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Item 1. Financial Statements

2022-10-12 compared with 2022-05-10 · 424 added, 132 removed, 223 unchanged (71% of the section changed)

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FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2022 AND 2021

CONSOLIDATED UNAUDITED BALANCE SHEETS AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

CONSOLIDATED UNAUDITED BALANCE SHEETS AS OF JUNE 30, 2022 AND DECEMBER 31, 2021

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

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Cash and cash equivalents

Accounts receivable

Unbilled receivables

Due from shareholder

Prepaid expenses

Total current assets

Liabilities and Stockholders’ Deficit

Long-term Assets

Operating lease asset

Equipment, net of accumulated depreciation

Total long-term assets

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities

Accounts payable and accrued liabilities

Current portion of long-term debt

Line of credit

Total current liabilities

Long-term Debt

Long-term debt, net of current portion

Operating lease liability

Notes payable

Total long-term debt

Total liabilities

Stockholders’ Deficit

Stockholders’ Equity (Deficit)

Common stock, par value $ 0.001 per share;

1,000,000,000 shares authorized;

51,450,147 shares issued and outstanding

76,450,147 and 51,450,147 shares issued and outstanding, as of 6/30/22 and 12/31/21, respectively

Additional paid-in-capital

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( 49,140,678 )

Total stockholders’ deficit

Total Liabilities and Stockholders’ Deficit

Total stockholders’ equity (deficit)

Total Liabilities and Stockholders’ Equity (Deficit)

accompanying notes to the consolidated financial statements.

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STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Cost of services

Operating expenses:

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Loss from operations

Other income (expenses)

( 1,270,084 )

Other income (expense):

Gain on extinguishment of liabilities

Interest income

Interest expense

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$ ( 612,235 )

$ ( 891,160 )

$ ( 972,866 )

Basic and diluted loss per common share

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STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

MONTHS ENDED MARCH 31, 2022 AND 2021

Three months ended March 31, 2022 (Unaudited)

Three months ended June 30, 2022

Number of shares

Paid-in Capital

Additional Paid-in Capital

Accumulated Deficit

Balance – December 31, 2021

Balance as of March 31, 2022

$ ( 49,588,652 )

$ ( 829,615 )

Balance as of March 31, 2022 (Unaudited)

Shares issued for cash

Shares issued in exchange for Range

Balance as of June 30, 2022

$ ( 50,031,838 )

Three months ended June 30, 2021

Number of shares

Additional Paid-in Capital

Accumulated Deficit

Balance as of March 31, 2021

$ ( 47,427,709 )

Three months ended March 31, 2021 (Unaudited)

Cancellation of common shares

Fair value of vested stock options

Balance as of June 30, 2021

$ ( 48,039,944 )

Six months ended June 30, 2022

Number of shares

Paid-in Capital

Additional Paid-in Capital

Accumulated Deficit

Balance – December 31, 2020

Balance as of December 31, 2021

$ ( 49,140,678 )

$ ( 381,641 )

Shares issued for cash

Shares issued in exchange for Range

Balance as of June 30, 2022

$ ( 50,031,838 )

Six months ended June 30, 2021

Number of shares

Additional Paid-in Capital

Accumulated Deficit

Balance as of December 31, 2020

$ ( 47,067,078 )

Cancellation of common shares

Fair value of vested stock options

Balance as of March 31, 2021 (Unaudited)

Balance as of June 30, 2021

$ ( 48,039,944 )

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STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Changes in operating assets and liabilities:

Prepaid expense and other current assets

Accounts receivable

Unbilled receivables

Interest accrued but not paid

Due from shareholder

Prepaid expense

Accounts payable and accrued liabilities

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Net cash used in operating activities

( 1,120,035 )

Cash flows from investing activities:

Cash acquired in acquisition of Range Environmental Resources

Equipment purchases

( 1,107,833 )

Cash paid for acquisition of Range Environmental Resources

Net cash used in investing activities

( 1,842,006 )

Cash flows from financing activities:

Issuance of shares for cash

Proceeds from long-term debt

Proceeds from line of credit

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Net increase (decrease) in cash

( 1,120,035 )

Cash and cash equivalents - beginning of period

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Cash paid during the period for:

Stock issued for acquisition

accompanying notes to the consolidated financial statements.

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TO CONSOLIDATED FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2022 AND 2021

AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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changed its name to Stevia First Corp.

and pursued a new strategy focused on developing stevia-based additives for the food and

beverage industry.

and pursued a new strategy focused on developing stevia-based additives for the food and beverage

In 2015, the Company changed its name to Vitality Biopharma, Inc.

and pursued a new strategy focused on developing

cannabinoid-based prodrugs anticipated to treat inflammatory conditions of the gastrointestinal tract by unlocking the therapeutic properties

of cannabinoids but without their unwanted psychoactive side effects.

and pursued a new strategy focused on developing cannabinoid-based

prodrugs anticipated to treat inflammatory conditions of the gastrointestinal tract by unlocking the therapeutic properties of cannabinoids

but without their unwanted psychoactive side effects.

October 2021, the Company changed its name to Malachite Innovation, Inc.

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difficult environmental situations in economically challenged communities.

May 2022, Daedalus acquired Range Environmental Resources, Inc., a West Virginia corporation (“Range Environmental”) and

Range Natural Resources, Inc., a West Virginia corporation (“Range Natural” and together with Range Environmental, the

“Range Entities”).

The Range Entities provide land reclamation, water restoration and environmental consulting services

to mining and non-mining customers throughout the Appalachian region with the goal of returning land to pre-mining conditions or

repurpose the land for natural, commercial, agricultural or recreational use.

The Range Entities’ water restoration services

seek to improve rivers, streams and discharges through novel and innovative treatment applications to help customers meet their

various regulatory standards and requirements.

The Range Entities also provide environmental consulting services to customers

typically in connection with land reclamation and water restoration projects and as an additional value-add service, sells

water treatment chemicals manufactured by third parties to their customers.

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 March 31, 2022, the Company incurred a net loss of $ 447,974 and used $ 394,181 of cash in our operating activities.

As reflected in the accompanying financial statements, during the six

months ended June 30, 2022, the Company incurred a net loss of $ 891,160 and used $ 845,068 of cash in our operating activities.

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

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

We estimate as of March

31, 2022, we had sufficient funds to operate the business for 15 months as $250,000 of our $1,000,000 revolving line of credit secured

in December 2021 was then available and $4,830,050 of the $5,000,000 equity financing line secured in August 2021 with an institutional

investor was available via equity issuances through December 31, 2022.

Although our existing cash balances and the availability

of funds under our equity financing line are estimated to be sufficient to fund our currently planned level of operations, we are actively

seeking additional financing and other sources of capital to fund our planned future operations at a lower cost of capital.

We estimate as of June 30, 2022, we had sufficient funds to operate the business for 18 months given our cash balance of $ 1,866,289 ,

line of credit availability of $ 150,000 , the availability of $4,830,050 under our $5,000,000 equity financing line via an executed securities

purchase agreement, and revenues being generated by the Range Entities .

Although our existing cash balances are estimated to be sufficient

to fund our currently planned level of operations, we are actively seeking additional financing and other sources of capital to accelerate

the funding and execution of our growth strategy and value creation plan.

However, these estimates could differ if we encounter unanticipated

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

We do not presently 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

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 near

term, with longer-term funding expected to come from revenue and profits from the anticipated ESG operations of our Daedalus Ecosciences

Based on the availability of the equity financing line and additional financing available under our revolving

credit facility, the Company believes it will have enough funds to ensure continuing operations as a stand-alone entity for a period

of at least one year from the issuance of these consolidated financial statements.

However, 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.

of Presentation

consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Graphium Biosciences, Inc.,

Daedalus Ecosciences, Inc., and Vitality Healthtech, Inc.

(dissolved in May 2021), and have been prepared in accordance with accounting

principles generally accepted in the United States of America.

consolidated financial statements include the accounts of the Company and its wholly owned direct subsidiaries, Graphium

Biosciences, Inc., Daedalus Ecosciences, Inc., and Vitality Healthtech, Inc.

(dissolved in May 2021), and its wholly-owned indirect

subsidiaries, Range Environmental Resources, Inc.

and Range Natural Resources, Inc., 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.

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Actual results could differ from those estimates.

Company applies the following standards and recognizes revenue when (1) services have been provided pursuant to an agreed-upon equipment

and labor hourly rate sheet or a fixed amount for a project, (2) products have been shipped to and accepted by the customer, and (3)

amounts are reasonably assured of collection, including the consideration of the customer’s ability and intention to pay when the

amount is due.

The Company primarily invoices customers and recognizes revenue on a periodic basis for equipment and labor hours provided

to a customer on a particular job based on an agreed-upon hourly rate sheet or a fixed amount for a project.

The Company also invoices

customers and recognizes revenue for equipment mobilization fees and materials and supplies required to complete a project.

invoices for the sales of chemicals and recognizes revenue when the products are delivered to the customer’s designated site.

for equipment, labor and chemicals are generally expensed as incurred since the projects are generally short-term and not subject to

Company’s performance obligations are satisfied at the point in time when the services are performed or when products are received

by the customer, which is when the customer has title and the significant risks and rewards of ownership.

and Cash Equivalents

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

accounts receivable are stated at the amount management expects to collect from the balances outstanding at the end of each fiscal period

reflected in the consolidated balance sheets.

Based on management’s assessment, it has concluded that losses on balances outstanding

as of those dates will be immaterial and, therefore, no allowances were recorded for the three or six months ended June 30, 2022 or June

is carried at cost.

Expenditures for maintenance and repairs are charged to cost of services.

Additions and betterments are capitalized.

The cost and related accumulated depreciation of equipment sold or otherwise disposed of are removed from the accounts and any gain or

loss is reflected in the current year’s earnings.

June 30, 2022

December 31, 2021

Depreciation expense

Company provides for depreciation of equipment using the straight-line method for both financial reporting and federal income tax purposes

over the estimated six-year useful lives of the equipment.

Company assesses the recoverability of its property, plant, and equipment by determining whether the depreciation of the assets over

their remaining lives can be recovered through projected future cash flows generated by the assets.

There were no assets identified for

Value of Financial Instruments

ASC 825 “Financial Instruments” requires that the Company disclose estimated fair values of financial instruments.

instruments held by the Company include, among others, accounts receivable, accounts payable and long-term debt.

The carrying amounts

reported in the balance sheets for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.

ASC 842 “Leases” requires the Company to determine 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.

Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present

value of unpaid lease payments.

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

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

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 March 31, 2022.

The laboratory space lease in Rocklin, California was renewed in March 2022 and ends on March 31, 2023.

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 Company accounts for such grants issued and vesting based on FASB 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 Consolidated Statements of Operations

with classification depending on the nature of the services rendered.

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

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as their inclusion would be anti-dilutive:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

March 31, 2022

SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

June 30, 2022

December 31, 2021

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costs are expensed as incurred.

Value of Financial Instruments

ASC 825, “Financial Instruments” requires that the Company disclose estimated fair values of financial instruments.

instruments held by the Company include, among others, accounts payable.

The carrying amounts reported in the balance sheets for assets

and liabilities qualifying as financial instruments are a reasonable estimate of fair value.

of October 1, 2021, we began operating under two segments:

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

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,

accordance with FASB ASC 280 “Segment Reporting”, the Company’s chief operating decision maker has been identified

as the Chief Executive Officer of the Company, 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.

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present or future financial statements.

ACQUISITION OF RANGE ENVIRONMENTAL RESOURCES AND RANGE NATURAL RESOURCES

May 2022, the Company and its wholly-owned subsidiary, Daedalus Ecosciences, Inc., entered into a Share Purchase Agreement with Range

Environmental Resources, Inc.

(“Range Environmental”), and Range Natural Resources, Inc.

(“Range Natural”, and

collectively with Range Environmental, the “Range Entities”), and the two (2) shareholders of the Range Entities (the “Range

Shareholders”) (the “Share Purchase Agreement”), under which the Company issued a total of 10,000,000 shares of the

Company’s common stock to the Range Shareholders and Daedalus Ecosciences paid cash consideration of $ 1,000,000 to the Range Shareholders

for 80 % of the outstanding common stock of each of the Range Entities.

to entering into the Share Purchase Agreement, the Company discovered that Joshua Justice, one of the Range Shareholders

(“Justice”), made certain misrepresentations in the Share Purchase Agreement.

On July 12, 2022, the Company entered into

a Separation Agreement, by and among the Company, Daedalus Ecosciences, the Range Entities, and Justice and his spouse (the

“Separation Agreement”) pursuant

to which Justice:

a) acknowledged that his employment with the Range Entities was terminated for cause effective June 30, 2022;

returned the 5,000,000 shares of the Company’s common stock that had been issued to him under the terms of the Share Purchase

c) transferred his 10% interest in each of the Range Entities to Daedalus Ecosciences;

and d) paid Daedalus Ecosciences

cash in an amount of $250,000.

As a result, only 5,000,000 of the Company’s common stock issued to the Range Shareholders is

considered to have been issued in exchange for 90% of the outstanding common stock of each of the Range Entities .

Subsequently,

on October 11, 2022, Daedalus Ecosciences and Jeremy Starks, the other Range Shareholder (“Starks”), entered into a

share purchase agreement, effective as of May 11, 2022 (the “Starks Agreement”) pursuant to which Starks agreed to

exchange his 10 % common

stock ownership of the Range Entities for 10 % of the Cash Dividends and Sale Proceeds

(as both terms are defined in the Starks Agreement) of the Range Entities, as a result of which, the Range Entities are now wholly-owned

subsidiaries of Daedalus Ecosciences and the Range Entities are reported as wholly-owned indirect subsidiaries of the Company in the financial

statements made part of this Form 10-Q.

No other changes were made to the consideration received by Mr.

Starks as part of the Share Purchase

Agreement and he remains as President of each of the Range Entities.

Company accounted for the transaction as a business combination in accordance ASC 805 “Business Combinations”.

has performed an allocation of the purchase price paid for the assets acquired and the liabilities assumed.

The fair values of the assets

acquired are set forth below.

The allocation of the purchase price is based on management’s estimates.

OF BUSINESS ACQUISITION ALLOCATION OF PURCHASE PRICE

Fair value of assets acquired:

Accounts receivables

Property and equipment

Total assets acquired

Fair value of liabilities assumed

Purchase price

Cash consideration

Common stock consideration

Total purchase price

Acquisition transaction costs incurred

increased to $ 751,421 at June 30, 2022.

There had been no goodwill at December 31, 2021.

The increase in goodwill was driven by the addition

of the Range Entities in the quarter and represents the value of the Range Entities’ brand

reputation, customer base and employee relations .

Goodwill by reportable segment is as follows:

ESG Operations Segment:

Beginning Balance

Ending Balance

of Common Stock and Warrants

May 2022, the Company entered into two securities purchase agreements providing for the issuance and sale by the Company of (i) 20,000,000

shares of the Company’s common stock (the “Shares”) at a price of $ 0.15 per share and (ii) warrants to purchase up

to an additional 20,000,000 shares of the Company’s common stock (the “Warrants”, and the shares issuable upon exercise

of the Warrants, the “Warrant Shares”) at a price of $ 0.60 per share.

The Warrants expire on May 10, 2027.

The aggregate proceeds

to the Company from the sale of the Shares and Warrants was $ 3,000,000 .

May 2022, the Company purchased 90 % of the outstanding common stock of each of the Range Entities for a combination of Company shares

and cash, as described in Note 2.

Only 5,000,000 of the Company’s common stock issued to the Range Shareholders is considered outstanding

as of June 30, 2022, in order to reflect the effects of the Separation Agreement.

STOCK OPTIONS

summary of the Company’s stock option activity during the three months ended March 31, 2022 is as follows:

SUMMARY OF STOCK OPTION ACTIVITY

summary of the Company’s stock option activity during the six months ended June 30, 2022 is as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

Exercise Price

Balance outstanding at December 31, 2021

Balance outstanding at March 31, 2022

Balance exercisable at March 31, 2022

summary of the Company’s stock options outstanding and exercisable as of March 31, 2022 is as follows:

Balance outstanding at June 30, 2022

Balance exercisable at June 30, 2022

summary of the Company’s stock options outstanding and exercisable as of June 30, 2022 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Outstanding, March 31, 2022

Exercisable, March 31, 2022

is no remaining unamortized cost of the outstanding stock-based awards at March 31, 2022.

At March 31, 2022, the 6,752,544 outstanding

Weighted Average Exercise Price

Weighted Average Grant- date Stock Price

Options Outstanding, June 30, 2022

$ 1.50 – 1.95

$ 2.00 – 2.79

$ 3.10 – 3.80

$ 4.00 – 4.70

Options Exercisable, June 30, 2022

$ 1.50 – 1.95

$ 2.00 – 2.79

$ 3.10 – 3.80

$ 4.00 – 4.70

is no remaining unamortized cost of the outstanding stock-based awards at June 30, 2022.

At June 30, 2022, the 6,752,544 outstanding

stock options had no intrinsic value.

summary of warrants to purchase common stock during the three months ended March 31, 2022 is as follows:

SUMMARY OF WARRANTS ACTIVITY

summary of warrants to purchase common stock during the six months ended June 30, 2022 is as follows:

SCHEDULE OF WARRANTS ACTIVITY

Exercise Price

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Expired/Cancelled

Balance outstanding and exercisable at March 31, 2022

March 31, 2022, the 646,668 outstanding stock warrants had no intrinsic value.

Balance outstanding and exercisable at June 30, 2022

June 30, 2022, the 20,646,668 outstanding stock warrants had no intrinsic value.

NOTES PAYABLE

Environmental was granted a loan (the “PPP loan”) from United Bank for $ 109,435 on March 9, 2021, pursuant to the Paycheck

Protection Program (the “PPP”) under the CARES Act.

PPP loan matures on March 9, 2023 and bears interest at a rate of 1 % per annum, with the first six months of interest deferred.

August 19, 2022, Range Environmental received notice that the U.S.

Small Business Administration (“SBA”) had reviewed the

forgiveness application of Range Environmental’s PPP loan and provided forgiveness of the entire principal of the PPP loan plus

accrued interest.

June 17, 2020, Range Environmental was granted an SBA Disaster Loan in the amount of $ 150,000 with

an interest rate of 3.75 %

On September 14, 2022, the Company paid

the entire balance due on this loan of $ 162,575 ,

including $ 12,575

in accrued interest.

following notes payable are outstanding as of June 30, 2022:

OF NOTES PAYABLE

SBA Disaster Loan

Total notes payable

LINE OF CREDIT

November 2021, the Company secured a revolving line of credit with a bank with a limit of $ 1,000,000 .

The line of credit has a maturity date of November

30, 2022 , and bears interest at one percent

above the prime rate.

As of March 31, 2022, the balance due under the line of credit was $ 750,000 .

November 2021, the Company obtained an unsecured revolving line of credit with a bank with a limit of $ 1,000,000 .

The line of credit

has a maturity date of November 30, 2022 , and bears interest at one percent ( 1 % ) above the prime rate.

As of June 30, 2022, the balance

due under the line of credit was $ 850,000 .

August 2021, the Company entered into a $ 5,000,000

equity line transaction with Triton Funds, LP (“Triton”) providing for the issuance and sale by the Company to Triton of

a number of shares of the Company’s common stock having an aggregate value of up to $ 5,000,000

and warrants to purchase up to an equal number of shares of the Company’s common stock.

In its sole discretion and subject to

certain agreed upon funding conditions, the

Company may submit, from time to time, notices obligating Triton to purchase shares with a value of up to $250,000 until the

financing arrangement expires on December 31, 2022 or Triton has purchased the $5,000,000 of shares pursuant to the equity line

transaction .

As of June 30, 2022, $ 4,830,050

is available under this equity line.

GAIN ON EXTINGUISHMENT OF ADVANCE

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the nature of this payment, it had previously recorded this payment as an advance that was included in current liabilities.

31, 2021, the Company, after consultation with outside legal counsel, determined that any claim to recover that advance was time barred

31, 2021, the Company, after consultation with outside legal counsel, determined that any claim to recover that payment was time barred

by the statute of limitations and the Company recorded relief of this liability and a gain from debt extinguishment of $ 296,653 during

the three months ended March 31, 2021.

the six months ended June 30, 2021.

LONG-TERM DEBT OBLIGATIONS

debt consists of debt on vehicles and equipment, which serves as the collateral.

Interest rates range from 3.69 % to 8.99 % for 2022.

The debt matures from 2022 through 2028 .

The aggregate amount of the debt was $ 1,258,382 at June 30, 2022, $ 392,708 of which is

due within one year of June 30, 2022, and $ 865,674 is due after June 30, 2023.

summary of payments due under the long-term debt by year is as follows:

OF MATURITIES OF LONG TERM DEBT

2022 (due between 7/1/22 and 6/30/23)

2023 (due between 7/1/23 and 6/30/24)

2024 (due between 7/1/24 and 6/30/25)

2025 (due between 7/1/25 and 6/30/26)

2026 (due between 7/1/26 and 6/30/27)

2027 and later (due on or after 7/1/27)

Total long-term debt

OPERATING LEASE

Company has an operating lease agreement for one piece of equipment leased by Range Environmental Resources with a remaining lease term

of 31 months.

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

The Company accounts for the lease

and non-lease components of its lease as a single lease component.

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

FASB ASC 842, an operating lease right-of-use (“ROU”) asset and liability is recognized at commencement date based on the

present value of lease payments over the lease term.

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

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

Generally, the implicit rate of interest in

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

lease payments.

The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating

The operating lease ROU asset includes any lease payments made and excludes lease incentives.

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

OF COMPONENTS OF LEASE EXPENSE

Three and Six

June 30, 2022

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

Other Information

Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2022

Weighted average remaining lease term – operating leases (in years)

Average discount rate – operating leases

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

OF LEASES SUPPLEMENTAL BALANCE SHEET INFORMATION

At June 30, 2022

Operating leases

Long-term right-of-use asset

Short-term operating lease liability

Long-term operating lease liability

Total operating lease liabilities

of the Company’s lease liabilities are as follows:

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Year Ending December 31

Operating Lease

2022 (remaining 6 months)

Total lease payments

Imputed interest/present value discount

Present value of lease liabilities

expenses related to leases with a duration of one year or less were $ 8,620 and $ 8,213 during the three months ended June 30, 2022 and

June 30, 2021, respectively.

Lease expenses related to leases with a duration of one year or less were $ 16,870 and $ 15,720 during the

six months ended June 30, 2022 and June 30, 2021, respectively.

MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK

to the Company’s two largest customers were 91 % of total sales for the three and six months ended June 30, 2022.

receivable from the same two customers were 93 % of total accounts receivable and unbilled receivables as of June 30, 2022.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

(the “insurer”) demanding that the Company reimburse the insurer for sums advanced by the insurer to a former director of

the Company as defense costs in connection with a claim purportedly arising under a previous directors and officers insurance policy.

the Company as defense costs in connection with a claim purportedly arising under a previous director’s and officer’s 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 March 31, 2022, no contingent liability has been recorded in the Company’s

Accordingly, as of June 30, 2022, no contingent liability has been recorded in the Company’s

consolidated statements of financial condition for this matter.

SEGMENT INFORMATION

280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with

the Company’s internal organizational structure as well as information about services, categories, business segments and

major customers in financial statements.

ASC 280 “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent

with the Company’s internal organizational structure as well as information about services, categories, business segments and major

customers in financial statements.

The Company has two reportable segments that are based on the following business units:

Prodrug Operations and ESG Operations.

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:

characteristics;

Operations – research and development primarily related to the advancement of the Company’s cannabinoid-based drug development

Operations – development and operation of businesses addressing the health and wellness of people and the planet, with a particular

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

challenged communities

accordance with FASB ASC 820, 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.

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 FASB ASC 820 due to their

similar customer base and similarities in:

economic characteristics;

nature of products and services;

and procurement, manufacturing and distribution processes.

The Company operates two

reportable business segments:

Prodrug Operations – research and development primarily related to the Company’s cannabinoid pharmaceuticals

Environmental,

Social and Governance (ESG) Operations – development of 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

and procurement, manufacturing

and distribution processes.

Company had no inter-segment sales for the periods presented.

financial information concerning the Company’s reportable segments is shown as below:

SUMMARY OF REPORTABLE SEGMENT TABLE TEXT BLOCK

For the three months ended March 31, 2022

Cannabinoid Prodrug Operations

OF FINANCIAL INFORMATION OF REPORTABLE SEGMENT

For the three months ended June 30, 2022

Therapeutic Operations

Cost of services

$ ( 295,934 )

$ ( 443,186 )

Capital expenditures for long-lived assets

For the six months ended June 30, 2022

Cost of services

$ ( 597,461 )

$ ( 891,160 )

Capital expenditures for long-lived assets

For the three months ended March 31, 2021

Cannabinoid Prodrug Operations

For the three months ended June 30, 2021

Therapeutic Operations

$ ( 514,423 )

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Capital expenditures for long-lived assets

For the six months ended June 30, 2021

Therapeutic Operations

$ ( 168,449 )

$ ( 804,417 )

$ ( 972,866 )

Capital expenditures for long-lived assets

SUBSEQUENT EVENTS

April 2022, the Company drew a total of $ 100,000 on the line of credit described in Note 4 to fund ordinary course operations.

August 19, 2022, Range Environmental received notice that the SBA had reviewed the forgiveness application of Range Environmental’s

PPP loan and provided forgiveness of the entire principal of the PPP loan plus accrued interest, which totaled an amount of debt forgiveness

equal to $ 109,435 .

August 31, 2022, the Company paid the entire balance due on the unsecured bank credit line of $ 863,305 , including $ 13,305 in accrued

September 14, 2022, the Company paid the entire balance due on the SBA Disaster Loan of $ 162,575 , including $ 12,575 in accrued interest.

July 12, 2022, the Company and Daedalus Ecosciences entered into the Separation Agreement pursuant to which, among other things, Justice:

a) acknowledged that his employment with the Range Entities was terminated for cause effective June 30, 2022;

b) returned the 5,000,000

shares of the Company’s common stock that had been issued to him under the terms of the Share Purchase Agreement;

c) transferred

his 10% interest in each of the Range Entities to Daedalus Ecosciences;

and d) paid Daedalus Ecosciences cash in the amount of $250,000 .

August 26, 2022, the Company entered into a securities purchase agreement with HTGT Enterprises LLC (“HTGT”) providing

for the issuance and sale by the Company to HTGT of (i) 1,666,667

shares of the Company’s common stock (the “HTGT Shares”) at a price of $ 0.15

per share and (ii) a warrant to purchase up to an additional 1,666,667

shares of the Company’s common stock (the “HTGT Warrant”, and the shares issuable upon exercise of the Warrant,

the “HTGT Warrant Shares”) at a price of $ 0.60

After deducting for fees and expenses, the aggregate net proceeds from the sale of the HTGT Shares and the HTGT Warrant

are approximately $ 248,000 .

October 11, 2022, Daedalus Ecosciences and Starks entered into the Starks Agreement pursuant to

which Daedalus Ecosciences acquired Starks’ 10 % common

stock ownership interest in the Range Entities.

As a result of this transaction, Daedalus Ecosciences is the sole shareholder of the

Range Entities.

No other changes were made to the consideration received by Starks as part of the Share Purchase Agreement entered into on May 11, 2022,

and he remains as President of each of the Range Entities.

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

What changed 10-Q

Item 1. Financial Statements