10q10k10q10k.net

What changed in INSPIRE VETERINARY PARTNERS, INC.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of INSPIRE VETERINARY PARTNERS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+313 added−274 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-08)

Top changes in INSPIRE VETERINARY PARTNERS, INC.'s 2024 10-K

313 paragraphs added · 274 removed · 169 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

33 edited+42 added−59 removed40 unchanged
Biggest changeAs partial consideration for the issuance of the shares pursuant to the General Release Agreement, each Releasor agreed to release Inspire from all potential, pending, or alleged claims, issues or complaints, whether asserted or which could be asserted by the Releasors against the Company, including any such claims, issues or complaints arising from or in connection with Inspire Veterinary’s previous acquisition from the Releasors of their ownership interest in Kauai Veterinary Clinic, Inc., located in Lihue, Hawaii, and associated real estate. — The Tumim Transaction On November 30, 2023, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Tumim Stone Capital LLC (“Tumim”), pursuant to which Tumim committed to purchase, subject to certain conditions and limitations, up to $30.0 million of shares of Class A Common Stock, at our direction from time to time, subject to the satisfaction of the terms and conditions in the Purchase Agreement.
Biggest changeAs partial consideration for the issuance of the shares pursuant to the General Release Agreement, each Releasor agreed to release Inspire from all potential, pending, or alleged claims, issues or complaints, whether asserted or which could be asserted by the Releasors against the Company, including any such claims, issues or complaints arising from or in connection with Inspire Veterinary’s previous acquisition from the Releasors of their ownership interest in Kauai Veterinary Clinic, Inc., located in Lihue, Hawaii, and associated real estate.
If the Notes is not repaid by the Maturity Date the default provisions are as follow: (i) The Face Value (as such term is defined in the Notes) of the Notes will increase by 20% (to a 50% OID -- $1,000,000 Face Value); (ii) the conversion price of the Notes will become convertible at the lower of (a) the Fixed Conversion Price or (b) 20% discount to a 3-Day volume-weighted average price (the “Default Conversion Price”).
If the Notes are not repaid by the Maturity Date the default provisions are as follow: (i) The Face Value (as such term is defined in the Notes) of the Notes will increase by 20% (to a 50% OID -- $1,000,000 Face Value); (ii) the conversion price of the Notes will become convertible at the lower of (a) the Fixed Conversion Price or (b) 20% discount to a 3-Day volume-weighted average price (the “Default Conversion Price”).
The Notes contain an original issued discount (“OID”) which shall be: (i) fifteen percent (15%) if the Notes are satisfied and paid in full on or before the forty-fifth (45 th ) day after the Original Issue Date (as such term is defined in the Notes), (ii) twenty percent (20%) if the Notes are satisfied and paid in full after such 45 th day but on or before the ninetieth (90 th ) day after the Original Issue Date, and (iii) thirty percent (30%) after such 90 th day.
The Notes contain an original issue discount (“OID”) which shall be: (i) fifteen percent (15%) if the Notes are satisfied and paid in full on or before the forty-fifth (45 th ) day after the Original Issue Date (as such term is defined in the Notes), (ii) twenty percent (20%) if the Notes are satisfied and paid in full after such 45 th day but on or before the ninetieth (90 th ) day after the Original Issue Date, and (iii) thirty percent (30%) after such 90 th day.
The material terms of the WealthSouth loan are summarized below. 10 Pets & Friends Animal Hospital LLC (P&F) The real estate underlying Pets & Friends Animal Hospital is located at 3625 Baltimore Ave, Pueblo, Colorado, and is owned by IVP CO Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $216,750 and was financed by WealthSouth.
The material terms of the WealthSouth loan are summarized below. Pets & Friends Animal Hospital LLC (P&F) The real estate underlying Pets & Friends Animal Hospital is located at 3625 Baltimore Ave, Pueblo, Colorado, and is owned by IVP CO Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $216,750 and was financed by WealthSouth.
To help protect our know-how, we require all of our employees, consultants, advisors and other contractors to enter into customary confidentiality agreements that prohibit the disclosure of confidential information. Competition The veterinary industry, as of early 2022, consists of approximately 13 national consolidators and 30 regional consolidators.
To help protect our know-how, we require all of our employees, consultants, advisors and other contractors to enter into customary confidentiality agreements that prohibit the disclosure of confidential information. 6 Competition The veterinary industry, as of early 2022, consists of approximately 13 national consolidators and 30 regional consolidators.
The initial rent in the first year of the lease is $2,350 per month increasing in annual increments for a total of 0.75% over ten years. The lease consists of 2,442 square feet of commercial space zoned to permit the provision of veterinary services. Lytle Veterinary Clinic, Inc.
The initial rent in the first year of the lease is $2,350 per month increasing in annual increments for a total of 0.75% over ten years. The lease consists of 2,442 square feet of commercial space zoned to permit the provision of veterinary services. 8 Lytle Veterinary Clinic, Inc.
Governmental regulations regarding care for pets while also preserving pets as property are favorable to the continued growth of the veterinary channel. 9 The following descriptions of regulations constitute all applicable regulations to the Company’s operations.
Governmental regulations regarding care for pets while also preserving pets as property are favorable to the continued growth of the veterinary channel. The following descriptions of regulations constitute all applicable regulations to the Company’s operations.
The material terms of the WealthSouth loan are summarized below. Valley Veterinary Services The real estate underlying Valley Veterinary Services facility is located 408 Grace Lane, Rostraver Township, Pennsylvania 15012 (Parcel Nos. 56-12-00-0-148 and 56-12-00-0-144) and is owned by IVP PA Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $590,000 and was financed by WealthSouth.
The property was purchased for $800,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. Valley Veterinary Services The real estate underlying Valley Veterinary Services facility is located 408 Grace Lane, Rostraver Township, Pennsylvania 15012 (Parcel Nos. 56-12-00-0-148 and 56-12-00-0-144) and is owned by IVP PA Properties, LLC, a 100%-owned subsidiary of the Company.
Kesier $151,695.60 worth of restricted shares of Class A common stock of the Company, which resulted in the issuance of 1,865,875 shares of Class A common stock based on the closing price of $0.0813 per share on the last trading day immediately prior to the date of the Consulting Agreement, as quoted on The Nasdaq Capital Market.
Keiser $151,695.60 worth of restricted shares of Class A common stock of the Company, which resulted in the issuance of 1,865,875 shares of Class A common stock based on the closing price of $0.0813 per share on the last trading day immediately prior to the date of the Consulting Agreement, as quoted on The Nasdaq Capital Market.
General Release On March 6, 2024, Inspire entered into a general release agreement with Kenneth Seth Lundquist, DVM, Charles “Chuck” Keiser, DVM, and Don I. Williamson, Jr.
Keiser on March 7, 2024. 1 General Release On March 6, 2024, Inspire entered into a general release agreement with Kenneth Seth Lundquist, DVM, Charles “Chuck” Keiser, DVM, and Don I. Williamson, Jr.
The Consulting Agreement contains certain non-disclosure and confidentiality provisions applicable to Dr. Keiser for the benefit of the Company. Dr. Keiser released the Company from any and all claims he may have had against the Company. The Consulting Agreement terminated upon delivery of the shares to Dr. Keiser on March 7, 2024.
The Consulting Agreement contains certain non-disclosure and confidentiality provisions applicable to Dr. Keiser for the benefit of the Company. Dr. Keiser released the Company from any and all claims he may have had against the Company. The Consulting Agreement terminated upon delivery of the shares to Dr.
Further, in the last quarter of 2023 and beyond, the Company intends to continue to the due diligence toward acquisition toward strategically acquiring existing general practice, specialty hospitals and/or expand existing locations to include emergency care and more complex surgeries, holistic care and comprehensive diagnostics which allow it to offer more complex surgeries and internal medicine work ups.
Further, the Company intends to continue to the due diligence toward acquisition toward strategically acquiring existing general practice, specialty hospitals and/or expand existing locations to include emergency care and more complex surgeries, holistic care and comprehensive diagnostics which allow it to offer more complex surgeries and internal medicine work ups.
The material terms of the WealthSouth loan are summarized below. WealthSouth Real Estate Loans Each WealthSouth loan bears a variable interest rate charged on all sum outstanding equal to the New York Prime Rate plus 0.50%, however, such rate can never be less than 3.57% per annum.
The property was purchased for $590,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. WealthSouth Real Estate Loans Each WealthSouth loan bears a variable interest rate charged on all sum outstanding equal to the New York Prime Rate plus 0.50%, however, such rate can never be less than 3.57% per annum.
The Company completed its initial public offering on August 31, 2023 and its shares of Class A Common Stock are quoted on The Nasdaq Capital Market under the symbol “IVP.” As of the date of this prospectus, the Company currently has fourteen veterinary hospitals located in ten states.
The Company completed its initial public offering on August 31, 2023 and its shares of Class A Common Stock are quoted on The Nasdaq Capital Market under the symbol “IVP.” The Company currently has thirteen veterinary hospitals located in nine states.
In each of these cases, Inspire has and will create structures which conform to legal standards and mitigate risk so as to allow the Company to acquire and operate in the states in which it chooses to do so. Employees As of April 1, 2024, we had 156 employees.
In each of these cases, Inspire has and will create structures which conform to legal standards and mitigate risk so as to allow the Company to acquire and operate in the states in which it chooses to do so. Employees As of March 31, 2025, we had 113 employees.
The property was purchased for $1,200,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. The Pony Express Veterinary Hospital The real estate underlying The Pony Express Veterinary Hospital is located at 893 Lower Bellbrook Road, Xenia, Ohio and is owned by IVP TX Properties, LLC, a 100%-owned subsidiary of the Company.
The Pony Express Veterinary Hospital The real estate underlying The Pony Express Veterinary Hospital is located at 893 Lower Bellbrook Road, Xenia, Ohio and is owned by IVP TX Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $500,000 and was financed by WealthSouth.
The Notes can be prepaid at any time prior to the Maturity Date without any penalties. 1 The Notes must be repaid in full from any future capital raises (debt, equity or any other form of capital raise) of Inspire Veterinary.
The Notes can be prepaid at any time prior to the Maturity Date without any penalties. The Notes must be repaid in full from any future capital raises (debt, equity or any other form of capital raise) of Inspire Veterinary. All of the funds raised must be used to repay the Notes until the Notes are repaid in full.
All of the funds raised must be used to repay the Notes until the Notes are repaid in full The Notes are convertible into shares of common stock of Inspire Veterinary, in full or in part, at any time after issuance at the discretion of the noteholder at a fixed conversion price of $0.03 per share (the “Fixed Conversion Price”).
The Notes are convertible into shares of Class A common stock of Inspire Veterinary, in full or in part, at any time after issuance at the discretion of the noteholder at a fixed conversion price of $0.03 per share (the “Fixed Conversion Price”).
Limitations for Duties for Non-Credentialed Employees New York State, and certain other states, have language in their individual veterinary practice acts which require credentials in the form of licensure or certifications to be held by veterinary personnel who perform certain duties.
The Company operates one clinic in Indiana and believes it is in compliance with applicable state law. 7 Limitations for Duties for Non-Credentialed Employees New York State, and certain other states, have language in their individual veterinary practice acts which require credentials in the form of licensure or certifications to be held by veterinary personnel who perform certain duties.
Generally, if the veterinary clinic is owned by a limited liability company, at least one member of the limited liability company must be a veterinarian, subject to the discretion of the Indiana Board of Veterinary Medical Examiners. The Company operates one clinic in Indiana and believes it is in compliance with applicable state law.
Generally, if the veterinary clinic is owned by a limited liability company, at least one member of the limited liability company must be a veterinarian, subject to the discretion of the Indiana Board of Veterinary Medical Examiners.
The Purchase Agreement contains a number of representations and warranties by Inspire Veterinary and the investors which are qualified by materiality or Material Adverse Effect as defined in the Purchase Agreement. The representations and warranties are customary for transactions of this nature and are subject to specified exceptions and qualification. The Purchase Agreement also contains customary confidentiality and indemnification provisions.
The Purchase Agreement contains a number of representations and warranties by Inspire and the investors which are qualified by materiality or Material Adverse Effect as defined in the Purchase Agreement, and also contain customary confidentiality and indemnification provisions.
The Old 41 Animal Hospital The real estate underlying The Old 41 Animal Hospital facility is located at 27551 Old 41 Road, Bonita Springs, Florida and 27567 Old 41 Road, Bonita Springs, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $800,000 and was financed by WealthSouth.
The material terms of the WealthSouth loan are summarized below. 9 The Old 41 Animal Hospital The real estate underlying The Old 41 Animal Hospital facility is located at 27551 Old 41 Road, Bonita Springs, Florida and 27567 Old 41 Road, Bonita Springs, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company.
Frank’s employment immediately for cause upon certain specified acts, and he may be entitled to severance payments in certain circumstances. —Charles Keiser Consulting Agreement On March 6, 2024, we entered into a consulting agreement (the “Consulting Agreement”) with Charles “Chuck” Keiser, DVM, an experienced professional of veterinary medicine and the business of veterinary medicine, and a former member of the board of directors of the Company, pursuant to which we agreed to compensate Dr.
Recent Developments Charles Keiser Consulting Agreement On March 6, 2024, we entered into a consulting agreement (the “Consulting Agreement”) with Charles “Chuck” Keiser, DVM, an experienced professional of veterinary medicine and the business of veterinary medicine, and a former member of the board of directors of the Company, pursuant to which we agreed to compensate Dr.
Frank is also barred from soliciting any clients or certain former clients of the Company for a period of two years following the termination of his employment with the Company. The Company has the right to terminate Mr.
Frank is also barred from soliciting any clients or certain former clients of the Company for a period of two years following the termination of his employment with the Company. The Company has the right to terminate Mr. Frank’s employment immediately for cause upon certain specified acts, and he may be entitled to severance payments in certain circumstances.
The acquisitions and valuation team is sufficient for current levels of acquisition activity and personnel have already been identified for expanding this team to provide deeper integration at industry events, generating organic leads and leveraging deep relationships with service and product suppliers across the industry. 8 We depend upon the skills, knowledge and experience of our management personnel, as well as that of our other employees, advisors, consultants and contractors, none of which are patentable.
The acquisitions and valuation team is sufficient for current levels of acquisition activity and personnel have already been identified for expanding this team to provide deeper integration at industry events, generating organic leads and leveraging deep relationships with service and product suppliers across the industry.
Our website address is www.inspirevet.com . Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this prospectus or the registration statement of which it forms a part. We also maintain a website at www.inspirevet.com , which provides additional information about the Company.
Our website address is www.inspirevet.com. Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this annual report on Form 10-K of which it forms a part.
Pursuant to the Purchase Agreement, Inspire Veterinary issued to certain investors two Increasing OID Senior Notes (each a “Note” and collectively the “Notes”) each for $250,000. The Notes have a maturity date of the earlier of December 26, 2024 or the consummation of a capital raise (the “Maturity Date”).
March OID Notes On March 26, 2024 we entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors. Pursuant to the Purchase Agreement, Inspire issued to certain investors two Increasing OID Senior Notes (each a “Note” and collectively the “Notes”) each for $250,000.
The Employment Agreement contains certain non-disclosure and confidentiality provisions applicable to Mr. Frank for the benefit of the Company. Mr.
Frank is eligible for annual bonuses which are dependent on certain key performance indications and incentive measurements are further described in the Employment Agreement. The Employment Agreement contains certain non-disclosure and confidentiality provisions applicable to Mr. Frank for the benefit of the Company. Mr.
The base salary will be reviewed at the end of each fiscal year and any recommended changes will be subject to approval of the board of directors of the Company. Mr. Frank is eligible for annual bonuses subject to satisfaction of both a “Revenue Target” and a “Profit Target”, as further described in the Employment Agreement.
T he base salary will be reviewed at the end of each fiscal year and any recommended changes will be subject to approval of the compensation committee of the board of directors of the Company . Mr.
The lease consists of 2,653 square feet of commercial space zoned to permit the provision of veterinary services. 11 All Breed Pet Care The real estate underlying the All Breed Pet Care facility is located at 7501 Peachwood Drive, Newburgh, Indiana, and is owned by IVP IN Properties, LLC, a 100%-owned subsidiary of the Company.
All Breed Pet Care The real estate underlying the All Breed Pet Care facility is located at 7501 Peachwood Drive, Newburgh, Indiana, and is owned by IVP IN Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $1,200,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below.
The use of proceeds from the Notes will be used for general corporate purposes and acquisitions. — Nasdaq Delisting Notification On March 8, 2024, Inspire Veterinary received a staff determination from The Nasdaq Stock Market (“Nasdaq”) to delist the Company’s securities from the Nasdaq Capital Market (the “Staff Determination”).
Nasdaq Compliance Minimum Bid Price and Stockholders’ Equity On March 8, 2024, we received a staff determination letter (the “Staff Determination”) from The Nasdaq Stock Market (“Nasdaq”) to delist the Company’s securities from the Nasdaq Capital Market.
The rent is $4,167 per month, increasing 3% annually.
The rent is $4,167 per month, increasing 3% annually. The lease consists of 2,653 square feet of commercial space zoned to permit the provision of veterinary services.
Previously, on November 27, 2023, the Company received a deficiency letter from the Listing Qualifications Department of Nasdaq indicating that the Company’s common stock is subject to potential delisting from the Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock had closed below the required minimum of $1.00 per share under Nasdaq Marketplace Rule 5550(a)(2) (the “Bid Price Rule”).
On December 16, 2024 , the Company received a letter from the Staff notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.0001 per share, for the prior 30 consecutive business days, the Company was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2).
Removed
The contents of our website or any other website, however, are not a part of this Annual Report and is not incorporated by reference into this Report. Recent Developments On March 26, Inspire Veterinary entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors.
Added
The Notes have a maturity date of the earlier of December 26, 2024 or the consummation of a capital raise (the “Maturity Date”).
Removed
Inspire Veterinary must keep enough shares of common stock in reserve in order to facilitate the conversion of the Notes at the Default Conversion Price. Additionally, Inspire Veterinary agrees to lower the floor price of the existing Series A Preferred Stock to $0.01.
Added
The Company appealed the Staff Determination and filed a hearing request with Nasdaq. 2 In addition, on April 11, 2024, the Company received a Staff Determination from Nasdaq notifying the Company that, based on the Company’s stockholders’ deficit of ($788,259) as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission, the Company does not meet the alternatives of market value of listed securities or net income from continuing operations.
Removed
In the event a noteholder agrees to release the funds to the Inspire Veterinary prior to the floor price on the Series A Preferred Stock being officially lowered and Inspire Veterinary then fails to officially lower the floor price within 7 calendar days, the Notes will be immediately considered in default.
Added
As such, the Company no longer complies with Nasdaq listing rules regarding minimal stockholder’s equity for continued listing. Accordingly, this matter serves as an additional basis for delisting the Company’s securities from Nasdaq. The Company’s hearing date with the Hearings Panel was held on May 14, 2024.
Removed
The Company may appeal the Staff Determination, however, to a Hearings Panel (the “Panel”) by filing a hearing request with Nasdaq on or before March 15, 2024. Hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. A hearing request will stay the delisting of the Company’s securities pending the Panel’s decision.
Added
In order to address the bid price deficiency, on April 15, 2024, our board of directors approved a reverse stock split of the Company’s authorized and issued and outstanding shares of Class A common stock, par value $0.0001 per share at a ratio of 1 for 100 (the “Reverse Stock Split”).
Removed
The Company intends to appeal the Staff Determination under the Low Priced Stock Rule and filed a hearing request with Nasdaq before March 15, 2024. Pending the hearing before the Panel, the Company’s securities will continue to be listed on the Nasdaq Capital Market.
Added
The Reverse Stock Split was effective on May 8, 2024. The total number of shares of Class A common stock authorized for issuance was reduced by a corresponding proportion from 100,000,000 shares to 1,000,000 shares.
Removed
In the immediate future, the Company intends to implement an appropriate reverse split of its Class A Common Stock in order to regain compliance with both the Low Priced Stocks Rule and the Bid Price Rule.
Added
On June 6, 2024, the Company received a letter from the Hearings Panel indicating that our request for continued listing on Nasdaq was granted subject to the following: (i) on or before June 15, 2024, the Company shall file a registration statement with the Securities and Exchange Commission for a public offering that will be led by Spartan Capital Securities, LLC, and (ii) on or before September 4, 2024, we shall demonstrate compliance with the minimum stockholder’s equity rule.
Removed
There can be no assurance, however, that the Company will be able to regain compliance with the Bid Price Rule and the Low Priced Stocks Rule or that it will otherwise be in compliance with other Nasdaq listing rules. 2 — Richard Frank Employment Agreement We entered into an employment agreement (the “Employment Agreement”) with Richard Frank, the Company’s current Chief Financial Officer.
Added
Shareholder Approval Rule On September 24, 2024, the Company received a Staff determination notifying the Company that, based on its review of the Company’s securities, the Staff determined that the Company failed to comply with Nasdaq’s shareholder approval requirements set forth in Listing Rule 5635(d).
Removed
Mr. Frank’s appointment as Chief Financial Officer had previously become effective upon consummation of Inspire’s initial public offering on August 31, 2023 and his Employment Agreement is effective as of January 1, 2024.
Added
The Staff stated that the Company’s “best efforts” public offering, which closed on July 12, 2024, did not qualify as a public offering for the purposes of Nasdaq’s shareholder approval rules.
Removed
The Employment Agreement provides for an initial one-year term with the ability to renew, upon the affirmative vote of the board of directors of the Company, for successive one-year terms. The Employment Agreement provides that Mr. Frank will receive a base salary of $210,000 per annum.
Added
As such, Listing Rule 5635(d), which requires prior shareholder approval for transactions other than public offerings involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price was not met. Accordingly, this matter serves as an additional basis for delisting the Company’s securities from Nasdaq.
Removed
Also, on the same date, we entered into a registration rights agreement (the “Registration Rights Agreement”) with Tumim, pursuant to which we agreed to file with the U.S.
Added
On December 12, 2024, the Company received a letter from the Staff notifying the Company that it has demonstrated compliance with the with the minimum equity requirement in Listing Rule 5550(b)(1) as required by the Panel.
Removed
Securities and Exchange Commission (the “Commission”) a registration statement to register for resale under the Securities Act of 1933, as amended (the “Securities Act”), the shares of our Class A Common Stock that may be issued to Tumim under the Purchase Agreement.
Added
Pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year, until December 12, 2025.
Removed
We and Tumim subsequently agreed in a letter agreement (the “Letter Agreement”) to certain amendments to the Purchase Agreement and the Registration Rights Agreement relating to the commitment shares and initial registration statement filing deadline, as reflected below. 3 Pursuant to the terms of the Purchase Agreement, as consideration for Tumim’s irrevocable commitment to purchase shares of our Class A Common Stock, we became obligated to issue to Tumim 2,869,182 shares of Class A Common Stock (the “Commitment Shares”), which equal to $600,000 divided by $0.209, which is the average daily volume-weighted average trading price for the Class A Common Stock on The Nasdaq Capital Market (“Nasdaq”) during the five consecutive trading days ending on the trading date immediately prior to our filing of a resale registration statement with the Commission.
Added
Additionally, the letter stated that upon further review of the terms and conditions of the “best efforts” offering closed by the Company on July 12, 2024, the Staff determined that the offering was not a “public offering” for the purposes of Nasdaq’s shareholder approval rules and accordingly, the Company was required, but failed, to obtain shareholder approval under the Listing Rule 5635(d) prior to issuing the securities in the offering.
Removed
Our sales of Class A Common Stock to Tumim, if any, will be subject to certain limitations, and may occur from time-to-time in Inspire Veterinary’s sole discretion, over the period commencing once certain customary conditions are satisfied, including securing effectiveness of a resale registration statement with the Commission, and ending on the first day of the month following the 24-month anniversary of the date on which the resale registration statement is declared effective by the Commission.
Added
The Company obtained post-execution shareholder ratification of the offering and the Panel determined a Public Reprimand Letter was an appropriate resolution to this matter.
Removed
Tumim has no right to require Inspire to sell any shares of Class A Common Stock to Tumim, but Tumim is obligated to purchase shares of Class A Common Stock pursuant to a valid purchase notice delivered by Inspire, subject to certain conditions and limitations.
Added
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a grace period of 180 days, or until June 16, 2025, to regain compliance with the minimum bid price requirement. 3 January 2025 Reverse Stock Split In order to address the bid price deficiency, on January 3, 2025, our board of directors approved a reverse stock split of the Company’s authorized and issued and outstanding shares of Class A common stock, par value $0.0001 per share at a ratio of 1 for 25 (the “January 2025 Reverse Stock Split”).
Removed
Purchase Price The shares of Class A Common Stock to be issued by Inspire and purchased by Tumim will be sold at a purchase price equal to 95% of the lowest daily volume-weighted average price of the Class A Common Stock on Nasdaq (or any other eligible national stock exchange, as applicable) during the three consecutive trading days immediately following the trading date on which a valid purchase notice is delivered to Tumim by Inspire.
Added
The January 2025 Reverse Stock Split was effective on January 27, 2025. The total number of shares of Class A common stock authorized for issuance was reduced from 100,000,000 shares to 1,000,000 shares.
Removed
Such purchase price will be adjusted for reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction by Inspire with respect to its Class A Common Stock.
Added
Increase in Authorized On January 29, 2025, the holders of a majority of the issued and outstanding voting securities (the “Majority Stockholders”) of Inspire Veterinary Partners, Inc., (the “Company”), approved, by written consent an amendment to the Company’s Amended and Restated Articles of Incorporation to increase the total number of authorized shares of Class A common stock to one hundred million (100,000,000) shares (the “Amendment”).
Removed
Actual sales of shares of Class A Common Stock to Tumim will depend on a variety of factors to be determined by Inspire from time-to-time, including, among other things, market conditions, the trading price of the Class A Common Stock, and the working capital needs, if any, of the Company.
Added
The Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada, which became effective on February 11, 2025.
Removed
The net proceeds from sales, if any, under the Purchase Agreement to Inspire will depend on the frequency and prices at which Inspire sells shares of Class A Common Stock to Tumim. Inspire expects that any proceeds received by Inspire from such sales to Tumim will be used for working capital and general corporate purposes.
Added
Best Efforts Offerings February Offering On July 12, 2025 we entered into Securities Purchase Agreements under which the Company agreed to sell to the investors named therein, in a best efforts public offering of an aggregate of 47,058,823 shares of Class A common shares and, at the option of purchasers, pre-funded warrants in lieu of shares, priced at a public offering price of $0.085 for one common share or pre-funded warrant (less the par value of each share of Class A common stock in the case of each pre-funded warrant).
Removed
Purchase Limits Pursuant to the Purchase Agreement, Inspire may not require Tumim to purchase, and Tumim will have no obligation to purchase, in any single transaction, shares of Class A Common Stock in excess of a number equal to the lowest of: (i) 100% of the average daily trading volume in the Class A Common Stock on Nasdaq (or any other eligible national stock exchange, as applicable) for the five consecutive trading days immediately prior to the trading date on which a valid purchase notice is delivered to Tumim, (ii) a 30% discount to the daily trading volume in the Class A Common Stock on Nasdaq (or any other eligible national stock exchange, as applicable), and (iii) $2.0 million divided by the volume-weighted average price for the Class A Common Stock on the trading day immediately prior to the trading date on which a valid purchase notice is delivered to Tumim.
Added
The pre-funded warrants are issuable to purchasers in lieu of shares of Class A common stock that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of the Company’s outstanding Class A common stock, if any such purchaser so chooses.
Removed
Consistent with applicable Nasdaq rules, Inspire may not issue to Tumim more than 1,214,293 shares of its Class A Common Stock (the “Exchange Cap”), which number of shares is equal to 19.99% of the shares of the Company’s Class A Common Stock issued and outstanding immediately prior to the execution of the Purchase Agreement, unless Inspire obtains stockholder approval to issue shares of its Class A Common Stock in excess of such limit in accordance with applicable rules of Nasdaq or any other applicable national stock exchange.
Added
Each pre-funded warrant is exercisable at any time to purchase one common share at an exercise price of $0.0001 per share. Gross proceeds from the offering, before deducting the placement agent’s fees and other offering expenses, were approximately $4.0 million. Spartan Capital Securities, LLC (“Spartan”) acted as sole placement agent in connection with this offering.
Removed
However, the Exchange Cap will not apply to the extent that and for so long as the average price of all shares of Class A Common Stock purchased pursuant to the Purchase Agreement is equal to or greater than $0.4954, which was the official closing price of the Class A Common Stock on Nasdaq on the date of signing the Purchase Agreement.
Added
July Offering On July 12, 2025 we entered into Securities Purchase Agreements under which the Company agreed to sell to the investors named therein, in a best efforts public offering of an aggregate of 6,000,000 units at an offering price of $1.00 per unit.
Removed
Moreover, Inspire may not issue or sell any shares of Class A Common Stock to Tumim which, when aggregated with all other shares of the Company’s Class A Common Stock then beneficially owned by Tumim and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 13d-3 promulgated thereunder), would result in Tumim beneficially owning more than 4.99% of the issued and outstanding shares of the Company’s Class A Common Stock (the “Beneficial Ownership Limitation”), unless such limit is increased or waived by Tumim. 4 Commitment Shares Pursuant to the terms of the Purchase Agreement, as consideration for Tumim’s irrevocable commitment to purchase shares of the Company’s Class A Common Stock, we became obligated to issue to Tumim a number of shares of Class A Common Stock (the “Commitment Shares”) equal to $600,000 divided by the average daily volume-weighted average price for the Class A Common Stock on Nasdaq during the five (5) consecutive trading days ending on the trading date immediately prior to Inspire Veterinary’s filing of a resale registration statement covering Tumim’s resales pursuant to the Registration Rights Agreement described below.
Added
Each unit consists of either one share of the Company’s Class A common stock, $0.001 par value per share, or one pre-funded warrant to purchase one share of the Company’s Class A common stock and one warrant to purchase one share of the Company’s Class A common stock.
Removed
The Commitment Shares are due on the trading day immediately following the date the resale registration statement is declared effective by the Commission.
Added
The units have no stand-alone rights and will not be certificated or issued as stand-alone securities and the components of the units will be immediately separable and will be issued separately in the offering. The warrants have an exercise price of $1.00 and are exercisable for a period of six months commencing upon issuance.
Removed
If the number of Commitment Shares due to Tumim would exceed the Beneficial Ownership Limitation, then we will become obligated to issue to Tumim a pre-funded warrant (the “Tumim pre-funded warrant”) to purchase shares of Class A Common Stock (the “Warrant Shares”), with an exercise price equal to $0.0001 per share, in an amount equal to the difference between $600,000 and the value of the Commitment Shares issued below the Beneficial Ownership Limitation, calculated using the same pricing mechanism as the pricing mechanism used to determine the Commitment Shares paid as Class A Common Stock.

… 54 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

55 edited+10 added−18 removed207 unchanged
Biggest changeWe may remain an emerging growth company until as late as December 31, 2026, though we may cease to be an emerging growth company earlier under certain circumstances, including if (i) we have more than $1.235 billion in annual revenue in any fiscal year, (ii) the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period. 30 Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including, among other things, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, presenting only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.
Biggest changeEven after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including, among other things, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, presenting only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. 27 Investors may find our Class A Common Stock less attractive to the extent we rely on the exemptions and relief granted by the JOBS Act.
Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. Our business plans may not be successful in addressing the cash flow issues. If we cannot continue as a going concern, our shareholders may lose their entire investment in us.
Our ability to continue as a going concern is dependent upon our generating cash flow sufficient to fund operations and reducing operating expenses. Our business plans may not be successful in addressing the cash flow issues. If we cannot continue as a going concern, our shareholders may lose their entire investment in us.
Management believes our continued success is largely dependent on positive perceptions of our company as a high-quality employer and operator within the veterinary space.
Our continued success is largely dependent on positive perceptions of our company. Management believes our continued success is largely dependent on positive perceptions of our company as a high-quality employer and operator within the veterinary space.
Acquisitions, investments and other strategic alliances involve numerous risks, including: ● problems integrating the acquired business, facilities or services, including issues maintaining uniform standards, procedures, controls and policies; ● unanticipated costs associated with acquisitions or strategic alliances; ● losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results; ● diversion of management’s attention from our existing business; ● risks associated with entering new markets in which we may have limited or no experience; ● potential loss of key employees of acquired businesses; ● the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; ● potential unknown liabilities associated with a business we acquire or in which we invest; and ● increased legal and accounting compliance costs.
Acquisitions, investments and other strategic alliances involve numerous risks, including: ● problems integrating the acquired business, facilities or services, including issues maintaining uniform standards, procedures, controls and policies; ● unanticipated costs associated with acquisitions or strategic alliances; 12 ● losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results; ● diversion of management’s attention from our existing business; ● risks associated with entering new markets in which we may have limited or no experience; ● potential loss of key employees of acquired businesses; ● the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; ● potential unknown liabilities associated with a business we acquire or in which we invest; and ● increased legal and accounting compliance costs.
Although we have entered an employment agreement with Kimball Carr, our Chair, President and Chief Executive Officer, for one 3-year term (automatically extending for one-year terms thereafter) there can be no assurance that Mr. Carr or any other senior executive officer will extend their terms of service. We may need to raise additional capital to achieve our goals.
Although we have entered an employment agreement with Kimball Carr, our President and Chief Executive Officer, for one 3-year term (automatically extending for one-year terms thereafter) there can be no assurance that Mr. Carr or any other senior executive officer will extend their terms of service. We may need to raise additional capital to achieve our goals.
If we are unable to recruit and retain qualified veterinarians, or to control our labor costs, our business, financial condition, and results of operations may be materially adversely affected. 18 Negative publicity arising from claims that we do not properly care for animals we handle could adversely affect how we are perceived by the public and reduce our sales and profitability.
If we are unable to recruit and retain qualified veterinarians, or to control our labor costs, our business, financial condition, and results of operations may be materially adversely affected. Negative publicity arising from claims that we do not properly care for animals we handle could adversely affect how we are perceived by the public and reduce our sales and profitability.
If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline and possibly adversely affect our ability to engage in future financings. 27 We do not intend to pay cash dividends for the foreseeable future.
If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline and possibly adversely affect our ability to engage in future financings. We do not intend to pay cash dividends for the foreseeable future.
These developments and others related to government regulation could have a material adverse effect on our reputation, business, financial condition, and results of operations. 23 Additionally, some states require veterinary para-professional team members to be licensed before performing tasks and duties which are critical to the workflow of a veterinary clinic.
These developments and others related to government regulation could have a material adverse effect on our reputation, business, financial condition, and results of operations. Additionally, some states require veterinary para-professional team members to be licensed before performing tasks and duties which are critical to the workflow of a veterinary clinic.
Any litigation may be expensive and time-consuming and could divert the attention of management from its business and negatively affect its operating results or financial condition. Furthermore, the outcome of any litigation cannot be guaranteed, and adverse outcomes can affect our results of operations negatively. 17 Purchasing real estate with hospital acquisitions brings additional complexity and cost.
Any litigation may be expensive and time-consuming and could divert the attention of management from its business and negatively affect its operating results or financial condition. Furthermore, the outcome of any litigation cannot be guaranteed, and adverse outcomes can affect our results of operations negatively. Purchasing real estate with hospital acquisitions brings additional complexity and cost.
Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, there could be a material adverse effect on our business, operating results, financial condition and prospects. Investors who buy shares at different times will likely pay different prices.
Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, there could be a material adverse effect on our business, operating results, financial condition and prospects. 24 Investors who buy shares at different times will likely pay different prices.
Further, our responses to any union organizing efforts could negatively impact our reputation and have adverse effects on our business, including on our financial results. 20 We may be subject to personal injury, workers’ compensation, discrimination, harassment, wrongful termination, wage and hour, and other claims in the ordinary course of business.
Further, our responses to any union organizing efforts could negatively impact our reputation and have adverse effects on our business, including on our financial results. We may be subject to personal injury, workers’ compensation, discrimination, harassment, wrongful termination, wage and hour, and other claims in the ordinary course of business.
Any of these factors may result in large and sudden changes in the volume and price at which our Class A common stock will trade. 29 In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities.
Any of these factors may result in large and sudden changes in the volume and price at which our Class A common stock will trade. In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities.
Issues such as building inspections and related delays, zoning requirements and permitting variabilities across many states all have the potential to cause delays with the purchase of acquisitions and increase the costs of acquiring target locations. Our estimate of the size of our addressable market may prove to be inaccurate.
Issues such as building inspections and related delays, zoning requirements and permitting variabilities across many states all have the potential to cause delays with the purchase of acquisitions and increase the costs of acquiring target locations. 15 Our estimate of the size of our addressable market may prove to be inaccurate.
As a result, they may be able to devote more resources to developing, manufacturing, marketing and selling their products, initiating or withstanding substantial price competition or more readily taking advantage of acquisitions or other opportunities. We may be unable to adequately protect our intellectual property rights.
As a result, they may be able to devote more resources to developing, manufacturing, marketing and selling their products, initiating or withstanding substantial price competition or more readily taking advantage of acquisitions or other opportunities. 19 We may be unable to adequately protect our intellectual property rights.
Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may materially and adversely affect our business, financial condition, and results of operations. 22 We may be subject to litigation.
Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may materially and adversely affect our business, financial condition, and results of operations. We may be subject to litigation.
In addition, if our Class A Common Stock is delisted, your ability to transfer or sell your Class A Common Stock may be limited and the value of those securities will be materially adversely affected. If our Class A Common Stock becomes subject to the penny stock rules, it may be more difficult to sell our Class A Common Stock.
In addition, if our Class A Common Stock is delisted, your ability to transfer or sell your Class A Common Stock may be limited and the value of those securities will be materially adversely affected. 23 If our Class A Common Stock becomes subject to the penny stock rules, it may be more difficult to sell our Class A Common Stock.
In the future, we may be subject to routine administrative complaints incidental to the dispensing of prescription pet medications through our veterinary services businesses. We are subject to environmental, health, and safety laws and regulations that could result in costs to us .
In the future, we may be subject to routine administrative complaints incidental to the dispensing of prescription pet medications through our veterinary services businesses. 22 We are subject to environmental, health, and safety laws and regulations that could result in costs to us .
If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate one or more of our veterinary service programs or any future commercialization efforts. 13 The Company incurs significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate one or more of our veterinary service programs or any future commercialization efforts. 11 The Company incurs significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
There can be no assurance that such ownership change will not occur in the future. 16 Our management does not have experience as senior management of a public company or ensuring compliance with public company obligations, and fulfilling these obligations will be expensive and time consuming, which may divert management’s attention from the day-to-day operation of its business.
There can be no assurance that such ownership change will not occur in the future. 14 Our management does not have experience as senior management of a public company or ensuring compliance with public company obligations, and fulfilling these obligations will be expensive and time consuming, which may divert management’s attention from the day-to-day operation of its business.
We cannot give assurance that we will be able to secure the necessary capital when needed. Consequently, we raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the year ended December 31, 2023.
We cannot give assurance that we will be able to secure the necessary capital when needed. Consequently, we raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the year ended December 31, 2024.
Due to our cumulative losses through December 31, 2023 we do not anticipate that such provision of the CARES Act will be relevant to us. The deductibility of federal NOLs may be limited. It is uncertain if and to what extent various states will conform to TCJA or the CARES Act. Our ability to utilize the U.S.
Due to our cumulative losses through December 31, 2024 we do not anticipate that such provision of the CARES Act will be relevant to us. The deductibility of federal NOLs may be limited. It is uncertain if and to what extent various states will conform to TCJA or the CARES Act. Our ability to utilize the U.S.
Consequently, we raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the years ended December 31, 2023 and 2022.
Consequently, we raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the years ended December 31, 2024 and 2023.
Debt financing may also involve debt instruments that are convertible into or exercisable for our common shares. The conversion of the debt-to-equity financing may dilute the equity position of our existing shareholders. 15 We may acquire other businesses that may be unsuccessful and could adversely dilute your ownership of our company.
Debt financing may also involve debt instruments that are convertible into or exercisable for our common shares. The conversion of the debt-to-equity financing may dilute the equity position of our existing shareholders. 13 We may acquire other businesses that may be unsuccessful and could adversely dilute your ownership of our company.
We are highly dependent upon our senior management, particularly Kimball Carr, our Chair, President and Chief Executive Officer, and Richard Frank, our Chief Executive Officer.
We are highly dependent upon our senior management, particularly Kimball Carr, our President and Chief Executive Officer, and Richard Frank, our Chief Executive Officer.
The Company and its auditors were not required to perform an evaluation of internal control over financial reporting as of or for the years ended December 31, 2023 or 2022 in accordance with the provisions of the Sarbanes-Oxley Act.
The Company and its auditors were not required to perform an evaluation of internal control over financial reporting as of or for the years ended December 31, 2024 or 2023 in accordance with the provisions of the Sarbanes-Oxley Act.
We have generated net operating loss carryforwards for U.S. income tax purposes, but our ability to use these net operating losses may be limited by our inability to generate future taxable income. Our U.S. businesses have generated consolidated net operating loss carryforwards (“U.S. NOLs”) for U.S. federal and state income tax purposes of $14,792,886 as of December 31, 2023.
We have generated net operating loss carryforwards for U.S. income tax purposes, but our ability to use these net operating losses may be limited by our inability to generate future taxable income. Our U.S. businesses have generated consolidated net operating loss carryforwards (“U.S. NOLs”) for U.S. federal and state income tax purposes of $14,264,261 as of December 31, 2024.
Sales of Class A Common Stock by us to Tumim, if any, will be subject to certain limitations, and may occur from time-to-time in our sole discretion, over the period commencing once certain customary conditions are satisfied, including securing effectiveness of the resale registration statement with the Commission and ending on the first day of the month following the 24-month anniversary of the date on which the resale registration statement is declared effective by the Commission. 26 Sales of our Class A Common Stock to Tumim under the Purchase Agreement will depend upon market conditions and other factors to be determined by us.
Sales of Class A Common Stock by us to Tumim, if any, will be subject to certain limitations, and may occur from time-to-time in our sole discretion, over the period commencing once certain customary conditions are satisfied, including securing effectiveness of the resale registration statement with the Commission and ending on the first day of the month following the 24-month anniversary of the date on which the resale registration statement is declared effective by the Commission.
Although a majority of our board of directors are independent, our non-independent directors, officers, and their affiliates control approximately 38.4% of the voting power of our outstanding common stock.
Although a majority of our board of directors are independent, our non-independent directors, officers, and their affiliates control approximately 98.0% of the voting power of our outstanding common stock.
Although a majority of our board of directors are independent, our non-independent directors, officers, and their affiliates control approximately 38.4% of the voting power of our outstanding common stock.
Although a majority of our board of directors are independent, our non-independent directors, officers, and their affiliates control approximately 98.0% of the voting power of our outstanding common stock.
Our board of directors may designate and issue shares of new classes of stock, including the issuance of up to 15,700,000 additional shares of Class B common stock, that could be superior to or adversely affect you as a holder of our Class A common stock.
Our board of directors may designate and issue shares of new classes of stock, including the issuance of up to 16,108,500 additional shares of Class B common stock, that could be superior to or adversely affect you as a holder of our Class A common stock.
Our directors Messrs. Carr, Keiser, and Lau hold a combined 3,020,750 shares of our Class B common stock and 102,256 shares of our Class A common stock, control approximately 38.4% of the voting power of the outstanding common stock prior to the issuance of any additional shares.
Our directors Messrs. Carr, Keiser, and Lau hold a combined 3,020,750 shares of our Class B common stock and 41 shares of our Class A common stock, control approximately 98.0% of the voting power of the outstanding common stock prior to the issuance of any additional shares.
Risks Related to our Common Shares and Securities We have received a listing deficiency notice from Nasdaq regarding our Class A Common Stock. Our Class A Common Stock currently trades on The Nasdaq Capital Market (“Nasdaq”). On March 8, 2024, we received a staff determination from Nasdaq to delist the Company’s securities from the Nasdaq Capital Market.
Risks Related to our Common Shares and Securities We have received a listing deficiency notice from Nasdaq regarding our Class A Common Stock. Our Class A Common Stock currently trades on The Nasdaq Capital Market (“Nasdaq”).
Charles Stith Keiser, our director and Vice-Chair and the holder of 2,150,000 shares of our Class B common stock and 24,528 shares of our Class A common stock, controls approximately 44% of the voting power of the Company as of the date of this prospectus. However, if Mr.
Charles Stith Keiser, our director and the holder of 2,150,000 shares of our Class B common stock and 10 shares of our Class A common stock, controls approximately 69.8% of the voting power of the Company as of the date of this prospectus. However, if Mr.
There can be no assurance, however, that the Company will be able to regain compliance with the Bid Price Rule and the Low Priced Stocks Rule or that it will otherwise be in compliance with other Nasdaq listing rules. 25 If the Class A Common Stock is not continued to be listed on Nasdaq, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity; ● a determination that the common shares are a “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common shares; ● a decrease in news about and analyst coverage for our Company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If the Class A Common Stock is not continued to be listed on Nasdaq, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity; ● a determination that the common shares are a “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common shares; ● a decrease in news about and analyst coverage for our Company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
The pet care industry is highly fragmented. We have completed acquisitions in the past and may pursue expansion, acquisition, investment and other strategic alliance opportunities in the future.
We have completed acquisitions in the past and may pursue expansion, acquisition, investment and other strategic alliance opportunities in the future.
Building an internal sales organization is time consuming and expensive and will significantly increase our compensation expense. If we are unable to market and build proven client-acquisition processes at local level our future revenue could suffer. Our business may be harmed if our computer network containing employee or other information is compromised, which could adversely affect our results of operations.
If we are unable to market and build proven client-acquisition processes at local level our future revenue could suffer. 17 Our business may be harmed if our computer network containing employee or other information is compromised, which could adversely affect our results of operations.
Failure to comply with governmental regulations or the expansion of existing or the enactment of new laws or regulations applicable to our veterinary services could adversely affect our business and our financial condition or lead to fines, litigation, or our inability to offer veterinary products or services in certain states.
In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations. 21 Failure to comply with governmental regulations or the expansion of existing or the enactment of new laws or regulations applicable to our veterinary services could adversely affect our business and our financial condition or lead to fines, litigation, or our inability to offer veterinary products or services in certain states.
In addition, cyber-attacks such as ransomware attacks could lock us out of our information systems and disrupt our operations. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Attacks may be targeted at us, our customers, our employees, or others who have entrusted us with information.
We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Attacks may be targeted at us, our customers, our employees, or others who have entrusted us with information.
