian overall animal healthcare market is reportedly growing at a 6.8% CAGR and is expected to exceed 4.4 billion by 2031.
Speaker #1: Moreover, we believe we have meaningful first-mover advantage in this significant market. To our knowledge, we believe our Spring with osteocushion technology is one of the first hydrogel-based intra-articular injectable veterinary medical devices to receive regulatory recognition from health will speed our market expansion Canada that permits commercialization in Canada.
Speaker #1: We also continue to hear from veterinarians and distributors that there is substantial pent-up demand for an by health Canada for commercialization in the Canadian market.
Speaker #1: We believe we also have a competitive advantage with our clinical studies particularly our canine studies. We believe our clinical data demonstrates the advantages of our Spring technology over competitive products, including a better long-term safety profile.
Speaker #1: Also during the year, we continue to advance our strategic collaboration with Commonwealth Markets, the syndicated ownership group behind the 2023 Kentucky Derby winner. Commonwealth is integrated Spring into the care protocols of its top-tier Thoroughbred stables, where it is being used to promote joint health, extend performance longevity, and support recovery in high-impact training and racing environments.
Speaker #1: This adoption by Commonwealth represents a strong validation of the effectiveness of Spring and we believe will open doors to other significant opportunities. We have continued to expand the awareness of the benefits of Spring among other key decision-makers, including presented at a number of major conferences earlier this year.
Speaker #1: This included the Florida Veterinary Medical Association Ocala Equine Conference, which was held at the World Equestrian Center in Ocala, Florida. The American College of Veterinary Sports Medicine and Rehabilitation Symposium in Lexington, Kentucky, and at the International Veterinary Academy of Pain Management Forum, which was held in Dallas, Texas.
Speaker #1: At these events, we demonstrated the research-backed benefits of Spring to veterinarians including leading surgeons, sports medicine, and rehabilitation experts in the veterinary industry. Such introductions are typically significant drivers of product adoption and new sales.
Speaker #1: We are planning to exhibit at several more conferences later this year, which we plan to announce on our website in the coming months. The conferences also present the opportunity to share results of recent studies like our new canine elbow study as well as other completed and published studies.
Speaker #1: We currently have additional canine and equine studies for tolerance and efficacy of Spring in the initial stages of development. We also continue to advance our pipeline of new products.
Speaker #1: With this greatly expanded and strengthened, with the acquisition of PBM last week. This includes new functional biomaterials as well as tissue and bone mimicking biomaterials that may be used to enhance the delivery of pharmacological agents and/or promote the regeneration, restoration, and/or remodeling of damaged or issued injured tissue and bone in animals and humans.
Speaker #1: Our collagen elastin hydrogel particles, or CEHM, when combined with PBM technology, can effectively create the structure or scaffolding and assist in facilitating biological activity for the body to restore and/or remodel its natural tissue.
Speaker #1: The PBM technology enhanced CEHM integrates with the host tissue and assists in the remodeling and restoring of tissue to a more normal and healthy state.
Speaker #1: This includes animal and human applications, such as using our functional biomaterial particle technology for physical and drug therapy treatments via the respiratory system using nebulizer.
Speaker #1: We are also investigating potential topical treatments for eye afflictions such as ocular ulcers as well as wound treatment where our functional biomaterial technology can help remodel and restore tissue to its original state.
Speaker #1: This could include assisting the healing process by delivering existing FDA-approved antibiotic antiviral and anesthetic substances. Beyond industry events, in May, we were also invited to present at the Market Movers Investor Summit, which was held at the historic Bank of New York.
Speaker #1: The conference provided us an opportunity to elevate awareness of the company in the institutional investor community. The exclusive event featured a fireside chat by Alex Rodriguez, who many of you know to be one of the greater MLB players of all time.
Speaker #1: He is now the founder and chairman and CEO of the Alternative Investment Group AROD Corp. It was a fun and exciting event for sure.
Speaker #1: Now, another exciting event, which I had mentioned earlier, which occurred in the final quarter of the fiscal year was Digital Landia's launch of its public access beta to its B2C agentic pet solution for pet owners.
Speaker #1: The B2C platform is designed to educate and engage pet owners while serving as a gateway to the company's planned B2B veterinary platform, created an integrated ecosystem that facilitates collaboration between pet owners and veterinary professionals.
Speaker #1: The B2B launch will include access to all of its specialized AI agents such as veterinarian, behavioral scientists, nutritionists, geneticists, vaccination specialists, trainers, radiologists, blood and fecal analysis, and urinalysis agents.
Speaker #1: Key for us is that its special B2B AI agents support the broader adoption of our veterinary products and services. The agents assist veterinarians in proactively diagnosing afflictions and diseases such as osteoarthritis and lamus, and suggest treatment options.
Speaker #1: Agentic pets AI-powered diagnosis boasts an amazing 97% accuracy and has such represents a paradigm shift in the medical treatment of companion animals. The solution targets Gen Zers, who represent 20% of US pet households with ownership growing more than 43% annually.
Speaker #1: Digital Landia reported that the public B2C beta launch of agentic pet crushed expectations with the onboarding of 1,000 plus 72 hours. They believe this demonstrated pent-up demand for AI-driven preventive pet healthcare and confirmed that pet owners are seeking proactive solutions that catch health issues before symptoms emerge rather than relying on outdated reactive care models.
Speaker #1: The successful beta program is anticipated to strengthen the value proposition of our pet Vivo AI B2B SaaS-based service offering in for thousands of vet clinics in our nationwide network.
Speaker #1: Finally, and recently, Pet Vivo AI achieved several important technology milestones that strengthened the foundation for future growth. This platform technology has deployed a highly resilient AI infrastructure developed to proprietary AI platform with persistent patient memory and introduced smartphone-based diagnostic capabilities that have the potential to significantly expand access to veterinary care.
Speaker #1: The agentic platform has also launched a data monetization framework creating the opportunity for veterinary professionals to participate in the value generated from anonymized health data, while integrating seamlessly into their existing practice management systems.
Speaker #1: As the regulatory landscape for digital health data continues to evolve, we believe Pet Vivo AI is well positioned to become an important data infrastructure platform serving veterinarians, pharmaceutical companies, and research organizations and we are now focused on scaling the platform and expanding adoption.
Speaker #1: Altogether, our technologies have created an exciting future for Pet Vivo that has transformative to not only veterinarians and the patients they serve, but potentially for humans as well.
Speaker #1: Looking ahead, we expect to see continued sales momentum and market penetration for the duration of fiscal 2027 and beyond.
Speaker #2: Thank you.
Speaker #1: In fact, we have never been in a better position to accelerate our growth and expand across high-growth US and international markets. Industry analysis say that the US animal market alone will double to $11.3 billion by 2030.
Speaker #1: Such massive growth is rare for such an already large industry and it therefore provides an exceptional strong tailwinds. As we continue to grow, and expand over the coming quarters, we will remain committed to advancing the best in pet health solutions and ensuring our products reach more veterinary professionals and pet owners.
Speaker #1: With our success in the efforts driving greater value for our stakeholders. Now, I would like to turn the call over to our CEO, John Lai, to provide some additional insights into these recent developments and answer any questions from our listeners.
Speaker #1: John?
Speaker #3: Thank you, John. One of the first things I'd like to bring up is our new Tier 1 AI IR marketing program. We have put it in place close to 90 days and we have well over 30,000 people or emails that have agreed to get updates as we do some updates to the shareholders.
Speaker #3: So we are building a large base of interested people on what's happening with Pet Vivo, the company, and it's a really neat system where our customer acquisition costs are potential shareholder acquisition costs is extremely low.
Speaker #3: The John Dolan's done a very good job of talking about the Digital Landia Pet Vivo AI and the other components we have coming in.
Speaker #3: So we're looking one of the key catalysts we should be looking at as we move forward to year-end is our animal studies that we're doing with Paul Biezo in the University of Connecticut.
Speaker #3: We anticipate these large animal studies to be completed right around calendar year-end for dogs and horses. That will give us some very powerful marketing data to go into the veterinary market as we position the IDE filings into the human market for our spring and the nanofiber technology.
Speaker #3: I'd just like to basically open it up now to Q&A. Operator, could you give provide the instructions to our call-in people for us to answer questions?
Speaker #4: Hi, John. Yes, so everyone that joined over the phone please dial star 9 to raise your hand. Or if you join over the computer, please go to the toolbox select the React button and click raise your hand.
Speaker #4: Repeating instructions for anyone that joined over the phone. Please dial star 9 to raise your hand. Or if you join over your computer, please go to the toolbox and React with raise hand.
Speaker #3: Well, if we don't have any questions, I'll just give a quick little summary. We anticipate development of additional products. So just keep on our website or get on to the AI IR program where we'll update you as we provide timetables of additional products coming in for both the human side as well as the animal side.
Speaker #3: And we anticipate over the next 12 months there will be a lot of news announcements as well as continue updates. So if there's no more questions, I will turn it over to John Dolan to provide wrap-up and thank you everyone for joining us on the call.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: Forward-looking statements can be identified by the use of words or phrases usually containing the word believe, estimate, project, intend, expect, should, will, or similar expressions.
Speaker #1: 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.
Speaker #1: Any forward-looking statements made during this conference call are not guarantees of future performance and involves certain risks uncertainties and assumptions which are difficult to predict.
Speaker #1: 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 US Securities and Exchange Commission.
Speaker #1: For more information about risk and uncertainties associated with the company's business, please refer to the management's discussion and analysis of financial conditions or results of operations and risk factors section of the company's SEC filings including but not limited to our annual report on the Form 10-K and quarterly reports on the Form 10-Q.
Speaker #1: Any forward-looking statements made during the conference call speaks as of today's date. The company expressly disclaims any obligations or undertakings to update or revise any forward-looking statements made during the conference call to reflect the changes in its expectations with regard there to or any changes in its events, conditions, or circumstances of which any forward-looking statements is based, except as required by law.
Speaker #1: I would like to remind everyone that this call will be made for will be made available for replay starting later this evening or likely tomorrow.
Speaker #1: Please refer to today's earnings release for dial-in replay instructions available via the company's website at www.petvivo.com. Thank you for attending today's presentation. This concludes the conference call.
