What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-15 · 215 added, 218 removed, 145 unchanged (75% of the section changed)

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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, 2021 filed on May 19, 2021, and the related audited financial statements and notes included therein.

reports filed with the Securities and Exchange Commission (the “SEC”), including our Transition Report on Form 10-KT for

the nine months ended December 31, 2021 filed on March 31, 2022, 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

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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 May

and the other risks described under the heading “Risk Factors” in our Transition Report on Form 10-KT filed with the SEC

on March 31, 2022.

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

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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,

to “Vitality Biopharma, Inc.” On October 1, 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:

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.

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 through an Environmental, Social and Governance (“ESG”) business strategy, with a particular focus on deploying technological

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

corporate headquarters is located in Cleveland, Ohio.

As of March 31, 2022, 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 experienced resources to advance our corporate objectives while maintaining a relatively lower overhead cost structure.

Biosciences, Inc.

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 patents and 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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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 2 nd half of calendar year 2022, subject to the Company securing sufficient additional funding or entering into

a strategic 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 U.S.

Food and Drug Administration (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 a 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 compounds.

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

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 utilizing this

proprietary technology.

light of our limited financial resources and the significant capital and human resources needed to advance our drug development program

to a revenue-generating stage, we have determined that the value of our cannaboside prodrug assets would likely be maximized through

a strategic transaction such as (i) a spin-off of our Graphium Biosciences subsidiary into a new publicly-traded company infused with

sufficient funding to advance its drug development program, or (ii) a sale of Graphium Biosciences or its drug development assets to

a biotech partner with the resources necessary to advance our drug development program.

The Company is actively exploring both strategic

alternatives for its drug development assets to maximize shareholder value.

Drug Designation

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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

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 colitis.

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.

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

Ecosciences is focused on creating shareholder value by addressing the health and wellness of the planet through an ESG-focused business

strategy, with a particular focus on deploying technological innovations and eco-friendly solutions to remedy difficult environmental

situations in economically challenged communities.

ESG business strategy is based on the foundational principle that sustainability and value creation are interconnected.

Rather than evaluating

the merits of an opportunity based solely on the short-term direct profitability of a proposed business initiative, sustainable business

practice takes a holistic approach and considers the environmental, social and financial impacts of that initiative on a wide range of

stakeholders, including shareholders, the environment and local communities.

We believe that a strong ESG proposition, properly capitalized,

will help us expand into and create value in new environmentally-focused markets.

We also believe that a robust ESG business model can

enhance our investment returns by allocating capital to more promising and more sustainable opportunities.

stronger external-value proposition may enable the Company to achieve greater strategic freedom.

Given that certain of the ESG business

initiatives under consideration may require governmental approvals or support, we believe that a focus on ESG core principles can ease

regulatory pressures and help reduce the Company’s risk of adverse government action.

We also believe that a strong ESG proposition

can help us attract and retain quality employees, enhance employee motivation by instilling a sense of purpose, and increase productivity

Company will require additional capital to successfully pursue its ESG business strategy.

While we believe there are an increasing number

of sources of financing available for ESG initiatives, there can be no assurance that the Company will successfully raise the needed

We believe that a commitment to ESG business principles will allow us to generate strong financial returns for shareholders

while also creating long-term environmental and social benefits.

we intend to focus our ESG business strategy on acquiring and developing businesses we believe have potential to conserve, protect and

re-purpose the natural environment in those areas in the U.S.

that have been negatively impacted by mining.

Our business development

strategy will initially focus on the following areas:

treatment and remediation

footprint reduction

usage and conservation

and disposal practices

products, technologies, and infrastructure

with the U.S.

Environmental Protection Agency (EPA) and other environmental regulatory bodies

may also build, invest in or acquire companies that use blockchain, or distributed ledger technology, to account for and verify voluntary-market

carbon credits generated by increased usage of renewable resources or the decreased usage of non-renewable resources to enable a more

efficient and transparent global market for carbon credits.

This may include companies (i) developing innovative products or solutions

to reduce or mitigate carbon emissions;

(ii) developing technologies that drive blockchain registry of credits or tokens;

(iii) issuing

tokens based on registry of carbon credits;

and (iv) developing exchange facilities for carbon credits.

believe that the Company is well-positioned from a managerial and operational perspective to pursue these business initiatives given

the experience of management in connection with other ventures successfully developing and executing various reclamation and remediation

programs at coal mines in Appalachia and creating profitable next-generation eco-friendly initiatives and stable jobs in local communities

previously reliant primarily on the highly cyclical coal mining industry.

March 2022, the Company entered into a non-binding letter of intent with the owners of Range Environmental Resources, Inc.

a West Virginia-based environmental services company operating throughout Appalachia, to purchase 80% of their shares in Range, a company

primarily focused on the reclamation of former coal mines, the remediation of non-compliant streams and waterways, and the reimagination

of challenging environmental situations into next generation industries and job-creating commercial activities.

In addition to this proposed

transaction, Company management is actively pursuing a number of other ESG-focused investment opportunities to advance this mission with

a particular focus on some of the most challenging environmental situations in disadvantaged communities.

of Operations

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

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

costs and travel expenses.

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).

Months Ended March 31, 2022 and March 31, 2021

net loss during the three months ended March 31, 2022 was $447,974 compared to a net loss of $360,631 for the three months ended March

We had no revenue from continuing operations during either the 2022 or 2021 period.

the three months ended March 31, 2022, we incurred general and administrative expenses in the aggregate amount of $317,941, compared

to $586,670 incurred during the three months ended March 31, 2021 (a decrease of $268,729).

General and administrative expenses generally

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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.

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

which decreased to $0 in the period ending March 31, 2022, as compared to $112,310 in the period ending March 31, 2021, expense related

to directors and officers insurance, which decreased to $120,390 during the period ending March 31, 2022, from $219,125 during the 2021

period (a decrease of $98,735), and legal fees, which decreased to $3,746 in the period ending March 31, 2022, as compared to $81,476

in the period ending March 31, 2021 (a decrease of $77,730).

addition, during the three months ended March 31, 2022, we incurred research and development costs of $125,730, compared to $70,637

during the three months ended March 31, 2021 (an increase of $55,093).

This increase resulted from an increase in wages related to research

and development, which increased to $84,311 in the period ending March 31, 2022, as compared to $48,919 in the period ending March 31,

2021 (an increase of $35,392), and legal fees, which increased to $31,617 during the three months ended March 31, 2022, from $0 during

the three months ended March 31, 2021.

the three months ended March 31, 2022, we recorded total net other expense in the amount of $4,303, compared to total net other income

recorded during the three months ended March 31, 2021, in the amount of $296,676.

This difference was primarily attributable to the gain

on extinguishment of liabilities of $296,653 recorded during the three months ended March 31, 2021.

increase in net loss attributable to common stockholders during the three months ended March 31, 2022 compared to the three months ended

March 31, 2021 in an amount equal to $87,343 is primarily due to the recognition of gains on the extinguishment of liabilities

in the amount of $296,676 during the three months ended March 31, 2021, compared to no gains recognized during the three months ended

March 31, 2022, offset by (i) a $268,729 decrease in general and administrative expenses during the three months ended March 31, 2022

compared to the three months ending March 31, 2021, and (ii) a $55,093 increase in research and development expenses during three months

ended March 31, 2022, compared to the three months ended March 31, 2021.

and Capital Resources

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.

have incurred losses since inception resulting in an accumulated deficit of $49,588,652 as of March 31, 2022, and further losses are

anticipated in the development of our business.

of March 31, 2022, we had total current assets of $45,046.

Our total current assets as of March 31, 2022 were comprised of cash in the

amount of $44,162 and prepaid expenses in the amount of $884.

Our total current liabilities as of March 31, 2022 were $883,553, represented

by $750,000 due under a revolving credit line and accounts payable of $133,553 including a $33,440 lease payment attributable to our

now-dissolved wholly-owned subsidiary, The Control Center, Inc., for which Malachite Innovations, Inc.

is not responsible.

on March 31, 2022, we had negative working capital of $838,507.

We had no long-term liabilities as of March 31, 2022.

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

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

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 $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.

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

months following March 31, 2022 are expected to be approximately $1,800,000, which is comprised of general operating and research

and development expenses.

Based on our cash balance of $44,162, the availability of $4,830,050 under our $5,000,000 equity financing

line and $250,000 available under our revolving credit line as of March 31, 2022, and our estimated total expenditures of

approximately $1,800,000 for the 12-month period ending March 31, 2023, we expect to have sufficient funds to operate our business

over the next 12 months.

We also expect to obtain additional financing and other sources of capital to fund our planned

future operations.

estimated total expenditures for the 12-month period ending March 31, 2023 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

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.

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 or to fund, in whole or in part, acquisitions in furtherance of our business strategy, 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 glycosylated cannabinoid technology or other intellectual property and could

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

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.

Cash Used in Operating Activities

have not generated positive cash flows from operating activities.

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.

For the three months ended March 31, 2022, net cash used in operating

activities was $394,181 compared to net cash used in operating activities of $557,334 for the three months ended March 31, 2021.

decrease was primarily attributable to a gain on extinguishment of liabilities of $296,653 recognized during the three months ended March

31, 2021, and 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 three months ended March 31, 2022 consisted primarily of a net loss

of $447,974, offset by an increase in accounts payable of $50,993.

Net cash used in operating activities during the three months ended

March 31, 2021 consisted primarily of a net loss of $360,631, and a gain on extinguishment of liabilities of $296,653, partially offset

by $112,310 related to stock-based compensation.

Cash Used in Investing Activities

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

the three months ended March 31, 2022 and March 31, 2021, no net cash was used in or provided by investing activities.

Cash 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.

the three months ended March 31, 2022, net cash provided from financing activities was $400,000, from a revolving credit line.

the three months ended March 31, 2021, no net cash was used in or provided by financing activities.

Sheet Arrangements

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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.

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

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 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.

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.

The Company issues stock options and warrants, shares of common stock, and equity interests as share-based

compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance with FASB

ASC 718, Compensation – Stock Compensation.

Stock-based compensation cost is measured at the grant date, based on the estimated

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

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.

estimates and assumption by management include, among others, assumptions used in valuing assets acquired in business acquisitions, reserves

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

assets, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity.

Actual results

could differ from those estimates.

Company periodically issues stock options and restricted stock awards 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 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.

Company’s revenue recognition policies will follow the guidance of Accounting Standards Codification (ASC) 606, Revenue from

Contracts with Customers .

ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms

of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations

in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance

obligations, and (5) recognizing revenue as each performance obligation is satisfied.

Accounting Pronouncements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis