What changed in this filing

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Item 1. Business

2023-03-31 compared with 2021-05-19 · 519 added, 257 removed, 8 unchanged (99% of the section changed)

otherwise provided in this Annual Report, references to the “Company,”

“we,”

“us”, and “our”

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

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

Mining Inc.”

to “Stevia First Corp.”

On July 15, 2016, our Board of Directors and shareholders approved a name change

to “Vitality Biopharma, Inc.”

Biopharma is a company focused on the advancement of pharmaceuticals and innovative technologies that improve the lives of patients.

We seek to achieve this objective through the development of novel cannabinoid pharmaceutical prodrugs known as cannabosides.

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

cannabosides are cannabinoid-glycoside prodrugs, which were discovered through application of the Company’s proprietary enzymatic

bioprocessing technologies, that are converted within the body after administration from an inactive molecule into a pharmacologically

Currently, the Company has produced more than 25 novel cannabosides, including glycosylated tetrahydrocannabinol (THC),

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

method of production and method of use.

otherwise provided in this Annual 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.”

Innovations, Inc.

(“Malachite”) is a public holding company dedicated to improving the health and wellness of people and

the planet through a novel and innovative approach to impact investing.

Malachite owns and operates a balanced portfolio of

operating businesses focused on developing long-term solutions to environmental, social and health challenges, with a particular

focus on economically disadvantaged communities.

Malachite takes an opportunistic approach to impact investing by leveraging its

competitive advantages and looking at solving old problems in new ways.

Malachite seeks to thoughtfully allocate its capital into

ventures that are expected to make a positive impact on the people-planet ecosystem and generate strong investment returns for our

shareholders.

corporate headquarters is located in Cleveland, Ohio, with additional office locations in Rocklin, California and Fola, West Virginia.

As of March 30, 2023, we employed 40 full-time employees and engaged various consultants and professional service firms to provide

us with flexible and experienced resources to advance our corporate objectives while maintaining a cost-effective overhead structure.

We strive to instill a corporate culture of honesty, integrity and respect while advancing our mission of doing well by doing good.

Business Segments

five operating business segments are:

(i) Environmental Services, (ii) Biochar Products and Solutions, (iii) Stream Mitigation Banking,

(iv) Environmental Security Services, and (v) Cannabinoid Drug Development.

Only the Environmental Services segment and the Cannabinoid

Drug Development operating segments had significant operations in 2022.

about our business segments should be read together with “Part II.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.”

Environmental

In May 2022, the Company acquired

Range Environmental Resources, Inc., a West Virginia corporation (“Range Environmental”) and Range Natural Resources, Inc.,

a West Virginia corporation (“Range Natural” and together with Range Environmental, the “Range Reclamation Entities”).

The Range Reclamation Entities provide land reclamation, water restoration and environmental consulting services to mining and non-mining

customers throughout the Appalachian region with the goal of returning land to pre-mining conditions or repurposing the land for natural,

commercial, agricultural or recreational use.

The Range Reclamation 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 Reclamation 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 their customers.

Range Natural also mines natural resources, including coal, for customers incidental to the reclamation and repurposing

of mine sites.

Energy Information Administration (“EIA”), the United States had 551 coal mines in 2020, comprised of 370

active mines, 141 idled or closed mines, and 40 new or activated mines.

Approximately 82% of those coal mines were located in

Appalachia (which comprises the Appalachian Mountains and is commonly known as the cultural region in the Eastern United States

stretching from the southern part of New York to the northern parts of Alabama and Georgia).

According to the EIA, there were

approximately three times as many coal mines in the United States in 2008 (compared to 2020) with approximately 89% located in

The precipitous decline in the number of operating coal mines since 2008 is due to various supply, demand and regulatory

factors, including a reduction in demand for coal as a source of electricity due to the increased use of natural gas and renewable

energy, an increase in coal production costs due to inflation and the dearth of cost-effective locations remaining for mining, and a

more stringent and costly regulatory environment, all of which have resulted in an increasingly difficult market for coal

2000, coal was responsible for 1,966 billion kWh of electricity generation, which represented 52% of the total electricity generation

in the United States.

However, in 2022, coal was responsible for only 828 billion kWh of electricity generation, which represented 20%

of the total electricity generation in the United States.