If our board of directors determined to issue the remaining 15,700,000 unissued Class B shares, such shares would represent an additional 392,500,000 votes and non-affiliated investors in our Class A Common Stock would have voting power of less than 1%. 28 Charles Stith Keiser, our director and Vice-Chair, the holder of 2,150,000 shares of our Class B common stock and 24,528 shares of our Class A common stock, controls approximately 27.3% of the voting power of the outstanding common stock of the Company.
If our board of directors determined to issue the remaining 16,979,250 unissued Class B shares, such shares would represent an additional 424,481,250 votes and non-affiliated investors in our Class A Common Stock would have voting power of less than 1%. 25 Charles Stith Keiser, our director, the holder of 2,150,000 shares of our Class B common stock and 10 shares of our Class A common stock, controls approximately 69.8% of the voting power of the outstanding common stock of the Company.
Any such claims or complaints, as well as any related news reports or reports on social media, even if inaccurate or untrue, could cause negative publicity, which in turn could harm our business and have a material adverse effect on our results of operations.
Any such claims or complaints, as well as any related news reports or reports on social media, even if inaccurate or untrue, could cause negative publicity, which in turn could harm our business and have a material adverse effect on our results of operations. 16 Our quarterly operating results may fluctuate due to the timing of expenses, veterinary facility acquisitions, veterinary facility closures, and other factors.
If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations. 12 If our business plan is not successful, we may not be able to continue operations as a going concern and our shareholders may lose their entire investment in us.
If our business plan is not successful, we may not be able to continue operations as a going concern and our shareholders may lose their entire investment in us.
A natural disaster or other catastrophic event in any of our major markets could have a material adverse impact on our business, financial condition, results of operations, or cash flows. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
A natural disaster or other catastrophic event in any of our major markets could have a material adverse impact on our business, financial condition, results of operations, or cash flows.
This could compromise our ability to pursue our growth strategy effectively and may adversely affect our ability to acquire customers or otherwise harm our business, financial condition, and results of operations. 24 We may fail to comply with various state or federal regulations covering the dispensing of prescription pet medications, including controlled substances, through our veterinary services businesses, which may subject us to reprimands, sanctions, probations, fines, or suspensions.
We may fail to comply with various state or federal regulations covering the dispensing of prescription pet medications, including controlled substances, through our veterinary services businesses, which may subject us to reprimands, sanctions, probations, fines, or suspensions.
If we fail to raise sufficient capital pursuant to the Purchase Agreement, we will have to explore other financing activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations.
As discussed in the Notes to Financial Statements included in this annual report on Form 10-K, as of December 31, 2024, we had $723,690 cash and restricted cash. 10 If we fail to raise sufficient capital pursuant to the Purchase Agreement, we will have to explore other financing activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations.
The protection of customer, employee, and company data in the information technology systems we use (including those maintained by third-party providers) is critical.
The protection of customer, employee, and company data in the information technology systems we use (including those maintained by third-party providers) is critical. In the normal course of business, we are and have been the target of malicious cyber-attack attempts and have experienced other security incidents.
In particular, COVID-19 has driven an increase in pet ownership and consumer demand for our products that may not be sustained or may reverse at any time. The success of our business depends in part on our ability to identify and respond to evolving trends in demographics and consumer preferences.
To the extent these trends slow or reverse, our sales and profitability would be adversely affected. In particular, COVID-19 has driven an increase in pet ownership and consumer demand for our products that may not be sustained or may reverse at any time.
In the normal course of business, we are and have been the target of malicious cyber-attack attempts and have experienced other security incidents. 21 Security could be compromised and confidential information, such as customer credit card numbers, employee information, or other personally identifiable information that we or our vendors collect, transmit, or store, could be misappropriated or system disruptions could occur.
Security could be compromised and confidential information, such as customer credit card numbers, employee information, or other personally identifiable information that we or our vendors collect, transmit, or store, could be misappropriated or system disruptions could occur. In addition, cyber-attacks such as ransomware attacks could lock us out of our information systems and disrupt our operations.
If we are unable to manage our growth effectively, the quality of our platform, efficiency of our operations, and management of our expenses could suffer, which could negatively impact our brand, business, operating results and profitability. 14 We may seek to grow our business through acquisitions of, or investments in, new or complementary businesses, and facilities, or through strategic alliances, and the failure to manage these acquisitions or strategic alliances, or to integrate them with our existing business, could have a material adverse effect on us.
We may seek to grow our business through acquisitions of, or investments in, new or complementary businesses, and facilities, or through strategic alliances, and the failure to manage these acquisitions or strategic alliances, or to integrate them with our existing business, could have a material adverse effect on us. The pet care industry is highly fragmented.
Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations. 26 The sale or availability for sale of substantial amounts of our Class A common stock could adversely affect their market price.
We expect to continue to incur net losses for the foreseeable future, as we continue our development and acquisition of veterinary hospitals and related veterinary servicing activities.
We expect to continue to incur net losses for the foreseeable future, as we continue our development and acquisition of veterinary hospitals and related veterinary servicing activities. If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations.
Our net loss for the twelve months ended December 31, 2023 was $14,792,886 and for the years ended December 31, 2022 and 2021 was $(4,911,926) and $(1,331,062), respectively. Our accumulated deficit as of December 31, 2023 was $21,215,257. As of December 31, 2023, we had total stockholders’ equity of approximately $788,259.
Our net loss for the twelve months ended December 31, 2024 was $14,264,261 and for the year ended December 31, 2023 was $14,792,886. Our accumulated deficit as of December 31, 2024 was $36,350,281. As of December 31, 2024, we had total stockholders’ equity of approximately $1,562,005.
We have also benefited from increasing pet ownership, discretionary spending on pets and current trends in humanization and premiumization in the pet industry, as well as favorable pet ownership demographics. To the extent these trends slow or reverse, our sales and profitability would be adversely affected.
Our business could be harmed by any material decline in the amount of consumer spending, which could reduce our sales, or a decrease in the sales of higher-margin products, which could reduce our profitability and adversely affect our business. 18 We have also benefited from increasing pet ownership, discretionary spending on pets and current trends in humanization and premiumization in the pet industry, as well as favorable pet ownership demographics.
Our articles of incorporation authorize the issuance of one hundred million (100,000,000) shares of Class A common stock, twenty million (20,000,000) shares of Class B common stock, and fifty million (50,000,000) shares of preferred stock.
Our articles of incorporation authorize the issuance of four million (4,000,000) shares of Class A common stock, twenty million (20,000,000) shares of Class B common stock, and fifty million (50,000,000) shares of preferred stock. We currently have 1,176,059, 3,020,750 and 0 shares of Class A common stock, Class B common stock and Series A preferred stock, respectively, issued and outstanding.
Risks Related to Government Regulation Various government regulations could limit or delay our ability to develop and commercialize our services or otherwise negatively impact our business.
Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. 20 Risks Related to Government Regulation Various government regulations could limit or delay our ability to develop and commercialize our services or otherwise negatively impact our business.
We may experience declines in sales or changes in the types of products and services sold during economic downturns. Our business could be harmed by any material decline in the amount of consumer spending, which could reduce our sales, or a decrease in the sales of higher-margin products, which could reduce our profitability and adversely affect our business.
We may experience declines in sales or changes in the types of products and services sold during economic downturns.
Removed
As discussed in the Notes to Financial Statements included in this Registration Statement, as of December 31, 2023, we had $378,961 cash and restricted cash.
Added
If we are unable to manage our growth effectively, the quality of our platform, efficiency of our operations, and management of our expenses could suffer, which could negatively impact our brand, business, operating results and profitability.
Removed
Our quarterly operating results may fluctuate due to the timing of expenses, veterinary facility acquisitions, veterinary facility closures, and other factors.
Added
Building an internal sales organization is time consuming and expensive and will significantly increase our compensation expense.
Removed
The COVID-19 outbreak has previously disrupted our business, and any future outbreak of a health epidemic or other adverse public health developments could materially and adversely affect our business and operating results.
Added
The success of our business depends in part on our ability to identify and respond to evolving trends in demographics and consumer preferences.
Removed
The COVID-19 outbreak previously disrupted our business and any future outbreak of a health epidemic or other adverse public health developments could materially and adversely affect our business and operating results. There is continuing uncertainty relating to the potential effect of COVID-19 on our business.
Added
This could compromise our ability to pursue our growth strategy effectively and may adversely affect our ability to acquire customers or otherwise harm our business, financial condition, and results of operations.
Removed
Infections may become more widespread and should that cause supply disruptions it would have a negative impact on our business, financial condition and operating results.
Added
On December 16, 2024, we received a staff determination from Nasdaq to delist the Company’s securities from the Nasdaq Capital Market, based upon the closing bid price of the Company’s Class A Common Stock.
Removed
In addition, a significant health epidemic could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect the market for our veterinary services, which could have a material adverse effect on our business, operating results and financial condition.
Added
For 30 consecutive business days the Company was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a grace period of 180 days, or until June 16, 2025, to regain compliance with the Minimum Bid Price Requirement.
Removed
The extent to which the COVID-19 pandemic impacts our business will depend on future developments that are uncertain and unpredictable, including the duration and severity of the COVID-19 pandemic, its impact on capital and financial markets, the continued timing of widespread availability of COVID-19 vaccines, the willingness of individuals to become vaccinated, the efficacy of vaccinations, virus mutations and variants, the length of time COVID-19 related restrictions continue to stay in place or are reinstituted and for economic and operating conditions to return to prior levels, together with resulting consumer behaviors, and numerous other uncertainties, all of which remain uncertain.
Added
There can be no assurance, however, that the Company will be able to regain compliance with the Bid Price Rule or that it will otherwise be in compliance with other Nasdaq listing rules.
Removed
Any of these events could have a material adverse impact on our business, financial condition, results of operations and ability to execute and capitalize on our strategies for a period of time that is currently unknown. 19 Our continued success is largely dependent on positive perceptions of our company.
Added
Sales of our Class A Common Stock to Tumim under the Purchase Agreement will depend upon market conditions and other factors to be determined by us.
Removed
In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Added
Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future.
Removed
The Staff Determination was issued because, as of March 7, 2024, the Company’s securities had a closing bid price of $0.10 or less for at least ten consecutive trading days. Accordingly, the Company is subject to the provisions contemplated under the Low Priced Stocks Rule.
Added
We may remain an emerging growth company until as late as December 31, 2026, though we may cease to be an emerging growth company earlier under certain circumstances, including if (i) we have more than $1.235 billion in annual revenue in any fiscal year, (ii) the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.
Removed
The Company may appeal the Staff Determination to a Hearings Panel by filing a hearing request with Nasdaq on or before March 15, 2024. Hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. A hearing request will stay the delisting of the Company’s securities pending the Panel’s decision.
Removed
Previously, on November 27, 2023, the Company received a deficiency letter from the Listing Qualifications Department of Nasdaq indicating that the Company’s common stock is subject to potential delisting from the Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock had closed below the required minimum of $1.00 per share under Nasdaq Marketplace Rule 5550(a)(2).
Removed
The Company intends to appeal the Staff Determination under the Low Priced Stock Rule and will file a hearing request with Nasdaq by March 15, 2024. Pending the hearing before the Panel, the Company’s securities will continue to be listed on the Nasdaq Capital Market.
Removed
In the immediate future, the Company intends to implement an appropriate reverse split of its Class A Common Stock in order to regain compliance with both the Low Priced Stocks Rule and the Bid Price Rule.
Removed
We currently have 80,306,073, 3,891,500 and 53,793 shares of Class A common stock, Class B common stock and Series A preferred stock, respectively, issued and outstanding.

… 3 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed6 unchanged
Biggest changeThe Company is in the process of establishing a cybersecurity policy which implement protocols to evaluate, recognize, and address significant risks, including those posed by cybersecurity threats.
Biggest changeThis cybersecurity policy is designed to establish a comprehensive framework for identifying, assessing, mitigating, and responding to cybersecurity risks across the organization. 28 The Company is in the process of establishing a cybersecurity policy which implement protocols to evaluate, recognize, and address significant risks, including those posed by cybersecurity threats.
The Company’s Board, together with management, is engaged in our cybersecurity monitoring managed by our third-party provider and it is constantly changing. Any issues are appropriately addressed timely. 31 To date, we have not experienced any cybersecurity incidents that materially affected our business strategy, results of operations or financial condition.
The Company’s Board, together with management, is engaged in our cybersecurity monitoring managed by our third-party provider and it is constantly changing. Any issues are appropriately addressed timely. To date, we have not experienced any cybersecurity incidents that materially affected our business strategy, results of operations or financial condition.
The Company recognizes the critical importance of cybersecurity in safeguarding sensitive information, maintaining operational resilience, and protecting stakeholders’ interests. This cybersecurity policy is designed to establish a comprehensive framework for identifying, assessing, mitigating, and responding to cybersecurity risks across the organization.
The Company recognizes the critical importance of cybersecurity in safeguarding sensitive information, maintaining operational resilience, and protecting stakeholders’ interests.

Item 2. Properties

Properties — owned and leased real estate

10 edited+0 added−3 removed6 unchanged
Biggest changeThe lease consists of 2,653 square feet of commercial space zoned to permit the provision of veterinary services. 33 All Breed Pet Care The real estate underlying the All Breed Pet Care facility is located at 7501 Peachwood Drive, Newburgh, Indiana, and is owned by IVP IN Properties, LLC, a 100%-owned subsidiary of the Company.
Biggest changeAll Breed Pet Care The real estate underlying the All Breed Pet Care facility is located at 7501 Peachwood Drive, Newburgh, Indiana, and is owned by IVP IN Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $1,200,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below.
Pets & Friends Animal Hospital LLC (P&F) The real estate underlying Pets & Friends Animal Hospital is located at 3625 Baltimore Ave, Pueblo, Colorado, and is owned by IVP CO Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $216,750 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below.
The material terms of the WealthSouth loan are summarized below. Pets & Friends Animal Hospital LLC (P&F) The real estate underlying Pets & Friends Animal Hospital is located at 3625 Baltimore Ave, Pueblo, Colorado, and is owned by IVP CO Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $216,750 and was financed by WealthSouth.
The initial rent in the first year of the lease is $2,350 per month increasing in annual increments for a total of 0.75% over ten years. The lease consists of 2,442 square feet of commercial space zoned to permit the provision of veterinary services. Lytle Veterinary Clinic, Inc.
The initial rent in the first year of the lease is $2,350 per month increasing in annual increments for a total of 0.75% over ten years. The lease consists of 2,442 square feet of commercial space zoned to permit the provision of veterinary services. 29 Lytle Veterinary Clinic, Inc.
The material terms of the WealthSouth loan are summarized below. Valley Veterinary Services The real estate underlying Valley Veterinary Services facility is located 408 Grace Lane, Rostraver Township, Pennsylvania 15012 (Parcel Nos. 56-12-00-0-148 and 56-12-00-0-144) and is owned by IVP PA Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $590,000 and was financed by WealthSouth.
The property was purchased for $800,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. Valley Veterinary Services The real estate underlying Valley Veterinary Services facility is located 408 Grace Lane, Rostraver Township, Pennsylvania 15012 (Parcel Nos. 56-12-00-0-148 and 56-12-00-0-144) and is owned by IVP PA Properties, LLC, a 100%-owned subsidiary of the Company.
Advanced Veterinary Care of Pasco, LLC (AVCP) The real estate underlying our Advanced Veterinary Care of Pasco facility, located at 12116 Cobble Stone Drive, Hudson, Florida, is leased from Remappa Family Limited Partnership for one year with two additional possible three-year renewals.
The material terms of the WealthSouth loan are summarized below. Advanced Veterinary Care of Pasco, LLC (AVCP) The real estate underlying our Advanced Veterinary Care of Pasco facility, located at 12116 Cobble Stone Drive, Hudson, Florida, is leased from Remappa Family Limited Partnership for one year with two additional possible three-year renewals.
The material terms of the WealthSouth loan are summarized below. WealthSouth Real Estate Loans Each WealthSouth loan bears a variable interest rate charged on all sum outstanding equal to the New York Prime Rate plus 0.50%, however, such rate can never be less than 3.57% per annum.
The property was purchased for $590,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. WealthSouth Real Estate Loans Each WealthSouth loan bears a variable interest rate charged on all sum outstanding equal to the New York Prime Rate plus 0.50%, however, such rate can never be less than 3.57% per annum.
The property was purchased for $1,200,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below. The Pony Express Veterinary Hospital The real estate underlying The Pony Express Veterinary Hospital is located at 893 Lower Bellbrook Road, Xenia, Ohio and is owned by IVP TX Properties, LLC, a 100%-owned subsidiary of the Company.
The Pony Express Veterinary Hospital The real estate underlying The Pony Express Veterinary Hospital is located at 893 Lower Bellbrook Road, Xenia, Ohio and is owned by IVP TX Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $500,000 and was financed by WealthSouth.
The Old 41 Animal Hospital The real estate underlying The Old 41 Animal Hospital facility is located at 27551 Old 41 Road, Bonita Springs, Florida and 27567 Old 41 Road, Bonita Springs, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $800,000 and was financed by WealthSouth.
The material terms of the WealthSouth loan are summarized below. 30 The Old 41 Animal Hospital The real estate underlying The Old 41 Animal Hospital facility is located at 27551 Old 41 Road, Bonita Springs, Florida and 27567 Old 41 Road, Bonita Springs, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company.
The loan bears interest at a rate of 4.35% per annum. 32 Chiefland Animal Hospital (CAH) The real estate underlying Chiefland Animal Hospital is located at 2630 North Young Boulevard, Chiefland, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company.
Chiefland Animal Hospital (CAH) The real estate underlying Chiefland Animal Hospital is located at 2630 North Young Boulevard, Chiefland, Florida, and is owned by IVP FL Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $279,500 and was financed by WealthSouth, a division of Farmers National Bank (“WealthSouth”).
The rent is $4,167 per month, increasing 3% annually.
The rent is $4,167 per month, increasing 3% annually. The lease consists of 2,653 square feet of commercial space zoned to permit the provision of veterinary services.
Removed
Kauai Veterinary Clinic, (KVC) The real estate underlying Kauai Veterinary Clinic is located at 1864 Haleukana Street, Lihue, Hawaii, and is owned by KVC Properties, LLC, a 100%-owned subsidiary of the Company. The property was purchased for $1,300.000 and was financed by a loan from First Southern National Bank.
Removed
The property was purchased for $279,500 and was financed by WealthSouth, a division of Farmers National Bank (“WealthSouth”). The material terms of the WealthSouth loan are summarized below.
Removed
The property was purchased for $500,000 and was financed by WealthSouth. The material terms of the WealthSouth loan are summarized below.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 34 PART II 35 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. [RESERVED] 37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 31 PART II 32 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 ITEM 6. [RESERVED] 33 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 34 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 55 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−7 removed11 unchanged
Biggest changeThe Plan provides for the award of stock options (incentive and non-qualified), stock awards and stock appreciation rights to officers, directors, employees and consultants who provide services to the Company. Under the plan, the capital stock available for issuance under the Plan are the shares of the Company’s authorized but unissued common stock.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans Effective October 18, 2022, shareholders of Company approved the Company’s 2022 Equity Incentive Plan (the “Plan”). The Plan provides for the award of stock options (incentive and non-qualified), stock awards and stock appreciation rights to officers, directors, employees and consultants who provide services to the Company.
Plan Category (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted- average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders: 2022 Plan $ Total equity compensation plans approved by stockholders $ Equity compensation plans not approved by security holders - - - Recent Sales of Unregistered Securities Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.
Plan Category (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted- average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders: 2022 Plan 4,747 $ 2.50 112,859 Total equity compensation plans approved by stockholders $ Equity compensation plans not approved by security holders - - - Recent Sales of Unregistered Securities Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.
Holders As of the date of this Annual Report, there were 100 stockholders of record for our Class A common stock, 5 stockholders of record for our Class B common stock and 2 stockholders of record for our Series A preferred stock.
Holders As of the date of this Annual Report, there were 41 stockholders of record for our Class A common stock, 3 stockholders of record for our Class B common stock and 0 stockholders of record for our Series A preferred stock.
The policy is administered by our Compensation Committee, except that the Board may decide to act as the administrator in lieu of the Compensation Committee or designate another committee of the Board (including a special committee) to act as the administrator other than the determination that recovery of “erroneously awarded compensation” is impracticable and not required (as described above). 36 The following table provides information regarding our equity compensation plan as of December 31, 2023.
The policy is administered by our Compensation Committee, except that the Board may decide to act as the administrator in lieu of the Compensation Committee or designate another committee of the Board (including a special committee) to act as the administrator other than the determination that recovery of “erroneously awarded compensation” is impracticable and not required (as described above).
Executive Incentive Compensation Recovery Policy We have adopted an executive incentive compensation recovery policy (the “Executive Incentive Compensation Recovery Policy”) pursuant to Section 10D of the Exchange Act, Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”), and Listing Rule 5608 adopted by Nasdaq (the “Listing Standards”).
Outstanding Equity Awards No equity awards to our named executive officers were outstanding as of December 31, 2024 or as of the date of this Annual Report. 32 Executive Incentive Compensation Recovery Policy We have adopted an executive incentive compensation recovery policy (the “Executive Incentive Compensation Recovery Policy”) pursuant to Section 10D of the Exchange Act, Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”), and Listing Rule 5608 adopted by Nasdaq (the “Listing Standards”).
Nasdaq Deficiency Notice Our Class A Common Stock is currently traded on The Nasdaq Capital Market (“Nasdaq”). On March 8, 2024, Inspire Veterinary received a staff determination from Nasdaq to delist the Company’s securities from the Nasdaq Capital Market.
Nasdaq Deficiency Notice Class A Common Stock currently trades on The Nasdaq Capital Market (“Nasdaq”). On December 16, 2024, we received a staff determination from Nasdaq to delist the Company’s securities from the Nasdaq Capital Market, based upon the closing bid price of the Company’s Class A Common Stock.
Removed
The Staff Determination was issued because, as of March 7, 2024, the Company’s securities had a closing bid price of $0.10 or less for at least ten consecutive trading days. Accordingly, the Company is subject to the provisions contemplated under Listing Rule 5810(c)(3)(A)(iii) (the “Low Priced Stocks Rule”).
Added
For 30 consecutive business days the Company was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a grace period of 180 days, or until June 16, 2025, to regain compliance with the Minimum Bid Price Requirement.
Removed
The Company may appeal the Staff Determination, however, to a Hearings Panel by filing a hearing request with Nasdaq on or before March 15, 2024. Hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. A hearing request will stay the delisting of the Company’s securities pending the Panel’s decision.
Added
Under the plan, the capital stock available for issuance under the Plan are the shares of the Company’s authorized but unissued common stock.
Removed
Previously, on November 27, 2023, the Company received a deficiency letter from the Listing Qualifications Department of Nasdaq indicating that the Company’s common stock is subject to potential delisting from the Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock had closed below the required minimum of $1.00 per share under Nasdaq Marketplace Rule 5550(a)(2) (the “Bid Price Rule”).
Added
The following table provides information regarding our equity compensation plan as of December 31, 2024.
Removed
The Company intends to appeal the Staff Determination under the Low Priced Stock Rule and will file a hearing request with Nasdaq by March 15, 2024. Pending the hearing before the Panel, the Company’s securities will continue to be listed on the Nasdaq Capital Market.
Removed
In the immediate future, the Company intends to implement an appropriate reverse split of its Class A Common Stock in order to regain compliance with both the Low Priced Stocks Rule and the Bid Price Rule.
Removed
There can be no assurance, however, that the Company will be able to regain compliance with the Bid Price Rule and the Low Priced Stocks Rule or that it will otherwise be in compliance with other Nasdaq listing rules. 35 Securities Authorized for Issuance under Equity Compensation Plans Effective October 18, 2022, shareholders of Company approved the Company’s 2022 Equity Incentive Plan (the “Plan”).
Removed
Outstanding Equity Awards No equity awards to our named executive officers were outstanding at December 31, 2023 or as of the date of this Annual Report.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+89 added−18 removed96 unchanged
Biggest changeNotes payable to FSB as of December 31, 2023 and 2022 consisted of the following: Original December 31, December 31, Issuance Principal Acquisition Entered Maturity Interest 2023 2022 Cost $ 1,105,000 KVC 1/25/2021 2/25/2041 4.35 % $ 997,010 $ 1,035,558 $ 13,264 1,278,400 KVC 1/25/2021 1/25/2031 4.35 % 960,849 1,074,251 10,085 469,914 KVC 1/25/2021 2/25/2023 5.05 % - 53,964 753 2,086,921 Pony Express 10/31/2022 10/31/2025 5.97 % 1,902,452 2,061,346 25,575 400,000 Pony Express 10/31/2022 10/31/2042 5.97 % 387,433 398,258 3,277 700,000 Pony Express 10/31/2022 8/16/2023 7.17 % - 700,000 - 568,000 Old 41 12/16/2022 12/16/2025 6.50 % 520,697 568,000 4,531 640,000 Old 41 12/16/2022 12/16/2025 6.50 % 623,861 640,000 5,077 375,000 Valley Vet 11/8/2023 11/8/2024 8.50 % 375,000 - 6,877 $ 7,623,235 $ 5,767,302 $ 6,531,377 $ 69,439 The Company amortized $14,611 and $5,429 of issuance cost in the aggregate during the year ended December 31, 2023 and 2022, respectively, for the FSB notes payable. 49 Notes payable as of December 31, 2023 and 2022 consisted of the following: December 31, December 31, 2023 2022 FNBD Notes Payable $ 9,309,286 $ 8,863,423 FSB Notes Payable 5,767,302 6,531,377 Car loan - 6,653 Total notes payable 15,076,588 15,401,453 Unamortized debt issuance costs (124,170 ) (135,240 ) Notes payable, net of issuance cost 14,952,418 15,266,213 Less current portion (1,469,043 ) (1,549,861 ) Long-term portion $ 13,483,375 $ 13,716,353 Notes payable repayment requirements as of December 31, 2023, in the succeeding years are summarized as follows: 2024 $ 1,469,043 2025 3,776,189 2026 1,008,110 2027 1,052,832 2028 1,098,387 Thereafter $ 6,672,027 Loan Payable On May 30, 2023, the Company entered into a Merchant Cash Advance Agreement for gross proceeds of $1,050,000 with an unrelated third-party financial institution.
Biggest changeNotes payable to FSB as of December 31, 2024 and 2023 consisted of the following: Original December 31, December 31, Issuance Principal Acquisition Entered Maturity Interest 2024 2023 Cost $ 1,105,000 KVC 1/25/2021 2/25/2041 4.35 % $ - $ 997,010 $ 13,264 1,278,400 KVC 1/25/2021 1/25/2031 4.35 % - 960,849 10,085 469,914 KVC 1/25/2021 2/25/2023 5.05 % - - 753 2,086,921 Pony Express 10/31/2022 10/31/2025 5.97 % 1,733,807 1,902,452 25,575 400,000 Pony Express 10/31/2022 10/31/2042 5.97 % 375,943 387,433 3,277 700,000 Pony Express 10/31/2022 8/16/2023 7.17 % - - - 568,000 Old 41 12/16/2022 12/16/2025 6.50 % 470,227 520,697 4,531 640,000 Old 41 12/16/2022 12/16/2025 6.50 % 406,641 623,861 5,077 375,000 Valley Vet 11/8/2023 11/8/2024 8.50 % 375,000 375,000 6,877 $ 7,623,235 $ 3,361,618 $ 5,767,302 $ 69,439 The Company amortized $19,053 and $14,611 of issuance cost in the aggregate during the year ended December 31, 2024 and 2023, respectively, for the FSB notes payable.
Name Closing Date Transaction Value 1 Kauai Veterinary Clinic 3 January 2021 $ 1,505,000 Chiefland Animal Hospital 2 August 2021 $ 564,500 Pets & Friends Animal Hospital 2 October 2021 $ 630,000 Advanced Veterinary Care of Pasco 3 January 2022 $ 1,014,000 Lytle Veterinary Clinic 2 March 2022 $ 1,442,469 Southern Kern Veterinary Clinic 2 March 2022 $ 2,000,000 Bartow Animal Clinic 3,4 May 2022 $ 1,405,000 Dietz Family Pet Hospital 2 June 2022 $ 500,000 Aberdeen Veterinary Clinic 3 July 2022 $ 574,683 All Breed Pet Care Veterinary Clinic 2 August 2022 $ 2,152,000 Pony Express Veterinary Hospital, Inc. 2 October 2022 $ 3,108,652 Williamsburg Animal Clinic 3 December 2022 $ 850,000 The Old 41 Animal Hospital 2 December 2022 $ 1,465,000 Valley Veterinary Services 3,5 November 2023 $ 1,790,000 1.
Name Closing Date Transaction Value 1 Kauai Veterinary Clinic 3,6 January 2021 $ 1,505,000 Chiefland Animal Hospital 2 August 2021 $ 564,500 Pets & Friends Animal Hospital 2 October 2021 $ 630,000 Advanced Veterinary Care of Pasco 3 January 2022 $ 1,014,000 Lytle Veterinary Clinic 2 March 2022 $ 1,442,469 Southern Kern Veterinary Clinic 2 March 2022 $ 2,000,000 Bartow Animal Clinic 3,4 May 2022 $ 1,405,000 Dietz Family Pet Hospital 2 June 2022 $ 500,000 Aberdeen Veterinary Clinic 3 July 2022 $ 574,683 All Breed Pet Care Veterinary Clinic 2 August 2022 $ 2,152,000 Pony Express Veterinary Hospital, Inc. 2 October 2022 $ 3,108,652 Williamsburg Animal Clinic 3 December 2022 $ 850,000 The Old 41 Animal Hospital 2 December 2022 $ 1,465,000 Valley Veterinary Services 3,5 November 2023 $ 1,790,000 1.
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $382,500. 40 Aberdeen Veterinary Clinic On July 29, 2022, the Company acquired the veterinary practice and related assets of Aberdeen Veterinary Clinic in Aberdeen, Maryland from Fritz Enterprises, Inc. for $574,683 through the Company’s wholly-owned subsidiary IVP MD Holding Company LLC.
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $382,500. Aberdeen Veterinary Clinic On July 29, 2022, the Company acquired the veterinary practice and related assets of Aberdeen Veterinary Clinic in Aberdeen, Maryland from Fritz Enterprises, Inc. for $574,683 through the Company’s wholly-owned subsidiary IVP MD Holding Company LLC.
The Company recently entered the equine care, or the care of horses, sector with the addition of the Pony Express Veterinary Hospital into the Company’s small-animal-only mix of locations. Growth strategies and expansion plans call for the Company to enter emergency care and mixed animal (such as bovine and additional equine care) in future years of growth.
The Company recently entered the equine care, or the care of horses, sector with the addition of the Pony Express Veterinary Hospital into the Company’s small-animal-only mix of locations. 34 Growth strategies and expansion plans call for the Company to enter emergency care and mixed animal (such as bovine and additional equine care) in future years of growth.
The transaction value is the amount of consideration paid for the acquisition of the veterinary practice (and as denoted the real estate operations) that was accounted for as a single business combination, in accordance with ASC Topic 805. 2. Acquisition includes both the veterinary practice and related assets and the real estate operations in the transaction value. 3.
