U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Mark One

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2021

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission File No. 000-55167

 

PetVivo Holdings Inc.

(Name of small business issuer in its charter)

 

Nevada		99-0363559
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

5251 Edina Industrial Blvd.

Edina, Minnesota 55439

(Address of princip(al executive offices)

 

(952) 405-6216

(Issuer’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		PETV		The Nasdaq Stock Market LLC
Warrants to purchase Common Stock		PETVW		The Nasdaq Stock Market LLC

 

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer	☐	Smaller reporting company	☒
			Emerging Growth Company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

 

Class		Outstanding as of August 13, 2021
Common Stock, $0.001		9,647,711

 

 

 

PETVIVO HOLDINGS, INC.

FORM 10-Q

FOR THE PERIOD ENDED June 30, 2021

 

INDEX

 

			Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			3
PART I. FINANCIAL INFORMATION			4
Item 1.	Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Qualitative and Quantitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		29
PART II. OTHER INFORMATION			31
Item 1.	Legal Proceedings		31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3.	Defaults Upon Senior Securities		31
Item 4.	Mine Safety Disclosure		31
Item 5.	Other information		31
Item 6.	Exhibits		32
SIGNATURES			33

 

 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

 

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of PetVivo Holdings Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

 

PART I.

 

ITEM 1. FINANCIAL STATEMENTS

 

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		June 30, 2021 (Unaudited)				March 31, 2021
Assets:
Current Assets
Cash and cash equivalents		$	143,084			$	23,578
Accounts receivable			-				-
Inventory, net			-				-
Prepaid expenses and other assets			102,550				123,575
Total Current Assets			245,634				147,153
Property and Equipment, net			202,168				214,038
Other Assets:
Deferred offering costs			305,353				280,163
Operating lease right-of-use			151,190				157,760
Trademark and patents, net			32,267				27,932
Security deposit			8,201				8,201
Total Other Assets			497,011				474,056
Total Assets		$	944,813			$	835,247
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities
Accounts payable and accrued expenses		$	1,149,040			$	962,885
Convertible notes and accrued interest			-				235,671
Accrued expenses – related parties			50,898				36,808
Operating lease liability – short term			26,754				26,582
PPP Loan and accrued interest			7,436				39,020
Notes payable and accrued interest - directors			20,300				20,000
Notes payable and accrued interest – related party			48,267				44,554
Note payable and accrued interest			37,860				39,528
Total Current Liabilities			1,340,555				1,405,048
Other Liabilities
Operating lease liability (net of current)			124,436				131,178
Share-settled debt obligation – related party, net of debt discount			196,000				196,000
Total Other Liabilities			320,436				327,178
Total Liabilities			1,660,991				1,732,226
Commitments and Contingencies (see Note 13)
Stockholders’ Equity (Deficit):
Preferred stock, par value $0.001, 20,000,000 shares authorized, issued 0 and 0 shares outstanding at June 30, 2021 and March 31, 2021
Common stock, par value $0.001, 250,000,000 shares authorized, issued 7,093,155 and 6,799,113 shares outstanding at June 30, 2021 and March 31, 2021			7,093				6,799
Additional Paid-In Capital			57,878,784				57,207,648
Accumulated Deficit			(58,602,055	)			(58,111,426	)
Total Stockholders’ Deficit			(716,178	)			(896,979	)
Total Liabilities and Stockholders’ Deficit		$	944,813			$	835,247

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the Three Months Ended
		June 30,				June 30,
		2021				2020
Revenues		$	4,145			$	2,006
Cost of Sales			5,051				-
Gross Profit			(906	)			2,006
Operating Expenses:
Sales and Marketing			49,731				46,682
General and administrative			330,945				397,392
Research and development			136,937				-
Total Operating Expenses			517,613				444,074
Operating Loss			(518,519	)			(442,068	)
Other Income (Expense)
Gain on Sale of Asset			-				482
Forgiveness of PPP loan and accrued interest			31,680				-
Derivative expense			-				(342,200
Interest Expense and other			(3,790	)			(30,222	)
Total Other Income (Expense)			27,890				(371,940	)
Net Loss before taxes			(490,629	)			(814,008	)
Income Tax Provision			-				-
Net Loss		$	(490,629	)		$	(814,008	)
Net Loss Per Share:
Basic and Diluted		$	(0.07	)		$	(0.16	)
Weighted Average Common Shares Outstanding:
Basic and Diluted			6,946,353				5,161,101

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

   

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

 

Three Months Ended June 30, 2021

 

		Common Stock								Additional Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance at March 31, 2021			6,799,113			$	6,799			$	57,207,648			$	(58,111,426	)		$	(896,979	)
Common stock sold			49,014				50				343,048				-				343,098
Cash paid to exercise warrants			4,500				4				39,996				-				40,000
Stock issued for debt conversion			80,522				80				232,578				-				232,658
Cashless warrant exercises			160,006				160				(160	)			-				-
Stock-based compensation			-				-				55,674				-				55,674
Net loss			-				-				-				(490,629	)			(490,629	)
Balance at June 30, 2021			7,093,155			$	7,093			$	57,878,784			$	(58,602,055	)		$	(716,178	)

 

Three Months Ended June 30, 2020

 

		Common Stock								Additional Paid-in				Accumulated				Common Stock to
		Shares				Amount				Capital				Deficit				be Issued				Total
Balance at March 31, 2020			5,727,965			$	5,728			$	53,494,748			$	(54,588,645	)		$	52,000			$	(1,036,170	)
Common stock and warrants sold			20,000				20				51,980				-				(52,000	)			-
Warrants issued with convertible debt			-				-				91,500				-				-				91,500
Stock-based compensation			30,000				30				183,214				-				-				183,244
Net loss			-				-				-				(814,008	)			-				(814,008	)
Balance at June 30, 2020			5,777,965			$	5,778			$	53,821,442			$	(55,402,653	)		$	-			$	(1,575,434	)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

Shares retroactively restated for a 1-for-4 reverse stock split in December 2020.

 

 

 

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the Three Months Ended
		June 30, 2021				June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss For The Period		$	(490,629	)		$	(814,008	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Derivative expense			-				342,200
Stock-based compensation			55,674				183,244
Depreciation and amortization			13,599				51,805
Amortization of debt discount			-				19,608
Forgiveness of PPP loan and accrued interest			(31,680	)			-
Intangible impairment			-				3,606
Gain on sale of asset			-				(482	)
Changes in Operating Assets and Liabilities
(Increase) decrease in prepaid expenses and other assets			21,025				(4,347	)
Increase in accounts receivable			-				(1,000	)
Deferred offering costs			(25,190	)			-
Interest accrued on convertible notes payable			192				8,819
Interest accrued on notes payable - related party			4,013				1,387
Interest accrued on notes payable			96				295
Increase (decrease) in accounts payable and accrued expense			182,949				(13,224	)
Increase (decrease) in accrued expenses - related party			14,090				(13,234	)
Net Cash Used In Operating Activities			(255,861	)			(235,331	)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of equipment			-				482
Purchase of equipment			-				(41,236	)
Increase in patents and trademarks			(6,063	)			(5,136	)
Net Cash Used in Investing Activities			(6,063	)			(45,890	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock sold			343,098				52,000
Proceeds from exercise of warrants			40,000
Proceeds from PPP loan			-				38,665
Proceeds from convertible notes			-				322,500
Repayments of convertible notes			-				(13,962	)
Repayments of notes payable			(1,668	)			-
Net Cash Provided by Financing Activities			381,430				399,203
Net Increase in Cash			119,506				117,982
Cash at Beginning of Period			23,578				10,582
Cash at End of Period		$	143,084			$	128,564
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During The Period For:
Interest		$	3,889			$	13,962
SUPPLEMENTAL DISCLOSURE ON NON-CASH FINANCING AND INVESTING ACTIVITIES
Derivative treated as debt discount		$	-			$	352,941
Stock granted for debt conversion		$	232,658				-

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

PetVivo Holdings, Inc.

