U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Mark One
For
the quarterly period ended
For the transition period from _______ to _______
Commission
File No.
(Name of small business issuer in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(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 | ||
| The
| ||||
| The
|
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)
Indicate
by check mark 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ☐ | 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 check mark 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 November 14, 2024 | |
Common Stock, $ Preferred Stock (Series A), $0.001 |
3,045,000 |
PETVIVO HOLDINGS, INC.
FORM 10-Q
FOR THE PERIOD ENDED September 30, 2024
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 | 26 |
| Item 3. | Qualitative and Quantitative Disclosures About Market Risk | 33 |
| Item 4. | Controls and Procedures | 33 |
| PART II. OTHER INFORMATION | 33 | |
| Item 1. | Legal Proceedings | 33 |
| Item 1A. | Risk Factors | 33 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
| Item 3. | Defaults Upon Senior Securities | 35 |
| Item 4. | Mine Safety Disclosure | 35 |
| Item 5. | Other information | 35 |
| Item 6. | Exhibits | 36 |
| SIGNATURES | 37 | |
| 2 |
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 the projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC’), including our Annual Report on Form 10-K for our fiscal year ended March 31, 2024, (“2023 10-K Report”) and risks described in other SEC filings. 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.
| 3 |
PART I.
ITEM 1. FINANCIAL STATEMENTS
PETVIVO HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30 2024 | March 31, 2024 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory, net (Note 3) | ||||||||
| Prepaid expenses and other assets (Note 4) | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment, net (Note 5) | ||||||||
| Other Assets: | ||||||||
| Operating lease right-of-use | ||||||||
| Trademark and patents, net (Note 6) | ||||||||
| Security deposit | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other payables | ||||||||
| Operating lease liability – short term | ||||||||
| Note payable and accrued interest | ||||||||
| Total Current Liabilities | ||||||||
| Other Liabilities | ||||||||
| Operating lease liability (net of current portion) | ||||||||
| Note payable and accrued interest (net of current portion) | ||||||||
| Total Other Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (see Note 10) | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Preferred Stock, par value $, shares authorized, and issued and outstanding at September 30, 2024 and March 31, 2024, respectively | ||||||||
| Common Stock, par value $, shares authorized, and issued and outstanding at September 30, 2024 and March 31, 2024, respectively | ||||||||
| Common Stock to be Issued | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements
| 4 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Sales and Marketing | ||||||||||||||||
| Research and Development | ||||||||||||||||
| General and Administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Loss on Extinguishment of Debt | ( | ) | ( | ) | ||||||||||||
| Settlement Expense | ( | ) | ( | ) | ||||||||||||
| Interest (Expense) Income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other (Expense) Income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| - | - | |||||||||||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income Tax Provision | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share: | ||||||||||||||||
| Basic and Diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 5 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three and Six Months Ended September 30, 2024
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated | Common Stock to be |
|||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Issued | Total | ||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Common stock sold | |||||||||||||||||||||||||||||||
| Conversion of debt and interest to common stock | - | ||||||||||||||||||||||||||||||
| Stock issued for services | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | |||||||||||||||||||||||||||||
| Vesting of restricted stock units | - | ( | ) | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Preferred stock sold | - | ||||||||||||||||||||||||||||||
| Stock issued for services | - | ||||||||||||||||||||||||||||||
| Common stock in lieu of compensation | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | |||||||||||||||||||||||||||||
| Vesting of restricted stock units | - | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 6 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three and Six Months Ended September 30, 2023
| Common Stock | Additional Paid-in | Accumulated | Common Stock to be | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Issued | Total | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock sold | ( | ) | ||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | ||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock and warrants sold | ||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||
| Conversion of debt and interest to common stock | ||||||||||||||||||||||||
| Value of stock and warrants issued on extinguishment of debt | - | |||||||||||||||||||||||
| Cashless warrant exercise | ( | ) | ||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | ||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 7 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss For The Period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Consulting and investor relations services paid in stock | ||||||||
| Stock issued in lieu of compensation | ||||||||
| Loss on extinguishment of debt | ||||||||
| Interest on convertible debentures | ||||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Increase in prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| (Increase) in accounts receivable | ( | ) | ( | ) | ||||
| Decrease (increase) in inventory | ( | ) | ||||||
| Increase in accounts payable and accrued expenses | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from the sale of common stock and warrants | ||||||||
| Proceeds from the sale of preferred stock and warrants | ||||||||
| Proceeds from issuance of convertible debentures | ||||||||
| Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Increase (Decrease) in Cash | ( | ) | ||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash Paid During The Period For: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES | ||||||||
| Convertible debentures and accrued interest converted to common stock | $ | $ | ||||||
| Stock granted for consulting services | $ | $ | ||||||
| (Decrease) increase to operating lease right of use asset and operating lease liability | $ | ( | ) | $ | ||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 8 |
PetVivo Holdings, Inc.
Condensed Notes to Consolidated Financial Statements
September 30, 2024
(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 and/or management of afflictions and diseases in animals, initially for dogs and horses. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. 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 its 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 PetVivo, Inc. 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.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the six months ended September 30, 2024, are not necessarily indicative of results to be expected for the year ending March 31, 2025, or for any other interim period or for any future year. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2024.
(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 during 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 reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
| 9 |
(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
(F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At September 30, 2024, the Company did not have cash balances in excess of the federally insured limits.
(G) Accounts Receivable
Accounts receivable consist primarily of amounts due from distributors (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable as well as a forecast of projected credit losses. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable since all receivables to date have been collected. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable is fully collectible. Accordingly, as of September 30, 2024, and March 31, 2024, our allowance for credit losses was zero.
In fiscal 2023, the Company has adopted an accounting standard: Adoption of ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables.
(H) Inventory
Inventories
are recorded in accordance with Accounting Standards Codification (“ASC”) 330, Inventory, and are stated at the lower of
cost or net realizable value. We account for inventories using the first in first out (“FIFO”) methodology. Provisions for
inventory obsolescence are charged to Cost of Sales. There were
(I) 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
(J) 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 the useful life of
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.
| 10 |
The Company had warrants outstanding as of September 30, 2024, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of September 30, 2024, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of September 30, 2024, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of September 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of September 30, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of September 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in Accounting Standards Codification (“ASC”) 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter 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 anti-dilutive.
(L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. Revenue is recognized upon delivery to the customer, which is when control of these products is transferred and in an amount that reflects the consideration the Company expects to receive for these products. Shipping costs charged to customers are reported as an offset to the respective shipping costs. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.
The
Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”)
on June 17, 2022. Contracts with the Distributor are evidenced by individual executed purchase orders subject to the terms of the Agreement.
The contracts consist of a single performance obligation related to the sale of our pet care products. Product sales occur once control
or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment
is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to
| 11 |
For
the three months ended September 30, 2024, and 2023, the Company recognized revenue from product sales under the Agreement of $
For
the six months ended September 30, 2024, and 2023, the Company recognized revenue from product sales under the Agreement of $
Assets and liabilities (included in accrued expenses) under the MWI Veterinary Supply Co. Agreement were as follows:
| September 30, 2024 | March 31, 2024 | |||||||
| Accounts receivable: MWI Veterinary Supply Co. | $ | $ | ||||||
| Rebate liability | ||||||||
| Distribution fee payable | ||||||||
The Company entered into a Distribution Services Agreement (the “Covetrus Agreement”) with Covetrus North America LLC (“Covetrus”) on December 18, 2023. Contracts with Covetrus are evidenced by individual executed purchase orders subject to the terms of the Covetrus Agreement. The contracts consist of a single performance obligation related to the sale of our pet care products. Product sales occur once control or title is transferred based on the commercial terms in the Covetrus Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. The Covetrus Agreement provides for a rebate payable to the Distributor based on annual sales volume that is retroactively applied. The rebate is estimated under the expected value method and is netted against revenue. Sales are subject to various rights of return provisions; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial as of September 30, 2024. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For
the three months ended September 30, 2024, and 2023, the Company did
For
the six months ended September 30, 2024, and 2023, the Company recognized revenue from product sales under the Agreement of $
(M) Research and Development
The Company expenses research and development costs as incurred.
(N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“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.
| 12 |
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 and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of September 30, 2024, and March 31, 2024, 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 note 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
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 the guidance of ASC 505-50.
Pursuant to ASC 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 date of grant.
The fair value of stock 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 ASC Paragraph 718-10-50-2(f)(2)(i), the expected term of stock options and similar instruments represents the period of time the stock options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holders’ expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holders’ expected exercise behavior.
● 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 stock 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 its average historical volatility over the expected contractual life of the stock options or similar instruments as its expected volatility.
| 13 |
● 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 ASC 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.
Stock options are valued using the Black-Scholes option-pricing model. The Black Scholes valuation model requires the input of highly subjective assumptions. The assumptions include the expected term of the option, the expected volatility of the price of our common stock, the expected dividend yield, and the risk-free interest rate. These estimates involve inherent uncertainties and the significant application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. We recognize compensation expense for these options on a straight-line basis over the requisite service period (see Note 11 – “Stockholders’ Equity”).
(Q) Income Taxes
The Company accounts for income taxes under ASC 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 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.
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.
(R) Recent Accounting Pronouncements
The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
| 14 |
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the consolidated financial statements for the six months ended September 30, 2024. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
NOTE 2 – RECLASSIFICATION OF PRIOR YEAR PRESENTATION
Reclassification. Certain prior period amounts have been reclassified to conform to current period presentation.
Certain prior year amounts have been reclassified for consistency with the current year presentation in the Consolidated Statements of Operations related to Total Cost of Sales to move certain research and development costs and added as an Operating Expense. There were no reclassifications made to the Consolidated Balance Sheets, Consolidated Statements of Changes in Stockholders’ Equity or Consolidated Statements of Cash Flows.
NOTE 3 – INVENTORY
As
of September 30, 2024, and March 31, 2024, the Company had inventory of $
The inventory components are as follows:
| September 30, 2024 | March 31, 2024 | |||||||
| Finished Goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Total Net | $ | $ | ||||||
| 15 |
NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As
of September 30, 2024, the Company had $
As
of March 31, 2024, the Company had $
NOTE 5 – PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
| September 30, 2024 | March 31, 2024 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Production equipment | ||||||||
| R&D equipment | ||||||||
| Computer equipment and furniture | ||||||||
| Total, at cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total Net | $ | $ | ||||||
Depreciation
expense was $
NOTE 6 – PATENTS AND TRADEMARKS
The components of patents and trademarks, all of which are finite lived, were as follows:
| September 30, 2024 | March 31, 2024 | |||||||
| Patents | $ | $ | ||||||
| Trademarks | ||||||||
| Total at cost | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Total net | $ | $ | ||||||
Amortization
expense was $
NOTE 7 – ACCRUED EXPENSES AND OTHER PAYABLES
The components of accrued expenses were as follows:
| September 30, 2024 | March 31, 2024 | |||||||
| Accrued payroll and related taxes | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total | $ | $ | ||||||
| 16 |
NOTE 8 – NOTE PAYABLE
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 $
In
October 2023 and amended in November 2023, the Company entered into a promissory note for $
On
February 5, 2024, the note and accrued interest of $
In
March 2024, the Company entered into a convertible promissory note for $
On
September 9, 2024, the Company entered into a convertible promissory note for $
NOTE 9 – 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. For the six months ended September 30, 2024, and 2023,
the Company made contributions to the plan of $
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset, and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (‘ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options is at our discretion and is included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Consolidated Balance Sheets.
| 17 |
None of our lease agreements contain material restrictive covenants or residual value guarantees.
Buildings
The
Company entered into an -month lease for
The
Company entered into a month lease for
On
January 10, 2023, the Company entered into a new lease agreement for approximately
Vehicles
We
leased vehicles for certain members of our field sales organization in the three months ended June 30, 2023, under a vehicle fleet program
whereby the noncancelable lease is for a term of
Operating
lease expense for the six months ended September 30, 2024, and 2023, was $
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of September 30, 2024:
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ | ||||
| Less: amount representing interest | ( | ) | ||
| Total | $ |
| 18 |
In
compliance with ASC 842, the Company recognized, based on
| Present value of future base rent lease payments | $ | |||
| Base rent payments included in prepaid expenses | ||||
| Present value of future base rent lease payments – net | $ |
As of September 30, 2024, 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 | $ | |||
| Total operating lease assets | ||||
| Operating lease current liability | ||||
| Operating lease other liability | ||||
| Total operating lease liabilities | $ |
Employment Agreements
The Company has employment agreements with its executive officers. As of September 30, 2024, these agreements contain severance benefits ranging from one month to six months if terminated without cause.
Legal Proceedings
David
Masters, a former employee, board member, and consultant to the Company, has threatened to file suit against the Company to recover in
excess of $
In
September 2023, Masters executed the long-term agreement and the Company recorded a settlement expense of $
NOTE 11 – GOING CONCERN
The accompanying consolidated 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 a net loss $
| 19 |
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 ability 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.
These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 12 – STOCKHOLDERS’ EQUITY
Equity Incentive Plan
On July 10, 2020, our Board of Directors unanimously approved the PetVivo Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which authorized the issuance of up to shares of our common stock as awards under the 2020 Plan, subject to approval by our stockholders at the Annual Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. On October 14, 2022, the stockholders of the Company approved the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Incentive Plan (the “Amended Plan”), which increased the number of shares of the Company’s common stock which may be granted under the Amended Plan from to . Unless sooner terminated by the Board, the Amended Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was at September 30, 2024.
Employees, consultants, advisors of the Company (or any subsidiary), and non-employee directors of the Company will be eligible to receive awards under the Amended 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 to promote or maintain a market for PetVivo common stock.
The Amended Plan is 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 Amended 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 Amended 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 Amended Plan is 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 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.
| 20 |
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 Amended Plan.
The Amended 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.
Common Stock
For the six months ended September 30, 2024, the Company issued shares of common stock as follows:
| i) |
shares in connection with the sale of stock in April and May 2024 in exchange for proceeds of $ |
| ii) |
shares in April 2024 in connection with the conversion of a convertible note plus interest in exchange for proceeds of $ |
| iii) |
shares in April 2024 to service providers for consulting services valued at market on the date of grant of $ |
| iv) |
shares in May 2024 to service providers for consulting services valued at market on the date of grant of $ |
| v) | shares related to vesting of restricted stock units (“RSUs”), vesting in April 2024. |
| vi) |
shares in July 2024 to service providers for consulting services valued at market on the date of grant of $ |
| vii) | shares related to vesting of restricted stock units (“RSUs”), vesting in July 2024. |
| viii) | shares related to vesting of restricted stock units (“RSUs”), vesting in September 2024. |
| ix) |
shares to be issued to the Company’s executive officers, in lieu of compensation valued at $ |
For the six months ended September 30, 2023, the Company issued shares of common stock as follows:
| i) |
shares in connection with the sale of stock in a registered direct offering which closed in April 2023 in exchange for proceeds of
$ |
| ii) | shares related to vesting of restricted stock units (“RSUs”), vesting in June 2023; |
| iii) |
shares related to vesting of RSUs to John Lai, the Company’s Chief Executive Officer, in lieu of compensation valued as of
$ |
| iv) |
shares in April 2023 to service providers for consulting services valued at market on the date of grant of $ |
| v) |
shares in May 2023 to service providers for consulting services valued at market on the date of grant of $ |
| vi) |
shares in June 2023 to service providers for consulting services valued at market on the date of grant of $ |
| vii) |
shares in July 2023 to service providers for consulting services valued at market on the date of grant of $ |
| 21 |
| viii) |
shares in July 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| ix) |
shares in connection with the sale of stock in August 2023 in exchange for proceeds of $ |
| x) |
shares in connection with the conversion of the Convertible Debentures in August 2023 totaling $ |
| xi) |
shares in August 2023 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of |
| xii) |
shares in August 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xiii) |
shares in August 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| xiv) | shares related to vesting of RSUs in August 2023; |
| xv) |
shares related to vesting of RSUs to John Lai, the Company’s Chief Executive Officer, in lieu of compensation valued at $ |
| xvi) |
shares in September 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xvii) |
shares in September 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| xviii) |
shares in September 2023 pursuant to a warrant holder’s cashless exercise of warrants for purchase of |
The
Company has issued shares of common stock to providers of investor relations services which are reported in the Consolidated
Statements of Changes in Stockholders’ Equity. The value of these shares is reported as a prepaid expense and are amortized to
expense over the contractual life of the respective consulting agreements. The amortization of stock issued for services as reported
in the Consolidated Statements of Operations and Cash Flows was $
Preferred Stock
For
the six months ended September 30, 2024, the Company issued shares of series A convertible preferred stock in exchange for
proceeds of $
The certificate of designation of rights and preferences has an optional conversion provision whereby each share of Series A Preferred Stock shall be convertible at any time at the option of a holder into shares of Common Stock. The Series A Preferred Stock also has an automatic conversion whereby the preferred shares shall automatically convert into Common Stock upon the one year anniversary of the issuance of the Series A Preferred Stock.
Time-Based Restricted Stock Units
We have granted time-based restricted stock units to certain participants under the 2020 Plan that are stock settled with common shares. Time-based restricted stock units granted under the 2020 Plan vest over three years. Stock-based compensation expense included in the Consolidated Statements of Operations for time-based restricted stock units was $ and $ for the three months ended September 30, 2024, and 2023, respectively and $ and $ for the six months ended September 30, 2024, and 2023, respectively. At September 30, 2024, there was approximately $ of total unrecognized compensation expense related to time-based restricted stock units that is expected to be recognized over a weighted-average period of .
| 22 |
Our time-based restricted stock unit activity for the year ended March 31, 2024, and the six months ended September 30, 2024 was as follows:
| Units Outstanding | Weighted Average Grant Date Fair Value Per Unit | Aggregate Intrinsic Value (1) | ||||||||||
| Balance at March 31, 2023 | $ | $ | ||||||||||
| Vested | ( | ) | - | |||||||||
| Cancelled | ( | ) | - | |||||||||
| Balance at March 31, 2024 | $ | |||||||||||
| Granted | ||||||||||||
| Vested | ( | ) | ||||||||||
| Cancelled | ( | ) | - | |||||||||
| Balance at September 30, 2024 | $ | $ | ||||||||||
| (1) |
Stock Options
Stock options issued to employees and directors typically vest over ( for directors) and have a contractual term of to . Stock-based compensation expense included in the Consolidated Statements of Operations for stock options was $ and $ for the three months ended September 30, 2024, and 2023, respectively and $ and $ for the six months ended September 30, 2024, and 2023, respectively. At September 30, 2024, there was approximately $ of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Annually, we make predictive assumptions regarding future stock price volatility, dividend yield, expected term, and forfeiture rate. The dividend yield assumption is based on expected annual dividend yield on a grant date. To date, no dividends on common stock have been paid by us. Expected volatility for grants is based on our average historical volatility over a similar period as the expected term assumption used for our options as the expected volatility. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. We use the “simplified method” to determine the expected term of the stock option grants. We utilize this method because we do not have sufficient public company exercise data in which to make a reasonable estimate.
| Six Months Ended | Year Ended | |||||||
| September 30, 2024 | March 31,2024 | |||||||
| Expected term | years | years | ||||||
| Expected volatility | % - | % | % - | % | ||||
| Risk-free interest rate | % - | % | % – | % | ||||
| Expected dividend yield | % | % | ||||||
| Fair value on the date of grant | $ | – $ | $ | - $ | ||||
| 23 |
| Options Outstanding | Weighted- Average Exercise Price Per Share (1) | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value (2) | |||||||||||
| Balance at March 31, 2023 | $ | years | $ | |||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Balance at March 31, 2024 | years | $ | ||||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Balance at September 30, 2024 | $ | years | $ | |||||||||||
| Options exercisable at September 30, 2024 | ||||||||||||||
| (1) | |
| (2) |
Stock options granted for the year ended March 31, 2024, and the six months ended September 30, 2024 were to employees and directors. The fair value of these options on the date of grant was $ and $ for the year ended March 31, 2024, and the six months ended September 30, 2024, respectively.
Options exercisable at September 30, 2024, had exercise prices ranging from $ to $.
| Six Months Ended | Year Ended | |||||||
| September 30, 2024 | Mar 31, 2024 | |||||||
| Number of: | ||||||||
| Non-vested options, beginning of period | ||||||||
| Non -vested options, end of period | ||||||||
| Vested options, end of period | ||||||||
Six Months Ended | Year Ended | |||||||
| September 30, 2024 | Mar 31, 2024 | |||||||
| Weighted-average grant date fair value of: | ||||||||
| Non-vested options, beginning of period | $ | $ | ||||||
| Non-vested options, end of period | $ | $ | ||||||
| Vested options, end of period | $ | $ | ||||||
| Forfeited options, during the period | $ | $ | ||||||
Warrants
During
the six months ended September 30, 2024, the Company issued warrants to purchase an aggregate of
| 24 |
| Six Months Ended | ||||
| September 30, 2024 | ||||
| Stock price on valuation date | $ | - $ | ||
| Exercise price | $ | - | ||
| Term (years) | ||||
| Volatility | % - | % | ||
| Risk-free rate | % - | % | ||
The Company did not issue any warrants for the three months ended September 30, 2023.
A summary of warrant activity for the year ended March 31, 2024, and the six months ended September 30, 2024 is as follows:
| Number of Warrants | Weighted- Average Exercise Price | Warrants Exercisable | Weighted- Average Exercisable Price | |||||||||||||
| Outstanding, March 31, 2023 | $ | $ | ||||||||||||||
| Granted and issued | ||||||||||||||||
| Cashless warrant exercises | ( | ) | ( | ) | ||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, March 31, 2024 | ||||||||||||||||
| Granted and issued | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Outstanding, September 30, 2024 | $ | $ | ||||||||||||||
| 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 | |||||||||||||||
| $-$ | $ | $ | ||||||||||||||||||
| $-$ | $ | $ | ||||||||||||||||||
| - | ||||||||||||||||||||
| - | ||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
Stock-based compensation expense included in the Consolidated Statements of Operations for warrants was $ and $ for the three months ended September 30, 2024, and 2023, respectively and $ and $ for the six months ended September 30, 2024, and 2023, respectively. At September 30, 2024, there was $ of future unrecognized warrant expense.
For the six months ended September 30, 2024 and 2023, the total stock-based compensation on all instruments was $ and $, respectively.
NOTE 13 – SUBSEQUENT EVENTS
From
October 1, 2024, through the date of this quarterly report 10Q filing, the Company issued a total of restricted common shares, as follows: i) restricted common shares for an investor relations
consultant; ii) restricted common shares to six independent board
members as annual compensation for board service; iii); and restricted common shares to four accredited investors
who purchased the shares for $
| 25 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
PetVivo Holdings, Inc. (the “Company,” “PetVivo,” “we” or “us) is an emerging biomedical device company focused on the manufacturing, commercialization, and licensing of innovative medical devices and therapeutics for animals. The Company has a pipeline of products for the treatment of animals. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes, and methods of use. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses, in the second quarter of its fiscal year ended March 31, 2022.
The Company was incorporated in March 2009 under Nevada law under a different name. The Company operates as one segment from its corporate headquarters in Edina, Minnesota.
CURRENT BUSINESS OPERATIONS
The Company is primarily engaged in the business of commercializing and licensing products in the veterinary market to treat and/or manage afflictions of companion animals such as dogs and horses. Most of our technology was developed for human biomedical applications, and we intend to leverage the investments already expended in their development to commercialize treatments for horses and companion animals in a capital and time-efficient way.
The Company’s initial product, Spryng™, and its pipeline products are derived from proprietary biomaterials that simulate a body’s cellular tissue by virtue of their reliance upon natural protein and carbohydrate compositions which incorporate such “tissue building blocks” as collagen, elastin, and proteoglycans such as heparin. Since these are naturally-occurring in the body, we believe they have an enhanced biocompatibility with living tissues compared to synthetic biomaterials such as those based upon alpha-hydroxy polymers (e.g PLA, PLGA, and the like), polyacrylamides, and other “natural” biomaterials that may lack the multiple proteins incorporated into our biomaterials. These proprietary protein-based biomaterials are similar to the body’s tissue thus allowing integration and tissue repair in long-term implantation in certain applications.
Our initial product, Spryng™, is a veterinary medical device designed to help reinforce and/or augment articular cartilage tissue for the management of lameness and other joint related afflictions, such as osteoarthritis, in horses and companion animals. Spryng™ is an intra-articular injectable product of biocompatible and insoluble particles that are slippery, wet-permeable, durable, and resilient to enhance the force cushioning function of the synovial fluid and cartilage. The particles mimic natural cartilage in composition, structure, and hydration. Multiple joints can be treated simultaneously. Our particles are comprised of collagen, elastin, and heparin, similar components found in natural cartilage. These particles show an effectiveness to reinforce and/or augment the cartilage, which enhances the functionality of the joint (e.g. provide cushion or shock-absorbing features to the joint and to provide joint lubricity).
| 26 |
Osteoarthritis, a common inflammatory joint disease in both dogs and horses, is a chronic, progressive, degenerative joint disease that is caused by a loss of synovial fluid and/or the deterioration of joint cartilage. Osteoarthritis affects approximately 14 million dogs and 1 million horses in the $11 billion companion animal veterinary care and product sales market.
Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in treating osteoarthritis in dogs, horses, and other pets. As there is no cure for osteoarthritis, current solutions treat symptoms, but do not manage the cause. The current treatment for osteoarthritis in dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (or “NSAIDs”) which are approved to alleviate pain and inflammation but present the potential for side effects relating to gastrointestinal, kidney, and liver damage and do not halt or slow joint degeneration. The Company offers an alternative to traditional treatments that only address the symptoms of the affliction. Spryng™ with OsteoCushion™ technology addresses the affliction, loss of synovial fluid, and/or the deterioration of joint cartilage, rather than treating just the symptoms and, to the best of our knowledge, has elicited minimal adverse side effects in dogs and horses. Spryng™-treated dogs and horses have shown an increase in activity even after they no longer are receiving pain medication or other treatments. Other treatments for osteoarthritis include steroid and/or hyaluronic acid injections, which are used for treating pain, inflammation and/or joint lubrication, but can be slow acting and/or short lasting.
We believe Spryng™ is an optimal solution to safely improve joint function in animals for several reasons:
| ● | Spryng™ addresses the underlying problems which relate to deterioration of cartilage causing bones to contact each other and a lack of synovial fluid. Spryng™ provides a biocompatible lubricious cushion to the joint, which establishes a barrier between the bones, thereby protecting the remaining cartilage and bone. | |
| ● | Spryng™ is easily administered with the standard intra-articular injection technique. Multiple joints can be treated simultaneously. | |
| ● | Case studies indicate many dogs and horses have long-lasting multi-month improvement in lameness after having been treated with Spryng™. | |
| ● | After receiving a Spryng™ injection, many canines are able to discontinue the use of NSAID’s, eliminating the risk of negative side effects. | |
| ● | Spryng™ is an effective and economical solution for treating osteoarthritis. A single injection of Spryng™ is approximately $600 to $900 per joint and typically lasts for at least 12 months. |
Historically, drug sales represent up to 30% of revenues at a typical veterinary practice (Veterinary Practice News). Revenues and margins at veterinary practices are being eroded because online, big-box, and traditional pharmacies have recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace lost prescription revenues with safe and effective products. Spryng™ is a veterinarian-administered medical device that should expand practice revenues and margins. We believe that the increased revenues and margins provided by Spryng™ will accelerate its adoption rate and propel it forward as the standard of care for canine and equine lameness related to or due to synovial joint issues.
We commenced sales of Spryng™ in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of Spryng™ in the United States through our distribution relationship with MWI Veterinary Supply Co. (“Distributor” or “MWI”) and the use of sales reps, clinical studies, and market awareness to educate and inform key opinion leaders on the benefits of SpryngTM.
We entered into a Distribution Services Agreement (“Distribution Agreement”) with MWI on June 17, 2022. Pursuant to the Agreement, we appointed MWI to distribute, advertise, promote, market, supply, and sell the Company’s lead product, SpryngTM on an exclusive basis for two (2) years within the United States (the “Territory”), transitioning to a non-exclusive basis thereafter; provided however that the Company shall extend the exclusivity for an additional one (1) year if MWI achieves certain performance targets agreed upon by the parties. The Company can continue to sell Spryng™ within the Territory to established accounts, which include: (a) customers who have purchased SpryngTM from the Company prior to the date of the Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and (d) customers that order via the internet who are not directly solicited by MWI to purchase Spryng™. All customers must be licensed veterinary practices.
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Spryng™ is classified as a veterinary medical device under the United States Food and Drug Administration (“FDA”) rules and pre-market approval is not required by the FDA. Spryng™ completed a safety and efficacy study in rabbits in 2007. Since that time, more than 2,000 horses and dogs have been treated with Spryng™. We entered into a clinical trial services agreement with Colorado State University on November 5, 2020. We expect this university clinical study to be completed in March 2024. Additionally, the Company successfully completed an equine tolerance study in March 2022 and began two canine clinical studies with Ethos Veterinary Health, the first beginning in May of 2022 with anticipated completion in October 2023, and the second beginning in June of 2023 with an expected completion in October 2024. We anticipate these and other studies that we plan to initiate will be primarily used to expand our distribution outlets since the large international and national distributors generally require a third-party university study and other third-party studies prior to including a product in their catalog of products.
We manufacture our products in an ISO 7 certified clean room manufacturing facility in Minneapolis using our patented and scalable self-assembly production process, which minimizes the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. A second ISO cleanroom facility is expected to be operational later this year. We believe that having two manufacturing facilities will help us minimize supply risks, allow for continued scaling of our production capacity, and expand our research and development facilities.
We also have a pipeline of therapeutic devices for both veterinary and human clinical applications. Some such devices may be regulated by the FDA or other equivalent regulatory agencies, including but not limited to the Center for Veterinary Medicine (“CVM”). We anticipate growing our product pipeline through the acquisition or in-licensing of additional proprietary products from human medical device companies specifically for use in pets. In addition to commercializing our own products in strategic market sectors and in view of the Company’s vast proprietary product pipeline, the Company may establish strategic out-licensing partnerships to provide secondary revenues.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our 2024 10-K Report and the consolidated financial statements and related notes in Item 1, Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2024 10-K Report under the heading “Risk Factors,” as updated and supplemented by risks described in other SEC filings. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
We are a smaller reporting company and have incurred substantial losses in connection with our operations. We will need substantial capital to pursue our current plans to commercialize our initial product, Spryng™.
RESULTS OF OPERATIONS
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | 200,720 | $ | 207,366 | $ | 324,470 | $ | 324,549 | ||||||||
| Cost of Sales | 21,162 | 21,862 | 34,156 | 34,167 | ||||||||||||
| Operating Expenses | 2,352,598 | 3,129,847 | 4,507,787 | 6,128,302 | ||||||||||||
| Other (Expense) Income | (2,453 | ) | (716,810 | ) | (5,083 | ) | (716,810 | ) | ||||||||
| Net Loss | $ | (2,175,493 | ) | $ | (3,661,153 | ) | $ | (4,222,556 | ) | $ | (6,554,730 | ) | ||||
| Net loss per share - basic and diluted | $ | (0.11 | ) | $ | (0.28 | ) | $ | (0.22 | ) | $ | (0.53 | ) | ||||
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For The Three Months Ended September 30, 2024, Compared to The Three Months Ended September 30, 2023
Total Revenues. Revenues were $200,720 and $207,366 for the three months ended September 30, 2024 and 2023, respectively. Revenues in the three months ended September 30, 2024, consist of sales of our Spryng™ products to our Distributors of $168,948 and to veterinary clinics in the amount of $31,771. Revenues in the three months ended September 30, 2023, consist of sales of our Spryng™ products to our Distributor of $135,976 and to veterinary clinics in the amount of $71,390.
Cost of Sales. Cost of sales were $21,162 and $21,862 for the three months ended September 30, 2024 and 2023, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs. Cost of sales in the three months ended September 30, 2024, compared to the three months ended September 30, 2023 remained constant.
Operating Expenses. Operating expenses were $2,352,598 and $3,129,847 for the three months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to decreased general and administrative (“G&A”) expenses and sales and marketing expenses related to the sale of our Spryng™ products.
General and administrative (“G&A”) expenses were $1,267,117 and $1,691,790 for the three months ended September 30, 2024 and 2023, respectively. General and administrative expenses include compensation and benefits, contracted services, legal and consulting fees, and stock compensation expenses.
Sales and marketing expenses were $620,307 and $1,078,725 for the three months ended September 30, 2024 and 2023, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the launch of our Spryng™ product.
Research and development (“R&D”) expenses were $465,174 and $359,332 for the three months ended September 30, 2024 and 2023, respectively. The increase was related to clinical studies and efforts to support the launch of Spryng™.
Operating Loss. As a result of the foregoing, our operating loss was $2,173,040 and $2,944,343 for the three months ended September 30, 2024 and 2023, respectively. The decrease was related to cost-cutting initiatives in general and administrative and sales and marketing expenses.
Other Expense. Other expense was $2,453 and $716,810 for the three months ended September 30, 2024 and 2023, respectively. Other expense in 2023 consisted of loss on extinguishment of debt and a settlement expense to David Masters.
Net Loss. Our net loss for the three months ended September 30, 2024 was $2,175,493 or ($0.11) per share as compared to a net loss of $3,661,153 or ($0.28) per share for the three months ended September 30, 2023. The decrease was related to cost-cutting initiatives in general and administrative expenses and sales and marketing expenses. The weighted average number of shares outstanding was 20,099,095 compared to 12,987,641 for the three months ended September 30, 2024 and 2023, respectively.
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For The Six Months Ended September 30, 2024, Compared to The Six Months Ended September 30, 2023
Total Revenues. Revenues were $324,470 and $324,549 for the six months ended September 30, 2024 and 2023, respectively. Revenues in the six months ended September 30, 2024, consist of sales of our Spryng™ products to our Distributors of $237,239 and to veterinary clinics in the amount of $87,231. Revenues in the six months ended September 30, 2023, consist of sales of our Spryng™ products to our Distributor of $169,371 and to veterinary clinics in the amount of $155,178.
Cost of Sales. Cost of sales were $34,156 and $34,167 for the six months ended September 30, 2024 and 2023, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs. Cost of sales in the six months ended September 30, 2024, compared to the three months ended September 30, 2023 remained constant.
Operating Expenses. Operating expenses were $4,507,787 and $6,128,302 for the six months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to decreased general and administrative (“G&A”) expenses and sales and marketing expenses related to the sale of our Spryng™ products.
General and administrative (“G&A”) expenses were $2,500,378 and $3,454,588 for the six months ended September 30, 2024 and 2023, respectively. General and administrative expenses include compensation and benefits, contracted services, legal and consulting fees, and stock compensation expenses.
Sales and marketing expenses were $1,154,720 and $2,020,611 for the six months ended September 30, 2024 and 2023, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the launch of our Spryng™ product.
Research and development (“R&D”) expenses were $852,689 and $653,103 for the six months ended September 30, 2024 and 2023, respectively. The increase was related to clinical studies and efforts to support the launch of Spryng™.
Operating Loss. As a result of the foregoing, our operating loss was $4,217,473 and $5,837,920 for the six months ended September 30, 2024 and 2023, respectively. The decrease was related to cost-cutting initiatives in general and administrative and sales and marketing expenses.
Other Expense. Other expense was $5,083 and $716,810 for the six months ended September 30, 2024 and 2023, respectively. Other expense in 2023 consisted of loss on extinguishment of debt and a settlement expense to David Masters.
Net Loss. Our net loss for the six months ended September 30, 2024 was $4,222,556 or ($0.22) per share as compared to a net loss of $6,554,730 or ($0.53) per share for the six months ended September 30, 2023. The decrease was related to cost-cutting initiatives in general and administrative expenses and sales and marketing expenses. The weighted average number of shares outstanding was 19,395,401 compared to 12,325,973 for the six months ended September 30, 2024 and 2023, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2024, our current assets were $1,246,384, including $126,239 in cash and cash equivalents. In comparison, our current liabilities as of that date were $1,858,017 including $1,157,728 of accounts payable and accrued expenses. Our working capital deficit as of September 30, 2024 was $611,633.
From October 1, 2024, through the date of this quarterly report 10Q filing, the Company sold 225,000 restricted common shares to four accredited investors who purchased the shares for $112,500 at $0.50 per share. The Company also raised $200,000 of short-term notes from two accredited investors with conversion provisions to convert at the lesser of the per share price at which the Company sells Shares of the Company may raise in a subsequent offering or $0.50 per share.
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We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan.
Net Cash Used in Operating Activities – We used $3,130,762 of net cash in operating activities for the six months ended September 30, 2024. This cash used in operating activities was primarily attributable to our net loss of $4,222,556, partially offset by stock-based compensation expense of $701,436 and investor relations and consulting services paid in stock of $315,088.
Net Cash Used in Investing Activities – We used $18,598 of net cash in investing activities for the six months ended September 30, 2024, consisting of costs capitalized for manufacturing and computer equipment.
Net Cash Provided by Financing Activities – During the six months ended September 30, 2024, we provided net cash of $3,188,196 from the sale of common stock and preferred stock and proceeds from the issuance of convertible debentures and notes 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 September 30, 2024, the Company’s inventory had a carrying value of $372,115 and was broken down into $12,303 of finished goods, $57,511 of work in process, and $302,301 in raw materials.
At March 31, 2024, the Company’s inventory had a carrying value of $390,076 and was broken down into $35,442 of finished goods, $20,289 of work in process, and $334,345 in raw materials.
MATERIAL COMMITMENTS
Note Payable
As of September 30, 2024, we are obligated on a note and accrued interest of $18,288.
