U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Mark One
For
the quarterly period ended
For the transition period from _______ to _______
Commission
File No.
(Name of small business issuer in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
| ||||
| The
|
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)
Indicate
by check 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging Growth Company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
| Class | Outstanding as of February 9, 2024 | |
| Common Stock, $0.001 |
PETVIVO HOLDINGS, INC.
FORM 10-Q
FOR THE PERIOD ENDED DECEMBER 31, 2023
INDEX
| Page | ||
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 2 | |
| PART I. FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
| Item 3. | Qualitative and Quantitative Disclosures About Market Risk | 29 |
| Item 4. | Controls and Procedures | 30 |
| PART II. OTHER INFORMATION | 30 | |
| Item 1. | Legal Proceedings | 30 |
| Item 1A. | Risk Factors | 30 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 4. | Mine Safety Disclosure | 31 |
| Item 5. | Other information | 31 |
| Item 6. | Exhibits | 32 |
| SIGNATURES | 33 | |
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Information included in this 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 the projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied in the forward-looking 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, 2023, (“2023 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.
| 2 |
PART I.
ITEM 1. FINANCIAL STATEMENTS
PETVIVO HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, 2023 | March 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment, net | ||||||||
| Other Assets: | ||||||||
| Operating lease right-of-use asset | ||||||||
| Patents and trademarks, net | ||||||||
| Security deposit | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liability – short term | ||||||||
| Notes payables and accrued interest | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Note payable and accrued interest (net of current portion) | ||||||||
| Operating lease liability (net of current portion) | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (see Note 9) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred Stock, par value $, shares authorized, shares issued and outstanding at December 31, 2023 and March 31, 2023 | ||||||||
| Common Stock, par value $, shares authorized, and issued and outstanding at December 31, 2023 and March 31, 2023, respectively | ||||||||
| Common Stock to be Issued | ||||||||
| Common Stock Receivable | ( | ) | ||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 3 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Sales and Marketing | ||||||||||||||||
| Research and Development | ||||||||||||||||
| General and Administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) Income | ||||||||||||||||
| Loss on Extinguishment of Debt | ( | ) | ||||||||||||||
| Settlement Expense | ( | ) | ||||||||||||||
| Extinguishment of payables | ||||||||||||||||
| Interest (Expense) Income | ( | ) | ( | ) | ||||||||||||
| Total Other Income (Expense) | ( | ) | ||||||||||||||
| - | - | |||||||||||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income Tax Provision | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share: | ||||||||||||||||
| Basic and Diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 4 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
For The Three And Nine Months Ended December 31, 2023
| Common Stock | Additional Paid-in | Accumulated | Common Stock | Common Stock to be | ||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Receivable | Issued | Total | ||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Common stock sold | ( | ) | ||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | ||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Common stock and warrants sold | ||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||
| Conversion of debt and interest to common stock | ||||||||||||||||||||||||||||
| Value of stock and warrants issued on extinguishment of debt | - | |||||||||||||||||||||||||||
| Cashless warrant exercise | ( | ) | ||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | ||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Common stock and warrants sold | ( | ) | ||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||
| Return of stock issued for services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | ( | ) | $ | ||||||||||||||||||||
| 5 |
For The Three And Nine Months Ended December 31, 2022
| Common Stock | Additional Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Cash paid to exercise warrants | ||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 6 |
PETVIVO HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss For The Period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Investor relations services paid in stock | ||||||||
| Consulting services paid in stock | ||||||||
| Stock issued in lieu of compensation | ||||||||
| Loss on extinguishment of debt | ||||||||
| Interest on convertible debentures | ||||||||
| Extinguishment of payables | ( | ) | ||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Decrease (increase) in prepaid expenses and other current assets | ( | ) | ||||||
| Increase in accounts receivable | ( | ) | ( | ) | ||||
| Increase in inventory | ( | ) | ( | ) | ||||
| Increase in accounts payable and accrued expenses | ||||||||
| Accrued interest on note payable | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from the sale of common stock and warrants | ||||||||
| Proceeds from issuance of convertible debentures | ||||||||
| Proceeds from issuance of note payable | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Decrease in Cash | ( | ) | ( | ) | ||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash Paid During The Period For: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES | ||||||||
| Convertible debentures and accrued interest converted to common stock | $ | $ | ||||||
| Prepaid stock issued for services | $ | $ | ||||||
| Increase to operating lease right of use asset and operating lease | $ | $ | ||||||
The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.
| 7 |
PETVIVO HOLDINGS, INC.
Condensed Notes to Financial Statements
December 31, 2023
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management 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 as 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 twenty 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 its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. 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-owned subsidiary of the Company.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three and nine months ended December 31, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
(C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
(D) 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 reporting 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-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
(E) Cash and Cash Equivalents
The
Company considers all highly-liquid, temporary cash investments with original maturity of three months or less to be cash equivalents.
The Company had
| 8 |
(F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At December 31, 2023, the Company did not have cash balances in excess of the federally insured limits.
(G) Accounts Receivable
Accounts
receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s
assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the
results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the
collectability of our accounts receivable as well as a forecast of projected credit losses. We update our assessment on a quarterly basis,
which to date has not resulted in any material adjustments to the valuation of our accounts receivable since all receivables to date
have been collected. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe
that substantially all accounts receivable are fully collectible. Accordingly, as of December 31, 2023 and March 31, 2023, our allowance
for credit losses was
(H) Inventory
Inventories
are recorded in accordance with Accounting Standards Codification (“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. Provisions for
inventory obsolescence are charged to Cost of Sales. There were
(I) Property & Equipment
Property
and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual
values) over the assets estimated useful life of
(J) Patents and Trademarks
The
Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the
lesser of the useful life of
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 had warrants outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
| 9 |
The Company had stock options outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter 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.
(L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. 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.
The
Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”)
on June 17, 2022. Contracts with the Distributor 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. Product sales occur once control
or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment
is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to
For
the three months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $
For
the nine months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $
| 10 |
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
| December 31, 2023 | March 31, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Rebate liability | ||||||||
| Distribution fee payable | ||||||||
The Company entered into a Distribution Services Agreement (the “Agreement”) with Covetrus North America LLC (“Covetrus”) on December 18, 2023. Contracts with Covetrus 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. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. 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 of December 31, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For
the three and nine months ended December 31, 2023 the Company recognized revenue from product sales to Covetrus of $
(M) Research and Development
The Company expenses research and development costs as incurred.
(N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“FASB”) staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
| ● | Level 1 - quoted market prices in active markets for identical assets or liabilities. | |
| ● | Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2023 and March 31, 2023, due to the short-term nature of these 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 note recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market, and (iii) contractual prices.
| 11 |
The
Company had
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation – Stock Compensation”‘ which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on grant-date fair value of the award. The Company has elected to recognized forfeitures as they occur as permitted under Accounting Standards Update (“ASU”) 2016-09 Improvements to Employee Share-Based Payment.
(P) Income Taxes
The Company accounts for income taxes under ASC 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 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.
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.
(Q) Recent Accounting Pronouncements
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 material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts 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 June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as accounts receivable, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the consolidated financial statements for the nine months ended December 31, 2023. The change had no impact on the Company’s financial statements.
| 12 |
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
NOTE 2 – INVENTORY
As
of December 31, 2023 and March 31, 2023, the Company had inventory of $
The inventory components are as follows:
| December 31, 2023 | March 31, 2023 | |||||||
| Finished Goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Total | $ | $ | ||||||
NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As
of December 31, 2023, the Company had $
As
of March 31, 2023, the Company had $
NOTE 4 – PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
| December 31, 2023 | March 31, 2023 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Production equipment | ||||||||
| R&D equipment | ||||||||
| Computer equipment and furniture | ||||||||
| Total, at cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total Net | $ | $ | ||||||
Depreciation
expense was $
NOTE 5 – PATENTS AND TRADEMARKS
The components of patents and trademarks, all of which are finite-lived, were as follows:
| December 31, 2023 | March 31, 2023 | |||||||
| Patents | $ | $ | ||||||
| Trademarks | ||||||||
| Total at cost | ||||||||
| Accumulated Amortization | ( |
) | ( |
) | ||||
| Total net | $ | $ | ||||||
Amortization
expense was $
| 13 |
NOTE 6 – ACCRUED EXPENSES
The components of accrued expenses were as follows:
| December 31, 2023 | March 31, 2023 | |||||||
| Accrued expenses | $ | $ | ||||||
| Accrued payroll and related taxes | ||||||||
| Accrued lease termination expense | ||||||||
| Total | $ | $ | ||||||
Pursuant
to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal
year 2018, the Company had recorded $
NOTE 7 – NOTES 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 $
In
October 2023 and amended in November 2023, the Company entered into a promissory note for $
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 December 31, 2023 and 2022,
the Company made contributions to the plan of $
| 14 |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (‘‘ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options is at our discretion and is included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Consolidated Balance Sheets.
None of our lease agreements contain material restrictive covenants or residual value guarantees.
Buildings
The
Company entered into an month lease for
The
Company entered into a month lease for
On
January 10, 2023, the Company entered into a new lease agreement for approximately
Vehicles
We
leased vehicles for certain members of our field sales organization in the nine months ended December 31, 2023, under a vehicle fleet
program whereby the noncancelable lease is for a term of
Operating
lease expense for the three months ended December 31, 2023 and 2022, was $
| 15 |
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of December 31, 2023:
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| Less: amount representing interest | ( | ) | ||
| Total | $ |
In
compliance with ASC 842, the Company recognized, based on
| Present value of future base rent lease payments | $ | |||
| Base rent payments included in prepaid expenses | ||||
| Present value of future base rent lease payments – net | $ |
As of December 31, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
| Operating lease right-of-use asset | $ | |||
| Total operating lease assets | ||||
| Operating lease current liability | ||||
| Operating lease non-current liability | ||||
| Total operating lease liabilities | $ |
Employment Agreements
The Company has employment agreements with its executive officers. As of December 31, 2023, these agreements contain severance benefits ranging from one month to six months if terminated without cause.
Legal Proceedings
David
Masters, a former employee, board member, and consultant to the Company, has threatened to file suit against the Company to recover in
excess of $
In
September 2023, Masters executed the long-term agreement and the Company recorded a settlement expense of $
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.
| 16 |
The
Company incurred net losses of $
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 ability 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.
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”), which authorized the issuance of up to shares of our common stock as awards under the 2020 Plan, subject to approval by our stockholders at the Annual Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. 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 which may be granted under the Amended Plan from to . Unless sooner terminated by the Board, the Amended Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was at December 31, 2023.
Employees, consultants, 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 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 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 Amended Plan.
| 17 |
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 $
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
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 $
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”) shares (“Registered Shares”) of the Company’s common stock (the “Common
Stock”) at a price of $ per share. Under the Purchase Agreements, the Company also agreed to issue and sell to the Investors
in a concurrent private placement (the “Private Placement,” and together with the Registered Offering, the “Offering”)
warrants to purchase an aggregate of
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 shares
of the Company’s common stock (the “Common Stock”) at a price of $ per share. Under the Purchase Agreements, the
Company also agreed to issue and sell to the Investors in a concurrent private placement (the “Private Placement,” and together
with the Offering, the “Offering”) warrants to purchase an aggregate of shares of Common Stock (the “Warrants”).
Net proceeds from the Offering were $
| 18 |
Common Stock
For the nine months ended December 31, 2023, the Company issued shares of common stock as follows:
| i) |
shares in connection with the sale of stock in a registered direct offering which closed in April 2023 in exchange for proceeds of
$ |
| ii) | shares related to vesting of restricted stock units (“RSUs”), vesting in June 2023; |
| iii) |
shares related to vesting of RSUs to John Lai, the Company’s Chief Executive Officer, in lieu of compensation valued as of
$ |
| iv) |
shares in April 2023 to service providers for consulting services valued at market on the date of grant of $ |
| v) |
shares in May 2023 to service providers for consulting services valued at market on the date of grant of $ |
| vi) |
shares in June 2023 to service providers for consulting services valued at market on the date of grant of $ |
| vii) |
shares in July 2023 to service providers for consulting services valued at market on the date of grant of $ |
| viii) |
shares in July 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| ix) |
shares in connection with the sale of stock in August 2023 in exchange for proceeds of $ |
| x) |
shares in connection with the conversion of the Convertible Debentures in August 2023 totaling $ |
| xi) |
shares in August 2023 pursuant to a warrant holder’s cashless exercise of a warrant for purchase of |
| xii) |
shares in August 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xiii) |
shares in August 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| xiv) | shares related to vesting of RSUs in August 2023; |
xv)
xvi) |
shares related to vesting of RSUs to John Lai, the Company’s Chief Executive Officer,
in lieu of compensation valued at $
shares in September 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xvii) |
shares in September 2023 to a service provider for consulting services valued at market on the date of grant of $ |
| xviii) |
shares in September 2023 pursuant to a warrant holder’s cashless exercise of warrants for purchase of |
| xix) |
shares in connection with the sale of stock in October 2023 in exchange for proceeds of $ |
| xx) | ()
shares returned in October 2023 from a service provider for cancellation of consulting agreement valued at $ |
| xxi) |
shares in November 2023 sold pursuant to the At The Market (ATM) agreement. Proceeds from the sale was $ |
| xxii) |
shares in October 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xxiii) | shares related to vesting of RSUs in October 2023; |
| xxiv) |
shares in November 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xxv) |
shares in December 2023 to service providers for consulting services valued at market on the date of grant of $ |
| xxvi) |
shares in connection with the sale of stock in December 2023 in exchange for proceeds of $ |
| xxvii) |
shares in December 2023 pursuant to the ATM. Proceeds from the sale was $ |
| xxviii) | shares related to vesting of RSUs in December 2023. |
| 19 |
For the nine months ended December 31, 2022, the Company issued shares of common stock as follows:
| i) |
shares in July 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price of
$ per share for cash proceeds of $ |
| ii) |
shares in August 2022 pursuant to a warrant holder’s exercise of warrants for purchase with a weighted average strike price
of $ per share for cash proceeds of $ |
| iii) |
shares in August 2022 to service providers for consulting services valued at $ |
| iv) | shares related to vesting of restricted stock units (“RSU’s), with RSU’s vesting in July 2022, RSU’s in August 2022, RSU’s in September 2022 and RSU’s in December 2022. |
In
August 2023, the Company granted shares of common stock to a service provider for consulting services valued at $
The
Company has issued shares of common stock to providers of investor relations services which are reported in the Condensed Consolidated
Statements of Changes in Stockholders’ Equity. The value of these shares are 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 Condensed Consolidated Statements of Operations and Cash Flows was $
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
Condensed Consolidated Statements of Operations for time-based restricted stock units was $
Our time-based restricted stock unit activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 was as follows:
| Units Outstanding | Weighted Average Grant Date Fair Value Per Unit | Aggregate Intrinsic Value (1) | ||||||||||
| Balance at March 31, 2022 | $ | $ | ||||||||||
| Granted | - | |||||||||||
| Vested | ( | ) | - | |||||||||
| Balance at March 31, 2023 | ||||||||||||
| Vested | ( | ) | - | |||||||||
| Balance at December 31, 2023 | $ | $ | ||||||||||
| (1) |
Stock Options
Stock options issued to employees and directors typically vest over (one year for directors) and have a contractual term of . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ and $ for the three months ended December 31, 2023 and 2022, respectively, and $ and $ for the nine months ended December 31, 2023 and 2022, respectively. At December 31, 2023, there was approximately $ of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of years.
| 20 |
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.
| Nine Months Ended | Year Ended | |||||||
| December 31, 2023 | March 31, 2023 | |||||||
| Expected term | years | years | ||||||
| Expected volatility | % - | % | % - | % | ||||
| Risk-free interest rate | % - | % | % – | % | ||||
| Expected dividend yield | % | % | ||||||
| Fair value on the date of grant | $ | - $ | $ | - $ | ||||
| Options Outstanding | Weighted- Average Exercise Price Per Share (1) | Weighted-Average Remaining Contractual Life | Aggregate Intrinsic Value (2) | |||||||||||
| Balance at March 31, 2022 | $ | years | $ | |||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Balance at March 31, 2023 | years | |||||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Balance at December 31, 2023 | $ | | years | $ | ||||||||||
| Options exercisable at December 31, 2023 | ||||||||||||||
| (1) | |
| (2) |
Stock options granted for the year ended March 31, 2023 and the nine months ended December 31, 2023 were to employees and directors. The fair value of these options on the date of grant was $ and $ for the year ended March 31, 2023 and the nine months ended December 31, 2023, respectively.
| 21 |
Options exercisable at December 31, 2023 had exercise prices ranging from $ to $.
| Nine Months Ended | Year Ended | |||||||
| December 31, 2023 | Mar 31, 2023 | |||||||
| Number of: | ||||||||
| Non-vested options, beginning of period | ||||||||
| Non-vested options, end of period | ||||||||
| Vested options, end of period | ||||||||
| Nine Months Ended | Year Ended | |||||||
| December 31, 2023 | Mar 31, 2023 | |||||||
| Weighted-average grant date fair value of: | ||||||||
| Non-vested options, beginning of period | $ | $ | ||||||
| Non-vested options, end of period | $ | | $ | |||||
| Vested options, end of period | $ | $ | ||||||
| Forfeited options, during the period | $ | $ | ||||||
Warrants
During
the nine months ended December 31, 2023 the Company issued warrants to purchase an aggregate of
| i) | |
| ii) |
warrants in August 2023 in connection with the conversion of convertible debentures to common stock valued at $ |
| iii) |
warrants in August 2023 to service providers valued at $ |
| iv) |
warrants in August 2023 to service providers valued at $ |
| v) |
| Nine Months Ended | ||||
| December 31, 2023 | ||||
| Stock price on valuation date | $ | - $ | ||
| Exercise price | $ | -$ | ||
| Term (years) | – | |||
| Volatility | % - | % | ||
| Risk-free rate | % - | % | ||
| 22 |
A summary of warrant activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 is as follows:
| Number of Warrants | Weighted- Average Exercise Price | Warrants Exercisable | Weighted- Average Exercisable Price | |||||||||||||
| Outstanding, March 31, 2022 | $ | $ | ||||||||||||||
| Exercised for cash | ( | ) | ( | ) | ||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, March 31, 2023 | ||||||||||||||||
| Granted and issued | ||||||||||||||||
| Cashless warrant exercises | ( | ) | ( | ) | ||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, December 31, 2023 | $ | $ | ||||||||||||||
| 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 | |||||||||||||||
| $-$ | $ | $ | ||||||||||||||||||
| - | ||||||||||||||||||||
| - | | |||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
Stock-based compensation expense included in the Consolidated Statements of Operations for warrants was $ and $ for the three months ended December 31, 2023 and 2022, respectively, and $ and $ for the nine months ended December 31, 2023 and 2022, respectively.
It is expected that the Company will recognize expense after December 31, 2023 related to warrants issued, outstanding, and valued using the Black Scholes pricing model as of December 31, 2023 of approximately $ over the next nine months.
For the three months ended December 31, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively. For the nine months ended December 31, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively.
NOTE 12 – SUBSEQUENT EVENTS
On
February 2, 2024, the Company sold units consisting of one share and one warrant at a price of $ per unit. Total proceeds
from the sale of the units were $
| 23 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
PetVivo Holdings, Inc. (the “Company,” “PetVivo,” “we” or “us) is an emerging biomedical device company focused on the manufacturing, commercialization, and licensing of innovative medical devices and therapeutics for animals. The Company has a pipeline of products for the treatment of animals. A portfolio of twenty-two patents protects the Company’s biomaterials, products, production processes, and methods of use. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses, in the second quarter of its fiscal year ended March 31, 2022.
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.
CURRENT BUSINESS OPERATIONS
The Company is primarily engaged in the business of commercializing and licensing products in the veterinary market to treat and/or manage afflictions of companion animals such as cats, dogs and horses. Most of our technology was developed for human biomedical applications, and we intend to leverage the investments already expended in their development to commercialize treatments for horses and companion animals in a capital and time-efficient way.
The Company’s initial product, Spryng™ with OsteCushion™ Technology, and its pipeline products are derived from proprietary biomaterials that simulate a body’s tissue by virtue of their reliance upon natural protein and carbohydrate compositions which incorporate such “tissue building blocks” as collagen, elastin, and proteoglycans such as heparin. Since these are naturally-occurring in the body, we believe they have an enhanced biocompatibility with living tissues compared to synthetic biomaterials such as those based upon alpha-hydroxy polymers (e.g. PLA, PLGA, and the like), polyacrylamides, and other “natural” biomaterials that may lack the multiple building-block proteins incorporated into our biomaterials. These proprietary protein-based biomaterials are similar to the body’s tissue thus allowing integration and tissue repair in long-term implantation in certain applications.
Spryng™, is a veterinary medical device designed to integrate with the synovial fluid before adsorbing onto the synovial membrane and subsequently being integrated into the subsynovial tissue. Such action assists in the management of lameness and other joint related afflictions, such as osteoarthritis, in horses and 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 promote restoration of proper joint mechanics. 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 and mammalian tissue. These particles show an effectiveness in promoting restoration of proper joint mechanics by incorporating with the joint’s synovial fluid and ultimately adsorbing onto the synovial lining wherein they integrate with the subsynovial tissue.
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 21 million dogs and 1 million horses in the $11 billion companion animal veterinary care and product sales market.
Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in treating osteoarthritis in dogs, horses, and other pets. As there is no cure for osteoarthritis, current solutions treat symptoms, but do not manage the cause. The current treatment for osteoarthritis in dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (or “NSAIDs”) which are approved to alleviate pain and inflammation but present the potential for side effects relating to gastrointestinal, kidney, and liver damage and do not halt or slow joint degeneration. The Company offers an alternative to traditional treatments that only address the symptoms of the affliction. Spryng™ with OsteoCushion™ technology addresses the affliction, loss of synovial fluid, and/or the deterioration of joint cartilage, rather than treating just the symptoms and, to the best of our knowledge, has elicited minimal adverse side effects in dogs and horses. Spryng™ administered dogs and horses have shown an increase in activity even after they no longer are receiving pain medication or other treatments. Other treatments for osteoarthritis include steroid and/or hyaluronic acid injections, which are used for treating pain, inflammation and/or joint lubrication, but can be slow acting and/or short lasting.
We believe Spryng™ is an optimal solution to safely improve joint function in animals for several reasons:
| ● | Spryng™ addresses the underlying problems which relate to deterioration of cartilage causing bones to contact each other and a lack of synovial fluid. Spryng™ provides biocompatible lubricious, viscosolid microparticles to the joint, which adsorbs onto the synovial membrane and subsequently integrates into the subsynovial tissue to promote restoration of proper joint mechanics. |
| 24 |
| ● | 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 syringe of Spryng™ is approximately $600 to $900 and typically lasts for at least 12 months when injected into a joint. |
Historically, drug sales represent up to 30% of revenues at a typical veterinary practice (Veterinary Practice News). Revenues and margins at veterinary practices are being eroded because online, big-box, and traditional pharmacies have recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace lost prescription revenues with safe and effective products. Spryng™ is a veterinarian-administered medical device that should expand practice revenues and margins. We believe that the increased revenues and margins provided by Spryng™ will accelerate its adoption rate and propel it forward as the standard of care for canine and equine lameness related to or due to synovial joint issues.
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 relationship with MWI Veterinary Supply Co. (“Distributor” or “MWI”) and the use of sales reps, clinical studies, and market awareness to educate and inform key opinion leaders on the benefits of Spryng™.
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 sell the Company’s lead product, Spryng™ on an exclusive basis for two (2) years within the United States (the “Territory”), transitioning to a non-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 the Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and (d) customers that order via the internet who are not directly solicited by MWI to purchase Spryng™. All customers must be licensed veterinary practices.
In December 2023, the Company and MWI agreed to change the Distribution Agreement from an exclusive distribution agreement to a non-exclusive distribution agreement, effective as of January 1, 2024. This is consistent with the Company’s strategy to create multiple sales channels for its products. In December 2023, the Company entered into a non-exclusive distribution agreement with Covetrus North America, LLC (“Covetrus Distribution Agreement”), to market, distribute and sell the Company’s products in the United States, including the District of Colombia. The Covetrus Distribution Agreement has an initial term of one year, which will be automatically renewed, unless either party provides notice of non-renewal at least thirty 30 days prior to the expiration of the term.
Spryng™ is classified as a veterinary medical device under the United States Food and Drug Administration (“FDA”) rules and pre-market approval is not required by the FDA. The Company completed a safety and efficacy study in rabbits in 2007 and tolerance studies in dogs and cats in 2023. Since 2007, more than 5,000 horses, dogs and cats 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 March 2024. Additionally, the Company began two canine clinical studies with Ethos Veterinary Health, the first beginning in May of 2022 with completion in October 2023, and the second beginning in June of 2023 with an expected completion in October 2024. We anticipate these and other studies that we plan to initiate will be primarily used to expand our distribution outlets since the large international and national distributors generally require a third-party university study and other third-party studies prior to including a product in their catalog of products.
We manufacture our products in an ISO 7 certified clean room manufacturing facility in Minneapolis using our patented and scalable self-assembly production process, which minimizes the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. A second ISO cleanroom facility is expected to be operational later this year. We believe that having two manufacturing facilities will help us minimize supply risks, allow for continued scaling of our production capacity, and expand our research and development facilities.
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We also have a pipeline of therapeutic devices for both veterinary and human clinical applications. Some such devices may be regulated by the FDA or other equivalent regulatory agencies, including but not limited to the Center for Veterinary Medicine (“CVM”). We anticipate growing our product pipeline through the acquisition or in-licensing of additional proprietary products from human medical device companies specifically for use in pets. In addition to commercializing our own products in strategic market sectors and in view of the Company’s vast proprietary product pipeline, the Company may establish strategic out-licensing partnerships to provide secondary revenues.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our 2023 10-K Report and the condensed consolidated financial statements and related notes in Item 1, Financial Statements appearing elsewhere in this 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 2023 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.
We are a smaller reporting company and have incurred substantial losses in connection with our operations. We will need substantial capital to pursue our current plans to commercialize our initial product, Spryng™.
RESULTS OF OPERATIONS
| For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | 595,891 | $ | 510,109 | $ | 920,440 | $ | 791,563 | ||||||||
| Cost of Sales | 183,087 | 223,687 | 406,270 | 424,866 | ||||||||||||
| Operating Expenses | 2,546,428 | 2,605,240 | 8,485,714 | 6,771,176 | ||||||||||||
| Other Income (Expense) | 383,776 | 7,200 | (333,034 | ) | 15,844 | |||||||||||
| Net Loss | $ | (1,749,848 | ) | $ | (2,311,618 | ) | $ | (8,304,578 | ) | $ | (6,388,635 | ) | ||||
| Net loss per share - basic and diluted | $ | (0.12 | ) | $ | (0.23 | ) | $ | (0.64 | ) | $ | (0.64 | ) | ||||
For The Three Months Ended December 31, 2023 Compared to The Three Months Ended December 31, 2022
Total Revenues. Revenues were $595,891 and $510,109 for three months ended December 31, 2023 and 2022, respectively. Revenues in the three months ended December 31, 2023 consist of sales of our Spryng™ product to MWI Veterinary Supply Co. (MWI) of $439,922, Covetrus of $106,074 and to veterinary clinics in the amount of $49,265. In the three months ended December 31, 2022, our revenues of $510,109 consisted of sales of our Spryng™ product to MWI of $456,502 and to veterinary clinics in the amount of $53,607 of sales to veterinary clinics.
Cost of Sales. Cost of sales were $183,087 and $223,687 for the three months ended December 31, 2023 and 2022, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs.
Operating Expenses. Operating expenses were $2,546,428 and $2,605,240 for the three months ended December 31, 2023 and 2022, respectively. Operating expenses consisted of general and administrative, sales and marketing and research and development expenses.
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General and administrative expenses were $1,282,787 and $1,309,534 for the three months ended December 31, 2023 and 2022, respectively. General and administrative expenses include compensation and benefits, contracted services, legal and consulting fees, stock issued for services and stock compensation expenses.
Sales and marketing expenses were $1,032,575 and $1,047,549 for the three months ended December 31, 2023 and 2022, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the continuing launch of our Spryng™ product.
Research and development expenses were $231,066 and $248,157 for the three months ended December 31, 2023 and 2022, respectively. The decrease was related to the increase in revenues and lower cost of sales as compared to the prior year.
Operating Loss. As a result of the foregoing, our operating loss was $2,133,624 and $2,318,818 for the three months ended December 31, 2023 and 2022, respectively. The decrease was related to the increase in revenues and lower cost of sales as compared to the prior year.
Other Income. Other income was $383,776 for the three months ended December 31, 2023 as compared to other income of $7,200 for the three months ended December 31, 2022. Other income in 2023 consisted primarily of the extinguishment of payables. Other income in 2022 consisted of net interest income.
Net Loss. Our net loss for the three months ended December 31, 2023 was $1,749,848 or ($0.12) per share as compared to a net loss of $2,311,618 or ($0.23) per share for the three months ended December 31, 2022. The decrease was related to the write-off of old vendor payables. The weighted average number of shares outstanding was 14,271,530 compared to 10,098,658 for the three months ended December 31, 2023 and 2022, respectively.
For The Nine Months Ended December 31, 2023 Compared to The Nine Months Ended December 31, 2022
Revenues. Revenues were $920,440 for the nine months ended December 31, 2023 compared to revenues of $791,563 in the nine months ended December 31, 2022. Revenues in the nine months ended December 31, 2023 consisted of sales of our Spryng™ product MWI of $595,891, Covetrus of $106,074 and to veterinary clinics in the amount of $196,419. In the nine months ended December 31, 2022, our revenues of $791,563 consisted of sales of our Spryng™ product to MWI of $574,766 and to veterinary clinics in the amount of $191,797 of sales to veterinary clinics.
Cost of Sales. Cost of sales was $406,270 and $424,866 for the nine months ended December 31, 2023 and 2022, respectively. Cost of sales includes product costs related to the sale of products and labor and overhead costs.
Operating Expenses. Operating expenses were $8,485,714 and $6,771,176 for the nine months ended December 31, 2023 and 2022, respectively. Operating expenses consisted of general and administrative, sales and marketing, and research and development expenses.
General and administrative expenses were $4,737,374 and $3,738,876 for the nine months ended December 31, 2023 and 2022, 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 issued for services and stock compensation.
Sales and marketing expenses were $3,053,184 and $2,572,103 for the nine months ended December 31, 2023 and 2022, 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 expenses were $695,156 and $460,197 for the nine months ended December 31, 2023 and 2022, respectively. The increase in R&D expenses was costs related to clinical studies and compensation.
Operating Loss. As a result of the foregoing, our operating loss was $7,971,544 and $6,404,479 for the nine months ended December 31, 2023 and 2022, respectively. The increase in our operating loss, was related to the costs to support the launch of Spryng™, stock issued for services and stock compensation.
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Other (Expense) Income. Other expense was $333,034 for the nine months ended December 31, 2023 as compared to other income of $15,844 for the nine months ended December 31, 2022, respectively. Other expense in 2023 consisted of a loss on extinguishment of debt of $534,366, the settlement payment and interest expense partially offset by the extinguishment of payables of 385,874. Other income in 2022 consisted of interest income.
Net Loss. Our net loss for the nine months ended December 31, 2023 was $8,304,578 or ($0.64) per share as compared to a net loss of $6,388,635 or ($0.64) per share for the nine months ended December 31, 2022. The weighted average number of shares outstanding was 12,976,851 compared to 10,047,040 for the nine months ended December 31, 2023 and 2022, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, our current assets were $1,492,884, including $80,085 in cash and cash equivalents. In comparison, our current liabilities as of that date were $1,662,120 including $1,336,111 of accounts payable and accrued expenses. Our working capital deficit as of December 31, 2023 was $169,236.
The Company has continued to realize losses from operations. As a result of the proceeds of $1,248,000 from the sale of common stock in February 2024 from a private offering and our accounts receivable balance of $518,686 at December 31, 2023, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements for at least the next two 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.
Net Cash Used in Operating Activities – We used $5,895,484 of net cash in operating activities for the nine months ended December 31, 2023. This cash used in operating activities was primarily attributable to our net loss of $8,304,578 and the extinguishment of payables of $385,874 partially offset by stock-based compensation expense of $1,537,437, loss on extinguishment of debt of $534,366, consulting services paid in stock of $339,641 and stock issued for investor relations services of $289,913.
Net Cash Used in Investing Activities – We used $279,802 of net cash in investing activities for the nine months ended December 31, 2023, consisting of costs capitalized for manufacturing and computer equipment.
Net Cash Provided by Financing Activities – We provided net cash in financing activities of $5,780,057 for the nine months ended December 31, 2023, consisting of $5,115,130 from the sale of common stock and warrants, $550,000 from the sale of convertible debentures and proceeds from a note payable of $120,000 partially offset by $5,073 in repayments of 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 hand through an inventory count.
At December 31, 2023, the Company’s inventory had a carrying value of $467,467 which consisted of $102,177 of finished goods, $20,289 of work in process, and $345,001 in raw materials.
At March 31, 2023, the Company’s inventory had a carrying value of $370,283 which consisted of $13,159 of finished goods, $53,398 of work in process, and $303,726 in raw materials.
MATERIAL COMMITMENTS
Notes Payable
As of December 31, 2023, we are obligated to pay notes and accrued interest in the amount of $144,776.
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OFF-BALANCE SHEET ARRANGEMENTS
As of December 31, 2023, and as of the date of this Quarterly Report, we do not have any off-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 report of independent registered public accounting firm accompanying our March 31, 2023 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming 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. Our working capital deficit at December 31, 2023 was $169,236.
We have continued to realize losses from operations. 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.
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.
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 do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts 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.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not required
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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 effective.
Changes in internal control over financial reporting.
There were no significant changes in our internal control over financial reporting in the third quarter of our fiscal year ending March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business, the resolution of which we do not anticipate would have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.
Refer to Note 9. Commitments and Contingencies, in the Notes to Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements of this Quarterly Report, for further information regarding legal contingencies.
ITEM 1A. RISK FACTORS
The following information updates, and should be read in conjunction with, the risk factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2023 ( “10-K”) which we filed with the Securities and Exchange Commission on March 17, 2023. Any of the risk factors contained in this Quarterly Report on Form 10-Q and the 10-K could materially affect our business, financial condition or future results, and such risk factors may not be the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. We do not undertake to update any of the “forward-looking” statements or to announce the results of any revisions to these “forward-looking” statements except as required by
The Company’s failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of its securities.
Our common stock and warrants are currently listed for trading on Nasdaq. On November 17, 2023, the Company received a letter from Nasdaq stating that the Company no longer meets the minimum $2.5 million stockholders’ equity requirement as of September 30, 2023, and that the continued listing of its securities is no longer warranted. Pursuant to Nasdaq Rules, the Company filed an appeal of this decision and the hearing date has been set for February 13, 2024. There can be no assurances that the Company will successfully appeal the delisting determination and receive an extension of time to demonstrate compliance with the Nasdaq stockholder equity rules. If the Company’s securities are delisted from Nasdaq, it would likely have a negative effect on the price of the Company’s common stock and may impair a stockholder’s ability to sell or purchase shares of our common stock. In addition, delisting could impair our ability to raise additional capital.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In October 2023, the Company sold 125,000 shares of its common stock to one investor for a total amount of $200,000.
In December 2023, the Company sold 352,224 shares of its common stock to five investors totaling $317,000. These investors also received warrants to purchase 317,000 shares at an exercise price of $1.50 per share. The warrants expire in December 2023.
On the first day of October, November and December 2023, the Company issued 16,668 shares of its restricted common stock (for an aggregate of 50,004 shares) to the consultant for services rendered in these months to the Company, which shares were valued at $31,666, 23,748 and $14,071, respectively. The Company entered into a services agreement with a consultant for a 12-month period on January 1, 2023.
In December 2023, the Company granted options to purchase an aggregate of 195,700 shares of its common stock under the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Plan (“Amended Plan”) to its Board of Directors for its compensation for the period October 1, 2023 to September 30, 2024. The exercise price of these options was $1.06 per share which was the closing price of the Company’s common stock on the date of the grant. The Director options vest on September 30, 2024 and expire on the earlier of the date on which the Director’s service with the Company is terminated or seven years after the grant date.
In October, November and December 2023, the Company issued 117,000 shares of common stock to service providers for consulting services valued at $223,640.
In October and December 2023, the Company issued 11,250 shares of common stock upon the vesting of restricted stock units issued to three employees.
All of the transactions described above were exempt from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering. The consultants in these transactions represented their intention to acquire these 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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not required.
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report.
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* The schedules and exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. The Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
** Filed herewith
+ Certain confidential portions of this Exhibit were omitted by means of marking such portion with brackets ([***]) because the identified confidential portions are both (i) not material and (ii) the type of information that PetVivo Holdings, Inc. treats as private or confidential.
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PETVIVO HOLDINGS, INC.
SIGNATURES
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.
| February 12, 2024 | By: | /s/ John Lai |
| John Lai | ||
| Its: | CEO, President, and Director | |
| (Principal Executive Officer) | ||
| February 12, 2024 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Its: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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Exhibit 10.1
CERTAIN CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND REPLACED WITH “ [***]” BECAUSE IT IS NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT PETVIVO HOLDINGS, INC. TREATS AS PRIVATE OR CONFIDENTIAL.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this “Agreement”) is effective as of January 1, 2024 (the “Effective Date”) by and between PetVivo Holdings, Inc (“Vendor”) and Covetrus North America, LLC, a Delaware limited liability company, (“Distributor” and together with Vendor collectively, the “Parties,” and each individually, a “Party”).
RECITALS
WHEREAS, Vendor desires to appoint Distributor, and Distributor desires to be appointed, to distribute Products of Vendor in the Territory (as defined below), pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article I - APPOINTMENT
Section 1.01 Appointment. Subject to the terms and conditions of this Agreement, Vendor hereby appoints Distributor on a non-exclusive basis and Distributor hereby accepts such appointment, as Vendor’s distributor with the right to promote, market, distribute and sell the products specifically identified on Exhibit A (the “Products and Price List”) within the United States of America, including the District of Columbia and all its possessions and territories, with the exception of Puerto Rico (the “Territory”) during the term of this Agreement.
Section 1.02 Term. This Agreement shall take effect as of the Effective Date and, subject to the provisions of Section 6.01, shall continue in force for an initial period of one year (the “Initial Term”). Thereafter, the Term shall automatically renew for successive renewal Terms of one year (each a “Renewal Term” and collectively with the Initial Term, the “Term”), unless either Party notifies the other, in writing, of its intent not to renew the Term of this Agreement at least 30 days prior to the end of the then-current Term.
Article II - DISTRIBUTION
Section 2.01 Duties of Distributor. Distributor shall use commercially reasonable efforts to promote, market, distribute and sell the Products to customers in the Territory.
Section 2.02 No Minimum Purchase Obligations. This Agreement imposes no minimum purchase obligations for Products on Distributor. Notwithstanding the foregoing, Distributor shall purchase a minimum initial stocking order of [***] and [***] or each [***]. Purchase orders subsequent to the initial stocking order shall be in master cases of [***]
Section 2.03 Promotional Materials. Subject to the terms of this Agreement, Distributor shall use sales and technical literature as well as promotional artwork and training materials provided by Vendor. Distributor may alter such materials or develop any other materials in connection with the marketing and distribution of Products (including but not limited to product brochures and sales aids), subject to Vendor’s review and prior written approval.
Section 2.04 Vendor Service Level Commitment. Vendor must provide Distributor with a report of Vendor’s “On Time Fill Rate” calculated quarterly by dividing (a) the total number of lines of Products shipped to Distributor within the Lead Time, by (b) the total number of lines of Products ordered by Distributor with those Lead Times. “Lead Time” means the number of days or the delivery date on Distributor’s ordered for those Products. The Parties will calculate and review the On Time Fill Rate report at the end of each calendar quarter. The Parties will review the Lead Times for each Product SKU of the Vendor on a quarterly basis.
Section 2.05 EDI. Vendor shall exchange data with Distributor through the Electronic Data Interchange (“EDI”) using, without limitation, the following transaction sets: (i) 810 Invoice, (ii) 850 Purchase Order; (iii) 855 Purchase Order Acknowledgments; and (iv) 856 Advanced Ship Notice/Manifest (including, without limitation, purchase order number, carrier, expected delivery date and location, item description and quantities, and cost). Specific data fields and any other requirements will be communicated in writing by Distributor to Vendor from time to time. If Vendor fails to use all required EDI transaction sets, then Distributor will invoice and Rev. Jul 2022 bill Vendor 1% of the invoice amount from Distributor’s payment of that invoice for each EDI transaction that Vendor has failed to implement until Vendor begins using that EDI transaction set.
Section 2.06 Veterinary Use Only Product. The Products are for veterinary use only and cannot be sold to individuals or entities that are not or do not include licensed veterinarians. Therefore, home delivery services are not applicable for the Products since such Products are administered through intra-articular injection only.
Article III - PAYMENT
Section 3.01 Pricing.
(a) Price List. Vendor will offer the Products to Distributor at the price(s) set forth on Exhibit A. Vendor reserves the right, in its sole discretion, upon [***] days advance written notice to Distributor, to change the prices listed on the Price List. In each case in which the prices on the Price List are changed by Vendor, Vendor shall deliver to Distributor a revised Price List, which will be deemed a part of this Agreement; provided, that no price change shall affect orders submitted to Vendor prior to such change. In addition, Vendor will provide Distributor the incentives described in Exhibit A.
(b) Payment Terms. Distributor must pay all amounts due and payable with respect to a Product to be delivered by Vendor net [***], from the later of Distributor’s receipt of Product or Distributor’s receipt of Vendor’s invoice for that Product. All payments to Vendor under this Agreement shall be made, at Distributor’s option, EDI, Automated Clearing House (ACH), or electronic wire transfer to an account designated by Vendor in writing from time to time. Distributor will invoice and bill to Vendor an administrative fee equal to [***] of the invoice amount to cover costs trace sales reporting.
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Section 3.02 Delivery, Risk of Loss, NDSC Logistics Fee.
(a) Delivery and Risk of Loss. Legal title to and risk of loss of all Products purchased by Distributor hereunder will be transferred to Distributor upon Products being accepted by Distributor at Distributor’s warehouse. If any Products are damaged during shipment to Distributor or are otherwise defective, Distributor shall notify Vendor and provide reasonable substantiation of that damage or defect. At Distributor’s election, Vendor shall either promptly deliver substitute Products to Distributor or issue Distributor a full credit for the same.
(b) Standard Shipping. All orders will be FOB Distributor’s warehouse as identified on Distributor’s purchase order (which warehouse locations are identified on Exhibit B to this Agreement).
Section 3.03 Product Transfers and Overages. If applicable, should Vendor fail to obtain proper licensing for any state and Distributor must transfer Product between its distribution centers to satisfy customer orders as a result of that failure, then Vendor must pay Distributor a fee equal to [***] of the cost of the Product that must be transferred during the period for which Vendor does not have proper licensing. Payment shall be made within [***] of receipt of Distributor’s claim for payment. In addition, Vendor must pay any freight costs for any Product overages shipped by Vendor to any Distributor distribution center or customer location that must be returned to Vendor.
Section 3.04 Floor Stock Adjustment. Vendor agrees to provide a floor stock adjustment when Vendor decreases price of an item and Distributor has inventory on hand or on order at the old price. Any floor stock adjustment is equal to the difference in old versus new price multiplied by the amount of inventory on hand or on order at the old price.
Section 3.05 Product Expiration. Distributor may return any unsold Products within [***] before Product’s expiration date (if any) and Vendor shall promptly provide to Distributor a [***] for the cost of such returned Product at [***]. In an effort to reduce the occurrence of expiration of Product, Distributor shall use its best efforts to implement first in first out (“FIFO”) inventory management.
Section 3.06 Sales Reporting. So long as Vendor is in good standing, Distributor shall report certain data to Vendor regarding the sales of the Products (“Sales Data”) to veterinary practices on a mutually agreed format and time. The Sales Data shall include, but may not be limited to, (i) veterinary clinic and/or veterinarian name, (ii) clinic and/or veterinarian business address, (iii) date of invoice, (iv) order number and (v) number of Product units delivered to clinic and/or veterinarian. This Sales Data shall be used only for internal tracking and regulatory purposes, including production scheduling and inventory management, regulatory quality control documenting and monitoring, and to calculate any vendor payables owed to Distributor. Distributor may report to Animalytix data regarding the sales of the Products.
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Article IV - WARRANTIES, INDEMNIFICATION, INSURANCE, & OPERATIONS
Section 4.01 Vendor’s Representations, Warranties, and Covenants. Vendor hereby represents, warrants and covenants that:
(a) Vendor is in compliance and shall continue to comply with all applicable laws, ordinances, regulations, rules, codes, orders and requirements, in the Territory, including without limitation the U.S. Federal Food, Drug and Cosmetic Act (collectively, “Legal Requirements”), including maintaining any applicable licenses and registrations, compliance with respect to any marketing, promotion, distribution and sale of the Products, and making filings with appropriate governmental authorities and disclosing reportable transactions with practitioners and other relevant parties with respect to any marketing, promotion, distribution and sale of the Products whether directly or on Vendor’s behalf;
(b) Vendor has proper legal title to the Products and that all information provided with the Products is complete and accurate; and
(c) Each Product delivered by Vendor or its authorized distributor(s) or agents (including direct and indirect shipments or electronic transmissions to Distributor’s veterinary customers) to or for Distributor:
(i) at the time of each shipment or delivery, complies with Legal Requirements regarding adulteration, misbranding and articles prohibited from interstate commerce;
(ii) is not adulterated, misbranded or otherwise prohibited by any Legal Requirements;
(iii) Is adequately contained, packaged and labeled, and conform to the claims and affirmations of fact made on any container or label, or in any applicable advertisement issued by Vendor;
(iv) has a remaining shelf-life for a period of at least 18 months from the date of delivery to Distributor.
(v) is free from defects in materials and workmanship and perform in accordance with published specifications related to veterinary medical device use; and
(vi) is merchantable and fit for its intended purpose for veterinary medical device use.
Section 4.02 Indemnification. Vendor shall indemnify, defend and hold Distributor harmless for and against any and all liabilities, losses, damages (including, actual, punitive and exemplary damages), claims, costs and expenses, interest, awards, judgments and penalties (including attorneys’ fees and expenses) suffered or incurred by Distributor arising or resulting from any:
(a) claim of trademark, trade dress, trade secret, copyright, patent or other intellectual property infringement relating to any Product (except to the extent arising or resulting from intellectual property supplied by Distributor);
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(b) product liability claim relating to any Product, with the exception of product liability claims due to the negligent or willful misconduct of the Distributor;
(c) breach by Vendor of any obligation to Distributor or any inaccuracy of any written representation made by Vendor to Distributor;
(d) negligent or willful action or omission of Vendor or any of its agents, employees, representatives, successors or assigns in connection with the manufacture, development, sale, distribution, storage or dispensing of the Products;
(e) action for the recall or seizure of the Products; or
(f) claim of false, misleading or deceptive advertising or similar claims relating to the Products.
Section 4.03 Limitation of Liability. EXCEPT FOR INDEMNIFICATION OBLIGATIONS UNDER SECTION 4.02 OR ANY BREACH OF SECTION 7.01 (NON-DISCLOSURE), IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL (INCLUDING, WITHOUT LIMITATION, LOST PROFITS), SPECIAL OR PUNITIVE DAMAGES FOR ANY CLAIM HEREUNDER RESULTING FROM ANY CAUSE WHATSOEVER, WHETHER BASED IN CONTRACT, NEGLIGENCE, STRICT LIABILITY, OTHER TORT OR OTHERWISE REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Section 4.04 Insurance. Vendor must maintain during the term of this Agreement (and if any policy is on a claims-made and reported form, for three years thereafter) comprehensive “occurrence” general liability insurance, including “occurrence” product liability, contractual liability insurance and advertising injury coverage, with minimum limits of liability of [***]. Upon Distributor’s request, Vendor shall deliver to Distributor a certificate thereof with “Covetrus North America, LLC and affiliates” named as an additional insured thereon. Such insurance must insure against all Products and must include United States territory and jurisdiction. Insurance coverage must be procured from an insurance company bearing an AM Best Rating of no less than B+ or a S&P Rating of no less than BBB. Distributor must be given at least 30 days’ notice of cancellation or expiration of this insurance.
Section 4.05 Adverse Events; Recalls.
(a) Adverse Events and Product Complaints. Distributor shall report to Vendor any adverse event, and/or product complaint, involving animals associated with any Product, whether or not considered to be product related, and whether or not used according to the label. In addition, Vendor shall report all product/manufacturing defects or product complaints (any communication that alleges deficiencies related to the identity, quality, purity, durability, reliability, safety, effectiveness, or performance) involving the Product distributed by Distributor to Distributor. A reportable event may also include an environmental or residue-related observation. These events should be reported by each party to the other party within three days and will provide the following information:
(i) Reporter: name, address and phone number of animal owner and/or veterinarian;
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(ii) Event: summary of what happened, when, concurrent treatments, how the reaction was treated and outcome of reaction, details of the alleged product complaint;
(iii) Animal: species, breed, age, weight, number treated, number reacted, number died, other health problems, state of health at time of reaction;
(iv) Product: therapy dates, duration dosage, reason for use, administered by whom and lot number; and
(v) Product Complaint: any communication that alleges deficiencies related to the identity, quality, purity, durability, reliability, safety, effectiveness, or performance of a distributed Product.
(b) Recall Expense Reimbursement. In the event of a recall, Distributor will invoice Vendor for any and all costs associated with those services Distributor provides as mutually agreed upon by the parties in the execution of the manufacturer’s recall including but not limited to, identification and sequestering of any recalled inventory still in-house, data mining to identify accounts that purchased recalled Product(s) and providing such data to the Vendor and/or contacting the affected accounts with specific instructions on what to do with that recalled Product, providing freight collection services to have the Product returned to Distributor (if applicable), warehousing and managing returned inventory according to the parameters of the recall, return shipping to the Vendor or Vendor’s designated recall processing designee, issuing customer credits for returned Product when applicable, and handling the expense reimbursement (receivable) for any and all services provided by Distributor in facilitating Vendor’s recall. Once invoiced, Vendor shall reimburse Distributor net 30 days. Delinquent reimbursement payments will be assessed a late fee of [***] per month ([***] annually).
Section 4.06 No Compensation or Conflicts of Interest. Vendor shall not provide any compensation or other benefit to Distributor’s employees without the prior written consent of Distributor and agrees to promptly disclose any financial relationships between Vendor and any Distributor employee which may give rise to a conflict of interest between such employee and Distributor.
Article V - INTELLECTUAL PROPERTY
Section 5.01 Definition. “Intellectual Property” means all trademarks, trade dress and related logos, graphical representations, copyrightable works and other protectable intellectual property. The Intellectual Property of Vendor related specifically to the Products that Vendor licenses to Distributor under this Agreement, includes, but is not limited to, the trademarks set forth in Exhibit C.
Section 5.02 Intellectual Property Use. Vendor grants Distributor a non-exclusive, non-transferable and royalty-free right and license to use Vendor’s Intellectual Property, and used on or in reference to the Products in connection with the advertising, promotion, marketing, distribution and sale of the Products in the Territory in accordance with this Agreement.
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Section 5.03 Images of Products for On-Line Use. Vendor will provide Distributor with images of Products from time to time at Distributor’s reasonable request for Distributor’s use under the terms of this Agreement.
Section 5.04 Trademark Use & Ownership. Vendor shall retain exclusive ownership of all Trademarks, and Distributor’s use of the Trademarks shall be for the sole purpose of performing its responsibilities under this Agreement and shall inure to the benefit of Vendor. Vendor shall not use in any manner any name, trade name, trademark or service mark of Distributor without the prior written consent of the Distributor.
Section 5.05 Post-Expiration/Termination Use. Upon expiration or termination of this Agreement, if Vendor does not repurchase Distributor’s entire inventory of Products remaining on hand at Vendor’s selling price to Distributor, then Distributor shall have the right to continue to use the Trademarks to sell any such remaining inventory of Products.
Article VI - TERMINATION
Section 6.01 Termination. Notwithstanding the terms of Section 1.02, this Agreement may be terminated as follows:
(a) Without Cause. Distributor or Vendor may terminate this Agreement, without cause, by notifying the Vendor of termination, in writing, at least [***] days before the end of the Initial Term or the then current Renewal Term, in which case this Agreement shall terminate upon the expiration of the Initial Term or Renewal Term.
(b) With Cause. Either Party may terminate this Agreement, with cause, effective immediately, by giving written notice to the other Party if:
(i) the other Party fails to pay any amount due under this Agreement on the due date for Payment and remains in default not less than {***] days after being notified in writing to make such payment;
(ii) the other Party commits a material breach of any other term of this Agreement which breach is irremediable or, if such breach is remediable, fails to remedy that breach within a period of [***] days after being notified in writing to do so;
(iii) the other party should file a petition of any type as to its bankruptcy, be declared bankrupt, become insolvent, make an assignment for the benefit of its creditors, go into liquidation or receivership, cease to function as a going concern, cease to conduct its operations in the normal course of business or otherwise lose legal control of its business, or should the other party or a substantial part of its business come into the control of one or more third parties other than those in control as of the date of this Agreement;
(iv) the other Party suspends or ceases, or threatens to suspend or cease, carrying on all or a substantial part of its business; or
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(v) the other Party is excused by a Force Majeure Event as defined in Section 9.01 and such event has lasted for more than ninety (90) consecutive days.
Section 6.02 No Liability. Neither party, by reason of the termination of this Agreement, shall be liable to the other for compensation, reimbursement or damages because of any loss of anticipated sales/rentals or prospective profits or because of expenditures, investments, leases, property improvements or other matters related to the business or goodwill of the parties.
Article VII - CONFIDENTIAL INFORMATION
Section 7.01 Non-Disclosure. Vendor and Distributor acknowledge that in the performance of their duties hereunder each may obtain access to Confidential Information (as defined below) of the other. Vendor and Distributor agree that, during the Term of this Agreement and for a period of two years after the termination of this Agreement, unless specifically permitted in writing by the other party, each will (x) retain in confidence and not disclose to any third party, and (y) use only for the purpose of carrying out their duties hereunder, any such Confidential Information. As used herein, the term “Confidential Information” means any information, or data, whether of a business or scientific nature and whether in written, oral or tangible form, relating to Vendor’s and Distributor’s business or potential business or its research and development activities, not generally available to or known to the public, and not otherwise known to the receiving party, that is disclosed to or learned by the other party pursuant hereto. Confidential Information does not include, however, information which (a) was available to the receiving party on a non-confidential basis prior to its disclosure by the disclosing party or its representative; (b) becomes available to the receiving party on a non-confidential basis from a person other than the disclosing party or its representatives who are not otherwise bound by a confidentiality agreement with the disclosing party or any of its representatives; (c) was independently developed or discovered by the receiving party; (d) has come within the public domain through no fault of, or action by, the receiving party or its representatives; or (e) which is required by law to be disclosed. For the avoidance of any doubt, such confidentiality restrictions on Vendor include, but are not limited to, disclosure of Distributor’s sales information to any third party which aggregates sales information/data for the production of industry market reports or analysis. It is understood that money damages would not be sufficient for any breach if this provision by either party or their representatives, and the parties agree that each party shall be entitled to equitable relief, including, without limitation, injunction and specific performance in the event of any breach of this provision.
Article VIII - MISCELLANEOUS
Section 8.01 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware as applicable to contracts made and to be performed in that state, without regard to conflicts of laws principles and without reference to conflict of laws principles and excluding the 1980 United Nations Convention on Contracts for the International Sale of Goods. The parties irrevocably submit to the jurisdiction and venue of the federal courts sitting in the state and federal courts in the State of Delaware, for the purpose of any suit, action or proceeding arising out of this agreement. The parties hereby irrevocably waive any and all defenses to the jurisdiction and venue of the aforesaid courts, including without limitation a motion to dismiss venue and the defense of an inconvenient forum to the maintenance of any such suit, action or proceeding.
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Section 8.02 Force Majeure. If a Party is prevented, hindered or delayed in performing its obligations under this Agreement by an event not reasonably foreseeable which is due to a cause beyond such Party’s control which renders performance of that Party’s obligations impossible or so difficult and costly as to be commercially unreasonable, then, upon giving written notice thereof to the other Party, such Party shall be released from any liability on its part for the performance of its obligations under this Agreement (except for any obligation to pay amounts due and owing hereunder). During any such period that the performance by one Party under this Agreement has been suspended, the other Party may likewise suspend the performance of its obligations hereunder to the extent it is commercially reasonable to do so.
Section 8.03 Independent Parties. Each party is acting under this Agreement as an independent contractor. This Agreement does not make either party the employee, partner, agent or legal representative of the other party for any purpose whatsoever. Neither party is granted any right or authority to assume or to create any obligation, liability or responsibility, express or implied, on behalf of or in the name of the other party.
Section 8.04 Notices. All notices or communications given or required under this Agreement shall be in writing and shall be effective upon the earlier of: (i) actual receipt; or (ii) the next business day following deposit with a nationally recognized overnight courier service with any delivery fees pre-paid and addressed to the Party at the address set forth on the signature page of this Agreement (or at such other address as may have been designated by written notice).
Addresses for Notice:
If to Vendor:
PetVivo Holdings, Inc
5151 Edina Industrial Blvd.
Suite 575
Edina, MN 55439
Attn: Randall A. Meyer, Chief Operating Officer
With a copy to:
PetVivo Holdings, Inc.
5151 Edina Industrial Blvd.
Suite 575
Edina, MN 55439
Attn: John F. Dolan, General Counsel
If to Distributor:
Covetrus North America, LLC
400 Metro Place
North Dublin, OH 43017
With a copy to:
Covetrus, Inc.
12 Mountfort Street
Portland, Maine USA 04101
Attn: Legal Department
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Section 8.05 Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.
Section 8.06 Exhibits. This Agreement has Exhibits A, B, and C, each of which forms an integral part of this Agreement and is made a part hereof by reference.
Section 8.07 Entire Agreement; Amendment; Waiver. This Agreement, including its Exhibits, reflects the entire agreement between Vendor and Distributor concerning the subject of this Agreement and supersedes all other prior and contemporaneous agreements between the parties. This Agreement may be amended only by an instrument in writing signed by both parties which expressly refers to this Agreement and specifically states that it is intended to amend it. The failure of either party to enforce at any time any of the provisions of this Agreement will not be construed to be a waiver of such provision or of the right of that party to subsequently enforce any such provision.
Section 8.08 Binding Effect. This Agreement will become effective only after it is signed on behalf of both parties. Thereafter, the Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement may be executed (including by electronic transmission) in two or more counterparts, each of which when taken together shall constitute one and the same. This Agreement is binding on Vendor and Distributor, and their respective successors and assigns and shall inure to the benefit of the other party, its successors and assigns and to the benefit of its officers, directors, agents and employees.
Section 8.09 Survival. Sections 3.05, 4.01-4.05, 5.04, 5.05, 7.01 and 8.01 survive termination or expiration of this Agreement for any reason.
Article
IX - GOVERNMENT APPROVALS, REGULATORY INQUIRIES,
AND PRODUCT COMPLAINTS/REPORTS
Section 9.01 Government Approvals. The Parties shall be responsible for obtaining and maintaining all regulatory approvals and any amendment or supplements required, if any to fulfill their own obligations hereunder.
Section 9.02 Regulatory Inquiries. Each Party shall promptly inform the other Party of the existence and substance of any inquiry or investigation related to Products initiated by any government authority or certification agency that may reasonably be anticipated to affect either Party’s ability to fulfill their obligations hereunder or that may reasonably be related to potential end user or patient safety concerns.
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Section 9.03 Regulatory Inspections and Information. To the extent required by law or at its reasonable discretion, each Party shall each permit all governmental authorities and certification agencies the reasonable right to inspect their respective facilities at which the Products or any components of them are handled, stored, shipped, and all records related to them. Both Parties shall reasonably assist such governmental authorities and certification agencies with such inspections. Each Party shall promptly notify the other of all such inspections related to or affecting the Products, and shall use reasonable efforts to provide the other Party the opportunity to be present at such inspections and shall use reasonable efforts, time of the essence, to comply with the government authority or certification agency requests for one Party to produce information that this confidential in nature to the disclosing Party, which as end user customer companies and contact information and location of the Products, Confidential Information and intellectual property and provided pursuant to this Section shall be solely used for the strict and limited purpose of complying with the government authority or certification agency requests or mandates, and shall not be used by the receiving Party for any commercial use, and shall be protected as Confidential Information under this Agreement.
Section 9.04 Product Complaints/Reports. Each Party shall promptly provide the other Party notice of any information regarding real or potential defects and complaints about the Products or would reasonably be material to the safety of them for their intended use. Each Party shall reasonably cooperate with the other in sharing any information that may constitute a complaint related to the Products. The Parties shall further use reasonable efforts to assist one another in investigating and correcting any problems that end user customers may experience with the Products, and implement any corrective action or communication. Vendor shall reimburse Distributor for the cost and expense incurred in the performance of those actions.
Section 9.05 Affirmative Action and Nondiscriminatory Obligations by U.S. Federal Contractors and Subcontractors. The following provisions are applicable to this Agreement and must be included in any subcontracts awarded involving this Agreement if Products or services under this Agreement are sold to the U.S. federal government.
This contractor and subcontractor shall abide by the requirements of 41 CFR Sections 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.
Notice of Employee Rights Under Federal Labor Laws. The Parties incorporate into this Agreement, as applicable, the obligations regarding the notice of employee rights under federal labor laws found at 29 CFR Part 471, Appendix A to Subpart A, and will incorporate those obligations into all applicable subcontracts as required by 29 CFR Part 471. For contracts of $100,000 or more, the contractor and subcontractor must file VETS-100A reports by September 30 of each year, or any applicable extension deadline that U.S. Department of Labor Veterans’ Employment and Training Service (VETS) announces. (41 CFR Part 61-300).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on and as of the date first written above.
| PetVivo Holdings, Inc | COVETRUS NORTH AMERICA, LLC | |||
| By: | /s/ John Lai | By: | /s/ Chris Brattelli | |
| Name: | John Lai | Name: | Chris Brattelli | |
| Title: | Chief Executive Officer | Title: | Vice President, Strategic Partnership and Supplier Relations | |
| Date: | December 18, 2023 | Date: | December 18, 2023 | |
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EXHIBIT 10.2
CERTAIN CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND REPLACED WITH “ [***]” BECAUSE IT IS NOT MATERIAL AND
IS THE TYPE OF INFORMATION THAT PETVIVO HOLDINGS, INC. TREATS AS PRIVATE OR CONFIDENTIAL.
FIRST
AMENDMENT TO DISTRIBUTION SERVICES AGREEMENT
BETWEEN
PETVIVO HOLDING, INC.
AND
MWI VETERINARY SUPPLY COMPANY
THIS AMENDMENT (this “Amendment”) is made and entered into as of the 9th day of December, 2023 by and among PetVivo Holdings, Inc, (the “Supplier”), and MWI Veterinary Supply Company (“MWI”).
RECITALS
WHEREAS, MWI and the Supplier entered into a Distribution Services Agreement dated as of June 17, 2022 (“Agreement”); and
WHEREAS, MWI and the Supplier would like to amend the provisions of the Agreement in view of the desire to continue the relationship and adjust MWI’s status as well as the Performance Rebate amounts potentially available to MWI.
WHEREAS, MWI and the Supplier would like the terms of this Amendment to be implemented on January 1, 2024.
NOW, THEREFORE, in consideration of the above recitals and the covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Defined Terms. Capitalized terms that are used in this Amendment have the meanings set forth in the Agreement, unless otherwise defined in this Amendment. Note that underlined text denotes additions and strikethrough text denotes deletions to the Agreement.
2. In the Section entitled “Appointment” of the Agreement, this Section shall be deleted in its entirety and replaced with the following:
(a) Appointment. Supplier hereby authorizes and appoints MWI to distribute, advertise, promote, market, supply, and sell (collectively, “Distribution” or “Distribution Services”) the Products within the United States of America (the “Territory”) and agrees to sell the Products to MWI as ordered by MWI from time to time in MWI’s sole discretion. This authorization and appointment shall designate MWI as a non-exclusive veterinary product distributor of Products for a period of one (1) year commencing on January 1, 2024 and may be extended for subsequent years according to the terms identified in Section 3.1 of this Agreement. The term “Products” means all animal health and related products of Supplier that are identified in the Pricing Schedule of Exhibit A and are purchased by MWI. Supplier shall make available for purchase by MWI all products Supplier makes available for purchase to any other animal health distributors or resellers of similar or smaller size (“Comparable Distributors”).
3. Exhibit A, Pricing Schedule, of the Agreement shall be deleted in its entirety and replaced with the following: [***].
IN WITNESS WHEREOF, each of the parties has caused this Amendment to the Agreement between the parties entered into on December 13, 2023 to be executed in the manner appropriate to each.
| MWI VETERINARY SUPPLY COMPANY | ||
| By: | /s/ Steve Shell | |
| Steve Shell | ||
| President | ||
| PETVIVO HOLDINGS, INC. | ||
| By | /s/ John Lai | |
| John Lai | ||
| Chief Executive Officer | ||
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Exhibit 31.1
Certification 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
I, John Lai, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of PetVivo Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 12, 2024 | By: | /s/ John Lai |
| John Lai | ||
| CEO, President, and Director | ||
| (Principal Executive Officer) |
Exhibit 31.2
Certification 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
I, Robert J. Folkes, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of PetVivo Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 12, 2024 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
Certification 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
In connection with the Quarterly Report of PetVivo Holdings, Inc., a Nevada corporation (the “Company”), on Form 10-Q for the quarter ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John Lai, Principal Executive Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: February 12, 2024 | By: | /s/ John Lai |
| John Lai | ||
| CEO, President and Director | ||
| (Principal Executive Officer) |
Exhibit 32.2
Certification 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
In connection with the Quarterly Report of PetVivo Holdings, Inc., a Nevada corporation (the “Company”), on Form 10-Q for the quarter ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert J. Folkes, Principal Financial Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: February 12, 2024 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 250,000,000 | 250,000,000 |
| Common stock, shares issued | 14,921,209 | 10,950,220 |
| Common stock, shares outstanding | 14,921,209 | 10,950,220 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Statement [Abstract] | ||||
| Revenues | $ 595,891 | $ 510,109 | $ 920,440 | $ 791,563 |
| Cost of Sales | 183,087 | 223,687 | 406,270 | 424,866 |
| Gross Profit | 412,804 | 286,422 | 514,170 | 366,697 |
| Operating Expenses: | ||||
| Sales and Marketing | 1,032,575 | 1,047,549 | 3,053,184 | 2,572,103 |
| Research and Development | 231,066 | 248,157 | 695,156 | 460,197 |
| General and Administrative | 1,282,787 | 1,309,534 | 4,737,374 | 3,738,876 |
| Total Operating Expenses | 2,546,428 | 2,605,240 | 8,485,714 | 6,771,176 |
| Operating Loss | (2,133,624) | (2,318,818) | (7,971,544) | (6,404,479) |
| Other (Expense) Income | ||||
| Loss on Extinguishment of Debt | (534,366) | |||
| Settlement Expense | (180,000) | |||
| Extinguishment of payables | 385,874 | 385,874 | ||
| Interest (Expense) Income | (2,098) | 7,200 | (4,542) | 15,844 |
| Total Other Income (Expense) | 383,776 | 7,200 | (333,034) | 15,844 |
| Loss before taxes | (1,749,848) | (2,311,618) | (8,304,578) | (6,388,635) |
| Income Tax Provision | ||||
| Net Loss | $ (1,749,848) | $ (2,311,618) | $ (8,304,578) | $ (6,388,635) |
| Net Loss Per Share: | ||||
| Earnings per share, basic | $ (0.12) | $ (0.23) | $ (0.64) | $ (0.64) |
| Earnings per share, diluted | $ (0.12) | $ (0.23) | $ (0.64) | $ (0.64) |
| Weighted Average Common Shares Outstanding: | ||||
| Weighted average number of shares outstanding, basic | 14,271,530 | 10,098,658 | 12,976,851 | 10,047,040 |
| Weighted average number of shares outstanding, diluted | 14,271,530 | 10,098,658 | 12,976,851 | 10,047,040 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management 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 as 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 twenty 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 its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. 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-owned subsidiary of the Company.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three and nine months ended December 31, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
(C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
(D) 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 reporting 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-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
(E) Cash and Cash Equivalents
The Company considers all highly-liquid, temporary cash investments with original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at December 31, 2023.
(F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At December 31, 2023, the Company did not have cash balances in excess of the federally insured limits.
(G) Accounts Receivable
Accounts receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable as well as a forecast of projected credit losses. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable since all receivables to date have been collected. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. Accordingly, as of December 31, 2023 and March 31, 2023, our allowance for credit losses was zero.
(H) Inventory
Inventories are recorded in accordance with Accounting Standards Codification (“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. Provisions for inventory obsolescence are charged to Cost of Sales. There were no provisions for obsolescence for the three and nine months ended December 31, 2023 and 2022, respectively.
(I) Property & Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the assets estimated useful life of 3 to 5 years for production and computer equipment and furniture and 5 to 7 years for leasehold improvements.
(J) Patents and Trademarks
The Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the lesser of the useful life of 60 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.
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 had warrants outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter 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.
(L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. 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.
The Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”) on June 17, 2022. Contracts with the Distributor 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. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon 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 of December 31, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $439,922 and $456,502 respectively. This represents 74% and 89% of total revenues for the three months ended December 31, 2023 and 2022, respectively.
For the nine months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $595,891 and $574,766, respectively. This represents 65% and 73% of total revenues for the nine months ended December 31, 2023 and 2022, respectively.
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
The Company entered into a Distribution Services Agreement (the “Agreement”) with Covetrus North America LLC (“Covetrus”) on December 18, 2023. Contracts with Covetrus 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. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. 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 of December 31, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three and nine months ended December 31, 2023 the Company recognized revenue from product sales to Covetrus of $106,704, respectively. This represents 18% and 12% of total revenues for the three and nine months ended December 31, 2023, respectively. Accounts receivable from Covetrus was $106,074 at December 31, 2023.
(M) Research and Development
The Company expenses research and development costs as incurred.
(N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“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:
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2023 and March 31, 2023, due to the short-term nature of these 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 note 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 on December 31, 2023 and March 31, 2023.
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation – Stock Compensation”‘ which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on grant-date fair value of the award. The Company has elected to recognized forfeitures as they occur as permitted under Accounting Standards Update (“ASU”) 2016-09 Improvements to Employee Share-Based Payment.
(P) Income Taxes
The Company accounts for income taxes under ASC 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 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.
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.
(Q) Recent Accounting Pronouncements
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 material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts 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 June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as accounts receivable, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the consolidated financial statements for the nine months ended December 31, 2023. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
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INVENTORY |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY | NOTE 2 – INVENTORY
As of December 31, 2023 and March 31, 2023, the Company had inventory of $467,467 and $370,283, respectively.
The inventory components are as follows:
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PREPAID EXPENSES AND OTHER CURRENT ASSETS |
9 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Prepaid Expenses And Other Current Assets | |
| PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of December 31, 2023, the Company had $426,646 in prepaid expenses and other current assets consisting primarily of $111,000 in investor relations costs, $193,000 in insurance costs, $41,000 in tradeshows, $19,000 in Nasdaq and FINRA fees, and $30,000 in software subscription fees.
As of March 31, 2023, the Company had $491,694 in prepaid expenses and other current assets consisting primarily of $115,000 in investor relations services, $130,000 in insurance costs, $63,000 in Nasdaq and FINRA fees, $56,000 in board compensation, $42,000 in tradeshows, $42,000 in supplier advance, and $19,000 in software subscription fees.
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PROPERTY AND EQUIPMENT |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
Depreciation expense was $28,286 and $28,719 for the three months ended December 31, 2023 and 2022, respectively. Depreciation expense was $87,374 and $54,044 for the nine months ended December 31, 2023 and 2022, respectively.
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PATENTS AND TRADEMARKS |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PATENTS AND TRADEMARKS | NOTE 5 – PATENTS AND TRADEMARKS
The components of patents and trademarks, all of which are finite-lived, were as follows:
Amortization expense was $2,041 and $2,227 for the three months ended December 31, 2023 and 2022, respectively. Amortization expense was $6,316 and $4,466 for the nine months ended December 31, 2023 and 2022, respectively.
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ACCRUED EXPENSES |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES | NOTE 6 – ACCRUED EXPENSES
The components of accrued expenses were as follows:
Pursuant to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal year 2018, the Company had recorded $332,238 as a potential payable to the lessor. During the three months ended December 31, 2023, the Company determined that this potential payable along with other vendor payables of $53,636 that were included in accounts payable have exceeded the statute of limitations for payments despite the Company’s best efforts to pay, and was unable to do so. As a result, a total of $385,874 of these payables were extinguished from the Company’s balance sheet at December 31, 2023 and included in other income on the Consolidated Statement of Operations.
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NOTES PAYABLE |
9 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Debt Disclosure [Abstract] | |
| NOTES PAYABLE | NOTE 7 – NOTES 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 December 31, 2023 and March 31, 2023, the amount outstanding on the note was $22,278 and $27,351, respectively. At December 31, 2023, the Company classified $7,248 as a current liability and $15,030 in other liabilities. At March 31, 2023, the Company classified $6,936 as a current liability and $20,415 in other liabilities.
In October 2023 and amended in November 2023, the Company entered into a promissory note for $120,000. The note accrues interest at a rate of 10% per annum. The principal and accrued interest are due in February 2024. Interest accrued on the note at December 31, 2023 was $2,498. The holder of the note has the option to convert the principal and accrued interest into shares of the Company’s common stock at a conversion rate of $0.75 per share. On February 5, 2024, the note and accrued interest of $123,255 was converted into shares of common stock.
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RETIREMENT PLAN |
9 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Retirement Benefits [Abstract] | |
| RETIREMENT PLAN | 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 December 31, 2023 and 2022, the Company made contributions to the plan of $12,014 and $8,183, respectively. For the nine months ended December 31, 2023 and 2022, the Company made contributions to the plan of $37,422 and $14,341, respectively.
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COMMITMENTS AND CONTINGENCIES |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (‘‘ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options is at our discretion and is included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Consolidated Balance Sheets.
None of our lease agreements contain material restrictive covenants or residual value guarantees.
Buildings
The Company entered into an 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 longer 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 was $2,340 and $2,294 as of December 31, 2023 and March 31, 2023, respectively.
The Company entered into a month lease for 2,400 square feet of office space located in Edina, Minnesota in January 2022. This lease will expire in March 2027. 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 December 31, 2023 and March 31, 2023 was $2,740 and $2,673, respectively.
On January 10, 2023, the Company entered into a new lease agreement for approximately 14,000 square feet of production and warehouse space with a commencement date of April 1, 2023, which is when the control and right of use for this asset took place. The initial monthly base rent is $8,420 and has annual increases of 2.5%. The Company is also responsible for its proportional share of common space expenses, property taxes, and building insurance. The lease will terminate on June 30, 2033 and the Company has a renewal option for a period of five years. The monthly base rent as of December 31, 2023 was $8,420.
Vehicles
We leased vehicles for certain members of our field sales organization in the nine months ended December 31, 2023, under a vehicle fleet program whereby the noncancelable lease is for a term of 48 months. The Company recognized an operating lease right-of-use asset for approximately $150,000 and corresponding and equal operating lease liability for the lessee. As of December 31, 2023, in addition to monthly rental fees specific to the vehicle, there are fixed monthly nonlease components that have been included in the ROU operating lease assets and operating lease liabilities. The nonlease components are not significant.
Operating lease expense for the three months ended December 31, 2023 and 2022, was $91,647 and $51,994, respectively. Operating lease expense for the nine months ended December 31, 2023 and 2022 was $266,912 and $101,954, respectively.
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of December 31, 2023:
In compliance with ASC 842, the Company recognized, based on the extended lease terms to June 2026, November 2026, March 2027, and June 2033, a treasury rate of 0.12%, 0.40%, 7.6%, and 4.39%, respectively, an operating lease right-of-use assets for approximately $1,465,000 and corresponding and equal operating lease liabilities for the leases. As of December 31, 2023, the present value of future base rent lease payments based on the remaining lease terms and weighted average discount rate are approximately 4.6 years and 4.05%, respectively, are as follows:
As of December 31, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
Employment Agreements
The Company has employment agreements with its executive officers. As of December 31, 2023, these agreements contain severance benefits ranging from one month to six months if terminated without cause.
Legal Proceedings
David Masters, a former employee, board member, and consultant to the Company, has threatened to file suit against the Company to recover in excess of $2 million. Masters’ threatened litigation relates to allegations that the Company promised him additional compensation, shares, warrants, and future employment while he was associated with the Company. The Company mediated these claims with Masters in 2022 and executed a mediated settlement agreement resolving these claims for a one-time payment of $180,000, to be effective upon execution of a long form agreement containing these and other settlement terms. The parties appointed the mediator as arbitrator to resolve any disputes arising during the drafting of the long form agreement on commercially reasonable terms. In early 2023, Masters commenced arbitration to have certain terms in the long form agreement decided. The arbitrator issued an award setting the final terms of the agreement.
In September 2023, Masters executed the long-term agreement and the Company recorded a settlement expense of $180,000. The settlement was paid in October 2023.
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GOING CONCERN |
9 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | 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 $8,304,578 for the nine months ended December 31, 2023, had net cash used in operating activities of $5,895,484 for the same period, and has an accumulated deficit of $80,148,607 on December 31, 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going 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.
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 ability 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.
These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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| STOCKHOLDERS’ EQUITY | 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”), which authorized the issuance of up to shares of our common stock as awards under the 2020 Plan, subject to approval by our stockholders at the Annual Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. 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 which may be granted under the Amended Plan from to . Unless sooner terminated by the Board, the Amended Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was at December 31, 2023.
Employees, consultants, 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 shares, but includes the following limits:
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 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 to three accredited investors pursuant to debenture subscription agreements (“Debenture Subscription Agreement”). The Convertible Debentures mature on January 26, 2024 (the “Maturity Date”), bear interest at a rate of 10% per annum and automatically convert into shares of the Company’s common stock on the earlier of (i) the Maturity Date or (ii) upon the occurrence of certain events prior to the Maturity Date, including, without limitation, the sale of common stock of at least $2 million.
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, the maturity date of the Convertible Debentures, provided that the Company adjust the original conversion rate to one share of the Company’s common stock for each $1.50 of principal (reduced from $1.60 in the Convertible Debenture) and pay an amount equal to six months of interest (the “New Conversion Rate”) and grant warrants to the Debenture Holders providing each Debenture Holder with the right to purchase the number of shares of the Company’s common stock issued to the Debenture Holder in the conversion. The Debenture Holders converted $550,000 in Convertible Debentures and accrued interest of $27,500 into shares of the Company’s common stock and warrants (“Warrants”) to purchase an aggregate of 385,000 shares of the Company’s common stock. The Warrants are exercisable any time on or after February 5, 2024 and prior to August 10, 2026 at an exercise price of $2.00 per share.
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. The loss is comprised of the value of the warrants issued of $463,476, as determined by the Black Scholes model; the value of additional shares issued of $45,834 as a result of the lower conversion rate to one share of the Company’s common stock issued and the additional interest of $25,056 which is the amount of interest credited to the Debenture Holders over the actual interest earned of $2,444. The value of the warrants and additional shares issued of $509,310 is reflected in the Consolidated Statements of Changes In Stockholders’ Equity.
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”) shares (“Registered Shares”) of the Company’s common stock (the “Common Stock”) at a price of $ per share. Under the Purchase Agreements, the Company also agreed to issue and sell to the Investors in a concurrent private placement (the “Private Placement,” and together with the Registered Offering, the “Offering”) warrants to purchase an aggregate of 1,200,002 shares of Common Stock (the “Warrants”). Net proceeds from the Registered Offering were $1,775,782, after deducting offering expenses of $24,218. The net proceeds were allocated between the common stock and warrants based on the relative fair values which were $502,417 and $1,273,365, respectively. The Warrants are exercisable any time on or after February 5, 2024 and prior to August 10, 2026 at an exercise price of $2.00 per share.
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 shares of the Company’s common stock (the “Common Stock”) at a price of $ per share. Under the Purchase Agreements, the Company also agreed to issue and sell to the Investors in a concurrent private placement (the “Private Placement,” and together with the Offering, the “Offering”) warrants to purchase an aggregate of shares of Common Stock (the “Warrants”). Net proceeds from the Offering were $317,000 offset by a stock receivable of $27,000 which was received in January 2024. The proceeds were allocated between the common stock and warrants based on the relative fair values which were $145,820 and $171,180, respectively. The Warrants are exercisable any time from the issue date and prior to December 9, 2026 at an exercise price of $ per share.
Common Stock
For the nine months ended December 31, 2023, the Company issued shares of common stock as follows:
For the nine months ended December 31, 2022, the Company issued shares of common stock as follows:
In August 2023, the Company granted shares of common stock to a service provider for consulting services valued at $537,500. In October 2023, the consulting agreement was terminated and all the common stock that was issued was returned to the Company.
The Company has issued shares of common stock to providers of investor relations services which are reported in the Condensed Consolidated Statements of Changes in Stockholders’ Equity. The value of these shares are 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 Condensed Consolidated Statements of Operations and Cash Flows was $124,103 and $108,794 for the three months ended December 31, 2023 and 2022, respectively, and $289,913 and $258,844 for the nine months ended December 31, 2023 and 2022, respectively.
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 Condensed Consolidated Statements of Operations for time-based restricted stock units was $182,377 for the three months ended December 31, 2023 and 2022, respectively, and $662,726 and $547,131 for the nine months ended December 31, 2023 and 2022, respectively. At December 31, 2023, there was approximately $ of total unrecognized compensation expense related to time-based restricted stock units that is expected to be recognized over a weighted-average period of .
Our time-based restricted stock unit activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 was as follows:
Stock Options
Stock options issued to employees and directors typically vest over (one year for directors) and have a contractual term of . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ and $ for the three months ended December 31, 2023 and 2022, respectively, and $ and $ for the nine months ended December 31, 2023 and 2022, respectively. At December 31, 2023, there was approximately $ of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 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.
Stock options granted for the year ended March 31, 2023 and the nine months ended December 31, 2023 were to employees and directors. The fair value of these options on the date of grant was $ and $ for the year ended March 31, 2023 and the nine months ended December 31, 2023, respectively.
Options exercisable at December 31, 2023 had exercise prices ranging from $ to $.
Warrants
During the nine months ended December 31, 2023 the Company issued warrants to purchase an aggregate of 2,317,226 shares of common stock as follows:
A summary of warrant activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 is as follows:
Stock-based compensation expense included in the Consolidated Statements of Operations for warrants was $ and $ for the three months ended December 31, 2023 and 2022, respectively, and $ and $ for the nine months ended December 31, 2023 and 2022, respectively.
It is expected that the Company will recognize expense after December 31, 2023 related to warrants issued, outstanding, and valued using the Black Scholes pricing model as of December 31, 2023 of approximately $ over the next nine months.
For the three months ended December 31, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively. For the nine months ended December 31, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively.
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SUBSEQUENT EVENTS |
9 Months Ended |
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Dec. 31, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS
On February 2, 2024, the Company sold units consisting of one share and one warrant at a price of $ per unit. Total proceeds from the sale of the units were $1,248,000. The warrants have an exercise price of $1.50 and expire on February 1, 2027. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (Policies) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| Organization and Description | (A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management 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 as 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 twenty 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.
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| Basis of Presentation | (B) Basis of Presentation
PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. 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-owned subsidiary of the Company.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three and nine months ended December 31, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
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| Principles of Consolidation | (C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
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| Use of Estimates | (D) 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 reporting 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-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
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| Cash and Cash Equivalents | (E) Cash and Cash Equivalents
The Company considers all highly-liquid, temporary cash investments with original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at December 31, 2023.
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| Concentration Risk | (F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At December 31, 2023, the Company did not have cash balances in excess of the federally insured limits.
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| Accounts Receivable | (G) Accounts Receivable
Accounts receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable as well as a forecast of projected credit losses. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable since all receivables to date have been collected. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. Accordingly, as of December 31, 2023 and March 31, 2023, our allowance for credit losses was zero.
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| Inventory | (H) Inventory
Inventories are recorded in accordance with Accounting Standards Codification (“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. Provisions for inventory obsolescence are charged to Cost of Sales. There were no provisions for obsolescence for the three and nine months ended December 31, 2023 and 2022, respectively.
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| Property & Equipment | (I) Property & Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the assets estimated useful life of 3 to 5 years for production and computer equipment and furniture and 5 to 7 years for leasehold improvements.
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| Patents and Trademarks | (J) Patents and Trademarks
The Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the lesser of the useful life of 60 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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| 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 had warrants outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of December 31, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of December 31, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of December 31, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter 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.
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| Revenue Recognition | (L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. 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.
The Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”) on June 17, 2022. Contracts with the Distributor 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. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon 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 of December 31, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $439,922 and $456,502 respectively. This represents 74% and 89% of total revenues for the three months ended December 31, 2023 and 2022, respectively.
For the nine months ended December 31, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $595,891 and $574,766, respectively. This represents 65% and 73% of total revenues for the nine months ended December 31, 2023 and 2022, respectively.
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
The Company entered into a Distribution Services Agreement (the “Agreement”) with Covetrus North America LLC (“Covetrus”) on December 18, 2023. Contracts with Covetrus 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. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. 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 of December 31, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three and nine months ended December 31, 2023 the Company recognized revenue from product sales to Covetrus of $106,704, respectively. This represents 18% and 12% of total revenues for the three and nine months ended December 31, 2023, respectively. Accounts receivable from Covetrus was $106,074 at December 31, 2023.
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| Research and Development | (M) Research and Development
The Company expenses research and development costs as incurred.
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| Fair Value of Financial Instruments | (N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“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:
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2023 and March 31, 2023, due to the short-term nature of these 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 note 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 on December 31, 2023 and March 31, 2023.
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| Stock-Based Compensation |
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation – Stock Compensation”‘ which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on grant-date fair value of the award. The Company has elected to recognized forfeitures as they occur as permitted under Accounting Standards Update (“ASU”) 2016-09 Improvements to Employee Share-Based Payment.
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| Income Taxes | (P) Income Taxes
The Company accounts for income taxes under ASC 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 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.
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.
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| Recent Accounting Pronouncements | (Q) Recent Accounting Pronouncements
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 material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts 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 June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as accounts receivable, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the consolidated financial statements for the nine months ended December 31, 2023. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES | Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
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INVENTORY (Tables) |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVENTORY | The inventory components are as follows:
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PROPERTY AND EQUIPMENT (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PROPERTY AND EQUIPMENT | The components of property and equipment were as follows:
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PATENTS AND TRADEMARKS (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMPONENTS OF PATENTS AND TRADEMARKS | The components of patents and trademarks, all of which are finite-lived, were as follows:
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ACCRUED EXPENSES (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES | The components of accrued expenses were as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF MATURITY OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY | The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of December 31, 2023:
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| SCHEDULE OF BASE RENT LEASE PAYMENTS |
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| SCHEDULE OF LEASE CURRENT AND NON-CURRENT ASSETS AND LIABILITIES | As of December 31, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
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STOCKHOLDERS’ EQUITY (Tables) |
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF TIME BASED RESTRICTED STOCK UNITS | Our time-based restricted stock unit activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 was as follows:
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| SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTION |
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| SCHEDULE OF STOCK OPTION ACTIVITY |
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| SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS |
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| SCHEDULE OF WARRANT’S USING BLACK-SCHOLES VALUATION |
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| SCHEDULE OF WARRANT ACTIVITY | A summary of warrant activity for the year ended March 31, 2023 and the nine months ended December 31, 2023 is as follows:
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| SCHEDULE OF RANGE OF WARRANT PRICES |
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SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accounts receivable | $ 409,032 | $ 81,510 |
| Rebate liability | 57,264 | 28,000 |
| Distribution fee payable | $ 39,026 | $ 5,187 |
SCHEDULE OF INVENTORY (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Finished Goods | $ 102,177 | $ 13,159 |
| Work in process | 20,289 | 53,398 |
| Raw materials | 345,001 | 303,726 |
| Total | $ 467,467 | $ 370,283 |
INVENTORY (Details Narrative) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Inventory | $ 467,467 | $ 370,283 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details Narrative) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Prepaid expenses and other assets | $ 426,646 | $ 491,694 |
| Investor Relations [Member] | ||
| Prepaid expenses and other assets | 111,000 | 115,000 |
| Insurance Costs [Member] | ||
| Prepaid expenses and other assets | 193,000 | 130,000 |
| Trade Shows [Member] | ||
| Prepaid expenses and other assets | 41,000 | 42,000 |
| Nasdaq and FINRA Fees [Member] | ||
| Prepaid expenses and other assets | 19,000 | 63,000 |
| Software Subscription Fees [Member] | ||
| Prepaid expenses and other assets | $ 30,000 | 19,000 |
| Board Compensation [Member] | ||
| Prepaid expenses and other assets | 56,000 | |
| Supplier Advance [Member] | ||
| Prepaid expenses and other assets | $ 42,000 |
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | $ 1,219,944 | $ 940,142 |
| Accumulated depreciation | (396,664) | (309,290) |
| Total Net | 823,280 | 630,852 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 393,886 | 216,159 |
| Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 656,057 | 577,067 |
| Research and Development Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 25,184 | 25,184 |
| Computer Equipment and Furniture [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | $ 144,817 | $ 121,732 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Property, Plant and Equipment [Abstract] | ||||
| Depreciation expense | $ 28,286 | $ 28,719 | $ 87,374 | $ 54,044 |
SCHEDULE OF COMPONENTS OF PATENTS AND TRADEMARKS (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Patents | $ 3,870,057 | $ 3,870,057 |
| Trademarks | 26,142 | 26,142 |
| Total at cost | 3,896,199 | 3,896,199 |
| Accumulated Amortization | (3,863,866) | (3,857,550) |
| Total net | $ 32,333 | $ 38,649 |
PATENTS AND TRADEMARKS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||
| Amortization expense | $ 2,041 | $ 2,227 | $ 6,316 | $ 4,466 |
SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued expenses | $ 241,959 | $ 188,666 |
| Accrued payroll and related taxes | 258,978 | |
| Accrued lease termination expense | 332,238 | |
| Total | $ 241,959 | $ 779,882 |
ACCRUED EXPENSES (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Payables and Accruals [Abstract] | ||
| Lease termination liability payable | $ 332,238 | $ 332,238 |
| Accounts payable | 53,636 | |
| Extinguishment of debt | $ 385,874 |
NOTES PAYABLE (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|---|
Feb. 05, 2024 |
Oct. 31, 2023 |
Sep. 30, 2023 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Jan. 31, 2020 |
|
| Subsequent Event [Line Items] | ||||||
| Notes payable | $ 120,000 | $ 22,278 | $ 27,351 | $ 42,500 | ||
| Debt instrument, interest rate | 10.00% | 6.00% | ||||
| Notes payable, current liabilities | 7,248 | 6,936 | ||||
| Notes payable other liabilities | 15,030 | $ 20,415 | ||||
| Debt instrument maturity date | February 2024 | |||||
| Interest accrued on notes payable | $ 2,498 | |||||
| Common stock conversion basis | The holder of the note has the option to convert the principal and accrued interest into shares of the Company’s common stock at a conversion rate of $0.75 per share | |||||
| Conversion of convertible securities | $ 577,500 | |||||
| Subsequent Event [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Conversion of convertible securities | $ 123,255 | |||||
| Conversion of convertible securities shares | 164,340 |
RETIREMENT PLAN (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Retirement Benefits [Abstract] | ||||
| Discretionary contributions | $ 12,014 | $ 8,183 | $ 37,422 | $ 14,341 |
SCHEDULE OF MATURITY OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY (Details) |
Dec. 31, 2023
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| 2024 | $ 49,104 |
| 2025 | 199,956 |
| 2026 | 203,898 |
| 2027 | 181,434 |
| 2028 | 114,410 |
| 2029 | 114,273 |
| Thereafter | 518,517 |
| Total | 1,381,592 |
| Less: amount representing interest | (127,777) |
| Total | $ 1,253,815 |
SCHEDULE OF BASE RENT LEASE PAYMENTS (Details) |
Dec. 31, 2023
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Present value of future base rent lease payments | $ 1,253,815 |
| Base rent payments included in prepaid expenses | |
| Present value of future base rent lease payments – net | $ 1,253,815 |
SCHEDULE OF LEASE CURRENT AND NON-CURRENT ASSETS AND LIABILITIES (Details) - USD ($) |
Dec. 31, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease right-of-use asset | $ 1,253,815 | |
| Total operating lease assets | 1,253,815 | $ 317,981 |
| Operating lease current liability | 196,263 | 78,149 |
| Operating lease non-current liability | 1,057,552 | $ 239,832 |
| Total operating lease liabilities | $ 1,253,815 |
GOING CONCERN (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2023 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
| Net loss | $ 1,749,848 | $ 3,661,153 | $ 2,893,577 | $ 2,311,618 | $ 2,111,589 | $ 1,965,428 | $ 8,304,578 | $ 6,388,635 | |
| Net cash used in operating activities | 5,895,484 | $ 5,500,247 | |||||||
| Accumulated deficit | $ 80,148,607 | $ 80,148,607 | $ 71,844,029 | ||||||
SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTION (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Expected term | 7 years | 7 years |
| Expected volatility, minimum | 75.90% | 111.70% |
| Expected volatility, maximum | 95.60% | 146.90% |
| Risk-free interest rate, minimum | 3.46% | 2.96% |
| Risk-free interest rate, maximum | 4.48% | 4.35% |
| Expected dividend yield | 0.00% | 0.00% |
| Minimum [Member] | ||
| Fair value on the date of grant | $ 1.06 | $ 1.87 |
| Maximum [Member] | ||
| Fair value on the date of grant | $ 2.74 | $ 2.79 |
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($) |
9 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|||||
| Equity [Abstract] | |||||||
| Options Outstanding, Beginning | 884,849 | 195,000 | |||||
| Weighted Average Exercise Price Per Share, Beginning | [1] | $ 2.19 | $ 1.56 | ||||
| Weighted Average Remaining Contractual Life | 5 years 10 months 24 days | 6 years 3 months 18 days | 6 years 10 months 24 days | ||||
| Aggregate Intrinsic Value, Beginning | [2] | $ 307,750 | $ 100,200 | ||||
| Options Outstanding, Granted | 664,939 | 714,849 | |||||
| Weighted Average Exercise Price Per Share, Granted | [1] | $ 1.88 | $ 2.37 | ||||
| Options Outstanding, Cancelled | (20,000) | (25,000) | |||||
| Weighted Average Exercise Price Per Share, Cancelled | [1] | $ 1.99 | $ 2.46 | ||||
| Options Outstanding, Ending | 1,529,788 | 884,849 | 195,000 | ||||
| Weighted Average Exercise Price Per Share, Ending | [1] | $ 2.06 | $ 2.19 | $ 1.56 | |||
| Aggregate Intrinsic Value, Ending | [2] | $ 307,750 | $ 100,200 | ||||
| Options exercisable | 466,084 | ||||||
| |||||||
SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Equity [Abstract] | ||
| Non-vested options, beginning of year | 709,394 | 195,000 |
| Non -vested options, end of year | 1,063,704 | 709,394 |
| Vested options, end of year | 466,084 | 175,455 |
| Weighted-average grant date fair value, non-vested options, beginning of year | $ 2.23 | $ 1.56 |
| Weighted-average grant date fair value, non-vested options, end of year | 1.95 | 2.23 |
| Weighted-average grant date fair value, vested options, end of year | 2.31 | 2.01 |
| Weighted-average grant date fair value, forfeited options, during the year |
SCHEDULE OF WARRANT’S USING BLACK-SCHOLES VALUATION (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Term (years) | 7 years | 7 years |
| Volatility, minimum | 75.90% | 111.70% |
| Volatility, maximum | 95.60% | 146.90% |
| Risk-free rate, minimum | 3.46% | 2.96% |
| Risk-free rate, maximum | 4.48% | 4.35% |
| Minimum [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Stock price on valuation date | $ 1.06 | $ 1.87 |
| Maximum [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Stock price on valuation date | $ 2.74 | $ 2.79 |
| Warrant [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Volatility, minimum | 78.00% | |
| Volatility, maximum | 83.30% | |
| Risk-free rate, minimum | 4.33% | |
| Risk-free rate, maximum | 4.64% | |
| Warrant [Member] | Minimum [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Stock price on valuation date | $ 1.03 | |
| Exercise price | $ 1.50 | |
| Term (years) | 2 years | |
| Warrant [Member] | Maximum [Member] | ||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Stock price on valuation date | $ 2.15 | |
| Exercise price | $ 2.75 | |
| Term (years) | 3 years |
SCHEDULE OF WARRANT ACTIVITY (Details) - Warrant [Member] - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Number of Warrants, Outstanding, Beginning balance | 3,562,817 | 3,757,484 |
| Weighted-Average Exercise Price, Outstanding, Beginning balance | $ 5.05 | $ 4.95 |
| Warrants Exercisable, Outstanding, Beginning balance | 3,540,317 | 3,693,734 |
| Weighted-Average Exercise Price, Beginning balance | $ 5.07 | $ 5.00 |
| Number of Warrants, Exercised for cash | (48,664) | |
| Weighted-Average Exercise Price, Exercised for cash | $ (1.36) | |
| Number of Warrants, Granted and issued | 2,317,226 | |
| Weighted-Average Exercise Price, Granted and issued | $ 2.04 | |
| Number of Warrants, Cashless warrant exercises | (63,584) | |
| Weighted-Average Exercise Price, Cashless warrant exercises | $ (1.34) | |
| Number of Warrants, Expired | (16,750) | (146,003) |
| Weighted-Average Exercise Price, Expired | $ (4.18) | $ (3.70) |
| Number of Warrants, Outstanding, Ending balance | 5,799,709 | 3,562,817 |
| Weighted-Average Exercise Price, Outstanding, Ending balance | $ 3.89 | $ 5.05 |
| Warrants Exercisable, Outstanding, Ending balance | 4,075,537 | 3,540,317 |
| Weighted-Average Exercise Price, Ending balance | $ 4.67 | $ 5.07 |
SCHEDULE OF RANGE OF WARRANT PRICES (Details) - Warrant [Member] - $ / shares |
9 Months Ended | ||
|---|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 5,799,709 | ||
| Weighted-Average Exercise Price, outstanding | $ 3.89 | $ 5.05 | $ 4.95 |
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 2 years 6 months 14 days | ||
| Number of Warrants, Exercisable | 4,075,537 | 3,540,317 | 3,693,734 |
| Weighted-Average Exercise Price, Exercisable | $ 4.67 | $ 5.07 | $ 5.00 |
| Range One [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 2,220,715 | ||
| Weighted-Average Exercise Price, outstanding | $ 1.84 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 2 years 8 months 12 days | ||
| Number of Warrants, Exercisable | 635,713 | ||
| Weighted-Average Exercise Price, Exercisable | $ 1.43 | ||
| Range One [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 1.20 | ||
| Range One [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 2.00 | ||
| Range Two [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 535,438 | ||
| Weighted-Average Exercise Price, outstanding | $ 2.54 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 1 year 5 months 23 days | ||
| Number of Warrants, Exercisable | 396,268 | ||
| Weighted-Average Exercise Price, Exercisable | $ 2.50 | ||
| Range Two [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 2.01 | ||
| Range Two [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 4.00 | ||
| Range Three [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 3,043,556 | ||
| Weighted-Average Exercise Price, outstanding | $ 5.63 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 2 years 7 months 9 days | ||
| Number of Warrants, Exercisable | 3,043,556 | ||
| Weighted-Average Exercise Price, Exercisable | $ 5.63 | ||
| Range Three [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 4.01 | ||
| Range Three [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 5.63 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2024 |
Dec. 06, 2023 |
Aug. 11, 2023 |
Aug. 04, 2023 |
Jul. 27, 2023 |
Oct. 14, 2022 |
Jan. 31, 2024 |
Dec. 31, 2023 |
Nov. 30, 2023 |
Oct. 31, 2023 |
Sep. 30, 2023 |
Aug. 31, 2023 |
Jul. 31, 2023 |
Jun. 30, 2023 |
May 30, 2023 |
Apr. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Oct. 31, 2022 |
Sep. 30, 2022 |
Aug. 31, 2022 |
Jul. 31, 2022 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Aug. 10, 2023 |
Oct. 13, 2022 |
Jul. 10, 2020 |
Jan. 31, 2020 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Aggregate amount of convertiable promissory note | $ 550,000 | ||||||||||||||||||||||||||||||||||
| Interest rate | 10.00% | 6.00% | |||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | 534,366 | ||||||||||||||||||||||||||||||||||
| Interest income | $ (2,098) | 7,200 | (4,542) | 15,844 | |||||||||||||||||||||||||||||||
| Value of warrants and additional shares issued | $ 509,310 | $ 509,310 | |||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction | 1,200,002 | 352,224 | 600,000 | 125,000 | 793,585 | ||||||||||||||||||||||||||||||
| Weighted average strike price | $ 1.50 | $ 2.75 | |||||||||||||||||||||||||||||||||
| Warrants sale of stock, shares | 2,317,226 | 2,317,226 | 2,317,226 | ||||||||||||||||||||||||||||||||
| Proceeds from offering of shares | $ 1,775,782 | $ 290,000 | $ 870,000 | $ 200,000 | $ 2,182,359 | $ 137,500 | |||||||||||||||||||||||||||||
| Payments of stock issuance costs | $ 24,218 | $ 88,765 | |||||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock | $ 145,820 | ||||||||||||||||||||||||||||||||||
| Proceeds from issuance of warrants | 171,180 | ||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | 41,006 | $ 74,589 | |||||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 14,071 | 23,747 | $ 255,305 | $ 293,125 | 740,978 | 123,078 | $ 49,920 | ||||||||||||||||||||||||||||
| Stock repurchased during period shares | 74,000 | 250,000 | |||||||||||||||||||||||||||||||||
| Stock repurchased during period value | $ 537,500 | ||||||||||||||||||||||||||||||||||
| Deferred offering costs | $ 2,672 | 63,107 | 2,672 | 2,672 | |||||||||||||||||||||||||||||||
| Proceeds from issuance initial public offering | 86,361 | $ 806,893 | |||||||||||||||||||||||||||||||||
| Proceeds from other equity | $ 89,033 | ||||||||||||||||||||||||||||||||||
| Warrant cash proceeds | |||||||||||||||||||||||||||||||||||
| Amortization of stock issued for services | 124,103 | 108,794 | $ 289,913 | 258,844 | |||||||||||||||||||||||||||||||
| Stock options contractual term | 5 years 10 months 24 days | 6 years 3 months 18 days | 6 years 10 months 24 days | ||||||||||||||||||||||||||||||||
| Stock-based Compensation | $ 517,390 | 305,971 | $ 1,653,032 | 1,069,585 | |||||||||||||||||||||||||||||||
| Minimum [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Options exercisable, exercise price | $ 1.39 | $ 1.39 | $ 1.39 | ||||||||||||||||||||||||||||||||
| Maximum [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Options exercisable, exercise price | $ 2.79 | $ 2.79 | $ 2.79 | ||||||||||||||||||||||||||||||||
| Convertible Debentures [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Debentures conversion, principal amount converted | $ 577,500 | ||||||||||||||||||||||||||||||||||
| Debentures conversion, accrued interest converted | $ 27,500 | ||||||||||||||||||||||||||||||||||
| Debentures conversion, shares issued | 385,000 | ||||||||||||||||||||||||||||||||||
| Weighted average strike price | $ 1.50 | ||||||||||||||||||||||||||||||||||
| Warrant Holders [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction | 12,212 | 24,447 | 24,217 | ||||||||||||||||||||||||||||||||
| Weighted average strike price | $ 1.35 | $ 1.33 | $ 1.41 | $ 1.33 | $ 1.35 | ||||||||||||||||||||||||||||||
| Warrants sale of stock, shares | 41,084 | 22,500 | 41,084 | ||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction warrant | 22,466 | ||||||||||||||||||||||||||||||||||
| Warrant cash proceeds | $ 34,370 | $ 32,188 | |||||||||||||||||||||||||||||||||
| Restricted Stock Units (RSUs) [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, shares | 10,000 | 1,250 | 22,000 | 6,250 | 11,250 | 44,500 | 1,250 | 22,000 | 10,000 | ||||||||||||||||||||||||||
| Time-Based Restricted Stock Units [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, shares | 90,000 | 177,184 | |||||||||||||||||||||||||||||||||
| Restricted stock compensation expense | $ 182,377 | 182,377 | $ 662,726 | 547,131 | |||||||||||||||||||||||||||||||
| Warrants outstanding | $ 228,000 | 228,000 | $ 228,000 | ||||||||||||||||||||||||||||||||
| Unrecognized compensation expenses recognition period | 6 months | ||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement, Option [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Unrecognized compensation expenses recognition period | 1 year 6 months | ||||||||||||||||||||||||||||||||||
| Stock options vesting period | 3 years | ||||||||||||||||||||||||||||||||||
| Stock options contractual term | 7 years | ||||||||||||||||||||||||||||||||||
| Stock-based Compensation | 276,328 | 350,006 | $ 785,451 | 480,792 | |||||||||||||||||||||||||||||||
| Unrecognized compensation expenses | $ 1,247,000 | $ 1,247,000 | $ 1,247,000 | ||||||||||||||||||||||||||||||||
| Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 1.50 | ||||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction | 1,386,469 | ||||||||||||||||||||||||||||||||||
| Weighted average strike price | $ 0.90 | ||||||||||||||||||||||||||||||||||
| Proceeds from issuance of private placement | $ 317,000 | ||||||||||||||||||||||||||||||||||
| Proceeds from stock plans | $ 27,000 | ||||||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock | $ 1,248,000 | ||||||||||||||||||||||||||||||||||
| Registered Offering [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Warrants sale of stock, shares | 1,200,002 | ||||||||||||||||||||||||||||||||||
| Registered Offering valued | $ 1,273,365 | ||||||||||||||||||||||||||||||||||
| Private Offering [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Warrants sale of stock, shares | 352,224 | 352,224 | 352,224 | ||||||||||||||||||||||||||||||||
| Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Warrants outstanding | $ 117,000 | $ 117,000 | $ 117,000 | ||||||||||||||||||||||||||||||||
| Stock-based Compensation | $ 58,685 | $ 0 | $ 204,855 | $ 41,662 | |||||||||||||||||||||||||||||||
| Common Stock [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Value of warrants and additional shares issued | |||||||||||||||||||||||||||||||||||
| Common stock, shares | 1,151,224 | 1,200,002 | 793,585 | 3,970,989 | 118,164 | ||||||||||||||||||||||||||||||
| Vesting of restricted stock units, shares | 11,250 | 22,000 | 6,250 | 11,250 | 33,250 | ||||||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation, shares | 20,200 | 30,300 | |||||||||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | $ 20 | $ 31 | |||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 167,004 | 349,498 | 49,998 | 25,000 | |||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 167 | $ 350 | $ 50 | $ 25 | |||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction warrant | 34,678 | ||||||||||||||||||||||||||||||||||
| Warrant cash proceeds | $ 11 | $ 22 | $ 6 | $ 11 | $ 33 | ||||||||||||||||||||||||||||||
| Chief Executive Officer [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, shares | 10,100 | ||||||||||||||||||||||||||||||||||
| Chief Executive Officer [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation, shares | 20,200 | 30,300 | |||||||||||||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | $ 41,006 | $ 74,589 | |||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, shares | 10,100 | 10,100 | 10,100 | 10,100 | |||||||||||||||||||||||||||||||
| Service Provider [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 16,672 | 16,666 | 133,666 | 16,666 | 16,666 | 16,666 | 16,666 | 16,666 | 16,666 | 25,000 | |||||||||||||||||||||||||
| Stock issued for services, value | $ 31,999 | $ 32,332 | $ 35,332 | $ 34,165 | $ 40,332 | $ 48,581 | $ 49,920 | ||||||||||||||||||||||||||||
| Service Provider [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 300,000 | ||||||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 234,741 | ||||||||||||||||||||||||||||||||||
| Service Provider One [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 250,000 | 42,000 | |||||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 537,500 | $ 89,040 | |||||||||||||||||||||||||||||||||
| Service Provider One [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 80,000 | ||||||||||||||||||||||||||||||||||
| Service Provider One [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 87,485 | ||||||||||||||||||||||||||||||||||
| Service One Provider [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Stock issued for services, shares | 7,500 | ||||||||||||||||||||||||||||||||||
| Stock issued for services, value | $ 14,775 | ||||||||||||||||||||||||||||||||||
| Employees and Directors [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Fair value of options on the date of grant | $ 984,552 | $ 1,543,087 | |||||||||||||||||||||||||||||||||
| 2020 Equity Incentive Plan [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Number of shares of common stock authorized | 1,000,000 | ||||||||||||||||||||||||||||||||||
| Amended Plan [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Number of shares of common stock authorized | 3,000,000 | 1,000,000 | |||||||||||||||||||||||||||||||||
| Number of shares available to grant | 843,535 | 843,535 | 843,535 | ||||||||||||||||||||||||||||||||
| Common stock available and reserved to be issued | 3,000,000 | ||||||||||||||||||||||||||||||||||
| Interest rate | $ 2,000,000 | ||||||||||||||||||||||||||||||||||
| Amended Plan [Member] | Non-employee Director [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Maximum aggregate number of shares of common stock granted | 10,000 | ||||||||||||||||||||||||||||||||||
| Debenture Subscription Agreements [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Aggregate amount of convertiable promissory note | $ 550,000 | ||||||||||||||||||||||||||||||||||
| Debentures maturity date | Jan. 26, 2024 | ||||||||||||||||||||||||||||||||||
| Interest rate | 10.00% | ||||||||||||||||||||||||||||||||||
| Convertible Debenture Conversion Agreements [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Debentures maturity date | Jan. 26, 2024 | ||||||||||||||||||||||||||||||||||
| Conversion price | $ 1.50 | $ 1.60 | |||||||||||||||||||||||||||||||||
| Debentures conversion, principal amount converted | $ 550,000 | ||||||||||||||||||||||||||||||||||
| Debentures conversion, accrued interest converted | $ 27,500 | ||||||||||||||||||||||||||||||||||
| Debentures conversion, shares issued | 385,000 | ||||||||||||||||||||||||||||||||||
| Debentures conversion, warrants issued | 385,000 | ||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 2.00 | ||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | $ 534,366 | ||||||||||||||||||||||||||||||||||
| Interest expense | $ 25,056 | ||||||||||||||||||||||||||||||||||
| Interest income | $ 2,444 | ||||||||||||||||||||||||||||||||||
| Convertible Debenture Conversion Agreements [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Debentures conversion, shares issued | 385,000 | ||||||||||||||||||||||||||||||||||
| Debetures conversion, value of shares issued | $ 463,476 | ||||||||||||||||||||||||||||||||||
| Convertible Debenture Conversion Agreements [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Debetures conversion, value of shares issued | $ 45,834 | ||||||||||||||||||||||||||||||||||
| Purchase Agreement [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 2.00 | ||||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction | 1,200,002 | ||||||||||||||||||||||||||||||||||
| Weighted average strike price | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | |||||||||||||||||||||||||||||||
| Warrants sale of stock, shares | 1,200,002 | ||||||||||||||||||||||||||||||||||
| Proceeds from offering of shares | $ 1,775,782 | ||||||||||||||||||||||||||||||||||
| Payments of stock issuance costs | 24,218 | ||||||||||||||||||||||||||||||||||
| Purchase Agreement [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Proceeds from offering of shares | 1,273,365 | ||||||||||||||||||||||||||||||||||
| Purchase Agreement [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Proceeds from offering of shares | $ 502,417 | ||||||||||||||||||||||||||||||||||
| Purchase Agreements [Member] | Five Investor [Member] | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||
| Sale of stock number of shares issued in transaction | 352,224 | ||||||||||||||||||||||||||||||||||
| Weighted average strike price | $ 0.90 | ||||||||||||||||||||||||||||||||||
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
1 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Feb. 02, 2024 |
Aug. 04, 2023 |
Dec. 31, 2023 |
Nov. 30, 2023 |
Oct. 31, 2023 |
Apr. 30, 2023 |
Dec. 31, 2023 |
|
| Subsequent Event [Line Items] | |||||||
| Number of shares sold | 1,200,002 | 352,224 | 600,000 | 125,000 | 793,585 | ||
| Sale price per share | $ 1.50 | $ 2.75 | |||||
| Proceeds from common stock to be issued | $ 145,820 | ||||||
| Subsequent Event [Member] | |||||||
| Subsequent Event [Line Items] | |||||||
| Number of shares sold | 1,386,469 | ||||||
| Sale price per share | $ 0.90 | ||||||
| Proceeds from common stock to be issued | $ 1,248,000 | ||||||
| Warrant exercise price | $ 1.50 | ||||||