U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2022

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

For the transition period from _______ to _______

Commission File No. 001-40715

PetVivo Holdings, Inc.

(Name of small business issuer in its charter)

Nevada

99-0363559

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

5251 Edina Industrial Blvd, Edina, Minnesota 55439

(Address of principal executive offices) (Zip Code)

(952) 405-6216

(Issuer’s telephone number)

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

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

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. Yes ☒ No ☐

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. Yes ☒ No ☐

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

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

Indicate by 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 10, 2022
Common Stock, $0.001		10,095,275

PETVIVO HOLDINGS, INC.

FORM 10-Q

FOR THE PERIOD ENDED September 30, 2022

INDEX

		Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		i

PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Qualitative and Quantitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II. OTHER INFORMATION		25

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosure	26
Item 5.	Other information	26
Item 6.	Exhibits	26

SIGNATURES		27

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

Information included in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of PetVivo Holdings, Inc. (the “Company”), to be materially different from future results, performance, or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied 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, 2022 (“2022 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.

PART I.

ITEM 1. FINANCIAL STATEMENTS

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2022 (Unaudited)			March 31, 2022
Assets:
Current Assets
Cash and cash equivalents	$	2,337,093		$	6,106,827
Accounts receivable		129,142			2,596
Inventory, net		304,967			98,313
Prepaid expenses and other assets		612,128			547,664
Total Current Assets		3,383,330			6,755,400

Property and Equipment, net		341,071			311,549

Other Assets:
Operating lease right-of-use		269,592			299,101
Patents and trademarks, net		43,986			48,452
Security deposit		12,830			12,830
Total Other Assets		326,408			360,383
Total Assets	$	4,050,809		$	7,427,332

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	422,141		$	323,384
Accrued expenses		765,086			784,375
Operating lease liability – short term		59,807			59,178
Note payable and accrued interest		6,737			6,549
Total Current Liabilities		1,253,771			1,173,486
Other Liabilities
Note payable and accrued interest (net of current portion)		23,868			27,201
Operating lease liability (net of current portion)		209,785			239,923
Total Other Liabilities		233,653			267,124
Total Liabilities		1,487,424			1,440,610
Commitments and Contingencies (see Note 9)		-			-
Stockholders’ Equity:
Preferred stock, par value $0.001, 20,000,000 shares authorized, 0 and 0 shares issued and outstanding at September 30, 2022 and March 31, 2022		-			-
Common stock, par value $0.001, 250,000,000 shares authorized, 10,095,275 and 9,988,361 shares issued and outstanding at September 30, 2022 and March 31, 2022, respectively		10,095			9,988
Additional Paid-In Capital		69,756,728			69,103,155
Accumulated Deficit		(67,203,438	)		(63,126,421	)
Total Stockholders’ Equity		2,563,385			5,986,722
Total Liabilities and Stockholders’ Equity	$	4,050,809		$	7,427,332

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

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2022			2021			2022			2021
	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Revenues	$	223,280		$	4,977		$	281,454		$	9,122

Cost of Sales		148,159			-			201,179			5,051
Gross Profit		75,121			4,977			80,275			4,071

Operating Expenses:

Sales and Marketing		867,985			235,767			1,524,554			285,498
Research and Development		140,384			116,380			212,040			253,317
General and Administrative		1,186,320			756,186			2,429,342			1,087,131

Total Operating Expenses		2,194,689			1,108,333			4,165,936			1,625,946

Operating Loss		(2,119,568	)		(1,103,356	)		(4,085,661	)		(1,621,875	)

Other Income (Expense)
Forgiveness of PPP loan and accrued interest		-			-			-			31,680
Interest Income (Expense)		7,979			(2,118	)		8,644			(5,908	)
Total Other Income (Expense)		7,979			(2,118	)		8,644			25,772

Loss before taxes		(2,111,589	)		(1,105,474	)		(4,077,017	)		(1,596,103	)

Income Tax Provision		-			-			-			-
Net Loss	$	(2,111,589	)	$	(1,105,474	)	$	(4,077,017	)	$	(1,596,103	)

Net Loss Per Share:
Basic and Diluted	$	(0.21	)	$	(0.13	)	$	(0.41	)	$	(0.21	)

Weighted Average Common Shares Outstanding:
Basic and Diluted		10,053,463			8,749,233			10,021,090			7,757,099

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

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

Six Months Ended September 30, 2022

	Shares		Amount		Capital			Deficit			Total
	Common Stock				Additional Paid-in			Accumulated
	Shares		Amount		Capital			Deficit			Total
Balance at March 31, 2022		9,988,361	$	9,988	$	69,103,155		$	(63,126,421	)	$	5,986,722
Stock-based compensation		-		-		231,231			-			231,231
Net loss		-		-		-			(1,965,428	)		(1,965,428	)
Balance at June 30, 2022		9,988,361	$	9,988	$	69,334,386		$	(65,091,849	)	$	4,252,525

Cash paid to exercise warrants		48,664		49		66,509			-			66,558
Vesting of restricted stock units		33,250		33		(33	)		-			-
Stock issued for services		25,000		25		49,895			-			49,920
Stock-based compensation		-		-		305,971			-			305,971
Net loss		-		-		-			(2,111,589	)		(2,111,589	)
Balance at September 30, 2022		10,095,275	$	10,095	$	69,756,728		$	(67,203,438	)	$	2,563,385

Six Months Ended September 30, 2021

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

Common stock sold		2,511,000		2,511		4,966,020			-			4,968,531
Warrants sold		-		-		4,889,252			-			4,889,252
Cash paid to exercise warrants		1,594		1		2,030			-			2,031
Cashless warrant exercise		40,038		40		(40	)		-			-
Stock issued for services		42,000		42		209,958			-			210,000
Stock-based compensation		-		-		104,092			-			104,092
Stock and warrants granted for debt conversion		43,556		44		195,956			-			196,000
Net loss		-		-		-			(1,105,474	)		(1,105,474	)
Balance at September 30, 2021		9,731,343	$	9,731	$	68,246,052		$	(59,707,529		$	8,548,254

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

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	September 30, 2022			September 30, 2021
	For the Six Months Ended
	September 30, 2022			September 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss For The Period	$	(4,077,017	)	$	(1,596,103	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Stock-based compensation		537,202			159,766
Stock issued for services		166,114			-
Depreciation and amortization		58,510			27,689
Forgiveness of PPP loan and accrued interest		-			(31,680	)
Changes in Operating Assets and Liabilities
Increase in prepaid expenses and other assets		(180,658	)		(285,238	)
Increase in accounts receivable		(126,546	)		-
Increase in inventory		(206,654	)		(74,637	)
Decrease in deferred offering costs		-			280,163
Interest accrued on convertible notes payable		-			192
Interest accrued on notes payable - related party		-			4,013
Increase in accounts payable and accrued expenses		79,468			212,506
Decrease in accrued expenses - related party		-			(36,808	)
Net Cash Used In Operating Activities		(3,749,581	)		(1,340,137	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		(83,566	)		(17,059	)
Disbursements for patents and trademarks		-			(19,154	)
Net Cash Used in Investing Activities		(83,566	)		(36,213	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock and warrants sold		-			10,200,881
Proceeds from exercise of warrants		66,558			42,031
Repayments of note payable		(3,145	)		(2,728	)
Repayments of PPP loan		-			(1,373	)
Repayments of notes payable - related party		-			(48,267	)
Repayments of notes payable - directors		-			(20,300	)
Net Cash Provided by Financing Activities		63,413			10,170,244

Net (Decrease) Increase in Cash		(3,769,734	)		8,793,894
Cash at Beginning of Period		6,106,827			23,578
Cash at End of Period	$	2,337,093		$	8,817,472

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During The Period For:
Interest	$	2,022		$	8,468

SUPPLEMENTAL DISCLOSURE ON NON-CASH FINANCING AND INVESTING ACTIVITIES
Stock granted for debt conversion		-		$	232,658
Stock granted for share-settled debt obligation conversion		-		$	196,000
Stock granted for consulting services	$	49,920		$	210,000

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

PetVivo Holdings, Inc.

Notes to Consolidated Financial Statements

September 30, 2022

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A)

Organization and Description

The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment of afflictions and diseases in animals, initially for dogs and horses. The Company 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 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 a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in Minnesota PetVivo becoming a wholly-owned subsidiary of the Company. In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of the Company.