Notes to Financial Statements

June 30, 2021

(Unaudited)

  

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

(A)	Organization and Description

 

The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment of afflictions and diseases in animals, initially for dogs and horses. The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.

 

(B)	Basis of Presentation

 

PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in Minnesota PetVivo becoming a wholly-owned subsidiary of the Company. In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of the Company.

 

In October 2020, the Company approved a 1-for-4 reverse split of our outstanding shares of common stock that was effectuated on December 29, 2020; concurrently, the Company increased its authorized shares of common stock from 225,000,000 to 250,000,000; all share and per share data has been retroactively adjusted for this reverse split for all periods presented.

 

(C)	Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.

 

(D)	Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share-based payments and derivative instruments and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution of services and interest.

 

 

(E)	Cash and Cash Equivalents

 

The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2021 and March 31, 2021.

 

(F)	Concentration-Risk

 

The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. As of June 30, 2021 and March 31, 2021, the Company did not have any cash balances in excess of the federally insured limits.

 

(H)	Property & Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the assets estimated useful life of (3) years for equipment, (5) years for automobile, and (7) years for furniture and fixtures.

 

(I)	Patents and Trademarks

 

The Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the lesser of a useful life of 60 months or the life of the patent. We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

 

(J)	Loss Per Share

 

Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The Company has 731,444 warrants outstanding as of June 30, 2021, with varying exercise prices ranging from $1.20 to $10.00 per share. The weighted average exercise price for these warrants is $2.15 per share. These warrants are excluded from the weighted average number of shares because they are considered antidilutive.

 

The Company has 1,288,937 warrants outstanding as of June 30, 2020, with varying exercise prices ranging from $1.33 to $17.28 per share. The weighted average exercise price for these warrants is $2.27 per share. These warrants are excluded from the weighted average number of shares because they are considered antidilutive.

 

The Company uses the guidance in Accounting Standards Codification 260 (“ASC 260”) to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised at the later date of the first day of the reporting period’s quarter or the inception date of the debt instrument. Also, the if-converted method shall not be applied for the purposes of computing diluted EPS if the effect would be antidilutive.

 

At June 30, 2021, the Company has a Share-Settled Debt Obligation to a Related Party of $196,000 which will convert into common shares at the stock price of our S-1 offering currently being conducted. Although the number of shares is yet to be determined, the obligation is potentially dilutive. The if-converted method shall not be applied for the purposes of computing EPS as the effect would be antidilutive.

 

(K)	Revenue Recognition

 

The Company recognizes revenue on arrangements in accordance with FASB ASC No. 606, “Revenue From Contracts With Customers”. Revenue is recognized upon shipment of our pet care products to our customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

 

 

(L)	Research and Development

 

The Company expenses research and development costs as incurred.

 

(M)	Fair Value of Financial Instruments

 

The Company applies the accounting guidance under FASB ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

 

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

 

	●	Level 1 - quoted market prices in active markets for identical assets or liabilities.
	●	Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	●	Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses, accrued expenses – related parties, notes payable and accrued interest, and notes payable and accrued interest - related party, notes payable – directors and others. The carrying amount of the Company’s financial instruments approximates their fair value as of June 30, 2021 and March 31, 2021, due to the short-term nature of these instruments and the Company’s borrowing rate of interest.

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.

 

The Company had no assets and liabilities measured at fair value on a recurring basis at June 30, 2021 and March 31, 2021.

 

(N)	Stock-Based Compensation - Non-Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

 

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

 

●       Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

●       Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

●       Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

●       Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

 

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

 

(O)	Income Taxes

 

The Company accounts for income taxes under Accounting Standards Codification (ASC) Topic 740. Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

 

 

As required by ASC Topic 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied ASC Topic 740 to all tax positions for which the statute of limitations remained open. As a result of the implementation of ASC Topic 740, the Company did not recognize any change in the liability for unrecognized tax benefits.

 

The Company is not currently under examination by any federal or state jurisdiction.

 

The Company’s policy is to record tax-related interest and penalties as a component of operating expenses.

 

(P)

Inventory

 

Inventories are recorded in accordance with ASC 330 and are stated at the lower of cost or net realizable value. We account for inventories using the first in first out (FIFO) methodology.

 

(Q)	Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this ASU supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. The Company adopted Topic 842 on April 1, 2019 and resulted in a right of use asset and liability of $154,917.

 

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

 

 

NOTE 2 – INVENTORY

 

As of June 30, 2021 and March 31, 2021, the Company had inventory of $41,468 and $47,068 of inventory, respectively, however, reserves of equal amounts for each respective period were taken because of the substantial doubt in the Company’s ability to utilize this inventory to obtain material sales.

 

The inventory components are as follows:

 

		June 30, 2021				March 31, 2021
Finished Goods		$	34,123			$	36,973
Raw Materials			6,273				8,773
Manufacturing Supplies			1,072				1,322
			41,468				47,068
Reserve for Obsolete Inventory			(41,468	)			(47,068	)
Total Net		$	—			$	—

 

The Company recognized income of $3,289 related to the change in the reserve of obsolete inventory for the year ended March 31, 2021.

 

 

NOTE 3 – PREPAID EXPENSES AND DEFERRED OFFERING COSTS

 

As of June 30, 2021, the Company had $102,550 in prepaid expenses and other assets consisting of approximately $84,000 in marketing services, $10,000 in insurance costs and $6,000 in rent. The Company also had deferred offering costs of $305,353 consisting of legal and accounting costs incurred related to our S-1 and S-1/A filings with the Securities and Exchange Commission on October 13, 2020, December 31, 2020, March 29, 2021 and July 13 2021, respectively, which will be recorded as a reduction of proceeds should we be successful in raising capital through this S-1 offering or expensed if not.

 

As of March 31, 2021, the Company had $123,575 in prepaid expenses and other assets consisting of approximately $78,000 in marketing services, $9,000 in annual OTC listing license and $9,000 in insurance costs. The Company also had deferred offering costs of $280,163 consisting of legal and accounting costs incurred related to our S-1 and S-1/A filings with the Securities and Exchange Commission on October 13, 2020, December 31, 2020 and March 29, 2021, respectively, which will be recorded as a reduction of proceeds should we be successful in raising capital through this S-1 offering or expensed if not.

 

NOTE 4 –PROPERTY AND EQUIPMENT

 

The components of property and equipment were as follows:

 

		June 30, 2021				March 31, 2021
Leasehold improvements		$	198,015			$	198,015
Production equipment			128,849				128,849
R&D equipment			25,184				25,184
Furniture			10,130				10,130
Total, at cost			362,178				362,178
Accumulated depreciation			(160,010	)			(148,140	)
Total Net		$	202,168			$	214,038

 

Depreciation expense was $11,870 and $6,489 for the three months ended June 30, 2021 and 2020, respectively.