OFF-BALANCE SHEET ARRANGEMENTS
As of September 30, 2024, and as of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. Our working capital deficit at September 30, 2024 was $611,633. We have continued to realize losses from operations. We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan.
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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 Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as accounts receivable, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the consolidated financial statements for the year ended March 31, 2024. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
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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 effective.
Changes in internal control over financial reporting.
There were no significant changes in our internal control over financial reporting in the second quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business, the resolution of which we do not anticipate would have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.
Refer to Note 9. Commitments and Contingencies, in the Condensed Notes to Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements of this Quarterly Report, for further information regarding legal contingencies.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for our fiscal year ended March 31, 2024. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition, and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition, or operating results in the future.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 1, 2023, the Company entered into a services agreement with a consultant for a 12 month period. On the first day of April, May, and June, 2023, the Company issued 16,666 shares of its restricted common stock (for an aggregate of 49,998 shares) to the consultant for services rendered to the Company, which shares were valued at $48,581, $40,332, and $34,165, respectively.
On the first day of April, May, and June 2023, the Company issued 10,100 shares of its restricted common stock, for an aggregate of 30,300 shares, to its CEO in lieu of compensation for the three months valued at $74,589.
In April, May, and June 2023, the Company granted options to purchase an aggregate of 374,239 shares of our common stock under the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Plan (“Amended Plan”) to 13 employees and 1 director. The exercise price of these options was the closing price of the Company’s common stock on the date of the grant, which ranged from $2.02 per share to $2.74 per share. The Employee options vest over a period of three years, with the first tranche vesting on the anniversary of the grant date. The employee options expire on the earlier of the date on which the employee’s service with the Company is terminated or seven years after the grant date.
On April 14, 2023, the Company made an initial grant of options to a new director to purchase 10,000 shares of the Company’s common stock. The options have an exercise price equal to $2.74, the closing price of the Company’s common stock on the date of grant, and the term is for seven years from the grant date. The options will vest on April 13, 2024, subject to continued service by the director through the vesting date. The new director also received a grant of options to purchase 10,239 shares at an exercise price of $2.74 per share, which represents his pro-rata compensation for serving as a Board member for the period between April 14, 2023 and September 30, 2023. The options vest on the earlier of (i) September 30, 2023, or (ii) the day immediately preceding the Company’s next annual meeting of stockholders following the grant date.
In June 2023, the Company issued 6,250 shares of common stock upon the vesting of restricted stock unit issued to two employees.
On the first day of July, August, and September 2023, the Company issued 16,666 shares of its restricted common stock (for an aggregate of 49,998 shares) to the consultant for services rendered in these months to the Company, which shares were valued at $35,332, $32,332, and $31,999, respectively. The Company entered into a services agreement with a consultant for a 12-month period on January 1, 2023.
On the first day of July and August 2023, the Company issued 10,100 shares of its restricted common stock, for an aggregate of 20,200 shares, to its CEO in lieu of compensation for the two months valued at $41,006.
In July and September 2023, the Company granted options to purchase an aggregate of 95,000 shares of its common stock under the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Plan (“Amended Plan”) to three employees. The exercise price of these options was the closing price of the Company’s common stock on the date of the grant, which ranged from $1.82 per share to $2.00 per share. The Employee options vest over a period of three years, with the first tranche vesting on the anniversary of the grant date. The employee options expire on the earlier of the date on which the employee’s service with the Company is terminated or seven years after the grant date.
In July, August and September 2023, the Company issued 299,500 shares of common stock to service providers for consulting services valued at $641,315.
In August 2023, the Company issued 22,000 shares of common stock upon the vesting of restricted stock units issued to three employees.
In August 2023, the Company issued 12,212 shares of common stock pursuant to a warrant holder’s cashless exercise of a warrant to purchase 22,500 shares of common stock at a strike price of $1.33 per share.
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In September 2023, the Company issued 22,466 shares of common stock pursuant to a warrant holder’s cashless exercise of warrants to purchase 41,084 shares of common stock at a weighted average strike price of $1.35 per share.
In April 2024, the Company issued 150,000 shares of its restricted common stock to its CEO valued at $90,000.
In April 2024, the Company sold 430,798 shares of common stock in connection with the conversion of a convertible note plus accrued interest in exchange for proceeds of $301,558 at a price of $0.70 per share.
In April and May 2024, the Company issued 1,889,434 shares of common stock in exchange for proceeds of $1,322,600 at a price of $0.70 per share.
In April and May 2024, the company issued 376,000 shares to service providers for consulting services valued at market on the date of grant of $214,160.
In July 2024, the Company issued 3,045,000 shares of series A convertible preferred stock in exchange for proceeds of $1,218,000 at a price of $0.40 per share.
In July 2024, the Company issued 120,000 shares to service providers for consulting services valued at market on the date of grant of $56,020.
In July and September 2024, the Company issued 42,312 shares of common stock upon the vesting of restricted stock units issued to four employees.
As of September 30, 2024, 330,000 shares to be issued to the Company’s executive officers, in lieu of compensation valued at $132,000, based on the closing stock prices on the issuance date.
All of the transactions described above were exempt from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering. The consultants in these transactions represented their intention to acquire these securities for investment only and not with a view to offer or sell, in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates and instruments issued in such transactions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not required.
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report.
** Filed herewith
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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.
| November 14, 2024 | By: | /s/ John Lai |
| John Lai | ||
| Its: | CEO, President, and Director | |
| (Principal Executive Officer) | ||
| November 14, 2024 | By: | /s/ Garry Lowenthal |
| Garry Lowenthal | ||
| Its: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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