(C)

Principles of Consolidation

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

(D)

Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include 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, future rebates payable to a distributor, product refund liabilities, lease assets and liabilities and valuation of deferred tax assets.

(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.

(F)

Concentration-Risk

The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. As of September 30, 2022 and March 31, 2022, the Company did have cash balances in excess of the federally insured limits.

(G)

Property & Equipment

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

(H)

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 60 months or the life of the patent. We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

(I)

Loss Per Share

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

The Company had 3,686,320 warrants outstanding as of September 30, 2022, with varying exercise prices ranging from $1.20 to $6.67 per share. The weighted average exercise price for these warrants is $5.02 per share. These warrants are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company had 339,418 restricted stock units outstanding as of September 30, 2022 which are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company had 393,789 options outstanding as of September 30, 2022, with varying exercise prices ranging from $1.39 to $2.79 per share. The weighted average exercise price for these options is $1.91 per share. These options are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company had 3,764,798 warrants outstanding as of September 30, 2021, with varying exercise prices ranging from $1.20 to $6.67 per share. The weighted average exercise price for these warrants is $4.95 per share. These warrants were excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company had 464,300 restricted stock units outstanding as of September 30, 2021 which were excluded from the weighted average number of shares because they are 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 at the later date of the first day of the reporting period’s quarter or the inception date of the debt instrument. Also, the if-converted method shall not be applied for the purposes of computing diluted EPS if the effect would be anti-dilutive.

(J)

Revenue Recognition

The Company derives revenue from the sale of our pet care products directly to its veterinarian customers in the United States. For performance obligations related to the sale of our pet care products, control transfers to the customer at a point in time. 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 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. Control transfers to the Distributor at a point in time. Revenue is recognized upon satisfaction of the performance obligation which is delivery to the Distributor; payment is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to 5% of gross monthly sales payable in 45 days; the distribution fee is netted against revenue. The 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 right of return provisions; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial. As a result, there is no refund liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.

For the three and six months ended September 30, 2022, the Company recognized revenue from product sales under the Agreement of $118,264. Assets and liabilities under the Agreement were as follows at September 30, 2022:


Accounts receivable	$	124,488
Rebate liability		-
Distribution fee payable	$	6,224

(K)

Research and Development

The Company expenses research and development costs as incurred.

(L)

Fair Value of Financial Instruments

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

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

	●	Level 1 - quoted market prices in active markets for identical assets or liabilities.

	●	Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	●	Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of September 30, 2022 and March 31, 2022, 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 no assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and March 31, 2022.

(M)

Stock-Based Compensation - Non-Employees

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

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

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.

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

	●	Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB ASC the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration the contractual term of the instruments and the holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate the holder’s 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 share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.

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

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

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time or 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.

(N)

Income Taxes

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

As required by ASC Topic 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

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.

(O)

Inventory

Inventories are recorded in accordance with 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.

(P)

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.

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 May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of the standard had no impact on the consolidated financial statements.

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

NOTE 2 – INVENTORY

As of September 30, 2022, and March 31, 2022, the Company had inventory of $304,967 and $98,313, respectively.

The inventory components are as follows:

SCHEDULE OF INVENTORY

	September 30, 2022		March 31, 2022
Finished goods	$	45,479	$	11,889
Work in process		21,525		22,960
Raw materials		237,963		63,464
Total Net	$	304,967	$	98,313

NOTE 3 – PREPAID EXPENSES AND OTHER ASSETS

As of September 30, 2022, the Company had $612,128 in prepaid expenses and other assets consisting primarily of $309,000 in insurance costs, $99,000 in investor relations services, $75,000 in tradeshows, $38,000 in clinical studies, $33,000 in Nasdaq and FINRA fees and $33,000 in software subscription fees.

As of March 31, 2022, the Company had $547,664 in prepaid expenses and other assets consisting primarily of $220,000 in investor relations services, $148,000 in insurance costs, $71,000 in clinical studies, $46,000 in tradeshows and $45,000 in Nasdaq fees.

NOTE 4 –PROPERTY AND EQUIPMENT

The components of property and equipment were as follows:

SCHEDULE OF PROPERTY AND EQUIPMENT

SEC Form 10-Q filed by PetVivo Holdings Inc.