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Item 1. Financial Statements

2021-08-13 compared with 2021-01-29 · 232 added, 714 removed, 80 unchanged (92% of the section changed)

1 unchanged sentence

BIOPHARMA, INC.

CONSOLIDATED FINANCIAL STATEMENTS

AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

MONTHS ENDED JUNE 30, 2021 AND 2020

CONSOLIDATED UNAUDITED BALANCE SHEETS

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

BIOPHARMA, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2020

March 31, 2020

Current Assets

BALANCE SHEETS

Cash and cash equivalents

Prepaid expenses and other current assets

Prepaid expenses and

other current assets

Total current assets

Operating lease right-of-use asset

Liabilities and Stockholders’

Current Liabilities

Accounts payable and accrued liabilities

Operating lease liability, short-term

Total current liabilities

and Stockholders’ Equity

Accounts payable and

accrued liabilities

Total liabilities

Commitments and contingencies

Stockholders’

Common stock, par value $ 0.001 per share;

1,000,000,000

shares authorized;

50,840,147 shares issued and outstanding

50,700,147 and 50,840,147 shares issued and outstanding, respectively

Additional paid-in-capital

2 unchanged sentences

( 47,427,709 )

Total stockholders’

Total Liabilities and Stockholders’

accompanying notes to the condensed consolidated financial statements.

Total stockholders’

Liabilities and Stockholders’ Equity

accompanying notes to the consolidated financial statements.

BIOPHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

STATEMENTS OF OPERATIONS

Months Ended June 30,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense)

Change in fair value of derivative liability

Gain on extinguishment of note payable

Gain on settlement

Total other income (expense), net

Income (loss) from continuing operations

Loss from discontinued operations

Net income (loss)

Interest income

Total other income,

$ ( 612,235 )

Net income (loss) per common share

Income (loss) from continuing operations

Loss from discontinued operations

$ ( 740,238 )

Basic and diluted loss

per common share:

Weighted average number of common shares outstanding

Basic and diluted

accompanying notes to the condensed consolidated financial statements.

accompanying notes to the consolidated financial statements.

BIOPHARMA, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

Three months ended December 31, 2020 (Unaudited)

Number of shares

Paid-in Capital

Accumulated Deficit

Balance –

September 30, 2020

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

MONTHS ENDED JUNE 30, 2021 AND 2020

months ended June 30, 2021 (Unaudited)

Balance – March 31, 2021

$ ( 47,427,709 )

Cancellation of common shares

Fair value of vested stock options

Balance as of December 31, 2020 (Unaudited)

$ (47,067,078 )

Three months ended December 31, 2019 (Unaudited)

Number of shares

Paid-in Capital

Accumulated Deficit

Balance as of September 30, 2019

Balance as of June 30, 2021 (Unaudited)

$ ( 48,039,944 )

Fair value of vested stock options

Balance as of December 31, 2019 (Unaudited)

months ended June 30, 2020 (Unaudited)

Balance – March 31, 2020

$ ( 46,546,858 )

Nine months ended December 31, 2020 (Unaudited)

Number of shares

Paid-in Capital

Accumulated Deficit

Balance –

March 31, 2020

Beginning balance , value

$ ( 46,546,858 )

Fair value of vested stock options

Balance as of December 31, 2020 (Unaudited)

Balance as of June 30, 2020 (Unaudited)

$ ( 47,287,096 )

months ended December 31, 2019 (Unaudited)

as of March 31, 2019

value of vested stock options

as of December 31, 2019 (Unaudited)

accompanying notes to the condensed consolidated financial statements.

accompanying notes to the consolidated financial statements.

BIOPHARMA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended December 31,

STATEMENTS OF CASH FLOWS

Months Ended June 30,

Cash flows from operating activities

$ ( 612,235 )

Loss from discontinued operations

Loss from continuing operations

Adjustments to reconcile net loss to net cash used in operating activities

$ ( 740,238 )

Adjustments to reconcile net loss to net cash

used in operating activities

Fair value of vested stock options

Operating lease expense

Change in fair value of derivative liability

Gain on settlement, net of cash received of $450,000

Gain on extinguishment of note payable

Accrual of interest added to note payable

Changes in operating assets and liabilities:

1 unchanged sentence

Accounts payable and accrued liabilities

Accounts payable - related party

Operating lease liability

Net cash used in operating activities- continuing operations

Net cash used in operating activities- discontinued operations

lease liability

Net cash used in operating activities

1 unchanged sentence

Proceeds from note payable

Net cash provided by financing activities

Net cash provided by

financing activities

Net decrease in cash

Cash and cash equivalents - beginning of period

Cash and cash equivalent - end of period

Cash and cash equivalents

- beginning of period

Cash and cash equivalents

- end of period

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Supplemental non-cash investing and financing activities:

Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of new lease accounting standard

Cancellation of shares

accompanying notes to the condensed consolidated financial statements.

accompanying notes to the consolidated financial statements.

BIOPHARMA, INC.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

TO CONSOLIDATED FINANCIAL STATEMENTS

MONTHS ENDED JUNE 30, 2021 AND 2020

BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Biopharma, Inc.

(the “Company”, “we”, “us”

or “our”), was incorporated in the

State of Nevada on June 29, 2007.

The Company’s fiscal year end is March 31.

Company is engaged in the research and development of cannabinoid prodrug pharmaceuticals, which we refer to as cannabosides.

We discovered these cannabosides through application of the Company’s proprietary enzymatic bioprocessing technologies.

(the “Company”, “we”, “us” or “our”), was incorporated in the State of

Nevada on June 29, 2007.

2015, the Company developed a new class of cannabinoids known as cannabosides, which were discovered through application of the Company’s

proprietary enzymatic bioprocessing technologies.

In 2016, the Company received approvals from the U.S.

Drug Enforcement Administration (the “DEA”) and the State of

California to initiate studies and manufacturing scale-up at its research and development facilities in order to develop cannabosides.

we do not have any commercial products currently available in the marketplace, the Company does not generate any revenues.

reflected in the accompanying financial statements, during the nine months ended December 31, 2020, the Company incurred a net

loss of $520,220 and used $1,047,742 of cash in our operating activities.

As of December 31, 2020, we had $1,441,471 of cash on

hand, stockholders’

equity of $1,111,715 and had working capital of $1,062,741.

total expenditures for the twelve months following December 31, 2020, are expected to be approximately $1,000,000, which is comprised

of research and development and general operating expenses.

Based on the funds we had available on December 31, 2020, we believe

that we have sufficient capital to fund our anticipated operating expenses for at least one year from the date that the financial

statements in this report are issued.

November 7, 2018, the SEC suspended the trading of our common stock.

Our common stock resumed trading with limited liquidity on

the grey market on November 21, 2018.

Grey market stocks are not traded or quoted on an exchange or inter-dealer quotation system,

but are reported by broker-dealers to their self-regulatory organization (“SRO”) and the SRO distributes the trade

data to market data vendors and financial websites.

Since grey market securities are not traded or quoted on an exchange or inter-dealer

quotation system, investor’s bids and offers are not collected in a central spot, so market transparency is diminished and

execution of orders is difficult.

We are actively pursuing the resumption of ordinary course trading status on the OTCQB.

September 2020, we retained DelMorgan & Co., an internationally recognized investment banking firm, to advise us on our strategic

alternatives, including potential financings, asset divestitures or strategic partnerships.

The Company is continuing to work

closely with DelMorgan in support of their retention.

we believe that our existing cash balances will be sufficient to fund our currently planned level of operations, we may require additional financing to fund our planned future operations.

We do not have any firm commitments for future

capital and until the Company’s securities resume ordinary course trading on the OTCQB (or are listed on a national exchange)

it will be difficult to obtain financing on commercially reasonable or acceptable terms.

We do not presently have, nor do we expect

in the near future to have, material revenue to fund our business from our operations, and we will need to obtain all of our necessary

funding from external sources in the near term.

Additional financing may be required to fund our planned operations in future

periods, including research and development activities relating to our principal product candidate, seeking regulatory approval

of that or any other product candidate we may choose to develop, commercializing any product candidate for which we are able to

obtain regulatory approval or certification, seeking to license or acquire new assets or businesses, and maintaining our intellectual

property rights and pursuing rights to new technologies.

We may seek to raise such funding from a variety of sources.

additional funds by issuing equity or convertible debt securities, our existing stockholders’

ownership may be diluted,

and obtaining commercial loans would increase our liabilities and future cash commitments.

If we pursue capital through alternative

sources, such as collaborations or other similar arrangements, we may be forced to relinquish rights to our proprietary technology

or other intellectual property that could result in our receipt of only a portion of any revenue that may be generated from a

partnered product or business.

Further, we may not be able to obtain additional financing from any of these sources on commercially

reasonable or acceptable terms when needed, or at all.

If we cannot raise the money that we need in order to continue to operate

and develop our business, we will be forced to delay, scale back or eliminate some or all of our operations.

If any of these were

to occur, there is a substantial risk that our business would fail and our stockholders could lose all of their investment.

these estimates could differ if we encounter unanticipated difficulties, or if our estimates of the amount of cash necessary to

operate our business prove to be wrong, and we use our available financial resources faster than we currently expect.

Considerations

global outbreak of COVID-19 has led to significant disruptions in the global economy, including the curtailment of activities

by businesses and consumers in much of the world as governments and others seek to limit the spread of the disease.

of the impact of the pandemic on our business and financial results will depend largely on future developments, including the

duration and severity of the outbreak, the length of restrictions and business closures imposed by domestic and foreign governments,

the impact on capital and financial markets, all of which are highly uncertain and cannot be predicted.

In the quarter ended December

31, 2020, the COVID-19 pandemic did not have a material net impact on our operating results.

We have also not observed any material

impairments of our assets or a significant change in the fair value of our assets due to the COVID-19 pandemic.

While it is not

possible at this time to estimate the full impact that COVID-19 will have on our business, restrictions resulting from COVID-19

on general economic conditions could, among other things, impair our ability to raise capital when needed.

This situation is changing

rapidly, and additional impacts may arise that we are not aware of currently.

of Presentation of Unaudited Condensed Financial Information

unaudited condensed financial statements of the Company for the three and nine months ended December 31, 2020 and 2019 have been

prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

for interim financial information, applied on a consistent basis, and pursuant to the requirements for reporting on Form 10-Q

and the requirements of Regulation S-K and Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities

Accordingly, they do not include all the information and footnotes required by U.S.

GAAP for complete audited financial

However, the information included in these financial statements reflects all adjustments (consisting solely of normal

recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial

position and the results of operations.

Results shown for interim periods are not necessarily indicative of the results to be

obtained for a full fiscal year or any future annual or interim period.

The balance sheet information as of March 31, 2020 was

derived from the Company’s audited financial statements as of and for the year ended March 31, 2020 included in the Company’s

Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2020.

These financial

statements should be read in conjunction with that report.

preparation of financial statements in conformity with generally accepted accounting principles in the United States requires

Drug Enforcement Administration

(the “DEA”) and the State of California to initiate studies and manufacturing scale-up at its research and development facilities

in order to develop cannabosides.

Currently, we do not have any commercial products and have not yet generated any revenues from our

cannabinoid prodrug pharmaceuticals.

accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement

of liabilities and commitments in the normal course of business.

As reflected in the accompanying financial statements, during the three

months ended June 30, 2021, the Company incurred a net loss of $ 612,235 and used $ 562,701 of cash in our operating activities.

factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the

financial statements are issued.

The financial statements do not include any adjustments that might be necessary should the Company be

unable to continue as a going concern.

ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and/or

raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due.

We estimate as of June 30, 2021, we will have sufficient funds to operate the business for the next three months.

Since our existing

cash balances are estimated to be insufficient to fund our currently planned level of operations, we will need additional financing

or other sources of capital to fund our planned future operations.

Further, these estimates could differ if we encounter unanticipated

difficulties, or if our estimates of the amount of cash necessary to operate our business prove to be wrong, and we use our available

financial resources faster than we currently expect.

No assurance can be given that any future financing or capital, if needed, will

be available or, if available, that it will be on terms that are satisfactory to the Company.

do not presently have, nor do we expect in the near future to have, significant revenue to fund our business from our operations, and

will need to obtain most of our necessary funding from external sources in the near term.

Since inception, the Company has experienced

recurring operating losses and negative operating cash flows, and we have funded our operations primarily through equity and debt financings,

and we expect to continue to rely on these sources of capital in the future.

If we raise additional funds by issuing equity or

convertible debt securities, our existing stockholders’ ownership will be diluted, and obtaining commercial loans would increase

our liabilities and future cash commitments.

If we cannot raise the money that we need in order to continue to develop our business,

we will be forced to delay, scale back or eliminate some or all of our proposed operations.

Company is subject to risks and uncertainties of the COVID-19 pandemic that could adversely impact our business, our liquidity and access

to capital markets and our business development activities.

The Company has implemented additional health and safety precautions and

protocols in response to the pandemic and government guidelines.

extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company is highly uncertain and difficult to predict

and quantify.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results

of operations and financial condition will depend on future developments that are highly uncertain, including as a result of new information

that may emerge concerning COVID-19 and the actions taken to contain or treat it, including vaccination efforts, as well as the economic

impact on local, regional, national and international markets.

of Presentation

The consolidated financial statements

include the accounts of the Company and its wholly owned subsidiary, Vitality Healthtech, Inc.

(dissolved in May 2021),

and have been prepared in accordance with accounting principles generally accepted in the United States of America.

Intercompany balances

and transactions have been eliminated in consolidation.

The Company’s fiscal year end is December 31.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

results could differ from those estimates.

The more significant estimates and assumptions by management include, among others, assumptions

used in reserves for accounts receivable, assumptions used in valuing equity instruments issued for services, the valuation allowance

for deferred tax assets, and accruals for potential liabilities.

Actual results could differ from those estimates.

Significant estimates and assumptions by management include, among others, the fair value of equity instruments issued for services, and assumptions used in the valuation of derivative

liabilities and the valuation allowance for deferred tax assets, and the accrual of potential liabilities.

Assets and Liabilities Measured at Fair Value

Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis.

assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used

to measure their fair value.

Authoritative guidance provided by FASB defines the following levels directly related to the amount

of subjectivity associated with the inputs:

prices in active markets for identical assets or liabilities.

other than the quoted prices in active markets, that are observable either directly or indirectly.

inputs based on the Company’s assumptions.

carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts payable, notes payable and advance,

approximate their fair values because of the short maturity of these instruments.

and Cash Equivalents

Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash

From time to time, the Company’s cash account balances exceed the balances covered by the Federal Deposit Insurance

The Company has never suffered a loss due to such excess balances.

Financial Instruments

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify

as embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument

is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported

in the statements of operations.

For stock-based derivative financial instruments, the Company uses a probability weighted average

Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates.

The classification

of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at

the end of each reporting period.

Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees

in non-capital raising transactions for services and for financing costs.

The Company accounts for such grants issued and vesting

based on FASB ASC 718, Compensation –

Stock Compensation (Topic 718) whereby the value of the award is measured on

the date of grant and recognized as compensation expense on the straight-line basis over the vesting period.

The Company recognizes

the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of

the services rendered.

fair value of the Company’s stock options and warrants are estimated using the Black-Scholes-Merton Option Pricing model

which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or

restricted stock, and future dividends.

Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton

Option Pricing model and based on actual experience.

The assumptions used in the Black-Scholes-Merton Option Pricing model could

materially affect compensation expense recorded in future periods.

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded

at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton Option Pricing

model to value the derivative instruments at inception and on subsequent valuation dates.

The classification of derivative instruments,

including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

Company follows the asset and liability method of accounting for income taxes.

Under this method, deferred income tax assets and liabilities

are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their

respective income tax basis (temporary differences).

The effect on deferred income tax assets and liabilities of a change in tax rates

is recognized as income (loss) in the period that includes the enactment date.

The Company determines whether

a contract is, or contains, a lease at inception.

Right-of-use assets represent the Company’s right to use an underlying asset

during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease

payments over the lease term.

The Company uses its incremental borrowing rate based on the information available at lease commencement

in determining the present value of unpaid lease payments.

The Company had no lease commitments for longer than one year as of June 30,

The laboratory space lease in Rocklin, California ends on March 31, 2022.

Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions

for services.

The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation, whereby

the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis

over the vesting period.

Recognition of compensation expense for non-employees is in the same period and manner as if the Company had

paid cash for the services.

The Company recognizes the fair value of stock-based compensation within its Statements of Operations with

classification depending on the nature of the services rendered.

fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain

assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future

Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based

on actual experience.

The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense

recorded in future periods.

and Diluted Loss Per Share

loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of outstanding

common shares during the period.

Diluted loss per share is computed by dividing net loss applicable to common stockholders by

the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding

if all dilutive potential common shares had been issued.

Diluted loss per share excludes all potential common shares if their

effect is anti-dilutive.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings

per share as their inclusion would be anti-dilutive:

Nine months ended

December 31, 2020

December 31, 2019

loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of outstanding common

shares during the period.

Shares of restricted stock are included in the basic weighted average number of common shares outstanding from

the time they vest.

Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average

number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential

common shares had been issued.

Shares of restricted stock are included in the diluted weighted average number of common shares outstanding

from the date they are granted unless they are antidilutive.

Diluted loss per share excludes all potential common shares if their effect

is anti-dilutive.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share

as their inclusion would be anti-dilutive:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

and Patent Application Costs

the Company believes that its patents and underlying technology have continuing value, the amount of future benefits to be derived from

the patents is uncertain.

Accordingly, patent costs are expensed as incurred.

and Development

and development costs consist primarily of fees paid to consultants and outside service providers, patent fees and costs, and

other expenses relating to the acquisition, design, development and testing of the Company’s product candidates.

Research and development costs are expensed as incurred.

and development costs consist primarily of fees paid to consultants and outside service providers, patent fees and costs, and other expenses

relating to the acquisition, design, development and testing of the Company’s treatments and product candidates.

Research and development

costs are expensed as incurred.

Company operates in one segment for the development of pharmaceuticals products.

In accordance with the “Segment Reporting”

Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews

operating results to make decisions about allocating resources and assessing performance for the entire Company.

Existing guidance, which

is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and

to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds

material assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting” due to

their similar customer base and similarities in:

economic characteristics;

nature of products and services;

and procurement, manufacturing,

and distribution processes.

Since the Company operates in one segment, all financial information required by “Segment Reporting”

can be found in the accompanying financial statements.

Accounting Pronouncements

June 2016, the FASB issued ASU No.

2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC

ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”)

to estimate credit losses on certain types of financial instruments, including trade receivables.

This may result in the earlier

recognition of allowances for losses.

ASU 2016-13 is effective for the Company beginning April 1, 2023, and early adoption is

The Company does not believe the potential impact of the new guidance and related codification improvements will be

material to its financial position, results of operations and cash flows.

August 2020, the FASB issued ASU No.

2020-06 (“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 in an Entity’s Own Equity.

ASU 2020-06 will simplify the accounting for convertible instruments

by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting

models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features

that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify

for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which

the premiums are recorded as paid-in capital.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts

in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 will be effective January

1, 2024, for the Company.

Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that

Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but

currently does not believe ASU 2020-06 will have a significant impact on the Company’s accounting for its convertible debt

The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified

Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact

on the Company’s present or future financial statements.

OPERATING LEASE

December 31, 2020, the Company’s wholly-owned subsidiary, The Control Center, Inc., (“TCC”) has an operating

lease agreement for office space that began in December 2012, and was amended in December 2015 and December 2019, and expires

February 28, 2021.

In addition, at December 31, 2020, TCC has a sublease agreement in place for the office space that began in

September 2019 and expires February 28, 2021.

TCC remains the primary obligor on the office space lease agreement.

Sublease income

was not significant during the three and nine months ended December 31, 2020 and 2019.

with an initial term of 12 months or less are not recorded on the balance sheet.

The Company accounts for the lease and non-lease

components of its lease as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term.

An operating lease right-of-use (“ROU”) asset and liability is recognized at commencement date based on the present

value of lease payments over the lease term.

ROU assets represent our right to use an underlying asset for the lease term and

lease liabilities represent our obligation to make lease payments arising from the lease.

Generally, the implicit rate of interest

in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present

value of lease payments.

components of lease expense and supplemental cash flow information related to leases for the period are as follows:

December 31, 2020

Operating lease cost (included in general and administrative expenses in the Company’s unaudited condensed consolidated statement of operations)

Other Information

Cash paid for amounts included in the measurement of lease liabilities for the three months ended December 31, 2020

Weighted average remaining lease term –

operating leases (in years)

Average discount rate –

operating leases

supplemental balance sheet information related to leases for the period is as follows:

At December 31, 2020

Operating leases

Long-term right-of-use asset

Short-term operating lease liability

Total operating lease liabilities

of the Company’s lease liabilities are as follows (in thousands):

Year Ending March 31

Operating Lease

2021 (remaining 2 months)

Total lease payments

Imputed interest/present value discount

Present value of lease liabilities

expenses were $45,970 and $139,218 during the three and nine months ended December 31, 2020, respectively.

GAIN ON EXTINGUISHMENT OF NOTE PAYABLE

May 6, 2020, the Company was granted a loan (the “PPP”

loan) from U.S.

Bank for $96,988 pursuant to the Paycheck

Protection Program under the CARES Act.

The PPP loan bore interest at 1% per annum with the first six months of interest deferred,

and was unsecured and guaranteed by the Small Business Administration (the “SBA”).

The Company used the entire PPP

loan amount for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health

care benefits, qualifying rent, and qualifying utilities.

On November 21, 2020, we received notice that the SBA had reviewed the

forgiveness application of our PPP loan and provided forgiveness of our PPP loan of $97,516, including accrued interest of $528.

We recognized a gain on extinguishment of the PPP loan of $97,516 during the three and nine months ended December 31, 2020.

GAIN ON SETTLEMENT

2016 to 2019, the Company recorded approximately $1.1 million due to a vendor for services, of which $612,405 had not been paid

and was included in accounts payable at March 31, 2020 and through November 30, 2020.

In December 2020, the Company reached

a settlement with the vendor to forgive the $612,405 of outstanding invoices, and in addition, the Company received a payment

from the vendor of $450,000.

This resulted in a gain on settlement of $1,062,405 during the three and nine months ended

December 31, 2020.

July 2018, we received a payment from a third party in the amount of $250,000 and a payment

of $46,653 was made on our behalf to a vendor .

To date, the Company has not confirmed the nature of these payments.

We have recorded these payments as an advance and at December 31, 2020 and March 31, 2020, it is included in

current liabilities on the accompanying financial statements.

June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments .

ASU 2016-13 requires entities to

use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments,

including trade receivables.

This may result in the earlier recognition of allowances for losses.

ASU 2016-13 is effective for the Company

beginning April 1, 2023, and early adoption is permitted.

The Company does not believe the potential impact of the new guidance and related

codification improvements will be material to its financial position, results of operations and cash flows.

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public

Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s

present or future financial statements.

STOCK OPTIONS

summary of the Company’s stock option activity during the nine months ended December 31, 2020 is as follows:

summary of the Company’s stock option activity during the three months ended June 30, 2021 is as follows:

SUMMARY OF STOCK OPTION ACTIVITY

Exercise Price

Balance outstanding at March 31, 2021

Balance outstanding at December 31, 2020

Balance exercisable at December 31, 2020

summary of the Company’s stock options outstanding and exercisable as of December 31, 2020 is as follows:

Balance outstanding at June 30, 2021

Balance exercisable at June 30, 2021

summary of the Company’s stock options outstanding and exercisable as of June 30, 2021 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Number of Options

1 unchanged sentence

Weighted Average Grant- date Stock Price

Options Outstanding, December 31, 2020

Options Outstanding, June 30, 2021

$ 1.50 - 1.95

6 unchanged sentences

$ 4.00 - 4.70

Options Exercisable, December 31, 2020

Options Exercisable, June 30, 2021

$ 1.50 - 1.95

6 unchanged sentences

$ 4.00 - 4.70

the nine months ended December 31, 2020, we expensed total stock-based compensation related to stock options of $349,546, and

the remaining unamortized cost of the outstanding stock-based awards at December 31, 2020 was approximately $160,000.

The remaining

unamortized cost will be amortized on a straight-line basis over a weighted average remaining vesting period of one year.

31, 2020, the 5,997,044 outstanding stock options had no intrinsic value.

summary of warrants to purchase the Company’s common stock during the nine months ended December 31, 2020 is as follows:

the three months ended June 30, 2021, we expensed total stock-based compensation related to stock options of $ 46,539 .

There is no remaining

unamortized cost of the outstanding stock-based awards at June 30, 2021.

At June 30, 2021, the 5,997,544 outstanding stock options had

no intrinsic value.

summary of warrants to purchase common stock during the three months ended June 30, 2021 is as follows:

SUMMARY OF WARRANTS ACTIVITY

Exercise Price

Balance outstanding at March 31, 2021

Balance outstanding and exercisable at December 31, 2020

December 31, 2020, the 146,668 outstanding stock warrants had no intrinsic value.

DISCONTINUED OPERATIONS

October 2018, the Company acquired Summit Healthtech, Inc.

(renamed Vitality Healthtech, Inc.), a specialty healthcare clinic.

In addition to Summit Healthcare, the Company sold research diagnostic testing kits (collectively, the Company’s clinical

and test kit operations).

In May 2019 the Company decided to close its clinical and test kit operations.

The clinical and test

kit operations meet the discontinued operations criteria and are reported as such in all periods presented on the accompanying

condensed consolidated financial statements.

following table presents the summarized components of loss from discontinued operations for the clinical and test kit operations:

Three Months Ended December 31,

Cost of sales

Research and development

General and administrative

Loss from discontinued operations

Nine Months Ended December 31,

Cost of sales

Research and development

General and administrative

Loss from discontinued operations

Expired/Cancelled

Balance outstanding and exercisable at June 30, 2021

June 30, 2021, the 146,668 outstanding stock warrants had no intrinsic value.

COMMITMENTS AND CONTINGENCIES

Investigation

August 19, 2016, we filed a resale registration statement on Form S-1 (“Form S-1”) with the SEC to register 2,650,000

shares of our common stock and 7,950,000 shares of our common stock issuable upon exercise of certain warrants.

We received a

letter from the Washington D.C.

office of the SEC dated December 10, 2016, stating that the staff of the SEC was conducting a

Section 8(e) examination with respect to this Form S-1 and that the Division of Corporate Finance would not take any further action

on the Form S-1 while the examination was pending.

On May 12, 2020, our outside legal counsel received a letter from the staff

of the SEC’s Enforcement Division stating that it has concluded the investigation as to the Company, and that it did not

intend to recommend an enforcement action by the SEC against the Company.

While certain former officers and directors may

request the Company to reimburse them for legal fees related to this matter, at December 31, 2020, management has

determined that the Company’s liability for those fees is not probable and we could not reasonably estimate those

Management’s Discussion and Analysis of Financial Condition and Results of Operations

used in this discussion and analysis and elsewhere in this Quarterly Report, the “Company”, “we”, “us”

or “our”

refer to Vitality Biopharma, Inc., a Nevada corporation.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our

Unaudited Condensed Financial Statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report.

information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated

with an investment in our common stock.

We urge you to carefully review and consider the various disclosures made by us in this

Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including

our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 filed on June 29, 2020, and the related audited financial

statements and notes included therein.

statements made in this Quarterly Report on Form 10-Q constitute “forward-looking statements”

within the meaning of

Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).

Forward-looking statements are projections in respect of future events or our future financial performance.

In some cases, you

can identify forward-looking statements by terminology such as “may,”

“will,”

“should,”

“intend,”

“expect,”

“plan,”

“anticipate,”

“believe,”

“estimate,”

“predict,”

“potential,”

or “continue”

or the negative of these terms or other comparable terminology.

These statements

are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s

actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance

expressed or implied by these forward-looking statements.

These risks and uncertainties include:

our ability to continue operating

as a going concern;

general economic and financial market conditions;

our ability to obtain additional financing as necessary;

any adverse occurrence with respect to our business or;

results of our research

and development activities that are less positive than we expect;

our ability to bring our intended products to market;

demand for our intended products;

shifts in industry capacity;

product development or other initiatives by our competitors;

in the availability of raw materials and costs associated with growing raw materials for our intended products;

other factors

beyond our control;

and the other risks described under the heading “Risk Factors”

in our Annual Report on Form 10-K

filed with the SEC on June 29, 2020.

we believe that the expectations and assumptions reflected in the forward-looking statements we make are reasonable, we cannot

guarantee future results, levels of activity or performance.

In addition, we cannot assess the impact of each factor on our business

or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed

by any forward-looking statements.

As a result, readers should not place undue reliance on any of the forward-looking statements

we make in this report.

Forward-looking statements speak only as of the date on which they are made.

Except as required by law,

we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Biopharma is a company focused on the advancement of pharmaceuticals and innovative technologies that improve the lives of patients.

We seek to achieve this objective through the development of novel cannabinoid pharmaceutical prodrugs, which we refer to as cannabosides.

We conduct our operations using our own personnel and facilities with the support of third-party resources as necessary to advance

our drug development programs.

cannabinoid-glycoside prodrugs, which we refer to as cannabosides, were discovered through application of the Company’s

proprietary enzymatic bioprocessing technologies, that are converted within the body after administration from an inactive molecule

into a pharmacologically active drug.

Currently, the Company has produced more than 25 novel cannabosides, including glycosylated

tetrahydrocannabinol (THC), cannabidiol (CBD), cannabidivarin (CBDV) and cannabinol (CBN), that are covered by patent applications

in the United States and various other countries for composition of matter, method of production and method of use.

corporate headquarters is located in Los Angeles, California.

As of January 28, 2021, we employed three full-time employees, including

one research professional working in our office and laboratory space in Rocklin, California.

In the past, we have engaged the

services of outside scientific and regulatory consultants to assist in our research and development activities, which is an approach

that provides us with flexible and highly-experienced resources to advance our clinical efforts while maintaining a relatively

lower overhead cost structure.

prodrug is a compound that, after administration, is metabolized into a pharmacologically active drug.

Prodrugs are often designed

to improve drug properties and reduce known or expected toxicities and adverse side effects.

By using our proprietary enzymatic

bioprocessing technologies, our clinical research team has developed a novel family of prodrugs by combining cannabinoid and glucose

The resulting compounds, known as cannabosides, have unique commercial applications and patentable compositions of

matter, which are separate and distinct from ordinary cannabinoids.

The advantages of cannabosides may include:

(i) administration

in a convenient oral formulation, (ii) targeted delivery with release in the colon or large intestine, (iii) improved stability

with limited degradation or drug metabolism, and (iv) delayed release enabling longer-lasting effects and fewer administrations

proprietary glycosylation process, which results in adding one or more glucose molecules to compounds, may enable our new cannabosides

to act as prodrugs that achieve targeted delivery of the bioactive compounds of cannabinoids to the gastrointestinal tract.

compounds are generally more stable and are water soluble, so upon ingestion, we believe they will remain intact and transit through

the esophagus, stomach and upper intestine with limited absorption or degradation from stomach acids.

However, once the glycosylated

compounds reach the lower intestine, we expect them to encounter glycoside hydrolase enzymes secreted by the human intestinal

microbiota that will cleave the polar glucose residues and release the active cannabinoid compound primarily in the large intestine

have focused our research and development activities on the glycosylation of cannabinoids given their well-known positive effects

on the human endocannabinoid system.

Our research and development activities originally focused on the glycosylation of CBD and

then later expanded into the glycosylation of THC.

The use of the cannabinoid THC has been shown to provide substantial anti-inflammatory

benefits on the human body, among other benefits, but is limited as a pharmaceutical option given its psychoactive and intoxicating

However, by glycosylating THC, we have learned through initial animal studies that the binding of glucose and THC

molecules restricts the release of THC into the body’s digestive system until the prodrug reaches the large intestine, at

which point the glycoside hydrolase enzymes cleave the glucose from the prodrug and the THC is released in a targeted and restricted

Further, we have learned through our initial animal studies that this targeted release of THC, which could be provided

in very low doses to achieve physiologically beneficial results, serves as an anti-inflammatory agent in the lower gastrointestinal

tract and minimizes the amount of THC absorbed into the blood stream, thereby avoiding the psychoactive and intoxicating properties

that hinder the broader pharmaceutical use of THC.

are developing our THC-glycoside prodrugs for the treatment of gastrointestinal diseases, including inflammatory bowel disease

(IBD) and irritable bowel syndrome (IBS) because of the targeted release described above.

IBD is a frequently chronic inflammatory

condition where parts of the digestive system become inflamed from an overactive immune response.

The disease can lead to irreversible

damage to the gastrointestinal tract and may require surgery to remove affected areas of the intestine.

Two major forms of the

disease are Crohn’s disease, which can affect any part of the digestive system, and ulcerative colitis, which often affects

the colon or large intestine.

The disease is often unpredictable with periods of painful and debilitating symptoms followed by

periods of remission with limited symptoms.

IBS has similar symptoms to IBD, including abdominal pain, but the underlying disease

process is quite different.

IBS is a functional gastrointestinal disorder that commonly affects the large intestine and is characterized

by abdominal cramping, diarrhea, constipation, and pain.

Currently, patients suffering from IBD are frequently prescribed anti-inflammatory

drugs such as steroids, biologics and immunosuppressants, and patients suffering from IBS are prescribed antibiotics, antidepressants

and gastrointestinal motility compounds, all of which often result in unwanted side effects.

most promising THC-glycoside (VBX-100) is being developed as an oral prodrug for the treatment of IBD and IBS.

VBX-100 was selected

from our THC-glycoside portfolio due to its compatibility with commercial production techniques and the optimal prodrug delivery

profile that maximizes intestinal anti-inflammatory properties while minimizing psychoactive or intoxicating effects.

pre-clinical studies on the efficacy of VBX-100 in animal models have shown favorable outcomes, including reduced inflammation

of the gastrointestinal tract and no measurable systemic THC found in tissue examined using highly-sensitive testing equipment.

Our pre-clinical development plan, which includes dose range finding studies, GLP toxicology studies, pharmacokinetic studies

and other pre-clinical research, is anticipated to be completed during the 1st half of calendar year 2022, subject to the Company

securing sufficient additional funding or entering into a strategic research and development partnership.

After our satisfactory

completion of all of the prerequisite pre-clinical in vitro and in vivo studies, an Investigational New Drug (IND)

application would be filed with the FDA and, upon receiving FDA approval, we would initiate our Phase 1 clinical trial, subject

to the Company securing sufficient additional funding or entering into the above-referenced strategic partnership.

addition to our research and development activities related to our THC-glycoside compounds, we are expanding and diversifying

our research and development activities to include the potential safety, efficacy and commercialization of our patented CBD-glycoside

CBD has well-known anti-anxiety, anti-inflammatory and anti-microbial properties, but unlike THC, CBD is non-psychoactive

and non-intoxicating.

By glycosylating CBD, we can create CBD-glucose compounds that may enable a targeted and concentrated delivery

of CBD in the gastrointestinal tract.

Currently we are evaluating the optimal CBD-glycoside delivery mechanism, which may include

an aqueous drink formulation since our glycosylation process significantly improves the water solubility of the CBD molecule.

Processing Methods

Company originally developed its proprietary enzymatic bioprocessing technologies to attach glucose molecules to the molecules

of stevia as part of our activities in the stevia processing industry.

We then expanded the application of this proprietary technology

to attach glucose molecules to cannabinoids, including THC and CBD.

We may pursue additional opportunities to develop new products

or license this technology.

of Operations

Months Ended December 31, 2020 and December 31, 2019

net income during the three months ended December 31, 2020, was $692,950 compared to a net loss of $795,295 for the three months

ended December 31, 2019.

This change was primarily attributable to a gain from a settlement of a vendor dispute.

in net loss during the three months ended December 31, 2019, was our loss from discontinued operations of $48,769.

such loss recorded in the corresponding 2020 period.

We had no revenue from continuing operations during either the 2020 or 2019

the three months ended December 31, 2020, we incurred general and administrative expenses in the aggregate amount of $394,567

compared to $506,926 incurred during the three months ended December 31, 2019 (a decrease of $112,359).

General and administrative

expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted

services, marketing, consulting costs and travel expenses.

The decrease in general and administrative costs in the period is

primarily attributable to a decrease in employee benefits expense of approximately $37,000, as well as a decrease

in travel expenses of approximately $21,000.

addition, during the three months ended December 31, 2020, we incurred research and development costs of $71,975, compared to

$241,840 during the three months ended December 31, 2019 (a decrease of $169,865).

This decrease resulted from a reduction in

staff in the 2020 period and corresponding decrease in research and development activities.

the three months ended December 31, 2020, we recorded total net other income in the amount of $1,159,492, compared to total net

other income recorded during the three months ended December 31, 2019 in the amount of $2,240.

During the three months ended December

31, 2020, we recorded a gain from a settlement of a vendor dispute in the amount of $1,062,405 and a gain related to the forgiveness

of our PPP loan of $97,516.

Months Ended December 31, 2020 and December 31, 2019

net loss during the nine months ended December 31, 2020 was $520,220 compared to a net loss of $3,614,024 for the nine months

ended December 31, 2019.

The decrease in net loss of $3,093,804 during the 2020 period is attributable primarily to operating

expenses reduced by $1,278,497, elimination of loss from discontinued operations of $714,827, gain on settlement of $1,062,405

and the gain related to the forgiveness of our PPP loan of $97,516.

Included in net loss during the nine months ended December

31, 2019, was our loss from discontinued operations of $714,827.

There was no loss from discontinued operations recorded in the

We had no revenue from continuing operations during either the 2020 or 2019 period.

the nine months ended December 31, 2020, we incurred general and administrative expenses in the aggregate amount of $1,342,110

compared to $2,094,026 incurred during the nine months ended December 31, 2019 (a decrease of $751,916).

General and administrative

expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted

services, marketing, consulting costs and travel expenses.

The majority of the decrease in general and administrative costs in

the period is attributable to a decrease in legal fees, most of which were incurred in connection with the Private

Investigation and Section 8(e) Examination, which decreased by approximately $500,000 from the previous nine-month period,

as well as a decrease in wages of approximately $152,000 from the previous nine-month period.

addition, during the nine months ended December 31, 2020, we incurred research and development costs of $338,268, compared to

$864,849 during the nine months ended December 31, 2019 (a decrease of $526,581).

This decrease resulted from a reduction in staff

during the 2020 period and corresponding decrease in research and development activities.

discontinued operations incurred a loss of $714,827 during the nine months ended December 31, 2019.

No loss from discontinued

operations was incurred during the nine months ended December 31, 2020.

the nine months ended December 31, 2020, we recorded total net other income in the amount of $1,160,158 compared to total net

other income recorded during the nine months ended December 31, 2019 in the amount of $59,678.

During the nine months ended December

31, 2020, we recorded a gain from a settlement of a vendor dispute in the amount of $1,062,405 and a gain related to the forgiveness

of our PPP loan of $97,516.

and Capital Resources

have incurred losses since inception resulting in an accumulated deficit of $47,067,078 as of December 31, 2020, and further losses

are anticipated in the development of our business.

of December 31, 2020, we had total current assets of $1,454,666, comprised primarily of cash in the amount of $1,441,471.

total current liabilities as of December 31, 2020 were $391,925, represented primarily by accounts payable and accrued liabilities

of $72,078 and an advance of $296,653.

As a result, on December 31, 2020, we had working capital of $1,062,741.

November 7, 2018, the SEC suspended the trading of our common stock.

Our common stock resumed trading with limited liquidity on

the grey market on November 21, 2018.

Grey market stocks are not traded or quoted on an exchange or inter-dealer quotation system,

but are reported by broker-dealers to their self-regulatory organization (“SRO”) and the SRO distributes the trade

data to market data vendors and financial websites.

Since grey market securities are not traded or quoted on an exchange or inter-dealer

quotation system, investor’s bids and offers are not collected in a central spot, so market transparency is diminished and

execution of orders is difficult.

We are actively pursuing the resumption of ordinary course trading status on the OTCQB or a

national exchange.

September 2020, we retained DelMorgan & Co., an internationally recognized investment banking firm, to advise us on our strategic

alternatives, including potential financings, asset divestitures or strategic partnerships.

The Company is continuing to work

closely with DelMorgan in support of their retention.

we believe that our existing cash balances will be sufficient to fund our currently planned level of operations, we may require additional financing to fund our planned future operations.

We do not have any firm commitments for future

capital and until the Company resumes ordinary course trading status on the OTCQB or a national exchange it will be difficult

to obtain financing on commercially reasonable or acceptable terms.

We do not presently have, nor do we expect in the near future

to have, material revenue to fund our business from our operations, and we will need to obtain all of our necessary funding from

external sources in the near term.

Additional financing may be required to fund our planned operations in future periods, including

research and development activities relating to our principal product candidate, seeking regulatory approval of that or any other

product candidate we may choose to develop, commercializing any product candidate for which we are able to obtain regulatory approval

or certification, seeking to license or acquire new assets or businesses, and maintaining our intellectual property rights and

pursuing rights to new technologies.

We may seek to raise such funding from a variety of sources.

If we raise additional funds

by issuing equity or convertible debt securities, our existing stockholders’

ownership will be diluted, and obtaining commercial

loans would increase our liabilities and future cash commitments.

If we pursue capital through alternative sources, such as collaborations

or other similar arrangements, we may be forced to relinquish rights to our proprietary technology or other intellectual property

that could result in our receipt of only a portion of any revenue that may be generated from a partnered product or business.

Further, we may not be able to obtain additional financing from any of these sources on commercially reasonable or acceptable

terms when needed, or at all.

If we cannot raise the money that we need in order to continue to operate and develop our business,

we will be forced to delay, scale back or eliminate some or all of our operations.

If any of these were to occur, there is a substantial

risk that our business would fail and our stockholders could lose all of their investment.

Cash Used in Operating Activities

have not generated positive cash flows from operating activities.

For the nine months ended December 31, 2020, net cash used in

operating activities-continuing operations was $1,047,742 compared to net cash used in operating activities-continuing operations

of $2,144,458 for the nine months ended December 31, 2019.

Net cash used in operating activities-continuing operations during

the nine months ended December 31, 2020 consisted primarily of a net loss of $520,220, and a decrease in accounts payable

of $178,045 offset by $349,546 related to stock-based compensation and gain on settlement of $612,405 net of the cash received.

Net cash used in operating activities-continuing operations during the nine months ended December 31, 2019 consisted primarily

of a net loss of $3,614,024, offset by $492,554 related to stock-based compensation and an increase in accounts payable of $292,521.

For the nine months ended December 30, 2019, net cash used in operating activities-discontinued operations was $714,883.

was used in operating activities-discontinued operations for the nine months ended December 31, 2020.

The losses incurred in the

2019 period were attributed to the losses incurred by the Company’s clinical operations.

Cash Used in Investing Activities

the nine months ended December 31, 2020 and December 31, 2019, no net cash was used in or provided by investing activities.

Cash Provided By Financing Activities

the nine months ended December 31, 2020, net cash provided from financing activities was $96,988 from the issuance of

a note payable.

During the nine months ended December 31, 2019, no net cash was used in or provided by financing activities.

Sheet Arrangements

have no significant 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 would be material to stockholders.

Accounting Policies

financial statements and accompanying notes included in this report have been prepared in accordance with United States generally

accepted accounting principles (“U.S.

GAAP”) applied on a consistent basis.

The preparation of financial statements

in conformity with U.S.

GAAP requires management 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 the reported

amounts of revenues and expenses during the reporting periods.

regularly evaluate the accounting policies and estimates that we use to prepare our financial statements.

In general, management’s

estimates are based on historical experience, on information from third party professionals, and on various other assumptions

that are believed to be reasonable under the facts and circumstances.

Actual results could differ from the estimates made by management.

believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of

our consolidated financial statements included in this report:

of Estimates and Assumptions

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the period.

Actual results could differ from those estimates.

The more significant estimates and assumption by management include, among others, the fair value of shares issued for services,

the fair value of options and warrants, and assumptions used in the valuation of our outstanding derivative liabilities.

Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees

in non-capital raising transactions for services and for financing costs.

The Company accounts for such grants issued and vesting

based on FASB ASC 718, Compensation –

Stock Compensation (Topic 718) whereby the value of the award is measured on

the date of grant and recognized as compensation expense on the straight-line basis over the vesting period.

The Company recognizes

the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of

the services rendered.

fair value of the Company’s stock options and warrants are estimated using the Black-Scholes-Merton Option Pricing model,

which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or

restricted stock, and future dividends.

Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton

Option Pricing model and based on actual experience.

The assumptions used in the Black-Scholes-Merton Option Pricing model could

materially affect compensation expense recorded in future periods.

Accounting Pronouncements

refer to Footnote 1 of the accompanying financial statements for management’s discussion of recent accounting pronouncements.

Quantitative and Qualitative Disclosures About Market Risk

Company received a letter in February 2021 from counsel for the Company’s previous director and officer insurance carrier (the

“insurer”) demanding that the Company reimburse the insurer for sums advanced by the insurer without the Company’s

knowledge or consent to a former director of the Company as defense costs in connection with a claim purportedly arising under a

previous director and officer liability insurance policy.

The Company believes it has no liability for this claim on the basis

of, among other things, Nevada law, the Company’s governing documents and the language of the policy.

Accordingly, as of June 30,

2021, no contingent liability has been recorded in the Company’s consolidated statements of financial condition for this matter.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements