RANGE IMPACT, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations As used in this discussion and analysis and elsewhere in this Quarterly Report, the “Company”, “we”, “us” or “our” refer to Malachite Innovations, Inc., a Nevada corporation. Cautionary Statement The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Consolidated Financial Statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including our 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. Certain statements made in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These risks and uncertainties include: general economic and financial market conditions; our ability to obtain additional financing as necessary; our ability to continue operating as a going concern; any adverse occurrence with respect to our business or; results of our research and development activities that are less positive than we expect; our ability to bring our intended products to market; market demand for our intended products; shifts in industry capacity; product development or other initiatives by our competitors; fluctuations in the availability and costs of raw materials required in our drug development process; other factors beyond our control; 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. Although we believe that the expectations and assumptions reflected in the forward-looking statements we make are reasonable, we cannot guarantee future results, levels of activity or performance. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed by any forward-looking statements. As a result, readers should not place undue reliance on any of the forward-looking statements we make in this report. Forward-looking statements speak only as of the date on which they are made. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason. Company Overview Unless 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 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.” 19 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 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. Our corporate headquarters is located in Cleveland, Ohio. As of June 30, 2022, we employed twenty-one full-time employees, including eighteen employees of the Range Entities, one cannabinoid research scientist working in our office and laboratory space in Rocklin, California, and two senior executives of the Company. 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. Graphium Biosciences, Inc. Cannaboside Prodrugs Our 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 patents and patent applications for composition of matter, method of production and method of use. A prodrug is a compound that, after administration, is metabolized into a pharmacologically active drug. Prodrugs are often designed to improve drug properties and reduce known or expected toxicities and adverse side effects. By using our proprietary enzymatic bioprocessing technologies, our clinical research team has developed a novel family of prodrugs by combining cannabinoid and glucose molecules. The resulting compounds, known as cannabosides, have unique commercial applications and patentable compositions of matter, which are separate and distinct from ordinary cannabinoids. The advantages of cannabosides may include: (i) administration in a convenient oral formulation, (ii) targeted delivery with release in the colon or large intestine, (iii) improved stability with limited degradation or drug metabolism, and (iv) delayed release enabling longer-lasting effects and fewer administrations by patients. Our proprietary glycosylation process, which results in adding one or more glucose molecules to compounds, may enable our new cannabosides to act as prodrugs that achieve targeted delivery of the bioactive compounds of cannabinoids to the gastrointestinal tract. Glycosylated compounds are generally more stable and water soluble, so upon ingestion, we believe they will remain intact and transit through the esophagus, stomach and upper intestine with limited absorption or degradation from stomach acids. However, once the glycosylated compounds reach the large intestine, we expect them to encounter glycoside hydrolase enzymes secreted by the human intestinal microbiota that will cleave the polar glucose residues and release the active cannabinoid compound primarily in the large intestine or colon. We have focused our research and development activities on the glycosylation of cannabinoids given their well-known positive effects on the human endocannabinoid system. Our research and development activities originally focused on the glycosylation of CBD and then later expanded into the glycosylation of THC. The use of the cannabinoid THC has been shown to provide substantial anti-inflammatory benefits on the human body, among other benefits, but is limited as a pharmaceutical option given its psychoactive and intoxicating properties. However, by glycosylating THC, we have learned through initial animal studies that the binding of glucose and THC molecules restricts the release of THC into the body’s digestive system until the prodrug reaches the large intestine, at which point the glycoside hydrolase enzymes cleave the glucose from the prodrug and the THC is released in a targeted and restricted manner. Further, we have learned through our initial animal studies that this targeted release of THC, which could be provided in very low doses to achieve physiologically beneficial results, serves as an anti-inflammatory agent in the lower gastrointestinal tract and minimizes the amount of THC absorbed into the blood stream, therefore avoiding the psychoactive and intoxicating properties that hinder the broader pharmaceutical use of THC. 20 We are