NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Organization and Description

PetVivo Holdings, Inc. was incorporated in Nevada under its 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 PetVivo Holdings, Inc. In April 2017, PetVivo Holdings, Inc. acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of PetVivo Holdings, Inc. In April 2025, PetVivo Holdings, Inc. changed the name of its wholly-owned subsidiary PetVivo, Inc. to PetVivo Animal Health, Inc. to better reflect the industry in which PetVivo Holdings, Inc. sells its products.

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. The Company currently has six (6) U.S. and four (4) foreign patents issued, with two (2) additional patent applications pending with the United States Patent and Trademark Office. The patents protect the Company’s biomaterials, products, production processes and methods of use. In February 2025, The Company signed an exclusive licensing agreement with VetStem, Inc. to market and sell their PrecisePRP™ (Platelet-Rich Plasma) product for both canine and equine. On July 24, 2026, the Company terminated the licensing agreement with VetStem, Inc.

The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota with an outsourced distribution location in St. Joseph, Missouri.

(B) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and ASC 270-10-50. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete annual financial statements. 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. These interim condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s annual report on Form 10-K for the fiscal year ended March 31, 2026.

Certain prior-period amounts have been reclassified to conform to the current-period presentation. These reclassifications had no effect on previously reported net income, total assets, total liabilities, or stockholders’ equity.

(C) Principles of Consolidation

The accompanying consolidated financial statements include all the accounts of PetVivo Holdings, Inc., and its four wholly owned corporations, Gel-Del Technologies, Inc., PetVivo Animal Health, Inc., Cosmeta Corp and PetVivo AI (collectively, the “Company”). All intercompany transactions have been eliminated upon consolidation.

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2012 and has elected to comply with certain reduced public company reporting requirements.

(D) Use of Estimates

In preparation of the consolidated 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 allowance for credit losses, 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 June 30, 2026.

(F) Concentration Risk

The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At June 30, 2026, the Company did not have cash balances in excess of the federally insured limits.

(G) Accounts Receivable

Accounts receivable is carried at its contractual amounts, less an estimated allowance for credit losses. Management estimates the credit losses using a loss-rate approach based on historical loss information, adjusted for management’s expectations about current and future economic conditions, as the basis to determine expected credit losses. Management exercises significant judgment in determining expected credit losses. Key inputs include macroeconomic factors, industry trends, the creditworthiness of counterparties, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Management believes that the composition of receivables is consistent with historical conditions as credit terms and practices and the client base has not changed significantly. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for credit losses only after all collection attempts have been exhausted. As of June 30, 2026 and March 31, 2026, the Company had not recorded an allowance for credit losses, as management determined that no allowance was necessary based on its assessment of the collectability of outstanding balances and the credit quality of its customers.

(H) Inventory

Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Inventory consists of raw materials, work-in-process and finished goods.

The Company evaluates inventory for excess, and obsolescence based on factors such as current inventory levels, estimated product life cycles, historical and forecasted customer demand, and input from the product development team. When necessary, an inventory write-off is recorded to reduce the carrying value of inventory to its estimated net realizable value. These estimates and assumptions are reviewed quarterly and annually and updated as needed based on the Company’s business plans and market conditions. The Company recorded an inventory write-off of $239,935 as of March 31, 2026, respectively. The inventory write-off is due to an ongoing negotiation of the VetStem licensing agreement whereby the PrecisePRP product has not been selling as originally expected. Therefore, management decided to sell the PrecisePRP product line at a discount, as to reduce the inventory levels, resulting in the Company recording an inventory write-off of $239,935.

(I) Property & Equipment

Property and equipment are recorded at cost. Expenditures for major additions and improvements 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. Leasehold improvements are depreciated using the straight-line method over the shorter of the estimated useful lives of the improvements or the remaining lease term (including renewal periods that are reasonably certain to be exercised).

(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 legal life of the patent. The Company evaluates 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. The Company has chosen to amortize over a sixty (60) month period, as the patent assets are expected to generate economic benefits for only five (5) years.

(K) Loss Per Share

The Company calculates earnings (loss) per share (“EPS”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260, Earnings Per Share. Basic EPS is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the years ended June 30, 2026 and 2025, the Company reported a net loss; therefore, diluted EPS is calculated the same as basic EPS, as the inclusion of all potentially dilutive securities would be anti-dilutive.

The following securities were excluded from the calculation of diluted loss per share because their effect would have been anti-dilutive:

(L) Revenue Recognition

The Company recognizes revenue in accordance with FASB 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 June 30, 2026 and March 31, 2026. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales. In March 2025, the Company mutually terminated its non-exclusive distribution agreement with MWI. Therefore, we have no distribution fees, no rebates and no right of return provisions. As a result, the Company no longer has any distribution fees, rebates or return liabilities recorded during the three months period ending June 30, 2026 and 2025. The balance sheet continues to show a $57,264 rebate liabilities for periods from 2023-2024. Further, there were no new rebate liabilities in the quarter ending June 30, 2026.

Assets and liabilities (included in accrued expenses) under the Agreement were as follows:

 SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES

We currently don’t have any distributor agreements in place, as of June 30, 2026. Product sales for all domestic shipments into the United States occur once control or title is transferred based on the commercial terms purchase orders. Revenue is recognized upon delivery to the Distributor in the United States, with international shipments, freight terms are FOB our warehouses, as ownership transfers for these international shipments when our product is picked up; payment is due within 30 days for domestic orders and payment-in-advance for international distributors.

From time-to-time, we honor returns for short-dated inventory (close to expiration). Inasmuch, sales periodically are subject to returns; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial as of June 30, 2026 and March 31, 2026. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.

In December 2024, the Company entered into new wholesale distribution partnerships with Vedco, Inc. (“Vedco”) and Clipper Distributing, LLC (“Clipper”). A distribution service agreement was not signed with either distribution partner. Contracts with both distribution partners are evidenced by individual executed purchase orders. The purchase orders 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 terms in the purchase order. Revenue is recognized upon delivery to the Distributor for domestic shipments, and for international shipments, ownership transfers at the point of freight pickup from our warehouse, at which time we recognize the revenue for these international customers; payment is due within 30 days. Neither distribution partnership provides for a distribution fee payable or a rebate payable.

For the three months ended June 30, 2026 and 2025, the Company recognized revenue from product sales to Vedco of $234,623 and $198,380, respectively. This represents 70% and 67% of total revenues for the three months ended June 30, 2026 and 2025, respectively. Additional revenue of $40,520 and $0 for the three months ended June 30, 2026 and 2025 from Clipper distributing. This represents 12% and 0% of total revenues for the three months ended June 30, 2026 and 2025, respectively.

Accounts receivable from Vedco was $56,516 and $83,494 at June 30, 2026, and March 31, 2026.

(M) Research and Development

The Company expenses research and development costs as incurred.

(N) Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and other liabilities. approximates their fair value as of June 30, 2026 and March 31, 2026, due to the short-term nature of these items.

The fair value of the Company’s debt approximates its carrying value as of June 30, 2026 and March 31, 2026, because the stated interest rates and terms of the debt are consistent with those currently available to the Company for similar instruments.

(O) Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. In accordance with ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting share-based payment transactions for acquiring goods and services from nonemployees are included. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

Stock compensation of $460,609 for the period ending June 30, 2026 consisted of; i) employee stock awards: $286,476; ii) board of directors compensation: $42,000; and iii) warrant expense: $132,133.

(P) Income Tax Provision

The Company is subject to income taxes in the U.S. The determination of these tax liabilities requires estimation, significant judgment, and interpretation of U.S. federal and state tax statutes, regulations, and case laws. Additionally, governing tax legislation could change significantly with little or no notice. It is important for us to monitor economic, political, and other conditions in the various countries with operations as changes in a jurisdiction’s conditions could impact the amount of deferred tax assets or our ability to utilize deferred tax assets in the future.

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the consolidated financial statement carrying amounts and the tax bases of assets and liabilities, as well as for net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates and laws expected to apply when the related temporary differences reverse or the carryforwards are utilized. The Company establishes a valuation allowance to reduce deferred tax assets to the amount expected to be realized when, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. For the current period ending June 30, 2026 the Company has recorded a full valuation allowance against its deferred tax assets.

As required by FASB ASC 740, Income Taxes, 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 recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense. See Note 16.

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

(Q) Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public entities with fiscal years beginning after December 15, 2024. The Company adopted this guidance for the year ended March 31, 2026 and applied the guidance on a retrospective basis. The adoption did not have a material impact on the consolidated financial statements. Refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Recently Issued Accounting Pronouncements section for further details.

In November 2024, the FASB issued ASU 2024-03, which requires public entities to disaggregate certain expense categories in the notes to the financial statements. The standard is effective for annual periods after December 15, 2026, and interim periods after December 15, 2027, with early adoption allowed. The Company is currently evaluating the impact of this guidance on its financial statement disclosures, but does not anticipate it will affect its results of operations or cash flows.

Effective January 1, 2026, the Company adopted ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Amendments to the Measurement of Credit Losses for Short-Term Receivables.” The update provides a practical expedient that permits an entity to assume that current economic conditions as of the balance sheet date remain unchanged over the remaining life of the asset, thereby removing the requirement to incorporate future macroeconomic forecasts for qualifying short-term accounts receivable and contract assets arising from revenue transactions.

The Company elected to apply the practical expedient prospectively to all current accounts receivable and contract assets within the scope of the guidance. The adoption of ASU 2025-05 did not have a material impact on our Condensed Consolidated Financial Statements and related footnote disclosures.

(R) Revision of Previously Issued Financial Statements

The Company identified an error in its accounting for the June 30, 2025 amendment of certain convertible notes. The Company previously recognized a beneficial conversion feature as a debt discount with a corresponding increase to additional paid-in capital. ASU 2020-06 eliminated the separate beneficial conversion feature recognition model, and the guidance was effective for the Company before the amendment. Accordingly, the Company corrected the error by removing the beneficial conversion feature and the related amortization of the debt discount.

For the year ended March 31, 2026, the correction eliminated $786,908 previously recorded as a beneficial conversion feature including $23,649 related to warrants issued with promissory notes. As a result, additional paid-in capital was reduced by a net $763,259, from $103,584,614 to $102,821,355, and accumulated deficit was reduced by $763,259, from $102,075,765 to $101,312,506. The correction had no effect on cash, total assets, total liabilities, total stockholders’ equity, or net cash used in operating activities as of and for the year ended March 31, 2026. The March 31, 2026 amounts presented in these interim financial statements have been revised.

For the three months ended June 30, 2025, the correction eliminated $763,259 previously presented as a beneficial conversion feature within additional paid-in capital, reducing additional paid-in capital from $97,236,660 to $96,473,401 and increasing convertible notes payable and accrued interest, net of discount from $1,129,222 to $1,892,481. Because the feature was recognized on June 30, 2025 and no related amortization was recorded during that quarter, the correction did not affect the previously reported net loss, loss per share, accumulated deficit, or net cash used in operating activities for the three months ended June 30, 2025. Total stockholders’ equity was reduced by $763,259.

The following tables summarizes the effect of the errors on the Company’s audited consolidated balance sheet as of March 31, 2026 and unaudited consolidated balance sheet as of June 30, 2025:

SCHEDULE OF UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

While the adjustments changed additional paid-in capital and accumulated deficit line items in the unaudited condensed consolidated balance sheets, they did not have an impact on total net cash used in operating activities, net cash used in investing activities, or net cash provided by financing activities.

The related notes to the unaudited condensed consolidated financial statements have also been revised to reflect the error corrections described above.

(S) Warrants

The Company evaluates warrants to purchase shares of its common stock to determine the appropriate accounting and classification based on the terms of each instrument and the applicable accounting guidance. Warrants issued in share-based payment transactions for goods or services are accounted for in accordance with ASC 718, Compensation—Stock Compensation. Other freestanding warrants are evaluated under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, as applicable.

Warrants that meet the criteria for equity classification are initially measured at fair value and recorded in additional paid-in capital and are not subsequently remeasured, except as otherwise required by applicable accounting guidance. Warrants that do not meet the criteria for equity classification are recorded as liabilities at fair value and are subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings until the warrants are exercised, expire, or otherwise no longer require liability classification.