| NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | (A)
Basis of Presentation 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 as and for the three months ended June 30, 2016 and 2015 are unaudited, in the opinion of our
management, such statements include all adjustments 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, 2016 are not necessarily indicative
of the results to be expected for the year ended March 31, 2017 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, 2016, included in our annual report on Form 10-K filed with the SEC. PetVivo
Inc. was originally incorporated under the laws of the state of Minnesota on August 1, 2013. The financials are the result of
a merger between Technologies Scan Corp., a corporation incorporated in the State of Nevada on March 31, 2009 now known as PetVivo
Holdings, Inc. and 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 that, which is PetVivo Holdings, Inc. The merger occurred on March 14, 2014. PetVivo
is in the business of distribution of medical devices and biomaterials for the treatment of afflictions and diseases in animals. On
April 10, 2015 the Company agreed to acquire Gel-Del Technologies. The issuances of the shares to consummate the transaction has
not been finalized however the financials presented are those of the combined entities under common control. (B)
Principles of Consolidation The
accompanying condensed consolidated financial statements include the accounts of PetVivo Holdings, Inc. and its wholly owned operating
subsidiary, PetVivo Inc. as well as its variable interest entity (VIE) Gel-Del Technologies, Inc. and its subsidiary, Cosmeta
Corp. All intercompany accounts have been eliminated upon consolidation. The
consolidation including the VIE is included due to the fact that PetVivo controls the entity as well as the fact an agreement
for acquisition has occurred. The
accounting for the acquisition of Gel-Del Technologies on April 10, 2015 was as follows: The
Company will issue 4,150,000 shares valued at market at $4.02 per share, which equaled $16,683,000 on the date of closing. The
assets of Gel-Del equaled $295,716 and its liabilities were $2,295,462 or a difference of $1,999,746 that resulted in a total
purchase consideration of $18,682,746, which was allocated between goodwill and the value of patents & trademarks. (C)
Use of Estimates In
preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from
those estimates. Significant estimates include 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 June 30, 2016 and March 31, 2016, the Company had no cash equivalents. (E)
Concentration-Risk The
Company maintains its cash with various financial institutions, which may exceed federally insured limits throughout the period. (F)
Machinery & Equipment Machinery
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 account their respective estimated residual values) over the assets estimated useful life of five (3) years
for equipment, (5) years for automobile, and (7) years for furniture and fixtures. Upon sale or retirement of computer equipment,
the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of
operations. (G)
Patents and Trademarks The
company capitalizes direct costs for their maintenance and advancement of their patents and trademarks and amortize these costs
over a useful life of 60 months. (H)
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. The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification (Section 740-10-25) with regards
to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be
claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the
tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of
being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest
and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments
to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25. The
Company is not currently under examination by any federal or state jurisdiction. The
Company's policy is to record tax-related interest and penalties as a component of operating expenses. (I)
Loss Per Share In
accordance with the accounting guidance now codified as FASB ASC Topic 260, "Earnings per Share" 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. (J)
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. (K)
Research and Development The
Company expenses research and development costs as incurred. (L)
Fair Value of Financial Instruments The
Company applies the accounting guidance under 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 and convertible notes payable. The carrying amount of the Company's financial instruments approximates
their fair value as of June 30, 2016 and March 31, 2016, due to the short-term nature of these instruments. In
instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input
that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular
input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The valuation of the Company's notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value,
(ii) current market and (iii) contractual prices. The
following table represents the Company's assets and liabilities by level measured at fair value on a recurring basis at June 30,
2016:
Description
Level
1 Level
2 Level
3
Notes
payable at fair value $ - $ - $ -
The
following assets and liabilities are measured on the condensed consolidated balance sheets at fair value on a recurring basis
utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation
of the beginning and ending balances of the liabilities:
Fair
Value Change
New
Fair
Value
April
1, in
fair Convertible
June
30,
2016
Value
Notes
Payments 2016
Notes
payable at fair value $ 31,689 $ 3,311 $ - $ (35,000 ) $ -
(M)
Embedded Conversion Features The
Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine
whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at
fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under
ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of
any beneficial conversion features. (N)
Derivative Financial Instruments Fair
value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity
instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company
uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible
debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement.
If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments
as derivative financial instruments. Once
determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease
in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair
value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. (O)
Beneficial Conversion Feature For
conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion
feature" ("BCF") and related debt discount. When
the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective
debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt. (P)
Debt Issue Costs and Debt Discount The
Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These
costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life
of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. (Q)
Stock-Based Compensation - Non-Employees Equity
Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services The
Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance
of Sub-topic 505-50 of the FASB Accounting Standards Codification ("Sub-topic 505-50"). 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 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. (R)
Recent Accounting Pronouncements On
March 30, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update on Stock Compensation
Improvements to Employee Share-Based Payment Accounting (Topic 718). The objective of this update is to simplify several aspects
of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards
as either equity or liabilities, and classification on the statement of cash flows. The update becomes effective for fiscal years
beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company
is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. The
Company does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will
have a material effect on the Companys consolidated financial position, results of operations, or cash flows. |