 

NOTE 5 – INTANGIBLE ASSETS

 

The components of intangible assets, all of which are finite-lived, were as follows:

 

		June 30, 2021				March 31, 2021
Patents		$	3,846,967			$	3,840,903
Trademarks			26,142				26,142
Total at cost			3,873,109				3,867,045
Accumulated Amortization			(3,840,842	)			(3,839,113	)
Total net		$	32,267			$	27,932

 

Amortization expense was $1,729 and $45,316 for the three months ended June 30, 2021 and 2020, respectively. The Company recorded an intangible impairment charge of $3,606 in the three months ended June 30, 2020.

 

 

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

The components of accounts payable and accrued expenses were as follows:

 

		June 30, 2021				March 31, 2021
Accounts payable		$	905,736			$	741,111
Accrued payroll and related taxes			243,304				221,774
Total		$	1,149,040			$	962,885

 

NOTE 7 - RELATED PARTY NOTES PAYABLE

 

At June 30, 2021 and March 31, 2021, the Company is obligated for a related party note payable and accrued interest in the total amount of $48,267 and $44,554, respectively; the maturity date of this note was June 30, 2022. The related party note payable terms are accrual of interest at eight percent annually with payments of $3,100 per month, which are applied to interest first, then principal. The terms also include a stipulation that if the Company receives additional financing during any 24-month period from the date of the note in the amount greater than $3,500,000, the Company will immediately pay the officer the principal amount of the note along with all interest due. Please see Note 9 to these financial statements for more information on this note.

 

The Company entered into notes payable with four directors in March 2021 which accrue interest at a rate of 6% annually and are due in September 2021. At June 30, 2021 and March 31, 2021, the principal and accrued interest outstanding on these notes is $20,300 and $20,000, respectively.

 

NOTE 8 – NOTES PAYABLE AND CONVERTIBLE NOTES

 

In January 2020, the Company entered into a lease amendment for our corporate office facility whereby the lease term was extended through November of 2026 in exchange for a loan of $42,500. The note payable accrues interest at a rate of 6% per annum. At June 30, 2021 and March 31, 2021, the amount outstanding on the note was $37,860 and $39,528, respectively. The note is classified as a current liability as the Company has not been current on its loan payments as of June 30, 2021 and March 31, 2021.

 

On May 1, 2020, the Company received $38,665 in loan proceeds pursuant to the Paycheck Protection Program enacted by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act. At March 31, 2021, the Company was obligated for the outstanding balance of $39,020. The principal and accrued interest may be forgivable and the Company has applied for forgiveness. The loan accrues interest at a rate of 1% per annum and matures on May 1, 2022; if not forgiven prior to December 1, 2020, the Company is required to pay monthly installments toward principal and interest until the note is paid in full. In June 2021, the Company received forgiveness of principal and accrued interest of $31,680. The remaining principal balance of $7,436 will be paid monthly beginning August 1, 2021 to May 1, 2022 at a monthly payment of $738.

 

At March 31, 2021, the Company was obligated for several convertible notes payable in the total amount of $235,671 made up of $230,000 in principal and $5,671 in interest. These notes and accrued interest of $2,658 were converted in April 2021 into 80,522 shares of common stock at a conversion price of $2.89 per share. These convertible notes accrue interest at a rate of 10%. Accrued interest is due and payable each calendar quarter in cash; during the three months ended June 30, 2021 and 2021, the Company paid out interest of $3,093 and $3,397, respectively, to these convertible note holders.

 

At June 30, 2020, the Company is obligated for one convertible note payable held by RedDiamond Partners, LLC (“RDCN”); the Company entered into the RDCN on June 15, 2020, whereby the note is convertible on or after January 15, 2021 and before maturity on March 15, 2021 at a rate of $.28/share. The RDCN was issued in the principal amount of $352,941 with $52,941 being made up of a 15% Original Issue Discount (“OID”) and included a conversion feature because there are exercise contingencies triggered by the occurrence of an Event of Default, which includes events that are outside the control of the Company (i.e. not based solely on the market for the Company’s stock or the Company’s own operations). Additionally, the RDCN accrues interest at a rate of 12.5% per annum, calculated on a 360-day-per-year-basis. At June 30, 2020, the Company owed $354,779 in outstanding balance whereby $352,941 was made up of principal and $1,838 was made up of accrued interest. This RDCN was issued alongside a warrant for purchase of 557,143 shares of Company common stock (“RDCN Warrants”) with a relative value of $91,500; see Note 15 for more information on these RDCN Warrants. The outstanding principal balance of the RDCN was reduced to $-0- by various discounts on the debt totaling ($352,941) as follows: i) the RDCN Warrants generated a discount on the debt of ($91,500) based on the relative value of the same; ii) $2,500 in investor legal costs was treated as a discount on the debt of ($2,500) since this was paid by the Company; iii) $52,941 of OID was treated as a discount on the debt of ($52,941); iv) a discount of ($206,000) was taken due to the conversion option being treated as a derivative. As of June 30, 2020, the Company had ($333,333) ($-0- at March 31, 2020) in unamortized debt discount remaining. In evaluating the various instruments and their components within this transaction (including issuance of the RDCN and RDCN Warrants) for treatment as a derivative and the respective accounting treatment of the same, the Company referenced ASC 470 and ASC 815 in conjunction with interpretive guidance. Subsequently, at June 30, 2020, the Company amortized a pro-rata portion of the discount on the debt on a straight-line basis to interest expense in the amount of $19,608. In conjunction with the RDCN and RDCN Warrants issuances, the Company also paid $30,000 and issued 75,000 warrants (“Think Warrants”) valued at $31,500 using the Black-Scholes model to Think Equity for soliciting the RedDiamond Partners, LLC transaction; see Note 15 for more information on these warrants. The total issuance costs paid to Think Equity of $61,500 of cash and warrants, which the Company recorded the relative value (as noted in Note 15) of $52,399 to expense since no further discount was available to be taken on the debt.

 

 

NOTE 9 – SHARE-SETTLED DEBT OBLIGATION – RELATED PARTY

 

Effective September 1, 2020, the Company entered into two debt settlement agreements with David B. Masters, a director of the Company, pursuant to an Amendment to Promissory Note and a Promissory Note. The Amendment to Promissory Note extends, for up to an additional two years and under the same terms as originally entered into, the original promissory notes which were issued by Gel-Del Technologies, Inc., a wholly owned subsidiary of the Company, to Dr. Masters. Because this Amendment to Promissory Note simply extended the term over which the Company is required to pay back the outstanding balance this change has been treated as a debt modification. The outstanding principal of $59,642 and interest balance of $6,058 of the original promissory notes was $65,700 at the time of execution of the Amendment to Promissory Note; the terms of this Amendment to Promissory Note are interest accrual at a rate of 8% on an annual basis or 20% if the note is in default. The Amendment to Promissory Note requires monthly payments of $3,100 and a maturity date of June 30, 2022, provided however that if the Company shall achieve $1,500,000 in equity sales or achieve gross product sales of $1,500,000, the Company must pay the outstanding balance at that time.

 

The Promissory Note was entered into with an effective date of September 1, 2020 in a principal amount of $195,000, which represented David Masters’ release of any claim to the $195,000 in past accrued salary he was owed, it accrues interest at a rate of 3% per annum, has a maturity date of August 31, 2022, and required payments of $4,000 per month beginning when the Company’s sale of products reach $3,500,000. The reclassification of the $195,000 was treated as a debt modification.

 

A Settlement and General Release (“Settlement Agreement”) was also executed by Dr. Masters to the benefit of the Company as a settlement and general release of any and all past claims, demands, damages, judgements, causes of action and liabilities that Dr. Masters ever had, may have or may acquire against the Company and its subsidiaries, including, but not limited to any claims related to (a) the ownership, operation, business, or financial condition of the Company or its business, (b) any promissory note, loan, contract, agreement or other arrangement, whether verbal or written, including all unpaid interest charges, late fees, penalties or any other charges thereon, entered into or established between Dr. Masters’ and his affiliates and the Company on or prior to the Effective Date, or (c) the employment of Dr. Masters by the Company (except for claims directly relating to the breach of the Amendment to Promissory Note, the Promissory Note or the Consulting Agreement).

 

On October 15, 2020, the Company entered into a note conversion agreement with David Masters whereby the Company and Mr. Masters both agreed to convert his note payable in the then outstanding balance of $193,158 made up of $192,500 in principal and $658 in accrued interest into common stock and warrants pursuant to terms identical to what is agreed upon in our proposed S-1 offering. Pursuant to this conversion agreement the Company agreed to convert $196,000 made up of $192,500 in principal and a conversion fee of $3,500 and Mr. Masters agreed to forego the interest accrued in the amount of $658. The conversion fee of $3,500 was treated as a discount on the debt and the $658 was treated as a reduction of the discount on debt. As of June 30, 2021 and March 31, 2021, the outstanding balance of $196,000 for this share-settled debt obligation had not yet been converted and is recorded as a liability due to the fact the Company had not agreed to terms of our S-1 offering currently being conducted.

  

 

At June 30, 2021 and March 31, 2021, the Company was obligated for principal and accrued interest in the amounts of $-0- and $-0-, respectively, related to the Promissory Note and $48,267 and $44,554 respectively, related to the Amendment to Promissory Note.

 

NOTE 10 – DERIVATIVE LIABILITY AND EXPENSE

 

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operation as other income (expense). Upon conversion or exercise of a derivative instruments, the instrument is marked to fair value at the conversion date then that fair value is recognized as a gain or loss on extinguishment. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.

 

The Company used the following assumptions for determining the fair value of the conversion feature in the RDCN referenced in Note 8 to these financial statements, under the binomial pricing model with Monte Carlo simulations at June 15, 2020 and June 30, 2020, the issuance and balance sheet dates, respectively:

 

		June 15, 2020				June 30, 2020
Stock price on valuation date		$	.42			$	.44
Conversion price		$	.28			$	.28
Days to maturity			273				258
Weighted-average volatility*			367	%			367	%
Risk-free rate			.18	%			.18	%

 

The initial valuation of $526,800 at June 15, 2020, generated a discount on the debt of $206,000, which net the convertible note liability to $-0- and forced a recognition of derivative expense of $320,800 and a corresponding offset to derivative liability of $526,800. At June 30, 2021 and 2020, the derivative liability was $-0-. The Company recognized $-0- and $21,400 to derivative expense for the three months ended June 30, 2021 and 2020, respectively.

 

NOTE 11–ACCRUED EXPENSES – RELATED PARTY

 

At June 30, 2021, the Company was obligated to pay $50,898 in accrued expenses due to a related party. Of the total, $29,855 was made up of accounts payable, while $21,043 was made up of accrued salaries.

 

At March 31, 2021, the Company was obligated to pay $36,808 in accrued expenses due to a related party. Of the total, $28,965 was made up of accounts payable, while $7,843 was made up of accrued salaries.

 

NOTE 12–RETIREMENT PLAN

 

In February 2021, the Company established a 401(k) retirement plan for its employees in which eligible employees can contribute a percentage of their compensation. The Company may also make discretionary contributions. The Company did not make any contributions to the plan for the three months ended June 30, 2021.

 

NOTE 13 – COMMITMENTS AND CONTINGENCIES

 

The Company entered into an eighty-four-month lease for 3,577 square feet of newly constructed office, laboratory and warehouse space located in Edina, Minnesota in May 2017. The base rent has annual increases of 2% and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance. This lease is terminable by the landlord if damage causes the property to no longer be utilized as an integrated whole and by the Company if damage causes the facility to be unusable for a period of 45 days. In January 2020, the Company entered into a lease amendment whereby agreed to extend the lease term through November of 2026 in exchange for receipt of a loan of $42,500 recorded to notes payable and a grant of $7,500, which has been recorded to accrued expenses and will be amortized over the remainder of the lease term. The base rent as of June 30 and March 31, 2021 is $2,205.

 

 

Rent expense for the three months ended June 30, 2021 and 2020 were $11,511 and $13,568, respectively.

 

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2021:

 

2022		$	20,020
2023			27,167
2024			27,710
2025			28,265
2026			28,830
2027			19,474
		$	151,466
Less: amount representing interest			(276	)
Total		$	151,190

 

In compliance with ASC 842, the Company recognized, based on the extended lease term to November 2026 and a treasury rate of 0.12%, an operating lease right-to-use assets for approximately $189,600 and corresponding and equal operating lease liabilities for the lease. As of June 30, 2021, the present value of future base rent lease payments based on the remaining lease term and weighted average discount rate are approximately 6 years and 0.12%, respectively, are as follows:

 

Present value of future base rent lease payments		$	151,190
Base rent payments included in prepaid expenses			-
Present value of future base rent lease payments – net		$	151,190

 

 

As of June 30, 2021, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:

 

Operating lease right-of-use asset		$	151,190
Total operating lease assets			151,190
Operating lease current liability			26,754
Operating lease other liability			124,436
Total operating lease liabilities		$	151,190

 

Pursuant to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal year 2017-2018, the Company had recorded as of those fiscal years approximately $330,000 as a potential payable to the lessor, which this liability remains as of June 30, 2021 and March 31, 2021 and is included in accounts payable.

 

The Company has employment agreements with the Chief Executive Officer and Chief Financial Officer. As of June 30, 2021 and March 31, 2021, these agreements do not contain severance benefits if terminated without cause.

 

 

NOTE 14 - GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.

 

The Company incurred net losses of $490,629 for the three months ended June 30, 2021 and had net cash used in operating activities of $255,861 for the same period. Additionally, the Company has an accumulated deficit of $58,602,055, negative working capital of $1,094,921, and a stockholders’ deficit of $716,178, at June 30, 2021. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months after the date of issuance on these financial statements. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability and/or to obtain adequate financing through the issuance of debt or equity in order to finance its operations.

 

Management intends to raise additional funds either through a private placement or public offering of its equity securities. Management believes that the actions presently being taken to further implement its business plan will enable the Company to continue as a going concern. While the Company believes in its viability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and raise additional funds.

 

COVID-19 has had an impact on the global economy, which directly or indirectly may have an impact on our ability to continue as a going concern.

 

These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 15 – COMMON STOCK AND WARRANTS

 

Equity Incentive Plan

 

On July 10, 2020, our Board of Directors unanimously approved the PetVivo Holdings, Inc “2020 Equity Incentive Plan” (the “2020 Plan”), subject to approval by our stockholders at the Regular Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. The number of shares of our common stock available and that may be issued as awards under the 2020 Plan is 1,000,000 shares. Unless sooner terminated by the Board, the 2020 Plan will terminate at midnight on July 10, 2030.

 

Employees, consultants and advisors of the Company (or any subsidiary), and non-employee directors of the Company will be eligible to receive awards under the 2020 Plan. In the case of consultants and advisors, however, their services cannot be in connection with the offer and sale of securities in a capital-raising transaction nor directly or indirectly promote or maintain a market for PetVivo securities.

 

The 2020 Plan will be administered by the Compensation Committee of our Board of Directors (the “Committee”), which has full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment, any deferral payment, and other terms and conditions of each award. Subject to provisions of the 2020 Plan, the Committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The Committee also has the authority to interpret and establish rules and regulations for the administration of the 2020 Plan. In addition, the Board of Directors may also exercise the powers of the Committee.

 

The aggregate number of shares of Petvivo common stock available and reserved to be issued under the 2020 Plan is 1,000,000 shares, but includes the following limits:

 

● the maximum aggregate number of shares of Common Stock granted as an Award to any Non-Employee Director in any one Plan Year will be 10,000 shares; provided that such limit will not apply to any election of a Non-Employee Director to receive shares of Common Stock in lieu of all or a portion of any annual Board, committee, chair or other retainer, or any meeting fees otherwise payable in cash.

 

  

Awards can be granted for no cash consideration or for any cash and other consideration as determined by the Committee. Awards may provide that upon the grant or exercise thereof, the holder will receive cash, shares of PetVivo common stock, other securities or property, or any combination of these in a single payment, installments or on a deferred basis. The exercise price per share of any stock option and the grant price of any stock appreciation right may not be less than the fair market value of PetVivo common stock on the date of grant. The term of any award cannot be longer than ten years from the date of grant. Awards will be adjusted in the event of a stock dividend or other distribution, recapitalization, forward or reverse stock split, reorganization, merger or other business combination, or similar corporate transaction, in order to prevent dilution or enlargement of the benefits or potential benefits provided under the 2020 Plan.

 

The 2020 Plan permits the following types of awards: stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, other stock-based awards, and dividend equivalents.

 

As of June 30, 2021, the Company has granted 34,300 restricted shares pursuant to the 2020 Plan of which 300 are vested.

 

Common Stock

 

For the three months ended June 30, 2021, the Company issued 294,042 shares of common stock as follows:

 

i) 80,522 shares in April 2021 pursuant to a conversion of a $230,000 convertible note and $2,658 in accrued interest at a conversion rate of $2.89 per share;

 

ii) 4,500 shares in April 2021 pursuant to a warrant holder’s exercise of warrants for purchase with a strike price of $4.44 per share for cash proceeds of $40,000.

 

iii) 36,915 shares in May 2021 pursuant to John Lai’s (CEO and a Director of the Company) cashless exercise of a warrant for purchase of 42,188 shares of common stock at a strike price of $1.33 per share;

 

iv) 79,767 shares in May 2021 pursuant to a warrant holder’s cashless exercise of a warrants for purchase of 139,286 shares of common stock at a strike price of $1.40 per share;

 

v) 49,014 shares during May and June of 2021 in exchange for $343,098 in cash to accredited investors, including an officer and two directors of the Company at a price of $7.00 per share; and

 

vi) 43,324 shares in June 2021 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of 56,250 shares of common stock at a strike price of $2.22 per share.

 

For the three months ended June 30, 2020, the Company issued 50,000 shares of common stock as follows:

 

i) i) 30,000 shares valued at $32,453 and recorded in Stock-based compensation to a service provider for video marketing services over a 6-month term; and

 

ii) 20,000 shares with a relative value of $34,709 pursuant to a purchase of 20,000 units whereby a unit is made up of 1 share of common stock and ½ warrant. The value of $34,709 along with the relative value of the warrants associated with this transaction of $17,291 ($52,000 total) was recorded during the quarter ended March 31, 2020 to Common Stock Subscribed and moved to Additional Paid in Capital and Capital Stock upon receipt of funds and issuance of shares of common stock during the quarter ended June 30, 2020.

 

  

Warrants

 

During the three months ended June 30, 2021, no warrants were issued.

 

During the three months ended June 30, 2020, the Company issued warrants to purchase a total of 206,873 shares of common stock as follows:

 

i) warrants issued for 10,000 shares, sold at $17,291 to one investor using the Black-Scholes model, whereas the warrants vested immediately upon issuance and are exercisable at $4.00 per share for 3 years from the grant date of April 6, 2020;

 

ii) warrants issued for 38,837 shares, valued at $57,717 using the Black-Scholes model, to directors, officers and consultants at exercise prices between $1.40 and 1.60 per share with a weighted average price per share of $1.52 per share; and

 

iii) warrants issued with debt for 158,036 shares, valued at $265,500 using the Black-Scholes model, to an investor and broker, whereby the relative value as described in Note 8 of $91,500 was recorded to Warrants issued in conjunction with convertible debt on the statement of equity; the warrants have a cashless warrant exercise feature, are exercisable at $1.40 per share for a term of five years from the date of the grant of June 15, 2020 and vested immediately.

 

These warrants’ values were arrived at by using the Black-Scholes valuation model with the following assumptions:

 

i) an expected volatility of the Company’s shares on the date of the grants of between approximately 350% and 433%, based on historical volatility.

 

ii) risk-free rates identical to the U.S. Treasury 3-year and 5-year Treasury Bill rates on the date of the grants between 0.29% and 1.16%.

 

A summary of warrant activity for the year ending March 31, 2021 and three-month period ending June 30, 2021 is as follows:

 

		Number of Warrants				Weighted- Average Exercise Price				Warrants Exercisable				Weighted- Average Exercisable Price
Outstanding, March 31, 2020			1,234,295			$	2.12				1,027,092			$	2.13
Issued in conjunction with convertible debt			158,036				1.40
Sold			10,000				4.00
Issued and granted			72,596				1.52
Exercised for cash			(205,946	)			(2.21	)
Cashless warrant exercises			(142,313	)			(1.64	)
Expired			(45,000	)			(3.78	)
Outstanding, March 31, 2021			1,081,668				2.02				881,982				2.00
Exercised for cash			(4,500	)			(8.89	)
Cashless warrant exercises			(237,724	)			(1.58	)
Cancelled			(108,000	)			(1.80	)
Outstanding, June 30, 2021			731,444			$	2.15				557,069			$	2.17

 

At June 30, 2021, the range of warrant prices for shares under warrants and the weighted-average remaining contractual life is as follows:

 

  

			Warrants Outstanding												Warrants Exercisable
Range of Warrant Exercise Price			Number of Warrants				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Life (Years)				Number of Warrants				Weighted- Average Exercise Price
$1.20-$2.00				419,831				$1.35				4.68				397,331				$1.35
2.01-4.00				207,938				2.48				3.09				56,063				3.15
4.01-10.00				103,675				4.77				1.32				103,675				4.77
Total				731,444				2.15				3.75				557,069				2.17

 

For the three months ended June 30, 2021 and 2020, the total stock-based compensation on all instruments was $55,674 and $183,244, respectively. It is expected that the Company will recognize expense after June 30, 2021 related to warrants issued, outstanding, and valued using the Black Scholes pricing model as of June 30, 2021 in the amount of approximately $104,000.

 

NOTE 16 – SUBSEQUENT EVENTS

 

In July of 2021, the Company sold an aggregate of 11,000 shares of common stock to 2 investors at a purchase price of $7 per share for total proceeds of $77,000.

 

On August 13, 2021, the Company sold an aggregate of 2,500,000 units to the public at a price of $4.50 per unit, for total net proceeds of approximately $9,800,000, net of commissions and estimated offering costs pursuant to an certain underwriting agreement dated August 10, 2021 between the Company and ThinkEquity, a division of Fordham Financial Management, Inc. (the “Underwriter”). Each unit consists of one common share and one warrant to purchase one common share. The Company granted the Underwriter an option for a period of 45 days to purchase up to an additional 375,000 shares and/or warrants, in any combination, to cover over-allotments, if any. On August 13, 2021, the Underwriter exercised its over-allotment option to purchase an additional 375,000 Warrants. The Underwriter has retained the right to exercise the balance of its over-allotment option within the 45-day period. The Company also granted the Underwriter warrants to purchase up to 125,000 shares of our common stock in connection with this offering. The warrants granted with this offering have an exercise price of $5.625 and expire August 10, 2026. In connection with the offering, the Company’s common stock and warrants began trading on the Nasdaq Stock Market LLC under the symbols “PETV” and “PETVW,” respectively.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

OVERVIEW

 

PetVivo Holdings, Inc.(the “Company, “we” or “us”) is an emerging biomedical device company currently focused on the manufacturing, commercialization and licensing of innovative medical devices and therapeutics for companion animals.. The Company’s lead product Kush® is scheduled for a focused commercial launch later this year. We have never been profitable.

 

We were incorporated in Nevada in 2009 under a former name. In 2014, we entered our current business through a reverse merger with PetVivo Inc., a Minnesota corporation founded in 2013. From this merger, PetVivo Inc. became our wholly-owned subsidiary, and concurrently we changed our Nevada corporate name to PetVivo Holdings, Inc.

Until August 10, 2021, our common stock was publicly traded in the over-the-counter (OTC) market and under the symbol “PETV”.

 

On August 13, 2021, the Company closed a firm commitment underwritten public offering in which it sold an aggregate of 2,500,000 units, to the public at a price of $4.50 per unit, for total net proceeds of approximately $9,800,000, net of commissions and estimated offering costs. Each unit consists of one share of common stock and one warrant to purchase one share of the Company’s common stock at a purchase price of $6.25 per share. The Company’s common stock and warrants are trading on the Nasdaq Capital Market under the symbols “PETV” and “PETVW,” respectively.

 

CURRENT BUSINESS OPERATIONS

 

We are an emerging biomedical device company focused on the licensing and commercialization of innovative medical devices and therapeutics for pets, based in Minneapolis, Minnesota. We operate in the $31 billion US veterinary care and products market (market size according to the American Pet Products Association). Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in treating osteoarthritis in pets and other animals. In addition, the role of pets in the family has greatly evolved in recent years as many pet owners consider their pets an important member of the family and are now willing to spend greater amounts of money on their pets to maintain their health and quality of life.

 

We intend to leverage our investments in the development of human therapeutics to commercialize treatments for pets in a capital and time-efficient way. A key component of this strategy is the accelerated timeline to revenues for veterinary medical devices, which enter the market earlier than the more-stringently regulated veterinary pharmaceuticals or human therapeutics.

 

Our lead product, Kush®, is scheduled for focused commercial launch later this year. Kush® is a veterinarian-administered joint injection for the treatment of osteoarthritis and lameness in dogs and horses. The Kush® device is made from natural components that are lubricious and cushioning to perform like cartilage for the treatment of pain and inflammation associated with osteoarthritis.

 

  

We believe that Kush® is an optimal treatment that safely improves joint function. The Kush® particles are lubricious, cushioning and long-lasting. The spongy, protein-based particles mimic the composition and protective function of cartilage (i.e., providing both a slippery cushion and healing scaffolding) and protect the joint as an artificial cartilage.

 

Using industry sources, we estimate osteoarthritis afflicts approximately 20 million owned dogs in the United States and the European Union, making canine osteoarthritis an estimated potential $4 billion market opportunity, this does not factor in any contra-lateral usage of the product by veterinarians. See Johnston, Spencer A. “Osteoarthritis. Joint anatomy, physiology, and pathobiology.” The Veterinary clinics of North America (1997):699-723; and http://www.americanpetproducts.org/press_industrytrends.asp.

 

In addition to being a treatment for osteoarthritis, the joint-cushioning and lubricity effects of Kush® have shown an ability to treat equine lameness that is due to navicular disease (a problem associated with misalignment of joints and bones in the hoof and digits).

 

Based on a variety of industry sources we estimate that 1 million owned horses in the United Stated and European Union suffer from lameness and/or navicular disease each year, making the equine lameness and navicular disease market an annual opportunity worth $550 million; this does not factor in any contra-lateral usage of the product by veterinarians. See Kane, Albert J., Josie Traub-Dargatz, Willard C. Losinger, and Lindsey P. Garber; “The occurrence and causes of lameness and laminitis in the US horse population” Proc Am Assoc Equine Pract. San Antonio (2000): 277-80; Seitzinger, Ann Hillberg, J. L. Traub-Dargatz, A. J. Kane, C. A. Kopral, P. S. Morley, L. P. Garber, W. C. Losinger, and G. W. Hill. “A comparison of the economic costs of equine lameness, colic, and equine protozoal myeloencephalitis (EPM).” In Proceedings, pp. 1048-1050. 2000; and Kilby, E. R. 10 CHAPTER, The Demographics of the U.S. Equine Population, The State of the Animals IV: 2007.

 

Osteoarthritis is a condition with degenerating cartilage, creating joint stiffness from mechanical stress resulting in inflammation and pain. The lameness caused by osteoarthritis worsens with time from the ongoing loss of protective cushion and lubricity. There are currently very few treatments for osteoarthritis; some of which are palliative pain therapy and joint replacement. Non-steroidal, anti-inflammatory drugs (NSAIDs) are used to alleviate the pain and inflammation, but long-term use has been shown to cause gastric problems. NSAIDs do not treat the cartilage degeneration issue to halt or slow the progression of the osteoarthritis condition.

 

We believe that our treatment of osteoarthritis in canines using Kush® is far superior to the current methodology of using NSAIDs. NSAIDs have many side effects, especially in canines, whereas the company’s treatment using Kush®, to our knowledge, has not elicited any adverse side effects in dogs. Remarkably, Kush®-treated dogs have shown an increase in activity even after they no longer are receiving pain medication.

 

No special training is required for the administration of the Kush device. The treatment is injected into synovial joint space using standard intra-articular injection technique and multiple joints can be treated simultaneously. Kush® immediately treats effects of osteoarthritis with no special post-treatment requirements.

 

Historically, drug sales represent up to 30% of revenues at a typical veterinary practice (Veterinary Practice News). Revenues and margins at veterinary practices are being eroded because online, big-box and traditional pharmacies recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace the lost prescription revenues. The Kush® device is veterinarian-administered and should expand practice revenues and margins. We believe that the increased revenues and margins provided by Kush® will accelerate its adoption rate and propel it forward as the standard of care for canine and equine lameness related to or due to synovial joint issues. If we are capitalized in a way the Company feels acceptable to move forward with commercial manufacturing of Kush®, our challenge will be whether we can consistently operate effectively to manufacture our products and to market and sell them in quantities and prices sufficient to obtain a satisfactory and sustaining profit. We have not done this to date and our challenge is to do so going forward.

 

We anticipate growing our product pipeline through the acquisition or in-licensing of additional proprietary products from human medical device companies specifically for use in pets. In addition to commercializing our own products in strategic market sectors and in view of the company’s vast proprietary product pipeline, the Company is seeking to continue to develop strategic out-licensing partnerships to provide secondary revenues.

 

  

We plan to commercialize our products in the United States through distribution relationships supported by regional and national distributors and complemented by the use of digital marketing to educate and inform pet owners; and in Europe and the rest of the world through commercial partners. In September 2019, the Company entered into an agreement with a service provider to film a 12-part, monthly series of interviews with our CEO, John Lai, Company key opinion leaders, and other media content to be aired on Bloomberg Television Network alongside 96 commercials; we anticipate this program to begin in the second half of 2021.

 

Most veterinarians in the United States buy a majority of their equipment and supplies from one of four veterinary-product distributors. Combined, these four distributors deliver more than 85%, by revenue, of the products sold to companion animal veterinarians in the U.S. We plan to have our product distribution leverage the existing supply chain and veterinary clinic and clinician relationships already established by these large distributors. We plan to support this distribution channel with regional sales representatives. Our representatives will support our distributors alongside the veterinary clinics and hospitals. We will also target pet owners with product education and treatment awareness campaigns utilizing a variety of digital marketing tools. The unique nature and the anticipated benefits provided by our products are expected to generate significant consumer response.

 

Our biomaterials have been through a human clinical trial and have been classified as a medical device for use as a dermal filler. The FDA does not require submission of a 510(k) or formal pre-market approval for medical devices used in veterinary medicine.

 

RESULTS OF OPERATIONS

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this prospectus, particularly in “RISK FACTORS.” We caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this prospectus.

 

We are a smaller reporting company and have not generated any material revenues to date and have incurred substantial losses in connection with our limited operations. We need substantial capital to pursue our current plans to bring our first products to market. The first of such products is a proprietary gel-like protein-based biomedical material for injection into the afflicted body parts of animals suffering from osteoarthritis or other impairments to be marketed under the trade name Kush®. It will provide to veterinarians an innovative treatment for dogs and horses suffering from osteoarthritis.

 

RESULTS OF OPERATION

 

		For the Three Months Ended
		June 30, 2021				June 30, 2020
Revenues		$	4,145			$	2,006
Total Cost of Sales			5,051				-
Total Operating Expenses			517,613				444,074
Total Other Income (Expense)			27,890				(371,940	)
Net Loss		$	(490,629	)		$	(814,008	)
Net loss per share - basic and diluted		$	(0.07	)		$	(0.16	)

 

* In October 2020, the Company approved a 1-for-4 reverse split of our outstanding shares of common stock that was made effective December 29, 2020. All share and per share data has been retroactively adjusted for this reverse split for all period presented.

 

  

For The Three Months Ended June 30, 2021 Compared to The Three Months Ended June 30, 2020

 

Total Revenues. Revenue was $4,145 and $2,016 for three months ended June 30, 2021 and 2020, respectively, and consisted of Kush® sales to veterinary clinics.

 

Total Cost of Sales. Cost of sales was $5,051 and $-0- for the three months ended June 30, 2021 and 2020, respectively.

 

Operating Expenses. Operating expenses were $517,613 and $444,074 for the three months ended June 30, 2021 and 2020, respectively. Operating expenses consisted of general and administrative, sales and marketing, and research and development expenses.

 

General and administrative (“G&A”) expenses were $397,392 and $330,945 for the three months ended June 30, 2021 and 2020, respectively. General and administrative expenses include corporate overhead, financial and administrative contracted services, consulting fees and stock compensation costs.

 

Sales and marketing expenses were $46,682 and $49,731 for the three months ended June 30, 2021 and 2020, respectively.

 

Research and development (“R&D”) expenses were $136,97 and $ -0- for the three months ended June 30, 2021 and 2020, respectively. The increase was related to efforts to support the launch of Kush^®.

 

Operating Loss. As a result of the foregoing, our operating loss was $518,519 and $442,068 for the three months ended June 30, 2021 and 2020.

 

Other Income (Expense). Other income was $27,890 for the three months ended June 30, 2021 as compared to other expense of $371,940 for the three months ended June 30, 2020. Other income in 2021 consisted of the foregiveness of PPP Loan and accrued interest of $31,680 partially offset by interest expense of $3,790. Other expense in 2020 consisted primarily of derivative expense related to debt financing of $342,200 and interest expense of $30,222.

 

Net Loss. Our net loss for the three months ended June 30, 2021 as 490,629 or ($0.07) as compared to a net loss of $814,008 or ($0.16) per share for the three months ended June 30, 2020. Net loss decreased primarily due to the derivative expense recognized on the debt financing in 2020. The weighted average number of shares outstanding was 6,946,353 compared to 5,161,101 for the three months ended June 30, 2021 and 2020, respectively.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our financial position and future prospects depend significantly on our access to financing to fund our operations during our development stage. Much of our current cost structure is based on costs related to personnel and facilities, and not subject to material variability. In order to fund our operations and working capital needs, we historically have utilized loans from accredited investors and others, equity sales of common stock to accredited investors and others having pre-existing relationships with us, and substantial issuances of stock-based compensation to satisfy outstanding debt and pay for development, management, financial, professional and other services.

 

As of June 30, 2021, our current assets were $245,634 including $143,084 in cash and $102,550 in prepaid expenses. In comparison, our current liabilities as of that date were $1,340,555 consisting of $1,149,040 of accounts payable and accrued expenses, $50,898 of accrued expenses – related party, $7,436 in PPP loan, $20,300 in notes payable and accrued interest - directors, $48,267 in notes payable and accrued interest – related party, $37,860 in a note payable and $26,754 in operating lease liability – short term. Our working capital deficiency as of June 30, 2021 was $1,094,921.

 

 

We will need to raise substantial additional capital through private or public offerings of our equity or debt securities, or a combination thereof, and we may have to use a material portion of any capital raised to repay past due debt obligations. To the extent any capital raised is insufficient to both satisfy operational working capital needs and meet any required debt payments, we will most likely need to either extend, refinance or convert to equity our outstanding indebtedness.

 

We currently have little cash to support our operations and projected commercial growth. Accordingly, we will require substantial additional financing to fund our operational working capital for at least the next 12 months. Financing may be sought by us from several sources such as private or public sales of our equity or convertible debt securities, and/or loans from affiliates, banks or other financial institutions. We have filed Forms S-1 and S-1/A with the Securities and Exchange Commission on October 13, 2020, December 31, 2020, March 29, 2021 and July 13, 2021, respectively, to raise capital through a public offering of our common stock. In the event we cannot obtain any such financing when needed on terms acceptable to us, if at all, our business would suffer substantially.

 

Liquidity represents the ability of a company to generate sufficient cash to provide for its immediate cash needs, which our continued losses have made it difficult for us to accomplish. Over the past several years we have continued to incur substantial losses without any source of material revenues or liquid assets, which has caused a serious and harmful effect to our liquidity and a substantial strain on our ongoing business operations.

 

We have not generated any operating cash flows since we are a development stage company which has not yet realized any significant commercial revenues.

 

Net Cash Used in Operating Activities – We used $255,861 of net cash in operating activities for the three months ended June 30, 2021. This cash used in operating activities was primarily attributable to our net loss of $490,629, forgiveness of PPP loan and accrued interest of $31,680 and an increase in deferred issue costs of $25,190 partially offset by an increase in accounts payable and accrued expenses of $182,949 and stock compensation expense of $55,674.

 

Net Cash Used in Investing Activities – We used $6,063 of net cash in investing activities for the three months ended June 30, 2021, consisting of costs capitalized to patents and trademarks.

 

Net Cash Provided by Financing Activities – During the three months ended June 30, 2021, we were provided with net cash of $381,430 from financing activities consisting of $383,098 in stock and warrants sale proceeds, which were partially offset by $1,668 in repayments of note payable.

 

Inventory

 

Inventories are stated at cost, subject to the lower of cost or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. We regularly review inventory quantities on hand through an inventory count.

 

At June 30, 2021, the Company’s inventory has a carrying value of $0 and is broken down into $324,123 of finished goods inventory, $6,273 in raw material inventory, and $1,072 in packaging inventory offset by a reserve of $41,468.

 

At March 31, 2021, the Company’s inventory has a carrying value of $0 and is broken down into $36,973 of finished goods inventory, $8,773 in raw material inventory, and $1,322 in packaging inventory offset by a reserve of $47,068.

 

  

MATERIAL COMMITMENTS

 

Accrued Salary

 

We are indebted to certain related parties with respect to unreimbursed expenses and accrued salaries of $50,898 at June 30, 2021. This amount is included in accrued expenses – related party.

 

Notes Payable

 

As of June 30, 2021, we are obligated on notes and accrued interest of $113,863 consisting of notes to third parties of $45,296 and to related parties of $68,567.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of June 30, 2021, and as of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

GOING CONCERN

 

The independent auditors’ report accompanying our March 31, 2021 Form 10-K and financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring losses from operations and have a working capital deficit. These factors raise substantial doubt about our ability to continue as a going concern.

 

We are presently seeking to address these going concern doubts through a number of actions including efforts to (a) raise additional capital and (ii) commencing a focused commercial launch of Kush® later this year. On August 13, 2021, we completed a firm commitment underwritten public offering in which we sold 2.5 million units at a purchase price of $4.50 per share and raised net proceeds of $9.8 million, after deducting underwriter’s commissions and expenses. We can provide no assurance that any of these efforts will be successful or, that even if successful, that they will alleviate doubts about our ability to continue as a going concern for more than the next twelve months.

 

CRITICAL ACCOUNTING POLICIES

 

We prepare our consolidated financial statements in accordance with generally accepted accounting standards in the United States of America. Our significant accounting policies are described in Note 1 to our consolidated financial statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the consolidated financial statements.

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

The following describes the recently issued accounting standards used in reporting our financial condition and results of operations. In some cases, accounting standards allow more than one alternative accounting method for reporting. In those cases, our reported results of operations would be different should we employ an alternative accounting method.

 

The FASB issued ASC 606 as guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The company adopted the guidance on April 1, 2018 and applied the cumulative catch-up transition method. There was no transition adjustment upon adoption of the new standard.

 

  

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this ASU supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. The Company adopted Topic 842 on April 1, 2019 and resulted in a right of use asset and liability of $154,917.

 

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

 

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required

 

ITEM 4. CONTROLS AND PROCEDURES

 

DISCLOSURE CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures.

 

We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.

 

Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

 

Management’s report on internal control over financial reporting.

 

Our chief executive officer and our chief financial officer are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
	●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and
	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

  

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (revised 2013). This assessment included an evaluation of the design and procedures of our control over financial reporting.

 

	●	Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.
	●	Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited.
	●	Limited checks and balances in processing cash and other transactions.

 

As part of the preparation of this report, we have applied compensating procedures and processes as necessary to attempt to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the period covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the years and periods then ended.

 

The existence of the material weaknesses in our internal control over financial reporting increases the risks that our financial statements may be misleading materially or even need to be restated. We are committed to improving our financial and oversight organization and procedures.

 

Changes in internal control over financial reporting.

 

There were no significant changes in our internal control over financial reporting during the first quarter of our fiscal year ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

AUDIT COMMITTEE

 

Our board of directors has established an audit committee consisting of three of our independent directors, Messrs James Martin (financial expert), Joseph Jasper, and David Deming. The audit committee’s primary function is to provide advice with respect to our financial matters and to assist our board of directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee’s primary duties and responsibilities are to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management’s establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our board of directors.

 

  

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Management is not aware of any pending legal proceedings contemplated by any governmental authority or any other party involving our properties or the Company. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings.

 

ITEM 1A. RISK FACTORS

 

Not required

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

In April through June of 2021, the Company issued a total of 294,042 shares of common stock as follows:

 

i) issued 49,014 shares of common stock to various investors for total proceeds of $343,098 at a price of $7.00 per share; and

 

ii) issued 4,500 shares upon the exercise of 4,500 warrants at an exercise price of $8.88 per share for total proceeds of $40,000; and

 

iii) issued 80,522 shares upon conversion of debt totaling $232,658 at a conversion price of $2.89 per share; and.

 

iv) Issued an aggregate of 160,006 shares upon the cashless exercise of warrants to two individuals and a corporate entity to purchase an aggregate of 237,724 shares at a weighted average conversion price of $1.58 per share.

 

All of these transactions discussed in this Item 2 were exempt from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not required.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not required.

 

ITEM 5. OTHER INFORMATION

 

None

 

  

ITEM 6. EXHIBITS

 

The following exhibits are filed as part of this Quarterly Report.

 

Incorporated by Reference

Exhibit No.

Description

Filed Herewith

Form

Period Ending

Exhibit

Filing Date

31.1

Certification of Principal Executive Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002

X

31.2

Certification of Principal Financial Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1

Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

32.2

Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

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XBRL Instance Document

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XBRL Taxonomy Schema

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XBRL Taxonomy Calculation Linkbase

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XBRL Taxonomy Definition Linkbase

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XBRL Taxonomy Label Linkbase

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XBRL Taxonomy Presentation Linkbase

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XBRL Instance Document

 

  

PETVIVO HOLDINGS, INC.

SIGNATURES

 

Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

August 14, 2021	By:	/s/ John Lai
		John Lai
	Its:	CEO, President and Director (Principal Executive Officer)
August 14, 2021	By:	/s/ Robert J. Folkes
		Robert J. Folkes
	Its:	Chief Financial Officer (Principal Financial and Accounting Officer)