The transaction value is the amount of consideration paid for the acquisition of the veterinary practice (and as denoted the real estate operations) that was accounted for as a single business combination, in accordance with ASC Topic 805. 2. Acquisition includes both the veterinary practice and related assets and the real estate operations in the transaction value. 35 3.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period that the amounts are determined. 52 Goodwill Goodwill represents the excess of the cost of an acquired business over the amounts assigned to its net assets.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period that the amounts are determined. 53 Goodwill Goodwill represents the excess of the cost of an acquired business over the amounts assigned to its net assets.
Reports are generated which allow Company management to view each of these as line-items as well as measure the ratio of service revenue versus product revenue within our revenue mix. 44 The Company believes the ratio metric is useful for the management and its investors for several reasons: ● The Company and its medical leadership teach and enable its medical staff to provide comprehensive medical care which is appropriate for each animal patient.
Reports are generated which allow Company management to view each of these as line-items as well as measure the ratio of service revenue versus product revenue within our revenue mix. 41 The Company believes the ratio metric is useful for the management and its investors for several reasons: ● The Company and its medical leadership teach and enable its medical staff to provide comprehensive medical care which is appropriate for each animal patient.
Each Practice to be acquired must have a minimum projected debt-service coverage ratio (“DSCR”) of 1.0x, defined as earnings before interest depreciation and amortization (“EBIDA”)/Annual Debt Service Requirement. 47 Under the MLOCA the Term Loans to acquire a Practice shall not exceed 10 years. The first twelve months of the Term Loan may be interest only.
Each Practice to be acquired must have a minimum projected debt-service coverage ratio (“DSCR”) of 1.0x, defined as earnings before interest depreciation and amortization (“EBIDA”)/Annual Debt Service Requirement. 44 Under the MLOCA the Term Loans to acquire a Practice shall not exceed 10 years. The first twelve months of the Term Loan may be interest only.
Simultaneously, the real estate operations, consisting of land and buildings, utilized by the All Breed practice was purchased for $1,200,000 through the Company’s wholly-owned subsidiary, IVP IN Properties, LLC. This acquisition was financed by three loans provided by Farmers National Bank of Danville for a total of $1,765,450.
Simultaneously, the real estate operations, consisting of land and buildings, utilized by the All Breed practice was purchased for $1,200,000 through the Company’s wholly-owned subsidiary, IVP IN Properties, LLC. This acquisition was financed by three loans provided by Farmers National Bank of Danville for a total of $1,945,450.
Because the Company leverages a leadership and support structure which is distributed throughout the United States, acquisitions are not centralized to one geographic area. The Company operates it business as one operating and one reportable segment.
Because the Company leverages a leadership and support structure which is distributed throughout the United States, acquisitions are not centralized to one geographic area. The Company operates its business as one operating and one reportable segment.
This acquisition was financed by one loan provided by First Southern National Bank for $375,000 and one loan provided by Farmers National Bank of Danville for $850,000. Comparability of Our Results of Operations The Company’s consolidated results of operations for the years ended December 31, 2023 compared to December 31, 2022 were significantly impacted by acquisitions.
This acquisition was financed by one loan provided by First Southern National Bank for $375,000 and one loan provided by Farmers National Bank of Danville for $850,000. 38 Comparability of Our Results of Operations The Company’s consolidated results of operations for the years ended December 31, 2024 compared to December 31, 2023 were significantly impacted by acquisitions.
Below is a summary of the acquisitions that closed from the inception of the Company through December 31, 2023, and the related transaction price.
Below is a summary of the acquisitions that closed from the inception of the Company through December 31, 2024, and the related transaction price.
The third loan with FSB that was entered into on October 31, 2022, was in the amount of $700,000. The loan has a fixed interest rate of 6.75% and a maturity date of April 1, 2023. The fixed rate loan has monthly payments of $6,903 except for a final monthly payment of $423,278.
The third loan with FSB that was entered into on October 31, 2022, was in the amount of $700,000. The loan has a fixed interest rate of 6.75% and a maturity date of October 31, 2025. The fixed rate loan has monthly payments of $6,903 except for a final monthly payment of $423,278.
The loan has a fixed interest rate of 5.97% and a maturity date of October 31, 2042. The fixed rate loan has monthly payments of $2,859. The commercial loan had issuance costs of $3,277 for the year ended December 31, 2022, that was capitalized and is being amortized straight line over the life of the loan.
The loan has a fixed interest rate of 5.97% and a maturity date of October 31, 2042. The fixed rate loan has monthly payments of $2,859. The commercial loan had issuance costs of $3,277 that was capitalized and is being amortized straight line over the life of the loan.
Further, in the last quarter of 2023 and beyond, the Company intends to continue to conduct the due diligence necessary to strategically acquire existing general practices, specialty hospitals, and/or expand existing locations to include emergency care and more complex surgeries, holistic care and comprehensive diagnostics which allow it to offer more complex surgeries and internal medicine work ups.
In 2025 and beyond, the Company intends to continue to conduct the due diligence necessary to strategically acquire existing general practices, specialty hospitals, and/or expand existing locations to include emergency care and more complex surgeries, holistic care and comprehensive diagnostics which allow it to offer more complex surgeries and internal medicine work ups.
This acquisition was financed by two loans provided by First Southern National Bank for a total of $1,208,000. 41 Valley Veterinary Service Acquisition On November 8, 2023, the Company acquired the animal hospital and related assets of Valley Veterinary Service, Inc in Rostraver Township, Pennsylvania for $800,000 in cash, a holdback agreement for $200,000 in cash that may be paid out at the end of the two year period following the acquisition based on continued employment by the two former owners and revenue targets for year 1 and year 2 following the effective date of the acquisition, which is not included in the consideration transferred, and issuance of restricted shares of the Company’s Class A common stock equal to $400,000 through the Company’s wholly owned subsidiary IVP PA Holding Company, LLC.
Valley Veterinary Service Acquisition On November 8, 2023, the Company acquired the animal hospital and related assets of Valley Veterinary Service, Inc in Rostraver Township, Pennsylvania for $800,000 in cash, a holdback agreement for $200,000 in cash that may be paid out at the end of the two year period following the acquisition based on continued employment by the two former owners and revenue targets for year 1 and year 2 following the effective date of the acquisition, which is not included in the consideration transferred, and issuance of restricted shares of the Company’s Class A common stock equal to $400,000 through the Company’s wholly owned subsidiary IVP PA Holding Company, LLC.
During its third calendar year, the Company has plans to seek multi-unit practices with regional presence to facilitate growth for the Company and also to move more swiftly into being a prime provider in select markets.
The Company has plans to seek multi-unit practices with regional presence to facilitate growth for the Company and also to move more swiftly into being a prime provider in select markets.
Interest Rate Risk Our credit facilities bear interest at a floating rate, generally equal to the New York Prime Rate plus an applicable margin. As a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the Master Lending and Credit Facility, which were $15,076,588 as of December 31, 2023.
Interest Rate Risk Our credit facilities bear interest at a floating rate, generally equal to the New York Prime Rate plus an applicable margin. As a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the Master Lending and Credit Facility, which were $11,983,137 as of December 31, 2024.
The most significant assumptions used in our application of the MPEEM and in the valuation analysis of acquired client lists are: ● A useful life of 15 years where after 10 years the remaining customer base results in small positive cash flows and no terminal value was calculated. ● A discount rate of 19.6% was selected to calculate the present value of the prospective after–tax cash flows associated with the customer base and business development relationships. ● We utilized an annual Company sales retention rate of 74.0% (Veterinary Services industry rate) for the Customer Base. ● The contributory asset charges are based on returns (8.3% to 19.7%) for Net Working Capital (normalized); Fixed Assets; Assembled Workforce; Trade Name; and Non-Competes. 53 As of December 31, 2023 our intangible assets and goodwill balances were as follows: December 31, 2023 Client List $ 2,071,000 Noncompete Agreement 398,300 Trademark 1,117,200 Other Intangible Assets 45,835 Goodwill 8,147,590 $ 11,779,925 Our valuations of the intangible assets apart of our veterinary clinics and animal hospital acquisitions has a relatively small value allocated to the client list (customer relationship) due to our use of the Veterinary Services industry rate of 74% for the retention rate in our valuations.
The most significant assumptions used in our application of the MPEEM and in the valuation analysis of acquired client lists are: ● A useful life of 15 years where after 10 years the remaining customer base results in small positive cash flows and no terminal value was calculated. ● A discount rate of 19.6% was selected to calculate the present value of the prospective after–tax cash flows associated with the customer base and business development relationships. ● We utilized an annual Company sales retention rate of 74.0% (Veterinary Services industry rate) for the Customer Base. ● The contributory asset charges are based on returns (8.3% to 19.7%) for Net Working Capital (normalized); Fixed Assets; Assembled Workforce; Trade Name; and Non-Competes. 54 As of December 31, 2024 our intangible assets and goodwill balances were as follows: December 31, 2024 Client List $ 1,916,444 Noncompete Agreement 398,300 Trademark 1,047,792 Other Intangible Assets 45,836 Goodwill 8,022,082 $ 11,430,454 Our valuations of the intangible assets apart of our veterinary clinics and animal hospital acquisitions has a relatively small value allocated to the client list (customer relationship) due to our use of the Veterinary Services industry rate of 74% for the retention rate in our valuations.
The transaction value excludes $200,000 for the Holdback Agreement associated with the acquisition. Kauai Veterinary Clinic Acquisition On January 25, 2021, the Company acquired Kauai Veterinary Clinic, Inc., located in Lihue, Hawaii on the island of Kauai providing regional and local veterinary services for $1,505,000 dollars through the Company’s wholly-owned subsidiary, IVP Practice Holding Company, LLC.
Kauai Veterinary Clinic Acquisition On January 25, 2021, the Company acquired Kauai Veterinary Clinic, Inc., located in Lihue, Hawaii on the island of Kauai providing regional and local veterinary services for $1,505,000 dollars through the Company’s wholly-owned subsidiary, IVP Practice Holding Company, LLC.
The increase was primarily due to the acquisition of depreciable or amortizable assets as part of the acquisitions of animal hospitals and clinics. Other Expenses: Other expenses are composed primarily of interest expenses and small denomination bank fee charges.
The increase was primarily due to the acquisition of depreciable or amortizable assets as part of the Valley Veterinary acquisition. Other Expenses: Other expenses are composed primarily of interest expenses and small denomination bank fee charges.
On November 28, 2023, the Company amended the financing arrangement to borrow an additional $531,071 resulting in the weekly payments to decrease to $56,800 to be paid over 40 weeks. This amendment increased the effective rate to 49%. The refinancing resulted in a loss on debt modification of $485,436.
On November 28, 2023, the Company amended the financing arrangement to borrow an additional $531,071 resulting in the weekly payments to decrease to $56,800 to be paid over 40 weeks. This amendment increased the effective rate to 49%.
Notes payable to FNBD as of December 31, 2023 and 2022 consisted of the following: Original December 31, December 31, Issuance Principal Acquisition Entered Maturity Interest 2023 2022 Cost $ 237,272 CAH 12/27/2021 12/27/2041 3.98 % $ 228,785 $ 237,272 $ 6,108 231,987 CAH 12/27/2021 12/27/2031 3.98 % 210,161 231,987 6,108 216,750 P&F 12/27/2021 12/27/2041 3.98 % 208,997 216,750 5,370 318,750 P&F 12/27/2021 12/27/2031 3.98 % 288,761 318,750 5,370 817,135 Pasco 1/14/2022 1/14/2032 3.98 % 746,733 817,135 3,085 478,098 Lytle 3/15/2022 3/15/2032 3.98 % 444,593 478,098 1,898 663,000 Lytle 3/15/2022 3/15/2042 3.98 % 645,392 663,000 11,875 425,000 Kern 3/22/2022 3/22/2042 3.98 % 413,713 425,000 7,855 1,275,000 Kern 3/22/2022 3/22/2032 3.98 % 1,185,648 1,275,000 4,688 246,500 Bartow 5/18/2022 5/18/2042 3.98 % 241,429 246,500 5,072 722,500 Bartow 5/18/2022 5/18/2032 3.98 % 683,262 722,500 2,754 382,500 Dietz 6/15/2022 6/15/2032 3.98 % 364,708 382,500 1,564 445,981 Aberdeen 7/19/2022 7/29/2032 3.98 % 428,747 445,981 1,786 1,020,000 All Breed 8/12/2022 8/12/2042 3.98 % 1,008,039 1,020,000 8,702 519,527 All Breed 8/12/2022 8/12/2032 3.98 % 503,471 519,527 3,159 225,923 All Breed 8/12/2022 8/12/2032 5.25 % 219,347 225,923 3,159 637,500 Williamsburg 12/8/2022 12/8/2032 5.25 % 637,500 637,500 2,556 850,000 Valley Vet 11/8/2023 11/8/2033 5.25 % 850,000 - 3,315 $ 9,713,423 $ 9,309,286 $ 8,863,423 $ 84,424 The Company amortized $7,152 and $6,813 of issuance cost in the aggregate during the year ending December 31, 2023 and 2022, respectively, for the FNBD notes payable.
Notes payable to FNBD as of December 31, 2024 and 2023 consisted of the following: Original December 31, December 31, Issuance Principal Acquisition Entered Maturity Interest 2024 2023 Cost $ 237,272 CAH 12/27/2021 12/27/2041 3.98 % $ 219,975 $ 228,785 $ 6,108 231,987 CAH 12/27/2021 12/27/2031 3.98 % 187,461 210,161 6,108 216,750 P&F 12/27/2021 12/27/2041 3.98 % 200,949 208,997 5,370 318,750 P&F 12/27/2021 12/27/2031 3.98 % 257,571 288,761 5,370 817,135 Pasco 1/14/2022 1/14/2032 3.98 % 667,050 746,733 3,085 478,098 Lytle 3/15/2022 3/15/2032 3.98 % 398,275 444,593 1,898 663,000 Lytle 3/15/2022 3/15/2042 3.98 % 621,020 645,392 11,875 425,000 Kern 3/22/2022 3/22/2042 3.98 % 398,089 413,713 7,855 1,275,000 Kern 3/22/2022 3/22/2032 3.98 % 1,062,126 1,185,648 4,688 246,500 Bartow 5/18/2022 5/18/2042 3.98 % 232,428 241,429 5,072 722,500 Bartow 5/18/2022 5/18/2032 3.98 % 613,737 683,262 2,754 382,500 Dietz 6/15/2022 6/15/2032 3.98 % 328,026 364,708 1,564 445,981 Aberdeen 7/19/2022 7/29/2032 3.98 % 386,120 428,747 1,786 1,020,000 All Breed 8/12/2022 8/12/2042 3.98 % 971,173 1,008,039 8,702 519,527 All Breed 8/12/2022 8/12/2032 3.98 % 453,984 503,471 3,159 225,923 All Breed 8/12/2022 8/12/2032 5.25 % 198,905 219,347 3,159 637,500 Williamsburg 12/8/2022 12/8/2032 5.25 % 580,834 637,500 2,556 850,000 Valley Vet 11/8/2023 11/8/2033 5.25 % 843,796 850,000 3,315 $ 9,713,423 $ 8,621,519 $ 9,309,286 $ 84,424 The Company amortized $6,206 and $7,152 of issuance cost in the aggregate during the year ending December 31, 2024 and 2023, respectively, for the FNBD notes payable. 45 FSB Commercial Loans The Company entered into three separate commercial loans with First Southern National Bank (“FSB”) as part of the acquisition.
