UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedMarch 31 2017, 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 Number:000-55167

PetVivo Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada99-0363559
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)(I.R.S. Employer
Identification No.)

5251 Edina Industrial Blvd.Blvd.

Edina, Minnesota

55439
(Address of principal executive offices)(Zip Code)

(612) 296-7305(952)405-6216

(Registrant’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:

Title of each class registered:Name of each exchange on which registered:
NoneNone

Securities registered under Section 12(g) of the Act:

Title of each class registered:Trading Symbol(s)Name of each exchange on which registered
Common Stock par value $0.001PETVNasdaq Stock Market Inc.
WarrantsPETVWNasdaq Stock Market Inc.

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ]

Yes [X] No

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ]

Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 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). [X] Yes [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer[  ]Accelerated filer[  ]
Non-accelerated filer[  ]Smaller reporting company[X]
(Do not check if a 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ]

Yes [X] No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. quarter $16,361,168.

As of March 31, 2017, it was approximately $30,577,083.

As of December 4, 2017,June 28, 2022, there were 16,689,3349,988,361 shares of the issuer’s $.001 par value common stock issued and outstanding.

Documents incorporated by reference. There are no annual reports to security holders, proxy information statements, or any prospectus filed pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by reference.

 

 

 

TABLE OF CONTENTS

PART IPage
Item 1.PART IBusiness3
Item 1.Business3
Item 1A.Risk Factors1413
Item 2.1B.PropertiesUnresolved Staff Comments3121
Item 2.Properties21
Item 3.Legal Proceedings3121
Item 4.Mine Safety Disclosures3121
PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  3121
Item 6.Selected Financial DataReserved  3323
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperation   3323
Item 7A.Quantitative and Qualitative Disclosures About Market Risk  3727
Item 8.Financial Statements and Supplementary Data  3727
Item 9.Changes in and DisagreementsAnd Disagreement with Accountants on Accounting andAnd Financial Disclosure  3827
Item 9A.Controls and Procedures  3827
Item 9B.Other Information  3928
Item 9C.Disclosures Regarding Foreign Jurisdictions that Prevent Inspection28
PART III
PART III
Item 10.Directors, Executive Officers and Corporate Governance  4028
Item 11.Executive Compensation  4432
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  46

36

Item 13.Certain Relationships and Related Transactions andAnd Director Independence  4738
Item 14.Principal Accounting Fees and Services  4739
PART IV
Item 15.Exhibits, Financial Statement Schedules40
Item 16.48Form 10-K Summary41
Item 17.Signatures42

This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. For more information, see “Cautionary Statement Regarding Forward-Looking Statements.”

As used in this report, the terms “we,” “us,” “our,” “PetVivo,” and the “Company” mean PetVivo Holding Company, Inc. and our consolidated wholly-owned subsidiaries, unless the context indicates another meaning.

Except as otherwise specifically indicated, all information in this Annual Report on Form 10-K has been retroactively adjusted to give effect to a 1-for-4 reverse stock split (“Reverse Stock Split”) that was effective as of December 29, 2020.

The information contained on or connected to our website is not incorporated by reference into this report.

2

 

PART I

Cautionary Statement Regarding Forward-Looking Information

This Annual Report of PetVivo Holdings, Inc. on Form 10-K contains forward-looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,” “plans,” “intends,” “objectives,” and similar expressions. These statements reflect management’s best judgment based on factors known at the time of such statements. The reader may find discussions containing such forward-looking statements in the material set forth under “Management’s Discussion and Analysis and Plan of Operations,” generally, and specifically therein under the captions “Liquidity and Capital Resources” as well as elsewhere in this Annual Report on Form 10-K. Actual events or results may differ materially from those discussed herein. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

PART I

ITEM 1. BUSINESS

BACKGROUNDOverview

We were incorporatedPetVivo 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 seventeen 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 Pharmascan Corp.osteoarthritis in dogs and horses, in the Statesecond quarter of Nevada onits fiscal year ended March 31, 2009. On September 21, 2010,2022.

In August 2021, we filedreceived net proceeds of approximately $9.7 million in a Certificateregistered public offering (“Public Offering”) of Amendment2.5 million units at a public offering price of $4.50 per unit. Each unit consisted of one share of our common stock and one warrant to purchase one share of our Articlescommon stock at an exercise price of Incorporation and changed our name to Technologies Scan Corp. On April 1, 2014, we filed a Certificate of Amendment to our Articles of Incorporation and changed our name to “PetVivo Holdings, Inc.” (the “Name Change”).

Minnesota PetVivo

On March 11, 2014, our Board of Directors authorized the execution of that certain securities exchange agreement dated March 11, 2014 (the “Securities Exchange Agreement”) with PetVivo Inc., a Minnesota corporation (“PetVivo”), and the shareholders of PetVivo who hold of record the total issued and outstanding$5.625 per share. The shares of common stock of PetVivo (the “PetVivo Shareholders”).and warrants were transferable separately immediately upon issuance. In accordanceconnection with the termsPublic Offering, the Company’s common stock and provisionswarrants were registered under Section 12(b) of the Securities Exchange Agreement, we acquired allAct and began trading on The Nasdaq Capital Market, LLC under the symbols “PETV” and “PETVW,” respectively

The Company was incorporated in March 2009 under Nevada law. The Company operates as one segment from its corporate headquarters in Edina, Minnesota. For further information, see Note 1, Description of the issued and outstanding shares of stock of PetVivo fromBusiness, in the PetVivo Shareholders, thus making PetVivo our wholly-owned subsidiary, in exchange for the issuancenote to the PetVivo Shareholders of an aggregate 2,310,939,804 shares of our restricted common stock.consolidated financial statements in Part II, Item 8.

PetVivo was founded in 2013 by John Lai and John Dolan, andBusiness Description

The Company is based in suburban Minneapolis, Minnesota. PetVivo is a biomedical device companyprimarily engaged in the business of acquiring/in-licensingcommercializing and adapting human biomedical technology andlicensing products for commercial sale in the veterinary market to treat petsand/or manage afflictions of companion animals such as dogs and other animals suffering from arthritis and other afflictions. PetVivo’s initial product, which is now being commercialized, is a medical device featuring the injectionshorses. Most of patented gel-like protein-based biomaterials into the afflicted body parts of pets and other animals suffering from osteoarthritis. PetVivo obtained the exclusive rights in a License Agreement for commercialization of this product from Gel-Del for the treatment of pets and other animals.

Gel-Del Technologies Inc.

Gel-Del is a biomaterial and medical device development and manufacturing company with its offices and production facilities based in Edina, Minnesota, andour technology was founded in 1999 by its chief executive officer, Dr. David B. Masters. Dr. Masters developed Gel-Del’s proprietary biomaterials that simulate a body’s cellular tissue and thus can be readily and effectively utilized to manufacture implantable therapeutic medical devices. The chief advantage of Gel-Del biomaterials is their enhanced biocompatibility with living tissues throughout the body. We are commercializing their technology in the veterinary field for the treatment of osteoarthritis. Gel-Del has also successfully completed a pivotal clinical trial using their novel thermoplastic biomaterial as dermal filler for human cosmetic applications. Gel-Del’s core competencies are developing and manufacturing medical devices containing its proprietary thermoplastic protein-based biomaterials that mimic the body’s tissue to allow integration, tissue repair, and regeneration for long-term implantation. These biomaterials are produced using a patented and scalable self-assembly production process. The inherent thermoplastic properties of these biomaterials are then utilized to manufacture or coat implantable devices.

While working together relating to their licensing agreement, in early 2014 our management and the management of Gel-Del determined to combine the two companies into one business entity producing, marketing and selling medical products based on Gel-Del technology for both humans and animals.

3

AGREEMENT AND PLAN OF MERGER

On March 20, 2017, we entered into triangular merger with our wholly-owned subsidiary, PetVivo Holdings Newco Inc. (“Newco”) and Gel-Del (the “Merger Agreement”). In accordance with the terms and provisions of the Merger Agreement, we effected a statutory merger transaction resulting in an exchange by the shareholders of Gel-Del on a pro rata basis of 100% of all outstanding Gel-Del capital stock in exchange for 5,450,000 shares of our restricted common stock, which represented approximately 30% of the total issued and outstanding shares of our common stock post-merger.

On April 10, 2017, the Merger Agreement was consummatedbiomedical applications, and we completed the acquisition of the total issued and outstanding shares of common stock of Gel-Del from the Gel-Del shareholders. The acquisition was completed and consummated through a statutory merger between Gel-Del and NewCo, which resulted in Gel-Del being the surviving entity and becoming our wholly-owned subsidiary. The Merger Agreement became effective upon the filing with the Secretary of State of Minnesota on April 10, 2017. Upon the effectiveness of the Merger Agreement, each share of Gel-Del common stock issued and outstanding immediately prior to the consummation of the Merger Agreement was converted into the right to receive 0.798 common share of the Company. Gel-Del did not have any outstanding options, warrants or other derivative securities or rights convertible into securities.

In accordance with this merger transaction, we acquired all Gel-Del technology and related patents and other intellectual property (IP) and production techniques, as well as Gel-Del’s modern and secure biomedical product manufacturing facilities being constructed in Edina, Minnesota.

Company Overview

We are based in suburban Minneapolis, Minnesota. We are a biomedical device company, which has been primarily engaged in the business of adapting human biomedical technology for products to be introduced for commercial sale in the veterinary market to treat pets and other animals suffering from arthritis and other afflictions. Our initial product, now being commercialized, is a medical device featuring injections of patented gel-like biomaterials into the afflicted body parts of pets or other animals suffering from osteoarthritis. The technology and manufacturing capability of this product was developed by Gel-Del and acquired by us for use to treat dogs, horses and other animals, but not for treatment of human afflictions. While working together pursuant to our initial license agreement, we and Gel-Del determined to combine our two companies through a stock exchange merger for the purpose of creating one combined entity utilizing Gel-Del technology to produce, market, and sell medical products based on Gel-Del technology for both animals and humans. After lengthy negotiations the parties entered into a definitive agreement for this merger, which resulted in the consummation of the merger in April, 2017.

4

CURRENT BUSINESS OPERATIONS

General

We are an emerging biomedical device company focused on the licensing and commercialization of innovative medical devices and therapeutics for pets, based in Minneapolis, Minnesota. We operate in the $15 billion US veterinary care market that has grown at a CAGR of 6.4% over the past five years according to the American Pet Products Association. Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in pets and other animals.

The role of pets in the family has greatly evolved in recent years. Many pet owners consider their pets an important member of the family. They are now willing to spend greater amounts of money on their pets to maintain their health and quality of life.

We intend to leverage the investments already expended in thetheir development of human therapeutics to commercialize treatments for pets in a capital and time efficienttime-efficient way. A key component

3

Many of this strategythe Company’s 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 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) and other “natural” biomaterials that may lack the multiple proteins incorporated into our biomaterials. These proprietary protein-based biomaterials appear to mimic the body’s tissue thus allowing integration and tissue repair in long-term implantation in certain applications.

Our initial product, Spryng™ is the accelerated timeline to revenues fora veterinary medical devices,device designed to help reinforce articular cartilage tissue for the management of lameness and other joint related afflictions, such as osteoarthritis, in companion animals. Spryng™ is an intra-articular injectible 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 augment the cartilage, which enterenhances the functionality of the joint (e.g. provide cushion or shock-absorbing features to the joint and to provide joint lubricity).

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 earlier than the more stringently regulatedsize, veterinary pharmaceuticals clinics and hospitals have very few treatments and/or human therapeutics.

We are planning to aggressively launch our lead product Kush Caninedrugs for use in Q4 2017. Kush Canine is a veterinarian-administered joint injection for the treatment oftreating osteoarthritis in dogs.dogs, horses and other pets. As there is no cure for osteoarthritis, current solutions treat symptoms, but do not manage the cause. The Kush Canine device is made from natural components thatcurrent treatment for osteoarthritis in dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (or “NSAIDs”) which are lubricious and cushioningapproved to perform like cartilage for the treatment ofalleviate pain and inflammation associated with osteoarthritis.

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

Using industry sources we estimate osteoarthritis afflicts 20 million owned dogs in the United States and the European Union, making canine osteoarthritis a $2.3 billion market opportunity. See Johnston, Spencer A. “Osteoarthritis. Joint anatomy, physiology, and pathobiology.” The Veterinary clinics of North (1997):699-723;

http://www.humanesociety.org/issues/petoverpopulation/facts/pet_ownership_statistics.html; andhttp://www.americanpetproducts.org/press_industrytrends.asp.

Osteoarthritis is a condition with degenerating cartilage, creating joint stiffness from mechanical stress resulting in inflammation and pain. The lameness caused by osteoarthritis worsens with time from the ongoing loss of protective cushion and lubricity (i.e., loss of slippery padding). There is no current treatmentbut present the potential for osteoarthritis, only palliative pain therapy or joint replacement. Non-steroidal anti-inflammatory drugs (NSAIDs) are used to alleviate the pain and inflammation, but long-term use has been shown to cause gastric problems. NSAIDs do not treat the cartilage degeneration issue to halt or slow the progression of the osteoarthritis condition.

We believe that our Kush Canine osteoarthritis treatment is far superior to current methodology of using NSAIDs. NSAIDs have many side effects especially in canines, whereasrelating 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 company’s injected Kush Canine treatmentsymptoms 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 our knowledge, has been found to elicit noelicited minimal adverse side effects. Remarkably, Kush treatedeffects in dogs showand horses. Spryng™-treated dogs and horses have shown an increase in activity even after they no longer are receiving pain medication.

5

No special training is requiredmedication or other treatments. Other treatments for the administration of the Kush Canine devices. The treatment is injected into synovialosteoarthritis include steroid and/or hyaluronic acid injections, which are used for treating pain, inflammation and/or joint space using standard intra-articular injection technique and multiple jointslubrication, but can be treated simultaneously. Kush Canine immediately treats effects of osteoarthritis with no special post treatment requirements.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 boxbig-box and traditional pharmacies have recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace the lost prescription revenues. Our treatments expand practice revenues & margins because they are veterinarian-administered. Our Kush Caninewith safe and effective products. Spryng™ is a veterinarian-administered medical device is veterinarian-administered tothat should expand practice revenues and margins. We believe that the increased revenues and margins provided by Kush CanineSpryng™ will accelerate its adoption rate and propel it forward as the standard of care for canine osteoarthritis.

Our product launch schedule includes at least two additional product releases in 2018. Our Kush Equine device for the treatment ofand equine lameness related to or impacting synovial joints is scheduled for launch in Q1 2018. The Kush Equine product has similar features and benefits as our Kush Canine device. In addition to being a treatment for osteoarthritis, the joint cushioning and lubricity effects of our devices have shown an ability to treat equine lameness that is due to navicular disease (a problem associatedsynovial joint issues.

4

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 800 horses and dogs have been treated with misalignmentSpryng™. 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 November 2023. Additionally, the Company successfully completed an equine tolerance study in March 2022 and began a canine clinical study with Ethos Veterinary Health in May of joints2022 with anticipated completion in fiscal 2023. We anticipate these and bonesother 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 commenced sales of Spryng™ in the hoofsecond quarter of fiscal 2022 and digits). We anticipate launchingplan to increase our Kush Digital Cushion (DC) device for the treatmentcommercialization efforts of navicular disease in 2018.

Based on a variety of industry sources we estimate that 1 million owned horsesSpryng™ in the United StatedStates through the use of sales reps, clinical studies and European Union suffer from lameness and/or navicular disease each year, makingmarket awareness to educate and inform key opinion leaders on the equine lamenessbenefits of Spryng™. We plan to support our commercialization efforts with the use of social media and navicular disease market an annual opportunity worth $600 million. See Kane, Albert J., Josie Traub-Dargatz, Willard C. Losinger,other methods to educate and Lindsey P. Garber; “The occurrenceinform key opinion leaders and causes of lamenessdecision makers at the top distributors and laminitis in the US horse population” Proc Am Assoc Equine Pract. San Antonio (2000): 277-80; Seitzinger, Ann Hillberg, J. L. Traub-Dargatz, A. J. Kane, C. A. Kopral, P. S. Morley, L. P. Garber, W. C. Losinger, and G. W. Hill. “A comparisonhigh prescriber veterinarians for companion animals of the economic costsavailability and benefits of equine lameness, colic,Spryng™.

We have established an ISO 7 certified clean room manufacturing facility located in our Minneapolis facility using a patented and equine protozoal myeloencephalitis (EPM).” In Proceedings, pp. 1048-1050. 2000;scalable self-assembly production process, which reduces the infrastructure requirements and Kilby, E. R. 10 CHAPTER, The Demographics ofmanufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. We recently began manufacturing commercial quantities and anticipate our ISO 7 certified facility will be able to handle projected production in units for at least the U.S. Equine Population, The State of the Animals IV: 2007.next five years.

Our currentWe also have a pipeline which includes 17 therapeutic devices for both veterinary and human clinical applications.

6

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 anticipates establishingmay establish strategic out-licensing partnerships to provide secondary revenues.

Product Pipeline

5

 

We plan to commercialize our products in the United States through distribution relationships supported by regional and national distributors and complemented by the use of social media educating and informing the pet owners, and in Europe and rest of world through commercial partners.

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

Gel-Del Particles have been through a human trial and have been classified as a medical device. The FDA does not require submission of a 510(k) or formal pre-market approval for medical devices used in veterinary medicine. We anticipate initial commercial production and sales in early 2018. We anticipate selling through existing veterinary distributors. See — “Gel-Del Technology” below.

Gel-Del Technology

Our wholly-owned subsidiary entered into that certain exclusive license agreement and manufacturing and supply agreement dated August 2, 2013 (the “License Agreement”) with Gel-Del pertaining to the manufacture and supply of products by Gel-Del derived from certain technology, including protein-based biomaterials and devices, which are beneficial for the veterinary treatment of animals having orthopedic joint afflictions (the “Technology”). We have since terminated the License Agreement based upon consummation of the Stock Exchange Agreement, which was terminated pursuant to the Agreement and Plan of Merger transaction with Gel-Del.

Gel-Del is a biomaterial and medical device manufacturing company based in Edina, Minnesota. We will be working together to commercialize Gel-Del’s technology in the veterinary field for the treatment of osteoarthritis. Gel-Del has also successfully completed a pivotal clinical trial using their novel thermoplastic biomaterial as dermal filler for human cosmetic applications. Gel-Del’s core competencies are developing and manufacturing medical devices containing its proprietary thermoplastic protein-based biomaterials that mimic the body’s tissue to allow integration, tissue repair, and regeneration for long-term implantation. These biomaterials are produced using a patented and scalable self-assembly production process. The inherent thermoplastic properties of these biomaterials are then utilized to manufacture or coat implantable devices.

Below is a listing of Gel-Del technologies:applications of our technology that we plan to commercialize or out-license to strategic partners:

Dermal Filler

Gel-Del®biomaterials are constructed from purified water, protein, and carbohydrate, tailored to simulate different body tissues that biologically integrate (bio-integration). Gel-Del’s technology is used to manufacture CosmetaLife®, dermal filler for wrinkle treatment by injection. These formed gel-particles fill, integrate and rejuvenate dermal skin tissue to remove the wrinkle.

7

Our biomaterials are constructed from purified water, protein, and carbohydrate, tailored to simulate different body tissues that biologically integrate (bio-integration). Our biomaterials can be manufactured and used as a dermal filler for wrinkle treatment by injection. These formed, gel particles fill, integrate and rejuvenate dermal skin tissue to remove the wrinkle. This product was taken through an FDA clinical trial under the name CosmetaLife®, see the results here: www.clinicaltrials.gov (NCT00414544).

Cardiovascular Devices

The blood compatible Gel-Del material, which allows blood contact and bio-integrative processes to occur without clotting, platelet attachment, or thrombogenesis, is used to repair cardiovascular tissue. VasoGraft, a blood vessel graft made from Gel-Del VasoCover™ material, is designed to mimic natural blood vessel tissue in almost every respect, including the components used.

Our blood-compatible biomaterial, which allows blood contact and bio-integrative processes to occur without clotting, platelet attachment, or thrombogenesis, is used to repair cardiovascular tissue. VasoGraft®, a blood vessel graft made from VasoCover™ material, is designed to mimic natural blood vessel tissue in almost every respect, including the components used.

Drug Delivery

Unique fabrication techniques allow Gel-Del’s material to homogeneously distribute drug in milligram to nanogram amounts, resulting in optimum performance and manufacturing capabilities for a variety of delivery methods, such as coatings, injectables, implantables or transmucosal delivery. The first planned transmucosal product, OraPatch, has been optimized and tested with peptide drugs with better efficacy than oral dosing via swallowing.

Unique fabrication techniques allow us to homogeneously distribute drug in milligram to nanogram amounts, resulting in optimum performance and manufacturing capabilities for a variety of delivery methods, such as coatings, injectables, implantables or transmucosal delivery. The first planned transmucosal product has been optimized and tested with peptide drugs with better efficacy than oral dosing via swallowing.

Orthopedic Devices

Gel-Del material will be used in a variety of shapes for orthopedic and dental applications. The first products, OrthoGelic™ and OrthoMetic™, will be aimed at difficult to heal,

Another of our materials can be used in a variety of shapes for orthopedic and dental applications. The first products, OrthoGelic™ and OrthoMetic™, will be aimed at difficult-to-heal, non-union broken bones, by using particles to fill the empty space. The orthopedic biomaterial, made to mimic the structural components of bone, can allow integration and healing to fill in the break and exclude non-bone tissue infiltration.

8

Wound Healing and In Vitro Devices

The ability of Gel-Del material to simulate body tissue is the technology behind BioSimix products. Applying bio-integrative materials to troubled soft tissue by itself or with cells, can aid the healing-repair process. The first products planned, WoundGelic™ and CelGelic™, mimic the structural components of tissue tobone, can allow integration and healing withto fill in the break and without cells, respectively.exclude non-bone tissue infiltration.

Intellectual Property

Our intellectual property portfolio is comprised of patents, patent applications, trademarks and trade secrets. We have eightten issued United States Patents with an additional seven US patent applications pending.Patents. In addition to the United States patent portfolio we also have 12eight patents issued or allowedgranted in key markets around the world including Canada, Australia and countries within the European Union. We have an additional nine applications pending in those key foreign markets.

Our patent portfolio is currently held in our wholly owned subsidiary Gel-Del Technologies. We believe we have developed a broad and deep patent portfolio around our biomaterials and manufacturing processes in addition to the application of these biomaterials for use as medical devices, medical device coatings and pharmaceutical delivery devices. The Company secures other technological know-how by trade secret law and also possesses fiveseveral trademarks that are either registered or protected pursuant to trademark common law.

United States Patents:

United States Patents:

10,967,104 – Encapsulated or Coated Stent Systems
10,850,006 – Protein Biomaterials and Bioacervates and Methods of Making and Using Thereof
10,744,236 – Protein Biomaterial and Biocoacervate Vessel Graft Systems and Methods of Making and Using Thereof
10,016,534 – Protein Biomaterial and Biocoacervate Vessel Graft Systems and Methods of Making and Using Thereof
9,999,705 – Protein Biomaterials and Bioacervates and Methods of Making and Using Thereof
9,107,937– Wound Treatments with Crosslinked Protein Amorphous Biomaterials

8,871,267– Protein Matrix Materials, Devices and Methods of Making and Using Thereof

8,623,393– Biomatrix Structural Containment and Fixation Systems and Methods of Use Thereof

8,529,939– Mucoadhesive Drug Delivery Devices and Methods of Making and Using Thereof

8,465,537– Encapsulated or Coated Stent Systems

8,153,591– Protein Biomaterials and Biocoacervates and Methods of Making and Using Thereof

7,662,409– Protein Matrix Materials, Devices and Methods of Making and Using Thereof

6,342,250– Drug Delivery Devices Comprising Bio-degradable Protein for the Controlled Release of Pharmacologically Active Agents & Method of Making

12 Foreign Patents Granted & Allowed

16 Patent Apps Pending (US & Foreign)

 

 

96

 

8 Foreign Patents Granted & Allowed

7 Patent Apps Pending (US & Foreign)

To maximize the strength and value of our patent portfolio, many of the claims use the transitional term “comprising”, which is synonymous with “including,” This use of transitional language is inclusive or open-ended and does not exclude additional, unrecited elements or method steps. Our patents also include method claims covering many of the applications and uses of the biomaterials as medical devices and drug delivery systems. With eight issued or allowed United States Patents that contain 328 claims,We believe our intellectual property portfolio strongly protects our proprietary technology, including the composition of raw elements used to produce our formulations, the fabricated biomaterials and their application in end products, thereby making our material and devices much more attractive to industry partners.

We will seek to protect our products and technologies through a combination of patents, regulatory exclusivity, and proprietary know-how. Our goal is to obtain, maintain and enforce patent protection for our products, formulations, processes, methods and other proprietary technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in other countries. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our current compounds and any future compounds in development.developed. We also strenuously protect our proprietary information and proprietary technology through a combination of contractual arrangements, trade secrets and patents, both in the United States and abroad. However, even patent protection may not always afford us with complete protection against competitors who seek to circumvent our patents.

We depend upon the skills, knowledge and experience of our scientific and technical personnel, including those of our company, as well as that of our advisors, consultants and other contractors, none of which is patentable. To help protect our proprietary know-how, which may not be patentable, and inventions for which patents may be difficult to obtain or enforce, we rely on trade secret protection and confidentiality agreements to protect our interests. To this end, we generally require all of our employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit disclosure of confidential information and, where applicable, require disclosure and assignment of ownership to us the ideas, developments, discoveries and inventions important to our business.

Companion Animal Market

Over the last several decades, we believe the animal health market and industry has a strong component in the overall U.S. economy and is more resistant to economic cycles. The veterinary sector is as an attractive area to participate in the growth of the broader healthcare industry without reimbursement risk. Based on our best knowledge, U.S. consumers will spend an estimated $60 billion on pets this year—a number that has been growing at a pace of more than 5% over the past decade. Therapeutics constitutes a small portion of this market (less than $2 billion) but we believe it is poised to expand as pet care becomes more complex and companies launch new products for unmet needs. The growth in the U.S. companion animal market has been continuing to increase due to the increase in the number of pet owning households.

The American Pet Products Association (APPA) 2013-2014 National Pet Owners Survey indicates U.S. pet ownership reached record levels in 2013. Specifically, 68% of all U.S. households owned a pet in 2013, up from 62% in 2002. The number of pet owning households totaled 82.5 million, representing a 10-year CAGR of 2.5%. In 2012, dogs and cats were the most popular pet species, owned by 46.7% and 37.3% of U.S. households, respectively. APPA also reported that there were 83.3 million dogs (10-year CAGR of +2.5%) and 95.6 million cats (10-year CAGR of +2.1%) in the U.S. In comparison, the total U.S. human population increased at +0.9% CAGR over the last decade. APPA reported that 2.8% of U.S. households owned horses in 2012. According to the APPA the total number of horses owned by U.S. households increased to 8.3 million in 2012, a 5% increase over the previous APPA survey conducted two years earlier.

Over the last several decades, we believe the animal health market and industry has a strong component in the overall U.S. economy and is more resistant to economic cycles. The veterinary sector is as an attractive area to participate in the growth of the broader healthcare industry without reimbursement risk. The American Pet Products Association (APPA) 2021-2022 National Pet Owners Survey indicates that $123.6 billion was spent on pets in the U. S. in 2021. Vet Care and product sales constitutes about $34.3 billion of the market. The growth in the U.S. companion animal market has been continuing to increase due to the increase in the number of pet-owning households.

The APPA 2021-2022 National Pet Owners Survey indicates U.S. pet ownership reached record levels in 2022. Specifically, 70% of all U.S. households owned a pet in 2022. That’s 90.5 million pet-owning households, up from 84.6 million in 2018. In 2022, dogs and cats were the most popular pet species, owned by 69% and 45% of U.S. households, respectively. APPA also reported that there were 69.0 million dogs and 45.3 million cats in the U.S. APPA reported that 3.5% of U.S. households owned horses in 2022. According to the American Horse Council, the total number of horses owned by U.S. households was 7.2 million.

107

 

Osteoarthritis Market.Market

Osteoarthritis, the most common inflammatory joint disease in both dogs and horses, is a progressive condition that is caused by a deterioration of joint cartilage. Over time, the joint cartilage deterioration creates joint stiffness from mechanical stress resulting in inflammation, pain and loss of range of motion, which may be referred to as lameness. Osteoarthritis joint stiffness and lameness worsens with time from gradual cartilage degeneration and an ongoing loss of protective cushion and lubricity (i.e., loss of slippery padding). As there is no cure for osteoarthritis, the various treatment methods are focused on managing the related symptoms of pain and inflammation. Veterinarians recommend several treatments depending on the severity of the disease, including a combination of rest, weight loss, physical rehabilitation, and a regimen of pain and anti-inflammatory drugs (NSAIDs). Non-steroidal anti-inflammatory drugs (NSAIDs) are used to alleviate the pain and inflammation caused by OA, but long-term NSAIDs cause gastric problems. Moreover, NSAIDs do not treat the cartilage degeneration issue to halt or slow progression of the OA condition.condition.

The prevalence of companion animal osteoarthritis is estimated through a variety of methods. In looking at the dog osteoarthritis incidence Spence Johnston’s article“Osteoarthritis. Joint anatomy, physiology, and pathobiology”is often cited, this article reportsMorris Animal Foundation estimates that 20% of allOA effects approximately 14 million adult dogs over the age of one year suffer from osteoarthritis. Using this simple methodology, management has estimated that 20% of the total dog population is under age one.

83.3 million – 20% = 66.6 million x 20% with OA = 13.3 million dogs with OA in U.S.

Our osteoarthritis market data has been validated by a number of reports evaluating a new NSAID that is estimated to be ready for commercial sale by Aratana Therapeutics, Inc. (PETX) in 2016. Craig-Hallum’s July 22, 2013 institutional research report on Aratana Therapeutics estimates the U.S. dog osteoarthritis market at 16.6 million dogs. William Blair & Company, L.L.C. releasedand owners consistently report it as a July 25, 2013 Equity Research report by Aratana Therapeutics that concluded that roughly 10% of dogs and cat suffer from osteoarthritis. (83.3 million dogs x 10% = 8.3 million dogs with OA) Stifel issued report on Aratana Therapeutics dated July 22, 2013 that estimated the osteoarthritis market to be 55% of dogs over the age of 10. This equates to a US market in 2014 of 7.1 million dogs with osteoarthritis.top concern.

Horse Osteoarthritis (Lameness)

The equineEquine osteoarthritis is the most common cause of lameness in horses. TheEquine OA is expensive to manage, with estimated annual average costs for diagnosis and treatment of equine lameness $3,000as high as $10,000-15,000 per horse with downtime & homecare costs being much higher (Oketo diagnose, treat, and McIlwraith, 2010). “The USDA National Economic Cost of Equine Lameness…medicate, researchers found in one study as referenced in the United States” published by 1978 places the annual incidence of lameness at 8.5-13.7 lameness events/100 horses.Horse – Equine Monthly.

As noted previously, the APPAAmerican Horse Council reported the total number of horses owned by U.S. households increasedwas 7.2 million. According to 8.3 millionan annual National Equine Health Survey conducted in 2012. A 2007 publication by Emily Kilby “The Demographicscollaboration with the British Equine Veterinary Association in 2016, 26% of the U.S. Equine Population” concludes the horse population for 9,464,200 in 2006 with racehorses being 9% of that population or 846,000 horses. The article “The Occurrence and Causes of Lameness and Laminitishorses suffered from lameness. As referenced in the U.S. Horse Population” estimates that 17%– Equine Monthly (June 2020), studies show 60% of racehorses and 5.4% of the rest of the horse population go lame annually.all lameness issues are related to OA. Based on the above assumptions we calculate that there are up to 611,658 new lameapproximately 1.1 million horses each year.suffering from OA.

Distribution

Most U.S. veterinarians buy a majority of their equipment and supplies from a preferred distributor. More than 75% of veterinarians name Covetrus North America/Butler Schein Animal Health, Inc., WebsterPatterson Veterinary, Supply Inc. (recently acquired by Patterson), MWI, Midwest Veterinary Supply, Inc. or Victor Medical Company as their preferred distributor. Combined, these top tiertop-tier distributors sell more than 85%, by revenue, of the products sold to companion animal veterinarians in the U.S. Butler, WebsterCovetrus, Patterson and MWI are recognized by manufacturers, distributors and veterinarians as the pre-eminent national companion animal veterinary supply distributors in the US. There are no other distributors that provide equivalent levels of service to manufacturers and regularly visit veterinarians in as wide a geographic area as Butler, WebsterCovetrus, Patterson or MWI. Midwest and Victor are large, regional distributors, also with strong reputations for high-quality service.distributors. The above data in this paragraph was sourced from File No. 101 0023 at the U.S. Federal Trade Commission.

11

OurWe plan to have our product distribution will leverage the existing supply chain and veterinary clinic and clinician relationships already established by these large distributors. We intend to support and supplement this distribution channel with regional business development & training representatives. OurWe plan to have our business development representatives will provide product training to distribution representatives, veterinarians and other veterinary staff. In addition, we intend to have our representatives willand veterinarian partners exhibit at key veterinary conferences in addition to supportingas well as support ongoing case studies. All of these sales, distribution, marketing and education efforts will also be supported by both veterinarian and pet owner product education and treatment awareness campaigns that will be conducted utilizing a variety of socialdigital media tools. The unique nature and the anticipated benefits provided by our firstSpryng™ product are expected to generate significant consumer response.

Our primary distribution channel is through the existing stocking distributors who having operating typical margins between fourteen to sixteen percent. We have budgeted a twenty percent margin for our distributors and a full fifty percent margin for the veterinary practices.

Gel-Del Particle Devices

Orthopedic Joint Treatments

A treatment for joint pain, which is made of injected protein-based gel-particles. In vivo studies indicate that the gel particle device can easily be combined with synovial fluid in a rabbit knee to form a joint cushion, buffering the adjacent bones/cartilage where no damage was caused to the cartilage from replacing the synovial fluid. The particles show an effectiveness to repair, reconstitute or remodel the tissue, cartilage, ligaments and/or bone and/or enhance the functionality of the joint (e.g. repair deteriorated components present in the joint to provide cushion or shock absorbing features to the joint and to provide joint lubricity)
AppTec Laboratories accomplished a gel-particle rabbit study. In short, New Zealand white rabbits (6) were injected in both stifle joints (knees) to fill but not extend the synovial space (~0.5 cc GDP/site).Rabbits were tested every other day for abnormal clinical signs including range of motion and joint observations until sacrifice. Behavioral testing revealed no abnormal scores for range of motion, withdrawal response, or joint observations (all animals were 100% normal). At one week and at four weeks the animals were sacrificed. AppTec pathologists evaluated knee joint histology. The reported cartilage surfaces of the femoral and tibia condyles and the menisci were grossly and histologically 100% normal for all animals and test sites. The test particles were found in all of the injection sites.
The test article did not cause changes in the articular cartilage of the femur or tibia when injected into the stifle joint of rabbits. The test article and control rabbit knees were not different for either 1 or 4 week time points for all histological measurements. In conclusion, the particles do not cause inflammation or damage to knee joint and will stick to exposed tissues and biologically integrate with those tissues. The particles were not found to stick to articular cartilage in any sample.

Our lead product, Spryng™, is a treatment for joint pain, which is made of injected, protein-based, biocompatible particles. In vivo studies indicate that the biocompatible particle device can easily be combined with synovial fluid in a rabbit knee to form a joint cushion, buffering the adjacent bones/cartilage where no damage was caused to the cartilage from replacing the synovial fluid. The particles show an effectiveness to augment and reinforce the tissue, cartilage, ligaments and/or bone and/or enhance the functionality of the joint (e.g. reinforce deteriorated components present in the joint to provide cushion or shock-absorbing features to the joint and to provide joint lubricity).

128

 

We retained AppTec Laboratories, an independent research organization, to conduct a gel-particle rabbit study in New Zealand in 2007. In this study, six white rabbits (6) were injected in both stifle joints (knees) to fill but not extend the synovial space (~0.5 cc GDP/site). Rabbits were tested every other day for abnormal clinical signs including range of motion and joint observations until sacrifice. Behavioral testing revealed no abnormal scores for range of motion, withdrawal response, or joint observations (all animals were 100% normal). At one week and at four weeks the animals were sacrificed. AppTec pathologists evaluated knee joint histology. The reported cartilage surfaces of the femoral and tibia condyles and the menisci were grossly and histologically 100% normal for all animals and test sites. The test particles were found in all of the injection sites.

The test particle did not cause changes in the articular cartilage of the femur or tibia when injected into the stifle joint of rabbits. The test article and control rabbit knees were not different for either 1 or 4-week time points for all histological measurements. In conclusion, the particles do not cause inflammation or damage to knee joint and will stick to exposed tissues and biologically integrate with those tissues. The particles were not found to stick to articular cartilage in any sample.

Regenerative Characteristics

The particlesparticle devices for joint injections have been extensively studied for a broad range of applications including the treatment of wrinkles as dermal filler. Here is an overview of the pre-clinical and clinical studies completed onfor CosmetaLife, which is the name used for the particle device when theyit was used as a dermal filler.

Particle Integration after 12 Weeks

The image at left shows collagen in blue, fibroblasts in red and CosmetaLife in gray. Note the typical cellularization and integration of collagen within the CosmetaLife matrix perimeter. Also notice the fibroblasts (collagen producers) are integrated throughout the injection site. Microvascularization, indicated by arrowheads, is also present in several locations. There is little to no sign of inflammation.

Trichrome Stain - 20x Objective

CosmetaLife (GDP) Particles

CosmetaLife is an easy-to-inject, water-protein-based dermal filler that not only fills nasolabial wrinkle depressions but also helps rejuvenate the dermal tissues, counteracting damage that causes wrinkles. The dermal cells are attracted to the CosmetaLife gel-particles, attach to them, and then slowly replace them with natural dermal material (extracellular matrix). The natural biological replacement process of CosmetaLife to collagen is estimated to take 6-12 months. CosmetaLife clinical trial on nasolabial folds supports this estimate. According to current scientific thought, the resulting natural extracellular matrix, comprised mostly of collagen, is estimated to last 10-16 years.

CosmetaLife injections allow the body to create more natural dermal structure in and around every particle. Enhancing the natural process of dermal tissue construction with CosmetaLife allows for long-term dermal contouring, corrections, and rejuvenation with little to no adverse side effects noted in clinical trials.

Particle Device Clinical Studies.Studies

The Company has conducted several biocompatibility animal studies. In the implantation study, no abnormal clinical signs were noted for any of the rabbits. The results of the sensitization study in guinea pigs showed a sensitization response equivalent to the negative controls.

The results of the histological report on the rabbit skin biopsies clearly demonstrate structural integration of the particles into the host tissues by week 12. Evaluators observed the particle material integration with normal tissue, remodeled and/or new collagen, and fibroblasts throughout the injected particles, mild to no inflammation, and new collagen-matrix production.

The Company has conducted several biocompatibility animal studies. In the implantation study, no abnormal clinical signs were noted for any of the rabbits. The results of the sensitization study in guinea pigs showed a sensitization response equivalent to the negative controls.

A Food and Drug Administration (FDA) IDE approved pivotal human clinical trial was begunbegan with CosmetaLife late in 2006. The clinical trial was a randomized, double blind,double-blind, parallel assignment, multi-center comparison of the safety and efficacy of CosmetaLife versus Restylane®Restylane® (Control) for the correction of nasolabial folds. One hundred seventy-one patients were skin tested and 145 were treated at six trial sites. The number of study exits after treatment totaled four subjects. This clinical trial was reported and published at www.clinicaltrial.govwww.clinicaltrials.gov (NCT00414544).

The feedback from physician investigators has beenwas positive with respect to CosmetaLife injection qualities, cosmetic appearance, and its feel to the touch. During the first three to four months of the study, CosmetaLife showed no decrease in efficacy, as compared to Restylane that showed an 11 percent decrease in efficacy. The FDA/IDE approved human clinical trial for the CosmetaLife product through twelve months was found to be the same as compared to control hyaluronic acid product, Restylane (For(for each interval the consensus of the blinded subjects tested preferred CosmetaLife or showed no preference at 3, 6, 9 and 12 months).

CosmetaLife particles, shown in figure to the left, were photographed from a light microscope under high magnification. GDP particles were immersed in a saline solution to help disperse them for better viewing. These particles are approximately 100 microns in size (0.1 mm in diameter).

Gel-Del Technologies usesWe use existing, scalable processes to reduce the infrastructure requirements and manufacturing risks to deliver a consistent, high qualityhigh-quality product while being responsive to volume requirements. Gel-Del is scalingWe are able to scale the manufacturing process for Gel-Del Particles production, to date makinghaving made batches in up to 2.0-kilogram quantities to near GMP (Good Manufacturing Practices) standards acceptable for human clinical trials.standards.

9

 

Particles Safety Study.Study

Patients injected with CosmetaLife were found to have no or mild inflammatory, irritation, or immunogenic responses. These results suggest the particles are biocompatible because it closely matches the skin structure, composition, and moisture content. The no to lowno-to-low immunogenic responses are attributed to the tight cross-linking of the GDPCosmetaLife matrix, which prevents immunogenic progenitor cells from producing antibodies.antibodies to the matrix.

13

In the clinical trial, the incidence of possible reaction to a skin test was 2.55 percent, with only one subject showing a reaction to a second test or 0.6%, (1 out of 171). We also have a study report by AppTec, Inc., our Contract Research Organization, that GDP (CosmetaLife) did not produce an antibody response during the clinical trial further supporting our belief that GDP is safe to use.

Gel-Del Particles are composed of materials that approximately meet the Generally Regarded As Safe (GRAS) requirements of the FDA. GDP contains materials from certified bovine and porcine tissue sources that do not harbor prion disease or BSE. Additionally, steps in the manufacturing process have been validated for deactivating all viruses.

In the clinical trial, the incidence of possible reaction to a skin test was 2.55 percent, with only one subject showing a reaction to a second test or 0.6%, (1 out of 171). We also have a study report by AppTec, Inc., our Contract Research Organization, that [CosmetaLife] did not produce an antibody response during the clinical trial further supporting our belief that it is safe to use.

CosmetaLife is composed of materials that approximately meet the Generally Regarded As Safe (GRAS) requirements of the FDA. CosmetaLife contains materials from certified bovine and porcine tissue sources that do not harbor prion disease or BSE. Additionally, steps in the manufacturing process have been validated for deactivating all viruses.

Extrusion force testing and the Clinical Trial usage both demonstrate the consistent and easy injection of GDP.

CosmetaLife. Twenty-five month stability testing shows that GDPCosmetaLife is stable at room temperature conditions. Moreover, GDPCosmetaLife has been shown to be stable at 40 °C (104 °F) conditions for at least 3 months.

Competition

The development and commercialization of new animal health medicines is highly competitive, and we expect considerable competition from major pharmaceutical, biotechnology and specialty animal health medicines companies. As a result, there are, and likely will continue to be, extensive research and substantial financial resources invested in the discovery and development of new animal health medicines. Our potential competitors include large animal health companies, such as Zoetis, Inc.; Merck Animal Health, the animal health division of Merck & Co., Inc.; Merial, the animal health division of Sanofi S.A.; Elanco, the animal health division of Eli Lilly and Company; Bayer Animal Health, the animal health division of Bayer AG; NAH, the animal health division of Novartis AG; Boehringer Ingelheim Animal Health, the animal health division of Boehringer Ingelheim GmbH; Virbac Group; Ceva Animal Health; Vetoquinol and Dechra Pharmaceuticals PLC. We are also aware of several smaller early stage animal health companies, such as Kindred Bio, Aratana Therapeutics Inc. (recently acquired by Elanco), NextVet and VetDC that are developing products for use in the pet therapeutics market.

Regulation – Human and Veterinary Use

Our lead product, Spryng™ and a number of the medical devices that we may manufacture for veterinary applications and human applications, are subject to regulation by numerous regulatory bodies, including the FDA and comparable international regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of medical devices. Medical devices are generally subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical evaluation program be conducted before a device receives approval for commercial distribution.

In the EU, medical devices are required to comply with the Medical Devices Directive and obtain CE Mark certification in order to market medical devices. The CE Mark certification, granted following approval from an independent Notified Body, is an international symbol of adherence to quality assurance standards and compliance with applicable European Medical Devices Directives. Distributors of medical devices may also be required to comply with other foreign regulations such as Ministry of Health Labor and Welfare approval in Japan. The time required to obtain these foreign approvals to market our products may be longer or shorter than that required in the U.S., and requirements for those approvals may differ from those required by the FDA. In Europe, our devices are classified as Class IIa or IIb, and will need to conform to the Medical Devices Directive.

10

In the U.S., specific permission from the FDA to distribute a new device is usually required (that is, other than in the case of very low risk devices), and we expect that some form of marketing authorization will be necessary for our devices. Marketing authorization is generally sought and obtained in one of two ways. The first process requires that a pre-market notification (510(k) Submission) be made to the FDA to demonstrate that the device is as safe and effective as, or “substantially equivalent” to, a legally-marketed device that is not subject to pre-market approval (“PMA”). A legally-marketed device is a device that (i) was legally marketed prior to May 28, 1976, (ii) has been reclassified from Class III to Class II or I, or (iii) has been found to be substantially equivalent to another legally-marketed device following a 510(k) Submission. The legally-marketed device to which equivalence is drawn is known as the “predicate” device. Applicants must submit descriptive data and, when necessary, performance data to establish that the device is substantially equivalent to a predicate device. In some instances, data from human clinical studies must also be submitted in support of a 510(k) Submission. If so, these data must be collected in a manner that conforms with specific requirements in accordance with federal regulations including the Investigational Device Exemption (IDE) and human subjects protections or “Good Clinical Practice” regulations. After the 510(k) application is submitted, the applicant cannot market the device unless FDA issues “510(k) clearance” deeming the device substantially equivalent. After an applicant has obtained clearance, the changes to existing devices covered by a 510(k) Submission which do not significantly affect safety or effectiveness can generally be made without additional 510(k) Submissions, but evaluation of whether a new 510(k) is needed is a complex regulatory issue, and changes must be evaluated on an ongoing basis to determine whether a proposed change triggers the need for a new 510(k), or even PMA. The 510(k) clearance pathway is not available for all devices: whether it is a suitable path to market depends on several factors, including regulatory classifications, the intended use of the device, and technical and risk-related issues for the device.

The second, more rigorous, process requires that an application for PMA be made to the FDA to demonstrate that the device is safe and effective for its intended use as manufactured. This approval process applies to most Class III devices. A PMA submission includes data regarding design, materials, bench and animal testing, and human clinical data for the medical device. Again, clinical trials are subject to extensive FDA regulation. Following completion of clinical trials and submission of a PMA, the FDA will authorize commercial distribution if it determines there is reasonable assurance that the medical device is safe and effective for its intended purpose. This determination is based on the benefit outweighing the risk for the population intended to be treated with the device. This process is much more detailed, time-consuming, and expensive than the 510(k) process. Also, FDA may impose a variety of conditions on the approval of a PMA.

Both before and after a device for the U.S. market is commercially released, we would have ongoing responsibilities under FDA regulations. The FDA reviews design and manufacturing practices, labeling and record keeping, and manufacturers’ required reports of adverse experiences and other information to identify potential problems with marketed medical devices. We would also be subject to periodic inspection by the FDA for compliance with the FDA’s quality system regulations, which govern the methods used in, and the facilities and controls used for, the design, manufacture, packaging, and servicing of all finished medical devices intended for human use. In addition, the FDA and other U.S. regulatory bodies (including the Federal Trade Commission, the Office of the Inspector General of the Department of Health and Human Services, the Department of Justice (DOJ), and various state Attorneys General) monitor the manner in which we promote and advertise our products. Although physicians are permitted to use their medical judgment to employ medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting products for such “off-label” uses and can only market our products for cleared or approved uses. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health, order a recall, repair, replacement, or refund of such devices, detain or seize adulterated or misbranded medical devices, or ban such medical devices. The FDA may also impose operating restrictions, enjoin and/or restrain certain conduct resulting in violations of applicable law pertaining to medical devices, including a hold on approving new devices until issues are resolved to its satisfaction, and assess civil or criminal penalties against our officers, employees, or us. The FDA may also recommend prosecution to the DOJ. Conduct giving rise to civil or criminal penalties may also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by our conduct.

The delivery of our devices in the U.S. market would be subject to regulation by the U.S. Department of Health and Human Services and comparable state agencies responsible for reimbursement and regulation of health care items and services. U.S. laws and regulations are imposed primarily in connection with the Medicare and Medicaid programs, as well as the government’s interest in regulating the quality and cost of health care.

11

The process of obtaining clearance to market products is costly and time-consuming in virtually all of the major markets in which we expect to sell products and may delay the marketing and sale of our products. Countries around the world have recently adopted more stringent regulatory requirements, which are expected to add to the delays and uncertainties associated with new product releases, as well as the clinical and regulatory costs of supporting those releases. No assurance can be given that any of our other medical devices will be approved on a timely basis, if at all. In addition, regulations regarding the development, manufacture and sale of medical devices are subject to future change. We cannot predict what impact, if any, those changes might have on our business. Failure to comply with regulatory requirements could have a material adverse effect on our business, financial condition and results of operations.

Pertaining to our Spryng™ product (offered for veterinary use only), in the U.S., the FDA does not require submission of a 510(k), PMA, or any pre-market approval for devices used in veterinary medicine. Device manufacturers who exclusively manufacture or distribute veterinary devices are not required to register their establishments and list veterinary devices and are exempt from post-marketing reporting. The FDA does have regulatory oversight over veterinary devices and can take appropriate regulatory action if a veterinary device is misbranded or adulterated. It is the responsibility of the manufacturer and/or distributor of these articles to assure that these animal devices are safe, effective, and properly labeled.

Exported devices are subject to the regulatory requirements of each country to which the device is exported. Some countries do not have medical device regulations, but in most foreign countries medical devices are regulated. Frequently, medical device companies may choose to seek and obtain regulatory approval of a device in a foreign country prior to application in the U.S. given the differing regulatory requirements. However, this does not ensure approval of a device in the U.S.

Research and Development

The Company is currently pursuing advancements in the composition, methods of manufacture and use for its proprietary biomaterials. It is anticipated that within the next twelve months the Company will pursue additional third-party studies related to the use of Spryngfor the treatment of osteoarthritis in canine and equine patients. The Company also anticipates that resources will be expended to advance and improve the manufacturing systems for Spryng that will increase product volume and overall efficiency. Finally, the Company anticipates that research and testing will be conducted in the next eighteen months involving the existing Spryngformulation and other variations to identify and determine the next commercial product(s) that may be administered to the digital cushion of horses for the treatment of navicular disease.

Employees and Human Capital

As of June 28, 2022, we had 15 employees. We also engage outside consultants to assist with research and development, clinical development and regulatory matters, investor relations, operations, and other functions from time to time.

The Company believes that its success depends on the ability to attract, develop, and retain key personnel. It also believes that the skills, experience, and industry knowledge of its employees significantly benefits its operations and performance. The Company believes that it offers competitive compensation and other means of attracting and retaining key personnel. None of our employees are represented by a labor union and we believe that our relationships with our employees are good.

Insurance

We currently maintain a “life science” commercial insurance policy with coverage in the amount of $5 million for our products and operations. The policy has been designed for those engaged in the life science business. We may face claims in excess of the limits of such insurance. As well, claims made against us may fall outside of our coverage. The policy is a “claims made” policy. Thus, our coverage must be maintained at the time a claim is made for us to be entitled to seek coverage from the issuer of the policy for such claims.

Available Information

The Company files annual, quarterly and current reports, proxy statements and all amendments to these reports and other information with the SEC. The Company makes available free-of-charge, on or through its website at http://www.petvivo.com, the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those filings, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information on the Company’s website is not incorporated by reference in this Annual Report on Form 10-K. Reports, proxy statements and other information regarding issuers that file electronically with the SEC, including the Company’s filings, are also available to the public from the SEC’s website at http://www.sec.gov.

12

ITEM 1A. RISK FACTORS

An investment in our securitiescommon stock and warrants involves a high degree of risk. You should carefully consider the risksfollowing described belowrisks together with all of the other information included in this reportprospectus before making an investment decision with regard to our securities.this offering. If anyone or more of the following risks actually occurs, our business, financial condition, and/orand results of operations coulduld be harmed. In that case,materially harmed, which most likely would result in a decline in the trading price of our common stock could decline, and you may losewarrants and investors losing part or even all or part of yourtheir investment. You should only purchase our securities if you can afford

Risks Relating to suffer the loss of your entire investment.Our Financial Condition

RISKS RELATED TO OUR BUSINESS

We have incurred substantial losses to date and could continue to incur such losses.

We have incurred substantial losses since commencing our current business. For the year ended March 31, 2022, we lost approximately $5 million without obtaining any significant commercial revenues and had an accumulated deficit of approximately $63 million. In order to achieve and sustain future revenues, we must succeed in our current efforts to commercialize Spryng™ for treatment of dogs and horses suffering from osteoarthritis. That will require us to produce our products effectively in commercial quantities, establish adequate sales and marketing systems, conduct clinical trials and tests which show the safety and efficacy of Spryng™ in dogs and horses and gain significant support from veterinarians in the use of our products. We expect to continue to incur losses until such time, if ever, as we succeed in significantly increasing our revenues and cash flow beyond what is necessary to fund our ongoing operations and pay our obligations as they become due. We may never generate revenues sufficient to become profitable or to sustain profitability.

If we are unable to obtain sufficient funding, we may have to reduce materially or even discontinue our business.

As of March 31, 2022, we had cash or cash equivalents of $6.1 million. We anticipate that our cash on hand will be adequate to satisfy operational and capital requirements for the next ten months. If we are unable to realize substantial revenues in the near future, we will need to seek additional financing beyond this ten month period to continue our operations. We also most likely will require additional financing to develop additional new products or to expand into foreign markets. Accordingly, our ability to commercialize Spryng™ and other products may be dependent on our receipt of the net proceeds from our future financings

Along with establishing effective production, marketing, sales, and distribution of Spryng™ and other products, we believe that our future capital requirements depend upon the timing and costs of many factors with some of them beyond our control, including our ability to establish an adequate base of veterinarian clinics using our products, costs in obtaining patents and any required regulatory approvals for future products, costs of any future target animal studies, costs related to new product development, costs of finished product inventory, expenses to attract and retain skilled personnel as needed, increased costs related to being a limitedlisted public company, and the costs of any future acquisitions of existing companies or IP technologies. There is no assurance that future additional capital will be available to us as needed, or if available upon terms acceptable to us.

Risks Relating to Our Business and Industry

We have no operating history upon which to base an evaluation of our prospects can be made.prospects.

We were incorporated in March 2009.have had no material commercial operations, since our primary efforts and resources have been directed toward acquiring our technology to produce and sell proprietary products for the animal market. Our lack of an operating history makes an evaluation of our business and prospects very difficult. Our prospects must be considered speculative, especially considering the risks, expenses and difficulties frequently encountered in the establishment of a new business. We cannot be certain that our business will be successful or that we will generate significant revenues. As of the date of this Annual Report, we have not commenced business operations involving the marketing and sale and distribution of the Gel-Del products. We may never be successful in developing a market for our products and thus may never become profitable. Therefore, ouran early-stage company. Our ability to operate our business successfully remains unknown and untested. If we are successful in marketingcannot commercialize our products we anticipate that we will retain future earnings, if any, and other cash resources for the future operation and development of our business as appropriate. We do not currently anticipate declaring or paying any cash dividends in the foreseeable future. Payment of any future dividends is solely at the discretion of our board of directors, which will take into account many factors including our operating results, financial conditions and anticipated cash needs. For these reasons, we may never achieve profitability or pay dividends.

14

We anticipate that our ability to generate revenues in the foreseeable future will depend on the successful development and commercialization of our products. If we are not successful in commercializing the productseffectively, or are significantly delayed or limited in doing so, our business and operations will be materially adversely affectedharmed substantially, and we may even need to curtail or cease operations.

Because we are a development stage company, we have no revenues to sustain our operations.

We are a development stage company that is currently developing our business. To date, we have not generated revenues. The success of our business operations will depend upon our ability to obtain customers and provide quality products to those customers. We are not able to predict whether we will be able to develop our business and generate revenues. If we are not able to complete the successful development of our business plan, generate revenues and attain sustainable operations, then our business will fail.

We have incurred a net loss since inception and expect to incur net losses for the foreseeable future.

During fiscal year ended March 31, 2017, our net loss was $16,521,698. We expect to incur operating and capital expenditures for the next year and, as a result, we expect significant net losses in the future. We will need to generate significant revenues to develop our business and expand our operations. We may not be able to generate sufficient revenues to achieve profitable operations.

We will need to raise additional capital to subsequently market the Gel-Del products and expand our operations. Our failure to raise additional capital will significantly affect our ability to fund our proposed activities.

We are currently not engaged in any sophisticated marketing program to market our products because we lack capital and revenues to justify the expenditure. In addition, our available funds will not fund our activities for the next twelve months. If we fail to raise additional funds, investors may lose their entire cash investment.

Our future capital requirements depend on many factors, including, but not limited to:

the results of our target animal studies for our current and future product candidates;
the timing of, and the costs involved in, obtaining regulatory approvals for any of our current or future product candidates;
the upfront and other payments, and associated costs, related to development and marketing of products;
the number and characteristics of the product candidates we pursue;
the scope, progress, results and costs of researching and developing any of our current or future product candidates and conducting target animal studies;
whether we acquire any other companies, assets, intellectual property or technologies in the future;
the cost of commercialization activities, if any of our current or future product candidates are approved for sale, including marketing, sales and distribution costs;
the cost of manufacturing our current and future product candidates and any products we successfully commercialize;
our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;
the expenses needed to attract and retain skilled personnel;
the costs associated with being a public company; and
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation.

1513

 

Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate:

our target animal studies or other development activities for our current or future product candidates;
our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize any of our current or future product candidates; or
our in-licensing and acquisition efforts and expansion of our product portfolio.

We are substantially dependent onupon the success of our current product candidates.Spryng™ and any failure of Spryng™ to achieve market acceptance would harm us significantly.

We currently have the Kush™ Canine Particles ready for commercial distribution as a medical device. To date, we have invested nearly all of ourOur recent efforts and financial resources inhave primarily been directed toward commercialization of

Spryng™ for the prior in-licensing, researchtreatment of dogs and developmenthorses suffering from osteoarthritis. Accordingly, our prospects rely heavily on the successful launch and follow-up marketing of this products. In addition to establishing effective production, marketing, sales, distribution and training for the Kush™ Canine Particles.

Our near-term prospects,use of Spryng™, we believe its successful commercialization will depend on other material factors including our ability to finance our companyeducate and to enter into strategic collaborations and generate revenue, will depend heavily on the successful development and commercialization of our current product candidates. The development and commercial success of our current product candidates will depend on a number of factors, including the following:

timely initiation and completion of our target animal studies for our current product candidates, which may be significantly slower than we currently anticipate and will depend substantially upon the satisfactory performance of third-party contractors;
our ability to demonstrate to the satisfaction of the CVM, the USDA and the European Medicines Agency, or EMA, or the applicable EU Member State national competent authorities, the safety and efficacy of our product candidates and to obtain regulatory approval in the United States and Europe;
our success in educatingconvince veterinarians and pet owners about the benefits, administration and use of our product candidates;
the prevalence and severity of adverse side effects, including a continued acceptable safety profile of the product following approval;
achieving and maintaining compliance with all regulatory requirements applicable to our product candidates;
the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments;
the effectiveness of our marketing, sales and distribution strategy and operations;
the ability of our third-party manufacturers to manufacture supplies of any of our current or future product candidates and to develop, validate and maintain commercially viable manufacturing processes that are compliant with current Good Manufacturing Practices, or cGMP;
our ability to successfully launch commercial sales of our current product candidates, assuming necessary approvals are obtained, whether alone or in collaboration with others;
our ability to enforce our intellectual property rights in and to our product candidates and avoid third-party patent interference, third-party initiated and U.S. PTO-initiated administrative patent proceedings or patent infringement claims; and
acceptance of our product candidates as safe and effective by veterinarians, pet owners and the animal health community.

16

Many of these factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenue through the sale of our product candidates. If we are not successful in commercializing one or more of our product candidates, or are significantly delayed in doing so, our business will be materially harmed and the value of your investment could substantially decline.

We may be unable to obtain all required regulatory approvals for our existing or future product candidates under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization efforts and adversely impact our potential to generate revenue, our business and our results of operations.

Our product candidates are in various stages of development, and with regards to some of these product candidates, our business depends up on their successful development, regulatory approval and commercialization. We currently have no products approved for sale and we may never obtain regulatory approval to commercialize any of our other current or future product candidates. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of therapeutics products are subject to extensive regulation by the CVM, the USDA, the EMA and other regulatory authorities in the United States and other countries, whose regulations differ from country to country. We are not permitted to market our products in the United States until we receive approval of a New Animal Drug Application, or NADA, from the CVM or a full product license from the USDA with respect to our biologic products, or in Europe until we receive approval from the European Commission or applicable EU State national competent authorities.

Even if we receive approval of an NADA, USDA product license or foreign regulatory filing for our product candidates, the CVM, the USDA or the applicable foreign regulatory body may approve our product candidates for a more limited indication than we originally requested, and the CVM or the USDA may not approve the labeling that we believe is necessary or desirable for the successful commercialization of our product candidates. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of our product candidates and would materially adversely impact our business and prospects.

Even if our current or future product candidates obtain regulatory approval, they may never achieve market acceptance or commercial success.

Even if we obtain CVM, USDA, EMA or other regulatory approvals, our current or future product candidates may not achieve market acceptance among veterinarians/clinicians and owners, and may not be commercially successful. Market acceptance of any of our current or future product candidates for which we receive approval depends on a number of factors, including:

the safety of our products as demonstrated in our target animal or human studies;
the indications for which our products are approved;
the acceptance by veterinarians/clinicians and pet owners of the product as a safe and effective treatment;
the proper training and administration of our products by veterinarians/clinicians;
the potential and perceived advantages of our product candidates over alternative treatments, including generic medicines and products approved for use by animals or humans that are used off label;

17

the cost of treatment in relation to alternative treatments and willingness to pay for our products, if approved, on the part of veterinarians/clinicians and pet owners;
the willingness of pet owners to pay for our treatments, relative to other discretionary items, especially during economically challenging times;
the relative convenience and ease of administration;
the prevalence and severity of adverse side effects; and
the effectiveness of our sales and marketing efforts and those of our collaborators.

Any failure by our product candidates that obtain regulatory approval to achieve market acceptance or commercial success would adversely affect our financial results.

Development of pet therapeutics involves an expensive and lengthy process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.

Development of pet therapeutics is expensive and can take many years to complete, and its outcome is inherently uncertain. To gain approval to market a pet therapeutic for a particular species of pet, we must provide the CVM, the USDA or foreign regulatory authorities, as applicable, with data from animal safety and effectiveness studies that adequately demonstrateof Spryng™, the safetyoccurrence and efficacyseverity of that product in the target animal for the intended indication applied for in the NADA, product license or other regulatory filing. We rely on contract research organizations, or CROs, and other third partiesany side effects to ensure the proper and timely conductpets from use of our studiesproducts, maintaining regulatory compliance and development efforts and, while we have agreements governing their committed activities, we have limited influence over their actual performance. Failure can occur at any time during the development process. Success in prior target animal studies or in the treatment of human beings with a product candidate does not ensure that our target animal studies will be successful and the results of development efforts by other parties may not be indicative of the results of our target animal studies and other development efforts. Product candidates in our studies may fail to show the desired safety and efficacy despite showing such results in initial data or previous human or animal studies conducted by other parties. Even if our studies and other development efforts are completed, the results may not be sufficient to obtain regulatory approvaleffective quality control for our product candidates. 

Once our target animal studies commence, we may experience delays in such studies and other development efforts and we do not know whether planned studies will begin on time, need to be redesigned or be completed on schedule, if at all. Pet therapeutics studies can be delayed or discontinued for a variety of reasons, including delay or failure to:

reach agreement on acceptable terms with prospective CROs and study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
complete target animal studies due to deviations from study protocol;
address any safety concerns that arise during the course of testing;
address any conflicts with new or existing laws or regulations;
add new study sites; or
manufacture sufficient quantities of product for use in studies.

If we experience delays in the completion of, or terminate any development efforts for our product candidates, the commercial prospects of our product candidates will be harmed, andproducts, our ability to generate product revenuesmaintain and enforce our patents and other intellectual property rights, any increased manufacturing costs from anythird-party contractors or suppliers, and the availability, cost and effectiveness of these product candidates will be delayed. In addition, any delays in completing our development efforts will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of our development efforts may also ultimately lead to the denial of regulatory approval of our product candidates.treatments offered by competitors.

18

Our product candidates, if approved,products will face significant competition in our industry, and our failure to compete effectively compete may prevent us from achieving any significant market penetration.

The development and commercialization of pet therapeuticsanimal care products is highly competitive, and we expect considerableincluding significant competition from major pharmaceutical, biotechnology, and specialty animal health medicinesmedical companies. As a result, there are, and will likely continue to be, extensive research and substantial financial resources invested in the discovery and development of new pet therapeutics. Our potential competitors include large animal health companies, such as Zoetis, Inc.; Merck Animal Health, the animal health division of Merck & Co., Inc.; Merial, the animal health division of Sanofi, S.A.; Elanco, the animal health division of Eli Lilly and Company; Bayer Animal Health, the animal health division of Bayer AG; Boehringer Ingelheim Animal Health, the animal health division of Boehringer Ingelheim GmbH; Novartis Animal Health, the animal health division of Novartis AG; Boehringer Ingelheim Animal Health; Virbac Group; Ceva Animal Health; VetoquinolVetaquinol; and Dechra Pharmaceuticals PLC. WeThere also are also aware of several smaller early stage animal health companies such aswhich have recently emerged in our industry and are developing therapeutics products that may compete with our products, including Kindred Bio, Aratana Therapeutics, NextVetNext Vet, and VetDC that are developing products for use in the pet therapeutics market.VetDC.

WeSince we are an early-stage company with a limited history of operations and many offinancing, virtually all our competitors have substantially more financial, technical and personnel resources than we do, including both financialus. Most of them also have established brands and technical resources. In addition, many of our competitors have moresubstantial experience than we have in the development, manufacture,production, regulation and worldwide commercialization of animal health medicines. We arecare products. Regarding our development of any new products or technology, we also competingcompete with academic institutions, governmental agencies and private organizations that are conductingconduct research in the field of animal health medicines.

Our competition will be determined in part by the potential indications for which our products are developed and ultimately approved by regulatory authorities. Additionally, the timing of market introduction of some of our potential products or of competitors' products may be an important competitive factor. Accordingly, the speed with which we can develop our compounds, complete target animal studies and approval processes, and supply commercial quantities to market are expected to be important competitive factors. We expect that competition among products approved for sale will bein our industry is based on variousseveral factors including primarily product efficacy,reliability and effectiveness, product pricing, product branding, adequate patent and other IP protection, safety reliability, availability, priceof use, and patent position. product availability.

If we are not successful in identifying, licensing or acquiring, developingAlthough for the foreseeable future, our efforts and commercializing additional product candidates, our abilityfinancial resources will continue to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our effort will focus on successfully commercializing Spryng™, our future business strategy plan includes the continued development and potential approvalidentification of our current Gel-Del patentedadditional animal care products a key element of our strategy is to identify,we may license, acquire or acquire, develop, and commercializethen commercializing such products into a branded product portfolio of products to serve the pet therapeutics market.along with Spryng™. Even if we successfully identify and license, further potential product candidates,acquire or develop such animal care products from our proprietary technology, or acquire any such new products, we may still fail to yield product candidatescommercialize them successfully for development and commercialization for manyvarious reasons, including competitors offering alternative products which are more effective than ours, our discovery of third-party IP rights already covering the following:

competitors may develop alternatives that render our product candidates obsolete;
product candidates we develop may nevertheless be covered by third parties' patents or other exclusive rights;
a product candidate may on further study be shown to have harmful side effects in pets or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
a product candidate may not be accepted as safe and effective by veterinarians, pet owners and the pet therapeutic community.

19

products, harmful side effects caused to animals by the products, inability to produce products in commercial quantities at an acceptable cost, or the products not being accepted by veterinarians and pet owners as being safe or effective. If we fail to developsuccessfully obtain and successfully commercialize other product candidates,future new animal care products, our business and future prospects may be harmed and our business will be more vulnerable to any problems that we encounter in developing and commercializing our current and future product candidates.substantially.

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop any of our current or future product candidates, conduct our in-licensing and development efforts and commercialize any of our current or future product candidates.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management and scientific personnel. We are highly dependent upon our senior management, as well as our senior scientists and other members of our senior management team. The loss of services of any of these individuals could delay or prevent the successful development of our current or future product pipeline, completion of our planned development efforts or the commercialization of our product candidates.

Competition for qualified personnel in the animal health fields is intense due to the limited number of individuals who possess the skills and experience required by our industry. We will need to hire additional personnel as we expand our development and commercial activities. We may not be able to attract and retain quality personnel on acceptable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their research output.

We rely substantially on outsourced contract manufacturers to manufacture our biomaterial products

With respect to our products, we do not currently have, nor do we currently plan to acquire, the infrastructure or capability internally to manufacture commercial quantities of the formulated Gel-Del Particles We will rely on third-parties to conduct studies of our contract manufacturers to manufacture the active pharmaceutical ingredientscurrent and new products, and their facilities may be subject to inspections by the CVM, the USDA or the EMA We do not control the manufacturing processes used by, and we are completely dependent on, these manufacturers to comply with cGMP for the manufacture of both ingredients and finished products, and if they cannot successfully manufacture material that conforms to our specifications and is made in compliance with the strict regulatory requirements of the CVM, the USDA or other regulatory authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. If the CVM, the USDA or the EMA does not approve our contract manufacturers' facilities used for the manufacture of our product candidates, or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would adversely impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

Furthermore, we may encounter difficulties with new or existing manufacturing processes, particularly if we seek to increase our manufacturing capacity significantly to support commercialization of our product candidates, if approved. Our reliance on contract manufacturers also requires us to provide trade secrets or other proprietary information to others engaged to make our products, increasing the possibility that our trade secrets or other proprietary information may be disclosed or misappropriated.

The commercialization of any of our Gel-Del Particles product candidates could be stopped, delayed or made less profitable if third-party manufacturers fail to provide us with sufficient quantities of product or fail to do so at acceptable quality levels or prices and in a timely manner.

