U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

FORM 10-Q(Mark One)

Mark One

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

For the quarterly period ended JuneSeptember 30, 20172022

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

For the transition period from _______ to _______

Commission File No.333-141060001-40715

PetVivo Holdings, Inc.

(Name of small business issuer in its charter)

Nevada99-0363559

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

5251 Edina Industrial Blvd.Blvd, Edina, Minnesota55439

Edina, Minnesota 55439

(Address of principal executive offices) (Zip Code)

(952)405-6216

(Issuer’s telephone number)

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

Securities registered pursuant to Section 12(b)Title of the Act:each classTrading Symbol(s)Name of each exchange on which registered:registered
NoneCommon Stock, par value $0.001PETVThe Nasdaq Stock Market LLC
Warrants to purchase Common StockPETVWThe Nasdaq Stock Market LLC

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

Common Stock, $0.001

(Title of Class)

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

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

 

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

Large accelerated filer[  ]Accelerated filer[  ]
Non-accelerated filer[  ]Smaller reporting company[X]
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 checkmarkcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

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

ClassOutstanding as of December 27, 2017November 10, 2022
Common Stock, $0.00118,777,04510,095,275

 

 

PETVIVO HOLDINGS, INC.

FORM 10-Q

FOR THE PERIOD ENDED JUNESeptember 30, 20172022

INDEX

Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSi
PART I. FINANCIAL INFORMATIONF-11
Item 1.Financial StatementsF-11
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations418
Item 3.Qualitative and Quantitative Disclosures About Market Risk824
Item 4.Controls and Procedures824
PART II. OTHER INFORMATION1025
Item 1.Legal Proceedings1025
Item 1A.Risk Factors25
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds1025
Item 3.Defaults Upon Senior Securities1026
Item 4.Mine Safety Disclosure1026
Item 5.Other information1026
Item 6.Exhibits1026
SIGNATURES1127

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

Information included in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of PetVivo Holdings, Inc. (the “Company”), to be materially different from future results, performance, or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied byin the forward-looking statements as a result of various factors.statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for our fiscal year ended March 31, 2022 (“2022 10-K Report”) and risks described in other SEC filings. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

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PART II.

ITEM 1. FINANCIAL STATEMENTS

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

  

September 30, 2022

(Unaudited)

  March 31, 2022 
Assets:        
Current Assets        
Cash and cash equivalents $2,337,093  $6,106,827 
Accounts receivable  129,142   2,596 
Inventory, net  304,967   98,313 
Prepaid expenses and other assets  612,128   547,664 
Total Current Assets  3,383,330   6,755,400 
         
Property and Equipment, net  341,071   311,549 
         
Other Assets:        
Operating lease right-of-use  269,592   299,101 
Patents and trademarks, net  43,986   48,452 
Security deposit  12,830   12,830 
Total Other Assets  326,408   360,383 
Total Assets $4,050,809  $7,427,332 
         
Liabilities and Stockholders’ Equity        
         
Current Liabilities        
Accounts payable $422,141  $323,384 
Accrued expenses  765,086   784,375 
Operating lease liability – short term  59,807   59,178 
Note payable and accrued interest  6,737   6,549 
Total Current Liabilities  1,253,771   1,173,486 
Other Liabilities        
Note payable and accrued interest (net of current portion)  23,868   27,201 
Operating lease liability (net of current portion)  209,785   239,923 
Total Other Liabilities  233,653   267,124 
Total Liabilities  1,487,424   1,440,610 
Commitments and Contingencies (see Note 9)  -   - 
Stockholders’ Equity:        
Preferred stock, par value $0.001, 20,000,000 shares authorized, 0 and 0 shares issued and outstanding at September 30, 2022 and March 31, 2022  -   - 
Common stock, par value $0.001, 250,000,000 shares authorized, 10,095,275 and 9,988,361 shares issued and outstanding at September 30, 2022 and March 31, 2022, respectively  10,095   9,988 
Additional Paid-In Capital  69,756,728   69,103,155 
Accumulated Deficit  (67,203,438)  (63,126,421)
Total Stockholders’ Equity  2,563,385   5,986,722 
Total Liabilities and Stockholders’ Equity $4,050,809  $7,427,332 

  June 30, 2017  March 31, 2017 
Assets:      
Current Assets        
Cash and cash equivalents $5,359  $25,434 
Accounts receivable  326   163 
Prepaids  8,383   8,590 
Security Deposit  8,201   - 
Total Current Assets  22,269   34,187 
         
Property and Equipment:        
Property & equipment  103,504   103,503 
Less: accumulated depreciation  (103,144)  (103,054)
Total Fixed Assets  360   449 
         
Other Assets:        
Trademark and patents-net  1,705,972   1,862,301 
Total Other Assets  1,705,972   1,862,301 
Total Assets $1,728,601  $1,896,937 
         
Liabilities and Stockholders’ Equity        
         
Current Liabilities        
Accounts payable & accrued expenses $1,122,818  $643,890 
Note payable and accrued interest-related party  200,190   197,055 
Notes payable and line of credit loan  127,295   131,247 
Convertible notes payable  109,315   105,000 
Total Current Liabilities  1,559,618   1,077,192 
         
Commitments and Contingencies        
         
Stockholders’ Equity:        
Common stock, par value $0.001, 250,000,000 shares authorized, issued 17,340,934 and 9,321,306 shares outstanding at June 30, 2017 and March 31, 2017  17,341   9,322 
Stock subscription receivable  (342,727)  - 
Common stock to be issued  112,500   1,349,919 
Additional Paid-In Capital  46,293,716   30,567,761 
Accumulated Deficit  (45,911,847)  (45,410,816)
Total Stockholders’ Equity  168,983   (13,483,814)
Non-Controlling Interest  -   14,303,559 
Total Stockholders’ Equity  168,983   819,745 
Total Liabilities and Stockholders’ Equity $1,728,601  $1,896,937 

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

1

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

  2022  2021  2022  2021 
  

Three Months Ended

September 30,

  

Six Months Ended

September 30,

 
  2022  2021  2022  2021 
Revenues $223,280  $4,977  $281,454  $9,122 
                 
Cost of Sales  148,159   -   201,179   5,051 
Gross Profit  75,121   4,977   80,275   4,071 
                 
Operating Expenses:                
                 
Sales and Marketing  867,985   235,767   1,524,554   285,498 
Research and Development  140,384   116,380   212,040   253,317 
General and Administrative  1,186,320   756,186   2,429,342   1,087,131 
                 
Total Operating Expenses  2,194,689   1,108,333   4,165,936   1,625,946 
                 
Operating Loss  (2,119,568)  (1,103,356)  (4,085,661)  (1,621,875)
                 
Other Income (Expense)                
Forgiveness of PPP loan and accrued interest  -   -   -   31,680 
Interest Income (Expense)  7,979   (2,118)  8,644   (5,908)
Total Other Income (Expense)  7,979   (2,118)  8,644   25,772 
                 
Loss before taxes  (2,111,589)  (1,105,474)  (4,077,017)  (1,596,103)
                 
Income Tax Provision  -   -   -   - 
Net Loss $(2,111,589) $(1,105,474) $(4,077,017) $(1,596,103)
                 
Net Loss Per Share:                
Basic and Diluted $(0.21) $(0.13) $(0.41) $(0.21)
                 
Weighted Average Common Shares Outstanding:                
Basic and Diluted  10,053,463   8,749,233   10,021,090   7,757,099 

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

2

PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

Six Months Ended September 30, 2022

  Shares  Amount  Capital  Deficit  Total 
  Common Stock  Additional Paid-in  Accumulated    
  Shares  Amount  Capital  Deficit  Total 
Balance at March 31, 2022  9,988,361  $9,988  $69,103,155  $(63,126,421) $5,986,722 
Stock-based compensation  -   -   231,231   -   231,231 
Net loss  -   -   -   (1,965,428)  (1,965,428)
Balance at June 30, 2022  9,988,361  $9,988  $69,334,386  $(65,091,849) $4,252,525 
                     
Cash paid to exercise warrants  48,664   49   66,509   -   66,558 
Vesting of restricted stock units  33,250   33   (33)  -   - 
Stock issued for services  25,000   25   49,895   -   49,920 
Stock-based compensation  -   -   305,971   -   305,971 
Net loss  -   -   -   (2,111,589)  (2,111,589)
Balance at September 30, 2022  10,095,275  $10,095  $69,756,728  $(67,203,438) $2,563,385 

Six Months Ended September 30, 2021

  Common Stock  Additional Paid-in  Accumulated    
  Shares  Amount  Capital  Deficit  Total 
Balance at March 31, 2021  6,799,113  $6,799  $57,207,648  $(58,111,426) $(896,979)
Common stock sold  49,014   50   343,048   -   343,098 
Cash paid to exercise warrants  4,500   4   39,996   -   40,000 
Stock issued for debt conversion  80,522   80   232,578   -   232,658 
Cashless warrant exercises  160,006   160   (160)  -   - 
Stock-based compensation  -   -   55,674   -   55,674 
Net loss  -   -   -   (490,629)  (490,629)
Balance at June 30, 2021  7,093,155�� $7,093  $57,878,784  $(58,602,055) $(716,178)
                     
Common stock sold  2,511,000   2,511   4,966,020   -   4,968,531 
Warrants sold  -   -   4,889,252   -   4,889,252 
Cash paid to exercise warrants  1,594   1   2,030   -   2,031 
Cashless warrant exercise  40,038   40   (40)  -   - 
Stock issued for services  42,000   42   209,958   -   210,000 
Stock-based compensation  -   -   104,092   -   104,092 
Stock and warrants granted for debt conversion  43,556   44   195,956   -   196,000 
Net loss  -   -   -   (1,105,474)  (1,105,474)
Balance at September 30, 2021  9,731,343  $9,731  $68,246,052  $(59,707,529  $8,548,254 

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

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PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCASH FLOWS

(UNAUDITED)

  Three Months Ended 
  June 30, 2017  June 30, 2016 
       
Revenues $1,183  $2,009 
         
Cost of Sales  -   - 
         
Gross Profit  1,183   2,009 
         
Operating Expenses:        
         
Research and Development  23,866   5,497 
General and Administration  460,638   622,738 
Total Operating Expenses  484,504   628,235 
         
Operating Loss  (483,321)  (626,226)
         
Other Income (Expense)        
Gain on Settlement of Debt  -   24,460 
Interest Expense  (17,710)  (8,686)
Total Other Income (Expense)  (17,710)  15,774 
         
Net Loss before taxes  (501,031)  (610,452)
         
Income Tax Provision  -   - 
         
Net Loss  (501,031)  (610,452)
         
Net Loss Attributable To Non-Controlling Interest  -   279,105 
         
Net loss attributable to PetVivo $(501,031) $(331,347)
         
Net Income (Loss) Per Share- Basic And Diluted $(0.03) $(0.04)
         
Weighted Average Common Shares Outstanding-Basic And Diluted  14,984,193   8,761,823 

  September 30, 2022  September 30, 2021 
  For the Six Months Ended 
  September 30, 2022  September 30, 2021 
CASH FLOWS FROM OPERATING ACTIVITIES:        
         
Net Loss For The Period $(4,077,017) $(1,596,103)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:        
Stock-based compensation  537,202   159,766 
Stock issued for services  166,114   - 
Depreciation and amortization  58,510   27,689 
Forgiveness of PPP loan and accrued interest  -   (31,680)
Changes in Operating Assets and Liabilities        
Increase in prepaid expenses and other assets  (180,658)  (285,238)
Increase in accounts receivable  (126,546)  - 
Increase in inventory  (206,654)  (74,637)
Decrease in deferred offering costs  -   280,163 
Interest accrued on convertible notes payable  -   192 
Interest accrued on notes payable - related party  -   4,013 
Increase in accounts payable and accrued expenses  79,468   212,506 
Decrease in accrued expenses - related party  -   (36,808)
Net Cash Used In Operating Activities  (3,749,581)  (1,340,137)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of equipment  (83,566)  (17,059)
Disbursements for patents and trademarks  -   (19,154)
Net Cash Used in Investing Activities  (83,566)  (36,213)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from stock and warrants sold  -   10,200,881 
Proceeds from exercise of warrants  66,558   42,031 
Repayments of note payable  (3,145)  (2,728)
Repayments of PPP loan  -   (1,373)
Repayments of notes payable - related party  -   (48,267)
Repayments of notes payable - directors  -   (20,300)
Net Cash Provided by Financing Activities  63,413   10,170,244 
         
Net (Decrease) Increase in Cash  (3,769,734)  8,793,894 
Cash at Beginning of Period  6,106,827   23,578 
Cash at End of Period $2,337,093  $8,817,472 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash Paid During The Period For:        
Interest $2,022  $8,468 
         
SUPPLEMENTAL DISCLOSURE ON NON-CASH FINANCING AND INVESTING ACTIVITIES        
Stock granted for debt conversion  -  $232,658 
Stock granted for share-settled debt obligation conversion  -  $196,000 
Stock granted for consulting services $49,920  $210,000 

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

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PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

  Common Stock  Additional
Paid-in
  Accumulated  Non- controlling  Stock to be  Shareholder    
  Shares  Amount  Capital  Deficit  Interest  Issued  Receivable  Total 
Balance March 31, 2016  7,931,639  $7,931  $28,224,376  $(29,879,283) $15,280,865.00  $1,576,649.00   -  $15,210,538 
                                 
Common stock to be issued  -   -   -   -   -   1,349,919.00   -   1,349,919 
                                 
Common shares issued to settle debt  788,325   789   1,575,860   -   -   (1,576,649)  -   - 
                                 
Common stock issued for cash  66,500   67   99,684   -   -   -   -   99,751 
                                 
Common stock issued for services  437,500   438   382,062   -   -   -   -   382,500 
                                 
Common shares 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 
                                 
Stock issued to reduce accrued salaries  2,100,128   2,100   1,207,819   -   -   (1,209,919)  -   - 
Stock to be issued  -   -   -   -   -   160,825   -   160,825 
Shareholder receivable  -   -   -   -   -   -   (342,727)  (342,727)
Stock issued for cash  90,000   90   31,410   -   -   (31,500)  -   - 
Stock issued for services  379,500   379   156,446   -   -   (156,825)  -   - 
Stock issued for services-Gel-Del  -   -   -   -   32,171   -   -   32,171 
Change in ownership in VIE  5,450,000   5,450   14,330,280   -   (14,335,730)  -   -   - 
Net loss  -   -   -   (501,031)  -   -   -   (501,031)
                                 
Balance June 30, 2017  17,340,934  $17,341  $46,293,716  $(45,911,847) $-  $112,500  $(342,727) $168,983 

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

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PETVIVO HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

  For the Three Months Ended 
  June 30, 2017  June 30, 2016 
CASH FLOWS USED IN OPERATING ACTIVITIES:        
         
Net Loss For The Period $(501,031) $(610,452)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:        
Non-cash consulting expense  32,172   - 
Stock issued for services  156,825   193,976 
Depreciation and amortization  162,320   197,824 
Amortization of debt issue costs  -   3,311 
Derivative gain adjustment  -   (24,460)
Changes in Operating Assets and Liabilities        
Decrease in prepaid expense and employee advances  206   5,667 
Increase in advances and receivables  (163)  (7,177)
Increase in accounts payable and accrued expense  101,698   190,076 
Net Cash Used in Operating Activities  (47,973)  (51,235)
         
CASH FLOWS USED IN INVESTING ACTVITITES        
Increase in security deposit  (8,201)  - 
Increase in patent costs  (5,901)  - 
Net Cash Used in Investing Activities  (14,102)  - 
         
CASH FLOWS USED IN FINANCING ACTIVITIES        
Proceeds from stock sale  31,500   60,000 
Common stock subscribed  10,500   39,750 
Repayments of convertible notes  -   (35,000)
Repayments of loans and line of credit  -   (13,251)
Net Cash Provided by Financing Activities  42,000   51,499 
         
Net (Decrease) Increase in Cash  (20,075)  264 
Cash at Beginning of Period  25,434   258 
Cash at End of Period $5,359  $522 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash Paid During The Year For:        
Interest  -   - 
Income taxes paid  -   - 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Shares issued as payment of note payable $-  $1,576,649 
Shares issued as payment for accrued salaries $1,209,919  $- 
Change in variable interest equity $14,335,730  $- 

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

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PetVivo Holdings, Inc.

Notes to Consolidated Financial Statements

JuneSeptember 30, 20172022

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A)Organization and Description

(A) BasisThe Company is in the business of Presentationlicensing and commercializing our proprietary medical devices and biomaterials for the treatment of afflictions and diseases in animals, initially for dogs and horses. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such osteoarthritis in dogs and horses, in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.

(B)Basis of Presentation

PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered itits current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in Minnesota PetVivo becoming a wholly-owned subsidiary of the Company.

In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly ownedwholly-owned subsidiary of the Company.

(C)Principles of Consolidation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim 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. Certain information and note disclosures, which are included in annual financial statements, have been omitted pursuant to these rules and regulations. We believe the disclosures made in these interim unaudited financial statements are adequate to make the information not misleading.

Although these interim financial statements at June 30, 2017 and for the three months ended June 30, 2017 and 2016 are unaudited, in the opinion of our management, such statements include all adjustments (consisting of normal recurring entries) necessary to present fairly our financial position, results of operations and cash flows for the periods presented. The results for the three months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ended March 31, 2018 or for any future period.

These unaudited interim financial statements should be read and considered in conjunction with our audited financial statements and the notes thereto for the year ended March 31, 2017, included in our annual report on Form 10-K filed with the SEC.

The Company is in the business of distribution of medical devices and biomaterials for the treatment of afflictions and diseases in animals. The Company’s management development and other operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.

(B) Principles of Consolidation

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

(D)Use of Estimates

The accounting for the acquisition of Gel-Del Technologies, began with the closing of the Security Exchange Agreement on April 10, 2015 and completed with the Agreement and Plan of Merger on April 10, 2017, with the Company’s previously issued 5,450,000 shares valued at market at $0.40 per share, which equaled $2,180,000 on the date of completion (April 10, 2017).

(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 collectability of accounts receivable, inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share basedshare-based payments, future rebates payable to a distributor, product refund liabilities, lease assets and derivative instrumentsliabilities and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution of services and interest.assets.

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(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. At June 30, 2017, the Company had $5,359 cash equivalents.

(F)Concentration-Risk

(E) Concentration-Risk

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

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(F) Machinery & Equipment

(G)Property & 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 five (3)3 to 5 years for production and computer equipment (5)and furniture and 5 to 7 years for automobile, and (7) years for furniture and fixturesleasehold improvements.

(H)Patents and Trademarks

(G) Patents and Trademarks

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

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(H) Loss Per Share

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

The Company has 133,500had 3,686,320 warrants outstanding as of JuneSeptember 30, 20172022, with varying exercise prices ranging from $3.50$1.20 to $1.50/$6.67 per share. The weighted average exercise price for these warrants is $ 2.235.02 per share. These warrants are excluded from the weighted average number of shares because they are considered anti-dilutive.

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

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

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

The Company had 464,300 restricted stock units outstanding as of September 30, 2021 which were excluded from the weighted average number of shares because they are considered anti-dilutive.

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

(J)Revenue Recognition

The Company derives revenue from the sale of our pet care products directly to its veterinarian customers in the United States. For performance obligations related to the sale of our pet care products, control transfers to the customer at a point in time. Revenue is recognized upon delivery to the customer, which is when control of these products is transferred and in an amount that reflects the consideration the Company expects to receive for these products. Shipping costs charged to customers are reported as an offset to the respective shipping costs. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.

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The Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”) on June 17, 2022. Contracts are evidenced by individual executed purchase orders subject to the terms of the Agreement. The contracts consist of a single performance obligation related to the sale of our pet care products. Control transfers to the Distributor at a point in time. Revenue is recognized upon satisfaction of the performance obligation which is delivery to the Distributor; payment is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to 5% of gross monthly sales payable in 45 days; the distribution fee is netted against revenue. The Agreement provides for a rebate payable to the Distributor based on annual sales volume that is retroactively applied. The rebate is estimated under the expected value method and is netted against revenue. Sales are subject to various right of return provisions; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial. As a result, there is no refund liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.

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

SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES

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

 

(I) Revenue Recognition

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. Revenues consist of Kush product sales to veterinary clinics.

(K)Research and Development

(J) Research and Development

The Company expenses research and development costs as incurred.

(L)Fair Value of Financial Instruments

(K) Fair Value of Financial Instruments

The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”)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.

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The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses notesand note payable notes payable - related party, and convertible notes payable.accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of JuneSeptember 30, 20172022 and March 31, 2017,2022, 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 notesnote recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.

The Company had no assets and liabilities measured at fair value on a recurring basis at JuneSeptember 30, 20172022 and DecemberMarch 31, 2016.2022.

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(M)Stock-Based Compensation - Non-Employees

(L)Recent Accounting PronouncementsEquity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

The FASBCompany accounts for equity instruments issued ASC 606 as guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict the transfer of promisedto parties other than employees for acquiring goods or services under the guidance of Sub-topic 505-50 of the FASB ASC (“Sub-topic 505-50”).

Pursuant to customersASC Section 505-50-30, all transactions in an amount that reflectswhich 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 entity expects to be entitled in exchange for those goodsperformance is complete or services. the date on which it is probable that performance will occur.

The guidance also requires disclosures regarding the nature, amount, timingfair value of share options 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 atsimilar instruments is estimated on the date of initial application (the cumulative catch-up transition method).grant using a Black-Scholes option-pricing valuation model. The company will adoptranges of assumptions for inputs are as follows:

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB ASC the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration the contractual term of the instruments and the holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate the holder’s expected exercise behavior.
Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.
Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the guidance on January 1, 2018 and applygrantee only after a specified period of time or if the cumulative catchup transition method. The transition adjustment to be recorded to stockholders’ equity upon adoptionterms of the new standardagreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

(N)Income Taxes

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

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

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

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

(O)Inventory

In February 2016,Inventories are recorded in accordance with ASC 330, Inventory, and are stated at the lower of cost or net realizable value. We account for inventories using the first in first out (FIFO) methodology.

(P)Recent Accounting Pronouncements

The Company has reviewed the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparencyaccounting pronouncements and comparability among organizations by recognizing lease assetsinterpretations thereof that have effectiveness dates during the periods reported and lease liabilitiesin future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this ASU supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognizeCompany’s reported financial position or operations in the statementnear term. The applicability of any standard is subject to the formal review of the Company’s financial positionmanagement.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying assetqualify for the lease term. For public companies,derivative scope exception, which will permit more equity contracts to qualify for the amendmentsexceptions. The ASU also simplifies the diluted net income per share calculation in this ASU arecertain areas. The new guidance is effective for fiscal years beginning after December 15, 2018,2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company is currently evaluatingadoption of the standard had no impact of adopting ASU No. 2016-02 on itsthe consolidated financial statements.

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

NOTE 2 - CONVERTIBLE NOTES PAYABLEINVENTORY

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

The Company has one convertible note outstanding in the amount of $105,000 plus accrued interest of $4,315.inventory components are as follows:

SCHEDULE OF INVENTORY 

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

NOTE 3 - RELATED PARTY PAYABLE

At June 30, 2017, the company is obligated for an officer note payable and accrued interest in the total amount of $200,190.

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NOTE 4 - NOTE PAYABLE3 – PREPAID EXPENSES AND OTHER ASSETS

The Company is obligated on the following notes:

1.Third Party Individuals $77,295 
2.Bank Credit Line*  50,000 
 Total $127,295 

*As of JuneSeptember 30, 2017, Gel-Del Technologies, Inc. was delinquent in the monthly payments of the Bank Credit Line and a Bank Credit Card issued by the same banking institution. The Company negotiated with the bank regarding restructuring 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 combined balance of $60,000 was settled for $38,000 on September 29, 2017 with a payment plan beginning on September 29th with an initial payment of $8,000 and three additional payments of $10,000 on the 15th of October, November, and December.

NOTE 5 - GOING CONCERN

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

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

NOTE 4 –PROPERTY AND EQUIPMENT

The components of property and equipment were as follows:

SCHEDULE OF PROPERTY AND EQUIPMENT

  September 30, 2022  March 31, 2022 
Leasehold improvements $216,159  $216,159 
Production equipment  250,738   197,967 
R&D equipment  25,184   25,184 
Computer equipment and furniture  107,693   76,898 
Total, at cost  599,774   516,208 
Accumulated depreciation  (258,703)  (204,659)
Total Net $341,071  $311,549 

Depreciation expense was $28,719 and $11,756 for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense was $54,044 and $23,627 for the six months ended September 30, 2022 and 2021, respectively.

NOTE 5 – PATENTS AND TRADEMARKS

The components of patents and trademarks, all of which are finite-lived, were as follows:

SCHEDULE OF COMPONENTS OF PATENTS AND TRADEMARKS

  September 30, 2022  March 31, 2022 
Patents $3,870,057  $3,870,057 
Trademarks  26,142   26,142 
Total at cost  3,896,199   3,896,199 
Accumulated Amortization  (3,852,213)  (3,847,747)
Total net $43,986  $48,452 

Amortization expense was $2,240 and $2,333 for the three months ended June 30, 2022 and 2021, respectively. Amortization expense was $4,466 and $4,062 for the six months ended September 30, 2022 and 2021, respectively.

NOTE 6 – ACCRUED EXPENSES

The components of accrued expenses were as follows:

SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES

  September 30, 2022  March 31, 2022 
Accrued payroll and related taxes $432,848  $452,137 
Accrued lease termination expense  332,238   332,238 
Total $765,086  $784,375 

Pursuant to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal year 2017-2018, the Company had recorded approximately $332,000 as a potential payable to the lessor. This liability remains outstanding as of September 30, 2022 and March 31, 2022 and is included in accrued expenses.

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NOTE 7 – NOTE PAYABLE

In January 2020, the Company entered into a lease amendment for our corporate office facility whereby the lease term was extended through November of 2026 in exchange for a loan of $42,500. The note payable accrues interest at a rate of 6% per annum. At September 30, 2022 and March 31, 2022, the amount outstanding on the note was $30,605 and $33,750, respectively. At September 30, 2022, the Company classified $6,737 as a current liability and $23,868 in other liabilities. At March 31, 2022, the Company classified $6,549 as a current liability and $27,201 in other liabilities.

NOTE 8 – RETIREMENT PLAN

In February 2021, the Company established a 401(k) retirement plan for its employees in which eligible employees can contribute a percentage of their compensation. The Company may also make discretionary contributions. For the three months ended September 30, 2022 and 2021, the Company made contributions to the plan of $8,183 and $0, respectively. For the six months ended September 30, 2022 and 2021, the Company made contributions to the plan of $14,341 and $0, respectively.

NOTE 9 – 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. This lease is terminable by the landlord if damage causes the property to no significant revenuelonger be utilized as an integrated whole and by the Company if damage causes the facility to be unusable for a period of 45 days. In January 2020, the Company entered into a lease amendment to extend the lease term through November of 2026 in exchange for receipt of a loan of $42,500 recorded to note payable. The monthly base rent as of September 30, 2022 and March 31, 2022 is $2,205.

The Company entered into a 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 monthly base rent as of September 30, 2022 and March 31, 2022 is $2,673.

Rent expense for the three months ended September 30, 2022 and 2021 was $25,541 and $22,892, respectively. Rent expense for the six months ended September 30, 2022 and 2021 was $60,976 and $34,403, respectively.

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of September 30, 2022:

SCHEDULE OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY

     
2023 $29,711 
2024  60,588 
2025  61,964 
2026  63,372 
2027  55,103 
Total  270,738 
Less: amount representing interest  (1,146)
Total $269,592 

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In compliance with ASC 842, the Company recognized, based on the extended lease term to November 2026 and a treasury rate of 0.12%, an operating lease right-to-use asset for approximately $189,600 and corresponding and equal operating lease liabilities for the lease. As of September 30, 2022, the present value of future base rent lease payments based on the remaining lease term and weighted average discount rate of approximately 4.6 years and 0.28%, respectively, are as follows:

SCHEDULE OF BASE RENT LEASE PAYMENTS

     
Present value of future base rent lease payments $269,592 
Base rent payments included in prepaid expenses  - 
Present value of future base rent lease payments – net $269,592 

As of September 30, 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 $269,592 
Total operating lease assets $269,592 
     
Operating lease current liability $59,807 
Operating lease other liability $209,785 
Total operating lease liabilities $269,592 

Employment Agreements

The Company has employment agreements with its executive officers. As of September 30, 2022, these agreements contain severance benefits ranging from one month to six months 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. Masters’ 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.

Purchase Commitment

We issued purchase orders as of September 30, 2022 totaling $100,000 for inventory that we expect to receive within the next six months.

NOTE 10 - GOING CONCERN

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

The Company incurred net losses of $4,077,017 for the six months ended September 30, 2022, had a negative equitynet cash used in operating activities of $3,749,581 for the same period and recurring material losses.has an accumulated deficit of $67,203,438 at September 30, 2022. These factorsconditions raise substantial doubt about the Company’s ability to continue as a going concern.concern for a period of at least twelve months after the date of issuance of these financial statements. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability and/or to obtain adequate financing through the issuance of debt or equity in order to finance its operations.

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

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

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

NOTE 11 – 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 the Regular Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. The number of shares of our common stock available and that may be issued as awards under the 2020 Plan is 1,000,000 shares. Unless sooner terminated by the Board, the 2020 Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was 143,850 at September 30, 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 to promote or maintain a market for PetVivo common stock.

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 also has the authority to interpret and establish rules and regulations for the administration of the 2020 Plan. In addition, the Board of Directors may also exercise the powers of the Committee.

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

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

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

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

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NOTE 6 - COMMON STOCK

Common Stock

From April 1, 2017 to June

For the six months ended September 30, 2017,2022, the Company issued 2,569,628106,914 shares of common stock as follows:

i)24,217 shares in July 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price of $1.33 per share for cash proceeds of $32,188;
ii)24,447 shares in August 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price of $1.41 per share for cash proceeds of $34,370;
iii)25,000 shares in August 2022 to service providers for consulting services valued at $49,920; and
iv)33,250 shares in related to vesting of restricted stock units.

For the six months ended September 30, 2021, the Company issued 2,932,230 shares of which 2,100,128common 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;
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 warrant 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, in exchange for net proceeds of $9,780,783, at a price of $4.50 per unit;
ix)43,556 shares and warrants in August 2021 pursuant to a conversion of $196,000 share-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 of 1,594 shares of common stock at a strike price of $1.27 per share for cash proceeds of $2,031; and
xii)42,000 shares in September 2021 to a service provider for future marketing and investor relations services valued at $210,000.

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 $182,377 and $79,064 for the three months ended September 30, 2022 and 2021, respectively and $364,754 and $108,108 for the six months ended September 30, 2022 and 2021, respectively. At September 30, 2022, there were approximately $1,323,000 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 1.8 years.

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Our time-based restricted stock unit activity for the year ended March 31, 2022, and the six month period ended September 30, 2022 is 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  (172,824) $3.44   - 
Balance at March 31, 2022  372,668  $4.07  $760,243 
Vested  (33,250) $5.17     
Balance at September 30, 2022  339,418  $3.96  $651,683 

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

Stock Options

Stock options issued to reduce accrued salaries valued at $1,209,919; 379,500 sharesemployees 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 $102,763 for the three months ended September 30, 2022 and $109,290 for the six months ended September 30, 2022. At September 30, 2022, there was approximately $327,000 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 2.4 years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Annually, we make predictive assumptions regarding future stock price volatility, dividend yield, expected term and forfeiture rate. The dividend yield assumption is based on expected annual dividend yield on a grant date. To date, no dividends on common stock have been paid by us. Expected volatility for grants is based on our average historical volatility over a similar period as the expected term assumption used for our options as the expected volatility. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. We use the “simplified method” to determine the expected term of the stock option grants. We utilize this method because we do not have sufficient public company exercise data in which to make a reasonable estimate.

The following table sets forth the assumptions used to estimate fair values of our stock options granted:

SCHEDULE OF ESTIMATED FAIR VALUES ASSUMPTIONS

  Six Months Ended September 30, 2022  

Year Ended

March 31, 2022

 
Expected term 7 years  7 years 
Expected volatility  173.2% - 207.8%  205.0% - 210.5%
Risk-free interest rate  2.96% - 3.69%  1.47%2.14%
Expected dividend yield  0%  0%
Fair value on the date of grant $1.87 - $2.79  $1.39 - $1.99 

Our stock option activity for the year ended March 31, 2022 and the six month period ended September 30, 2022 is 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 
Granted  198,789  $2.26         
Balance at September 30, 2022  393,789  $1.91   6.6 years  $68,841 
Options exercisable at September 30, 2022  43,789             

(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 stock options outstanding was based on our closing stock price on the last trading day of this period.

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The following summarizes additional information about our stock options:

SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS

September 30, 2022
Number of:
Non-vested options, beginning of period195,000
Non-vested options, end of period350,000
Vested options, end of period43,789

  September 30, 2022 
Weighted-average grant date fair value of:    
Non-vested options, beginning of period $               1.56 
Non-vested options, end of period $1.89 
Vested options, end of period $2.07 
Forfeited options, during the period  - 

Warrants

During the three and six months ended September 30, 2022, no warrants were for services valued at market for $156,825; and 90,000 shares for cash of $31,500.issued.

As of JuneDuring the six months ended September 30, 2017,2021, the Company had 133,250issued warrants outstanding. On August 5, 2015, 40,000 to purchase an aggregate of 3,043,556 shares of common stock in connection with its public offering of 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,
warrants to purchase 43,556 shares of the Company’s common stock, pursuant to a conversion of $196,000 share-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.

These warrants’ values were issued as settlement for business advising, management consulting, fund raising and public relations consultingarrived at exercise price of $3.50/share for a five year term. On April 11, 2016, 20,000 warrants were issued as part of subscription agreements atby using the Black-Scholes option pricing model with the following assumptions:

i) an exercise price of $2.00/share for a term of five years. On June 7, 2016, 13,250 warrants were issued as part of a subscription agreement at an exercise price of $2.00/share for a term of five years. On September 19, 2016, 60,000 warrants were issued as part of a subscription agreement at an exercise price of $1.50/share for a term of five years.

NOTE 7 - AGREEMENT AND PLAN OF MERGER

In April 10, 2017, the Agreement and Plan of Merger completed by the Company’s subsidiary, PetVivo Holdings Newco Inc. (“Newco”) and Gel-Del Technologies, Inc. with Gel-Del being the surviving corporation and becoming a wholly-owned subsidiary of the Company. Under the Merger Agreement, all shareholders of Gel-Del exchanged their shares for 5,540,000 sharesexpected volatility of the Company’s restricted common stock, which represented approximately 30%shares on the date of the grants of approximately 315% based on historical volatility.

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

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A summary of warrant activity for the year ended March 31, 2022 and six month period ended September 30, 2022 is as follows:

SCHEDULE OF WARRANT ACTIVITY

  Number of
Warrants
  Weighted-
Average
Exercise
Price
  Warrants
Exercisable
  Weighted-
Average
Exercisable
Price
 
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 
Exercised for cash  (48,664) $(1.37)        
Expired  (22,500) $(1.33)        
Outstanding, September 30, 2022  3,686,320  $5.02   3,641,320  $5.06 

At September 30, 2022, the range of warrant prices for shares under warrants and the weighted-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   347,073  $1.35   3.93   347,073  $1.35 
                      
$2.01-4.00   207,938  $2.48   1.84   162,938  $2.55 
                       
$4.01-6.67   3,131,309  $5.60   3.76   3,131,309  $5.60 
                       
 Total     3,686,320  $5.02   3.67   3,641,320  $5.06 

Stock-based compensation expense included in the Consolidated Statements of Operations for warrants was $20,831 and $25,028 for the three months ended September 30, 2022 and 2021, respectively. Stock-based compensation expense included in the Consolidated Statements of Operations for warrants was $41,662 and $51,658 for the six months ended September 30, 2022 and 2021, respectively. At September 30, 2022, there was no future unrecognized warrant expense.

For the three months ended September 30, 2022 and 2021, the total issuedstock-based compensation on all instruments was $284,475 and outstanding$104,092, respectively. For the six months ended September 30, 2022 and 2021, the total stock-based compensation on all instruments was $515,706 and $159,766, respectively.

NOTE 12 – SUBSEQUENT EVENT

On October 14, 2022, the stockholders of the Company approved the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Incentive Plan (the “Amended Plan”), which increased the number of shares of the Company’s common stock post-merger.which may be granted under the Amended Plan from 1,000,000 to 3,000,000.

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Through this Merger, the Company 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 under construction in Edina, Minnesota.

NOTE 8 – INCOME TAXES

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 – LEASE AND COMMITMENTS

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 on May 3, 2017. The base rent is $2,078 per month and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance.

NOTE 10 – SUBSEQUENT EVENTS

In June 2017,the Company issued 2,100,128 restricted shares in settlement of $1,209,919 in past due compensation owed to four officers/directors of the Company.

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

In June 2017, the Company had issued too many shares as compensation to four officers/directors of the Company. The Company revised its calculation to 1,418,528 restricted shares in settlement of $1,209,919 in past due compensation. As of June 30, 2017, the revised calculation resulted in the stock subscription receivable of $342,727, which theses officers/directors agreed to return their shares. The corrected number of shares have been issued and the matter has been resolved.

In July 2017,the Company issued 750,000 warrants to John Lai providing incentive to John Lai to continue his functions of raising operating capital and providing other services as the President of the Company, The exercise price will be$0.30 per share.

In September 2017,the Company issued 5,450,000 shares of its common stock to Gel-Del Technologies, Inc. shareholders to complete the merger in exchange for Gel-Del’s surrendered outstanding shares.

As of December 2017, the Company raised $525,000 through a private offering of its common stock and purchase warrants at $0.35 per unit. The private offering was exempt from registration in accordance with Section 4(2) of the Securities Act of 1933.

In December 2017, the Company offered a discount on a warrant exercise price for shares from $1.50 per share to $1.00 per share in order to raise operating capital. This discount was accepted by the warrant holder and raised $60,000.

In December 2017, the Company raised $250,000 through a new private offering of its common stock at $1.00 per unit. The private offering was exempt from registration in accordance with Section 4(a)(2) of the Securities Act of 1933.

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

GENERAL

We are a biomedical device company engaged in the business of developing, manufacturing and commercializing biomedical technology and related healthcare patented products to treat pets and other animals suffering from arthritis and other painful afflictions. Our initial product, which is now being commercialized, is a medical device featuring the injection of patented gel-like protein-based biomaterials into the afflicted body parts of dogs, horses, and other pets and animals suffering from osteoarthritis.

We were incorporated in Nevada in 2009 under a former name. In 2014, we entered our current business through a reverse merger with PetVivo Inc., a Minnesota corporation founded in 2013. From this merger, PetVivo Inc. became our wholly owned subsidiary, and concurrently we changed our Nevada corporate name to PetVivo Holdings, Inc. Our common stock(the “Company”, “PetVivo”, “we” or “us) is publicly traded in the over-the-counter (OTC) market under the symbol “PETV.”

Merger With Gel-Del

Through a lengthy negotiation and merger process commenced in late 2014, we eventually acquired Gel-Del Technologies, Inc., a Minnesota corporation (“Gel-Del”) effective in April 2017. Prior to this Gel-Del merger, we had licensed Gel-Del’s biomedical technology for use in treatment of pets and other animals. While working together incident to this licensing arrangement, we and Gel-Del determined to merge and combine the two companies into one entity producing, marketing and selling medical products based on Gel-Del technology for both humans and animals.

Our merger with Gel-Del was effected through a statutory merger transaction resulting in an exchange by the shareholders of Gel-Del on a pro rata basis of 100% of all outstanding capital stock of Gel-Del in exchange for 5,450,000 shares of our restricted common stock, which represented approximately 30% of our total outstanding common shares post-merger. This merger became effective upon its filing with the Secretary of State of Minnesota on April 10, 2017, resulting in Gel-Del becoming our wholly owned subsidiary. Upon the effectiveness of this merger, each common share of Gel-Del outstanding immediately prior to consummation of the merger was converted into the right to receive 0.798 of a common share of our Company. Gel-Del did not have any outstanding options, warrants or other derivative securities or rights.

From this merger, we acquired all Gel-Del technology and related patents and other intellectual property (IP) rights and production techniques, as well as Gel-Del’s modern development and operational facilities being established in Edina, Minnesota. All of our management, development, marketing and administrative operations are now conducted from this suburban Minneapolis headquarters.

Gel-Del is a biomaterial and medical device development and manufacturing company founded in 1999. Gel-Del’s proprietary patented biomaterials 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 first commercializing Gel-Del’s technology in the veterinary field for the treatment of osteoarthritis. Gel-Del has also successfully completed a pivotal clinical trial using novel Gel-Del biomaterial as a dermal filler for human cosmetic applications. Gel-Del’s core competencies relate to the development and production of 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. Gel-Del biomaterials are produced using a patented and scalable self-assembly production process.

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PLANNED BUSINESS OPERATIONS

We are an emerging biomedical device company focused on the licensingmanufacturing, commercialization, and commercializationlicensing of innovative medical devices and therapeutics for pets, basedanimals. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intra-articular injection for the management of lameness and other joint afflictions such as osteoarthritis in suburban Minneapolis,dogs and horses, in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes, and methods of use.

In August 2021, we received net proceeds of approximately $9.8 million in a registered public offering (“Public Offering”) of 2.5 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 common stock at an exercise price of $5.625 per share. The shares of common stock and warrants were transferable separately immediately upon issuance. In connection with the Public Offering, the Company’s common stock and warrants were registered under Section 12(b) of the Exchange Act 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 under a different name. The Company operates as one segment from its corporate headquarters in Edina, Minnesota. We operate

CURRENT BUSINESS OPERATIONS

The Company is primarily engaged in the $15business of commercializing and licensing products in the veterinary market to treat and/or manage afflictions of companion animals such as dogs and horses. The Company’s lead product, Spryng™, is based on proprietary technology developed for human biomedical applications, and we intend to leverage the investments already expended in this development to commercialize treatments for pets in a capital and time-efficient way.

The Company’s lead product, Spryng™ is derived from proprietary biomaterials that simulate a body’s cellular or acellular 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 differentiated from polymeric biomaterials such as those based upon alpha-hydroxy polymers (e.g. PLA, PLGA, and the like) polyacrylamides and other “synthetic” biomaterials that may lack the multiple “natural” proteins and carbohydrates 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.

The Company’s lead product, Spryng™ is a veterinary medical device designed to help reinforce and augment articular cartilage tissue for the management of lameness and other joint related afflictions, such as osteoarthritis, in companion animals. Spryng™ is an intra-articular injectable product of biocompatible and insoluble particles that are slippery, wet-permeable, durable, and resilient to enhance the force cushioning function of the synovial fluid and cartilage. The particles mimic natural cartilage in composition, structure, and hydration. Multiple joints can be treated simultaneously. Our particles are comprised of collagen, elastin, and heparin, similar components found in natural cartilage. These particles show an effectiveness to reinforce and augment the cartilage, which enhances the functionality of the joint (e.g. provide cushion or shock-absorbing features to the joint and to provide joint lubricity).

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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 UScompanion animal veterinary care market that has grown at a CAGR of 6.4% over the past five years according to the American Pet Products Association. and product sales market.

Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in petstreating osteoarthritis in dogs, horses 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 investments already expended in the development of human therapeutics to commercialize treatments for pets in a capital and time efficient way. A key component of this strategy is the accelerated timeline to revenues for veterinary medical devices, which enter the market earlier than the more stringently regulated veterinary pharmaceuticals or human therapeutics.

The company is planning to aggressively launch its lead product Kush Canine in early 2018. Kush Canine is a veterinarian-administered joint injection for the treatment of osteoarthritis in dogs. The Kush Canine device is made from natural components that perform like cartilage for the treatment of 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. Based on industry sources, we estimate osteoarthritis afflicts 20 million owned dogs in the United States and the European Union, which we believe makes canine osteoarthritis a $2.3 billion market opportunity.

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). Therepets. As there is no effectivecure for osteoarthritis, current solutions treat symptoms but do not manage the cause. The current treatment for osteoarthritis only palliative pain therapy or joint replacement. Non-steroidalin dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (NSAIDS)(or “NSAIDs”) which are usedapproved to alleviate the pain and inflammation but long-term use has been shownpresent the potential for side effects relating to cause gastric problems. NSAIDSgastrointestinal, kidney and liver damage and do not treat the cartilage degeneration issue to halt or slow joint degeneration. The Company offers an alternative to traditional treatments that only address the progressionsymptoms of the osteoarthritis condition.

We believe thataffliction. 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 Kush Canine osteoarthritis treatment is far superior to current treatments of using NSAID’s. NSAID’s have manyknowledge, has elicited minimal adverse side effects especially in canines, whereas the company’s injected Kush Canine treatment has been found to elicit no adverse side effects. Remarkably, Kush treated dogs showand horses. Spryng™-treated dogs and horses have shown an increase in activity even after they no longer are receiving pain drugs. 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 the effects of osteoarthritis and no special post treatment careslow acting and/or short lasting.

We believe Spryng™ is required.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, industry data has shown that drug sales represent up to 30% of revenues at a typical veterinary practice. And we believe that revenuespractice (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-administeredthat will help veterinarians provide a new solution for treating dogs and horses which have lameness due to expand practice revenues and margins. We believe that the increasedsynovial joint issues, while expanding revenues and margins provided by Kush Canine will accelerate its adoption rate and propel it forwardfor their practices.

Spryng™ is classified as the standard of care for canine osteoarthritis.

We also intend to launch in 2018 our Kush Equinea veterinary medical device for the treatment of equine lameness in horses. The Kush Equine product has similar features and benefits as our Kush Canine device.

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We estimate that 1 million owned horses inunder the United States Food and European Union suffer from lameness and/orDrug 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 1,000 horses and dogs have been treated with Spryng™. We entered into a clinical trial services agreement with Colorado State University on November 5, 2020. We expect this university clinical study to be completed in December 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 2022 with anticipated completion in fiscal 2023. We anticipate these and other joint/bone disease each year, making the treatment of such afflicted horses an annual market opportunity worth $600 million.

Westudies that we plan to commercializeinitiate will be primarily used to support our productscommercialization efforts and expand the use of Spryng™ in other applications.

We commenced sales of Spryng™ in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of Spryng™ in the United States through our distribution relationships supported by regionalrelationship with MWI Veterinary Supply Co. (“Distributor” or “MWI”) and national distributorsuse the use of sales reps, clinical studies and veterinary associationsmarket awareness to educate and other groups as complemented byinform key opinion leaders on the benefits of Spryng™. We plan to support our commercialization efforts with the use of social media and other methods to educate and inform pet owners,key opinion leaders and in Europehigh prescriber veterinarians for companion animals of the availability and restbenefits of world through collaborating commercial partnersSpryng™.

We entered into a Distribution Services Agreement (“Distribution Agreement”) with MWI on June 17, 2022. Pursuant to the Agreement, we appointed MWI to distribute, advertise, promote, market, supply, and distributors.

We believe most veterinarians insell the Company’s lead product, Spryng™ on an exclusive basis for two (2) years within the United States buy(the “Territory”), transitioning to a majoritynon-exclusive basis thereafter; provided however that the Company shall extend the exclusivity for an additional one (1) year if MWI achieves certain performance targets agreed upon by the parties. The Company can continue to sell Spryng™ within the Territory to established accounts, which include: (a) customers who have purchased Spryng™ from the Company prior to the date of their equipmentthe Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and supplies from one of several large(d) customers that order via the internet who are not directly solicited by MWI to purchase Spryng™. All customers must be licensed veterinary products distributors. Ourpractices.

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We have established an ISO 7 certified clean room manufacturing facility located in our Minneapolis facility using a patented and scalable self-assembly production process, which reduces the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product distributionwhile being responsive to volume requirements. We recently began manufacturing commercial quantities and anticipate our ISO 7 certified facility will leveragebe able to handle projected production in units for at least the existing supply chain and veterinary clinic and clinician relationships already established by these large distributors, and 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 Kush products are expected to generate significant consumer response.next five years.

RESULTS OF OPERATIONS

We are a development stage company with no history of commercial revenues, and we have incurred recurring substantial losses since inception. The following discussion should be read in conjunction with our unaudited2022 10-K Report and the consolidated financial statements and related notes includedin Item 1, Financial Statements appearing elsewhere in this report.Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2022 10-K Report under the heading “Risk Factors,” as updated and supplemented by risks described in other SEC filings. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Results of Operations for theWe are a smaller reporting company and have not generated material revenues to date and have incurred substantial losses in connection with our limited operations. We need substantial capital to pursue our current plans to commercialize our initial product, Spyng™.

RESULTS OF OPERATIONS

  For the Three Months Ended September 30,  For the Six Months Ended September 30, 
  2022  2021  2022  2021 
             
Revenues $223,280  $4,977  $281,454  $9,122 
                 
Cost of Sales  148,159   -   201,179   5,051 
                 
Operating Expenses  2,194,689   1,108,333   4,165,936   1,625,946 
                 
Other Income (Expense)  7,979   (2,118)  8,644   25,772 
                 
Net Loss $(2,111,589) $(1,105,474) $(4,077,017) $(1,596,103)
                 
Net loss per share - basic and diluted $(0.21) $(0.13) $(0.41) $(0.21)

For The Three Months Ended JuneSeptember 30, 2017 and 20162022 Compared to The Three Months Ended September 30, 2021

RevenueRevenues– Revenue was $1,183. Revenues were $223,280 for the three months ended JuneSeptember 30, 20172022 compared to $2,009revenues of $4,977 for the three months ended JuneSeptember 30, 2016.2021. Revenue in both three-month periodsthe three months ended September 30, 2022 consisted of Kushsales of our Spryng™ product sampleto veterinary clinics in the amount of $105,016 and to our Distributor of $118,264, respectively. In the three months ended September 30, 2021, our revenues of $4,977 consisted of sales to veterinary clinics. The increase in our revenues in the three months ended September 30, 2022 is due to (i) increased sales to veterinary clinics due to our marketing and other commercialization efforts which began in September 2021, and (ii) sales to our Distributor pursuant to our Distribution Agreement.

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Cost of Sales– We did not incur any cost. Cost of sales for either three-month period ended June 30, 2017was $148,159 and 2016, and accordingly our gross profit was the same as revenue for both periods.

Operating Expenses– Operating expenses$0 for the three months ended JuneSeptember 30, 2017 were $483,3212022 and 2021, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs. The Company began commercialization of its Spryng™ product in September 2021, which resulted in increased cost of sales in the three months ended September 30, 2022 compared to $626,226the same period in the prior year.

Operating Expenses. Operating expenses were $ 2,194,689 and $1,108,333 for the three months ended JuneSeptember 30, 2016, which decrease2022 and 2021, respectively. Operating expenses consisted of $142,905 in the 2017 first quarter was due primarily to higher stock equity compensation in the 2016 first quarter. Researchgeneral and administrative, sales and marketing, and research and development expensesexpenses. The Company began commercialization of its Spryng™ product in September 2021, which resulted in increased from $5,497 in the 2016 first quarter to $23,866 in the 2017 first quarter. Most of our expenses in both of these quarters were general and administrative expenses whichand sales and marketing expenses related to the sale of its Spryng™ product in the three months ended September 30, 2022 compared to the same period in the prior year.

General and administrative (“G&A”) expenses were $460,638$1,186,320 and $756,186 for the three months ended JuneSeptember 30, 2017 compared2022 and 2021, respectively. G&A expenses include compensation and benefits, contracted services, consulting fees, stock compensation and incremental public company costs. The increase in G&A expenses was related to $622,738compensation and benefits, legal and consulting fees, stock compensation and incremental public company costs.

Sales and marketing expenses were $867,985 and $235,767 for the three months ended JuneSeptember 30, 2016.2022 and 2021, respectively. Sales and marketing expenses include compensation, consulting, tradeshows and stock compensation costs to support the launch of our Spryng™ product. The increase in sales and marketing expenses was due to the launch and commercialization of Spryng.™

Other Income (Expenses)– Other incomeResearch and development (“R&D”) expenses were $140,384 and $116,380 for the three months ended JuneSeptember 30, 20172022 and 2021, respectively. The increase in R&D expenses was $-0-related to the timing of clinical studies in the three months ended September 30, 2022 compared to $24,460the same period in the prior year.

Operating Loss. As a result of the foregoing, our operating loss was $2,119,568 and $1,103,356 for the three months ended JuneSeptember 30, 2016 from gain on a debt settlement. Other2022 and 2021, respectively. The increase in our operating loss was related to the increased operating expenses consistedincurred to support the launch of interest expense of $17,710 forSpryng™ and the first quarter of 2017incremental public company costs incurred in the three months ended September 30, 2022 compared to interest expense of $8,686 for the first quarter of 2016.same period in the prior year.

Net (Loss)Other Income (Expense).– Our net (loss) Other income was $7,979 for the three months ended JuneSeptember 30, 2017 was $(501,031)2022 as compared to $(610,452)other expense of $2,118 for the three months ended which decreaseSeptember 30, 2021. Other income in 2022 consisted of $109,421net interest income. Other expense in 2021 consisted of net interest expense.

Net Loss. Our net loss for the 2017 first quarterthree months ended September 30, 2022 was attributable primarily$2,111,589 or ($0.21) per share as compared to higher stock compensationa net loss of $1,105,474 or ($0.13) per share for the three months ended September 30, 2021. The increase in our net loss was related to the increased operating expenses incurred to support the launch of Spryng™ and salaries.the incremental public company costs compared to the same period in the prior year. The weighted average number of shares outstanding was 10,053,463 compared to 8,749,233 for the three months ended September 30, 2022 and 2021, respectively.

Liquidity and Capital ResourcesFor The Six Months Ended September 30, 2022 Compared to The Six Months Ended September 30, 2021

Our financial position and future prospects depend significantly on our accessRevenues. Revenues were $281,454 for the six months ended September 30, 2022 compared to financing to fund our operations during our development stage. Muchrevenues of $9,122 for the six months ended September 30, 2021. Revenue for the six months ended September 30, 2022 consisted of sales of our current cost structureSpryng™ product to veterinary clinics in the amount of $163,190 and to our Distributor in the amount of $118,264, respectively. In the six months ended September 30, 2021, our revenues of $9,122 consisted of sales to veterinary clinics. The increase in our revenues in the six months ended September 30, 2022 is based ondue to (i) increased sales to veterinary clinics due to our marketing and other commercialization efforts which began in September 2021, and (ii) sales to our Distributor pursuant to the Distribution Agreement.

Cost of Sales. Cost of sales was $201,179 and $5,051 for the six months ended September 30, 2022 and 2021, respectively. Cost of sales includes product costs related to personnelthe sale of products and facilities,labor and not subjectoverhead costs. The Company began commercialization of its Spryng™ product in September 2021, which resulted in increased cost of sales in the six months ended September 30, 2022 compared to material variability. In order to fund our operations and working capital needs, we historically have utilized loans from accredited investors and others, equity sales of common stock to accredited investors and others having pre-existing relationships with us, and substantial issuances of stock-based compensation to satisfy outstanding debt and pay for development, management, financial, professional and other services.the same period in the prior year.

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Operating Expenses. Operating expenses were $4,165,936 and $1,625,946 for the six months ended September 30, 2022 and 2021, respectively. Operating expenses consisted of general and administrative, sales and marketing, and research and development expenses. The Company began commercialization of its Spryng™ product in September 2021, which resulted in increased general and administrative expenses and sales and marketing expenses related to the sale of its Spryng™ product in the six months ended September 30, 2022 compared to the same period in the prior year.

General and administrative (“G&A”) expenses were $2,429,342 and $1,087,131 for the six months ended September 30, 2022 and 2021, respectively. G&A expenses include compensation and benefits, contracted services, consulting fees, stock compensation and incremental public company costs. The increase in G&A expenses was related to compensation and benefits, legal and consulting fees, stock compensation and incremental public company costs.

Sales and marketing expenses were $1,524,554 and $285,498 for the six months ended September 30, 2022 and 2021, respectively. Sales and marketing expenses include compensation, consulting, tradeshows and stock compensation costs to support the launch of our Spryng™ product. The increase in sales and marketing expenses was due to the launch and commercialization of Spryng™ .

Research and development (“R&D”) expenses were $212,040 and $ 253,317 for the six months ended September 30, 2022 and 2021, respectively. The decrease in R&D expenses was related to the timing of clinical studies in the six months ended September 30, 2022 compared to the same period in the prior year.

Operating Loss. As a result of the foregoing, our operating loss was $4,085,661 and $1,621,875 for the six months ended September 30, 2022 and 2021, respectively. The increase in our operating loss, was related to the costs to support the launch of Spryng™ and the incremental public company costs incurred in the six months ended September 30, 2022 compared to the same period in the prior year.

Other Income. Other income was $8,644 for the six months ended September 30, 2022 as compared to other income of $25,772 for the six months ended September 30, 2021. Other income in 2022 consisted of net interest income. Other income in 2021 consisted of the forgiveness of PPP loan and accrued interest of $31,680 partially offset by interest expense of $5,908.

Net Loss. Our net loss for the six months ended September 30, 2022 was $4,077,017 or ($0.41) per share as compared to a net loss of $1,596,103 or ($0.21) per share for the six months ended September 30, 2021. The weighted average number of shares outstanding was 10,021,090 compared to 7,757,099 for the six months ended September 30, 2022 and 2021, respectively.

LIQUIDITY AND CAPITAL RESOURCES

On August 13, 2021, we closed an underwritten 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 JuneSeptember 30, 2017,2022, our current assets were $22,269$3,383,330, including only approximately $5,000$2,337,093 in cash.cash and cash equivalents. In comparison, our current liabilities as of that date were $1,559,618 consisting of $1,122,818$1,253,771 including $1,187,227 of accounts payable/payable and accrued expenses and $436,800 of notes payable.expenses. Our working capital deficiency as of JuneSeptember 30, 20172022 was $1,537,349.$2,129,559.

The Company has continued 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 capital expenditure requirements for the next four months. We will need to raise substantialadditional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through private or public offeringsthe sale of our equity or debt securities or a combination thereof, and we may havefrom time to use a material portion of any capital raised to repay past due debt obligations. Totime for the extent any capital raised is insufficient both satisfy operational working capital needs and meet any required debt payments, we will most likely need to either extend, refinance or convert to equity our outstanding indebtedness.

We currently have little cash to support our operations and projected commercial growth. Accordingly, we will require substantial additional financingforeseeable future to fund our operational workingbusiness expansion. Our ability to obtain such additional capital for at leastwill likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the next 12 months. Financing mayCompany will be sought by us from a number of sources such as private or public sales of our equity or convertible debt securities, and/or loans from affiliates, banks or other financial institutions. In the event we cannot obtain any such financing when needed on terms acceptablesuccessful in its ability to us, if at all, ourraise additional capital to fund its business would suffer substantially.plan.

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

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

Net Cash Used in Operating Activities We used $(47,973)$3,749,581 of net cash in operating activities for the threesix months ended JuneSeptember 30, 2017 compared to $(51,235) for the three months ended June 30, 2016.2022. This decrease in cash used in operating activities during the 2017 first quarter was primarily attributable decreasesto our net loss of $4,077,017, an increase in inventories of $206,654, an increase in prepaid expenses and other assets of $180,658 and an increase in accounts receivable of $126,546, partially offset by stock compensation expense of $537,202 and stock issued for services and accrued expenses.of $166,114.

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Net Cash Used in Investing Activities– We used $14,102$83,566 of net cash in investing activities infor the threesix months ended JuneSeptember 30, 2017,2022, consisting of a security deposit increase of $8,201costs capitalized for manufacturing and a capitalized patent cost of $5,901, compared to $-0- net cash used in investing activities in the three months ended June 30, 2016.computer equipment.

Net Cash Provided by Financing ActivitiesDuringCash provided from financing activities was $63,413 the threesix months ended JuneSeptember 30, 2017, we were provided by financing activities with an amount2022 consisting of net cash received from the exercise of $42,000consisting of common stock subscribed of $10,500 and proceeds from common stock sales of $31,500. In comparison, during the three months ended June 30, 2016, we were provided by financing activities with net cash of $51,499 including proceeds from sales of common stock of $99,750warrants partially offset by aggregate$3,145 in repayments of $48,251a note payable.

Inventory

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

At September 30, 2022, the Company’s inventory has a carrying value of $304,967 and is broken down into $45,479 of finished goods, $21,525 of work in process and $237,963 in raw materials.

At March 31, 2022, the Company’s inventory had a linecarrying value of credit.$98,313 and was broken down into $11,889 of finished goods, $22,960 of work in process and $63,464 in raw materials.

MATERIAL COMMITMENTS

Accrued SalaryNote Payable

We are indebted to related parties. At June 30, 2017, we are obligated for unpaid officer salaries and advances of $348,319. This amount is included in accounts payable and accrued expenses.

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Notes Payable

As of JuneSeptember 30, 2017,2022, we are obligated on a note and accrued interest of $30,605.

Purchase Commitment

We issued purchase orders as of September 30, 2022 totaling $100,000 for inventory that we expect to receive within the following notes:next six months.

1.   Third Party Individual $77,295 
2.   Bank Credit Line  50,000 
      Total $127,295 

OFF-BALANCE SHEET ARRANGEMENTS

As of JuneSeptember 30, 20172022, and as of the date of this Quarterly 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’ report accompanying our March 31, 20172022 10-K Report and March 31, 2016 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. In August 2021, we raised approximately $9,781,000 from the sale of units in a Public Offering. Our working capital at September 30, 2022 was $2,129,559. We believe this working capital is sufficient to fund operations for the next four months (see “Liquidity and Capital Resources” above).

We have suffered recurringcontinued to realize losses from operations,operations. However, as a result of our Public Offering, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements for at least the next four months. We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan.

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CRITICAL ACCOUNTING POLICIES

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

RECENTLY ISSUED ACCOUNTING STANDARDS

The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a working capital deficit and are currentlymaterial impact on the Company’s reported financial position or operations in defaultthe near term. The applicability of any standard is subject to the formal review of the payment terms of certain note agreements. These factors raise substantial doubt about our ability to continueCompany’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 going concern.single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

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

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

ITEM 3. QUANTITATIVEQUALITATIVE AND QUALITATIVEQUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicableAs a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to Instruction 6 to Item 201(e) of Regulation S-K, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

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

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

Management’s report on internal control over financial reporting.

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

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

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

Our chief executive officer and our chief financial officer assessed the effectiveness of our internal control over financial reporting as of June 30, 2017. Based on our assessment, our chief executive officer and our chief financial officer believe that, as of June 30, 2017, our internal control over financial reporting was not effective, 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.

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

Changes in internal control over financial reporting.

There were no significant changes in our internal control over financial reporting duringin the firstsecond quarter of our fiscal year endedending March 31, 20182023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

AUDIT COMMITTEE

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

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Management is not aware of anyFrom time to time, we may become involved in legal proceedings contemplated by any governmental authorityarising in the ordinary course of our business, the resolution of which we do not anticipate would have, individually or any other party involvingin the aggregate, a material adverse effect on our propertiesbusiness, financial condition, or us. Asresults of operations.

Refer to Note 9. Commitments and Contingencies, in the dateNotes to Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in anyfor further information regarding legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against our properties or us.contingencies.

ITEM 1A. RISK FACTORS

Not requiredIn addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our 2022 10-K Report. The risks discussed in our 2022 10-K Report could materially affect our business, financial condition and future results. The risks described in our 2022 Form 10-K Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.

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

Unregistered salesSales of our equity securities inEquity Securities

For the first quarterthree months ended JuneSeptember 30, 2017 are2022, the Company issued 106,914 shares of common stock as follows:

i)24,217 shares in July 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price of $1.33 per share for cash proceeds of $32,188;
ii)24,447 shares in August 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price of $1.41 per share for cash proceeds of $34,370; and
iii)25,000 shares in August 2022 to service providers for consulting services valued at $49,920; and
iv)33,250 shares in July and August 2022 in related to vesting of restricted stock units issued to five employees.

i) In April-June, 2017, the Company sold 90,000 unregistered common shares in private placements to three investors for total proceedsAll of $31,500, which proceedsthese transactions described above were used for working capital purposes.

ii) In June 2017, the Company sold an aggregate of 2,100,128 unregistered common shares valued at $1,209,919 to four of its executive officers to settle outstanding accrued salaries owed to them.

iii) Also in June 2017, the Company sold an aggregate of 379,500 unregistered common shares valued at $156,825 to three persons for compensation for management and consulting services, including 160,000 shares valued at $80,000 issued to our Chief Executive Officer.

The sale of all the foregoing unregistered securities were pursuant to transactions not involving a public offering and thus exempt from registration in reliance on the exemption under Section 4(a)(2) of the Securities Act of 1933, as amended.amended, 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 the 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.

Use of Proceeds from IPO

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 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 common stock at an exercise price of $5.625 per share. The shares of common stock and warrants were transferable separately immediately upon issuance. At the closing of the Public 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 registered under the Securities Act pursuant 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 offering. In connection with the Public Offering, the Company’s common stock and warrants were registered under Section 12(b) of the Exchange Act 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 Public Offering.

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As disclosed in the Registration Statement, we used a portion of the net proceeds from the Public Offering for debt repayment of $101,400 consisting of (i) $36,808 in accrued salary and expenses relating to the CEO; (ii) $20,000 in a note payables to four directors, which accrued interest at a rate of 6.5% per annum and matured in September 2021; and (iii) repayment of $44,554 in a note payable to our former Director of Science and Technology and a director, which accrued interest at a rate of 8% per annum, and maturity date of June 30, 2022.

There has been no material change in our 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 3. DEFAULTS UPON SENIOR SECURITIES

Not required.

ITEM 4. MINE SAFETY DISCLOSURES

Not required.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

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

Exhibit No.DescriptionIncorporated by Reference
10.19

Exhibit

No.

Agreement 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 DescriptionFiled Herewith

Form

Period

Ending

Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2017.

Filing

Date

31.1
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*2002X
31.2
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*2002X
32.1
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*2002X
32.2
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*2002X
101.ins
101.insInline XBRL Instance Document**Document
101.sch
101.schInline XBRL Taxonomy Schema**Schema
101.cal
101.calInline XBRL Taxonomy Calculation Linkbase**Linkbase
101.def
101.defInline XBRL Taxonomy Definition Linkbase**Linkbase
101.lab
101.labInline XBRL Taxonomy Label Linkbase**Linkbase
101.pre
101.preInline XBRL Taxonomy Presentation Linkbase**Linkbase
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

10��26
Table of Contents

PETVIVO HOLDINGS, INC.

SSIGNATURESIGNATURES

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


January 25, 2018November 10, 2022By:/s/ Wesley HayneJohn Lai
Wesley HayneJohn Lai
Its:Chief

CEO, President and Director

(Principal Executive OfficerOfficer)

January 25, 2018November 10, 2022By:/s/ Cynthia JenkinsRobert J. Folkes
Cynthia JenkinsRobert J. Folkes
Its:

Chief Financial Officer

(Principal Financial and Accounting Officer)

 11
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