Liquidity and Capital Resources Since inception, we have financed our operations from a combination of: ● issuance and sale of senior convertible notes; ● issuance of convertible debentures; ● borrowings under other debt consisting of: (i) a principal lending relationship with Farmers National Bank of Danville; (ii)a principal lending relationship with First Southern National Bank; (iii) short term financing arrangements under merchant cash advance agreement; ● common stock purchase agreement with Tumim Stone Capital LLC, ● proceeds from issuance of equity; and ● cash generated from operations. 46 The Company has experienced operating losses since its inception and had a total accumulated deficit of $21,215,257 as of December 31, 2023.
Liquidity and Capital Resources Since inception, we have financed our operations from a combination of: ● issuance and sale of senior convertible notes; ● issuance of convertible debentures; ● borrowings under other debt consisting of: (i) a principal lending relationship with Farmers National Bank of Danville; (ii)a principal lending relationship with First Southern National Bank; (iii) short term financing arrangements under merchant cash advance agreement; ● common stock purchase agreement with Tumim Stone Capital LLC, ● proceeds from issuance of equity; and ● cash generated from operations.
During the year ended December 31, 2023, the Company amortized $671,719 of OID and issuance cost included in interest expense on the statement of operations. During the year ended December 31, 2023, the Company made $1,923,474 in payments on the loan payable. The outstanding balance of the loan payable as of December 31, 2023, is $2,063,058.
The financing arrangement is guaranteed by the Company’s CEO. During the year ended December 31, 2023, the Company amortized $671,719 of OID and issuance cost included in interest expense on the statement of operations. During the year ended December 31, 2023, the Company made $1,923,474 in payments on the loan payable.
For the year ended December 31, 2023 cash flow from operations included a $13.7 million net loss, an increase of $8.8 million compared to 2022, non-cash add-backs to net loss of $6.8 million, and a $2.5 million increase in cash flows from changes in operating assets and liabilities, driven primarily by increased outstanding accounts payable and accrued expenses.
For the year ended December 31, 2024 cash flow from operations included a $14.3 million net loss, an increase of $529 thousand compared to 2023, non-cash add-backs to net loss of $6.6 million, and a $2.4 million increase in cash flows from changes in operating assets and liabilities, driven primarily by decreased outstanding accounts payable and accrued expenses and an increase to prepaid expenses offset by an increase to loans payable.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates, regulatory, and inflation.
Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates, regulatory, and inflation.
The loan had issuance costs of $5,077 for the year ended December 31, 2022, that was capitalized and is being amortized straight line over the life of the loan. The FSB commercial loans are guaranteed by Kimball Carr, Chief Executive Officer and President and Charles Stith Keiser, our Vice Chairman and former Chief Operating Officer.
The loan has a fixed interest rate of 8.5%. The loan had issuance costs of $5,077 that was capitalized and is being amortized straight line over the life of the loan. The FSB commercial loans are guaranteed by Kimball Carr, Chief Executive Officer and President and Charles Stith Keiser, our director and former Chief Operating Officer.
Cost of revenue For the Year Ended December 31, 2023 vs. 2022 December 31, 2023 December 31, 2022 Variance in Dollars Variance in Percent Cost of services revenue $ 9,700,963 $ 5,308,104 $ 4,392,859 83 % Cost of product revenue 3,420,515 1,981,046 1,439,469 73 % Total cost of revenues (exclusive of depreciation and amortization, shown separately below) $ 13,121,478 $ 7,289,150 $ 5,832,328 80 % 45 Cost of service revenue (exclusive of depreciation and amortization): Cost of service revenue consists of cost directly related to the animal services provided at the Company’s veterinary clinics and animal hospitals, which primarily includes personnel-related compensation costs of the employees at the Company’s veterinary clinics or animal hospitals, laboratory costs, pet supply costs, third-party veterinarian contractors, office rent, utilities, supplies, and other cost arising as a result of the services being performed, excluding depreciation and amortization.
Cost of revenue For the Year Ended December 31, 2024 vs. 2023 December 31, 2024 December 31, 2023 Variance in Dollars Variance in Percent Cost of services revenue $ 9,736,282 $ 9,700,963 $ 35,319 0 % Cost of product revenue 3,563,279 3,420,515 142,764 4 % Total cost of revenues (exclusive of depreciation and amortization, shown separately below) $ 13,299,561 $ 13,121,478 $ 178,083 1 % Cost of service revenue (exclusive of depreciation and amortization): Cost of service revenue consists of cost directly related to the animal services provided at the Company’s veterinary clinics and animal hospitals, which primarily includes personnel-related compensation costs of the employees at the Company’s veterinary clinics or animal hospitals, laboratory costs, pet supply costs, third-party veterinarian contractors, office rent, utilities, supplies, and other cost arising as a result of the services being performed, excluding depreciation and amortization.
Simultaneously, the real estate operations consisting of land and building utilized by the Old 41 practice for $800,000 from Scott A. Gregory DVM, LLC through the Company’s wholly owned subsidiary, IVP FL Properties, LLC.
Simultaneously, the real estate operations consisting of land and building utilized by the Old 41 practice for $800,000 from Scott A. Gregory DVM, LLC through the Company’s wholly owned subsidiary, IVP FL Properties, LLC. This acquisition was financed by two loans provided by First Southern National Bank for a total of $1,208,000.
The loan has a fixed interest rate of 6.50% and a maturity date of December 16, 2025. The fixed rate loan has twelve monthly payments of approximately $2,830, followed by monthly payments of $7,443. and the interest rate is 6.50%.
The second loan with FSB that was entered into December 16, 2022, was in the amount of $640,000. The loan has a fixed interest rate of 6.50% and a maturity date of December 16, 2025. The fixed rate loan has twelve monthly payments of approximately $2,830, followed by monthly payments of $7,443. and the interest rate is 6.50%.
All Breed Pet Care Veterinary Clinic On August 12, 2022, the Company acquired the veterinary practice and related assets of All Breed Pet Care veterinary clinic in Newburgh, Indiana from Tejal Rege for $952,000 through the Company’s wholly-owned subsidiary IVP IN Holding Company LLC.
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $445,981. 37 All Breed Pet Care Veterinary Clinic On August 12, 2022, the Company acquired the veterinary practice and related assets of All Breed Pet Care veterinary clinic in Newburgh, Indiana from Tejal Rege for $952,000 through the Company’s wholly-owned subsidiary IVP IN Holding Company LLC.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued.
For the year ended December 31, 2024, the Company sustained a net loss of $14,264,261. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued.
Lytle Veterinary Clinic On March 15, 2022, the Company acquired the veterinary practice and related assets of Lytle Veterinary Clinic in Texas from Lytle Veterinary Clinic, Inc. for $662,469 through the Company’s wholly-owned subsidiary IVP Texas Holding Company, LLC and its wholly-owned subsidiary, IVP Texas Managing Co., LLC.
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $817,135. 36 Lytle Veterinary Clinic On March 15, 2022, the Company acquired the veterinary practice and related assets of Lytle Veterinary Clinic in Texas from Lytle Veterinary Clinic, Inc. for $662,469 through the Company’s wholly-owned subsidiary IVP Texas Holding Company, LLC and its wholly-owned subsidiary, IVP Texas Managing Co., LLC.
The second commercial loan with FSB entered into on January 11, 2021 in the amount of $1,278,400 has a fixed interest rate of 4.35% and a maturity date of September 1, 2024. The commercial loan was modified in January 2021 to extend the maturity date to January 25, 2031.
On September 20, 2024, this loan was assumed by Kauai RE Holdings LLC in the sale of Kauai Veterinary Clinic (“KVC”). The second commercial loan with FSB entered into on January 11, 2021 in the amount of $1,278,400 has a fixed interest rate of 4.35% and a maturity date of January 25, 2024.
The commercial loan had issuance costs of $25,575 for the year ended December 31, 2022, that was capitalized and is being amortized straight line over the life of the loan. The second loan with FSB that was entered into on October 31, 2022, was in the amount of $400,000.
The fixed rate loan has monthly payments of $23,138 except for a final monthly payment of $1,608,530. The commercial loan had issuance costs of $25,575 that was capitalized and is being amortized straight line over the life of the loan. The second loan with FSB that was entered into on October 31, 2022, was in the amount of $400,000.
Cost of product revenue (exclusive of depreciation and amortization): Cost of product revenue consists of cost directly related to the product sales at the Company’s veterinary clinics and animal hospitals, which primarily includes personnel-related compensation costs of the employees at the Company’s veterinary clinics or animal hospitals, purchase price of the medication we dispense, and purchase price of product sold, excluding depreciation and amortization.
The increase in cost of service revenue sold excluding depreciation and amortization was driven primarily by the acquisition of Valley Veterinary animal hospital and increase to service costs slightly offset by the sale of the KVC practice in the third quarter of 2024. 42 Cost of product revenue (exclusive of depreciation and amortization): Cost of product revenue consists of cost directly related to the product sales at the Company’s veterinary clinics and animal hospitals, which primarily includes personnel-related compensation costs of the employees at the Company’s veterinary clinics or animal hospitals, purchase price of the medication we dispense, and purchase price of product sold, excluding depreciation and amortization.
Post purchase pressures include rising talent acquisition and staffing costs in addition to challenges in achieving productivity and average patient charges necessary to achieve growth and profitability. 38 Results of Operations Acquisition and Growth Strategy With an emphasis on general practice hospitals in its first seven to eight quarters, the Company expanded into purchase of mixed animal hospitals in late 2022, adding equine care to its mix.
Results of Operations Acquisition and Growth Strategy With an emphasis on general practice hospitals in its first seven to eight quarters, the Company expanded into purchase of mixed animal hospitals in late 2022, adding equine care to its mix.
Our primary uses of cash from operating activities are the funding of our payroll and veterinary animal hospital and clinic related cost as well as the costs of supplied used in providing veterinary services. The Company incurred higher costs related to the initial public offering that closed in August 2023 and higher costs associated with being a public company.
Our primary uses of cash from operating activities are the funding of our payroll and veterinary animal hospital and clinic related cost as well as the costs of supplied used in providing veterinary services.
Simultaneously to the closing of KVC, the Company acquired the underlying real estate from a third party in exchange for $1,300,000 through the Company’s wholly-owned subsidiary, IVP Real Estate Holding Co., LLC.
Simultaneously to the closing of KVC, the Company acquired the underlying real estate from a third party in exchange for $1,300,000 through the Company’s wholly-owned subsidiary, IVP Real Estate Holding Co., LLC. These acquisitions were financed with threes loans provided by First Southern National Bank for a total of $2,383,400.
The fixed rate loan has monthly payments of $13,157 and the interest rate remained at 4.35%. The commercial loan had issuance costs of $10,085 for the year ended December 31, 2021 that was capitalized and is being amortized straight line over the life of the loan.
The fixed rate loan has monthly payments of $13,157 and a full payoff of the remaining principal balance at maturity. The commercial loan had issuance costs of $10,085 that was capitalized and is being amortized straight line over the life of the loan.
These acquisitions were financed with threes loans provided by First Southern National Bank for a total of $2,383,400. 39 Chiefland Animal Hospital Acquisition On August 20, 2021, the Company acquired the veterinary practice and related assets of Chiefland Animal Hospital from Polycontec, Inc. for $285,000 through the Company’s wholly-owned subsidiary, IVP Practice Holding Company, LLC.
Chiefland Animal Hospital Acquisition On August 20, 2021, the Company acquired the veterinary practice and related assets of Chiefland Animal Hospital from Polycontec, Inc. for $285,000 through the Company’s wholly-owned subsidiary, IVP Practice Holding Company, LLC.
Each Practice to be acquired must have a minimum projected DSCR of 1.0x, defined as EBIDA/Annual Debt Service Requirement. The MLOCA terminates and the Closed End Draw Note matures on August 18, 2024.
Each Practice to be acquired must have a minimum projected DSCR of 1.0x, defined as EBIDA/Annual Debt Service Requirement.
With the acquisition of The Pony Express Veterinary Hospital, Inc. including equine care and emergency and specialty services and intends to continue to expand such services. 37 With fourteen clinics located in eleven states as of the date of this filing, Inspire Veterinary purchases existing hospitals which have the financial track record, marketplace advantages and future growth potential which make them worthy acquisition targets.
With thirteen clinics located in nine states as of the date of this filing, Inspire Veterinary purchases existing hospitals which have the financial track record, marketplace advantages and future growth potential which make them worthy acquisition targets.
The financing arrangement is secured by an interest in virtually all assets of the Company with a first security interest in accounts receivable.
The outstanding balance of the loan payable as of December 31, 2023, is $2,063,058. The financing arrangement is secured by an interest in virtually all assets of the Company with a first security interest in accounts receivable. The financing arrangement is guaranteed by the Company’s CEO.
Such activity, along with the timing of cash payments, are the primary drivers of the year over year changes in net cash used in operating activities.
Such activity, along with the timing of cash payments, are the primary drivers of the year over year changes in net cash used in operating activities. 52 Investing Activities Our uses of cash for investing activities are capital expenditures for purchases of property and equipment for our animal hospital and clinics.
The first loan with FSB that was entered into on October 31, 2022, was in the amount of $2,086,921. The loan has a fixed interest rate of 5.97% and a maturity date of October 31, 2025. The fixed rate loan has monthly payments of $23,138 except for a final monthly payment of $1,608,530.
On October 31, 2022 the company entered into three separate commercial loans with FSB as part of the Pony Express Practice acquisition. The first loan with FSB that was entered into on October 31, 2022, was in the amount of $2,086,921. The loan has a fixed interest rate of 5.97% and a maturity date of October 31, 2025.
The commercial loan had issuance costs of $753 for the year ended December 31, 2021 that was capitalized and is being amortized straight line over the life of the loan. 48 On October 31, 2022 the company entered into three separate commercial loans with FSB as part of the Pony Express Practice acquisition.
The loan had issuance costs of $5,077 that was capitalized and is being amortized straight line over the life of the loan. 46 On November 8, 2023, the Company entered into a commercial loan with FSB as part of the Valley Vet practice acquisition. The loan with FSB was entered into on November 8, 2022 for $375,000.
In addition to the Valley Veterinary services acquisition in November 2023. Product Revenues: Product revenue is recognized when control passes, which occurs at a point in time when the customer completes a transaction at our animal hospitals or clinics and receives the product.
Product Revenues: Product revenue is recognized when control passes, which occurs at a point in time when the customer completes a transaction at our animal hospitals or clinics and receives the product. Product revenue decreased $391,876, or 8%, to $4,403,583 for the year ended December 31, 2024 as compared to $4,795,459 for the year ended December 31, 2023.
The Company expects to incur additional costs and require additional capital as the Company continues to acquire additional veterinary hospitals, clinics and practices. For the year ended December 31, 2023, the Company’s cash used in operations was $3,820,771. The Company’s primary short-term cash requirements are to fund working capital, lease obligations and short-term debt, including current maturities of long-term debt.
For the year ended December 31, 2024, the Company’s cash used in operations was $10,005,866. 43 The Company’s primary short-term cash requirements are to fund working capital, lease obligations and short-term debt, including current maturities of long-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of additional business acquisitions.
The commercial loan was modified in January 2021 to extend the maturity date to February 25, 2041. The fixed rate loan has monthly payments of $6,903 and the interest rate remained at 4.35%.
The first commercial loan in the amount of $1,105,000 has a fixed interest rate of 4.35% and a maturity date of January 25, 2024. The fixed rate loan has monthly payments of $6,903 and a full payoff of the remaining principal balance at maturity.
The financing arrangement is guaranteed by the Company’s CEO. 50 Operating leases The future minimum lease payments required under leases as of December 31, 2023, were as follows: Fiscal Year Operating Leases 2024 $ 249,808 2025 230,198 2026 231,959 2027 233,619 2028 238,078 Thereafter 1,100,287 Undiscounted cash flows 2,283,949 Less: imputed interest (628,214 ) Lease liability $ 1,655,735 Cash Flows for The Year Ended December 31, 2023 and 2022 The following table provides detailed information about our net cash flows for the periods indicated: Year Ended December 31, 2023 2022 Net cash used in operating activities $ (3,820,772 ) $ (2,658,309 ) Net cash used in investing activities (1,869,529 ) (14,666,796 ) Net cash provided by financing activities 5,625,008 15,710,940 Net increase (decrease) in cash and cash equivalents $ (19,879 ) $ (1,614,165 ) Operating Activities Our primary source of cash from operating activities is the revenue generated from our animal hospitals and clinics.
Operating leases The future minimum lease payments required under leases as of December 31, 2024, were as follows: Fiscal Year Operating Leases 2025 $ 333,200 2026 312,299 2027 316,369 2028 323,311 2029 336,045 Thereafter 1,332,102 Undiscounted cash flows 2,953,326 Less: imputed interest (825,858 ) Lease liability $ 2,127,468 Cash Flows for The Year Ended December 31, 2024 and 2023 The following table provides detailed information about our net cash flows for the periods indicated: Year Ended December 31, 2024 2023 Net cash used in operating activities $ (10,005,866 ) $ (3,820,771 ) Net cash used in investing activities (237,983 ) (1,869,530 ) Net cash provided by financing activities 10,588,578 5,625,009 Net increase (decrease) in Cash, cash equivalents and restricted cash $ 344,729 $ (65,292 ) Operating Activities Our primary source of cash from operating activities is the revenue generated from our animal hospitals and clinics.
Under the terms of the agreement, the Company must pay $57,346 each week for 26 weeks with the first payment being due June 6, 2023. The financing arrangement has an effective interest rate of 49%. The financing arrangement includes an original issuance discount (“OID”) of $441,000 and issuance costs of $50,000.
The financing arrangement has an effective interest rate of 49%. The financing arrangement includes an original issuance discount (“OID”) of $441,000 and issuance costs of $50,000.
The Company’s ability to fund its cash needs will depend, in part, on its ability to generate cash in the future, which depends on future financial results. The Company’s future results are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control.
The Company’s future results are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control. The Company’s future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions.
Working capital requirements can vary significantly from period to period, particularly as a result of additional business acquisitions. The Company’s medium-term to long-term cash requirements are to service and repay debt, to expand through acquisitions, and to invest in facilities and equipment for growth initiatives.
The Company’s medium-term to long-term cash requirements are to service and repay debt, to expand through acquisitions, and to invest in facilities and equipment for growth initiatives. The Company’s ability to fund its cash needs will depend, in part, on its ability to generate cash in the future, which depends on future financial results.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
The Company did not make any acquisitions during the year ended December 31, 2024. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
The loan has a fixed interest rate of 6.50% and a maturity date of December 16, 2025. The fixed rate loan has monthly payments of $4,772, except for a final payment of 593,039.
The loan has a fixed interest rate of 6.50% and a maturity date of December 16, 2025. The fixed rate loan has monthly payments of $4,772 and a full payoff of the remaining principal balance at maturity. The loan had issuance costs of $4,531 that was capitalized and is being amortized straight line over the life of the loan.
The loan had issuance costs of $4,531 for the year ended December 31, 2022, that was capitalized and is being amortized straight line over the life of the loan. The second loan with FSB that was entered into December 16, 2022, was in the amount of $640,000.
The Bridge Note was funded in two installments of net proceeds of $1,100,000 in December 2021 and the second installment January 2022. The Bridge Loan had issuance costs of $70,500 for the first installment and $54,000 for the second installment that is amortized straight line over the life of the loan.
Payment terms are at the point of sale but may also occur upon completion of the service.
Payment terms are at the point of sale but may also occur upon completion of the service. Service revenue increased $ 308,592 or 3%, to $12,188,526 for the year ended December 31, 2024 as compared to $11,879,934 for the year ended December 31, 2023.
The commercial loan had issuance costs of $13,264 for the year ended December 31, 2021 that was capitalized and is being amortized straight line over the life of the loan.
The commercial loan had issuance costs of $13,264 that was capitalized and is being amortized straight line over the life of the loan. The Company entered into a Forbearance Agreement that extended the maturity date to August 31, 2024 and required the lender to make monthly payments of $9,016 and increased the interest rate to 8.15% per annum.
The Company’s future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions. These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of December 31, 2024, had an accumulated deficit of $36,350,281.
Removed
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $817,135.
Added
With the acquisition of The Pony Express Veterinary Hospital, Inc. including equine care and emergency and specialty services and intends to continue to expand such services.
Removed
This acquisition was financed by a loan provided by Farmers National Bank of Danville for a total of $445,981.
Added
Post purchase pressures include rising talent acquisition and staffing costs in addition to challenges in achieving productivity and average patient charges necessary to achieve growth and profitability.
Removed
Results of Operations for the years ended December 31, 2023 and 2022: Summary of Results of Operations Year Ended December 31, 2023 2022 $ Change % Change Service revenue $ 11,879,934 $ 7,032,800 4,847,134 69 % Product revenue 4,795,459 2,801,978 1,993,481 71 % Total revenue 16,675,393 9,834,778 6,840,615 70 % Operating expenses Cost of service revenue (exclusive of depreciation and amortization, shown separately below) 9,700,963 5,308,104 4,392,859 83 % Cost of product revenue (exclusive of depreciation and amortization, shown separately below) 3,420,515 1,981,046 1,439,469 73 % General and administrative expenses 9,476,287 5,467,642 4,008,645 73 % Debt extinguishment loss 16,105 - 16,105 100 % Depreciation and amortization 1,252,539 596,124 656,415 110 % Total operating expenses 23,866,409 13,352,916 10,513,493 79 % Loss from operations (7,191,016 ) (3,518,138 ) (3,672,878 ) 104 % Other income (expenses): Interest income 21 1,021 (1,000 ) -98 % Interest expense (2,538,710 ) (1,425,260 ) (1,113,450 ) 78 % Loss on debt modification (927,054 ) - (927,054 ) 100 % Beneficial conversion feature (4,137,261 ) - (4,137,261 ) 100 % Other income 1,134 357 777 218 % Total other expenses (7,601,870 ) (1,423,882 ) (6,177,988 ) 434 % Loss before income taxes (14,792,886 ) (4,942,020 ) (9,850,866 ) 199 % Benefit for income taxes - 30,094 (30,094 ) -100 % Net loss (14,792,886 ) (4,911,926 ) (9,880,960 ) 201 % Dividend on convertible series A preferred stock (271,245 ) - (271,245 ) 100 % Net loss attributable to class A and B common stockholders $ (15,064,131 ) $ (4,911,926 ) ######### 207 % Net loss per Class A and B common shares: Basic and diluted $ (2.25 ) $ (0.95 ) Weighted average shares outstanding per Class A and B common shares: Basic and diluted 6,692,515 5,160,182 42 Revenue The following table presents the breakdown of revenue between products and services: For the Year Ended December 31, December 31, 2023 vs. 2022 2023 2022 Variance in Dollars Variance in Percent Revenue: Service Revenue $ 11,879,934 $ 7,032,800 $ 4,847,134 69 % Percentage of revenue 71 % 72 % Product Revenue 4,795,459 2,801,978 1,993,481 71 % Percentage of revenue 29 % 28 % Total $ 16,675,393 $ 9,834,778 $ 6,840,615 70 % Average Daily Service Revenue for the Year Ended December 31, 2023 vs. 2022 Animal Hospital & Clinics December 31, 2023 December 31, 2022 $ Change % Change Kauai Veterinary Clinic $ 4,134 $ 3,625 $ 509 14 % Chiefland Animal Hospital 1,631 1,440 191 13 % Pets & Friends Animal Hospital 2,676 2,598 78 3 % Advanced Veterinary Care of Pasco 1,888 2,009 (121 ) -6 % Lytle Veterinary Clinic 1,759 2,898 (1,139 ) -39 % Southern Kern Veterinary Clinic 2,809 2,929 (120 ) -4 % Bartow Animal Clinic 2,350 2,475 (125 ) -5 % Dietz Family Pet Hospital 1,804 1,790 14 1 % Aberdeen Veterinary Clinic 1,718 1,003 714 71 % All Breed Pet Care Veterinary Clinic 2,838 2,551 287 11 % Pony Express Veterinary Hospital 4,070 2,740 1,331 49 % Williamsburg Animal Clinic 2,252 1,753 498 28 % Old 41 Animal Hospital 2,227 2,179 48 2 % Valley Veterinary Services Animal Hospital 2,699 - 2,699 100 % Total Daily Service Revenue $ 34,855 $ 29,991 $ 4,864 43 Average Daily Product Revenue for the Year Ended December 31, 2023 vs. 2022 Animal Hospital & Clinics December 31, 2023 December 31, 2022 $ Change % Change Kauai Veterinary Clinic $ 1,810 $ 1,827 $ (17 ) -1 % Chiefland Animal Hospital 1,033 1,215 (183 ) -15 % Pets & Friends Animal Hospital 911 906 5 1 % Advanced Veterinary Care of Pasco 816 921 (105 ) -11 % Lytle Veterinary Clinic 914 392 523 133 % Southern Kern Veterinary Clinic 530 812 (282 ) -35 % Bartow Animal Clinic 1,027 212 815 385 % Dietz Family Pet Hospital 853 889 (35 ) -4 % Aberdeen Veterinary Clinic 573 1,064 (491 ) -46 % All Breed Pet Care Veterinary Clinic 1,287 1,025 262 26 % Pony Express Veterinary Hospital 1,815 1,402 413 29 % Williamsburg Animal Clinic 744 513 231 45 % Old 41 Animal Hospital 648 1,141 (493 ) -43 % Valley Veterinary Services Animal Hospital 1,219 - 1,219 100 % Total Daily Product Revenue $ 14,180 $ 12,318 $ 1,862 Revenue in General: The Company believes the breakdown of gross revenue into service revenue and product revenue categories produces meaningful measures to Company management and the Company’s investors in light of the Company’s objective to protect the service channel and derive the majority of its revenue from services and expertise which are not capable of disruption from other channels.
Added
The transaction value excludes $200,000 for the Holdback Agreement associated with the acquisition. 6. The veterinary practice was sold on September 20, 2024.
Removed
The increase in service revenue was driven primarily by acquisitions of animal hospitals and clinics accumulated from the prior year and increasing the prices of our services throughout our clinics and animal hospitals that resulted in organic growth. 9 of 14 animal hospitals and clinics experienced increased daily service revenue compared to the year prior.
Added
On September 20, 2024, the Company completed the divestiture of its Kauai Veterinary Clinic (“KVC”) to Kauai RE Holdings LLC for $2.0 million, in notes payable assumed by the buyer, with no cash consideration. The agent for the sale was Gregory Armstrong, a current shareholder of the Company and a member of Kauai RE.
Removed
The increase in product revenue was driven primarily by acquisitions of animal hospitals and clinics accumulated from the prior year and increasing the prices of several products to pass along the higher cost of those products to the customer.
Added
Charles Keiser, DVM, is a member of Kauai RE and the father of our board member Charles Stith Keiser, who is the Company’s largest shareholder through his entity Wilderness Trace Veterinary Partners, LLC. The divestiture resulted in a gain of $467,049 in fiscal year 2024, which was recorded in “Gain on sale of business” in the Statements of Operations.
Removed
We had organic growth with our daily product revenue increasing by $643 during the year ended December 31, 2023 compared to the prior year. In addition to the Valley Veterinary services acquisition in November 2023.
Added
As a result of the transaction, the Company disposed of $125,508 of goodwill based on the relative fair value of KVC. The estimated fair value of KVC less estimated costs to sell exceeded it carrying amount as of the transaction date.
Removed
The increase in cost of service revenue sold excluding depreciation and amortization was driven primarily by acquisitions of animal hospitals and clinics completed in the prior year in addition to inflationary pressures such as increased wages and veterinary supplies used in services.
Added
As the sale of KVC was not considered, a significant disposal or a strategic shift that would have a major effect on the Company’s operations or financial results, it was not reported as discontinued operations.
Removed
The increase in cost of product revenue excluding depreciation and amortization was driven primarily by acquisitions of animal hospitals and clinics completed in the prior year in addition to inflationary pressures that increased the cost of products and increased wages.
Added
Results of Operations for the years ended December 31, 2024 and 2023: Summary of Results of Operations Year Ended December 31, For the Year Ended 2024 2023 $ Change % Change Service revenue $ 12,188,526 $ 11,879,934 308,592 3 % Product revenue 4,403,583 4,795,459 (391,876 ) -8 % Total revenue 16,592,109 16,675,393 (83,284 ) 0 % Operating expenses Cost of service revenue (exclusive of depreciation and amortization, shown separately below) 9,736,282 9,700,963 35,319 0 % Cost of product revenue (exclusive of depreciation and amortization, shown separately below) 3,563,279 3,420,515 142,764 4 % General and administrative expenses 11,421,352 9,476,287 1,663,815 18 % Depreciation and amortization 1,308,619 1,252,539 56,080 4 % Impairment expense 56,664 - 56,664 100 % Gain on sale of business (467,049 ) - (467,049 ) 100 % Total operating expenses 25,619,147 23,850,304 1,768,843 7 % Loss from operations (9,027,038 ) (7,174,911 ) (1,852,127 ) 26 % Other income (expenses): Interest income 53 21 32 152 % Interest expense (3,098,290 ) (2,538,710 ) (559,580 ) 22 % Loss on debt extinguishment - (16,105 ) 16,105 -100 % Loss on debt modification (2,134,218 ) (927,054 ) (1,207,164 ) 130 % Beneficial conversion feature - (4,137,261 ) 4,137,261 -100 % Other income (expenses) (4,768 ) 1,134 (5,902 ) -520 % Total other expenses (5,237,223 ) (7,617,975 ) 2,380,752 -31 % Loss before income taxes (14,264,261 ) (14,792,886 ) 528,625 -4 % Benefit for income taxes - - - 0 % Net loss (14,264,261 ) (14,792,886 ) 528,625 -4 % Dividend on convertible series A preferred stock (220,850 ) (271,245 ) 50,395 -19 % Net loss attributable to class A and B common stockholders $ (14,485,111 ) $ (15,064,131 ) 579,020 -4 % Net loss per Class A and B common shares: Basic and diluted $ (2.61 ) $ (3.50 ) Weighted average shares outstanding per Class A and B common shares: Basic and diluted 5,550,959 4,309,796 39 Revenue The following table presents the breakdown of revenue between products and services: For the Year Ended December 31, December 31, 2024 vs.
Removed
The increase was primarily due to the Company’s initial public offering that closed in August 2023 and the additional cost of becoming a public company in addition to higher wages and 3 rd party cost due to inflationary pressures. Depreciation and Amortization Expense: Depreciation and amortization expenses mainly relate to the assets used in generating revenue.
Added
December 31, 2023 2024 2023 $ Change % Change Revenue: Service Revenue $ 12,188,526 $ 11,879,934 $ 308,592 3 % Percentage of revenue 73 % 71 % Product Revenue 4,403,583 4,795,459 (391,876 ) -8 % Percentage of revenue 27 % 29 % Total $ 16,592,109 $ 16,675,393 $ (83,284 ) 0 % Average Daily Service Revenue for the Year Ended December 31, 2024 vs.
Removed
The increase was primarily the result of the Company incurring indebtedness in the form of bank loans and other indebtedness to finance the acquisition of animal hospitals and clinics, the beneficial conversion feature on the convertible debenture and series A preferred stock recognized upon the completion of the IPO and for general working capital.

… 88 more changes not shown on this page.