developing our THC-glycoside prodrugs for the treatment of gastrointestinal diseases, including inflammatory bowel disease (IBD) and irritable bowel syndrome (IBS) because of the targeted release described previously. IBD is a frequently chronic inflammatory condition where parts of the digestive system become inflamed from an overactive immune response. The disease can lead to irreversible damage to the gastrointestinal tract and may require surgery to remove affected areas of the intestine. Two major forms of the disease are Crohn’s disease, which can affect any part of the digestive system, and ulcerative colitis, which often affects the colon or large intestine. The disease is often unpredictable with periods of painful and debilitating symptoms followed by periods of remission with limited symptoms. IBS has similar symptoms to IBD, including abdominal pain, but the underlying disease process is quite different. IBS is a functional gastrointestinal disorder that commonly affects the large intestine and is characterized by abdominal cramping, diarrhea, constipation, and pain. Currently, patients suffering from IBD are frequently prescribed anti-inflammatory drugs such as steroids, biologics and immunosuppressants, and patients suffering from IBS are prescribed antibiotics, antidepressants and gastrointestinal motility compounds, all of which often result in unwanted side effects. Our most promising THC-glycoside (VBX-100) is being developed as an oral prodrug for the treatment of IBD and IBS. VBX-100 was selected from our THC-glycoside portfolio for compatibility with commercial production techniques and the optimal prodrug delivery profile that maximizes intestinal anti-inflammatory properties while minimizing psychoactive or intoxicating effects. Initial pre-clinical studies on the efficacy of VBX-100 in animal models have shown favorable outcomes, including reduced inflammation of the gastrointestinal tract and no measurable systemic THC found in tissue examined using highly-sensitive testing equipment. In 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 sale of Graphium Biosciences or its assets to a biotech partner with the resources necessary to advance our drug development program, (ii) a private capital raise directly into Graphium Biosciences to secure sufficient funding to meaningfully advance our drug development program, or (iii) a spin-off of our Graphium Biosciences subsidiary into a new publicly-traded company infused with sufficient funding to meaningfully advance our drug development program as a new stand-alone company. The Company is actively exploring all potential strategic alternatives for its drug development assets to maximize shareholder value. 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. 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. Accordingly, 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. 21 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. 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 Overview Daedalus 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. Our 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. A 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 overall. The 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 capital. 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. Initially, 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: ● Land reclamation ● Water treatment and remediation ● Carbon footprint reduction ● Water usage and conservation ● Renewable energy usage ● Recycling and disposal practices ● Green products, technologies, and infrastructure ● Relationship with the U.S. Environmental Protection Agency (EPA) and other environmental regulatory bodies We 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. 22 We 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 successful ventures that are 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. Range Environmental Resources and Range Natural Resources In May 2022, we acquired 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. Our land reclamation services seek to return land to pre-mining conditions or repurpose the land for natural, commercial, agricultural or recreational use. Our 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, sell water treatment chemicals manufactured by third parties to our customers. Additional ESG Opportunities The Company is actively pursuing a number of other ESG-focused investment opportunities to advance its mission with a particular focus on some of the most challenging environmental situations in disadvantaged communities. Results of Operations Three Months Ended June 30, 2022 and June 30, 2021 Our net loss during the three months ended June 30, 2022 was $443,186 compared to a net loss of $612,235 for the three months ended June 30, 2021. Our revenue during the three months ended June 30, 2022 was $639,359 and our gross profit was $64,952. We had no revenue during the three months ended June 30, 2021. During the three months ended June 30, 2022, we incurred general and administrative expenses in the aggregate amount of $380,326, compared to $514,437 incurred during the three months ended June 30, 2021 (a decrease of $134,111). General and administrative expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, marketing, consulting costs and travel expenses. The majority of the decrease in general and administrative costs relates to professional fees which decreased to $11,790 during the three months ended June 30, 2022, as compared to $145,000 during the three months ended June 30, 2021 (a decrease of $133,210), and stock-based compensation which decreased to $0 during the three months ended June 30, 2022, as compared to $39,456 during the three months ended June 30, 2021. In addition, during the three months ended June 30, 2022, we incurred research and development costs of $107,823, compared to $97,812 during the three months ended June 30, 2021 (an increase of $10,011). This increase resulted from an increase in legal fees allocated to research and development, which increased to $13,961 in the period ended June 30, 2022, as compared to $0 in the period ended June 30, 2021. During the three months ended June 30, 2022, we recorded total net other expense in the amount of $19,989, compared to total net other income recorded during the three months ended June 30, 2021, in the amount of $14. This difference was attributable to the interest expense of $19,989 incurred during the three months ended June 30, 2022, as compared to $0 in the three months ended June 30, 2021. During the three months ended June 30, 2022, we had a net loss of $443,186 compared to a net loss of $612,235 during the three months ended June 30, 2021. The decrease in net loss attributable to common stockholders of $169,049 is primarily due to the gross profit of $64,952 earned during the three months ended June 30, 2022, compared to gross profit of $0 earned during the three months ended June 30, 2021. Additionally, professional fees decreased by $133,210 in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021. 23 Six Months Ended June 30, 2022 and June 30, 2021 Our net loss during the six months ended June 30, 2022 was $891,160 compared to a net loss of $972,866 for the six months ended June 30, 2021. Our revenue during the six months ended June 30, 2022 was $639,359 and our gross profit was $64,952. We had no revenue or gross profit during the six months ended June 30, 2021. During the six months ended June 30, 2022, we incurred general and administrative expenses in the aggregate amount of $698,267, compared to $1,101,635 incurred during the six months ended June 30, 2021 (a decrease of $403,368). The majority of the decrease in general and administrative costs relates to stock-based compensation which decreased to $0 during the six months ended June 30, 2022, as compared to $130,516 during the six months ended June 30, 2021, professional fees which decreased to $12,540 during the six months ended June 30, 2022, as compared to $145,000 during the six months ended June 30, 2021 (a decrease of $132,460), and legal fees, which decreased to $75,000 during the six months ended June 30, 2022, as compared to $181,395 during the six months ended June 30, 2021 (a decrease of $106,395). In addition, during the six months ended June 30, 2022, we incurred research and development costs of $233,553, compared to $168,449 during the six months ended June 30, 2021 (an increase of $65,104). This increase resulted from an increase in wages related to research and development, which increased to $167,836 in the period ended June 30, 2022, as compared to $97,361 in the period ended June 30, 2021 (an increase of $70,475), and legal fees, which increased to $45,578 during the six months ended June 30, 2022, from $0 during the six months ended June 30, 2021. These costs were offset by a decrease in stock-based compensation which decreased to $0 during the six months ended June 30, 2022, as compared to $28,333 during the six months ended June 30, 2021. During the six months ended June 30, 2022, we recorded total net other expense in the amount of $24,292, compared to total net other income of $297,218 recorded during the six months ended June 30, 2021. This difference was primarily attributable to the gain on extinguishment of liabilities of $296,653 recorded during the six months ended June 30, 2021. During the six months ended June 30, 2022, we had a net loss of $891,160 compared to a net loss of $972,866 during the six months ended June 30, 2021. The decrease in net loss attributable to common stockholders of $81,706 is primarily due to the recognition of gains on the extinguishment of liabilities in the amount of $296,653 during the six months ended June 30, 2021, compared to no gains recognized during the six months ended June 30, 2022, offset by a $403,368 decrease in general and administrative expenses during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, and a $65,104 increase in research and development expenses during the six months ended June 30, 2022, compared to the six months ended June 30, 2021. Liquidity and Capital Resources We have incurred losses since inception resulting in an accumulated deficit of $50,031,838 as of June 30, 2022. As of June 30, 2022, we had total current assets of $2,964,609, comprised primarily of cash in the amount of $1,866,289, and accounts receivable and other receivables of $1,097,436. Our total current liabilities as of June 30, 2022 were $1,791,448, consisting of $850,000 due under a revolving credit line, the current portion of our long-term debt in the amount of $392,708, and accounts payable of $548,740, which includes a $33,440 lease payment attributable to our now-dissolved wholly-owned subsidiary, The Control Center, Inc., for which we are not responsible. As a result, on June 30, 2022, we had working capital of $1,173,161. As of June 30, 2022, we had long-term assets of $2,560,690, which were comprised of net property and equipment of $1,680,438, goodwill of $751,421, operating lease asset of $119,939, and deposits of $8,892. As of June 30, 2022, we had long-term liabilities of $1,256,652, which were comprised of long-term debt, net of current portion of $865,674, notes payable of $271,039, and operating lease liability of $119,939. 24 Sources of Capital Based on our current corporate strategy, our total expenditures for the 12 months following June 30, 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 $1,866,289, $150,000 available under our revolving credit line as of June 30, 2022, $4,830,050 available under our equity financing line, revenues being generated by the Range Entities, and our estimated total expenditures of approximately $1,800,000 for the 12-month period ending June 30, 2023, we expect to have sufficient funds to operate our business over the next 12 months. We expect to generate funds from our ESG operations, but may also seek additional financing and other sources of capital to accelerate the funding and execution of our growth strategy and value creation plan. Our estimated total expenditures for the 12-month period ending June 30, 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 operations. If any of these were to occur, there is a substantial risk that our business would fail. Since inception, we have primarily funded our operations through equity and debt financings. The Company has revenue earned from its investment in the Range Entities that we expect will fund their ongoing operations and provide excess cash to fund all or a portion of additional ESG investments made by Daedalus in the future. We may also supplement our funding through equity and debt financings in the 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. Net Cash Used in Operating Activities We have not historically generated positive cash flows from operating activities. For the six months ended June 30, 2022, net cash used in operating activities was $845,068 compared to net cash used in operating activities of $1,120,035 for the six months ended June 30, 2021. This decrease was primarily attributable to a gain on extinguishment of liabilities of $296,653 recognized during the six months ended June 30, 2021, and an increase in accounts payable of $192,628 during the six months ended June 30, 2022, partially offset by a decrease in the expenses recorded for stock-based compensation related to stock options of $158,849 during the six months ended June 30, 2021. Net cash used in operating activities during the six months ended June 30, 2022, consisted primarily of a net loss of $891,160 and an increase of unbilled receivables of $230,929, offset by an increase in accounts payable of $192,628 and a decrease in accounts receivable of $273,412. Net cash used in operating activities during the six months ended June 30, 2021, consisted primarily of a net loss of $972,866, and a gain on extinguishment of liabilities of $296,653, partially offset by $158,849 related to stock-based compensation. Net Cash Used in Investing Activities During the six months ended June 30, 2022, net cash used in investing activities was $1,842,006. Net cash used in investing activities during the six months ended June 30, 2022, consisted primarily of equipment purchases totaling $1,107,833 and cash paid for the acquisition of Range Environmental of $750,000. No net cash was used in or provided by investing activities during the six months ended June 30, 2021. 25 Net Cash Provided By Financing Activities During the six months ended June 30, 2022, net cash provided from financing activities was $4,515,020, consisting of $3,000,000 received from the issuance of common stock and warrants, proceeds of $1,015,020 from long-term debt and $500,000 from a revolving line of credit. During the six months ended June 30, 2021, no net cash was used in or provided by financing activities. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to stockholders. Critical Accounting Policies Our financial statements and accompanying notes included in this report have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from the estimates made by management. We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements included in this report: Use of Estimates and Assumptions The 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, 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. Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. 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. Revenue The Company’s revenue recognition policies will follow the guidance of FASB ASC 606 “ Revenue from Contracts with Customers .” FASB 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. The Range Entities primarily invoice customers and recognize 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 Range Entities also invoice customers and recognize revenue for equipment mobilization fees and materials and supplies required to complete a project. The Range Entities invoice for the sales of chemicals and recognize revenue when the products are delivered to the customer’s designated site. Costs for equipment, labor and chemicals are generally expensed as incurred since the projects are generally short-term and not subject to a contract. The Range Entities’ 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. The Range Entities do not have any significant financing components as payment is received within a commercially reasonable time after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year. Shipping and handling amounts paid by the customers are included in revenue. Contract modifications are routine in the performance of the Range Entities’ contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are a result of changes in the scope of work, or the products or services required to complete the contract and are customarily approved in advance by the customer. 26 Recent Accounting Pronouncements Please refer to Footnote 1 of the accompanying financial statements for management’s discussion of recent accounting pronouncements. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable.