What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-10-12 · 348 added, 330 removed, 98 unchanged (87% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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

used in this discussion and analysis and elsewhere in this Quarterly Report, the “Company” refers to Malachite Innovations,

Inc., a Nevada corporation.

following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction

with the Company’s 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 the Company’s

business or the risks associated with an investment in the Company’s common stock.

The Company urges you to carefully review and

consider the various disclosures made by the Company in this Quarterly Report and in the Company’s other reports filed with the

Securities and Exchange Commission (the “SEC”), including the Company’s 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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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 are projections in respect of future events or the Company’s 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 the Company’s or its 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

market demand for our intended products;

general economic and financial market

the Company’s ability to obtain additional financing as necessary;

the Company’s ability to continue operating

as a going concern;

any adverse occurrence with respect to the Company’s business or;

results of the Company’s research and

development activities that are less positive than it expects;

the Company’s ability to bring its intended products to market;

market demand for the Company’s 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.

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

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.

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.”

product development or other initiatives by the Company’s

fluctuations in the availability and costs of raw materials required in the Company’s drug development process;

factors beyond the Company’s control;

and the other risks described under the heading “Risk Factors” in the Company’s

Transition Report on Form 10-KT filed with the SEC on March 31, 2022.

the Company believes that the expectations and assumptions reflected in the forward-looking statements it makes are reasonable, the Company

cannot guarantee future results, levels of activity or performance.

In addition, the Company cannot assess the impact of each factor

on its 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

the Company makes in this report.

Forward-looking statements speak only as of the date on which they are made.

Except as required by

law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

otherwise provided in this Quarterly Report, references to the “Company” 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, the Company completed a merger

with its wholly-owned subsidiary, Stevia First Corp., whereby the Company changed its name from “Legend Mining Inc.” to “Stevia

First Corp.” On July 15, 2016, the Company’s Board of Directors and shareholders approved a name change to “Vitality

Biopharma, Inc.” On October 1, 2021, the Company completed a merger with its wholly-owned subsidiary, Malachite Innovations, Inc.,

whereby the Company changed its name from “Vitality Biopharma, Inc.” to “Malachite Innovations, Inc.”

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

We seek to accomplish this objective

The Company seeks to accomplish this objective

through the operation of two wholly-owned subsidiaries:

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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

targeting the health and wellness of people, with a particular focus on advancing its broad portfolio of over 100 glycosylated cannabinoid

prodrugs and (ii) Daedalus Ecosciences, Inc.

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

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.

Company’s corporate headquarters is located in Cleveland, Ohio.

As of September 30, 2022, the Company employed twenty-three full-time

employees, including twenty employees of the Range Entities, one cannabinoid research scientist working in the Company’s office

and laboratory space in Rocklin, California, and two senior executives of the Company.

The Company also has, in the past, engaged the

services of scientific and regulatory consultants to assist in its research and development activities, which is an approach that provides

the Company with flexible and experienced resources to advance its 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

Company’s 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),

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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.

resulting compounds, known as cannabosides, have unique commercial applications and patentable compositions of matter, which are separate

and distinct from ordinary cannabinoids.

By using the Company’s proprietary enzymatic

bioprocessing technologies, its clinical research team has developed a novel family of prodrugs by combining cannabinoid and glucose

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.

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.

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.

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

(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.

Company’s proprietary glycosylation process, which results in adding one or more glucose molecules to compounds, may enable

its 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, the Company believes

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, the Company expects 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.

Company has focused its research and development activities on the glycosylation of cannabinoids given their well-known positive effects

on the human endocannabinoid system.

The Company’s 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, the Company has 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

are developing our THC-glycoside prodrugs for the treatment of gastrointestinal diseases, including inflammatory bowel disease (IBD)

Further, the Company

has learned through its 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

Company is developing 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.

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result in unwanted side effects.

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.

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.

is actively exploring all potential strategic alternatives for its drug development assets to maximize shareholder value.

Company’s most promising THC-glycoside (VBX-100) is being developed as an oral prodrug for the treatment of IBD and IBS.

was selected from the Company’s 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.

Company has determined that the value of its cannaboside prodrug assets would likely be maximized through a public capital raise into

the Company or a private capital raise into Graphium Biosciences to secure funding to advance VBX-100 through its

remaining pre-clinical animal studies and its Phase I and Phase II clinical trials.

Drug Designation

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

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

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

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

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

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

in the adult population.

December 2019, we received a letter from the OOPD informing us that the FDA determined that the Company may be eligible for pediatric-subpopulation

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

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

in May 2020, we filed a response letter with the OOPD addressing the other deficiencies noted in the Company’s original submission

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

(2) our scientific

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

and (3) more comprehensive supporting documentation

for the use of VBX-100 in pediatric patients with ulcerative colitis.

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

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

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

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

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

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

was released only after ulcerative colitis was present.

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

a supplemental response letter with the OOPD providing the requested in vivo treatment-only mouse study results in support of

our position that VBX-100 may be effective as a treatment for pediatric ulcerative 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

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

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

In March 2018, the OOPD denied the Company’s request

based, in part, on the FDA’s decision to no longer grant Orphan Drug Designation status to drugs for pediatric subpopulations of

common diseases (i.e., diseases or conditions with an overall prevalence of over 200,000), unless the use of the drug in the pediatric

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

disease from the disease in the adult population.

December 2019, the Company’s received a letter from the OOPD informing it that the FDA determined that the Company may be eligible

for pediatric-subpopulation designation because the Company submitted its 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, the Company 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;

Company’s scientific rationale for the specific animal models used in its 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, the Company received a

letter from the OOPD stating that it was unable to grant the Company’s request for an Orphan Drug Designation status because its

VBX-100 prodrug was administered before and after colitis was induced in its 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, the Company was advised

to perform a second in vivo mouse study in which its 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, the Company 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 its position that VBX-100 may be effective as a treatment for pediatric ulcerative

August 9, 2021, the Company received a letter from the OOPD stating that it has been granted Orphan Drug Designation for its 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.

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

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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.

Company’s 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.

The Company believes that a strong ESG

proposition, properly capitalized, will help the Company expand into and create value in new environmentally-focused markets.

also believe that a robust ESG business model can enhance its 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.

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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

The Company also believes that a strong ESG

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

productivity overall.

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.

While the Company believes 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.

The Company believes that a commitment to ESG business principles will allow the Company to generate strong financial

returns for shareholders while also creating long-term environmental and social benefits.

the Company intends to focus its ESG business strategy on acquiring and developing businesses the Company believes 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:

Company’s business development strategy will initially focus on the following areas:

treatment and remediation

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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;

Company 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;

(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 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.

Company believes that it 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.

Environmental Resources and Range Natural Resources

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.

May 2022, the Company, through its Daedalus Ecosciences

subsidiary, 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.

The Range Entities’

land reclamation services seek to return 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, sell water treatment chemicals manufactured by third parties to its customers.

ESG Opportunities

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of Operations

Months Ended June 30, 2022 and June 30, 2021

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

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.

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.

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.

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.

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.

Months Ended June 30, 2022 and June 30, 2021

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,

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.

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).

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.

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.

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

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.

Months Ended September 30, 2022 and September 30, 2021

Company’s net loss during the three months ended September 30, 2022 was $119,616 compared to a net loss of $504,358 for the three

months ended September 30, 2021.

The Company’s revenue during the three months ended September 30, 2022 was $1,547,258 and its

gross profit was $357,783.

The Company had no revenue during the three months ended September 30, 2021.

the three months ended September 30, 2022, the Company incurred general and administrative expenses in the aggregate amount of $449,041,

compared to $436,523 incurred during the three months ended September 30, 2021 (an increase of $12,518).

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 relates to health insurance costs

in the ESG Operations segment of $44,955 that were not incurred in the 2021 period.

These costs were offset by a decrease in professional

fees in the 2022 period.

The Company incurred professional fees of $3,550 during the three months ended September 30, 2022, as compared

to $52,500 during the three months ended September 30, 2021 (a decrease of $48,950).

addition, during the three months ended September 30, 2022, the Company incurred research and development costs of $106,744, compared

to $67,838 during the three months ended September 30, 2021 (an increase of $38,906).

This increase resulted from an increase in wages

allocated to the Therapeutic Operations segment, which increased to $83,479 in the period ended September 30, 2022, as compared to $48,443

in the period ended September 30, 2021 (an increase of $35,036).

the three months ended September 30, 2022, the Company recorded total net other income in the amount of $78,386, compared to total net

other income recorded during the three months ended September 30, 2021, in the amount of $3.

This difference was attributable to a gain

of $109,435 related to the forgiveness of the Company’s ESG Operations segment’s PPP loan offset by interest expense of $31,049

incurred during the three months ended September 30, 2022.

No amounts were recorded related to these items during the three months ended

September 30, 2021.

the three months ended September 30, 2022, the Company had a net loss of $119,616 compared to a net loss of $504,358 during the three

months ended September 30, 2021.

The decrease in net loss attributable to common stockholders of $384,742 is primarily due to the gross

profit of $357,783 earned during the three months ended September 30, 2022, compared to gross profit of $0 earned during the three months

ended September 30, 2021.

Months Ended September 30, 2022 and September 30, 2021

Company’s net loss during the nine months ended September 30, 2022 was $1,010,776 compared to a net loss of $1,477,224 for the

nine months ended September 30, 2021.

The Company’s revenue during the nine months ended September 30, 2022 was $2,186,617 and

its gross profit was $422,735.

The Company had no revenue or gross profit during the nine months ended September 30, 2021.

the nine months ended September 30, 2022, the Company incurred general and administrative expenses in the aggregate amount of $1,147,308,

compared to $1,538,158 incurred during the nine months ended September 30, 2021 (a decrease of $390,850).

The majority of the decrease

in general and administrative costs relates to stock-based compensation which decreased to $0 during the nine months ended September

30, 2022, as compared to $130,516 during the nine months ended September 30, 2021, professional fees which decreased to $16,090 during

the nine months ended September 30, 2022, as compared to $197,500 during the nine months ended September 30, 2021 (a decrease of $181,410),

and legal fees, which decreased to $93,770 during the nine months ended September 30, 2022, as compared to $303,474 during the nine months

ended September 30, 2021 (a decrease of $209,704).

addition, during the nine months ended September 30, 2022, the Company incurred research and development costs of $340,297, compared

to $236,287 during the nine months ended September 30, 2021 (an increase of $104,010).

This increase resulted from an increase in wages

related to research and development, which increased to $251,316 in the period ended September 30, 2022, as compared to $145,803 in the

period ended September 30, 2021 (an increase of $105,513), and legal fees, which increased to $51,871 during the nine months ended September

30, 2022, from $0 during the nine months ended September 30, 2021.

These costs were offset by a decrease in stock-based compensation

which decreased to $0 during the nine months ended September 30, 2022, as compared to $28,333 during the nine months ended September

the nine months ended September 30, 2022, the Company recorded total net other income in the amount of $54,094, compared to total net

other income of $297,221 recorded during the nine months ended September 30, 2021.

This difference was primarily attributable to the

gain on extinguishment of liabilities of $296,653 recorded during the nine months ended September 30, 2021, compared to a gain of $109,435

related to the forgiveness of the Company’s ESG Operations segment’s PPP loan, offset by interest expense of $55,341 incurred

during the nine months ended September 30, 2022.

the nine months ended September 30, 2022, the Company had a net loss of $1,010,776 compared to a net loss of $1,477,224 during the nine

months ended September 30, 2021.

The decrease in net loss attributable to common stockholders of $466,448 is primarily due to the gross

profit of $422,735 earned during the nine months ended September 30, 2022, compared to gross profit of $0 earned during the nine months

ended September 30, 2021.

and Capital Resources

have incurred losses since inception resulting in an accumulated deficit of $50,031,838 as of June 30, 2022.

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.

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

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.

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

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.

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.

Company has incurred losses since inception resulting in an accumulated deficit of $50,151,454 as of September 30, 2022.

of September 30, 2022, the Company had total current assets of $1,654,684, comprised primarily of cash in the amount of $1,156,799, and

accounts receivable and other receivables of $497,001.

The Company’s total current liabilities as of September 30, 2022 were $721,085,

consisting of the current portion of long-term debt in the amount of $396,939, and accounts payable of $324,146, which includes a $33,440

lease payment attributable to the Company’s now-dissolved wholly-owned subsidiary, The Control Center, Inc., for which it is not

As a result, on September 30, 2022, the Company had working capital of $933,599.

of September 30, 2022, the Company had long-term assets of $2,552,967, which were comprised of net equipment assets of $1,683,406, goodwill

of $751,421, operating lease asset of $109,248, and deposits of $8,892.

As of September 30, 2022, the Company had long-term liabilities

of $878,983, which were comprised of long-term debt, net of current portion of $769,735, and operating lease liability of $109,248.

on the Company’s current corporate strategy, its total expenditures for the 12 months following September 30, 2022 are expected

to be approximately $1,800,000, which is comprised of general operating and research and development expenses.

Based on the Company’s

cash balance of $1,156,799, $1,000,000 available under its revolving credit line as of September 30, 2022, $4,830,050 available under

its equity financing line, revenues being generated by the Range Entities, and its estimated total expenditures of approximately $1,800,000

for the 12-month period ending September 30, 2023, the Company expects to have sufficient funds to operate its business over the next

The Company expects to generate funds from its ESG Operations, but may also seek additional financing and other sources of

capital to accelerate the funding and execution of its growth strategy and value creation plan.

Company’s estimated total expenditures for the 12-month period ending September 30, 2023 could increase if the Company encounters

unanticipated expenses in connection with operating its business as presently planned.

In addition, the Company’s estimates of

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

much faster than it currently expects.

If the Company cannot raise the capital necessary to continue to develop its business, the Company

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

If any of these were to occur, there is a substantial

risk that the Company’s business would fail.

inception, the Company has primarily funded its operations through equity and debt financings.

The Company has revenue earned from its

investment in the Range Entities that it expects will fund its ongoing operations and provide excess cash to fund all or a portion

of additional ESG investments made by Daedalus in the future.

The Company may also supplement its 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

If the Company

issues equity or convertible debt securities to raise additional funds or to fund, in whole

or in part, acquisitions in furtherance of its business strategy, the Company’s existing stockholders may experience substantial

dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of its existing stockholders.

If the Company incurs additional debt, it may increase the Company’s leverage relative to its earnings or to its equity capitalization,

requiring the Company to pay additional interest expenses.

Obtaining commercial loans, assuming those loans would be available, would

increase the Company’s liabilities and future cash commitments.

If the Company pursues capital through alternative sources, such

as collaborations or other similar arrangements, the Company may be forced to relinquish rights to its proprietary glycosylated cannabinoid

technology or other intellectual property and could result in its 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 the Company seeks to raise capital, it may incur substantial

costs in those pursuits, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other

1 unchanged sentence

Cash Used in Operating Activities

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,

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

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.

Company has not historically generated positive cash flows from operating activities.

For the nine months ended September 30, 2022, net

cash used in operating activities was $568,536 compared to net cash used in operating activities of $1,503,046 for the nine months ended

September 30, 2021.

This decrease was primarily attributable to a lower net loss of $1,010,776 for the nine months ended September 30,

2022, compared to a net loss of $1,477,224 for the nine months ended September 30, 2021, as well as a gain on extinguishment of liabilities

of $296,653 recognized during the nine months ended September 30, 2021, and a decrease in accounts receivable of $554,181 during the

nine months ended September 30, 2022, partially offset by a decrease in the expenses recorded for stock-based compensation related to

stock options of $158,849 during the nine months ended September 30, 2021.

Net cash used in operating activities during the nine months

ended September 30, 2022, consisted primarily of a net loss of $1,010,776 and an increase of unbilled receivables of $161,263, offset

by a decrease in accounts receivable of $554,181.

Net cash used in operating activities during the nine months ended September 30, 2021,

consisted primarily of a net loss of $1,477,224, and a gain on extinguishment of liabilities of $296,653, partially offset by $158,849

related to stock-based compensation.

Cash Used in Investing Activities

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.

the nine months ended September 30, 2022, net cash used in investing activities was $1,977,502.

Net cash used in investing activities

during the nine months ended September 30, 2022, consisted primarily of equipment purchases totaling $1,243,329 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 nine months ended

September 30, 2021.

Cash Provided By Financing Activities

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.

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

the nine months ended September 30, 2022, net cash provided by financing activities was $3,664,494, compared to net cash provided from

financing activities of $119,000 during the nine months ended September 30, 2021.

Net cash provided by financing activities for the nine

months ended September 30, 2022 consisted of $3,250,000 received from the issuance of common stock and warrants, proceeds of $923,309

from long-term debt, offset by the payoff of the SBA Disaster Loan of $158,815 and the payoff of the revolving line of credit of $350,000.

The cash provided during the nine months ended September 30, 2021 was a result of the issuance of common stock and warrants under an

Sheet Arrangements

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.

Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its

financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or

capital resources that would be material to stockholders.

Accounting Policies

financial statements and accompanying notes included in this report have been prepared in accordance with United States generally accepted

accounting principles (“U.S.

Company’s 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

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.

regularly evaluate the accounting policies and estimates that we use to prepare our financial statements.

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.

Company regularly evaluates the accounting policies and estimates that it uses to prepare its financial statements.

In general, management’s

2 unchanged sentences

Actual results could differ from the estimates made by management.

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:

Company believes the following critical accounting policies require it to make significant judgments and estimates in the preparation

of its consolidated financial statements included in this report:

of Estimates and Assumptions

11 unchanged sentences

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.

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

2 unchanged sentences

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,

(1) identifying the contracts or agreements with a customer, (2) identifying its 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.

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.

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.

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.

Accounting Pronouncements

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis