RANGE IMPACT, INC. 10-Q

Item 1. Financial Statements (unaudited) VITALITY BIOPHARMA, INC. CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED JUNE 30, 2021 AND 2020 (Unaudited) CONSOLIDATED UNAUDITED BALANCE SHEETS 4 CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS 5 CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY 6 CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS 7 NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS 8 3 VITALITY BIOPHARMA, INC. CONSOLIDATED BALANCE SHEETS June 30, 2021 March 31, 2021 (unaudited) Assets Current Assets Cash and cash equivalents $ 321,436 $ 884,137 Prepaid expenses and other current assets - 3,195 Total current assets 321,436 887,332 Deposits 9,702 9,502 Total Assets $ 331,138 $ 896,834 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued liabilities $ 33,440 $ 33,440 Total liabilities 33,440 33,440 Commitments and contingencies - - Stockholders’ Equity Common stock, par value $ 0.001 per share; 1,000,000,000 shares authorized; 50,700,147 and 50,840,147 shares issued and outstanding, respectively 50,500 50,640 Additional paid-in-capital 48,287,142 48,240,463 Accumulated deficit ( 48,039,944 ) ( 47,427,709 ) Total stockholders’ equity 297,698 863,394 Total Liabilities and Stockholders’ Equity $ 331,138 $ 896,834 See accompanying notes to the consolidated financial statements. 4 VITALITY BIOPHARMA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, 2021 2020 Revenues $ - $ - Operating expenses: General and administrative 514,437 573,253 Research and development 97,812 167,464 Total operating expenses 612,249 740,717 Loss from operations ( 612,249 ) ( 740,717 ) Other income Interest income 14 479 Total other income, net 14 479 Net loss $ ( 612,235 ) $ ( 740,238 ) Basic and diluted loss per common share: $ ( 0.01 ) $ ( 0.01 ) Weighted average number of common shares outstanding Basic and diluted 50,700,147 50,840,147 See accompanying notes to the consolidated financial statements. 5 VITALITY BIOPHARMA, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY THREE MONTHS ENDED JUNE 30, 2021 AND 2020 Three months ended June 30, 2021 (Unaudited) Common Stock Additional Number of shares Amount Paid-in Capital Accumulated Deficit Total Balance – March 31, 2021 50,840,147 $ 50,640 $ 48,240,463 $ ( 47,427,709 ) $ 863,394 Cancellation of common shares ( 140,000 ) ( 140 ) 140 - - Fair value of vested stock options - - 46,539 - 46,539 Net loss - - - ( 612,235 ) ( 612,235 ) Balance as of June 30, 2021 (Unaudited) 50,700,147 $ 50,500 $ 48,287,142 $ ( 48,039,944 ) $ 297,698 Three months ended June 30, 2020 (Unaudited) Common Stock Additional Number of shares Amount Paid-in Capital Accumulated Deficit Total Balance – March 31, 2020 50,840,147 $ 50,640 $ 47,778,607 $ ( 46,546,858 ) $ 1,282,389 Beginning balance , value 50,840,147 $ 50,640 $ 47,778,607 $ ( 46,546,858 ) $ 1,282,389 Fair value of vested stock options - - 124,927 - 124,927 Net loss - - - ( 740,238 ) ( 740,238 ) Balance as of June 30, 2020 (Unaudited) 50,840,147 $ 50,640 $ 47,903,534 $ ( 47,287,096 ) $ 667,078 See accompanying notes to the consolidated financial statements. 6 VITALITY BIOPHARMA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, 2021 2020 Cash flows from operating activities Net loss $ ( 612,235 ) $ ( 740,238 ) Adjustments to reconcile net loss to net cash used in operating activities Fair value of vested stock options 46,539 124,927 Operating lease expense - 33,256 Changes in operating assets and liabilities: Prepaid expense and other current assets 3,195 2,471 Deposits ( 200 ) 146 Accounts payable and accrued liabilities - ( 106,017 ) Operating lease liability - ( 33,821 ) Net cash used in operating activities ( 562,701 ) ( 719,276 ) Cash flows from financing activities: Proceeds from note payable - 96,988 Net cash provided by financing activities - 96,988 Net decrease in cash ( 562,701 ) ( 622,288 ) Cash and cash equivalents - beginning of period 884,137 2,392,225 Cash and cash equivalents - end of period $ 321,436 $ 1,769,937 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - See accompanying notes to the consolidated financial statements. 7 VITALITY BIOPHARMA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED JUNE 30, 2021 AND 2020 (Unaudited) 1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Vitality Biopharma, Inc. (the “Company”, “we”, “us” or “our”), was incorporated in the State of Nevada on June 29, 2007. In 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. Currently, we do not have any commercial products and have not yet generated any revenues from our cannabinoid prodrug pharmaceuticals. Going Concern The 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. These 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. The 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. We 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. COVID-19 The 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. 8 The 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. Basis 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. Use of Estimates The 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. Actual 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. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. From time to time, the Company’s cash account balances exceed the balances covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances. 9 Derivative Financial Instruments The 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 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. Income Taxes The 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. Leases 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, 2021. The laboratory space lease in Rocklin, California ends on March 31, 2022. Stock-Based Compensation The 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. The 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 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. Basic and Diluted Loss Per Share Basic 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 June 30, 2021 2020 Options 5,997,544 6,030,044 Warrants 146,668 946,669 Total 6,144,212 6,976,713 10 Patents and Patent Application Costs Although 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. Research and Development Research 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. Segments The 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. Recent Accounting Pronouncements In 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. Other 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. 2. STOCK OPTIONS A summary of the Company’s stock option activity during the three months ended June 30, 2021 is as follows: SUMMARY OF STOCK OPTION ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at March 31, 2021 5,997,544 $ 0.84 Granted - Exercised - Expired - - Cancelled - - Balance outstanding at June 30, 2021 5,997,544 $ 0.84 Balance exercisable at June 30, 2021 5,997,544 $ 0.84 11 A 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 Weighted Average Exercise Price Weighted Average Grant- date Stock Price Options Outstanding, June 30, 2021 750,000 $ 0.30 $ 0.30 2,000,000 $ 0.35 $ 0.35 1,664,542 $ 0.50 $ 0.50 128,000 $ 0.96 $ 0.96 130,000 $ 1.00 $ 10.00 500,834 $ 1.50 - 1.95 $ 1.50 - 1.95 657,500 $ 2.00 - 2.79 $ 2.00 - 2.79 123,334 $ 3.10 - 3.80 $ 3.10 - 3.80 43,334 $ 4.00 - 4.70 $ 4.00 - 4.70 5,997,544 Options Exercisable, June 30, 2021 750,000 $ 0.30 $ 0.30 2,000,000 $ 0.35 $ 0.35 1,664,542 $ 0.50 $ 0.50 128,000 $ 0.96 $ 0.96 130,000 $ 1.00 $ 10.00 500,834 $ 1.50 - 1.95 $ 1.50 - 1.95 657,500 $ 2.00 - 2.79 $ 2.00 - 2.79 123,334 $ 3.10 - 3.80 $ 3.10 - 3.80 43,334 $ 4.00 - 4.70 $ 4.00 - 4.70 5,997,544 During 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. 3. WARRANTS A summary of warrants to purchase common stock during the three months ended June 30, 2021 is as follows: SUMMARY OF WARRANTS ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at March 31, 2021 146,668 $ 3.00 Granted - - Exercised - - Expired/Cancelled - - Balance outstanding and exercisable at June 30, 2021 146,668 $ 3.00 At June 30, 2021, the 146,668 outstanding stock warrants had no intrinsic value. 4. COMMITMENTS AND CONTINGENCIES The 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. 12