What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-13 · 182 added, 138 removed, 181 unchanged (64% of the section changed)

1 unchanged sentence

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.

or “our” refer to Malachite Innovations, Inc., a Nevada corporation.

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

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publicly any forward-looking statements for any reason.

otherwise provided in this Quarterly Report, references to the “Company,” “we,” “us”, and

“our” refer to Vitality Biopharma, Inc., a Nevada corporation formed on June 29, 2007 as Legend Mining Inc., and its consolidated

subsidiaries.

On October 10, 2011, we completed a merger with our wholly-owned subsidiary, Stevia First Corp., whereby we changed our

name from “Legend Mining Inc.” to “Stevia First Corp.” On July 15, 2016, our Board of Directors and shareholders

approved a name change to “Vitality Biopharma, Inc.”

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 known as cannabosides.

our operations using our own personnel and facilities with the support of third-party resources to advance our drug development programs.

cannabosides are cannabinoid-glycoside prodrugs, which 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

Currently, the Company has produced more than 100 novel cannabosides, including glycosylated tetrahydrocannabinol

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

of matter, method of production and method of use.

Additionally,

the Company is evaluating the expansion of its corporate strategy to create long-term sustainable value for its shareholders by building

a more diversified portfolio of assets through organic growth and strategic acquisitions.

Specifically, the Company is considering special

situation opportunities in a variety of industries, including without limitation, businesses that utilize innovative technologies to

address the unfavorable environmental impacts of climate change.

corporate headquarters is located in Los Angeles, California.

As of August 12, 2021, we employed three full-time employees, including

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

We also have, in the past, engaged the services

of 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.

otherwise provided in this Quarterly Report, references to the “Company,” “we,” “us”, and “our”

refer to Malachite Innovations, Inc., a Nevada corporation formed on June 29, 2007 as Legend Mining Inc., and its consolidated subsidiaries.

On October 10, 2011, we completed a merger with our wholly-owned subsidiary, Stevia First Corp., whereby we changed our name from “Legend

Mining Inc.” to “Stevia First Corp.” On July 15, 2016, our Board of Directors and shareholders approved a name change

to “Vitality Biopharma, Inc.” On September 30, 2021, we completed a merger with our wholly-owned subsidiary, Malachite Innovations,

Inc., whereby we changed our name from “Vitality Biopharma, Inc.” to “Malachite Innovations, Inc.”

Malachite Innovations is a

company focused on improving the health and wellness of people and the planet.

We seek to accomplish this objective through the operation

of two wholly-owned subsidiaries:

(i) Graphium Biosciences, Inc.

which is focused on developing new innovations targeting the health

and wellness of people, with a particular focus on advancing our broad portfolio of over 100 glycosylated cannabinoid prodrugs and (ii)

Daedalus Ecosciences, Inc.

which is focused on evaluating new innovations targeting the health and wellness of the planet, with a particular

focus on deploying technological innovations and eco-friendly solutions to remedy difficult environmental situations in economically

challenged communities.

Our corporate headquarters

is located in Cleveland, Ohio.

As of November 14, 2021, we employed three full-time employees, including one research professional working

in our office and laboratory space in Rocklin, California.

We also have, in the past, engaged the services of 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.

Graphium Biosciences

Graphium Biosciences is

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 known as cannabosides.

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

to advance our drug development programs.

cannabosides are cannabinoid-glycoside prodrugs, which 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 100 novel cannabosides, including glycosylated

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

applications for composition of matter, method of production and method of use.

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

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proprietary technology.

Orphan Drug Designation

In January 2018, we filed

a request with the FDA’s Office of Orphan Products Development (OOPD) for an Orphan Drug Designation of our VBX-100 prodrug for

the treatment of pediatric ulcerative colitis.

In March 2018, the OOPD denied our request based, in part, on the FDA’s decision

to no longer grant Orphan Drug Designation status to drugs for pediatric subpopulations of common diseases (i.e., diseases or conditions

with an overall prevalence of over 200,000), unless the use of the drug in the pediatric subpopulation meets the regulatory criteria

for an orphan subset, or the disease in the pediatric subpopulation is considered a different disease from the disease in the adult population.

However, in December 2019,

we received a letter from the OOPD informing us that the FDA determined that the Company may be eligible for pediatric-subpopulation

designation because we submitted our original request for an Orphan Drug Designation before the guidance Clarification of Orphan

Designation of Drugs and Biologics for Pediatric Subpopulations of Common Diseases was finalized in July 2018.

As a result, in May 2020,

we filed a response letter with the OOPD addressing the other deficiencies noted in the Company’s original submission in January

2018, which included, among other things (1) support for the prevalence of pediatric ulcerative colitis;

(2) our scientific rationale

for the specific animal models used in our pre-clinical animal studies;

and (3) more comprehensive supporting documentation for the use

of VBX-100 in pediatric patients with ulcerative colitis.

In August 2020, we received a letter from the OOPD informing us that it was

unable to grant our request for an Orphan Drug Designation status because our VBX-100 prodrug was administered before and after colitis

was induced in our in vivo mouse studies, which resulted in the need for more scientific data to support the efficacy

of our VBX-100 prodrug in a treatment-only setting.

As a result, we were advised to perform a second in vivo mouse study

in which our VBX-100 prodrug would be administered only after colitis was induced in order to provide a clear indication that the active

drug was released only after ulcerative colitis was present.

In May 2021, we completed the treatment-only in vivo mouse

study and filed a supplemental response letter with the OOPD providing the requested in vivo treatment-only mouse study

results in support of our position that VBX-100 may be effective as a treatment for pediatric ulcerative colitis.

On August 9, 2021, we

received a letter from the OOPD stating that we have been granted Orphan Drug Designation for our glycosylated cannabinoid VBX-100 for

the treatment of pediatric ulcerative colitis.

Drug Designation

January 2018, we filed a request with the FDA’s Office of Orphan Products Development (OOPD) for an Orphan Drug Designation of

our VBX-100 prodrug for the treatment of pediatric ulcerative colitis.

In March 2018, the OOPD denied our request based, in part, on

the FDA’s decision to no longer grant Orphan Drug Designation status to drugs for pediatric subpopulations of common diseases (i.e.,

diseases or conditions with an overall prevalence of over 200,000), unless the use of the drug in the pediatric subpopulation meets the

regulatory criteria for an orphan subset, or the disease in the pediatric subpopulation is considered a different disease from the disease

in the adult population.

December 2019, we received a letter from the OOPD informing us that

the FDA determined that the Company may be eligible for pediatric-subpopulation designation because we submitted our original request

for an Orphan Drug Designation before the guidance Clarification of Orphan Designation of Drugs and Biologics for Pediatric Subpopulations

of Common Diseases was finalized in July 2018.

in May 2020, we filed a response letter with the OOPD addressing the

other deficiencies noted in the Company’s original submission in January 2018, which included, among other things (1) support for

the prevalence of pediatric ulcerative colitis;

(2) our scientific rationale for the specific animal models used in our pre-clinical

animal studies;

and (3) more comprehensive supporting documentation for the use of VBX-100 in pediatric patients with ulcerative colitis.

In August 2020, we received a letter from the OOPD informing us that it was unable to grant our request for an Orphan Drug Designation

status because our VBX-100 prodrug was administered before and after colitis was induced in our in vivo mouse studies, which resulted

in the need for more scientific data to support the efficacy of our VBX-100 prodrug in a treatment-only setting.

As a result, we were

advised to perform a second in vivo mouse study in which our VBX-100 prodrug would be administered only after colitis was induced

in order to provide a clear indication that the active drug was released only after ulcerative colitis was present.

In May 2021, we completed

the treatment-only in vivo mouse study and filed a supplemental response letter with the OOPD providing the requested in vivo

treatment-only mouse study results in support of our position that VBX-100 may be effective as a treatment for pediatric ulcerative

August 9, 2021, we received a letter from the OOPD stating that we have been granted Orphan Drug Designation for our glycosylated cannabinoid

VBX-100 for the treatment of pediatric ulcerative colitis.

The Company is currently evaluating several regulatory pathways for the

advancement of its VBX-100 prodrug through pre-clinical and clinical studies, including leveraging the benefits of the Orphan Drug Designation

granted by the OOPD.

Daedalus Ecosciences

Daedalus Ecosciences is focused

on new innovations addressing the health and wellness of the planet, with a particular focus on deploying technological innovations and

eco-friendly solutions to remedy difficult environmental situations in economically challenged communities.

The Company is actively evaluating

a number of attractive investment opportunities intended to advance this mission with a particular focus on investments that advance

environmental, social and governance principles.

of Operations

Months Ended June 30, 2021 and June 30, 2020

net loss during the three months ended June 30, 2021 was $612,235 compared to a net loss of $740,238 for the three months ended June

We had no revenue from continuing operations during either the 2021 or 2020 period.

the three months ended June 30, 2021, we incurred general and administrative expenses in the aggregate amount of $514,437, compared to

$573,253 incurred during the three months ended June 30, 2020 (a decrease of $58,816).

Months Ended September 30, 2021 and September 30, 2020

net loss during the three months ended September 30, 2021 was $504,358 compared to a net loss of $472,932 for the three months ended

September 30, 2020.

We had no revenue during either the 2021 or 2020 period.

the three months ended September 30, 2021, we incurred general and administrative expenses in the aggregate amount of $436,523 compared

to $374,290 incurred during the three months ended September 30, 2020 (an increase of $62,233).

General and administrative expenses generally

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costs and travel expenses.

The majority of the decrease in general and administrative costs in the period relates to stock-based compensation

which decreased to $39,456 in the period ending June 30, 2021, as compared to $108,122 in the period ending June 30, 2020, and audit

fees, which decreased to $17,000 in the period ending June 30, 2021, as compared to $47,062 in the period ending June 30, 2020, offset

by an increase in legal fees, which increased to $99,919 in the period ending June 30, 2021, as compared to $39,757 in the period ending

June 30, 2020.

addition, during the three months ended June 30, 2021, we incurred research and development costs of $97,812, compared to $167,464 during

the three months ended June 30, 2020 (a decrease of $69,652).

This decrease resulted from a decrease in wages related to research and

development, which decreased to $48,443 in the period ending June 30, 2021, as compared to $82,604 in the period ending June 30, 2020.

the three months ended June 30, 2021, we recorded total net other income in the amount of $14, compared to total net other income recorded

during the three months ended June 30, 2020 in the amount of $479, all of which represented interest income.

resulted in a net loss of $612,235 during the three months ended June 30, 2021 compared to a net loss of $740,238 during the three months

ended June 30, 2020.

The majority of the increase in general and administrative costs in the period relates to legal fees, which

increased to $122,079 in the period ending September 30, 2021, as compared to $40,828 in the period ending September 30, 2020 (primarily

as a result of the preparation of the equity line documents and accompanying registration statement on Form S-1 filed with the Securities

and Exchange Commission as well as legal fees related to our corporate restructuring), offset by a decrease in stock-based compensation

which decreased to $0 in the period ending September 30, 2021, as compared to $91,059 in the period ending September 30, 2020.

addition, during the three months ended September 30, 2021, we incurred research and development costs of $67,838, compared to $98,829

during the three months ended September 30, 2020 (a decrease of $30,991).

The majority of this decrease resulted from a reduction in

stock-based compensation which decreased to $0 in the period ending September 30, 2021, as compared to $21,250 in the period ending September

the three months ended September 30, 2021, we recorded total net other income in the amount of $3, compared to total net other income

recorded during the three months ended September 30, 2020 in the amount of $187, all of which related to interest income in both periods.

resulted in a net loss of $504,358 during the three months ended September 30, 2021 compared to a net loss of $472,932 during the three

months ended September 30, 2020.

Months Ended September 30, 2021 and September 30, 2020

net loss during the six months ended September 30, 2021 was $1,116,593 compared to a net loss of $1,213,170 for the six months ended

September 30, 2020.

We had no revenue during either the 2021 or 2020 period.

the six months ended September 30, 2021, we incurred general and administrative expenses in the aggregate amount of $950,960 compared

to $947,543 incurred during the six months ended September 30, 2020 (an increase of $3,417).

General and administrative expenses generally

include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, marketing, consulting

costs and travel expenses.

We incurred professional fees of $197,500 during the six months ending September 30, 2021, compared to $120,000

during the six months ending September 30, 2020 and legal fees of $221,998 during the six months ending September 30, 2021, compared

to $80,585 during the six months ending September 30, 2020 (the increase as a result of the preparation of the equity line documents

and accompanying registration statement on Form S-1 filed with the Securities and Exchange Commission as well as legal fees related to

our corporate restructuring and proxy statement).

These expenses were offset by costs in the period related to stock-based compensation

which decreased to $39,456 in the six months ending September 30, 2021, as compared to $199,181 in the period ending September 30, 2020.

addition, during the six months ended September 30, 2021, we incurred research and development costs of $165,650, compared to $266,293

during the six months ended September 30, 2020 (a decrease of $100,643).

The majority of this decrease resulted from a reduction in wages

which decreased to $96,885 in the period ending September 30, 2021, as compared to $141,360 in the period ending September 30, 2020,

and a reduction in stock-based compensation which decreased to $7,083 in the period ending September 30, 2021, as compared to $38,055

in the period ending September 30, 2020.

the six months ended September 30, 2021, we recorded total net other income in the amount of $17, compared to total net other income

recorded during the six months ended September 30, 2020 in the amount of $666, all of which related to interest income during both periods.

and Capital Resources

have incurred losses since inception resulting in an accumulated deficit of $48,039,944 as of June 30, 2021, and further losses are anticipated

in the development of our business.

of June 30, 2021, we had total current assets of $331,138.

Our total current assets as of June 30, 2021 were comprised primarily of cash

in the amount of $321,436.

Our total current liabilities as of June 30, 2021 were $33,440, represented entirely by a lease payment attributable

to our wholly-owned subsidiary, The Control Center, Inc., which was dissolved in May 2021, and for which Vitality Biopharma, Inc.

is not responsible.

As a result, on June 30, 2021, we had working capital of $297,698.

We had no long-term liabilities as of June 30,

have incurred losses since inception resulting in an accumulated deficit of $48,544,302 as of September 30, 2021, and further losses

are anticipated in the development of our business.

As of September 30, 2021, we

had total current assets of $57,425 which were comprised exclusively of cash.

Our total current liabilities as of September

30, 2021 were $155,671, which included a lease obligation of $33,440 attributable to a now dissolved wholly-owned subsidiary for

which the Company is not responsible.

As a result, on September 30, 2021, we had negative working capital of $(98,246).

no long-term liabilities as of September 30, 2021.

do not expect to generate any revenue in the near term.

We currently have no commitments for any future funding.

As of June 30, 2021,

we had cash in the amount of $321,436.

Based on our current corporate strategy, our total expenditures for the 12 months

following June 30, 2021, are expected to be approximately $1,500,000, which is comprised of research and development and general

following September 30, 2021 are expected to be approximately $2,000,000, which is comprised of research and development and general

operating expenses.

Based on our cash balance of $321,436 on June 30, 2021, and our estimated total expenditures of approximately $1,500,000

for the 12-month period ending June 30, 2022, we do not expect to have sufficient funds to operate our business over the next 12

Furthermore, our estimate of total expenditures could increase if we encounter unanticipated difficulties.

In addition, our estimates

of the amount of cash necessary to fund our business may prove to be too low, and we could spend our available financial resources much

faster than we currently expect.

If we cannot raise the capital necessary to continue to develop our business, we will be forced to delay,

scale back or eliminate some or all of our proposed operations.

If any of these were to occur, there is a substantial risk that our business

inception, we have primarily funded our operations through equity and debt financings.

We expect to continue to fund our operations primarily

through equity and debt financings in the foreseeable future.

However, sources of additional funds may not be available when needed,

on acceptable terms, or at all.

If we issue equity or convertible debt securities to raise additional

funds, our existing stockholders may experience substantial dilution, and the new equity or debt securities may have rights, preferences

and privileges senior to those of our existing stockholders.

If we incur additional debt, it may increase our leverage relative to our

earnings or to our equity capitalization, requiring us to pay additional interest expenses.

Obtaining commercial loans, assuming those

loans would be available, 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 and which could result in our receipt of only a portion of any revenue that may be generated from a partnered product

Moreover, regardless of the manner in which we seek to raise capital, we may incur substantial costs in those pursuits,

including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other related costs.

Based on our cash balance of $57,425 and the availability of $4,881,000 under our $5,000,000 equity line as of

September 30, 2021, and our estimated total expenditures of approximately $2,000,000 for the 12-month period ending September

30, 2022, we expect to have sufficient funds to operate our business over the next 12 months.

We are also actively seeking additional

financing and other sources of capital to fund our planned future operations at a lower cost of capital, including through a revolving

line of credit with a financial institution.

estimated total expenditures for the 12-month period ending September

30, 2022 could increase if we encounter unanticipated expenses in connection with operating our business as presently planned.

In addition, our estimates of the amount of cash necessary to fund our business may prove to be too low, and we could spend our available

financial resources much faster than we currently expect.

If we cannot raise the capital necessary to continue to develop our business,

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

If any of these were to occur, there is a

substantial risk that our business would fail.

inception, we have primarily funded our operations through equity and debt financings, and expect to continue to do so for

the foreseeable future.

However, additional funds may not be available when needed, on acceptable terms, or at all.

If we issue equity

or convertible debt securities to raise additional funds, our existing stockholders may

experience substantial dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of

our existing stockholders.

If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization,

requiring us to incur additional interest expense.

Obtaining commercial loans, assuming those loans are available,

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 and

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

regardless of the manner in which we seek to raise capital, we may incur substantial costs in those pursuits, including investment banking

fees, legal fees, accounting fees, printing and distribution expenses and other related costs.

Cash Used in Operating Activities

have not generated positive cash flows from operating activities.

For the three months ended June 30, 2021, net cash used in operating

activities-continuing operations was $562,701 compared to net cash used in operating activities-continuing operations of $719,276 for

the three months ended June 30, 2020.

This decrease was primarily attributable to a decrease in accounts payable, partially offset by

a decrease in the expenses recorded for stock-based compensation related to stock options.

Net cash used in operating activities-continuing

operations during the three months ended June 30, 2021 consisted primarily of a net loss of $612,235, offset by $46,539 related to stock-based

compensation.

Net cash used in operating activities-continuing operations during the three months ended June 30, 2020 consisted primarily

For the six months ended September 30, 2021, net cash used in operating

activities was $945,712 compared to net cash used in operating activities of $1,134,773 for the six months ended September 30, 2020.

This decrease was primarily attributable to an increase in accounts payable, partially offset by a decrease in the expenses recorded

for stock-based compensation related to stock options.

Net cash used in operating activities during the six months ended September 30,

2021 consisted primarily of a net loss of $1,116,593, offset by $46,539 related to stock-based compensation and $122,231 related to an

increase in accounts payable.

Net cash used in operating activities during the six months ended September 30, 2020 consisted primarily

of a net loss of $1,213,170, and a decrease in accounts payable of $160,326 offset by $237,237 related to stock-based compensation.

Cash Used in Investing Activities

the three months ended June 30, 2021 and June 30, 2020, no net cash was used in or provided by investing activities.

the six months ended September 30, 2021 and September 30, 2020, no net cash was used in or provided by investing activities.

Cash Provided By Financing Activities

the three months ended June 30, 2020, net cash provided from financing activities was $96,988, from the issuance of a note payable.

During the three months ended June 30, 2021, no net cash was used in or provided by financing activities.

the six months ended September 30, 2021, net cash provided from financing activities was $119,000, compared to net cash provided by financing

activities of $96,988 during the six months ended September 30, 2020.

The cash provided during the 2021 period was a result of the issuance

of common stock and warrants under an equity line and during the 2020 period, a result of the issuance of a note payable.

Sheet Arrangements

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and recognized as compensation expense on a 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.

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

11 unchanged sentences

fair value of the award, and is recognized as expense over the requisite service period.

In June 2021, the Company’s

Board of Directors approved the Company’s 2021 Stock Incentive Plan (the “2021 Plan”) and reserved 10,000,000 shares

of the Company’s common stock for issuance pursuant to the 2021 Plan.

The shareholders of the Company approved the 2021 Plan on

August 12, 2021, at the Company’s annual stockholder meeting.

All of the outstanding options as of June 30, 2021, were issued under

the Company’s 2012 Stock Incentive Plan, which will expire on February 3, 2022.

June 2021, the Company’s Board of Directors approved the Company’s 2021 Stock Incentive Plan (the “2021 Plan”)

and reserved 10,000,000 shares of the Company’s common stock for issuance pursuant to the 2021 Plan.

The shareholders of the Company

approved the 2021 Plan on August 12, 2021, at the Company’s annual stockholder meeting.

All of the outstanding options as of September

30, 2021, were issued under the Company’s 2012 Stock Incentive Plan, which will expire on February 3, 2022.

Accounting Pronouncements

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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 2. Management’s Discussion and Analysis