| NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | Petvivo Inc.was
originally incorporated under the laws of the state of Minnesota on August 1, 2013.The financials are the result of a merger between
Technologies Scan Corp., a corporation incorporated in the State of Nevada on March 31, 2009 now known as PetVivo Holdings, Inc
and PetVivo Inc.. For accounting purposes the Company is treating the merger as a reverse merger whereby the financials presented
are those of the surviving entity which is Petvivo. The merger occurred on March 14, 2014. PetVivo is in
the business of distribution of medical devices and bio materials for the treatment of afflictions and diseases in animals. (B)
Principles of Consolidation The accompanying
consolidated financial statements include the accounts of Petvivo Holdings, Inc. and its wholly owned operating subsidiary, Petvivo
Inc. All intercompany accounts have been eliminated upon consolidation. (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 estimated useful lives and potential impairment of property and equipment, estimate
of fair value of share based payments and derivative instruments and recorded debt discount, valuation of deferred tax assets
and valuation of in-kind contribution of services and interest. (D)
Cash and Cash Equivalents The Company
considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.
At March 31, 2015 and 2014, the Company had no cash equivalents. (E)
Loss Per Share In accordance
with the accounting guidance now codified as FASB ASC Topic 260, "Earnings 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 computation
of basic and diluted loss per share at March 31, 2015 excludes the common stock equivalents of the following potentially dilutive
securities because their inclusion would be anti-dilutive:
March
31, 2015
Convertible Debt (Exercise price - $1.16
- $3.25 share) 190,273
Total 190,273 (H)
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. (I)
Fair Value of Financial Instruments The Company
applies the accounting guidance under Financial Accounting Standards Board ("FASB") ASC 820-10, "Fair Value Measurements" The guidance
also establishes a fair value hierarchy for measurements of fair value as follows:
● Level 1 - quoted market prices in active markets
for identical assets or liabilities.
● Level 2 - inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical
or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.
● Level 3 - unobservable inputs that are supported by little or
no market activity and that are significant to the fair value of the assets or liabilities. The Company's
financial instruments consist of accounts payable, accrued expenses, notes payable, notes payable - related party, loan payable
- related party, convertible notes payable, and deferred rent payable. The carrying amount of the Company's financial instruments
approximates their fair value as of March 31, 2015 and 2014, due to the short-term nature of these instruments. The Company
accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. (J)
Embedded Conversion Features The Company
evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether
the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value
with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815,
the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial
conversion features. (K)
Derivative Financial Instruments Fair value accounting
requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments,
and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes
option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument
is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument
is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative
financial instruments. Once determined,
derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair
value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding
derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. (L)
Beneficial Conversion Feature For conventional
convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature"
("BCF") and related debt discount. When the Company
records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt
instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt. (M)
Debt Issue Costs and Debt Discount The Company
may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may
be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the
debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. (N)
Stock-Based Compensation - Non Employees Equity
Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services The Company
accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic
505-50 of the FASB Accounting Standards Codification ("Sub-topic 505-50"). Pursuant to
ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever
is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier
of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company
is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company's
most recent private placement memorandum ("PPM"), or weekly or monthly price observations would generally be more appropriate
than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid
and asked quotes and lack of consistent trading in the market. The fair value
of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model.
The ranges of assumptions for inputs are as follows:
● Expected
term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards
Codification the expected term of share options and similar instruments represents the period of time the options and similar
instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder's
expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data
to estimate holder's expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are
thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options
and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon
which to estimate expected term.
● Expected volatility
of the entity's shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded
or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company
to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons
for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the
average historical volatility of the comparable companies over the expected contractual life of the share options or similar
instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations
would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations
for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent
trading in the market.
● Expected annual rate
of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall
disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is
based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the expected
term of the share options and similar instruments.
● Risk-free
rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the
expected term of the share options and similar instruments. Pursuant to
ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee
enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments),
then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement
date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement
is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized
as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to
ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return
for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement
for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such
an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof)
of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in
which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides
guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic. Pursuant to
Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable
by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee
achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and
in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of
paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share
option and similar instrument that the counterparty has the right to exercise expires unexercised. Pursuant to
ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable
equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received
(that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement
date and no entry should be recorded. (O)
Recent Accounting Pronouncements In June 2014,
FASB issued Accounting Standards Update ("ASU") No. 2014-10, "Development Stage Entities (Topic 915): Elimination
of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation".
The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal
of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and
Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information
about the risks and uncertainties related to the company's current activities. Furthermore, the update removes an exception provided
to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which
may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest
in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014,
including interim periods therein. Early application with the first annual reporting period or interim period for which the entity's
financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The
Company adopted this pronouncement for the three months ended August 31, 2014. In June 2014,
FASB issued Accounting Standards Update ("ASU") No. 2014-12, "Compensation Stock Compensation ( Topic 718 );
Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite
Service Period". The amendments in this ASU apply to all reporting entities that grant their employees share-based payments
in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service
period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service
period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to
awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU
are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption
is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the
effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest
annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition
is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial
statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective
transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is
not expected to have a material impact on our results of operations, cash flows or financial condition. We are currently reviewing
the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. In August 2014,
the FASB issued Accounting Standards Update "ASU" 2014-15 on "Presentation of Financial Statements Going Concern (Subtopic
205-40) Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". Currently, there is
no guidance in U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance.
In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments
require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles
that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6)
require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued).
We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash
flows or financial condition. All other newly
issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable. |
