STOCKHOLDERS’ EQUITY | NOTE 12 – 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”), which authorized the issuance of up to 1,000,000 1,000,000 3,000,000 822,605 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 Amended 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 Amended 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 Amended 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 Amended 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 Amended Plan is 3,000,000 ● 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 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 the grant. The term of any award cannot be longer than ten years from the date of the 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 Amended Plan. The Amended 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. Convertible Debentures On July 27, 2023, the Company issued convertible promissory notes (“Convertible Debentures”) in the aggregate amount of $ 550,000 January 26, 2024 10 2 On August 11, 2023, the Company entered into Convertible Debenture Conversion Agreements (“Conversion Agreements”) with the three debenture holders (“Debenture Holders”). Pursuant to the Conversion Agreements, each Debenture Holder agreed to voluntarily and immediately convert the outstanding balance on their Convertible Debenture into shares of the Company’s common stock prior to January 26, 2024 1.50 1.60 550,000 27,500 385,000 385,000 2.00 As a result of the inducement to the Debenture Holders to voluntarily convert the outstanding balance of their Convertible Debentures prior to their maturity date, the Company recognized a loss on extinguishment of debt of $ 534,366 463,476 45,834 25,056 2,444 509,310 On February 5, 2024, Alan Sarroff, a related party, due to being a greater than 10% shareholder of the Company converted an outstanding promissory note dated October 16, 2023, as amended on November 13, 2023 (the “Convertible Note”), in the amount of $ 120,000 3,255 164,340 May 14, 2024 10 0.75 Sale of Common Stock On August 4, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with two accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a registered direct offering (the “Registered Offering”) 1,200,002 1.50 1,200,002 1,775,782 24,218 502,417 1,273,365 2.00 On December 6, 2023, the Company entered into a Private Offering (the “Purchase Agreement”) with five accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a direct offering 352,224 0.90 352,224 317,000 27,000 145,820 171,180 1.50 On February 2, 2024, the Company sold 1,386,469 0.90 1,247,819 1.50 Common Stock For the year ended March 31, 2024, the Company issued 6,108,400 i) 793,585 2,182,359 88,765 2.75 137,500 ii) From April 2023 through June 2023, 30,300 74,589 iii) From April 2023 through June 2023, 49,998 123,078 iv) From July 2023 through September, 2023, 349,498 740,978 v) In August 2023, sale of 1,200,002 1,775,782 24,218 1.50 vi) In August 2023, 385,000 577,500 27,500 1.50 vii) From August 2023 through September 2023, 34,678 63,584 1.34 viii) From July 2023 through August 2023, 28,250 ix) In August 2023, 20,200 41,006 x) 125,000 200,000 xi) ( 250,000 537,500 xii) During November and December 2024, an aggregate of 674,000 959,033 65,779 893,254 xiii) From October 2023 through December 2023, 167,004 293,123 xiv) During October through December 2023, 11,250 xv) During December 2023, 352,224 290,000 xvi) In January 2024, 1,386,469 1,247,819 xvii) During January through March 2024, 109,834 xviii) During January through March 2024, 324,000 423,216 xix) In February 2024, 164,340 123,255 3,255 .75 xx) During February 2024, 152,768 1,247,819 For the year ended March 31, 2023, the Company issued 961,859 i) 24,217 1.33 32,188 ii) 24,447 1.41 34,370 iii) 25,000 49,920 iv) 177,184 10,000 22,000 1,250 11,250 10,000 122,684 v) 610,011 1,389,245 2.32 vi) 101,000 349,920 The Company received $ 137,500 The Company has issued shares of common stock to providers of consulting services which are reported in the Consolidated Statements of Stockholders’ Equity. The value of these shares is reported as a prepaid expense and are amortized to expense over the contractual life of the respective consulting agreements. The amortization of stock issued for services as reported in the Consolidated Statements of Cash Flows was $ 442,559 399,840 Time-Based Restricted Stock Units We have granted time-based restricted stock units to certain participants under the Amended Plan that are stock-settled with common shares. Time-based restricted stock units granted under the Amended Plan vest over three years. Total stock-based compensation expense included in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows was $ 2,109,783 1,462,768 667,668 606,014 56,000 .5 Our time-based restricted stock unit activity for the year ended March 31, 2024, was as follows: SCHEDULE OF TIME BASED RESTRICTED STOCK UNITS Units Outstanding Weighted Aggregate Balance at March 31, 2022 372,668 $ 4.07 $ 760,243 Granted 60,600 2.89 - Vested (177,184 ) 3.99 - Balance at March 31, 2023 256,084 3.85 643,209 Vested (198,584 ) 3.82 - Cancelled (25,500 ) 3.77 Balance at March 31, 2024 32,000 $ 4.08 $ 32,000 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 employees typically vest over three years seven years 2,109,783 1,462,768 1,102,522 662,429 1,087,401 1.6 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 VALUE ASSUMPTION Year Ended March 31, 2024 Year Ended March 31, 2023 Expected term 6 7 Expected volatility 75.9 95.7 % 111.7 146.9 % Risk-free interest rate 3.46 4.52 % 2.96 4.35 % Expected dividend yield 0 % 0 % Fair value on the date of grant $ 1.20 2.75 $ 1.87 2.79 Our stock option activity for the years ended March 31, 2024 and 2023 was as follows: SCHEDULE OF STOCK OPTION ACTIVITY Options Outstanding Weighted- (1) Weighted- Aggregate (2) Balance at March 31, 2022 195,000 $ 1.56 6.9 $ 100,200 Granted 714,849 2.37 Cancelled (25,000 ) 2.46 Balance at March 31, 2023 884,849 2.19 6.3 $ 307,750 Granted 822,605 1.77 Cancelled (198,332 ) 2.03 Balance at March 31, 2024 1,509,122 $ 1.98 5.7 $ — Options exercisable at March 31, 2024 572,415 (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. The closing stock price at the end of the period (March 31, 2024) was $ 1.07 Stock options granted for the year ended March 31, 2024 and 2023 were to employees and directors. The fair value of these options on the date of grant was $ 1,107,799 984,552 Options exercisable at March 31, 2024, had exercise prices ranging from $ 1.39 2.79 The following summarizes additional information about our stock options: SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS Year Ended March 31, 2024 Year Ended March 31, 2023 Number of: Non-vested options, beginning of period 709,394 195,000 Non-vested options, end of period 936,707 709,394 Vested options, end of period 572,415 175,455 Year Ended March 31, 2024 Year Ended March 31, 2023 Weighted-average grant date fair value of: Non-vested options, beginning of period $ 2.23 $ 1.56 Non-vested options, end of period $ 1.84 $ 2.23 Vested options, end of period $ 2.21 $ 2.01 Forfeited options, during the period $ 2.03 $ - Warrants During the year ended March 31, 2024 the Company issued warrants to purchase an aggregate of 4,386,463 i) 1,200,002 1,273,365 ii) 385,000 463,476 iii) 300,000 234,741 iv) 80,000 87,485 v) 352,224 vi) 430,000 vii) 1,639,237 These warrants’ values were arrived at by using the Black-Scholes valuation model with the following assumptions: SCHEDULE OF WARRANT’S USING BLACK-SCHOLES VALUATION Year Ended March 31, 2024 Stock price on valuation date $ 1.07 2.15 Exercise price $ 1.20 2.75 Term (years) 2.0 3.0 Volatility 75.9 95.7 % Risk-free rate 3.46 4.52 % A summary of warrant activity for the years ended March 31, 2024, and 2023 is as follows: SCHEDULE OF WARRANT ACTIVITY Number of Weighted- Warrants Weighted- Outstanding, March 31, 2022 3,757,484 $ 4.95 3,693,734 $ 5.00 Exercised for cash (48,664 ) (1.36 ) Granted and issued - - Cashless warrant exercises - - Expired (146,003 ) (3.70 ) Outstanding, March 31, 2023 3,562,817 5.05 3,540,317 5.07 Granted and issued 4,386,463 1.80 Cashless warrant exercises (63,584 ) (1.34 ) Expired (16,750 ) (4.18 ) Outstanding, March 31, 2024 7,768,946 $ 3.29 7,768,946 $ 3.28 On March 31, 2024, 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 Price Weighted- Average Remaining Contractual (Years) Number of Warrants Weighted- Average Exercise Price $ 1.20 2.00 4,189,952 $ 1.63 2.80 635,713 $ 1.43 2.01 4.00 535,438 2.54 1.48 396,268 2.50 4.01 5.63 3,043,556 5.63 2.61 3,043,556 5.63 Total 7,768,946 $ 3.29 2.54 4,075,537 $ 4.67 Total stock-based compensation expense included in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows was $ 2,109,783 and $ 1,462,768 for the years ended March 31, 2024, and 2023, respectively, of which warrants were $ 339,644 and $ 41,662 for the year ended March 31, 2024 and 2023, respectively. At March 31, 2024, there was no future unrecognized warrant expense. |