To manufacture our product candidates in the quantities that we believe would be required to meet anticipated market demand, our third-party manufacturers may need to increase manufacturing capacity, which could involve significant challenges and may require additional regulatory approvals. In addition, the development of commercial-scale manufacturing capabilities may require us and our third-party manufacturers to invest substantial additional funds and hire and retain technical personnel who have the necessary manufacturing experience. Neither we nor our third-party manufacturers may successfully complete any manufacturing scale-up activities required to increase existing manufacturing capabilities in a timely manner, or at all.

20

The raw materials used to manufacture our products are generally readily available and can be obtained from multiple suppliers in commercial quantities. However, we rely on our contract manufacturers to obtain any raw materials necessary to manufacture our products, and we do not have any control over the process or timing of the acquisition of these materials. Furthermore, if there is a disruption to our or our third-party manufacturers' relevant operations, we will have no other means of producing our product candidates until they restore the affected facilities or we or they procure alternative manufacturing facilities or raw materials. Additionally, any damage to or destruction of our third-party manufacturers' facilities or equipment may significantly impair our ability to manufacture product candidates on a timely basis.

We currently rely on third parties to conduct all of our target animal studies and certain other development efforts. If these third parties do not successfully carry outperform their contractual dutiescontracted commitments effectively or substantially fail to meet expected study deadlines, we could be delayed from effectively commercializing our future products.

We entered into canine clinical study agreements with Colorado State University on November 25, 2020 and Ethos Veterinary Health in May of 2022. In the future, we may engage other third parties to conduct studies of Spryng™ and other products to be unableintroduced by us. We expect to obtain regulatory approval for or commercialize our current or future product candidates.

We currently do not conduct our target animal studies,have limited control over the timing and resources that such third parties will devote to the studies. Although we must rely on CROs to conduct these studies. The third parties with whom we contract for the execution of our studies play a significant role in the conduct of these studies and the subsequent collection and analysis of data. However, these third parties are not our employees, and except for contractual duties and obligations, we have limited ability to control the amount or timing of resources that they devote to our programs. Although we rely on these third parties to conduct our studies, we remain responsible for ensuring that eachany of our studies isare conducted in accordancecompliance with the development plan and protocol. Moreover, the CVM, the USDA and EMA require us to comply withprotocols, regulations and standards set by industry regulatory authorities and commonly referred to as current good clinical practices ("cGCPs"(“cGCPs”), or and good laboratory practices ("GLPs"(“GLPs”), for. These required clinical and laboratory practices include many items regarding the conducting, monitoring, recording and reporting the results of ourtarget animal studies to ensure that the data and results of these studies are objective and scientifically credible and accurate.

14

Our success is highly dependent on the clinical advancement of our products and adverse results in clinical trials and other studies could prevent us from effectively commercializing our future products

There can be no assurance that clinical trials or studies of Spryng™ and our other products will demonstrate the safety and efficacy of such products in a statistically significant manner. Failure to show efficacy or adverse results in clinical trials or studies could significantly harm our business. While some clinical trials and studies of our product candidates may show indications of safety and efficacy, there can be no assurance that these results will be confirmed in subsequent clinical trials or studies or provide a sufficient basis for regulatory approval, if required. In addition, the execution of target animalside effects observed in clinical trials or studies, and the subsequent compilation and analysis of the data produced requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, it is imperativeor other side effects that these parties communicate and coordinate with one another. Moreover, these third partiesappear in later clinical trials or studies, may also have relationships with other commercial entities, some of which may compete with us. Many ofadversely affect our potential agreements with these third parties may be terminated by these third parties upon as little as 30 days' prior written notice of a material breach by us that is not cured within 30 days. Many of these agreements may also be terminated by such third parties under certain other circumstances, including our insolvency or our failuredistributors’ ability to comply with applicable laws. In general, these agreements require suchmarket and commercialize our products.

Our operations will rely on third parties to reasonably cooperate with us atproduce our expense for an orderly winding down of services of suchraw materials to produce our products.

We will rely on independent third parties underto produce the agreements. Ifraw materials (e.g. collagen, elastin and heparin) that we use to produce our Spryng™ products. As such, we will be dependent upon their services and will not be in a position to control their operations as we might if we directly produced these raw materials. While we believe the third parties conductingraw materials used to manufacture Spryng™ products are readily available and can be obtained from multiple reliable sources on a timely basis, circumstances outside our target animal studies do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or needcontrol may impair our ability to be replaced, or if the quality or accuracyhave an adequate supply of the data they obtain is compromised dueraw materials to the failure to adhere toproduce our development protocols or cGCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties, which could be difficult and costly, and our target animal studies may be extended, delayed or terminated or may need to be repeated. If any of the foregoing were to occur, the regulatory approval for and commercialization of the product candidate being tested in such studies may be delayed or require us to utilize additional resources.Spryng™ products.

We currently have no sales organization. If we are unable to establish sales capabilities on our own or through third parties,experience the rapid commercial growth we anticipate, we may not be able to manage such growth effectively.

We contemplate rapid growth for our business as we bring our Spryng™ products to market and sellanticipate that will place significant new demands on our current or future product candidates, if approved, or generate product revenue.

We currently do not have a sales organization. In order to commercialize any ofmanagement and our current or future product candidates in the United Statesoperational and any jurisdictions outside the United States,financial resources. Our organizational structure will become more complex as we must build our marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services,add additional personnel, and we may not be successful in doing so. We expectwould likely require more financial and staff resources to establish a direct sales organization in the United States, complemented by distributors, to commercializesupport and continue our product candidates, which will be expensive and time-consuming. Outside of the United States we intend to partner with companies with an established commercial presence to market our products in those locations.growth. If we are unable to enter into such arrangements on acceptable termsmanage our growth effectively, our business, financial condition and results of operations may be materially harmed.

We have a limited marketing and sales organization, and if our current marketing and sales personnel are insufficient or at all,inadequate to support the current introduction of our Spryng™ products, we may not be able to successfully commercialize our current product candidates or any future product candidates that receive regulatory approval. sell these products in quantities to become commercially successful.

We have noa limited marketing and sales organization, and we have minimal prior experience in the marketing, sale and distribution of pet therapeutics and therecare products. There are significant risks involved in our building and managing aan effective sales organization, including our ability to hire, retainadequately train, maintain and motivate qualified individuals, generate sufficient sales leads provide adequate training to sales and marketing personnel,other contacts, and effectively oversee a geographically dispersed sales and marketing team.establish effective product distribution channels. Any failure or substantial delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products. If we are not successful in commercializing any of our current or future product candidates, either on our own or through collaborations with one or more distributors, our future product revenue will suffer and we would incur significant additional losses.

21

We will need to increase the size of our organization, and we may experience difficulties in managing growth.

We will need to continue to expand our managerial, operational, financial and other resources in order to manage our operations and target animal studies, continue our development activities and commercialize any of our current or future product candidates. Our management and personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively execute our growth strategy requires that we:

manage our target animal studies and other development efforts effectively;
identify, recruit, maintain, motivate and integrate additional employees;
manage our internal development efforts effectively while carrying out our contractual obligations to third parties; and
continue to improve our operational, financial and management controls, reporting systems and procedures.

We are incurring significant costs as a result of operating as a public company, and our management is expected to devote substantial time to new compliance initiatives.

As a privately-held company, we were not required to comply with certain corporate governance and financial reporting practices and policies required of a publicly-traded company. As a publicly-traded company, we have incurred and will continue to incur significant legal, accounting and other expenses that we were not required to incur in the recent past, particularly after we are no longer an "emerging growth company" as defined under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, the JOBS Act, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, and The NASDAQ Global Market, have created uncertainty for public companies and increased our costs and time that our board of directors and management must devote to complying with these rules and regulations. We expect these rules and regulations to increase our legal and financial compliance costs and lead to a diversion of management time and attention from revenue-generating activities.

Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a publicly-traded company. However, the measures we take may not be sufficient to satisfy our obligations as a publicly-traded company.

For as long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies." These exemptions provide for, but are not limited to, relief from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and an extended transition period for complying with new or revised accounting standards. We may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We may remain an "emerging growth company" for up to five years. To the extent we are no longer eligible to use exemptions from various reporting requirements under the JOBS Act; we may be unable to realize our anticipated cost savings from those exemptions.

22

We are not currently required to evaluate our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, when applicable, could have a material adverse effect on our business and share price.financial condition.

As an emerging growth company, we are not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly-traded companies required by Section 404 of the Sarbanes-Oxley Act, or Section 404. We are required to meet these standards in the course of preparing our consolidated financial statements as of and for the year ended March 31, 2017 and our management has reportedOur business will depend significantly on the sufficiency and effectiveness of our internal control over financial reporting for such year. Additionally, under the recently enacted JOBS Act, our independent registered public accounting firm will not be required to attestmarketing and product promotional programs and incentives.

Due to the effectivenesshighly competitive nature of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act untilindustry, we are no longer an "emerging growth company." The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complexeffectively and require significant documentation, testingefficiently promote and possible remediation. 

A material weakness in internal control was identified in connection with the preparation of our financial statements and the audit of our financial results. In order to remedy the material weakness, we will need to implement resulting improvements in our internal controls. In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. Furthermore, failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and share price and could limit our ability to report our financial results accurately and timely.

Changes in distribution channels for pet therapeutics could negatively impact our market share, margins and distribution of our products.

In most markets, pet owners typically purchase their pet therapeutics directly from veterinarians. Pet owners increasingly could purchase pet therapeutics from sources other than veterinarians, such as Internet-based retailers, "big-box" retail stores or other over-the-counter distribution channels. This trend has been demonstrated by the significant shift away from the veterinarian distribution channel in the sale of parasiticides and vaccines in recent years. Pet owners also could decrease their reliance on, and visits to, veterinarians as they rely more on Internet-based animal health information. Because we expect to market our pet prescription products through the veterinarian distribution channel, any decrease in visits to veterinarians by pet owners could reduce our market share for such productsinternet, television and materially adversely affect our operating resultsprint advertising, social media, and financial condition. In addition, pet owners may substitute human health products for pet therapeutics if human health products are deemed to be lower-cost alternatives.

Legislation has also been proposed in the United States, and may be proposed in the United States or abroad in the future, that could impact the distribution channels for our pet products. For example, such legislation may require veterinarians to provide pet owners with written prescriptions and disclosure that the pet owner may fill prescriptions through a third party, which may further reduce the number of pet owners who purchase their pet therapeutics directly from veterinarians. Such requirements may lead to increased use of generic alternatives to our products or the increased substitution of our products with other pet therapeutics or human health products if such other products are deemed to be lower-cost alternatives. Many states already have regulations requiring veterinarians to provide prescriptions to pet owners upon request and the American Veterinary Medical Association has long-standing policies in place to encourage this practice.

Over time, thesetrade promotions and other competitive conditions may increase our reliance on Internet-based retailers, "big-box" retail stores or other over-the-counter distribution channelsincentives to sell our pet products. Any of these events could materially adversely affect our operating resultssustain and financial condition.

23

Consolidation of our customers could negatively affect the pricing of our products.

Veterinarians are our primary customers. In recent years, there has been a trend towards the concentration of veterinarians in large clinics and hospitals. If this trend towards consolidation continues, these customers could attempt to improve their profitability by leveraging their buying power to obtain favorable pricing. The resulting decrease in our prices could have a material adverse effect on our operating results and financial condition.

Generic products may be viewed as more cost-effective than our products.

We may face competition from products produced by other companies, including generic alternatives to any of our products. We will need to depend on patents to provide us with exclusive marketing rights for some of our products. The protection afforded which varies from country to country, is limited by the scope and applicable terms of patents and the availability of legal remedies in the applicable country. As a result, we may face competition from lower-priced generic alternatives to many of our products. Generic competitors are becoming more aggressive in terms of pricing, and generic products are an increasing percentage of overall animal health sales in certain regions. In addition, private label products may compete with our products. If pet therapeutics customers increase their use of new or existing generic or private label products, our operating results and financial condition could be materially adversely affected.

Our pet therapeutics will be subject to unanticipated safety or efficacy concerns, which may harm our reputation.

Unanticipated safety or efficacy concerns can arise with respect to pet therapeutics, whether or not scientifically or clinically supported, leading to product recalls, withdrawals or suspended or declining sales, as well as product liability, and other claims. In addition, we depend on positive perceptions of the safety and quality of our products, and pet therapeutics generally, by our customers, veterinarians and end-users, and such concerns may harm our reputation. These concerns and the related harm to our reputation could materially adversely affect our operating results and financial condition, regardless of whether such reports are accurate.

After consummation of our merger acquisition of Gel-Del, we acquired and now own all intellectual property rights developed by Gel-Del.

All of the intellectual property rights of Gel-Del or that we develop with respect to Gel-Del Particles are or will be owned by us. However, we may face claims from non-practicing entities, which have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect.

In addition to infringement claims against us, if third parties have prepared and filed patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the U.S. PTO to determine the priority of invention. Third parties may also attempt to initiate reexamination, post grant review or inter parties’ review of our patents in the U.S. PTO. We may also become involved in similar opposition proceedings in the European Patent Office or similar offices in other jurisdictions regarding our intellectual property rights with respect to our products and technology.

If our efforts to protect the proprietary nature of the intellectual property related to any of our current or future product candidates are not adequate, we may not be able to compete effectively in our market.

We will rely upon a combination of patents, trade secret protection and confidentiality to protect the intellectual property related to our current product candidates and our development programs.

Composition-of-matter patents on the active pharmaceutical ingredient are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, including pet therapeutics, as such patents provide protection without regard to any particular method of use or manufacture. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, veterinarians may recommend that pet owners use these products off label, or pet owners may do so themselves. Although off-label use may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute. Method of manufacturing patents protects a specific way to make a product and do not prevent a third party from making the product by a different method and then using the product for our uses. We cannot be certain that the claims in our patent applications will be considered patentable by the U.S. PTO and courts in the United States, or by the patent offices and courts in foreign countries.

24

The strength of patents in the field of pet therapeutics involves complex legal and scientific questions and can be uncertain. The patent applications that we own or license may fail to result in issued patents in the United States or in other foreign countries. Even if the patents do successfully issue, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our products or our intellectual property or prevent others from designing around our claims. If the breadth or strength of protection provided by the patents and patent applications we own, in-license or pursue with respect to any of our current or future product candidates is threatened, it could threaten our ability to commercialize any of our current or future product candidates. Further, if we encounter delays in our development efforts, the period of time during which we could market any of our current or future product candidates under patent protection would be reduced. Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our product candidates. Furthermore, for patent applications in which claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the U.S. PTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. For patent applications containing a claim not entitled to a priority date before March 16, 2013, there is a greater level of uncertainty in the patent law with the passage of the America Invents Act, which brings into effect significant changes to the U.S. patent laws that have yet to be well defined, and which introduces new procedures for challenging pending patent applications and issued patents. A primary change under this reform is creating a "first to file" system in the United States, which requires us to minimize the time from invention to filing of a patent application.

Even where laws provide protection, costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and the outcome of such litigation would be uncertain. Moreover, any actions we may bring to enforce our intellectual property against our competitors could provoke them to bring counterclaims against us, and some of our competitors have substantially greater intellectual property portfolios than we have.

We will also rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our product development processes that involve proprietary know-how, information or technology that is not covered by patents. Although we require all of our employees to assign their inventions to us, and endeavor to execute confidentiality agreements with all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology, we cannot be certain that we have executed such agreements with all parties who may have helped to develop our intellectual property or had access to our proprietary information, nor that our agreements will not be breached. We cannot guarantee that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market.

25

We may be involved in lawsuits Moreover, from time to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents, or patents that may issue to us in the future, or the patents of our licensors that are licensed to us. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, if we or one of our future collaborators were to initiate legal proceedings against a third party to enforce a patent covering our current product candidates, or one of our future products, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar claims before the U.S. PTO, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our current or future product candidates. Such a loss of patent protection could have a material adverse impact on our business.

Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be unsuccessful, it could have an adverse effect on the price of our common stock. Finally, we may not be able to prevent, alone or with the support of our licensors, misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights fully.

The regulatory approval process is uncertain, requires us to utilize significant resources, and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates.

The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of pet therapeutics are subject to extensive regulation by the CVM, the USDA or the EMA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. We are not permitted to market any of our current or future product candidates in the United States until we receive approval of an NADA from the CVM or a product license from the USDA. We have not submitted an application for or received marketing approval for our current product candidates. Obtaining approval of an NADA from CVM or a product license from the USDA can be an uncertain process that requires us to utilize significant resources. The CVM, the USDA or any foreign regulatory bodies can delay, limit or deny approval of any of our product candidates for many reasons, including:

we are unable to demonstrate to the satisfaction of the CVM, the USDA, the EMA or the applicable foreign regulatory body that the product candidate is safe and effective for the requested indication;
the CVM, the USDA or the applicable foreign regulatory body may disagree with our interpretation of data from our target animal studies and other development efforts;
we may be unable to demonstrate that the product candidate's benefits outweigh any safety or other perceived risks;
the CVM, the USDA or the applicable foreign regulatory body may require additional studies;
the CVM, the USDA or the applicable foreign regulatory body may not approve of the formulation, labeling and/or the specifications of our current and future product candidates;
the CVM, the USDA or the applicable foreign regulatory body may fail to approve our manufacturing processes or facilities, or the manufacturing processes or facilities of third-party manufacturers with which we contract; and
the approval policies or regulations of the CVM, USDA or the applicable foreign regulatory body may significantly change in a manner rendering the data from our studies insufficient for approval.

26

In addition, failure to comply with CVM and other applicable United States and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including: warning letters, civil and criminal penalties, injunctions, withdrawal of approved products from the market, product seizure or detention, product recalls, total or partial suspension of production, and refusal to approve pending NADAs or product licenses or supplements to approved NADAs or product licenses. 

Regulatory approval of an NADA or supplement NADA, or of a product license, is not guaranteed, and the approval process requires us to utilize significant resources, may take several years, and is subject to the substantial discretion of the CVM, the USDA or the EMA. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat studies, or perform additional studies. If any of our current or future product candidates fails to demonstrate safety and efficacy in our studies or for any other reason does not gain regulatory approval, our business and results of operations will be materially and adversely harmed.

Even if we receive regulatory approval for any of our current or future product candidates, we will be subject to ongoing CVM, USDA or EMA obligations and continued regulatory review, which may result in significant additional expense. Additionally, any product candidates, if approved, will be subject to labeling and manufacturing requirements and could be subject to other restrictions. Failure to comply with these regulatory requirements or the occurrence of unanticipated problems with our products could result in significant penalties.

Any regulatory approvals that we or any of our collaborators receive for any of our current or future product candidates may be subject to conditions of approval or limitations on the approved indicated uses for which the product may be marketed, or may contain requirements for potentially costly surveillance to monitor the safety and efficacy of the product candidate. In addition, if the CVM, the USDA or the EMA approves any of our current or future product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP, GLP and good clinical practices, or GCP, for any studies that we conduct post-approval. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;
fines, warning letters or holds on target animal studies;
refusal by the CVM, the USDA or the EMA to approve pending applications or supplements to approved applications filed by us or our strategic collaborators, or suspension or revocation of product license approvals;
product seizure or detention, or refusal to permit the import or export of products; and
injunctions or the imposition of civil or criminal penalties.

The CVM's, USDA's or the EMA's policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtainedto change our marketing strategies and we mayspending allocations based on responses from our veterinarian customers and pet owners. If our marketing, advertising and trade promotions are not achievesuccessful to create and sustain consistent revenue growth or sustain profitability, which would adversely affect our business.

27

Failure to obtain regulatory approvals in foreign jurisdictions for our product candidates would prevent us from marketing our products internationally.

In order to market any product outside of the United States, including in the EEA (which is comprised of the 28 member states of the European Union plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, separate regulatory approvals are required. More concretely, in the EEA, pet therapeutics can only be commercialized after obtaining a Marketing Authorization ("MA"). Before granting the MA, the EMA or the competent national authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

The approval procedures vary among countries and can involve additional studies and testing, and the time required to obtain approval may differ from that required to obtain CVM or USDA approval. Animal studies conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the CVM or USDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the CVM or the USDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtaining CVM or USDA approval. We may not be able to file for regulatory approvals or to do so on a timely basis and, even if we do file them, we may not receive necessary approvals to commercialize our products in any market.

If approved, any of our current or future products may cause or contribute to adverse medical events that we are required to report to the CVM, USDA and regulatory authorities in other countries and, if we fail to do so, we could be subjectrespond to sanctions that would materially harm our business.

If we are successful in commercializing any of our current or future products, regulations of the CVM, the USDA and of the regulatory authorities in other countries require that we report certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events we become aware of within the prescribed timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we fail to comply with our reporting obligations, the CVM, USDA and regulatory authorities in other countries could take action including criminal prosecution, the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

Legislative or regulatory reforms with respect to pet therapeutics may make it more difficult and costly for us to obtain regulatory clearance or approval of any of our current or future product candidates and to produce, market, and distribute our products after clearance or approval is obtained.

From time to time, legislation is drafted and introduced in the U.S. Congress that could significantly change the statutory provisions governing the testing, regulatory clearance or approval, manufacture, and marketing of regulated products. In addition, CVM and USDA regulations and guidance are often revised or reinterpreted by the CVM and USDA in ways that may significantly affect our business and our products. Similarstrategy changes in laws or regulations can occur in other countries. Any new regulations or revisions or reinterpretations of existing regulations in the United States or in other countries may impose additional costs or lengthen review times of any of our current or future product candidates. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require:

changes to manufacturing methods;
recall, replacement, or discontinuance of certain products; and
additional record keeping.

28

Each of these would likely entail substantial time and cost and could materially harm our financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products would harmindustry, our business, financial condition and results of operations.

Our research and development relies on evaluations in animals, whichoperations may become subject to bans or additional regulations.

As a biopharmaceutical company with a focus on pet therapeutics, the evaluation of our existing and new products in animals is required to register our products. Animal testing in certain industries has been the subject of controversy and adverse publicity. Some organizations and individuals have attempted to ban animal testing or encourage the adoption of additional regulations applicable to animal testing. To the extent that the activities of such organizations and individuals are successful, our research and development, and by extension our operating results and financial condition, could be materially adversely affected. In addition, negative publicity about us or our industry could harm our reputation.

RISKS RELATED TO OUR COMMON STOCK

Our ability to raise additional capital through the sale of our stock may be harmed by competing resales of our common stock by the selling shareholders in our registration statement that was declared effective by the SEC.

The price of our common stock could fall if the selling shareholders sell substantial amounts of our common stock. These sales would make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate, because the selling shareholders may offer to sell their shares of common stock to potential investors for less than we do. Moreover, potential investors may not be interested in purchasing shares of our common stock if the selling shareholders are selling their shares of common stock.

We depend on the efforts and abilities of our officers.

We currently have four officers and directors who are also our only employees. The demands on each of these individuals' time will increase because of our status as a public company. Our officers and directors have limited experience in managing a public company, which may impact our ability to meet our financial and business objectives as potential investors may not want to invest in a company whose management has limited public company experience. The interruption of the services of our management could significantly hinder our operations, profits and future development, if suitable replacements are not promptly obtained. We do not currently have any executive compensation agreements. We cannot guaranty that our management will remain with us.

Our management ranks are thin and losing or failing to add key personnel could affect our ability to successfully grow our business.

Our future performance depends substantially on the continued service of our management. In particular, our success depends upon the continued efforts of our management personnel, including our Chief Executive Officer, John Lai, and our Chief Financial Officer/Treasurer and Secretary, John F. Dolan. We cannot guarantee that either Messrs. Lai or Dolan will remain with us.

The costs to meet our reporting requirements as a public company subject to the Securities Exchange Act of 1934 will be substantial.

We will incur ongoing expenses associated with professional fees for accounting and legal expenses associated with being a public company. We estimate that these costs will range up to $50,000 per year for the next few years. Those fees will be higher if our business volume and activity increases. Those obligations will reduce and possibly eliminate our ability and resources to fund our operations effectively.

2915

 

Any damage to our reputation or our brand may materially harm our business.

Developing, maintaining and expanding our reputation and brand with veterinarians, pet owners and others will be critical to our success. Our auditors have questionedbrand may suffer if our marketing plans or product initiatives are unsuccessful. The importance of our brand and demand for our products may decrease if competitors offer products with benefits similar to or as effective as our products and at lower costs to consumers. Although we maintain procedures to ensure the quality, safety and integrity of our products and their production processes, we may be unable to detect or prevent product and/or ingredient quality issues such as contamination or deviations from our established procedures. If any of our products cause injury to animals, we may incur material expenses for product recalls, and may be subject to product liability claims, which could damage our reputation and brand substantially.

If we fail to attract and retain qualified management and key scientific personnel, we may be unable to successfully commercialize our current products or develop new products effectively.

Our success will significantly be dependent upon our current management and key scientific technicians, and also on our ability to continueattract, retain and motivate future management and employees. We are highly dependent upon our current management and technology personnel, and the loss of the services of any of them could delay or prevent the successful commercialization or development of current or future products. Competition to obtain qualified personnel in the animal health field is intense due to the limited number of individuals possessing the skills and experience required by our industry. We may not be able to attract or retain qualified personnel as needed on acceptable terms, or at all, which would harm our business and operations.

Natural disasters and other events beyond our control could materially adversely affect us.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, asinternational commerce and the global economy, and thus could have a "going concern." Investorsstrong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics (including the ongoing Coronavirus (COVID-19) epidemic) and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers, and could decrease demand for our services.

Risks relating to Manufacturing

We may lose allnot be able to manage our manufacturing and supply chain effectively, which would harm our results of their investment ifoperations.

We must accurately forecast demand for our products in order to have adequate product inventory available to fill customer orders timely. Our forecasts will be based on multiple assumptions that may cause our estimates to be inaccurate, and thus affect our ability to ensure adequate manufacturing capability to satisfy product demand. Any material delay in our ability to obtain timely product inventories from our manufacturing facility and our ingredient suppliers could prevent us from satisfying increased consumer demand for our products, resulting in material harm to our brand and business. In addition, we will need to continuously monitor our inventory and product mix against forecasted demand to avoid having inadequate product inventory or having too much product inventory on hand. If we are unable to continue operationsmanage our supply chain effectively, our operating costs may increase materially.

Risks relating to our Intellectual Property

Failure to protect our intellectual property could harm our competitive position or cause us to incur significant expenses and generate revenues.personnel resources to enforce our rights.

We hope to obtain significant revenues from future product sales. In the absence of significant sales and profits, we may seek to raise additional funds to meet our working capital needs, principally through the additional sales of our securities. However, we cannot guarantee that weOur success will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to us. As a result, substantial doubt exists aboutdepend significantly upon our ability to continue as a going concern.

Our officersprotect our intellectual property (“IP”) rights, including patents, trademarks, trade secrets, and directors own approximately 73.21%process know-how, which valuable assets support our brand and the perception of our outstanding shares of common stock, allowing these shareholdersproducts. We rely on patent, trademark, trade secret and other intellectual property laws, as well as non-disclosure and confidentiality agreements to control matters requiring approvalprotect our intellectual property. Our non-disclosure and confidentiality agreements may not always effectively prevent disclosure of our shareholders.proprietary IP rights, and may not provide an adequate remedy in the event of an unauthorized disclosure of such information, which could harm our competitive position. We also may need to engage in costly litigation to enforce or protect our patent or other proprietary IP rights, or to determine the validity and scope of proprietary rights of others. Any such litigation could require us to expend significant financial resources and also divert the efforts and attention of our management and other personnel from our ongoing business operations. If we fail to protect our intellectual property, our business, brand, financial condition and results of operations may be materially harmed.

16

 

Our

We may be subject to intellectual property infringement claims, which could result in substantial damages and diversion of the efforts and attention of our management.

We must respect prevailing third-party intellectual property, and the procedures and steps we take to prevent our misappropriation, infringement or other violation of the intellectual property of others may not be successful. If third parties assert infringement claims against us, our suppliers, or veterinarians using our products and technology, we could be required to expend substantial financial and personnel resources to respond to and litigate or settle any such third-party claims. Although we believe our patents, manufacturing processes and products do not infringe in any material respect on the intellectual property rights of other parties, we could be found to infringe on such proprietary rights of others. Any claims that our products, processes or technology infringe on third-party rights, regardless of their merit or resolution could be very costly to us and also materially divert the efforts and attention of our management and technical personnel. Any adverse outcome to us from one or more such claims against us could, among other things, require us to pay substantial damages, to cease the sale of our products, to discontinue our use of any infringing processes or technology, to expend substantial resources to develop non-infringing products or technology, or to license technology from the infringed party. If one or more of such adverse outcomes occur, our ability to compete could be affected significantly and our business, financial condition and results of operations could be harmed substantially.

Risks related to Regulation

We may be unable to obtain required regulatory approvals for future products timely or at all, and the denial or substantial delay of any such approval could delay materially or even prevent our efforts to commercialize new products, which could adversely impact our ability to generate future revenues.

Based on our determination that our Spryng™ products is a device for the treatment of animals rather than being a pharmaceutical product, we believe we are not required to obtain regulatory approval to produce and market them for their current intended uses. However, we have not received confirmation from any regulatory authority that our determination is correct. The production, marketing and sale of any future products for the treatment of animals based on our proprietary technology may be require us to obtain regulatory approval from the Center for Veterinarian Medicine (“CVM”), a branch of the FDA, and/or the USDA, and also certain state regulatory authorities. Any substantial delay or inability to obtain required regulatory approvals for any new products developed by us could substantially delay or even prevent their commercialization, which would materially adversely impact our business and prospects.

Moreover, at such future time that we commence business internationally, our products will need to obtain regulatory approval for labeling, marketing and sale in foreign countries from authorities such as the European Commission (“EU”) or the European Medicine Agency (“EMA”). Any substantial delay or inability to obtain any necessary foreign regulatory approvals for our products could harm our business and prospects materially.

Risks relating to our Information Technology

A failure of one or more key information technology systems, networks or processes may harm our ability to conduct our business effectively.

The effective operation of our business and operations will depend significantly on our information technology and computer systems. We will rely on these systems to effectively manage our sales and marketing, accounting and financial, and legal and compliance functions, new product development efforts, research and development data, communications, supply chain and product distribution, order entry and fulfillment, and other business processes. Any material failure of our information technology systems to perform satisfactorily, or their damage or interruption from circumstances beyond our control such as power outages or natural disasters, could disrupt our business materially and result in transaction errors, processing inefficiencies, and even the loss of sales and customers., causing our business and results of operations to suffer materially.

17

Risks Related to our Company

Ownership and control of our Company is concentrated in our management.

As of June 1, 2022, our officers and directors beneficially own in the aggregate,or control approximately 73.21%30% of our outstanding shares of common stock. SuchThis concentrated ownership and control by our management could adversely affect the status and perception of our common stock and/or warrants. In addition, any material sales of common stock of our management, or even the perception that such sales will occur, could cause a material decline in the trading price of our common stock and/or warrants.

Due to this ownership concentration, our management has the ability to control all matters requiring stockholder approval including the election of all directors, the approval of mergers or acquisitions, and other significant corporate transactions. Any person acquiring our common stock most likely will have no effective voice in the management of our company. This ownership concentration also could delay or prevent a change of control of the companyCompany, which could deprive our stockholders from receiving a premium for their common shares.

The market price of our common stock is highly volatile because of several factors, including a limited public float.

The market price of our common stock has been volatile in the past and the market price of our common stock and our warrants is likely to be highly volatile in the future. You may negatively affectnot be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.

Other factors that could cause such volatility may include, among other things:

actual or anticipated fluctuations in our operating results;
the absence of securities analysts covering us and distributing research and recommendations about us;
we may have a low trading volume for a number of reasons, including that a large portion of our stock is closely held;
overall stock market fluctuations;
announcements concerning our business or those of our competitors;
actual or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms;
conditions or trends in the industry;
litigation;
changes in market valuations of other similar companies;
future sales of common stock;
departure of key personnel or failure to hire key personnel; and
general market conditions.

Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, our officersthe stock market in general has at times experienced extreme volatility and directors can control matters requiring approval by our security holders, includingrapid decline that has often been unrelated or disproportionate to the electionoperating performance of all directors.

Investors should not look to dividends as a source of income.

We do not intend to pay cash dividends inparticular companies. These broad market fluctuations may adversely affect the foreseeable future. Consequently, any economic return will initially be derived, if at all, from appreciation in the fair market value of our stock, and not as a result of dividend payments.

The trading price of our common stock onand/or warrants, regardless of our actual operating performance.

Our common stock has in the over-the-counter market will fluctuate significantlypast been a “penny stock” under SEC rules, and stockholders may have difficulty reselling their shares.

As of the date of this Annual Report,if our common stock trades onis deemed to be a “penny stock,” it will be more difficult to resell our securities.

In the Pink Sheets OTC market. There is a volatility associated with such securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price ofpast, our common stock: (i) disappointing results from our exploration or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends

In addition, stock markets generally experience price and volume fluctuations and the market prices of over-the-counter (OTC) securities have been highly volatile. These fluctuations are sometimes unrelated to operating performance and may adversely affect the market price of our common stock. Aswas a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.

Additional issuance of equity securities may result in dilution to our existing stockholders.

Our Articles of Incorporation, as amended, authorize the issuance of 250,000,000 shares of common stock. The Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing in the future, and the issuance of any such shares may result in a reduction of the book value or market price of the then outstanding shares of our common stock. If we do issue any such additional shares in the future, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders.

Because we may be subject to the "penny stock" rules, the level of trading activity in our stock may be reduced - which may make it difficult for investors to sell their shares.

Broker-dealer practices in connection with transactions in "penny stocks" are regulated by certain penny stock rules adopted by the“penny stock” under applicable Securities and Exchange Commission. Penny stocks, like shares ofCommission (“SEC”) rules (generally defined as non-exchange traded stock with a per-share price below $5.00). While our common stock generally are equity securities withis currently not considered a price“penny stock,” if we do not continue to satisfy the requirements to be exempt from the “penny stock” rules, it will be more difficult to resell our securities. “Penny stock” rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of less than $5.00,penny stocks to persons other than securities registered on certain national securities exchangesthose who qualify as “established customers” or quoted on NASDAQ. The“accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stock rules require a broker-dealer,stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, andfurnish monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell these securities to persons other than established customers and "accredited investors" must makecustomer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser'spurchaser’s written agreement to the transaction. Consequently, these

18

Legal remedies available to an investor in “penny stocks” may include the following:

If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.
If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.

These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules,rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and investors inliquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock or our warrants and may findaffect your ability to resell our common stock and our warrants.

Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments. For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance that our common stock will not be classified as a “penny stock” in the future.

If we fail to maintain effective internal control over financial reporting, the price of our securities may be adversely affected.

Our internal controls over financial reporting have weaknesses and conditions that require correction or remediation. For the year ended March 31, 2022, we identified three material weaknesses in our assessment of the effectiveness of and procedures. We have (i) deficiencies in the segregation of duties, (ii) deficiencies in the staffing of our financial accounting department and (iii) limited checks and balances in processing cash and other transactions. Any failure by us to implement the changes necessary to maintain an effective system of internal controls could harm our operating results materially and cause investors and financial analysts to lose confidence in our reported financial information. Any such loss of confidence in the investment community would have a negative effect on the trading and price of our common stock and warrants.

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal controls over financial reporting, and for certain issuers, an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal controls over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it difficultwill take or costly it will be to sell their shares.complete the assessment of the effectiveness of our internal controls over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or Chief Financial Officer determines that our internal controls over financial reporting are not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected.

3019

 

We do not anticipate paying any dividends on our common stock for the foreseeable future.

We have not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future. We anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and expected future growth.

The elimination of monetary liability against our directors and executive officers under Nevada law and the existence of indemnification rights held by them granted by our bylaws could result in substantial expenditures by us.

Our shares are eligibleArticles of Incorporation eliminate the personal liability of our directors and officers to be traded electronically.

Our shares are eligible with Depository Trustthe Company (DTC)and its stockholders for damages for breach of fiduciary duty to trade electronically. Becausethe maximum extent permissible under Nevada law. In addition, our Bylaws provide that we are DTC eligible,obligated to indemnify our directors or officers to the fullest extent authorized by Nevada law for costs or damages incurred by them involving legal proceedings brought against them relating to their positions with the Company. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against our directors or officers.

Our Articles of Incorporation, Bylaws, and Nevada law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.

Our Articles of Incorporation, Bylaws, and Nevada law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 1,000,000 shares canof preferred stock. This preferred stock may be electronically transferred between brokerage accounts.issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights, and sinking fund provisions. None of our preferred stock will be outstanding at the closing of this offering. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

Provisions of our Articles of Incorporation, Bylaws, and Nevada law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our certificate of incorporation and by-laws and Delaware law, as applicable, among other things:

provide the board of directors with the ability to alter the by-laws without stockholder approval;
establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings; and
provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum.

20

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Property held by us.As of December 5, 2017, weWe do not own any interests in real estate other than a month to monthestate. We lease for our facilities.

Our Facilities.Our executive, administrative, manufacturingapproximately 3,600 square feet of office, laboratory and operating offices are locatedwarehouse space at 5251 Edina Industrial Blvd. Edina, Minnesota. This lease will expire in November 2026.

In January 2022, we leased an additional 2,400 square feet of office space near the location above. This lease will expire in March 2027. Refer to Note 9. Commitments and Contingencies, Edina, Minnesota 55439. We believein the Notes to Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report, for further information regarding our leases.

The Company believes that ourthe current facilities are suitable and adequate for ourto meet the Company’s current needs and that suitable additional suitable space will be available as and when needed on acceptable terms as required.terms.

ITEM 3. LEGAL PROCEEDINGS

We areFrom 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 currentlyanticipate would have, individually or in the aggregate, a partymaterial adverse effect on our business, financial condition, or results of operations.

Refer to anyNote 9. Commitments and Contingencies, in the Notes to Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report, for further information regarding legal proceedings.contingencies.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATIONMarket Information

OurThe Company’s common stock is listed for quotationpublicly traded on the OTC Pink SheetsNasdaq Capital Market under the symbol "PETV." The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the OTC: PK stock market. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.“PETV.”

Quarter Ended High Bid  Low Bid 
June 30, 2015 $6.50  $3.75 
September 30, 2015 $5.60  $2.25 
December 31, 2015 $4.30  $2.20 
March 31, 2016 $2.20  $1.30 
June 30, 2016 $2.15  $1.20 
September 30, 2016 $1.26  $0.28 
December 31, 2016 $0.84  $0.30 
March 31, 2017 $0.44  $0.29 

31

Number of Stockholders

HOLDERS

The approximate numberAs of March 31, 2022, there were approximately 287 stockholders of record at October 20, 2017 was 87.record. The number of stockholders of record does not include certain beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers, and other fiduciaries.

21

 

DIVIDEND POLICY

Dividends

We have never declared or paid a cash dividend on our capital stock. We do not expect to payany cash dividends on our common stock inand anticipate that for the foreseeable future. We currently intend to retain ourfuture all earnings if any,will be retained for use in our business. Anyrather than paid out as cash dividends declared in

Unregistered Sales of Securities

From January 1, 2022 through March 31, 2022, the future will be at the discretionCompany issued a total of our Board of Directors.

AGREEMENT AND PLAN OF MERGER

April 10, 2017 Merger

On March 20, 2017, we entered into an agreement and plan of merger with our wholly-owned subsidiary, PetVivo Holdings Newco Inc. (“Newco”) and Gel-Del (the “Merger Agreement”). In accordance with the terms and provisions of the Merger Agreement, we effected a statutory merger transaction resulting in an exchange by the shareholders of Gel-Del on a pro rata basis of 100% of all outstanding Gel-Del capital stock in exchange for 5,450,000230,633 shares of our restricted common stock, which represented approximately 30% of the total issued and outstanding shares of our common stock post-merger.

On April 10, 2017, the Merger Agreement was consummated and we completed the acquisition of the total issued and outstanding shares of common stock of Gel-Del from the Gel-Del shareholders. The acquisition was completed and consummated through a statutory merger between Gel-Del and our wholly owned subsidiaryPetVivo NewCo, which resulted in Gel-Del being the surviving entity and becoming our wholly-owned subsidiary. The Merger Agreement became effective upon the filing with the Secretary of State of Minnesota on April 10, 2017. Upon the effectiveness of the Merger Agreement, each share of Gel-Del common stock issued and outstanding immediately prior to the consummation of the Merger Agreement was converted into the right to receive 0.798 common share of the Company. Gel-Del did not have any outstanding options, warrants or other derivative securities or rights convertible into securities.

In accordance with this merger transaction, we acquired all Gel-Del technology and related patents and other intellectual property (IP) and production techniques, as well as Gel-Del's modern and secure biomedical product manufacturing facilities being constructed in Edina, Minnesota.

Effective April 10, 2017, the Stock Exchange Agreement dated November 21, 2014 between PetVivo and Gel-Del was terminated since that agreement became moot and superseded upon the effectiveness of the Merger.

Company Overview

We were founded in 2013 by John Lai and John Dolan. We are based in suburban Minneapolis, Minnesota. We are a biomedical device company primarily engaged in the business of adapting human biomedical technology for products to be introduced for commercial sale in the veterinary market to treat pets and other animals suffering from arthritis and other painful afflictions. Our initial product, now being commercialized, is a medical device featuring injections of patented gel-like biomaterials into the afflicted body parts of pets or other animals suffering from osteoarthritis. The technology and manufacturing capability of this product was developed by Gel-Del.

RECENT SALES OF UNREGISTERED SECURITIES

During fiscal year ended March 31, 2017 and to date, we issued an aggregate of 1,089,667 shares of unregisteredits common stock as follows:

32(i)issued 51,192 shares of common stock to members of the Board of Directors pursuant to vesting of restricted stock units,
(ii)issued 58,109 shares of common stock to providers of consulting services, and
(iii)issued 121,332 shares of common stock related to vesting of restricted stock units.

Settlement of Debt

Effective March 31, 2016, we entered into six debt settlement agreements with creditors holding outstanding notes, which resulted in the Company converting all of the $1,576,649 outstanding matured debt owed to the note holders by us into equity in the form of common stock of PetVivo. These debt conversions included all principal, accrued interest and any other expenses relating to these notes, including $655,919 owed to Gemini Master Fund, Ltd., $509,088 owed to St. George Investments LLC, $154,500 owed to Carebourn Capital, L.P., $125,892 owed to Jeanne Rudelius, $78,750 owed to Scott Johnson, and $52,500 owed to Union Capital LLC.

The foregoing conversions were all accomplished based on a conversion price of $2.00 per common share, and accordingly our Board of Directors authorized the issuance of an aggregate of 788,325 shares of our common stock to be issued to the six note holders in complete satisfaction of all debt obligations held by them under their respective notes.

We regard these substantial and material debt-to-equity conversions to be a significant benefit to our current financial position and balance sheet, as well as to our future ability to finance the planned operations and projected commercial growth of our business.

Concurrent with its conversion of indebtedness to Gemini Master Fund, Ltd. ("Gemini"); Gemini also exercised a warrant held by Gemini incident to their note. This warrant exercise was a "cashless" transaction by Gemini, and resulted in our issuance to Gemini of an additional 97,317 shares of our common stock.

All of the foregoing securities issuancesthese transactions described above were unregistered and made by PetVivo as non-public transactions. The shares of common stock were issued to all United States residentsexempt from registration in reliance on Section 4(a)(2) underof the United States Securities Act of 1933, as amended, (the "Securities Act").as a transaction by an issuer not involving a public offering. The purchasers of securities in each of these transactions represented their intention to acquire 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.

Stock IssuedPurchases of Equity Securities by the Registrant and Affiliated Purchasers

None.

Securities Authorized for Cash and ServicesIssuance

From April 1, 2016 toThe following table sets forth securities authorized for issuance under any equity compensation plan approved by our stockholders as well as any equity compensation plans not approved by our stockholders as of March 31, 2017,2022.

Equity Compensation Plan Information
 
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights  Weighted average exercise price of outstanding options, warrants and rights  Number of Securities remaining available for future issuance under
equity compensation plans (excluding securities
reflect in table)
 
Plans approved by shareholders(1)  1,000,000   3.20   233,923 
Plans not approved by shareholders(2)     757,484  $2.29       — 

(1)PetVivo Holdings, Inc. 2020 Equity Incentive Plan.
(2)Represents warrants granted to officers, directors, employees, financial advisors, consultants, investors, and other service providers pursuant to individual contracts, investments, awards or arrangements for compensatory purposes.

22

Use of proceeds from our initial public offering of common stock

On August 13, 2021, we completed our Public Offering pursuant to which we issued and sold an aggregate of 2,500,000 units at the Company issued 1,389,667public offering price of $4.50 per unit. Each unit consisted of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $5.625 per share. The shares of common stock inand warrants were transferable separately immediately upon issuance. At the year ended March 31, 2017, of which 788,325 shares were for settlement of debt valued at market of $1,576,649, 437,500 shares were for services valued at market for $382,500, 97,342 shares were for interest valued at market of $151,476, and 66,500 shares for cash of $99,750.

Allclosing of the foregoing securities issuancesPublic Offering, the underwriter exercised its over-allotment option to purchase an additional 375,000 warrants for an aggregate purchase price of $3,850.

The offer and sale of all of the units in our Public Offering were unregistered and made by PetVivo as non-public transactions in reliance on Section 4(a)(2) under the United States Securities Act of 1933, as amended (the "Securities Act"). The securities have not been registered under the Securities Act or under any state securities laws and may not be offered or sold withoutpursuant to a registration statement on Form S-1, as amended (File No. 333-249452), which was declared effective by the SEC on August 10, 2021 (“Registration Statement”). ThinkEquity, a division of Fordham Financial Management, Inc. acted as the sole book-running manager for the Public Offering. In connection with the United States SecuritiesPublic Offering, the Company’s common stock and warrants were registered under Section 12(b) of the Exchange Commission or an applicable exemptionAct and began trading on The Nasdaq Capital Market, LLC under the symbols “PETV” and “PETVW,” respectively.

We received aggregate gross proceeds from our Public Offering of $11,253,850 (inclusive of the underwriter’s exercise of its overallotment option to purchase warrants). After deducing underwriting discounts and commissions and other offering expenses, we received net proceeds of approximately $9,781,000 from the registration requirements.Public Offering.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

As of the date of this Annual Report,March 31, 2022, we estimated that we have used approximately $3.7 million of the proceeds for the purposes disclosed in the Registration Statement. There has been no compensation plans under whichmaterial change in our equity securities were authorized for issuance.intended use of proceeds from our Public Offering as described in the Prospectus filed with the SEC pursuant to Rule 424(b)(4) on August 13, 2021

ITEM 6. SELECTED FINANCIAL DATARESERVED

Not applicable.

ITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the year ended March 31, 2017, together withand related notes thereto as includedthat appear elsewhere in this Annual Report on Form 10-K. Theprospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to suchthose differences include but are not limited to those discussed below and elsewhere in this Annual Report,prospectus, particularly in “RISK FACTORS.” We caution the section entitled "Risk Factors." Our audited financialreader not to place undue reliance on these forward-looking statements, are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.which reflect management’s analysis only as of the date of this Annual Report.

33

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

The independent auditor’s report accompanying our March 31, 2022 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming“assuming that we will continue as a going concern, and, accordingly, do not include adjustments relating to the recoverability and realization of” which contemplates that we will realize our assets and classificationsatisfy our liabilities and commitments in the ordinary course of liabilities that might be necessary should we be unablebusiness. We have suffered recurring losses from operations, and our working capital is insufficient to fund our operations for the next 12 months. These factors raise substantial doubt about our ability to continue in operation.as a going concern.

23

 

We will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

RESULTS OF OPERATION

 For Fiscal
Year Ended
March 31, 2017
 For Fiscal
Year Ended
March 31, 2016
  For Fiscal Year Ended March 31, 
      2022  2021 
Revenues $7,124   75,000  $115,586  $12,578 
        
Total Cost of Sales  201,154   10,695 
Total Operating Expenses  16,396,777   3,326,183   4,970,960   1,960,871 
        
Total Other Income (Expense)  (132,045)  (1,479,614)  41,533   (1,563,792)
        
Net Income (loss) $(16,521,698)  (4,730,797)
        
Interest $188,505   270,582 
        
Net Loss attributable to PetVivo $(15,531,533)  (3,651,744)
        
Net Loss  (5,014,995)  (3,522,780)
Net loss per share - basic and diluted $(1.73)  (0.46) $(.57)* $(.57)*

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

For The Fiscal Year Ended March 31, 20172022 (“fiscal 2022”) Compared to FiscalThe Year Ended March 31, 20162021 (“fiscal 2021”)

Total Revenues.RevenuesFor. Revenues increased to $115,586 in fiscal year ended March 31, 2017, we earned $7,124 in revenue from product sold and consulting fees2022 compared to $75,000 earned$12,578 in grant revenue during fiscal year ended March 31, 2016 (a decrease2021 and consisted of $67,876).sales to veterinary clinics. The Company began commercialization of its Spryng™ product in September 2021.

Total Cost of Sales. Cost of sales was $201,154 in fiscal 2022 compared to $10,695 for fiscal 2021. The increase is directly related to increased sales of the Spryng™ product. Cost of sales includes product costs related to the sale of products and labor and overhead costs. The increase and the negative gross margin are primarily attributed to our product costs and related product launch expenses from the commercialization of Spryng™ in September 2021.

Operating Expenses.Expenses. Operating expenses forincreased to $4,970,960 in fiscal year ended March 31, 2017 were $16,396,7772022 compared to $3,326,183 for$1,960,871 in fiscal year ended March 31, 2016 (an increase of $13,070,594). For fiscal year ended March 31, 2017, our operating2021. Operating expenses consisted of: (i) $167,891 (2016: $168,600) in research and development; and (ii) $16,228,886 (2016: $3,157,583) in general and administrative. The major differences inof general and administrative, sales and marketing, and research and development expenses. The increase is primarily due to increased G&A expenses were the increase in 2017and sales and marketing expenses related to the impairment loss recorded on the Gel-Delsale of our Spryng™ product.

General and Cosmeta transaction.administrative (“G&A”) expenses were $3,148,494 and $1,767,664 in fiscal 2022 and 2021, respectively. General and administrative expenses generally include corporate overhead, financialcompensation and administrativebenefits, contracted services, consulting fees, stock compensation and incremental public company costs.

Sales and marketing expenses were $1,347,585 and $94,997 in fiscal 2022 and 2021, respectively. Sales and marketing expenses include compensation, consulting, costs.tradeshows and stock compensation costs to support the launch of our Spryng™ product.

We consummatedResearch and development (“R&D”) expenses were $474,881 and $98,230 in fiscal 2022 and 2021, respectively. The increase was related to clinical studies and efforts to support the merger with Gel-Dellaunch of Spryng™.

Operating Loss. As a result of the foregoing, our operating loss was $5,056,528 and 1,958,988 in the process recognized that we realized a loss of $14,081,031 duefiscal 2022 and 2021, respectively. The increase was related to the change incosts to support the valuationlaunch of Gel-Del capital stock pursuant to an original 2014 merger agreementSpryng™ and the valuationincremental public company costs.

Other Income (Expense). Other income was $41,533 in fiscal 2022 as compared to expense of $1,563,792 in fiscal 2021. Other income in fiscal 2022 consisted of the Gel-Del capital stock receivedforgiveness of PPP Loan of $31,680 and net interest income of $9,853. Other expense in fiscal 2021 consisted primarily of derivative expense related to debt financing of $1,702,100 and interest expense of $228,595 partially offset by us upon the completiona gain on debt extinguishment of the merger on April 10, 2017. The completion of the Merger Agreement required the transfer of all issued capital stock in Gel-Del to us in exchange for 5,450,000 shares of our common stock. The closing market price per share of our common stock on April 10, 2017 was $0.40 for a total aggregate stock exchange amount of $2,180,000 rather than the amount originally recorded for the Stock Exchange Agreement, which was $16,600,000. We addressed this issue by recognizing an impairment of Goodwill in the amount of $13,407,693. We further recognized a realized loss on the sale of Gel-Del to PetVivo in the amount of $14,081,031 and a reduction in Trademarks and Patents-Net in the amount of $673,340.$366,903.

3424

 

Thus, our operating loss for fiscal year ended March 31, 2017 was $16,357,653 compared to an operating loss of $3,251,183 for fiscal year ended March 31, 2016.

Other Income (Expenses).Other expenses for fiscal year ended March 31, 2017 were $132,045 (2016: $1,479,614). Other expenses consisted of: (i) gain (loss) on settlement of debt of $24,460 (2016: ($382,296); (ii) sale of equipment of $32,000 (iii) change in fair value of derivatives of $-0- (2016: $165,444); (iv) interest of $188,505 (2017: $270,582); and (v) amortization of issue costs of $-0- (2016: $992,180).

Net Loss before Taxes.Therefore, our. Our net loss before taxes forin fiscal year ended March 31, 20172022 was ($16,521,698) as compared to ($4,730,797) for fiscal year ended March 31, 2016. Net loss generally increased primarily due to the recording during fiscal year ended March 31, 2017 of: (i) loss on the sale of Gel-Del to PetVivo of $14,081,031; (ii) not having the loss of licensing costs of $488,000); (iii) not having the penalty interest expense of $589,168; (iv) recording less stock for services of $197,900; and (v) recording less depreciation and amortization of $57,866.

Interest.During fiscal year ended March 31, 2017, we incurred $188,505 in interest as compared to $270,582 in interest incurred during fiscal year ended March 31, 2016.

Net Loss Attributable to PetVivo.Therefore, our net loss attributable to PetVivo for fiscal year ended March 31, 2017 was ($15,531,533)$5,014,995 or $1.73) per share($0.57) as compared to a net loss attributable to PetVivo forof $3,522,780 or ($0.57) per share in fiscal year ended March 31, 2016 of ($3,651,744) or ($0.46) per share.2021. The weighted average number of shares outstanding during fiscal year ended March 31, 2017 was 8,955,2228,760,877 compared to 7,853,8626,198,717 for fiscal year ended March 31, 2016.2022 and 2021, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Fiscal Year Ended March 31, 2017

On August 13, 2021, we closed an underwriting public offering of 2,500,000 units, at a price of $4.50 per unit. Net proceeds from the Public Offering were approximately $9,781,000, net of commissions and expenses of the offering. As of March 31, 2017,2022, our current assets were $34,187 and our current liabilities were $1,077,192, which resulted in a working capital deficit of $1,043,005.

As of March 31, 2017, our current assets were comprised of: (i) $25,434$6,755,400 including $6,106,827 in cash and cash equivalents; (ii) $163 in accounts receivable; and (iii) $8,590 in prepaid expenses. As of March 31, 2017, our total assets were $1,896,937 comprised of: (i) current assets of $34,187; (ii) $449 in property and equipment (valued at $103,503 less depreciation of $103,054); (iii) goodwill valued at $-0-; and (iv) trademark and patent – net valued at $1,862,301.

As of March 31, 2017,equivalents. In comparison, our current liabilities as of that date were comprised of: (i) $643,890 in$1,173,486 including $1,107,759 of accounts payable and accrued expenses; (ii) $197,055 in notes payable and accrued interest – related party; (iii) notes payableexpenses. Our working capital as of 131,247; and (iv) convertible notes payable of $105,000).

Stockholders' equity decreased from $15,210,538 as at March 31, 2016 to $819,745 as at March 31, 2017.2022 was $5,581,914.

The Company is in the process of securing an underwriter to raise funds commencing the first quarter of 2018 in order to fund future operations. At the present time the Company has sufficient funds to begin operations with a recent move into new office space which houses laboratories for the commencement of KUSH products. The new laboratories are being set up to begin production in the first quarter 2018. The Company has secured salescontinued to realize losses from operations. However, as a result of our Public Offering, we believe we will have sufficient cash to meet our anticipated operating costs and marketing teamscapital expenditure requirements for at least the next 10 months. We will need to sell product once production commences. The Company added new independent board members and has formed a business advisory committee. Other board committees areraise additional capital in the processfuture to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of being formed as well.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 Flows fromUsed in Operating Activities.Activities We have not generated positiveused $4,174,957 of net cash flows fromin operating activities due to a lack of a source of revenues. For thein fiscal year ended March 31, 2017, net2022. This cash flows used in operating activities was ($143,017) (2016: ($690,330)). Net cash flows used in operating activities during fiscal year ended March 31, 2017 consisted primarily of aattributable to our net loss of $16,521,698 (2016: $4,730,797), which was adjusted by: (i) $134,400 in non-cash consulting expense (2016: $-0-); (ii) $395,359 (2016: $555,250) in stock issued for services; (iii) $151,476 (2016: $-0-) in stock issued for interest; (iv) $1,289,921 (2016: $282,000) in stock issued to settle liabilities (v) $746,845 (2016: $743,631) in depreciation and amortization; (vi) $3,311 (2016: $992,180) in amortization of debt issue costs; (vii) $14,081,031(2016: $-0-) in loss of sale of Gel-Del & Cosmeta; (viii) $-0- (2016: ($165,444) in derivative loss adjustment; (ix) ($24,460) (2016: $382,296) in$5,014,995, forgiveness of debt;PPP loan and (x) $-0- (2016: $488,000)accrued interest of $31,680 an increase in license.

35

Net cash flows used in operating activities during fiscal year ended March 31, 2017 was further changed by: (i) a decreaseinventory of $98,313 and an increase in prepaid expenses and other assets of $26,431) (2016: $215,500); (ii) an increase in advances and receivables of ($163) (2016: ($15,900)) and (iii)$208,668 partially offset by an increase in accounts payable and accrued expenses of ($425,470) (2016: $562,954).$144,874, stock compensation expense of $702,896 stock issued for services of $84,130 and investor relations services paid in stock of $220,050.

Net Cash Used in Investing Activities – We used $183,183 of net cash in investing activities in fiscal 2022 consisting of purchase of equipment of $154,030 and costs capitalized to patents and trademarks of $29,154.

Net Cash Provided by Financing Activities – During fiscal 2022, we were provided with net cash of $10,441,390 from financing activities consisting of $10,242,912 in stock and warrants sale proceeds and a decrease in deferred offering costs of $280,163, which were partially offset by $81,685 in repayments of note payable, including those to directors and a related party.

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 March 31, 2022, the Company’s inventory has a carrying value of $98,313 and is broken down into $11,889 of finished goods, $22,960 of work in process and $63,464 in raw material.

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

MATERIAL COMMITMENTS

Note Payable and Accrued Interest

As of March 31, 2022, we are obligated on notes and accrued interest of $33,750.

25

 

Cash Flows from Investing Activities.For

PURCHASE COMMITMENTS

The Company issued purchase orders in fiscal year ended March 31, 2017, net cash flows used by investing activities was ($36,465) compared2022 totaling $250,000 for inventory that we expect to net cash flows used by investing activities during fiscal year ended March 31, 2016 of $-0- consisting of change of assets.receive within the next year.

Cash Flows from Financing Activities.OFF-BALANCE SHEET ARRANGEMENTSWe have financed our operations primarily from debt or the issuance of equity instruments. For fiscal year ended March 31, 2017, net cash flows provided from financing activities was $204,658 (2016: $650,725) consisting of: (i) $99,750 (2016: $137,105) in proceeds from stock; (ii) $1,230 (2016; $-0-) increase in notes to related parties; (iii) $105,000 (2016: $524,750) in proceeds from convertible notes, which was offset by ($35,000) (2016: ($-0-) in repayments; (iv) $12,500 (2016: $193,370) in proceeds from loans, which was offset by ($38,822) (2016: ($204,500)) in repayments and (v) $60,000 (2016: $-0-) in cash received from stock subscription.

MATERIAL COMMITMENTS

Accrued Salary

We are indebted to related parties. At March 31, 2017, we are obligated for unpaid officer salaries and advances of $197,055. This amount is included in accounts payable and accrued expenses.

Notes Payable

We are obligated on the following notes: (i) third party individual in the amount of $67,826; and (ii) bank line credit of $63,421.

We have a bank credit line available up to $75,000. As of March 31, 2017, there was $11,579 available due upon demand. Interest is at 6.5%.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

As2022, and as of the date of this Annual Report, we do not have any off balanceoff-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

GOING CONCERN

The independent auditors'auditors’ report accompanying our March 31, 20172022 Form 10-K and financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assumingassuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring lossesIn August 2021, we raised approximately $9,781,000 from operations, havethe sale of units in a Public Offering. Our working capital deficitat March 31, 2022 was $5,581,914. We believe this working capital is sufficient to fund operations for the next ten months (see Liquidity and Capital Resources above).

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 currentlydescribed in defaultNote 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 payment terms of certain note agreements. These factors raise substantial doubt about our ability to continue as a going concern.consolidated financial statements.

36

RECENTLY ISSUED ACCOUNTING STANDARDS

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

The FASB issued ASC 606 as guidanceASU 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 do not believe that any new or modified principles will have a material impact on the recognitionCompany’s reported financial position or operations in the near term. The applicability of revenue fromany 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 with customersto 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 May 2014 with amendments in 2015certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and 2016. Revenue recognition will depictearly adoption is permitted. The Company is currently evaluating the transferimpact of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders' equity upon 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 standardASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is not expected to be material.effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this new guidance will have on its financial statements.

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

26

 

IITEMITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements for the years ended March 31, 2022 and 2021 are being filed with this report and commence on page F-1, immediately following the signature page.

ITEM 9. CHANGES AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain controls and procedures that are designed to ensure that information required by Item 8 are presentedto be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

Management’s annual report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP) and includes those policies and procedures that:

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

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

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (revised 2013). This assessment included an evaluation of the design and procedures of our control over financial reporting.

27

Based on our assessment, our management concluded that as of March 31, 2022, our internal control over financial reporting was not effective due to certain material weaknesses including:

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

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

Our Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

Changes in internal control over financial reporting

In the fourth quarter of fiscal 2022, the Company hired a part-time controller to provide our Chief Financial Officer with more time to perform oversight and supervisory functions. We also believe this new hire is the first step in addressing our material weaknesses relating to lack of segregation of duties and deficiencies in the staffing or our accounting department. We intend on hiring additional personnel for our accounting department in the next year. Other than as discussed above, there have been no changes in our internal control over financial reporting in the fourth quarter of 2022.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

Our executive officers are appointed by and serve at the discretion of our board of directors. The following order:table includes the names, ages and positions held by our executive officers and directors as of June 24, 2022:

NameAgeManagement and/or Director Positions
John Lai59Chief Executive Officer, President and Director
Robert J. Folkes60Chief Financial Officer
Randall A. Meyer59Chief Operating Officer
John F. Dolan58Vice President Business Development, General Counsel, and Secretary
Gregory Cash65Chairman
David Deming62Director
Joseph Jasper57Director
Scott Johnson57Director
James Martin83Director
Robert Rudelius66Director

28

John Lai, has served as a director and senior executive officer since March 2014, serving in various capacities that include serving as our Chief Financial Officer from May 2018 through December 2018 and serving as our Chief Executive Officer from March 2014 to May 2017 and June 2019 to present. From March 2012 to April 2016, Mr. Lai also was Chief Executive Officer and a director of Blue Earth Resources, Inc., a small public company which acquired and managed working interests in producing oil and gas leases in Louisiana. Mr. Lai has over thirty years of senior executive and operational management and financial experience while holding key executive positions with several public companies in various industries. In 1992, Mr. Lai founded, and until December 2012 was the principal owner and President of Genesis Capital Group, Inc., which provided significant consulting services to many public and private companies in powersports, technology and other industries, while advising its clients in corporate development, mergers and acquisitions, and private and public capital-raising through equity offerings. Mr. Lai’s role as a co-founder of the company and his many years of experience as a chief executive officer of many public or private companies are material factors regarding his qualifications to serve on our Board of Directors.

Robert J. Folkes, has served as our Chief Financial Officer since April 14, 2021. Prior to joining us, he served as the Chief Operating Officer from February 2015 until September, 2020 and as the Chief Financial Officer from 2005 until April 2016 of Tactile Systems Technology, Inc. (NASDAQ: TCMD), a manufacturer and developer of at-home therapy devices that treat chronic swelling conditions such as lymphedema and chronic venous insufficiency. Since September 2020 through the current date, Mr. Folkes was a financial consultant. Prior to joining TCMD in 2004, Mr. Folkes was the Chief Financial Officer for Advanced Respiratory, a medical device company, from 1997 until its sale in 2003. Prior to joining Advanced Respiratory, Mr. Folkes was an Audit Senior Manager for Ernst & Young LLP. He served as Ernst & Young’s Senior Manager of the Entrepreneurial Services Group, and was involved with numerous SEC registrations, mergers and acquisitions. Mr. Folkes is a Certified Public Accountant and earned a B.A. in Accounting from the University of Minnesota – Carlson School of Management.

Randall A. Meyer. Mr. Meyer has served as a director since April 2015, and served as our Chief Operating Officer from April 2015 to November 2017. From January 2009 to April 2015, Mr. Meyer served as Chief Operating Officer of Gel-Del Technologies, Inc. while being in charge of all operational and marketing activities of Gel-Del. Prior to joining Gel-Del, Mr. Meyer’s substantial medical device industry management experience included being Chief Operating Officer of Softscope Medical Technologies, Inc. and being Chief Executive Officer of Tactile Systems Technology, Inc. Mr. Meyer’s role as the senior operational officer of Gel-Del for many years and his long experience as an executive officer of several companies in the medical device industry are material factors regarding his qualifications to serve on our Board of Directors.

John F. Dolan. Mr. Dolan has served as a director since March 2014, and he served as our Chief Financial Officer from March 2014 to November 2017. Since March 2013, Mr. Dolan also has served as corporate and intellectual property counsel for KILO, Inc. and TerraCOH, Inc., both alternative energy companies. Mr. Dolan has also served as general counsel for Traust IP Finance, LLC since June, 2019. From June 2000 to July 2012, Mr. Dolan was a shareholder in the intellectual property group of the Minneapolis law firm of Fredrikson & Byron, where he specialized in securing and protecting domestic and foreign patent and other IP rights for various clients including biomaterials technology and products. During the past five years, Mr. Dolan also has provided consulting services to several early-stage companies on all aspects of IP asset protection as well as new technology and corporate development. His extensive career in the intellectual property field includes serving as a patent examiner with the U.S. Patent and Trademark Office. Mr. Dolan’s role as a cofounder of the Company and his extensive experience in intellectual property, mergers and acquisitions, private equity, corporate governance, and general corporate law are material factors which demonstrate his qualifications to serve on our Board of Directors.

Gregory Cash. Mr. Cash has served as a director of the Company since July 2019. He has more than 35 years senior management and/or key sales and marketing executive experience in the life sciences industry, including being Chief Executive Officer or Division President of publicly traded and privately held cardiovascular medical device companies. Since 2011, he has been the Chief Executive Officer and principal owner of Argent International LLC, Minneapolis, MN, a consulting firm he founded to provide management, marketing and financial consulting services to start-up and established companies in the life sciences industry. Prior to founding Argent, Mr. Cash served for over thirty years in senior executive management or marketing roles with leading medical device companies, including five years with Boston Scientific Corporation and over fourteen years with Medtronic, Incorporated. His many industry achievements also feature extensive and high-level overseas experience including being Chief Executive Officer or a senior marketing executive of both start-up and established international medical device companies in European countries including The United Kingdom, France and Italy, as well as serving for several years as the Marketing Manager in Asia for all Medtronic product lines. Mr. Cash’s many years of experience as an executive in the medical device industry are material factors regarding his qualification to serve on our Board of Directors.

29

David Deming. Mr. Deming has served as a director of the Company since September 2017. Mr. Deming has over 35 years of institutional investment management experience with pensions, endowments, family offices and high net worth investors. He is currently serving as the Chief Investment Officer of Onward for Business, a main street business brokerage firm, which he joined in January 2020. He served for over 19 years as the Director of Business Development at Arbor Capital Management, LLC from January 1997 until October 2016. Subsequent thereto, he served as the Director of Marketing and Investor Relations at BCCM Advisors, an alternative investment platform, from August 2018 to March 2020 and as the Director of Business Development, Chief Compliance Officer and Partner at Asymmetric Capital Management from October 2016 until August 2018. Prior thereto, he held positions with brokerage and trading firms, including, Merrill Lynch, Paine Webber and Leuthold Weeden Capital Management and was a floor trader at the Chicago Board of Trade. Mr. Deming’s extensive experience in the finance industry is a material factor which demonstrates his qualifications to serve on our Board of Directors.

Joseph Jasper. Mr. Jasper has served as a director of the Company since August 20, 2018. He is a CFA who since 2005 has been Chief Executive Officer of Vermillion Capital Management, an institutional investment firm. From 2002 to 2005, Mr. Jasper was Managing Director and Director of Fixed Income Strategy and Marketing for Piper Jaffray Company. Prior to 2002, he spent 20 years managing, structuring and selling fixed income and equity securities at several leading investment banking firms, including U.S. Bancorp Libra and UBS PaineWebber. Mr. Jasper also serves as Vice Chairman of the Board of Directors of MicroNet, Inc. and as a director of GroundCloud, Inc. both privately-held companies. He has previously served as a director or principal advisor to many operating and venture-stage companies across a broad range of industries. Mr. Jasper received an MBA degree from the University of St. Thomas, where he also has served as its Adjunct Professor of Finance. Mr. Jasper’s extensive financing and accounting expertise are material factors which demonstrate his qualifications to serve on our Board of Directors.

Scott Johnson. Mr. Johnson has served as a director of the Company since July 2019. He is a licensed professional engineer with over 30 years experience in the life sciences industry. He has been a leader in cross-functional engineering, risk management, design controls, production engineering, quality control, auditing and FDA compliance for numerous manufacturers. Since 2012, he has been the President and principal owner of Stratego, Inc., a life sciences consulting corporation he founded to provide client services for the remediation of significant challenges with the FDA. Significant engagements of Stratego include risk management and post-market surveillance services for defibrillator products at Philips Healthcare, risk management and quality audit services for combination products at Baxter and Hospira, a subsidiary of Pfizer, quality remediation management for implantable medical devices at St. Jude Medical, a product regulatory roadmap for Varuna Biomedical and engineering PMA submissions content at Zimmer Biomet –Biologics. Mr. Johnson’s lengthy past employment include five years of employment with SciMed Life Systems, four years systems engineering, testing and compliance liaison for PumpWorks, and Part 11 compliance project manager for automated production and test systems at Boston Scientific. His engineering projects for the production of medical devices include substantial domestic and foreign facility experience. Mr. Johnson’s many years of experience as an executive in the life science industries and expertise with medical product design and regulatory issues are material factors which demonstrate his qualifications to serve on our Board of Directors.

James Martin. Mr. Martin has served as a director of the Company since July 2019. He is a retired Certified Public Accountant (“CPA”) and attorney whose career included his responsibility as Partner in Charge of KPMG’s tax practice for its Newport Beach, California office. In that role he provided and oversaw the rendition of tax services for numerous clients in varied industries including those for which KPMG provided a certified audit. He retains his AICPA membership and holds Accounting and Law Degrees from the University of Washington and, on a Fellowship, received a Master of Laws Degree from New York University. Mr. Martin’s extensive accounting expertise is a material factor which demonstrate his qualifications to serve on our Board of Directors.

30

Robert Rudelius. Mr. Rudelius has served as a director of the Company since August 2018. Currently, he is the Chief Executive Officer and Managing Director of Noble Ventures, LLC, a company he founded in 2001 that provides advisory and consulting services to early and mid-stage companies in the information technology, communications, medical technology and social e-commerce industries. He is also the co-founder, President & CEO of MedicaMetrix, Inc., a company that is building a commercialization engine that will launch a stream of medical devices aimed at delivering transformative healthcare solutions for unmet medical needs. From April 1999 through May 2001, when it was acquired by StarNet L.P., Mr. Rudelius was the founder and CEO of Media DVX, Inc., a start-up business that provided a satellite-based, IP-multicasting alternative to transmitting television commercials via analog videotapes to television stations, networks and cable television operators throughout North America. From April 1998 to April 1999, Mr. Rudelius was the President and Chief Operating Officer of Control Data Systems, Inc., during which time Mr. Rudelius reorganized and re-positioned the software company as a professional technology services company, resulting in the successful sale of the company to British Telecom. From October 1995 through April 1998, Mr. Rudelius was the founding Managing Partner of AT&T Solutions, Inc., a subsidiary of AT&T Inc. (NYSE: T) and headed the Media, Entertainment & Communications industry practice. From January 1990 through September 1995, Mr. Rudelius was a partner in McKinsey & Company’s information, technology and systems practice, during which time he headed the practice in Japan and the United Kingdom. Mr. Rudelius began his career at Arthur Andersen & Co. where he was a leader in the firm’s financial accounting systems consulting practice. Mr. Rudelius served as a member of the Axogen, Inc. (NASDAQ: AXGN) Board of Directors for ten years from September 2010 through September 30, 2020, where he served on the audit committee and as a member of the compensation committee. Mr. Rudelius has an M.B.A. from the Kellogg School of Management at Northwestern University and a B.S. in mathematics and economics from Gustavus Adolphus College in St. Peter, Minnesota. Mr. Rudelius’ qualifications to serve on our Board of Directors include his extensive executive leadership and financial experience, particularly in connection with rapid growth technology businesses, and his experience as a director of publicly traded companies.

There are no family relationships between any of our executive officers and directors.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. To the Company’s knowledge, based solely on a review of the Form 3’s, 4’s and 5’s electronically filed with the SEC during fiscal 2022, all such filing requirements applicable to the Company’s directors, executive officers and greater than 10% beneficial owners were complied with, except Mr. Folkes filed his Form 3 late due to administrative issues with securing the filing codes.

Committees of the Board of Directors

We have an Audit Committee, Compensation Committee, and Nominating Committee. Our Audit Committee consists of three independent directors who are David Deming, James Martin and Joseph Jasper, with Mr. Martin considered as an “audit committee financial expert” within the meaning of Regulation S-K of the SEC. Our Compensation Committee consists of three independent directors who are David Deming, Scott Johnson and Robert Rudelius. Our Nominating Committee consists of three independent directors who are Greg Cash, Joseph Jasper and Robert Rudelius.

Code of Ethics

We have adopted a Code of Ethics which applies to our board of directors, executive officers and other employees. Our Code of Ethics outlines the broad principles of ethical business conduct we have adopted, including subject areas such as confidentiality, conflicts of interest, corporate opportunities, public disclosure reporting, protection of company assets, and compliance with applicable laws. A copy of our Code of Ethics is available without charge to any person by written request to us at our principal offices at 5251 Edina Industrial Blvd., Edina, MN 55439.

Director Compensation

Directors who are not employees of the Company are paid director’s fees, in cash, stock, or a combination thereof. In fiscal 2022, we did not pay any cash compensation to our non-employee directors. All compensation was paid with stock and RSU’s, which ½ of the compensation paid with stock on October 1, 2021, the date of grant, and the remaining RSU’s vesting six months from the date of grant. In fiscal 2022, our non-employee directors received the following compensation for their services: each non-employee director received an annual retainer of $40,000; the Chairman received an additional $10,000; each non-employee director serving as a chair of a standing committee received an additional $5,000 and each non-employee director who served on two or more committee received an additional $2,500 per year.

31

The following table provides information on compensation paid to our non-employee directors for their services as members of our board of directors during our fiscal year ended March 31, 2022:

Name of Director 

Fees paid

in cash
($)

  

Stock awards

($)(1)

  

Warrant

awards

($)(2)

  

All other

compensation

($)

  

Total

($)

 
Gregory Cash $  $51,999  $  $130,000(3) $181,999 
David Deming $  $39,901  $  $81,000(3) $120,901 
Joseph Jasper $  $22,499  $  $  $22,499 
Scott M. Johnson $  $38,899  $  $  $38,899 
James Martin $  $22,499  $  $  $22,499 
Dr. David Masters(4) $  $19,999  $  $77,218(3) $97,217 
Robert Rudelius $  $22,499  $  $  $22,499 

(1)The value in this column reflects the aggregate grant date fair value of the stock award as computed in accordance with ASC Topic 718. Information regarding the valuation assumptions used in the calculations is included in “Note 15 – Stockholder’s Equity” to our audited consolidated financial statements included in our 2022 Form 10-K.
(2)

The value in this column reflects the aggregate grant date fair value of the warrants as computed in accordance with ASC Topic 718. Information regarding the valuation assumptions used in the calculations is included in “Note 15 – Stockholder’s Equity” to our audited consolidated financial statements included in our 2021 Form 10-K. As of March 31, 2022, the aggregate number of outstanding warrants held by Mr. Cash was 27,099; for Mr. Deming was 57,354; for Mr. Jasper was 48,225; for Mr. Johnson was 25,376, for Mr. Martin was 39,800 and for Mr. Rudelius was 44,135.

(3)Represents consulting fees paid to these directors.
(4)Mr. Masters was no longer a member of the Board effective as of March 5, 2022.

ITEM 11. EXECUTIVE COMPENSATION

The Company qualifies as a “smaller reporting company” under rules adopted by the SEC. Accordingly, the Company has provided scaled executive compensation disclosure that satisfies the requirements applicable to the Company in its status as a smaller reporting company. Under the scaled disclosure obligations, the Company is not required to provide, among other things, a compensation discussion and analysis or a compensation committee report, and certain other tabular and narrative disclosures relating to executive compensation.

Our named executive officers (“Named Executive Officers” or “NEO’s”) for fiscal year ended March 31, 2022 (“fiscal 2022”) were as follows:

John Lai, our Chief Executive Officer and President;
Robert Folkes, our Chief Financial Officer; and
Randall Meyer, our Chief Operating Officer.

Certain information regarding the compensation of our Named Executive Officer for our fiscal years ended March 31, 2022 (“fiscal 2022”) and March 31, 2021 (“fiscal 2021”) is provided on the following pages.

32

SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation paid to or earned by our Named Executive Officers for fiscal 2022 and 2021.

 

Name and

Principal Position

 Year 

Salary

($)

  

Bonus

($)(1)

  

Stock Awards

($)(2)

  Non-Equity Incentive Plan Compensation ($)  All Other Compensation ($)(3)  

Total

($)

 

 

John Lai
 

2022

  

202,083

   

20,000

   

481,500

     $6,160  

$

709,743

 
CEO and President 2021  91,668      148,602         $240,270 
                           

Robert J. Folkes

Chief Financial Officer(4)

 2022  211,250   100,000   173,340     $3,348  $487,938 
                           

Randall Meyer

Chief Operating Officer(5)

 2022  128,333   30,000   208,650        $366,983 

(1)Amounts reported represents discretionary bonus payments on amounts earned in fiscal 2022, which will be paid after the Company files its Annual Report on 10-K for fiscal 2022 with the SEC.
(2)Amounts shown represents grant date fair value computed in accordance with ASC Topic 718, with respect to restricted stock awards (based on the closing price of our common stock on the grant date) and stock option awards.Information regarding the valuation assumptions used in the calculations are included in “Note 15 – Stockholder’s Equity” of our audited consolidated financial statements included in our 2022 Form 10-K.
(3)Represents the payment of health insurance premiums by the Company for Mr. Lai and Mr. Folkes.
(4)Mr. Folkes was appointed to serve as the Company’s Chief Financial Officer on April 14, 2021.
(5)Mr. Meyer was appointed to serve as the Company’s Chief Operating Officer on September 10, 2021.

Narrative Disclosure to the Summary Compensation table

The following is a discussion of certain terms that we believe are necessary to understand the information disclosed in the Summary Compensation Table.

Base Salaries

The Company’s Named Executive Officers receive a base salary for services rendered to the Company, which is set forth in their respective employment agreements. The base salary payable to each Named Executive Officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role, and responsibilities. From April 1, 2020, through September 8, 2021, Mr. Lai received a base salary of $100,000 which was increased to $275,000, effective as of September 1, 2022. Mr. Folkes joined the Company on April 14, 2021, and his initial salary was $190,000 per year, which was increased to $240,000 per year effective as of September 1, 2022. Mr. Meyer joined the Company, as its Chief Operating Officer, on September 1, 2021 and his base salary is $220,000 per year.

Bonuses

In November 2021, the Company established a bonus plan for its executives and employees, with a performance target based on total revenues. If the Company achieved the performance target, each employee would receive a bonus equal to a certain percentage of his or her salary. The Company realized that the performance target would not be achieved because the Company’s ability to sell its lead product, Spryng™, was limited because it did not have canine and equine studies which distributors and other vendors needed to review before purchasing the Company’s products. The Compensation Committee determined that the performance target was unrealistic and not an appropriate target for the Company at this time. The Compensation Committee believed that the executives and other employees had done exceptional work in transitioning the Company from being a start-up company to a revenue-producing company. As such, the Compensation Committee awarded discretionary bonuses to the executives and other employees. The Compensation Committee awarded discretionary bonuses to Mr. Lai, Mr. Folkes, and Mr. Meyers for their services in fiscal 2022 in the amounts of $20,000, $100,000, and $30,000, respectively. The Company will not make these bonus payments to the Named Executive Officers until its files its 10-K for its fiscal year ended March 31, 2022.

33

Equity Compensation

Our Compensation Committee administers our 2020 Equity Incentive Plan (the “Equity Incentive Plan”) and approves the amount of, and terms applicable to, grants of stock options, restricted stock units, and other types of equity awards to employees, including the Named Executive Officers. The Equity Incentive Plan permits the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (“RSU’s), and stock bonus awards (all such types of awards, collectively, “equity awards”), although incentive stock options may only be granted to employees.

On April 14, 2021, the Company granted 34,000 RSU’s to Mr. Folkes pursuant to the terms of his employment agreement. These RSU’s vest over a three year period, with 10,000 RSU’s vesting on January 1, 2022, 10,000 vesting on January 1, 2023, and 14,000 vesting on January 1, 2024. Furthermore, these RSU grants are subject to Mr. Folkes remaining employed at the Company.

On September 9, 2021, the Compensation Committee granted RSU’s to our Named Executive Officers for their exceptional performance in assisting the Company in closing its public offering in which it raised $11.2 million in gross proceeds and listed its common stock and warrants on the NASDAQ Capital Market. The Named Executive Officers received the following RSU grants (“November 2021 RSU Grants”): Mr. Lai – 150,000 RSU’s, Mr. Folkes – 54,000 RSU’s, and Mr. Meyer – 65,000 RSU’s. These RSU’s vest in three installments, with 1/3 vesting on March 31, 2022, 1/3 vesting on March 31, 2023 and 1/3 vesting on March 31, 2024, based upon continued employment with the Company.

For the grant date fair values of the options and RSU’s, please see the Summary Compensation Table above.

Perquisites

We offer health insurance to our Named Executive Officers on the same basis that these benefits are offered to our other eligible employees. We offer a 401(k) plan to all eligible employees. The Company also provides other benefits to its Named Executive Officers on the same basis as provided to all of its employees, including vacation and paid holidays.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2022

The following table sets forth for each Named Executive Officer, information regarding outstanding equity awards as of March 31, 2022. The option awards and per share amounts for all periods reflect our 1-for-4 reverse stock split, which was effective December 29, 2020. Market value is based on the closing stock price of $2.04 on March 31, 2022.

  Option Awards  Stock Awards 
Name 

Number of

securities

underlying

unexercised

options

exercisable

(#)

  

Number of

securities

underlying

unexercised

options

unexercisable

(#)

  

Option

exercise

price

($)

  

Option

expiration

date

  

Number of

shares or

units

of stock

that

have not

vested

(#)

  

Market

value of

shares or

units of

stock that

have not

vested

($)(1)

 
                   
John Lai  75,000(1)  60,000(1)  2.24   10/31/2024   100,000(2) $204,000 
   19,847      1.95   12/31/2024       
   24,253      1.27   3/31/2025       
   7,441      1.60   6/30/2025       
                         
Robert J. Folkes              60,000(3) $122,400 
                   
                         
Randall Meyer  10,547      1.20   1/15/2029   43,333(4) $88,399 
   1,213      1.95   12/31/2024       
   1,104      1.27   3/31/2025       
   559      1.60   6/30/2025       
                   

34

(1)Mr. Lai was granted a warrant to purchase up to 135,000 shares of our common stock at an exercise price of $2.24 per share pursuant to his employment agreement. The warrants have a five-year term and 90,000 warrants vest quarterly over a three-year term and 45,000 warrants vest based on certain performance conditions; 22,500 of which have expired and 22,500 of which vest if the Company completes a successful listing on the Exchange and sustains a stock price of at least $16.00 for the thirty consecutive days of trading.
(2)Comprised of 100,000 unvested shares underlying an RSU award granted on September 9, 2021, which will vest in equal installments on March 31, 2023, and March 31, 2024, subject to the executive’s continued employment with the Company. The RSU’s will vest automatically if there is a Change of Control (as defined in our Equity Incentive Plan).
(3)Comprised of 24,000 unvested shares underlying an RSU award granted on April 14, 2021, with 10,000 shares vesting on January 1, 2023, and 14,000 shares vesting on January 1, 2024, and 36,000 unvested shares underlying an RSU award granted on September 9, 2021, which will vest in equal installments on March 31, 2023, and March 31, 2024, with both RSU awards subject to the executive’s continued employment with the Company. The RSU’s will vest automatically if there is a change of control (as defined in our Equity Incentive Plan.)
(4)Comprised of 43,333 unvested shares underlying an RSU award granted on September 9, 2021, which will vest in equal installments on March 31, 2023, and March 31, 2024, subject to the executive’s continued employment with the Company. The RSU’s will vest automatically if there is a Change of Control ( as defined in our Equity Incentive Plan).

Executive Employment Agreements

Prior Employment Agreements

The Company entered into an employment agreement (“2019 Agreement”) with John Lai on October 1, 2019, to serve as the Company’s Chief Executive Officer for a term of 3 years. Mr. Lai’s annual base salary was a minimum of $100,000 or such higher amount, as determined by the Board. Mr. Lai could be terminated for Cause or without cause upon ten (10) days advance written notice. Mr. Lai was eligible to receive discretionary bonuses, as determined by the Board, and eligible for all employee benefits provided to executives of similar tenure. His 2019 Agreement contained customary confidentiality and non-competition provisions which survived for a period of one year after his employment with the Company was terminated. As discussed below, Mr. Lai’s 2019 Agreement was replaced with a new employment agreement on November 10, 2021.

The Company entered into an employment agreement (“April 2021 Agreement”) with Robert Folkes on April 14, 2021, to serve as the Company’s Chief Financial Officer. The employment agreement was for a term of approximately two years and nine months and terminated on January 31, 2024. Mr. Folkes’ annual base salary was $190,000 per year and he was eligible to receive a bonus of up to 50% of his base salary based upon the achievement of performance goals developed by the Compensation Committee. He could be terminated for cause or without cause upon ten (10) days advance written notice. His employment agreement contained customary confidentiality and non-competition provisions which survived for a period of one year after his employment with the Company was terminated. As discussed below, Mr. Folkes April 2021 Agreement was replaced with a new employment agreement on November 10, 2021

35

Current Employment Agreements

Effective as of November 10, 2021, the Company entered into new employment agreements with Mr. Lai, which replaced his 2019 Agreement, and Mr. Folkes which replaced his April 2021 Agreement. In addition, the Company entered into a new employment agreement with Randall Meyer to serve as the Company’s Chief Operating Officer effective as of November 10, 2021. With the exception of salary and severance payments, the employment agreements are substantially similar.

All of these employment agreements expire on September 30, 2024. Messrs. Lai, Folkes, and Meyer each have annual base salaries of $275,000, $240,000 and $220,000, respectively, subject to potential increase or decrease from time to time as determined by the Compensation Committee of the Board of Directors. The employment agreements also provide for a target annual bonus as determined by the Compensation Committee. In addition to an annual salary and bonus, the employment agreements provide that the executive officers are entitled to participate in any equity and/or long-term compensation programs established by the Company for senior executive officers and all of the Company’s retirement, group life, health, and disability insurance plans and any other employee benefit plans.

The employment agreements provide for termination of the executive officers at any time by the Company for Cause (as defined in the employment agreements) or without Cause. If an executive officer is terminated for Cause, he will receive his salary through the termination date and reimbursement of any unpaid expenses and accrued but unused vacation/paid time off (“Accrued Obligations”). If the executive officer’s employment is terminated by the Company without Cause, subject to the execution of a release of any and all claims or potential claims against the Company, the executive officer will be entitled to receive a severance payment, his accrued but unpaid bonus, if any, and any Accrued Obligations owed through the termination date, in a lump sum payment within 10 days after the termination date. Mr. Folkes will receive a severance payment equal to 6 months of his base salary. Mr. Lai and Mr. Meyer will each receive a severance payment equal to 1 month’s base salary. If the executive’s employment is terminated as a result of his death or disability, he or his estate will receive his compensation through the date of termination, his accrued and unpaid bonus, if any, and Accrued Obligations through the date of termination.

Each executive officer is required to agree to non-competition, non-solicitation, and confidentiality obligations. The confidentiality covenants are perpetual, while the non-compete and non-solicitation covenants apply during the term of the new employment agreements and for 12 months following the executive officer’s termination.

Potential Payments on Change in Control or Termination without Cause under November RSU Grants

The employment agreements for Mr. Lai, Mr. Folkes, and Mr. Meyer do not contain any provisions providing for the acceleration of any salary or bonus payments if there is a change in control. The RSU Grants awarded to Mr. Lai, Mr. Folkes, and Mr. Meyer on September 9, 2021, and to Mr. Folkes on April 14, 2021 pursuant to our Equity Incentive Plan contain provisions that provide for accelerated vesting of the RSU’s if there is a change of control of the Company (as such term is defined in the Equity Incentive Plan). In addition, if Mr. Lai, Mr. Folkes, or Mr. Meyer is terminated without cause, any RSU’s that would have vested on or before the first anniversary of such termination had the executive remained employed shall be accelerated and deemed to have vested as of the termination date. Any time-based Restricted Shares that have not vested as described above may not be transferred and will be forfeited on the date the Named Executive Officer’s employment with the Company terminates.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of June 1, 2022 (the “Record Date”), we had 9,988,361 shares of our common stock issued and outstanding. The following table sets forth, as of the Record Date, information concerning the beneficial ownership of shares of our common stock held by our directors, our named executive officers, our directors and executive officers as a group, and each person known by us to be a beneficial owner of more than 5% of our outstanding common stock. Unless otherwise indicated, the business address of each of our directors, executive officers and beneficial owners of more than 5% of our outstanding common stock is c/o PetVivo Holdings, Inc., 5251 Edina Industrial Blvd., Edina, MN 55439. Each person has sole voting and investment power with respect to the shares of our common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

36

As used in this section, the term “beneficial ownership” with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which provide that shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or become exercisable within 60 days of the date of the table are deemed beneficially owned by their holders. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.

Name of Officers, Directors, and Beneficial OwnersAmount and Nature of Beneficial OwnerPercent of
Class

Named Executive Officers and Directors

John Lai

1,092,307 shares (1)10.94%
Robert J. Folkes 41,000 shares(2)*
Randall A. Meyer581,767 shares(3)5.78%
Scott Johnson200,941 shares(4)2.01%
Gregory Cash62,149 shares(5)*
David Deming87,244 shares(6)*
James Martin142,318 shares(7)1.42%
Joseph Jasper65,767 shares(8)*
Robert Rudelius189,468 shares(9)1.90%
All directors and named executive (officers as a group 9 persons)
2,458,185 shares(10)24.61%
5% Stockholders
John F. Dolan581,767 shares(11)5.82%
Stanley Cruden757,372 shares(12)7.58%
David B. Masters1,155,782 shares(13)8.39%

* Less than 1%.

 

(1)Amount consists of 957,992 shares owned directly by Mr. Lai, and warrants to purchase 126,815 shares that are vested or will vest within 60 days of the Record Date.
(2)Amount consists of 41,000 shares directly owned by Mr. Folkes.
(3)Amount consists of 563,568 shares that are owned directly by Mr. Meyer and includes warrants to purchase 13,423 shares that are vested or will vest within 60 days of the Record Date.

37

 

(4)Amount consists of 175,565 shares held by Mr. Johnson directly and includes warrants to purchase 25,376 shares that are vested or will vest within 60 days of the Record Date.
(5)Amount consists of 35,050 shares held by Mr. Cash directly and warrants to purchase 27,099 shares that are vested or will vest within 60 days of the Record Date.
(6)Amount consists of 29,890 shares held by Mr. Deming directly or with his spouse and warrants to purchase 57,354 shares that are vested or will vest within 60 days of the Record Date.
(7)Amount consists of 102,518 shares held by Mr. Martin directly, his two IRA accounts, by Martinmoore Holdings, LLP, a company controlled by Mr. Martin who exercises sole voting and dispositive power over the shares, warrants to purchase 39,800 shares that are vested or will vest within 60 days of the Record Date.
(8)Amount includes 17,542 shares held directly by Mr. Jasper and warrants to purchase 48,225 shares that are vested or will vest within 60 days of the Record Date.
(9)Amount includes 145,333 shares held by Mr. Rudelius directly, in his IRA, and by Noble Ventures, LLC, a company controlled by Mr. Rudelius and warrants to purchase 44,135 shares that are vested or will vest within 60 days of the Record Date.
(10)Amount includes warrants owned by all of our named executive officers and directors, as a group, to purchase an aggregate of 389,727 shares that are vested or will vest within 60 days of the Record Date.
(11)Amount consists of 497,905 shares held directly by Mr. Dolan and warrants to purchase 83,862 shares that are vested or will vest within 60 days of the Record Date.
(12)As reported in Mr. Cruden’s Amendment No. 8 to his Schedule 13G filed with the SEC on May 20, 2022.
(13)

Amount consists of 1,114,082 shares held directly by Dr. Masters and warrants to purchase 41,700 shares that are vested or will vest within 60 days of the Record Date. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The following is a summary of the transactions since April 1, 2020 between the Company and its executive officers, directors, nominees for directors, principal shareholders and related parties involves amounts in excess of $120,000 or that the Company has chosen to voluntarily disclose.

David Masters

Note and Settlement Agreement

Effective September 1, 2020, the Company entered into two debt settlement agreements with David B. Masters, a director of the Company, pursuant to (i) an Amendment to Promissory Note (“Amendment”) which amended certain outstanding promissory notes dated September 5, 2013, February 11, 2014 and August 14, 2014 (collectively, the “Outstanding Notes”) issued by Gel-Del, the Company’s wholly-owned subsidiary, with an aggregate amount owed of $65,700 and (ii) a Promissory Note (“Note”) having a principal amount of $195,000, which represents accrued salary owed to Dr. Masters. The Amendment extends, for up to an additional two years and under the same terms as originally entered into, the Outstanding Notes. The Company also entered into a Settlement and General Release (“Settlement Agreement”) with Dr. Masters that provides for the settlement and general release of any and all past claims, demands, damages, judgements, causes of action and liabilities that Dr. Masters may have had, may currently have or may acquire against the Company and its subsidiaries, including, but not limited to any claims related to (a) the ownership, operation, business, or financial condition of Company or its business, (b) any promissory note, loan, contract, agreement or other arrangement, whether verbal or written, including all unpaid interest charges, late fees, penalties or any other charges thereon, entered into or established between Dr. Masters and his affiliates and the Company on or prior to the September 1, 2020 or (c) the employment of Dr. Masters by the Company (except for claims directly relating to the breach of the Amendment, the Note or the Consulting Agreement).

Effective October 15, 2020 we entered into a note conversion agreement with David B. Masters in which he agreed to convert his Promissory Note having an outstanding principal amount of $192,500 plus a conversion fee of $3,500 into units (the “Units”) consisting of one share of the Company’s common stock and one warrant to purchase one share of Common Stock, as part of the Company’s public offering of Units.

At the closing of the Company’s public offering on August 13, 2021, the Note was converted into 43,556 Units, which consisted of 43,556 shares of the Company’s common stock and warrant to purchase 43,556 shares of our common stock. The warrants have an exercise price of $5.625 per share and expire on August 13, 2026. The Company also repaid the outstanding balance under the Amendment, which was $25,954 as of the closing date of the public offering.

38

As of May 11, 2022, the Company believed that it had satisfied all of its obligations to Dr. Masters in full. However, the Company received correspondence from an attorney representing Dr. David Masters, alleging, among other items, that the Company breached the Settlement Agreement and Consulting Agreement with him and owes him additional monies pursuant to these agreements. The Company believes that Dr. Master’s claims are without merit and has retained legal counsel to respond to these allegations. The Company does not believe that this matter will have a material impact on its financial position or results of operations.

Warrants

On September 4, 2020, the Company granted warrants for 30,000 shares of its common stock valued at $96,000 to David Masters for production and manufacturing consulting services, at a price of $1.40 per share, vesting in equal monthly amounts over the four-month period ending December 31, 2020 for a term of 5 years from the date of the grant.

John Lai

On December 16, 2019, PetVivo, Holdings, Inc.John Lai, Wesley Hayne and Edward Wink entered into an escrow agreement (“Escrow Agreement”) which replaced the prior escrow agreement dated June 7, 2017 between the parties. Pursuant to the Escrow Agreement, the escrow agent held 254,018 shares of the Company’s common stock registered in the name of Mr. Lai in escrow, which shares would be released when (i) PetVivo obtains equity financing in an amount of at least $5 million and (ii) PetVivo’s listed on Nasdaq, the New York Stock Exchange or an equivalent securities exchange. This condition was met on August 13, 2021 and the shares were released to Mr. Lai.

Consolidated Financial Statements

In February of 2020, the Company issued John Lai 15,349 shares of common stock pursuant to his cashless conversion of an outstanding warrant for 42,188 shares of common stock with a strike price of $1.48 per share.

On October 30, 2020, Mr. Lai converted 42,188 warrants into common stock with an exercise and conversion price of $1.33 per share into 32,347 shares of our common stock on a cashless basis pursuant to the warrant’s cashless conversion feature. In January 2021, Mr. Lai converted 42,188 warrants into common stock with an exercise and conversion price of $1.33 per share into 38,516 shares of our common stock on a cashless basis pursuant to the warrant’s cashless conversion feature.

In May 2021, Mr. Lai converted 42,188 warrants into common stock with an exercise and conversion price of $1.33 per share into 36,915 shares of our common stock on a cashless basis pursuant to the warrants cashless conversion feature.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table presents the fees for professional audit services rendered by Assurance for the audit of the Company’s annual financial statements for the fiscal years ended March 31, 20172022 and 20162021, and fees for other services rendered by Assurance during those periods:

Fee Category Fiscal 2022  Fiscal 2021 
Audit Fees $73,605  $45,130 
Audit-Related Fees  0   0 
Tax Fees  0   0 
All Other Fees  0   0 
Total Fees $73,605  $45,130 

Audit Fees. Audit fees consist of fees related to professional services rendered in connection with the audit of our annual audited financial statements and review of our quarterly unaudited financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings during these time periods.

Audit-Related Fees. Audit-related fees, which were not incurred, would consist of fees billed for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed under “Audit Fees.”

Tax Fees. Tax fees, which were not incurred, would include fees for professional services for tax compliance, tax advice, and tax planning work.

 

TABLE OF CONTENTSAll Other Fees. All Other fees, which were not incurred, would include fees for products and services other than the services reported above.

Pre-Approval Policies and Procedures

Prior to engaging our accountants to perform a particular service, our Board of Directors obtains an estimate for the service to be performed. All of the services described above were approved by the Board of Directors in accordance with its procedures.

39

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)Financial Statements.

Included in Item 8

(b)Exhibits required by Item 601.

3.1ReportsArticles of Incorporation, as amended*
3.2Bylaws (incorporated by reference to Exhibit 3.3 in the Company’s Registration Statement on Form S-1 (File No. 333-173569) filed with the SEC on April 18, 2011).
4.1Description of Common Stock (incorporated by reference to Exhibit 4 in the Company’s Form 10-K for fiscal 2021 filed with the SEC on June 29, 2021).
10.1Employment Agreement effective as of November 1, 2021 between PetVivo Holdings, Inc. and John Lai (incorporated by reference to Exhibit 10.1 in the Company’s Form 8-K filed with the SEC on November 10, 2021).
10.2Employment Agreement effective as of November 1, 2021 between PetVivo Holdings, Inc. and Robert Folkes (incorporated by reference to Exhibit 10.2 in the Company’s Form 8-K filed with the SEC on November 10, 2021).
10.3Employment Agreement effective as of November 1, 2021 between PetVivo Holdings, Inc. and Randall Meyer (incorporated by reference to Exhibit 10.3 in the Company’s Form 8-K filed with the SEC on November 10, 2021).
10.4PetVivo, Inc. 2020 Equity Compensation Plan (incorporated by reference to Appendix B in the Company’s Definitive Information Statement filed with the SEC on September 1, 2020).+
10.5Form of Stock Option Agreement for use with the PetVivo Holdings, Inc. 2020 Equity Incentive Plan*+
10.6Form of Restricted Stock Unit Award Agreement for use with the PetVivo Holdings, Inc. 2020 Equity Incentive Plan*+
10.7Employment Agreement dated as of April 14, 2021 between PetVivo Holdings, Inc. and Robert J. Folkes (incorporated by reference to 10.1 in the Company’s Form 8-K filed with the SEC on April 15, 2021).+
10.8Settlement and General Release Agreement effective September 1, 2020 between PetVivo Holdings, Inc. and its wholly-owned subsidiaries and David B. Masters (incorporated by reference to Exhibit 10.3 in the Company’s Form 8-K filed with the SEC on September 17, 2020).
10.9Consulting Agreement effective September 1, 2020 between PetVivo Holdings, Inc. and David B. Masters (incorporated by reference to Exhibit 10.4 in the Company’s Form 8-K filed with the SEC on September 17, 2020). +

40

10.10Note Conversion Agreement effective as of October 15, 2020 by and between PetVivo Holdings, Inc. and David B. Masters (incorporated by reference to Exhibit 10.1 in the Company’s Form 8-K filed with the SEC on October 26, 2020).
10.11Employment Agreement dated October 1, 2019 between PetVivo Holdings, Inc. and John Lai (incorporated by reference to Exhibit 10.25 in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 filed with the SEC on February 7, 2020.
10.12Escrow Agreement effective as of December 16, 2019 by and between PetVivo Holdings, Inc., John Dolan and John Lai (incorporated by reference to Exhibit 10.13 in the Company’s reference to Exhibit 10.3 in the Company’s Form S-1/A (File No. 333-24942) filed with the SEC on December 31, 2020).+
21.1List of Subsidiaries*
23.1Consent of Assurance Dimensions, Inc.*
31.1Certification of Principal Executive Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
31.2Certification of Principal Financial Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
32.1Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith

+ Indicates compensatory plan

ITEM 16. FORM 10-K SUMMARY

Not Applicable.

41

ITEM 17.

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PetVivo Holdings, Inc.,

a Nevada corporation

June 24, 2022By:/s/ John Lai
John Lai
Its:

CEO, President and Director

(Principal Executive Officer)

June 24, 2022By:/s/ Robert J. Folkes
Robert J. Folkes
Its:

Chief Financial Officer

(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ John LaiJune 24, 2022
John Lai
CEO, President and Director
(Principal Executive Officer)
/s/ Robert J. FolkesJune 24, 2022
Robert J. Folkes
Chief Financial Officer
/s/ Robert RudeliusJune 24, 2022
Robert Rudelius
Director

/s/ David DemingJune 24, 2022
David Deming
Director
/s/ Joseph JasperJune 24, 2022
Joseph Jasper
Director
/s/ Scott JohnsonJune 24, 2022
Scott Johnson
Director
/s/ Gregory CashJune 24, 2022
Gregory Cash
Director
/s/ James MartinJune 24, 2022
James Martin
Director

42

PETVIVO HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements for the Years Ended March 31, 2022 and 2021
Report of Independent Registered Public Accounting Firm PCAOB ID: 5036F-2
Consolidated Balance Sheets – March 31, 2022 and 2021F-3
Consolidated Statements of Operationsfor the Years Ended March 31, 2022 and Comprehensive Loss2021F-4
Consolidated Statements of Stockholders'Changes in Stockholders’ Equity [Deficit](Deficit)F-5
Consolidated Statements of Cash Flows for the Years Ended March 31, 2022 and 2021F-6
Notes to Consolidated Financial StatementsF-7

F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors and

Stockholders of Petvivo Holdings, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Petvivo Holdings, Inc. (the Company) as of March 31, 20172022 and 2016,2021, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years then ended. Petvivo Holdings, Inc.’s management is responsiblein the period ended March 31, 2022 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph- Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 14 to the consolidated financial statements, the Company has suffered recurring losses for the year ended March 31, 2022. For the year ended March 31, 2022, the Company had a net loss of $5,014,995 and net cash used in operating activities of $4,174,957; and as of March 31, 2022 an accumulated deficit of $63,126,421. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 14. The consolidated financial statements.statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. The companyCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and si gnificantsignificant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the financial positionstatements and (2) involved our especially challenging, subjective, or complex judgments. The communication of Petvivo Holdings, Inc. as of March 31, 2017 and 2016, andcritical audit matters does not alter in any way our opinion on the results of its operations and its cash flows for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financials have been prepared assuming Petvivo Holdings, Inc. will continuefinancial statements, taken as a going concern. As of March 31, 2017, Petvivo Holdings, Inc. had accumulated losses of approximately $45,410,000whole, and a working capital deficit of approximately $1,043,000. Thesewe are not, by communicating the critical audit matters raise substantial doubt aboutbelow, providing separate opinions on the Petvivo Holdings, Inc.’s abilitycritical audit matters or on the accounts or disclosures to continue as a going concern. These factors, and Petvivo Holdings, Inc.’s plans are discussed in Note 5.which they relate.

We did not identify any critical audit matters that need to be communicated.

Soles, Heyn & Company, LLP

West Palm Beach, Florida

December 13, 2017

/s/ Assurance Dimensions
We have served as the Company’s auditor since 2019.

Margate, Florida

June 24, 2022

F-2

 

PETVIVO HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

  March 31, 2022  March 31, 2021 
Current Assets        
Cash and cash equivalents $6,106,827  $23,578 
Accounts receivable  2,596   - 
Inventory, net  98,313   - 
Prepaid expenses and other assets  547,664   123,575 
Total Current Assets  6,755,400   147,153 
         
Property and Equipment, net  311,549   214,038 
         
Other Assets:        
Deferred offering costs  -   280,163 
Operating lease right-of-use asset  299,101   157,760 
Patents and trademarks, net  48,452   27,932 
Security deposits  12,830   8,201 
Total Other Assets  360,383   474,056 
Total Assets $7,427,332  $835,247 
         
Liabilities and Stockholders’ Equity (Deficit)        
Current Liabilities        
Accounts payable $323,384  $408,873 
Accrued expenses  784,375   554,012 
Convertible notes and accrued interest  -   235,671 
Accrued expenses – related parties  -   36,808 
Operating lease liability – current portion  59,178   26,582 
PPP Loan and accrued interest  -   39,020 
Notes payable and accrued interest - directors  -   20,000 
Notes payable and accrued interest – related party  -   44,554 
Note payable and accrued interest (current portion)  6,549   39,528 
Total Current Liabilities  1,173,486   1,405,048 
Other Liabilities        
Note payable and accrued interest (net of current portion)  27,201   - 
Operating lease liability (net of current portion)  239,923   131,178 
Share-settled debt obligation – related party, net of debt discount  -   196,000 
Total Other Liabilities  267,124   327,178 
Total Liabilities  1,440,610   1,732,226 
Commitments and Contingencies (see Note 13)        
Stockholders’ Equity (Deficit):        
Preferred stock, par value $0.001, 20,000,000 shares authorized, 0 and 0 shares issued and outstanding at March 31, 2022 and March 31, 2021  -   - 
Common stock, par value $0.001, 250,000,000 shares authorized, 9,988,361 and 6,799,113 shares issued and outstanding at March 31, 2022 and March 31, 2021, respectively  9,988   6,799 
Additional Paid-In Capital  69,103,155   57,207,648 
Accumulated Deficit  (63,126,421)  (58,111,426)
Total Stockholders’ Equity (Deficit)  5,986,722   (896,979)
Total Liabilities and Stockholders’ Equity (Deficit) $7,427,332  $835,247 

  March 31, 2017  March 31, 2016 
Assets:        
Current Assets        
Cash and cash equivalents $25,434  $258 
Accounts receivable  163   - 
Employee advance  -   15,900 
Prepaids  8,590   19,121 
Total Current Assets  34,187   35,279 
         
Property and Equipment:        
Property & equipment  103,503   103,504 
Less: accumulated depreciation  (103,054)  (102,694)
Total Fixed Assets  449   810 
         
Other Assets:        
Goodwill  -   13,407,693 
Trademark and patents-net  1,862,301   3,245,662 
Total Other Assets  1,862,301   16,653,355 
Total Assets $1,896,937  $16,689,444 
         
Liabilities and Stockholders' Equity (Deficit):        
         
Current Liabilities        
Accounts payable & accrued expenses $643,890  $1,063,538 
Note payable and accrued interest-related party  197,055   193,370 
Notes payable and line of credit loan  131,247   165,849 
Convertible notes payable, net of discount of $0 and $3,311 at        
March 31, 2017 and March 31, 2016, respectively  105,000   31,689 
Derivative liability  -   24,460 
Total Current Liabilities  1,077,192   1,478,906 
         
Commitments and Contingencies        
         
Stockholders' Equity:        
         
Common stock,  par value $0.001, 250,000,000 shares
authorized, issued 9,321,306 and 7,931,639
shares outstanding at March 31, 2017 and 2016
  9,322   7,931 
Common stock to be issued  1,349,919   1,576,649 
Additional Paid-In Capital  30,567,761   28,224,376 
Accumulated Deficit  (45,410,816)  (29,879,283)
Total PetVivo Stockholders' (Deficit) Equity  (13,483,814)  (70,327)
Non-Controlling Interest  14,303,559   15,280,865 
Total Stockholders' Equity  819,745   15,210,538 
Total Liabilities and Stockholders' (Deficit) Equity $1,896,937  $16,689,444 

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

F-3

 

PETVIVO HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

  Year Ended  Year Ended 
  March 31, 2017  March 31, 2016 
       
Revenues $7,124  $75,000 
         
Cost of Sales  -   - 
         
Gross Profit  7,124   75,000 
         
Operating Expenses:        
         
Research and Development  167,891   168,600 
General and Administration  16,228,886   3,157,583 
Total Operating Expenses  16,396,777   3,326,183 
         
Operating Loss  (16,389,653)  (3,251,183)
         
Other Income (Expense)        
Gain (Loss) on Settlement of Debt  24,460   (382,296)
Sale of Equipment  32,000   - 
Change in Fair Value of Derivatives  -   165,444 
Interest Expense  (188,505)  (270,582)
Amortization of Issue Costs  -   (992,180)
Total Other Expense  (132,045)  (1,479,614)
         
Net Income (Loss) before taxes  (16,521,698)  (4,730,797)
         
Income Tax Provision  -   - 
         
Net Income (Loss)  (16,521,698)  (4,730,797)
         
Net Loss Attributable To Non-Controlling
 Interest
  990,165   1,079,053 
         
Net loss attributable to PetVivo $(15,531,533) $(3,651,744)
         
Net Income (Loss) Per Share- Basic
And Diluted
 $(1.73) $(0.46)
         
Weighted Average Common Shares
 Outstanding-Basic And Diluted
  8,955,222   7,853,862 
  2022  2021 
  

Year Ended March 31,

 
  2022  2021 
Revenues $115,586  $12,578 
         
Cost of Sales  201,154   10,695 
Gross Profit (Loss)  (85,568)  1,883 
         
Operating Expenses:        
         
Sales and Marketing  1,347,585   94,977 
Research and Development  474,881   98,230 
General and Administrative  3,148,494   1,767,664 
         
Total Operating Expenses  4,970,960   1,960,871 
         
Operating Loss  (5,056,528)  (1,958,988)
         
Other Income (Expense)        
Gain on Debt Extinguishment  -   366,903 
Forgiveness of PPP loan and accrued interest  31,680   - 
Derivative Expense  -   (1,702,100)
Interest Income (Expense)  9,853   (228,595)
Total Other Income (Expense)  41,533   (1,563,792)
         
Net Loss before taxes  (5,014,995)  (3,522,780)
         
Income Tax Provision  -   - 
         
Net Loss $(5,014,995) $(3,522,780)
         
Net Loss Per Share:        
Basic and Diluted $(0.57) $(0.57)
         
Weighted Average Common Shares Outstanding:        
Basic and Diluted  8,760,877   6,198,717 

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

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

 

F-4

 

PETVIVO HOLDINGS, INC.

CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYSTOCKHOLDERS’ EQUITY(DEFICIT)

  Shares  Amount  Capital  Deficit  Issued  Total 
Year Ended March 31, 2022
                   
  Common Stock  Additional Paid-in  Accumulated  Common Stock to be    
  Shares  Amount  Capital  Deficit  Issued  Total 
Balance at March 31, 2021  6,799,113  $6,799  $57,207,648  $(58,111,426)  -       $(896,979)
Adjustment for 1-for-4 reverse stock split                        
Adjustment for 1-for-4 reverse stock split, shares                        
Common stock sold  2,560,014   2,560   5,309,069   -       5,311,629 
Warrants sold  -   -   4,889,252   -   -   4,889,252 
Cash paid to exercise warrants  6,094   6   42,025   -      42,031 
Cashless warrant exercise  200,044   200   (200)  -       - 
Stock issued for services  126,194   126   524,104   -       524,230 
Stock-based compensation  -   -   702,896   -      702,896 
Stock issued for debt conversion  80,522   80   232,578   -   -   232,658 
Vesting of restricted stock units  172,824   173   (173)  -       - 
Warrants issued with convertible debt                        
Stock and warrants granted for debt conversion  43,556   44   195,956   -   -   196,000 
Net loss  -   -   -   (5,014,995)      (5,014,995)
Balance at March 31, 2022  9,988,361  $9,988  $69,103,155  $(63,126,421)  -  $5,986,722 

Year Ended March 31, 2021
                   
  Common Stock  Additional Paid-in  Accumulated  Common Stock to be   
  Shares  Amount  Capital  Deficit  Issued  Total 
Balance at March 31, 2020  5,727,965  $5,728  $53,494,747  $(54,588,645) $52,000  $(1,036,170)
Adjustment for 1-for-4 reverse stock split  724   -   -   -   -   - 
Common stock sold  246,071   246   368,254   -   (52,000)  316,500 
Cash paid to exercise warrants  205,946   206   455,291   -   -   455,497 
Stock issued for services  204,752   205   541,003   -   -   541,208 
Warrants issued with convertible debt  -   -   91,500   -   -   91,500 
Stock-based compensation  -   -   452,674   -   -   452,674 
Stock issued for debt conversion  305,950   306   1,804,286   -   -   1,804,592 
Cashless warrant exercises  107,705   108   (108)  -   -   - 
Net loss  -   -   -   (3,522,780)  -   (3,522,780)
Balance at March 31, 2021  6,799,113  $6,799  $57,207,648  $(58,111,426) $-  $(896,979)

        Additional             
  Common Stock  Paid-in  Accumulated  Non- controlling  Stock to be    
  Shares  Amount  Capital  Deficit  Interest  Issued  Total 
Balance March 31, 2015  7,700,289  $7,700  $26,381,094  $(26,227,539) $-  $-  $161,255 
                             
Non-controlling interest  -   -   -   -   16,683,000   -   16,683,000 
                             
Common stock issued for cash  10,600   10   37,090   -   -   -   37,100 
                             
Common stock issued for services  149,000   149   555,101   -   -   -   555,250 
                             
Common shares issued to settle  liabilities  70,500   71   281,929   -   -   -   282,000 
                             
Issuance of Gel Del Preferred stock for cash  -   -   -   -   100,005   -   100,005 
                             
Stock issued to extend debt  1,250   1   4,349   -   -       4,350 
                             
Write off of preacquisition liabilities  -   -   -   -   (423,282)      (423,282)
                           - 
Exercise of Gel Del options  -   -   -   -   195   -   195 
Settlement of derivative liabilities  -   -   427,870   -   -   -   427,870 
Stock to be issued for conversion of debt  -   -   -   -   -   1,576,649   1,576,649 
Inducement to convert debt  -   -   536,943   -   -   -   536,943 
                           - 
Net Loss  -   -   -   (3,651,744)  (1,079,053)  -   (4,730,797)
Balance March 31, 2016  7,931,639   7,931   28,224,376   (29,879,283)  15,280,865   1,576,649   15,210,538 
                             
Stock issued to reduce debt  788,325   789   1,575,860   -   -   (1,576,649)  - 
Stock to be issued  -           -   -   1,349,919   1,349,919 
Stock issued for cash  66,500   67   99,684   -   -   -   99,751 
Stock issued for services  437,500   438   382,062   -   -   -   382,500 
Stock issued for interest  97,342   97   151,379   -   -   -   151,476 
Stock issued for services-Gel-Del  -   -   -   -   12,859   -   12,859 
Warrants issued for services  -   -   134,400   -   -   -   134,400 
Net loss  -   -   -   (15,531,533)  (990,165)  -   (16,521,698)
                             
Balance March 31, 2017  9,321,306  $9,322  $30,567,761  $(45,410,816) $14,303,559  $1,349,919  $819,745 

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

F-5

 

PETVIVO HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

  March 31, 2022  March 31, 2021 
  For the Year Ended 
  March 31, 2022  March 31, 2021 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net Loss For The Period $(5,014,995) $(3,522,780)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:        
Derivative expense  -   1,702,100 
Stock-based compensation  702,896   452,674 
Stock issued for services  84,130   541,208 
Investor relations services paid in stock  220,050   - 
Depreciation and amortization  65,153   86,712 
Amortization of debt discount  -   174,595 
Forgiveness of PPP loan and accrued interest  (31,680)  - 
(Gain) on debt extinguishment  -   (366,903)
Changes in Operating Assets and Liabilities        
(Increase) decrease in prepaid expenses and other assets  (208,668)  9,948 
Increase in accounts receivable  (2,596)  1,000 
Increase in inventories  (98,313)  - 
Interest accrued on convertible notes payable  (3,013)  (1,310)
Interest accrued on notes payable - related party  4,013   - 
Interest accrued on notes payable - directors  -   382 
Interest accrued on PPP Loan  -   355 
Increase (decrease) in accounts payable and accrued expense  144,874   174,652 
Increase (decrease) in accrued expenses - related party  (36,808)  (19,799)
Net Cash Used In Operating Activities  (4,174,957)  (767,166)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of equipment  (154,030)  (140,685)
Disbursements for patents and trademarks  (29,154)  (19,479)
Net Cash Used in Investing Activities  (183,184)  (160,164)
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from stock and warrants sold  10,200,881   316,500 
Proceeds from exercise of warrants  42,031   455,497 
Decrease (Increase) in deferred offering costs  280,163   (280,163)
Equity sale proceeds receivable  -   52,000 
Proceeds from PPP loan  -   38,665 
Proceeds from notes payable - directors  -   45,000 
Proceeds from notes payable  -   35,000 
Proceeds from convertible notes  -   297,500 
Repayments of notes payable  (5,778)  (2,972)
Repayments of PPP loan  (7,340)  - 
Repayments of notes payable - related party  (48,267)  (16,701)
Repayments of notes payable - directors  (20,300)  - 
Net Cash Provided by Financing Activities  10,441,390   940,326 
         
Net Increase in Cash and Cash Equivalents  6,083,249   12,996 
Cash and Cash Equivalents at Beginning of Year  23,578   10,582 
Cash and Cash Equivalents at End of Year $6,106,827  $23,578 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION        
Cash Paid During The Year For:        
Interest $9,642  $36,596 
         
SUPPLEMENTAL DISCLOSURE ON NON-CASH FINANCING AND INVESTING ACTIVITIES        
Derivative treated as debt discount $-  $352,941 
Stock granted for debt conversion $232,658  $1,804,592 
Warrants issued in debt financing $-  $91,500 
Stock granted for share-settled debt obligation conversion $196,000     
Stock granted for investor relations services $220,050  $- 
Increase to operating lease right of use asset and operating lease liability $167,924  $- 
Accounts payable – related party converted to share-settlement debt obligation – related party $-  $196,000 
Leasehold improvements included in accounts payable $-  $33,580 
Warrants converted $-  $103 
Note payable – related party converted into common stock $-  $25,382 

  For the year ended  For the year ended 
  March 31, 2017  March 31, 2016 
CASH FLOWS FROM OPERATING ACTIVITIES:        
         
Net Income (Loss) For The Period $(16,521,698) $(4,730,797)
Adjustments to Reconcile Net Loss to Net Cash Used in        
Operating Activities:        
Non-cash consulting expense  134,400   - 
Stock issued for services  395,359   555,250 
Stock issued for interest  151,476   - 
Stock issued to settle liabilities  1,289,921   282,000 
Depreciation and amortization  746,845   743,631 
Amortization of debt issue costs  3,311   992,180 
Loss of sale of Gel-Del & Cosmeta  14,081,031   - 
Derivative (gain) or loss adjustment  -   (165,444)
Forgiveness of debt  (24,460)  382,296 
License  -   488,000 
Changes in Operating Assets and Liabilities        
Decrease in prepaid expense and employee advances  26,431   215,500 
Increase in advances and receivables  (163)  (15,900)
Increase in accounts payable and accrued expense  (425,470)  562,954 
Net Cash Used in Operating Activities  (143,017)  (690,330)
         
CASH FLOWS FROM INVESTING ACTVITITES        
Increase in patent costs  (36,465)  - 
Net Cash Used in Investing Activities  (36,465)  - 
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from stock sale  99,750   137,105 
Increase in notes to related parties  1,230   - 
Proceeds from convertible notes  105,000   524,750 
Proceeds from notes payable  12,500   193,370 
Cash received from common stock subscription  60,000   - 
Repayments of convertible notes  (35,000)  - 
Repayments of loans and line of credit  (38,822)  (204,500)
Net Cash Provided by Financing Activities  204,658   650,725 
         
Net (Decrease) Increase in Cash  25,176   (39,605)
Cash at Beginning of Period  258   39,863 
Cash at End of Period $25,434  $258 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash Paid During The Year For:        
Interest  -   - 
Income taxes paid  -   - 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTINGAND FINANCING ACTIVITIES:        
Shares issued as payment of note payable $-  $1,362,246 
Shares issued as payment for accrued salaries $1,209,919  $282,000 

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

F-6

 

PetVivo Holdings, Inc.

Notes to Consolidated Financial Statements

March 31, 20172022 and 2021

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A)Organization and Description

(A) Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC.

PetVivo Inc. was originally incorporated under the laws of the state of Minnesota on August 1, 2013.The financials are the result of a merger between Technologies Scan Corp., a corporation incorporated in the State of Nevada on March 31, 2009 now known as PetVivo Holdings, Inc. and its subsidiaries, PetVivo Inc., Gel-Del Technologies, Inc., and Cosmeta Corp. (collectively the “Company”). For accounting purposes the Company is treating the merger as a reverse merger whereby the consolidated financials presented are those of the surviving entity that, which is PetVivo. The merger occurred on March 14, 2014.

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

(B)Basis of Presentation

OnPetVivo 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 10, 20152017, the Company agreed to acquire Gel-Del Technologies. The Company consummated the merger withacquired another Minnesota corporation, Gel-Del Technologies, Inc. on April 10, 2017 through an Agreementa statutory merger, in which Gel-Del and Plan of Merger as explained in Note 7. The issuanceits wholly-owned subsidiary, Cosmeta, Inc. became wholly-owned subsidiaries of the Company.

In October 2020, the Company approved a 1-for-4 reverse split of our outstanding shares of common stock that was effectuated on December 29, 2020; concurrently, the Company increased its authorized shares of common stock from 225,000,000to complete the transaction250,000,000; all share and per share data has been finalized and the financialsretroactively adjusted for this reverse split for all periods presented are those of the consolidated entities under common control..

(C)Principles of Consolidation

(B) Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of PetVivo Holdings,the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and its wholly owned operating subsidiary, PetVivo, Inc. as well as its variable interest entity (VIE) Gel-Del Technologies and its subsidiary Cosmeta Inc. All intercompany accounts have been eliminated upon consolidation.

(D)Use of Estimates

The consolidation including the VIE is included due to the fact that the Company controls the entity as well as the fact an agreement for acquisition has occurred.

The accounting for the acquisition of Gel-Del Technologies on April 10, 2017 was as follows:

The Company will issue 5,450,000 shares valued at market at $0.40 per share, which equaled $2,180,000 on the date of closing. The assets of Gel-Del equaled $295,716 and its liabilities were $2,295,462 or a difference of $1,999,746 that resulted in a total purchase consideration of $4,179,746, which was allocated between goodwill and the value of patents & trademarks.

(C) 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 inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share basedshare-based payments and derivative instruments and recorded debt discount, lease assets and liabilities and valuation of deferred tax assets and valuation of in-kind contribution of services and interest.assets.

F-7(E)Cash and Cash Equivalents

(D) Cash and Cash Equivalents

The Company considers all highly liquidhighly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. AtThe Company had 0 cash equivalents at March 31, 2017 and March 31, 2016, the Company had no cash equivalents.2021.

(F)Concentration-Risk

(E) Concentration-Risk

The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits throughoutlimits. As of March 31, 2022, the period.Company did have cash balances in excess of the federally insured limits. At March 31, 2021, the Company did not have any cash balances in excess of the federally insured limits.

(G)Property & Equipment

(F) Machinery & Equipment

MachineryProperty and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of furniture fixtures and equipment is computed by the straight-line method (after taking into accountconsidering their respective estimated residual values) over the assets estimated useful life of three (3)(3) years for production and computer equipment five (5) years for automobile, and seven (7) years for furniture and fixtures. Upon sale or retirement of computer equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.(5-7) years leasehold improvements.

F-7

 

(G) Patents and Trademarks

(H)Patents and Trademarks

The Company capitalizes direct costs for theirthe maintenance and advancement of their patents and trademarks and amortizes these costs over athe lesser of useful life of 60 months.

(H) Income Taxes

The Company accounts for income taxes under Accounting Standards Codification (ASC) Topic 740. Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using months or 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.

The Company adopted the provisions of ASC Topic 740, on January 1, 2007. Previously, the Company had accounted for tax contingencies in accordance with Statement of Financial Accounting Standards No. 5,Accounting for Contingencies.As required by ASC Topic 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied ASC Topic 740 to all tax positions for which the statute of limitations remained open. As a resultlife of the implementationpatent. We evaluate the recoverability of ASC Topic 740,intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the Company did not recognize any change in the liability for unrecognized tax benefits.asset may be impaired.

(I)Loss Per Share

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.

(I) Loss Per Share

In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basicBasic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

The Company has 3,754,484 warrants outstanding as of March 31, 2022, 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 are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company has 372,668 restricted stock units outstanding as of March 31, 2022, with varying exercise prices ranging from $3.00 to $9.50 per share. The weighted average exercise price for these restricted stock units is $3.85 per share. These restricted stock units are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company has 195,000 options outstanding as of March 31, 2022, with varying exercise prices ranging from $1.39 to $1.99 per share. The weighted average exercise price for these options is $1.56 per share. These options are excluded from the weighted average number of shares because they are considered anti-dilutive.

The Company has 1,081,668 warrants outstanding as of March 31, 2021, with varying exercise prices ranging from $1.20 to $10.00 per share. The weighted average exercise price for these warrants is $2.02 per share. These warrants are excluded from the weighted average number of shares because they are considered anti-dilutive.

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

At March 31, 2021, the Company had $230,000 in convertible notes principal and $5,671 in interest outstanding that mature in our fiscal quarter ended June 30, 2021. If converted, the $230,000 in outstanding principal and $5,671 in accrued interest would convert into 81,579 shares of common stock at a rate of $2.89 per share. Also at March 31, 2021, the Company had a share-settled debt obligation with a related party wherein $196,000 in principal will be converted into units of one share of common stock and one warrant for a share of common stock with the exact number of units to be determined by the terms of an S-1 offering currently being conducted. See Note 8 to these financial statements for more information on the convertible notes discussed in this paragraph.

(J)Revenue Recognition

The Company derives revenue from the sale of pet care products to its veterinarian customers in the Unites 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 shipment, which is when control of these products is transferred to our customers and in an amount that reflects the consideration the Company expects to receive for these products. Shipping cost charged to customers are reported as an offset to the respective shipping cost. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.

F-8

 

(K)Accounts Receivable

(J) Revenue Recognition

The Company will recognize revenueAccounts receivable are recorded at management’s assessment of the expected consideration to be received, based on arrangementsa detailed review of historical pricing adjustments and collections. Management relies on the results of the assessment, which includes payment history of the applicable customer as a primary source of information in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only whenestimating the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of our accounts receivable. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the resultingvaluation of our accounts receivable. We believe the assessment provides reasonable estimates of our accounts receivable is reasonably assured. Revenues consist of Kush product sales to veterinary clinics.valuation, and therefore believe that substantially all accounts receivable are fully collectible.

(L)Research and Development

(K) Research and Development

The Company expenses research and development costs as incurred.

(M)Fair Value of Financial Instruments

(L) Fair Value of Financial Instruments

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

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

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

The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses, accrued expenses – related parties, notes payable and accrued interest, and notes payable and accrued interest - related party, loannotes payable - related party– directors and convertible notes payable.others. The carrying amount of the Company’s financial instruments approximates their fair value as of March 31, 20172022 and March 31, 2016,2021, due to the short-term nature of these instruments.instruments and the Company’s borrowing rate of interest.

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

The following table represents the Company’sCompany had 0 assets and liabilities by level measured at fair value on a recurring basis at March 31, 2017:2022 and 2021.

DescriptionLevel 1Level 2Level 3
Notes payable at fair value$$$

The following assets and liabilities are measured on the condensed consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:

F-9

 

(N)Stock-Based Compensation - Non-Employees

        New       
  Fair Value  Change in fair  Convertible     Fair Value 
  April 1, 2016  Value  Notes  Conversions  March 31, 2017 . 
               
Notes payable at fair value $31,689  $3,311  $                  $(35,000) $                 

(M) Embedded Conversion Features

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.

(N) Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

(0) Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

(P) Debt Issue Costs and Debt Discount

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

(Q) Stock-Based Compensation - Non-Employees

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

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

F-10

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

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

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

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

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

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

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

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

F-11F-10

 

(O)Income Taxes

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

As required by ASC paragraph 505-50-30-S99-1, ifTopic 450, the Company receivesrecognizes the financial statement benefit of a right to receive future servicestax 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 exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (thatfinancial statements is the instrumentslargest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied ASC Topic 740 to all tax positions for which the statute of limitations remained open. As a result of the implementation of ASC Topic 740, the Company did not recognize any change in the liability for unrecognized tax benefits.

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

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

(P)Inventory

Inventories are not considered issued until they vest). Consequently, there would be no recognitionrecorded in accordance with ASC 330, Inventory, and are stated at the measurement date and no entry should be recorded.lower of cost or net realizable value. We account for inventories using the first in first out (FIFO) methodology.

(Q)Recent Accounting Pronouncements

(R) Recent Accounting Pronouncements

The Company has reviewed the FASB issued ASC 606 as guidanceASU 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 do not believe that any new or modified principles will have a material impact on the recognitionCompany’s reported financial position or operations in the near term. The applicability of revenue fromany 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 with customersto 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 May 2014 with amendments in 2015certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and 2016. Revenue recognition will depictearly adoption is permitted. The Company is currently evaluating the transferimpact of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The company will adopt the guidance on January 1, 2018 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ equity upon 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 standardASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is not expected to be material.effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this new guidance will have on its financial statements.

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

F-11

 

(R)Reclassifications

Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements. Accrued expenses is reported separately from accounts payable in the balance sheet since the amounts are material. In addition, the change in deferred offering costs is classified as a financing activity in the statement of cash flows. There was no effect on the change in net assets or net increase in cash and cash equivalents from these reclassifications.

NOTE 2 DERIVATIVE LIABILITY/NOTES PAYABLE CONVERTIBLE DEBENTURESINVENTORY

In AprilAs of 2016March 31, 2022 and March 31, 2021, the Company paid a convertible debenture in full for $35,000. Thehad inventory of $98,313 and $47,068, respectively. At March 31, 2021, the Company has one sole convertible notea reserve of $47,068 because of the substantial doubt in the amountCompany’s ability to utilize this inventory to obtain material sales.

The inventory components are as follows:

SCHEDULE OF INVENTORY

  March 31, 2022  March 31, 2021 
Finished Goods $11,889  $36,973 
Work in Process  22,960   - 
Raw Materials  63,464   8,773 
Manufacturing Supplies  -   1,322 
Inventory, Gross  98,313   47,068 
Reserve for Obsolete Inventory  -   (47,068)
Total Net $98,313  $- 

At March 31, 2022, both the inventory cost of $105,000. The maturity date of$47,068 and the convertible note is February 21, 2018 with an interest rate of 12% per annum. Interest will be payablerelated reserve were written off. There was no impact on the maturity date in cash, unlesscost of sales as the note is converted earlier.reserve offset the cost.

In July 2016, theThe Company recognized a gainbenefit to cost of sales of $3,289 related to the change in the reserve of obsolete inventory for the year ended March 31, 2021.

For the year ended March 31, 2022, the Company reported a negative gross margin on sales as a result of production costs to build inventory levels to support the settlementlaunch of derivative liability of $24,460.our product in October 2021.

NOTE 3 RELATED PARTY PAYABLEPREPAID EXPENSES AND DEFERRED OFFERING COSTS

AtAs of March 31, 2017,2022, the Company is obligated for unpaid officer salaries and advances of $197,055 that consist of $5,915 had $547,664 in accounts payable due to officers, $94,188 in bridge loanprepaid expenses and other loans made by officers toassets consisting primarily of $220,000 of stock based compensation in investor relations services, $148,000 in insurance costs, $71,000 in clinical studies, $46,000 in tradeshows and $45,000 in Nasdaq fees.

As of March 31, 2021, the Company had $123,575 in prepaid expenses and accrued interest on loansother assets consisting primarily of $16,952.

NOTE 4 NOTE PAYABLE AND LINE OF CREDIT

$78,000 in marketing services, $9,000 in annual OTC registration fee and $9,000 in insurance costs. The Company is obligatedalso had deferred offering costs of $280,163 consisting of legal and accounting costs incurred related to our S-1 and S-1/A filings with the Securities and Exchange Commission on the following notes:

1.  Third Party Individuals  67,826 
2.  Bank Credit Line*  63,421 
        
   Total $131,247 

*AsOctober 13, 2020, December 31, 2020 and March 29, 2021, respectively, which was recorded as a reduction of November 26, 2017, Gel-Del Technologies, Inc. was delinquent in the monthly paymentsproceeds as a result of the Bank Credit Line and a Bank Credit Card through the same banking institution. The Company negotiated a settlement with the bank regarding the Bank Credit Line having an outstanding balance of $50,000 and the Bank Credit Card having an outstanding balance of $10,000; both were originally incurred by Gel-Del Technologies, Inc. The bank agreed to a settlement payment of $38,000 for the combined balance of $60,000. A payment plan of $8,000 due on September 29, 2017 to be applied to the Bank Credit Lineraising capital in the amount of $6,666 and $1,333 applied to the credit card balance. A payment of $10,000 due on October 15, 2017 to be applied to the Bank Credit Line in the amount of $ 8,333 and $1,666 applied to the credit card balance. A payment of $10,000 due on November 15, 2017 to be applied to the Bank Credit Line in the amount of $ 8,333 and $1,666 applied to the credit card balance. A final payment of $10,000 due on December 15, 2017 to be applied to the Bank Credit Line in the amount of $8,333 and $1,666 applied to the credit card balance.its registered offering.

F-12

 

NOTE 4 –PROPERTY AND EQUIPMENT

The components of property and equipment were as follows:

SCHEDULE OF PROPERTY AND EQUIPMENT

  March 31, 2022  March 31, 2021 
Leasehold improvements $216,159  $198,015 
Production equipment  197,967   128,849 
R&D equipment  25,184   25,184 
Computer equipment and furniture  76,898   10,130 
Total, at cost  516,208   362,178 
Accumulated depreciation  (204,659)  (148,140)
Total Net $311,549  $214,038 

During the year ended March 31, 2022 and 2021, depreciation expense was $56,519 and $36,554, respectively.

NOTE 5 – INTANGIBLE ASSETS

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

SCHEDULE OF INTANGIBLE ASSETS

  March 31, 2022  March 31, 2021 
Patents $3,870,057  $3,840,903 
Trademarks  26,142   26,142 
Total at cost  3,896,199   3,867,045 
Accumulated Amortization  (3,847,747)  (3,839,113)
Total net $48,452  $27,932 

During the year ended March 31, 2022 and 2021, amortization expense was $8,634 and $50,158, respectively.

NOTE 6 – ACCRUED EXPENSES

The components of accrued expenses were as follows:

SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES

  March 31, 2022  March 31, 2021 
Accrued payroll and related taxes $452,137  $221,774 
Accrued lease termination expense  332,238   332,238 
         
Total $784,375  $554,012 

Pursuant to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal year 2017-2018, the Company hashad recorded as of those fiscal years approximately $332,000 as a bank credit linepotential payable to the lessor, which this liability remains as of $75,000. March 31, 2022 and March 31, 2021 and is included in accrued expenses.

NOTE 7 - RELATED PARTY NOTES PAYABLE

At March 31, 2017 there was $11,579 of unused credit. Interest is at 6.5%. As mentioned above, as of December 15, 2017,2022 and March 31, 2021, the Company plansis obligated for a related party note payable and accrued interest in the total amount of $0 and $44,554, respectively; the maturity date of this note was April 30, 2020. The related party note payable terms are accrual of interest at eight percent annually with payments of $3,100 per month, which are applied to completeinterest first, then principal. The terms also include a stipulation that if the payment planCompany receives additional financing during any 24-month period from the date of the note in the amount greater than $3,500,000, the Company will immediately pay the officer the principal amount of the note along with Wells Fargo Bank.

all interest due. Please see Note 10 to these financial statements for more information on this note. The Company repaid this related party note with net proceeds from its Public Offering. See Note 15 – Common Stock and Warrants – Units sold in Public Offering.

F-13

The Company entered into notes payable with four directors in March 2021 which accrue interest at a rate of 6% annually and are due in September 2021. At December 31, 2021 and March 31, 2021, the principal and accrued interest outstanding on these notes is $0 and $20,000, respectively. The Company repaid these director notes with net proceeds from its Public Offering.

NOTE 8 – NOTES PAYABLE AND CONVERTIBLE NOTES

In January 2020, the Company entered into a lease amendment for our corporate office facility whereby the lease term was indebtedextended through November of 2026 in exchange for a loan of $42,500. The note payable accrues interest at a rate of 6% per annum. At March 31, 2022 and March 31, 2021, the amount outstanding on the note was $33,750 and $39,528, respectively. At March 31, 2021, the note is classified as a current liability as the Company has not been current on its loan payments. At March 31, 2022, the Company is current on its loan payments and classified $6,549 as a current liability and $27,201 in other liabilities.

On May 1, 2020, the Company received $38,665 in loan proceeds pursuant to the Paycheck Protection Program enacted by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act. At March 31, 2021, the Company was obligated for the outstanding balance of $39,020. The principal and accrued interest may be forgivable and the Company applied for forgiveness. The loan accrues interest at a rate of 1% per annum and matures on May 1, 2022; if not forgiven prior to December 1, 2020, the Company is required to pay monthly installments toward principal and interest until the note is paid in full. In June 2021, the Company received forgiveness of principal and accrued interest of $31,680. The remaining principal balance of $3,769 will be paid in monthly payments of $738 ending May 1, 2022. This note was paid in full in February 2022.

At March 31, 2021, the Company is obligated for several convertible notes payable in the total amount of $235,671 made up of $230,000 in principal and $5,671 in interest. These convertible notes accrue interest at a rate of 10%. Accrued interest is due and payable each calendar quarter in cash. In April 2021, these notes and accrued interest of $2,658 were converted into 80,522 shares of common stock at a conversion price of $2.89 per share. The remaining accrued interest was paid in cash. At March 31, 2022, there is no outstanding principal or accrued interest outstanding on these notes.

The Company entered into a convertible note payable held by RedDiamond Partners, LLC (“RDCN”) on June 15, 2020, whereby the RDCN was convertible on or after January 15, 2021 and before maturity on March 15, 2021 at a rate of $1.12/share. The RDCN was issued in the principal amount of $352,941 with $52,941 being made up of a 15% Original Issue Discount (“OID”) and included a conversion feature. However, this conversion feature’s exercise contingency was only utilizable if triggered by the occurrence of an Event of Default, which included events that were outside the control of the Company (i.e., not based solely on the market for the Company’s stock or the Company’s own operations). Additionally, the RDCN accrued interest at a rate of 12.5% per annum, calculated on a note bearing interest at prime plus 5.5%360-day-per-year-basis. This RDCN was issued alongside a warrant to a bankpurchase of 139,286 shares of Company common stock (“RDCN Warrants”) with a monthly paymentrelative fair value of $2,786$91,500. Upon inception, the outstanding principal balance of the RDCN was reduced to $-0- by various discounts on the debt totaling $352,941 as follows: i) the RDCN Warrants generated a discount on the debt of $91,500 based on the relative fair value of the same; ii) $2,500 in investor legal costs was treated as a discount on the debt since this was paid by the Company; iii) $52,941 of OID was treated as a discount on the debt; iv) a discount of $206,000 was taken due to the conversion option being treated as a derivative. In evaluating the various instruments and expiring in January, 2017. All assetstheir components within this transaction (including issuance of Gel-Del are pledgedthe RDCN and RDCN Warrants) for treatment as collateral. On February 23, 2017,a derivative and the respective accounting treatment of the same, the Company referenced ASC 470 and ASC 815 in conjunction with interpretive guidance. In conjunction with the RDCN and RDCN Warrants issuances, the Company also paid this note in full$30,000 and receivedissued 75,000 warrants (“Think Warrants”) valued at $31,500 using the Black-Scholes model to Think Equity for soliciting the RedDiamond Partners, LLC transaction. The total issuance costs paid to Think Equity of $61,500 of cash and warrants, which the Company recorded the relative fair value of $52,399 to expense since no further discount was available to be taken on the debt. For the year ended March 31, 2021, the Company amortized a releasepro-rata portion of the collateral pledge in all assets of Gel-Del.

The Company is indebteddiscount on the debt on a straight-line basis to Robert Rudeliusinterest expense in the amount of $55,326 which consists$173,174. At October 26, 2020, the Company entered into a note conversion agreement that converted the then outstanding balance of a convertible note$368,995 made up of $50,000$352,941 in principal and $16,054 in accrued interest into 263,568 shares of $5,326. The interestcommon stock at a rate on this loan is 8%of $1.40 per share when the market price of the stock was $6.56. The Company is indebted to Scott Johnsonsettlement relieved a derivative liability in the amount of $7,500. The$1,908,100, outstanding principal and interest rate on this loan is 6%of $368,995, and a due date of September 2, 2018. The Company is indebted to Gary Bryantdebt discount in the amount of $5,000. The interest rate$181,187 in exchange for stock valued on the date of the settlement in the total amount of $1,729,005; this triggered a gain on debt extinguishment of $366,903. Please see Note 11 to these financial statements for more information on this loan is 6%conversion. As of March 31, 2021, the Company had $-0- in unamortized debt discount remaining and owed $-0- in principal and interest pursuant to the RDCN.

F-14

NOTE 9 – SHARE-SETTLED DEBT OBLIGATION – RELATED PARTY

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

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

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

On October 15, 2020, the Company entered into a note conversion agreement with David Masters whereby the Company and Dr. Masters both agreed to convert his note payable in the then outstanding balance of $193,158 made up of $192,500 in principal and $658 in accrued interest into units, consisting of common stock and warrants, as of the date of the closing of the Company’s Public Offering. Pursuant to this conversion agreement the Company agreed to convert $196,000 made up of $192,500 in principal and a conversion fee of $3,500 and Dr. Masters agreed to forego the interest accrued in the amount of $658. The conversion fee of $3,500 was treated as a discount on the debt and the $658 was treated as a reduction of the discount on debt. As of March 31, 2021, the outstanding balance of $196,000 for this share-settled debt obligation had not yet been converted and is recorded as a liability due to the fact the Company had not yet been converted and is recorded as a liability as the Company had not agreed to terms of our S-1 offering currently being conducted. At the closing of the Company’s Public Offering on August 13, 2021, the outstanding balance of this debt obligation converted into 43,556 units, which consists of 43,556 shares of common stock and warrants to purchase 43,556 shares of the Company’s common stock.

At March 31, 2022 and March 31, 2021, the Company was obligated for principal and accrued interest in the amounts of $-0- and $196,000, respectively, related to the Promissory Note and $0 and $44,554 respectively, related to the Amendment to Promissory Note.

F-15

NOTE 10 – DERIVATIVE LIABILITY AND EXPENSE

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

The Company used the following assumptions for determining the fair value of the conversion feature in the RDCN referenced in Note 8 to these financial statements, under the binomial pricing model with Monte Carlo simulations at June 15, 2020, September 30, 2020 and October 26, 2020, the issuance, balance sheet, and conversion dates, respectively:

SCHEDULE OF DERIVATIVE LIABILITY ASSUMPTIONS

  June 15, 2020  September 30, 2020  October 26, 2020 
Stock price on valuation date $1.68  $1.60  $6.56 
Conversion price $1.12  $1.12  $1.12 
Days to maturity  273   166   140 
Weighted-average volatility*  367%  327%  197%
Risk-free rate  .18%  .12%  .11%

The initial valuation of $526,800 at June 15, 2020, generated a discount on the debt of $206,000, which net the convertible note liability to $-0- and forced a recognition of derivative expense of $320,800 and a corresponding offset to derivative liability of $526,800. At September 30, 2020, the Company revalued the derivative liability at $937,500. On October 26, 2020, the Company revalued the derivative liability to $1,908,100. For the year ended March 31, 2021, the Company recognized $1,702,100 to derivative expense and derivative liability. On October 26, 2020, Company entered into a conversion agreement whereby the RDCN was converted into 263,568 shares of common stock at a rate of $1.40 per share; this triggered a gain on extinguishment of debt in the amount of $366,903 as described in Note 8. There was 0 remaining derivative liability at March 31, 2021.

NOTE 11–ACCRUED EXPENSES – RELATED PARTY

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

In August 2021, the total amount due to the related party was paid from the proceeds of its Public Offering and there is 0 remaining liability at March 31, 2022.

NOTE 12–RETIREMENT PLAN

In February 2021, the Company established a 401(k)-retirement plan for its employees in which eligible employees can contribute a percentage of their compensation. The Company may also make discretionary contributions. The Company made contributions to the plan of $8,000 for the year ended March 31, 2022.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company entered into an eighty-four month lease for 3,577 square feet of newly constructed office, laboratory and warehouse space located in Edina, Minnesota in May 2017. The base rent has annual increases of 2% and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance. In January 2020, the Company entered into a lease amendment whereby agreed to extend the lease term through November of 2026 in exchange for receipt of a loan of $42,500 recorded to notes payable and a grant of $7,500, which has been recorded to accrued expenses and will be amortized over the remainder of the lease term. The base rent as of March 31, 2022 is $2,205.

F-16

The Company entered into an sixty-three month lease for 2,400 square feet of office, space located in Edina, Minnesota in January 2022. The base rent has annual increases of 2.5% and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance. The base rent as of March 31, 2022 is $2,673.

Rent expense for the years ended March 31, 2022 and March 31, 2021 were $81,816 and $56,546, respectively.

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of March 31, 2022:

SCHEDULE OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY

     
2023 $59,243 
2024  60,588 
2025  61,964 
2026  63,372 
2027  55,102 
Total  300,270 
Less: amount representing interest  (1,169)
Total $299,101 

In connection with the lease that was added in January 2022, the Company recorded an operating lease right of use asset and corresponding operating lease liability of $167,924. As of March 31, 2022, in compliance with ASC 842, the Company recognized, based on the extended lease term to November 2026 and March 2027 and a treasury rate of 0.12% and 0.40%, respectively, an operating lease right-to-use assets for approximately $488,701 and corresponding and equal operating lease liabilities for the lease. As of March 31, 2022, the present value of future base rent lease payments based on the remaining lease term and weighted average discount rate of approximately 4.8 years and 0.28%, respectively, are as follows:

SCHEDULE OF BASE RENT LEASE PAYMENTS

     
Present value of future base rent lease payments $299,101 
Present value of future base rent lease payments – net $299,101 

As of March 31, 2022, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:

SCHEDULE OF LEASE CURRENT AND NON-CURRENT ASSETS AND LIABILITIES

     
Operating lease right-of-use asset $299,101 
Total operating lease assets  299,101 
     
Operating lease current liability  59,178 
Operating lease other liability  239,923 
Total operating lease liabilities $299,101 

Employment Agreements

The Company has employment agreements with its executive officers. As of March 31, 2022, these agreements contain severance benefits ranging from one month to six months if terminated without cause. As of March 31, 2021, the employment agreements to executive officers did not contain severance benefits if terminated without cause.

Legal Proceedings

The Company has received correspondence from an attorney representing Dr. David Masters, our former Chief Technology Officer and former director, alleging that the Company, among other items, breached its settlement and consulting agreement with him and owes him additional monies pursuant to these agreements. His attorney also alleges that the Company promised to enter into a new employment agreement with him and failed to fulfill that promise. The Company believes that Dr. Master’s claims are without merit and has retained legal counsel. The Company does not believe that this matter will have a material impact on its financial position or results of operations.

F-17

Purchase Commitment

We issued purchase orders in the fiscal year ended March 31, 2022 totaling $250,000 for inventory that we expect to receive within the next year.

NOTE 14 2018.

NOTE 5–- GOING CONCERN

As reflected in theThe accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company had minimal revenueas a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and hadsatisfy our liabilities and commitments in the ordinary course of business. In August 2021, we raised net proceeds of approximately $9,781,000 from the sale of 2,500,000 units to the public at a negative equity andprice of $4.50 unit in a material loss.registered public offering. Our working capital at March 31, 2022 was $5,581,914. The Company expects to incur losses in the future as we commercially launch Spryng.™ We believe this working capital is sufficient to fund operations for the next ten months.

The Company expects to incur losses in the future as its commercially launches its first product. These factorsconditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is inconcern for a period of at least twelve months after the processdate of securing an underwriterissuance of these consolidated financial statements. Management intends to raise additional funds commencing the first quarter of 2018by selling securities in order to fund future operations. At the present time the Company has sufficient funds to begin operations with a recent move into new office space which houses laboratories for the commencement of KUSH products. The new laboratories are being set up to begin production in the first quarter 2018. The Company has secured sales and marketing teams to sell product once production commences. The Company added new independent board members and has formed a business advisory committee. Other board committees are in the process of being formed as well.public or private offerings. 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 theits viability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generateraise additional funds.

The financial statements do not include any adjustments that might be necessary ifCOVID-19 has had an impact on the Company is unableglobal economy, which directly or indirectly may have an impact on our ability to continue as a going concern.

NOTE 15 – 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”), subject to approval by our stockholders at a Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. The number of shares of our common stock authorized under the 2020 Plan is 1,000,000 shares. Unless sooner terminated by the Board, the 2020 Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was 233,923 at March 31, 2022.

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

The 2020 Plan 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 2020 Plan, the Committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The Committee has the authority to interpret and establish rules and regulations for the administration of the 2020 Plan. In addition, the Board of Directors may also exercise the powers of the Committee.

F-18

 

NOTE 6– COMMON STOCK

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

the maximum aggregate number of shares of Common Stock granted as an Award to any Non-Employee Director in any one Plan Year will be 25,000 shares; provided that such limit will not apply to any election of a Non-Employee Director to receive shares of Common Stock in lieu of all or a portion of any annual Board, committee, chair or other retainer, or any meeting fees otherwise payable in cash.

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

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

Units – Public Offering

On August 13, 2021, the Company sold an aggregate of 2,500,000 units at a price to the public of $4.50 per unit (the “Public Offering”), each unit consisting of one share of common stock, and a warrant to purchase one share of common stock at an exercise price of $5.625 per share pursuant to an Underwriting Agreement we entered into with ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”) The shares of common stock and warrants were transferrable separately immediately after issuance. The Company also issued 95,10043,556 units pursuant to a conversion of $196,000 shared-settled debt obligation in the Public Offering at a price of $4.50 per unit.

The Company received gross proceeds of $11,253,850 at the closing of the Public Offering, before deducting underwriting discounts and commissions of eight percent (8%), and expenses. The total expenses, which reduced the total proceeds included in the common stock and warrants sold in the statement of shareholders’ equity, of the Public Offering were $1,473,067, which included ThinkEquity’s expenses relating to the offering. The net proceeds were allocated between the common shares and warrants based on the relative fair values which was $4,891,531 and $4,889,252, respectively.

In addition, pursuant to the Underwriting Agreement, the Company granted ThinkEquity a 45-day option to purchase up to 375,000 additional shares of common stock, and/or 375,000 additional warrants, to cover over-allotments in connection with the Offering, which ThinkEquity partially exercised to purchase 375,000 warrants on the closing date.

Pursuant to the Underwriting Agreement, we issued warrants (the “Underwriter’s Warrants”) to ThinkEquity to purchase 125,000 shares of common stock (5% of the shares of common stock sold in the Public Offering). The Underwriter’s Warrants are exercisable at $5.625 per share of common stock and have a term of five years. The Underwriter’s Warrants are subject to a lock-up for 180 days from the commencement of sales in the Offering, including a mandatory lock-up period in accordance with FINRA Rule 5110(e), and will be non-exercisable for six (6) months after August 13, 2021.

Common Stock

For the year ended March 31, 2022, the Company issued 3,189,248 shares of common stock as follows:

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

ii) 4,500 shares in April 2021 pursuant to the exercise of warrants with a strike price of $4.44 per share for cash proceeds of $40,000;

F-19

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

iv) 79,767 shares in May 2021 pursuant to a warrant holder’s cashless exercise of a warrants for purchase of 90,500 shares of common stock at a strike price of $1.40 per share;

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

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

vii) 11,000 shares in July 2021 in exchange for $77,000 in cash to accredited investors at a price of $7.00 per share;

viii) 2,500,000 shares and warrants, as part of the units issued on August 13, 2021 in the Public Offering, at a price of $4.50 per unit;

ix) 43,556 shares and warrants in August 2021 pursuant to a conversion of $196,000 shared-settled debt obligation in the Public Offering at a price of $4.50 per unit;

x) 40,038 shares in August 2021 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of 48,786 shares of common stock at a strike price of $1.40 per share;

xi) 1,594 shares in September 2021 pursuant to a warrant holder’s exercise of warrants for purchase with a strike price of $1.27 per share for cash proceeds of $2,031;

xii) 42,000 shares in September 2021 to a service provider for future marketing and investor relations services valued at $210,000;

xiii) 25,585 shares in October 2021 to members of the Board of Directors valued at 69,080 as compensation for board service;

xiv) 500 shares in December 2021 to a service provider for consulting services valued at $2,000;

xv) 300 shares in December 2021 related to vesting of restricted stock units;

xvi) 10,000 shares in January 2022 related to vesting of restricted stock units;

xvii) 7,500 shares in January 2022 to a service provider for consulting services valued at $20,100;

xviii) 42,000 shares in March 2022 to a service provider for future marketing and investor relations services valued at $210,000;

xix) 8,609 shares in March 2022 to service providers for consulting services valued at $13,050;

xx) 162,524 shares in March 2022 related to vesting of restricted stock units.

For the year ended March 31, 2021, the Company issued 1,070,424 shares of common stock as follows:

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

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

F-20

iii) 12,500 shares valued at $22,000 on July 1, 2020 to two service providers as follows: a) 10,000 to a marketing and investor relations service provider valued at $17,600; and b) 2,500 to a legal service provider valued at $4,400;

iv) 15,257 shares valued at $12,053 on July 24, 2020 to one warrant holder whereby this warrant holder converted on a cashless basis 25,000 warrants into 15,257 shares of common stock and the warrant had an exercise price of $1.20 per share;

v) 226,071 shares during August and September of 2020 in exchange for $316,500 in cash to four accredited investors;

vi) 162,252 shares valued at $486,755 to directors and officers on September 14, 2020 as bonuses for work over the past two years as follows:

a.33,619 to John Lai
b.26,217 to John Carruth
c.22,993 to John Dolan
d.10,789 to Gregory Cash
e.10,711 to David Deming
f.10,627 to Robert Rudelius
g.10,550 to Randy Meyer
h.9,302 to Jim Martin
i.9,300 to Scott Johnson
j.9,209 to Joseph Jasper
k.8,935 to David Masters

vii) 25,003 shares valued at $25,383 to three directors on August 14, 2020, pursuant to their conversions of notes in the total outstanding balance amount of $25,382 made up of $25,000 in principal and $382 in accrued interest; these notes had a set conversion price of $1.02 per share;

viii) 263,568 shares in October 2020 pursuant to conversion of $368,995 in principal and interest of the RDCN valued at $1,729,005 as outlined in this Form 10-Q’s note 8;

ix) 32,347 shares in October 2020 pursuant to John Lai’s cashless exercise of a warrant for purchase of 42,188 shares of common stock at a strike price of $1.33 per share;

x) 202,499 shares in October, November, and December to twenty accredited investors pursuant to their exercising of warrants with strike prices of $2.22 per share for cash proceeds of $449,993 recorded to cash paid to exercise warrants;

xi) 793 shares in October 2020 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of 6,750 shares of common stock at a strike price of $4.44 per share;

xii) 17,379 shares on January 2021 pursuant to a conversion of a $50,000 convertible note and $205 in accrued interest at a conversion rate of $2.89 per share;

xiii) 38,516 shares in January 2021 pursuant to John Lai’s (CEO and a Director of the Company) cashless exercise of a warrant for purchase of 42,188 shares of common stock at a strike price of $1.33 per share;

xiv) 15,629 shares in January 2021 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of 17,187 shares of common stock at a strike price of $1.33 per share;

xv) 5,163 shares in February 2021 pursuant to a warrant holder’s cashless exercise of warrant for purchase of 9,000 shares of common stock at a strike price of $4.44 per share;

xvi) 3,447 shares in March 2021 to a director pursuant to a warrant holder’s exercise of warrants for purchase with a strike price of $1.60 per share for cash proceeds of $5,504.

F-21

On October 31, 2019, the Company’s Board of Directors also approved a compensation plan for John Lai that included his retention of 150,000 escrowed shares that he never returned to the Company’s Treasury.

John Lai (CEO & Director), Randall Meyer (Director), and John Dolan (Secretary & Director) are all related parties, and the reduction of $375,936 as outlined in the above Roman numeral vi was included in Accrued Expenses – Related Party. The settlement of $80,029 for a former employee’s accrued salary as outlined in the above Roman numeral vi was accounted for as a reduction of Accounts Payable and Accrued Expenses. A loss on extinguishment of debt was recorded in the amount of $81,738 related to these transactions as indicated in Roman numeral vi above.

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 $606,014 for the year ended March 31, 2022. At March 31, 2022, there were approximately $1,505,000 of total unrecognized pre-tax compensation expense related to time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.3 years.

Our time-based restricted stock unit activity for the year ended March 31, 2022 was as follows:

SCHEDULE OF TIME BASED RESTRICTED STOCK UNITS

  Units
Outstanding
  Weighted Average Grant Date Fair Value Per Unit  Aggregate Intrinsic Value (1) 
          
Balance at March 31, 2021  -   -   - 
             
Granted  549,565  $3.86   - 
Expired  (4,073) $2.70     
Vested  (172,874)  3.44     
Balance at March 31, 2022  372,668  $4.07  $760,243 

(1)The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of this period.

Stock Options

Stock options issued to employees typically vest over three years and have a contractual term of seven years. Stock-based compensation expense included in the Consolidated Statements of Operations for stock options was $3,595 for the year ended March 31, 2022. No options vested in the year ended March 31, 2022. At March 31, 2022, there was approximately $299,000 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 6.9 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 dividend on common stock has 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 date in which to make a reasonable estimate.

F-22

The following table sets forth the estimated fair values of our stock options granted:

SCHEDULE OF ESTIMATED FAIR VALUES ASSUMPTIONS

Year Ended
March 31, 2022
Expected term7 years
Expected volatility205.0% - 210.5%
Risk-free interest rate1.47%2.14%
Expected dividend yield0%
Fair value on the date of grant$1.39 - $1.99

Our stock option activity for the year ended March 31, 2022 was as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

  Options
Outstanding
  Weighted- Average Exercise Price Per Share (1)  Weighted-Average Remaining Contractual Life  Aggregate Intrinsic Value (2) 
             
Balance at March 31, 2021  -   -   -   - 
                 
Granted  195,000  $1.56       - 
Balance at March 31, 2022  195,000  $1.56   6.9 years  $100,200 

(1)The exercise price of each option granted during the period shown above was equal to the market price of the underlying stock on the date of grant.
(2)The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of this period.

There were 0 options exercisable at March 31, 2022.

The following summarizes additional information about our stock options:

SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS

Year Ended
March 31, 2022
Number of:
Non-vested options, beginning of year-
Non -vested options, end of year195,000
Vested options, end of year-

  Year Ended 
  March 31, 2022 
Weighted-average grant date fair value of:    
Non-vested options, beginning of year  - 
Non-vested options, end of year $1.56 
Vested options, end of year  - 
Forfeited options, during the year  - 

Warrants

During the year ended March 31, 2022, the Company issued warrants to purchase an aggregate of 3,043,556 shares of common stock in the quarter ended June 30, 2015,connection with its Public Offering of which 14,000 shares were for services valued at market for $56,000. 70,500 shares were issued for debt reduction of $282,000 and 10,600 shares for cash of $37,100.Units, as follow:

warrants to purchase 2,500,000 shares of the Company’s common stock with a relative value of $4,805,528, at an exercise price of $5.625 per share for five years from the grant date of August 10, 2021 issued to investors in the public offering as part of the units,

From July 1, 2015 to September 30, 2015 the Company issued 1,250 shares for an extension of a convertible debt consideration valued at market for an expense of $4,350.

From October 1, 2015 to December 31, 2015 the Company issued 125,000 shares of stock for services valued at market which equaled $474,500. Some of the services are recognized over a one year contract with the unearned portion shown as prepaid expense.

From January 1 to March 31, 2016 10,000 shares were issued for services of $24,750.

In March 2016 the Company agreed to settle their convertible debt with interest by issuing 788,325 shares at $2.00 per share. The actual shares issuance occurred in April 2016.

F-13F-23

 

warrants to purchase 43,556 shares of the Company’s common stock, pursuant to a conversion of $196,000 shared-settled debt obligation in the Public Offering, with a relative value of $83,724, at an exercise price of $5.625 per share for five years from the grant date of August 10, 2021 to the Company’s former Director of Science and Technology and Director pursuant to a note conversion in the public offering as part of the units,
warrants to purchase 500,000 shares of the Company’s common stock at an exercise price of $5.625 per share for five years from the grant date of August 10, 2021 issued to ThinkEquity upon exercise of its over-allotment option and pursuant to the Underwriting Agreement. These warrants were considered issuance costs of the Public Offering which resulted in a zero impact on additional paid-in capital.

Also during this periodThese warrants’ values were arrived at by using the Company received $100,000 for stock in its subsidiary pursuantBlack-Scholes valuation model with the following assumptions:

i) an expected volatility of the Company’s shares on the date of the grants of approximately 315% based on historical volatility.

ii) risk-free rate identical to a subscription agreement.the U.S. Treasury 5-year treasury bill rate on the date of the grants between 0.82%.

From April 1, 2016 to June 30, 2016During the Company granted 953,142 shares of which 788,325 were issued to satisfy debt of $1,575,649, 40,000 shares for cash of $60,000 and the remainder of 124,817 shares were issued as follows; 27,475 for services valued at market for $42,500 and 97,342 shares for interest valued at $151,476.

From July 1, 2016 to September 30, 2016,year ended March 31, 2021, the Company issued 136,500warrants to purchase a total of 240,632 shares of common stock inas follows:

i) warrants issued for 10,000 shares, sold at $17,291 to one investor using the quarter ended September 30, 2016,Black-Scholes model, whereas the warrants vested immediately upon issuance and are exercisable at $4.00 per share for 3 years from the grant date of which 110,000April 6, 2020;

ii) warrants issued for 38,846 shares, were for services valued at market$57,707 using the Black-Scholes model, to directors, officers and consultants at exercise prices between $1.40 and 1.60 per share with a weighted average price per share of $1.52 per share;

iii) warrants issued with debt for $190,000,158,036 shares, valued at $265,500 using the Black-Scholes model, to an investor and 26,500broker, whereby the relative value as described in Note 8 of $91,500 was recorded to Warrants issued in conjunction with convertible debt on the statement of equity; the warrants have a cashless warrant exercise feature, are exercisable at $1.40 per share for a term of five years from the date of the grant of June 15, 2020 and vested immediately;

iv) warrants for 3,750 shares for cashtwo directors board service on July 1, 2020, valued at $6,600 using the Black-Scholes model, whereby the value of $39,750. The Company received cashthe warrants was recorded to Stock-based compensation on the statement of $60,000equity and whereas the warrants vest monthly in equal installments for 60,000two months from the date of the grant and are exercisable for 5 years from the date of the grant at $1.20 per share;

v) warrants for 30,000 shares to be issued.a director for consulting services on September 1, 2020, valued at $96,000 using the Black-Scholes model, whereby the value of the warrants is recorded to Stock-based compensation on the statement of equity in equal monthly installments as they vest in equal monthly installments for four months from the date of the grant and are exercisable for 5 years from the date of the grant at $1.40 per share.

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

i)an expected volatility of the Company’s shares on the date of the grants of between approximately 350% and 433%, based on historical volatility;
ii)ii) risk-free rates identical to the U.S. Treasury 3-year and 5-year treasury bill rates on the date of the grants between 0.29% and 1.16%;

F-24

 

From October 1, 2016 to

A summary of warrant activity for the year ending March 31, 2020 and nine-month period ending December 31, 2016, the Company issued -0- shares of common stock in the quarter ended December 31, 2016, of which -0- shares were for services valued at market for $-0-, and -0- shares for cash of $-0-. Warrants were issued for services valued at $134,400.2021 is as follows:

SCHEDULE OF WARRANT ACTIVITY

  Number of
Warrants
  

Weighted-Average
Exercise
Price

  Warrants
Exercisable
  Weighted-
Average
Exercisable
Price
 
             
Outstanding, March 31, 2020  1,234,295  $2.12   1,027,092  $2.13 
                 
Issued in conjunction with convertible debt  158,036   1.40         
Sold for Cash  10,000   4.00         
Issued and granted  72,596   1.52         
Exercised for cash  (205,946)  (2.21)        
Cashless warrant exercises  (142,313)  (1.64)        
Expired  (45,000)  (3.78)        
Outstanding, March 31, 2021  1,081,668   2.02   881,982   2.00 
Issued and granted  3,043,556   5.63         
Exercised for cash  (6,094)  (6.90)        
Cashless warrant exercises  (237,724)  (1.58)        
Expired  (15,922)  (5.27)        
Cancelled  (108,000)  (1.79)        
Outstanding, March 31, 2022  3,757,484  $4.95   3,693,734  $5.00 

From January 1, 2017 toAt March 31, 2017,2022, the Company issued 300,000-range of warrant prices for shares of common stock inunder warrants and the quarterweighted-average remaining contractual life is as follows:

SCHEDULE OF RANGE OF WARRANT PRICES

   Warrants Outstanding  Warrants Exercisable 
Range of Warrant Exercise Price  Number of Warrants  Weighted- Average Exercise Price  

Weighted-Average

Remaining Contractual Life (Years)

  Number of Warrants  Weighted- Average Exercise Price 
$1.20-$2.00   418,237  $1.35   3.93   418,237  $1.35 
                      
2.01-4.00   207,938   2.48   2.34   134,813   2.59 
                      
4.01-6.67   3,131,309   5.60   4.26   3,131,309   5.60 
                      
Total   3,757,484  $4.95   4.12   3,693,734  $5.00 

For the year ended March 31, 2017, of which 300,000 shares were for services valued at market for $150,000,2022 and -0- shares for cash of $-0-.The2021, the total stock based compensation on all instruments was $702,896 and $452,674, respectively. It is expected that the Company agreed to issue stock for accrued officer salaries due from PetVivo, Inc. and Gel-Del Technologies, Inc. valued at $1,209,919. The Company agreed to issue stock for it Chief Revenue Officer valued at $80,000. The Company issued stock for services of employees of Gel-Del valued at $12,859.

As ofwill recognize expense after March 31, 2017,2022 related to warrants issued, outstanding, and valued using the Company had 133,250 warrants outstanding.Black Scholes pricing model as in the amount of approximately $31,000.

NOTE 7 - AGREEMENT AND PLAN OF MERGER

The Agreement and Plan of Merger was completed by the Company’s wholly-owned subsidiary, PetVivo Holdings Newco Inc. (“Newco”) and Gel-Del (the “Merger Agreement”). In accordance with the terms and provisions of the Merger Agreement, the Company effected a statutory merger transaction resulting in an exchange by the shareholders of Gel-Del on a pro rata basis of 100% of all outstanding Gel-Del capital stock in exchange for 5,540,000 shares of the Company’s restricted common stock, which represented approximately 30% of the total issued and outstanding shares of our common stock post-merger.

On April 10, 2017, the Merger Agreement was consummated and the Company completed the acquisition of the total issued and outstanding shares of common stock of Gel-Del from the Gel-Del shareholders. The acquisition was completed and consummated through a statutory merger between Gel-Del and NewCo, which resulted in Gel-Del being the surviving entity and becoming our wholly-owned subsidiary. The Merger Agreement became effective upon the filing with the Secretary of State of Minnesota on April 10, 2017. Upon the effectiveness of the Merger Agreement, each share of Gel-Del common stock issued and outstanding immediately prior to the consummation of the Merger Agreement was converted into the right to receive 0.788 common share of the Company. Gel-Del did not have any outstanding options, warrants or other derivative securities or rights convertible into securities.

Through this Merger Agreement, we acquired all of Gel-Del’s technology and related patents and other intellectual property (IP) and production techniques, as well as Gel-Del’s modern and secure biomedical product manufacturing facilities being jointly constructed by Gel-Del and the Company in Edina, Minnesota.

Although the Agreement and Plan of Merger had been completed, the shares of common stock were issued September 5, 2017.

NOTE 8 16 – INCOME TAXES

The following table presents the currentnet deferred tax assets as of March 31, 2022 and deferred income tax provision (benefit) for federal and state income taxes:2021:

SCHEDULE OF DEFERRED TAX ASSETS

  2017  2016 
Current tax provision:        
Federal $  $ 
State      
         
Deferred tax provision (benefit):        
Federal  (4,986,791)  (478,315)
State  (948,664)  (90,992)
Change in valuation allowance  5,935,455   569,757 
         
Total provision for income tax $  $ 
  2022  2021 
Net operating loss carryforwards $5,091,000  $4,924,000 
Stock compensation  512,000   307,000 
Other  96,000   44,000 
Total deferred tax assets  5,699,000   5,275,000 
Valuation allowance  (5,699,000)  (5,275,000)
Net deferred tax assets $  $ 

F-14F-25

 

Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes.

Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. The Company’s deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers would be limited under the Internal Revenue Code should a significant change in ownership occur within a three yearthree-year period. There were no depreciation differences.

At March 31, 20172022 and 2016,2021, respectively, the Company had net operating loss carryforwards of approximately $16,762,992$17,700,000 and $2,095,960, respectively, which begin to expire in 2029.$17,100,000. The deferred tax assets arising from the net operating loss carryforwards are approximately $16,763,000$5,091,000 and $789,000$4,924,000 as of March 31, 20172022 and 2016,2021, respectively. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, they concluded not to retain a deferred tax asset since it is uncertain whether the Company can utilize this asset in future periods. Therefore, they have established a full reserve against this asset. The change in the valuation allowance in 2017during the years ended March 31, 2022 and 20162021 was approximately $5,519,204and $90,992$424,000 and $441,000, respectively.The net operating loss carryforwards, if not utilized, generally expire twenty years from the date the loss was incurred, beginning in 2022, and losses incurred after 2019 are carried forward indefinitely and subject to annual limitations for federal and Minnesota purposes.

A reconciliationOf the approximately $17,700,000 in net operating loss carryforwards, approximately $7,000,000 has been accumulated in our pre-merger operating subsidiary, Gel-Del Technologies, Inc. IRC 382 provides guidance around whether or not the Company is able to utilize the pre-merger Gel-Del Technologies, Inc. net operating loss of the expectedapproximately $7,000,000. Management is currently analyzing whether or not these pre-merger dollars will be allowable if our deferred tax computed at the U.S. statutory federal incomeasset is ever realized.

Income tax rateexpense (benefits) to the total benefitstatutory rate of 21% for income taxes atthe years ended March 31, 2017, 20162022 and 2021 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

  2017  2016 
Expected tax at 34% and 9.3% $(5,935,455) $(569,307)
Change in valuation allowance  5,935,455   569,307 
Provision for income taxes $  $ 
  2022  2021 
Tax benefits at statutory rate  21.0%  21.0%
State income tax benefit, net of federal  7.7%  7.7%
Tax rate adjustment to deferred tax assets  -   3.2%
Gross effective rate  28.7%  31.9%
Valuation allowance  (28.7%)  (31.9%)
Net effective rate  -   - 

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of March 31, 20172022 and 2016,2021, the Company had no0 accrued interest and penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and Minnesota. Our tax years for 020142019 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority.

Management has evaluated tax positions in accordance with FASB ASC 740, and has not identified any tax positions, other than those discussed above, that require disclosuredisclosure.

NOTE 17 – SUBSEQUENT EVENT

On June 17, 2022, the Company entered into an exclusive distribution agreement (“agreement”) with MWI Veterinary Supply Company. The term of the agreement is for two years and can be extended for a third year if certain milestones are achieved.

F-15F-26

 

The Company has not filed tax returns for 2014, 2015, 2016, and 2017. The Company’s subsidiaries, Gel-Del Technologies, Inc., and Cosmeta Corp have not filed tax returns for tax years 2013, 2014, 2015, 2016, and 2017. It should be noted that the tax liability for all the companies for those years is likely to be none or minimal as a result of net operating losses recorded in those years. Gel-Del Technologies, Inc. and Cosmeta Corp file consolidated returns. There are penalties for not filing timely returns. These penalties have not been determined at this time, however, due to the operating losses, penalties are expected to be minimal.

NOTE 9 COMMITMENTS

The Company has a month to month lease agreement for manufacturing and office space with a monthly amount of $4,101. During 2017 the rent expense was $130,164 and $134,752 for 2016.

NOTE 10 RETIREMENT AND PENSION PLAN

The Company has instituted a Simplified Employment Pension Plan whereby the employer can contribute up to 15% of salary to a maximum of $22,500 per year. The Company has not paid into the Simplified Employment Pension Plan for fiscal years 2017 and 2016.

NOTE 11 – SUBSEQUENT EVENTS

Effective March 8, 2017,four officers/directors of the Company agreed to cash settlements in lieu of a total of $1,209,919 past due compensation owed to them by the Company and subsequently converted the cash settlements into a total of 2,100,128 restricted shares of common stock of the Company; these restricted shares were issued on June 8, 2017.

John Lai and John Dolan each agreed to cash settlements of $43,625 for $174,500 of their past due compensation, which was subsequently converted into a total of 1,308,750 restricted shares of PetVivo Holdings common stock. Regarding John Lai, his converted shares were offset and reduced by 500,000 shares incident to a former escrow arrangement, resulting in Mr. Lai receiving 154,375 shares through this transaction.

David Masters agreed to a cash settlement of $45,592 for $455,919 of his past due compensation and subsequently converted the cash settlement into 683,878 shares.

Randall Meyer agreed to a cash settlement of $40,500 for $405,000 of his past due compensation and subsequently converted the cash settlement into 607,500 shares.

All of the foregoing securities issuances were unregistered and made by the Company as non-public transactions, and accordingly exempt from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

On April 10, 2017,the Company completed the acquisition of all outstanding shares of common stock of Gel-Del Technologies, Inc., a Minnesota corporation (“Gel-Del”). This acquisition was completed and closed through a statutory merger between Gel-Del and Pet-Vivo Holdings Newco, Inc., a Minnesota corporation and wholly owned subsidiary of the Company, resulting in Gel-Del being the surviving entity and becoming a wholly owned subsidiary of PetVivo (“the Merger”). The Merger became effective upon its filing with the Secretary of State of Minnesota on April 10, 2017.

Upon the effectiveness of the Merger, each share of Gel-Del common stock outstanding immediately prior to the effective time of the Merger was converted into the right to receive 0.788 common share of the Company. Gel-Del had no outstanding options, warrants or other derivative securities or rights convertible into its securities.

As a result of the Merger, the Company issued a total of 5,450,000 shares of its unregistered common stock to the pre-merger shareholders of Gel-Del common stock. The issuance of these shares of common stock of PetVivo is unregistered in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

F-16

Effective April 10, 2017, the Stock Exchange Agreement dated November 21, 2014 between PetVivo and Gel-Del was suspended upon the completion of the Merger and as stated in Agreement and Plan for Merger is Section 9.04, Entire Agreement-Survival of Terms.

On April 10 2017, the Company completed the Merger with Gel-Del and in the process recognized that the Company realized an impairment loss of $14,081,031 due to the change in the valuation of Gel-Del capital stock received by the Company pursuant to the original Securities Exchange Agreement transaction dated November 24, 2014 and the valuation of the Gel-Del capital stock received by the Company’s upon the completion of the Merger on April 10, 2017. The completion of the Merger required the transfer of all issued capital stock in Gel-Del to the Company in exchange for 5,450,000 shares of the Company’s common stock. The closing market price per share of the Company on April 10, 2017 was $0.40 for a total aggregate stock exchange amount of $2,180,000 rather than the amount originally recorded for this securities exchange which was $16,600,000. During the year ended March 31, 2017, the Company recognized an impairment of goodwill in the amount of $13,407,693. For the year ended March 31, 2017, the Company recognized an impairment loss on the completion of the merger with Gel-Del and its subsidiary Cosmeta to PetVivo in the amount of $14,081,031 and a reduction in Trademarks and Patents-Net in the amount of $673,340.

On June 26, 2017, the management and Board of Directors determined that the past due compensation that was used to calculate settlement cash payments for four officers of the Company and which was subsequently converted to 2,100,128 restricted shares of common stock of the Company on March 8, 2017, was inconsistent with the accrued compensation amount recorded in the official accounting books of the Company. Therefore, the Board of Directors and four officers agreed that the cash settlements owed to each officer and corresponding number of shares issued pursuant to the Settlement Agreements be adjusted in view of the actual booked accrued compensation for the period ending December 31, 2016. The accrued compensation, settlement amounts and conversion shares granted for each of the four officers were adjusted as follows:

David Masters agreed to an adjusted cash settlement of $30,750 for $307,500 of his past due compensation and subsequently converted the adjusted cash settlement into 461,250 shares.

Randall Meyer agreed to an adjusted cash settlement of $30,750 for $307,500 of his past due compensation and subsequently converted the adjusted cash settlement into 461,250 shares.

John F. Dolan agreed to an adjusted cash settlement of $33,068 for $132,274 of his past due compensation and subsequently converted the adjusted cash settlement into 496,028 shares.

John Lai agreed to a cash settlement of $29,979 for $119,918 of his past due compensation and subsequently converted the adjusted cash settlement into 449,692 shares.

Effective July 17, 2017, the Board of Directors of the Company appointed Wesley C. Hayne as Chief Executive Officer (CEO) of PetVivo Holdings, Inc. to succeed John Lai who served as CEO of the Company since 2013. Concurrently, Mr. Lai was appointed President of the Company to succeed Dr. David B. Masters. The Board of Directors also approved and agreed to an Executive Employment Agreement (“Agreement”) for Mr. Hayne with certain material terms as follows: (i) Mr. Hayne shall receive a base salary of $8,000 monthly, of which $2,500 is payable to him monthly and $5,500 is earned but deferred until the Company receives capital funding in an amount of at least $1,000,000. Upon receipt of such funding, Mr. Hayne shall be paid his deferred salary he has earned plus a monthly amount based on an annual rate of at least $96,000; (ii) the initial term of employment is until May 31, 2019, with renewal for successive terms of one year each unless the parties cannot mutually agree to any extended term provisions; (iii) Mr. Hayne was granted 200,000 shares of restricted common stock of the Company as a signing bonus; (iv) the Agreement contains standard provisions for termination “for cause” upon the occurrence of certain events such as criminal conduct or material dishonesty toward the Company or material nonperformance of duties; (v) during his employment with the Company and for one year following his termination of employment for any reason, Mr. Hayne will not, anywhere in the world, directly or indirectly engage in any commercial activity in competition with the Company, and also he will not recruit or assist in the recruitment of any of the employees of the Company to leave the Company for employment by a business with which Mr. Hayne is associated or affiliated; and (vi) as an inducement for Mr. Hayne to accept the position of CEO of the Company and to continue serving the Company for his entire initial employment term, John Lai has assigned and conveyed 1,250,000 shares of Mr. Lai’s common stock of the Company for Mr. Hayne - of these shares, 50,000 shares were acquired by Mr. Hayne upon commencement of his employment as CEO of PetVivo, and the balance of 1,200,000 shares are escrowed and will vest and be acquired by Mr. Hayne ratably over his initial employment term ending on May 31, 2019.

Effective September 5, 2017,the Company issued 6,856,111 shares of PetVivo Holdings stock to Gel-Del Technologies, Inc. shareholders to replace 8,589,037 shares of their stock.

On November 28, 2017, the Company has raised $516,250 on its July 7, 2017 private offering of its common stock and purchase warrants at $0.35 per unit. The private offering is made on a “best efforts” basis in accordance with Section 4(2) of the Securities Act of 1933. Offers and sales of these securities will be made only to “accredited investors” as defined in Rule 501 of the Securities Act of 1933. The offering price of these securities has been determined arbitrarily by the management of PetVivo, and bears no particular relationship to the Company’s net worth, revenues or any other standard criteria of value.

F-17

ITEM 9. CHANGES AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

APPOINTMENT OF PATRICK HEYN, CPA, P.A.

On October 24, 2017, the Company retained Soles, Heyn & Company, LLP, as its principal independent registered public accounting firm. This changed engagement was necessary due to the recent merger of our former registered public accounting firm, Patrick D. Heyn, CPA, P.A. with Soles, Heyn & Company, LLP. During the Company’s two most recent fiscal years and to the date of this report, the Company has not consulted with Soles, Heyn & Company, LLP regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements and either a written report was provided to the Company or oral advice was provided to the Company that Soles, Heyn & Company, LLP, concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement and required to be reported under Item 304(a) (1)(iv) of Regulation S-K and the related instructions thereto. Item 401(a) is not applicable since there was no resignation or dismissal of the registrant’s certifying accountant involved in this merger of accounting firms.

On August 31, 2015, our Board of Directors approved the engagement of Patrick Heyn ("Heyn"), as our independent accountant effective immediately to audit our financial statements and to perform reviews of interim financial statements. During the fiscal years ended March 31, 2014 and 2013 through April 17, 2015 neither we nor anyone acting on our behalf consulted with Heyn regarding: (i) either the application of any accounting principles to a specific completed or contemplated transaction or the type of audit opinion that might be rendered by Heyn on our financial statements; or (ii) any matter that was either the subject of a disagreement with Cutler or a reportable event with respect to Cutler.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

Management's annual report on internal control over financial reporting.

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

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

38

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

Our Chief Executive Officer and our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of March 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") inInternal Control — Integrated Framework.

Based on our assessment, our Chief Executive Officer and our Chief Financial Officer believe that, as of March 31, 2017, our internal control over financial reporting is not effective based on those criteria, due to the following:

Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.
Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.
Lack of audit committee.

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

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management's report in this report.

Changes in internal control over financial reporting

There were no significant changes in our internal control over financial reporting during the fourth quarter of the year ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

39

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

EXECUTIVE OFFICERS AND DIRECTORS

All directors hold office until their successors have been elected and qualify. All officers are appointed by the board of directors and serve at the discretion of the board. The following table includes the names and positions held of our executive officers and their current ages:

NAMEAGEPOSITIONDIRECTOR SINCE
Wesley C. Hayne70Chief Executive Officer and a DirectorJuly 2017
John Lai54President and a DirectorMarch 2014
John F. Dolan51Secretary, Treasurer/General Counsel and a DirectorMarch 2014
David B. Masters, Ph.D.58Chief Technical Officer and a DirectorApril 2015
Randall A. Meyer52Chief Operating Officer and a DirectorApril 2015
Cynthia Jenkins58Chief Financial Officer
Peter Vezmar60DirectorSeptember 2017
David Deming57DirectorSeptember 2017
David E. Merrill69DirectorNovember 2017

Biographies

Wesley C. Hayne.Mr. Hayne has served as our Chief Executive Officer since June 7, 2017. Mr. Hayne started trading stocks at 13 years of age, incorporated his first business at 20 years of age and has since owned and/or operated companies as an executive in a variety of business sectors (manufacturing, entertainment, finance, restaurant and hospitality, building products and computer software/services). He is experienced in financial strategies and understands what it takes to successfully grow a company that ultimately leads to success measured thru the creation of jobs and wealth.

Early in his career, age 23, he was an executive in the entertainment business and worked as Director of Promotion for Heilicher Brothers, Inc., the world’s largest record distributor at the time. Later at age 26 he was Regional Promotion Manager for MCA Records, Inc. (division of Universal Studio’s) followed by Founding and taking the position of Executive VP of ASI Records, the latter two companies being publically traded.

Mr. Hayne left the entertainment business at age 32 to follow a dream to become a stockbroker and five years later at the age of 37 he founded and became President and CEO of Hayne, Miller, Swearingen & Glore, a broker dealer specializing in high growth companies. He sourced and managed numerous public (NASDAQ) and private underwritings (Mesaba Aviation, Sportsman’s Guide, First Team Sports, Custom Laboratories, Concourse, GrowBiz (Once Up on a Child, Play It Again Sports, etc.), Ballistic Recovery Systems, Successories, Classic Medical, Casino America, Casino Resources, WTC Industries, etc.). In addition to various acquisitions and mergers, Mr. Hayne expanded the firm’s retail business throughout the Midwest, with offices in Minneapolis and Chicago. At the same time he was a founding partner of First Financial Public Relations which served several publically traded companies. This was successfully sold after five years of operation and in 1994 he sold his interest in the brokerage firm to start another challenging project.

40

In 1995, Mr. Hayne founded and served as CEO of International Concept Development, Inc. developing American and German Franchises (Country Inns & Suites, Blimpies, and Aral Petroleum) in Eastern Europe and following that, back in the USA, Biorefining, Inc., a think tank for proprietary technologies in the renewable energy sector. He served in management (CEO, CFO) positions specializing in young startup companies until he joined Emergent Financial Group in 2012 where he served as Chief Strategy Officer. In 2016 Mr. Hayne moved to Prescott, Arizona and joined Source Capital Group’s office in Scottsdale, Arizona as Vice President Investments specializing in alternative type opportunities.

Historically, he served for years on the Board of Directors and as Chairman of the Audit Committee of K-tel International, Inc. as well as having served as a Director on several other Boards to include First Team Sports, Inc., HMS Holdings, Inc., Innovative Bio-Technology, LLC., British American Business Council Minnesota (BABC) and the Minnesota Sinfonia (“…the family orchestra”). He was also a member of the Minnesota Traders Association and Regional Investment Bankers Association.

Mr. Hayne attended the University of Minnesota / College of Education. Following the U of M he graduated from Programming Systems Institute for computer programming. He has taken extension courses at University of Northwestern in religion and the University of Minnesota in business law. He studied art at the Minneapolis Institute of Art. He attended Hennepin Technical College’s Customized Training Services for Web Design and in 2012 he received his Web Design Certificate from Normandale Community College. He held a Building Contractors License for several years in the State of Minnesota up to April, 2016 while operating a family business his dad started in 1938. He attended Securities School obtaining Series 7, 63, 24, 82 and 3 (Commodities) licenses and currently holds Series 63 and 82 licenses.

John Lai.Mr. John Lai has been our President and a director since March 2014. Mr. Lai has over thirty years of senior operations and financial experience and has served as president, chief financial officer and director of a number of corporations with a record of facilitating acquisitions, business launches, reverse mergers, and driving production revenue growth. Mr. Lai is recognized as an expert in the Powersports industry. He is on the expert consulting staff of Cohen research in NYC. Mr. Lai also contracts out to give analysis on the Powersports industry to mutual funds such as Janus, Neuberger Bergmen, and Fidelity.

Mr. Lai currently served as chief executive officer and president of PetVivo, based in Minneapolis, Minnesota, an emerging biomedical device company focused on the licensing and commercialization of innovative medical devices for pets, or pet therapeutics. Mr. Lai also served as chief executive officer and a director of Blue Earth Resources from 2012. Blue Earth, based in Burnsville, Minnesota, engaged in the acquisition, operation and management of majority working interests in producing oil and gas leases having wells in certain major oilfields of northwestern Louisiana leases. Mr. Lai served as chief executive officer and a director of Rovrr Inc. from 2008-2011, which offers advanced marketing solutions and proven methodologies to deliver successful social media monetization applications with high user acceptance. Mr. Lai also has served as president and director of Viper Powersports which designed and produced American made cruisers and engine platforms in the motorcycle industry. He also negotiated the acquisition of Thor Inc. and two pending acquisitions within the Powersports industry. Mr. Lai has also served as a director and chief financial officer of Buyitnow.com, where he managed the completion of a $35,000,000 private placement through Paine Webber, and was responsible for financial operations and forecasting with revenues over $40,000,000 and 100 employees.

Mr. Lai served as an advisor to Tech-Squared and raised private capital, which later became Digital River (DRIV), where he provided advice on financing options and the management team. Mr. Lai formed Genesis Capital Group, Inc. in 1992 as a Merchant Banking boutique focused on mergers and acquisitions, reverse mergers, deal structuring, and equity placements. Genesis Capital will commit its own capital to bring a transaction to its fruition. Mr. Lai has benefitted from years of networking within the industry to solve problems and situations in the small cap arena while completing over five transactions since the early 1990's.

Prior to forming Genesis Capital Group, Inc. in 1992, he held varies positions at investment firms. Between 1985 - 1992, Mr. Lai held positions at banking firms based in Chicago IL, New York City, NY. and Minneapolis, MN. He has been active in several charitable organizations. Mr. Lai has been quoted inDow Jones News, Investors Daily, Minnesota Business Journal, Wall Street Journal, Finance and Commerceand several other business publications.

41

John F. Dolan.Mr. John Dolan has been a director since our inception and was our Secretary, Treasurer/Chief Financial Officer until November 2017. Mr. Dolan is also corporate and intellectual property counsel for Holt Power Group Inc. Prior to joining Holt Power Group Inc.; Mr. Dolan was a shareholder in Fredrikson & Byron's intellectual property group and was a co-chair of its Cleantech group. Mr. Dolan works with corporations to strategically secure and protect domestic and foreign patent rights in a variety of technologies, including chemical compounds and compositions, industrial processes, films and coatings, biomass and biomaterials, mechanical devices, food products, packaging, recycled and building materials, biofuels and other renewable energies.

Mr. Dolan also advises companies on all aspects of intellectual property asset protection as well as technology and corporate development. Consultations include projects related to technology transfer and licensing, intellectual property due diligence in mergers, acquisitions and investments, product clearance analysis and opinions, business plan development, corporate set-up and structure strategies and patent litigation.

Mr. Dolan has also assisted entrepreneurs in the formation and development of new companies and has provided target identification and negotiation services related to venture funding, strategic partnering, licensing and merger and acquisitions. Mr. Dolan was also the founder of a company that commercialized a green technology where he crafted the strategy for the development, protection and utilization of unique intellectual property to raise capital, manufacture and commercialize products and license its technology.

Mr. Dolan has served as a patent examiner with the U.S. Patent and Trademark Office where he examined patent applications related to organic chemistry and biotechnology. This opportunity coupled with his legal experience has provided him a unique perspective of the intellectual property field.

David B. Masters, Ph.D.Dr. Masters has served as our Chief Technical Office and as a member of the Board of Directors since April 10, 2015. Dr. Masters served as founder, p resident, chief executive officer and chief technical officer of Gel-Del from 1999 until 2015. As the chief inventor of Gel-Del's technology platform, Dr. Masters focused on Gel-Del's novel biomaterials, biomaterial applications, its intellectual property, development of the products in pre-clinical and clinical trials, and addressed Gel-Del's financial needs for taking forward its products with licensing agreements and equity investments totaling approximately $6 million. Dr. Masters also was the principal investigator in bringing to Gel-Del over $6 million in National Institutes of Health government grants to forward its technology and products. He also served as chairman of the board of directors of Gel-Del from 1999 until its merger with us.

Dr. Masters is internationally recognized as an expert in biomaterials and local drug delivery. Over the past twenty years, Dr. Masters has developed novel biomaterial and drug delivery products, including implantable medical devices for neurologic, vascular, orthopedic, urologic and dermal applications.

Dr. Masters received his B.A. in Biochemistry and Biopsychology from Rutgers University, New Brunswick, NJ, with Scholar Distinction, and in 1989, a Masters Degree in Chemistry, and a Ph.D. in 1992 in Behavioral and Neural Sciences, from Rutgers University, Newark, NJ, including two awards for excellence in research. After Rutgers, he joined Harvard Medical School as a Research Fellow, Department of Anesthesiology, to study solid implantable dosage forms in collaboration with Dr. Robert Langer of M.I.T. This led to patented work on biodegradable polymers for local delivery of analgesic agents, a start-up company, and many published reports. Dr. Masters became an Instructor in Anesthesiology at Harvard before leaving for The Mayo Clinic (1993) where he was an Assistant Professor and Associate Consultant. His work using protein matrices has been funded by six NIH grants. Dr. Masters has over 60 peer reviewed publications, book chapters and abstracts, and over 28 patents issued, pending or applications. In 1999, Dr. Masters founded Gel-Del Technologies, Inc., which started operations in 2000 after he left Mayo Clinic.

Randall A. Meyer.Mr. Meyer has served as a member of our board of directors since April 10, 2015 and he was our Chief Operating Officer until November 2017. Mr. Meyer served as chief operating officer of Gel-Del from January 2009 to April 2015 where he focused on business development and product pipeline expansion, in addition to his efforts to secure working capital. Mr. Meyer joined Gel-Del Technologies in January 2007 as a full-time business development consultant where he targeted new markets and applications for the company's biomaterials and devices.

Prior to joining Gel-Del, Mr. Meyer was chief operating officer at Softscope Medical Technologies Inc. where he guided the early-stage medical device company through successful preclinical studies, clinical trial approval and the securing of $4.5 million in capital. SoftScope was acquired by Fujinon. From 2003 until 2005 Mr. Meyer served as chief executive officer and as a member of the board of directors at Tactile Systems Technology, Inc., where his accomplishments included securing private equity funding, developing a profitable reimbursement strategy and leading its vascular device through FDA compliance, clinical trials and a successful commercial launch.

42

Cynthia Jenkins.Ms. Jenkins has served as our Chief Financial Officer since September 1, 2017. Ms. Jenkins has held the offices of CEO, President, Vice President, Chief Financial Officer, and Secretary/Treasurer and has been in upper management of small to mid-size broker-dealers for more than forty years. Ms. Jenkins has comprehensive financial, compliance, and operational experience to expedite growth in new and existing firms in addition to acclimating them to the rules and regulations of the U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA).

Ms. Jenkins has specialized in assisting startup companies in building solid foundations in their financial and compliance/regulations departments. Ms. Jenkins has extensive expertise in AML audits, 3012 GAP Analysis testing, and documenting companies’ Written Supervisory and Compliance Procedures. Ms. Jenkins holds Series 7, 24, 27, 52, 63, and 99 securities licenses.

Peter Vezmar, Independent Director. Mr. Vezmar has over thirty-five years of diverse experience in business management and strategy, corporate finance, IPOs, mergers and acquisitions, financial reporting, regulatory compliance, tax matters and corporate governance. He has a wide range of experience and understanding in many industries, including options/futures, life sciences/biotech, IT technologies, insurance, transportation/ logistics and advertising, among others. Currently, Mr. Vezmar is President and CEO of Marula Enterprises, Inc., a holding company founded to pursue investment opportunities primarily focused on targeted middle-market companies.

David Deming, Independent Director. Mr. Deming has thirty years of commitment to the Institutional Asset Management Industry focusing on business development, client service, compliance and operations management in addition to extensive experience in branding and creating successful start-up companies. He has experience in institutional firm formation and establishing: operations, compliance, business development, and client service; he has also established and launched a mutual fund, commingled funds and LP’s. Mr. Deming is currently a Partner at Asymmetric Capital Management, LLC. and also serves as the acting CEO, Treasurer and a Director at Wildfire 5G, Inc.

David E. Merrill,Independent Director. Mr. Merrill has for many years been an executive officer, sales representative or consultant for several leading medical device companies. Since 2011, Mr. Merrill has been principal owner and Chief Executive Officer of Merrill Family Enterprises, LLC (“MFE”), a medical device consulting and investment company based in Fort Worth, Texas, which provides management and marketing advisory and product distribution services for its clients.

Mr. Merrill was employed by Medtronic for a total of thirteen years while serving in various positions including as a sales representative for a leading Medtronic territory which had Mayo Clinic as its largest account, as District Manager of the three-state region of Texas, Oklahoma and New Mexico, and as Medtronic’s overall Director of Sales Development and Support. His successful career with Medtronic also included extensive international experience while serving for three years as Vice President of Cardiac Rhythm Management, Asia-Pacific. During this three-year period, Medtronic revenues from his Far Eastern territory increased from $150-$160 Million to near $300 Million. For his sales and marketing achievements at Medtronic, he was inducted into the prestigious Medtronic’s President Club. Mr. Merrill’s extensive experience in the medical device industry also included ten years as Senior Director, Southwest Region for the Cardiac Division of St. Jude Medical, which key region included ten southwestern states.

Mr. Merrill’s overseas experience included being Vice President, International of I-Flow Corporation, which recruited and hired him primarily to develop a substantial international market for I-Flow medical products. During his ten-year period with I-Flow, he successfully negotiated and obtained I-Flow product distribution agreements with large leading international medical device companies in Germany, Japan, Mexico and other countries. International annual sales of I-Flow products under Mr. Merrill’s leadership grew to $30 Million having a gross margin of 60%. I-Flow was acquired by Kimberly Clark in 2010. Mr. Merrill assisted in the integration of I-Flow’s business with Kimberly Clark, after which he founded, incorporated and organized MFE.

43

For the past ten years, there have been no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony.

Family Relationships

There are no family relationships among our current directors or officers.

Involvement in Certain Legal Proceedings

During the past five years, have been involved in any legal proceeding concerning: (i) any bankruptcy petition filed by or against any business of which they were a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction permanently or temporarily enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity; or (iv) being found by a court, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law unless the judgment was reversed, suspended or vacated).

CORPORATE GOVERNANCE

Audit Committee and Compensation Committee

Presently, the Board of Directors acts as the compensation committee and the audit committee, however, the Board has adopted a compensation committee and audit committee to become effective January 1, 2018.

Code of Ethics

We do not currently have a Code of Ethics that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We plan to adopt a Code of Ethics to become effective in 2018.

Director Independence

Three of our directors are deemed independent including Messrs. Vezmar, Deming, and Merrill.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our principal executive officers during the year ended March 31, 2017 and 2016.

44

Summary Compensation Table

Name and Principal Position Year  Salary
($)
  Bonus
($)
  Stock
Awards
($)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Nonqualified
Deferred
Compensation
Earnings

($)
  All Other
Compensation
($)
  Total
($)
 
John Lai, President  2017   18,000   0   72,000   0   0   0   0   90,000 
and Director (1)  2016   24,000   0   0   0   0   0   0   24,000 
                                                                          
John F.Dolan, Secretary,  2017   48,750   0   72,000   0   0   0   0   120,750 
Treasurer/GC
  2016   32,000   0   0   0   0   0   0   32,000 
and Director (2)                                    
                                     
David Masters, CTO  2017   48,750   0   146,250   0   0   0   0   195,000 
and Director (3)  2016   65,000   0   172,000   0   0   0       237,000 
                                     
Randall Meyer,COO  2017   48,750   0   146,250   0   0   0   0   195,000 
and Director (4)  2016   120,798   0   110,000   0   0   0   0   230,798 
                                     
Wes Hayne, CEO  2017   7,500   0   0   0   0   0   0   7,500 
and Director (5)  2016   0   0   0   0   0   0   0   0 

(1)During fiscal year ended March 31, 2017, no cash compensation was paid to John Lai and the remaining amount due and owing was converted to stock or has been accrued. During fiscal year ended March 31, 2016 an aggregate of $24,000 was paid to John Lai and the remaining amount due and owing was accrued.

(2)During fiscal year ended March 31, 2017, no cash compensation was paid to John Dolan and the remaining amount due and owing was converted to stock or has been accrued. During fiscal year ended March 31, 2016, an aggregate $32,000 was paid to John Dolan and the remaining amount due and owing has accrued.

(3)During fiscal year ended March 31, 2017, no cash compensation was paid to David Masters and the remaining amount due and owing was converted to stock or has been accrued. During fiscal year ended March 31, 2016, an aggregate of $65,000 was paid to David Masters and the remaining amount due and owing has accrued. During fiscal year ended March 31, 2016, we issued 43,000 shares of restricted common stock to David Masters at $4.00 per share resulting in compensation of $172,000.

(4)During fiscal year ended March 31, 2017, no cash compensation was paid to Randall Meyer and the remaining amount due and owing was converted to stock or has been accrued. During fiscal year ended March 31, 2016, an aggregate $120,798 was paid to Randall Meyer and the remaining amount due and owing has accrued. During fiscal year ended March 31, 2016, we issued 27,500 shares of restricted common stock to Randall Meyer at $4.00 per share resulting in compensation of $110,000.

(5)During fiscal year ended March 31, 2017, $2,500 cash compensation was paid to Wesley Hayne and the remaining amount due and owing has been accrued. During fiscal year ended March 31, 2016, no compensation was paid or owed to Wesley Hayne.

OUTSTANDING EQUITY AWARDS

As of March 31, 2017, the following named executive officers had the following unexercised options, stock that has not vested, and equity incentive plan awards:

STOCK OPTIONS//SAR GRANTS. No grants of stock options or stock appreciation rights were made during the fiscal year ended March 31, 2017.

45

LONG TERM INCENTIVE PLANS.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.

DIRECTOR COMPENSATION

None of our directors received any compensation for their service as directors during the fiscal year ended March 31, 2017:

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the beneficial ownership of our common stock as of August 21, 2017 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.

Title of ClassName and Address of Beneficial Owner
Officers and Directors
Amount and Nature of
Beneficial Owner
Percent of
Class (1)
Common StockWesley C. Hayne1,610,000 shares,
5251 Edina Industrial Blvd.CEO and Director
Edina, Minnesota 554399.28%
Common StockJohn Lai2,137,591 shares,
Edina Industrial Blvd.President and Director
Edina, MN 5543912.33%
Common StockJohn F. Dolan1,946,084 shares
Edina Industrial Blvd.Secretary, Treasurer/GC and
Edina, Minnesota 55439Director11.22%
Common StockDavid B. Masters5,134,394 shares
Edina Industrial Blvd.CTO/Director
Edina, Minnesota 5543929.61%
Common StockRandall A. Meyer1,868,013 shares
Edina Industrial Blvd.COO/Director
Edina, Minnesota 5543910.77%
Common StockAll directors and named executive officers as a group (5 persons)12,696,082 shares73.21%

(1)Percentage of beneficial ownership of our common stock is based on 17,340,934 shares of common stock outstanding as of the date of this Annual

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which provide that shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by their holders. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.

46

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Related Party Transactions - Stock Issuances

On March 8, 2017, our Board of Directors authorized the issuance of an aggregate 2,100,128 shares of our shares of restricted common stock to four of our executive officers and directors as settlement for amounts due and owing for past services and associated benefits. The issuance of shares was as follows: (i) 683,878 shares of common stock at $0.40 per share to Dr. David B. Masters, our Chief Technical Officer and member of the Board of Directors, as settlement for $455,919; (ii) 607,500 shares of common stock at $0.40 per share to Randall A. Meyer, our former Chief Operating Officer and member of the Board of Directors, as settlement for $405,000; (iii) 654,375 shares of common stock at $0.40 per share to John F. Dolan, our former Chief Financial Officer and member of the Board of Directors, as settlement for $174,500; and (iv) 654,375 shares of common stock at $0.40 per share to John Lai, our President and member of the Board of Directors, as settlement for $174,500. John Lai’s converted shares were offset and reduced by 500,000 shares incident to a former escrow arrangement, resulting in Mr. Lai receiving 154,375 shares through this transaction.

On June 26, 2017, our Board of Directors determined that the past due compensation that was used to calculate settlement cash payments for four officers of the Company and which was subsequently converted to 2,100,128 restricted shares of common stock of the Company on March 8, 2017, was inconsistent with the accrued compensation amount recorded in the official accounting books of the Company. Therefore, the Board of Directors and four officers agreed that the cash settlements owed to each officer and corresponding number of shares issued pursuant to the Settlement Agreements be adjusted in view of the actual booked accrued compensation for the period ending December 31, 2016. The accrued compensation, settlement amounts and conversion shares granted for each of the four officers were adjusted as follows: (i) David Masters agreed to an adjusted cash settlement of $30,750 for $307,500 of his past due compensation and subsequently converted the adjusted cash settlement into 461,250 shares; (ii) Randall Meyer agreed to an adjusted cash settlement of $30,750 for $307,500 of his past due compensation and subsequently converted the adjusted cash settlement into 461,250 shares; (iii) John F. Dolan agreed to an adjusted cash settlement of $33,068.50 for $132,274 of his past due compensation and subsequently converted the adjusted cash settlement into 496,028 shares; and (iv) John Lai agreed to a cash settlement of $29,979 for $119,918 of his past due compensation and subsequently converted the adjusted cash settlement into 449,692 shares. John Lai’s converted shares were offset and reduced by 500,000 shares incident to a former escrow arrangement, resulting in Mr. Lai agreeing to return an additional 50,308 personally owned shares to the Company through this transaction.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed for the fiscal years ended March 31, 2017 and 2016 for professional services rendered by the principal accountant for the audit of our annual financial statements included in our Form 10-K and review of our quarterly unaudited financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $28,000 in each year.

Audit-Related Fees

For the fiscal years ended March 31, 2017 and 2016, there were no fees billed for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under "Audit Fees."

Tax Fees

For the fiscal years ended March 31, 2017 and 2016, there were no fees billed for services for tax compliance, tax advice, and tax planning work by our principal accountants.

47

All Other Fees

None.

Pre-Approval Policies and Procedures

Prior to engaging our accountants to perform a particular service, our Board of Directors obtains an estimate for the service to be performed. All of the services described above were approved by the Board of Directors in accordance with its procedures.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements.

Included in Item 8

(b) Exhibits required by Item 601.

Exhibit No.Description
3.1Articles of Incorporation, incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on April 18, 2011
3.2Certificate of Amendment to Articles of Incorporation, incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on April 18, 2011
3.3Certificate of Amendment to Articles of Incorporation incorporated by reference to Exhibit 3.1 of Current Report on Form 8-K filed on March 10, 2014
3.4Certificate of Amendment to Articles of Incorporation incorporated by reference to Exhibit 3.1 of Current Report on Form 8-K filed on April 7, 2014.
3.3Bylaws, incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on April 18, 2011
10.1Letter of Intent between Technologies Scan Corp. and 6285431 Canada Inc. dated September 5, 2012 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 11, 2012.
10.2Rescission Agreement between Technologies Scan Corp. and 6285431 Canada Inc. dated April 12, 2013 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2013.
10.3Letter of Intent between Technologies Scan Corp. and Social Geek Media Inc. dated April 6, 2013 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2013.
10.4Memorandum of Amendment between Technologies Scan Corp. and Social Geek Media Inc. dated May 17, 2013 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 21, 2013.
10.512% Convertible Debenture of $100,000 between Technologies Scan Corp. and 6287182 Canada Inc. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 16, 2013.
10.612% Convertible Debenture of $100,000 between Technologies Scan Corp. and Brevets Futek MSM Ltee. incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 16, 2013.
10.7Rescission Agreement dated November 9, 2013 among Social Geek Meda Inc., Patrick Aube and Technologies Scan Corp. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 13, 2013

48

10.8Letter of Intent dated December 16, 2013 between FedTech Services Inc. and Technologies Scan Corp. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2013
10.9Term Sheet between Technologies Scan Corp. and PetVivo Inc. dated February 10, 2014 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2014.
 10.10Settlement Agreement dated February 2, 2014 between Technologies Scan Corp. and Ghislaine St.-Hilaire incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2014.
10.11Securities Exchange Agreement among Technologies Scan Corp., PetVivo Inc. and shareholders of PetVivo Inc. dated March 21, 2014 incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2014.
10.12Convertible Promissory Note dated March 17, 2014 between Technologies Scan Corp. and 9165-5643 Quebec Inc incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014.
10.13Convertible Promissory Note dated March 17, 2014 between Technologies Scan Corp. and Elden Brochu incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014.
10.14Convertible Promissory Note dated March 17, 2014 between Technologies Scan Corp. and Gina Drouin incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014.
10.15Convertible Promissory Note dated March 17, 2014 between Technologies Scan Corp. and Christian Fontaine incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014
10.16Convertible Promissory Note dated March 17, 2014 between Technologies Scan Corp. and Ferme Semen Inc. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2014
10.17Term Sheet dated June 2, 2014 between Technologies Scan Corp. and Gel-Del Technologies Inc. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 2, 2014.
10.18Terminated Stock Purchase Agreement dated November 21, 2014 between PetVivo Holdings Inc. and Gel-Del Technologies Inc. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2014.
10.19Agreement and Plan of Merger dated March 20, 2017 among PetVivo Holdings, Inc., PetVivo Holdings NewCo, Inc., and Gel-Del Technologies Inc. incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2017.
10.20Securities Purchase Agreement dated February 11, 2015 between PetVivo Holdings Inc. and Gemini Master Fund Ltd. incorporated by reference to Exhibit 10.20 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission on September 18, 2017.
16.1Letter from KBL LLP dated May 24, 2013 incorporated by reference to Exhibit 16.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 2013.
31.1Certification of Principal Executive Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002*
31.2Certification of Principal Financial Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002*
32.1Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.insXBRL Instance Document**
101.schXBRL Taxonomy Schema**
101.calXBRL Taxonomy Calculation Linkbase**
101.defXBRL Taxonomy Definition Linkbase**
101.labXBRL Taxonomy Label Linkbase**
101.preXBRL Taxonomy Presentation Linkbase**

* Filed herewith.

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PetVivo Holdings, Inc.,

a Nevada corporation

December 13, 2017By:/s/ Wesley C. Hayne
Wesley C. Hayne
Its:

Chief Executive Officer and Director

(Principal Executive Officer)

December 13, 2017By:/s/ Cynthia Jenkins
Cynthia Jenkins
Its:Chief Financial Officer(Principal Financial and Accounting Officer)

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:/s/ Wesley C. HayneDecember 13, 2017
Wesley C. Hayne
Its:Chief Executive Officer and , Director
(Principal Executive Officer)

By:/s/ Cynthia JenkinsDecember 13, 2017
Cynthia Jenkins
Its:Chief Financial Officer
(Principal Financial and Accounting Officer)

50