According to the EIA, 23% of the 200,568 megawatts of coal-fired capacity currently

operating in the United States is scheduled to retire by the end of 2029 due to the high cost of operations, continued competition from

natural gas and renewable energy resources, and sustainable initiatives of energy producers.

the reclamation of closed and inactive mine sites has not kept pace with the increase in closed and

idled mine sites, thus creating a substantial backlog of reclamation work that needs to be completed on former mine sites.

According to the U.S.

Office of Surfacing Mining

Reclamation and Enforcement (“OSMRE”), there are approximately 50,000 high-priority abandoned mine land locations in the

United States resulting from legacy coal mining operations that failed to adequately reclaim the land and waterways back to their

natural state.

Additionally, there are tens of thousands of active mine sites in the United States that require contemporaneous

reclamation of land and waterways during the active mining process, and an estimated equally large number of idled mine locations

that also require significant land reclamation and water restoration services.

the Surface Mining Control and Reclamation Act of 1977 (“SMRCA”), OSMRE was established for two basic purposes:

(i) to ensure

coal mines in the United States operate in a manner that protects citizens and the environment during mining operations and to restore

the land to beneficial use following mining, and (ii) to implement an Abandoned Mine Land (“AML”) reclamation program to

address the hazards and environmental degradation resulting from two centuries of coal mining activities that occurred before SMRCA was

passed in 1977.

The AML reclamation program is funded through fees levied against coal producers based on tons of coal produced.

September 2020, the AML reclamation fund had collected a total of $11.7 billion in coal mining fees over the life of the program, with

$9.5 billion (81%) appropriated and distributed in accordance with SMCRA, and $2.2 billion (19%) unappropriated and available for future

disbursement.

In November 2021, the Infrastructure Investment and Jobs Act was enacted, which, among other things, authorized $11.3 billion

in new funding to be appropriated for deposit into the AML reclamation fund.

Importantly, the AML reclamation fund is only available

to help fund the reclamation of mines abandoned before SMCRA was enacted in 1977;

therefore, all mines abandoned after the year 1977

cannot access funding from the AML reclamation fund and must obtain funding from other sources.

Additionally,

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

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

Specifically, the Company is

considering special situation opportunities in a variety of industries, including without limitation, businesses that utilize innovative

technologies to address the unfavorable environmental impacts of climate change.

corporate headquarters is located in Los Angeles, California.

As of May 18, 2021, we employed three full-time employees, including

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

We also have, in the past, engaged the services

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

with flexible and highly-experienced resources to advance our clinical efforts while maintaining a relatively lower overhead cost structure.

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.

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

each state in Appalachia has a Department of Environmental Protection (“DEP”) or an equivalent agency that oversees coal

mining permitting, operations, and reclamation.

Under DEP rules and regulations, coal mining companies are required to develop a

mining and reclamation plan that is approved by the applicable state agency, obtain a mining permit from the state, and secure a

reclamation surety bond from a qualified third-party insurance company or provide a comparable financial guarantee.

The reclamation

surety bond provides the state with financial assurances that land reclamation and waterway restoration will be performed in

accordance with the original reclamation plan once mining is complete if the coal mining company, as primary obligor, fails to

Therefore, there are at least three groups who may need land reclamation, water restoration and environmental

auditing services:

(i) mining companies when permits are active and reclamation bonds are not in default, (ii) surety bond insurers

when reclamation bonds are in default, and (iii) states through their AML reclamation funds for mine lands abandoned before 1977 and

for mine lands with defaulted coal mining companies and surety bond insurers after 1977.

the time of acquisition in May 2022, the Range Reclamation Entities had one reclamation customer, 15 pieces of owned and financed

equipment, eight pieces of rented equipment, and 12 employees, all located and operating in West Virginia.

As of March 30, 2023,

less than one year later, the businesses had three reclamation customers, more than 40 pieces of owned and financed equipment, and

27 employees in West Virginia.

For the full year 2021, the Range Reclamation Entities had revenues of approximately $2.5 million.

Since their acquisition in March 2022, the Range Reclamation Entities have generated revenues of approximately $4.8 million

representing pro-forma annualized revenues of approximately $6.0 million.

The Range Reclamation Entities have also made a

significant investment in recruiting, retaining and rewarding employees, including providing new benefits such as health insurance,

paid time off, vacation days, 401K retirement plan, and job advancement training.

The Range Reclamation Entities’ employees

are their most valuable asset, and therefore we are committed to building a best-in-class culture and financially rewarding our

talented, hard-working employees so that we can maximize the good we can do for our people and their families.

Range Reclamation Entities are planning for continued growth in their land reclamation, water restoration and consulting businesses

by expanding their market share with existing coal mining customers and reclamation bond insurers, adding new coal mining and

non-coal mining customers, and collaborating with the Company’s other operating businesses to generate incremental sales opportunities.

We will seek to add additional

people, equipment and technologies to support these ambitious growth goals to ensure we successfully execute our value creation

plans for the Company and our shareholders.

Products and Solutions

Preta, Inc., an Ohio corporation (“Terra Preta”), is a biochar product development and environmental solutions business

started by the Company in December 2022.

Terra Preta is developing a novel and innovative combination of biochar, proprietary materials

and structural designs intended to create several first-of-its-kind agricultural and water filtration products and solutions.

is a solid, lightweight carbon-rich material produced by the thermal decomposition of organic material (such as cellulosic

feedstock, including wood and plants) using a chemical-conversion process known as pyrolysis.

Carbonization pyrolysis is a chemical

degradation process that heats organic materials to produce carbon-rich biochar, liquid bio-oils, and syngas products.

Since organic

material is thermally decomposed without oxygen during the pyrolysis process, combustion does not occur, so the process allows for

the permanent capture of carbon in the biochar end-product and eliminates the release of climate-damaging carbon dioxide into the

The specific yield of biochar during the carbonization pyrolysis process depends on several variables such as

temperature, heating time and heating rate.

Lower temperatures, longer heating times and lower heating rates typically yield more

biochar and less bio-oil and syngas.

Preta has been launched to build a full-cycle, carbon-negative business that reduces greenhouse gases from the atmosphere, passively

filters contaminated water without the use of harsh chemicals, and provides a fortified, nutrient-rich soil amendment to improve the

growth of agricultural products.

gases, comprised of carbon dioxide, methane, nitrous oxide and fluorinated gases, are gases that trap heat in the atmosphere, and

are generally believed to result in warmer temperatures and climate change, including changing weather patterns, rising sea levels,

and more extreme weather events.

Carbon dioxide enters the atmosphere through, among other things, the burning of fossil fuels,

solid waste and other biomass materials, and is removed from the atmosphere when absorbed by plants during the photosynthesis

Terra Preta is in discussions with a large affiliated landowner to enter into a long-term lease or purchase of at least

100 acres of former mine land in West Virginia for the planting, growth and harvesting of crops to serve as the primary feedstock

for our biochar production operations.

The newly planted crops would then act as a “carbon sink”, drawing substantial

amounts of carbon dioxide from the atmosphere into the plants through the photosynthesis process.

When the plants are harvested,

biochar is produced through the carbonization pyrolysis process and the captured carbon dioxide is permanently preserved as carbon

in the biochar product for use in water treatment and agricultural end uses.

to rules adopted under the Clean Water Act of 1972 (“Clean Water Act”), the U.S.

Environmental Protection Agency (“EPA”)

has implemented various pollution control programs such as wastewater standards for industry and recommendations for pollutants in surface

The Clean Water Act prohibits any party from discharging pollutants into a water of the United States unless they have a permit

issued under the National Pollutant Discharge Elimination System (“NPDES”), which contains limits on what a party can

discharge and establishes monitoring and reporting requirements.

On mining sites, coal operators are required to sample and test their

water discharges on a regular basis to ensure compliance with the Clean Water Act and applicable NPDES permits.

Currently, most mining operators treat non-compliant water with temporary holding ponds and expensive chemicals such as pH adjusters,

coagulants and flocculants that require constant reapplication to ensure compliance.

Terra Preta will focus on developing a proprietary,

biochar-based passive treatment system that treats non-compliant mine site discharges to ensure compliance with the Clean Water Act and

NPDES permits without the need for holding ponds or expensive chemicals.

agriculture plays a critical role in the stability, growth, and diversification of our future food supply chain and the growth of

plants intended to serve as a carbon sink to reduce greenhouse gases.

High-quality soil, a key condition for sustainable

agriculture, requires organic matter, microorganisms, nutrients, and optimal compaction.

Subsoils with a sufficient number of

air-filled pores have little restriction to drainage and aeration, and typically are able to decompose and cycle organic matter and

nutrients more efficiently.

Alternatively, soil with poor aeration leads to the build-up of carbon dioxide, reduces the ability of

plants to absorb water and nutrients, and leads to increased plant stress and root disease.

To help address the ill effects of soil

compaction, Terra Preta is developing a proprietary, fortified biochar soil amendment that provides unique soil structuring

characteristics that will allow plants to grow strong roots that optimize the absorption of water and nutrients, thereby reducing

root stress and disease.

December 2022, Terra Preta filed trademarks for biochar goods and services related to agricultural and water treatment applications.

In March 2023, Terra Preta filed provisional patents related to novel and innovative agricultural and water treatment solutions and designs.

Additionally, in March 2023, Terra Preta purchased two pyrolysis ovens that each produce one ton of biochar per day to advance our research

and development activities.

We anticipate that several biochar-based water filtration and soil amendment products will be available for

production and sale by the end of 2023.

Mitigation Banking

December 2022, the Company formed Pristine Stream Ventures, Inc., an Ohio corporation (“Pristine Stream”) to engage in the

business of establishing “mitigation banks” throughout the Appalachian region in order to restore and preserve environmentally

degraded streams and waterways and support new economic development, with a particular focus on coal mine sites in economically disadvantaged

areas that are being repositioned for next generation industries and job creation.

mitigation bank is a stream, wetland or other aquatic resource that has been restored or preserved for the purpose of providing compensation

for environmental impacts to other aquatic resources.

A mitigation bank is created to ensure that ecological loss resulting from new

development is offset by the restoration and preservation of other nearby natural habitats so there is no net loss to the environment.

Regulatory agencies determine the number of mitigation credits that a mitigation bank may earn and sell upon the completion of each specific

restoration project, and likewise, the number of mitigation credits that a developer is required to purchase to offset the environmental

impact of the new development project.

Section 404 of the Clean Water Act, a permit from the U.S.

Army Corps of Engineers (“Army Corps”) is required to begin a

new development that impacts a wetland, stream or other aquatic resource.

The Army Corps, following the guidance set forth by the EPA,

will grant a permit if the applicant:

(i) takes all practicable steps to avoid an adverse impact to a wetland, stream, or other aquatic

resource, (ii) minimizes unavoidable damage to a wetland, stream, or other aquatic resource, and (iii) compensates for permanent destruction

of a wetland, stream, or other aquatic resource by creating a new comparable aquatic resource, or by restoring a degraded one.

a wetland, stream or aquatic resource is permanently destroyed as part of a project, the developer must either restore or preserve a

new wetland, stream or aquatic resource, or purchase available credits from a qualified and approved mitigation bank that has already

restored or preserved a wetland, stream or aquatic resource in a qualifying hydrological unit code (“HUC”) zone.

States Geological Survey created HUC zones based on a hierarchical land area classification system incorporating surface hydrological

features in a standard, uniform graphical framework.

HUC zone requirements are used to ensure a restored waterway is proximally located

to an impacted waterway so that the no net-loss principle incorporates a geographic factor.

mitigation can be accomplished through three options approved by the Army Corps:

(i) the developer purchases appropriate credits from

an approved mitigation bank, (ii) the developer pays into an approved in-lieu fee fund, or (iii) the developer performs the requisite

amount of aquatic restoration.

The Army Corps determines, on a case-by-case basis, the appropriate compensation option and amount of

compensation mitigation required by a developer to off-set unavoidable adverse effects to the aquatic environment.

In determining the

amount of compensation mitigation, the Army Corps will consider the functional loss at the development site, the expected functional

gain at the mitigation site, the net loss of aquatic resource surface area, risk and uncertainty of the mitigation project, and loss

of natural habitat.

Stream is planning to establish mitigation banks throughout the Appalachian region to earn mitigation credits which Pristine Stream would

later sell to developers to allow them to offset the impact of development activities in similar geographical areas.

Pristine Stream plans

to identify and select qualifying aquatic sites, work closely with applicable federal and state regulatory agencies, and use the

Range Reclamation Entities to repair and restore damaged waterways to earn mitigation credits that can be sold by Pristine Stream.

Stream is currently analyzing the supply and demand dynamics of many HUC zones throughout the Appalachian region to determine

the optimal areas of focus for its new mitigation banks, and anticipates initiating its first mitigation banking project in Appalachia

by the end of 2023.

Environmental

Security Services

Security Resources, Inc., an Ohio corporation (“Range Security”), is an environmental security services business started

by the Company in November 2022.

Range Security is focused on providing eco-friendly, technology-driven security services to active and

former mine sites, with a particular focus on locations transitioning from coal mining to next generation industries.

Range Security

is intended to serve as a complementary business to the Range Reclamation Entities.

sites in the Appalachian region frequently comprise thousands of acres of natural habitat with valuable infrastructure and operating

assets disbursed across large tracts of land.

However, many of these mine sites lack adequate broadband access or cellular service, and

therefore traditional technology-based security solutions are not available.

Also, due to the large land areas and often challenging

access roads and mountainous terrain, consistent visual confirmation of the safety and security of high value assets is problematic,

and unnecessary amounts of carbon dioxide are emitted from heavy-duty trucks used to perform frequent visual security checks.

due to the remoteness and lack of technological options, most security services in the market fail to provide an independent verification

of the security status of a mine site and confirmation of visual security checks, resulting in a customer’s uncertainty regarding

the actual security services being provided.

assets commonly found on mine sites requiring high-levels of security services include office buildings, coal operation facilities

such as preparation plants and loadout facilities, power stations and electrical lines, vehicles and heavy equipment, supplies and

chemicals, and spare parts and components.

These high-value assets are frequently the target of theft since all or parts of these

assets can be easily removed from the mine site and sold for cash.

Unfortunately, the actual damage to the operation resulting from

this type of destructive theft is frequently many times the market value of the stolen item, primarily due to the losses resulting

from the down-time of operations, the cost of repairs and replacement components, and the long-term damage to critical

infrastructure that can be repurposed and used to attract next generation industries once the mining is complete.

March 2023, Range Security was engaged by its first customer for environmental security services covering a 13,000-acre coal mine

site in West Virginia.

Range Security has hired seven new security professionals, and is focusing its recruitment efforts on

military veterans, police officers, and other professionals with security experience.

Range Security has purchased two

fuel-efficient utility task vehicles for ground surveillance and a thermal-imaging drone for aerial surveillance, all of which use

significantly less fuel and electricity to operate than traditional security vehicles and provide a much broader coverage range with

a substantially lower carbon footprint.

Range Security is also in the process of establishing satellite-based wireless service to

support video surveillance and enable a mobile technology solution used by our security professionals to provide real-time evidence

of visual security checks.

Range Security plans to expand its security service business onto several additional mine sites prior to

the end of 2023, with a particular focus on locations with valuable infrastructure being repurposed into non-coal multi-use

complexes with attractive job growth prospects and next generation industry opportunities.

Drug Development

Biosciences, Inc., a Nevada corporation (“Graphium”), is a cannabinoid-based drug development company tracing its history

of technological innovation and drug advancement back to October 2011 through two predecessor entities, Stevia First Corp.

Biopharma, Inc.

In October 2021, the Company formed Graphium as a wholly-owned subsidiary and transferred all of its drug development

assets to this newly-formed entity.

is advancing a broad portfolio of glycosylated cannabinoid prodrugs that have been developed to unlock the rebalancing effects of the

endocannabinoid system to address numerous chronic conditions with inadequate pharmaceutical options.

Graphium’s leading drug candidate,

VBX-100, is a glycosylated tetrahydrocannabinol (“THC”) cannabinoid that targets inflammatory conditions of the gastrointestinal

tract but without unwanted psychoactive or intoxicating side effects.

Cannabinoids,

including THC and cannabidiol (“CBD”), have well-known therapeutic benefits through their interaction with the human

endocannabinoid system, which serves a regulating and rebalancing function in the body.

For decades, patients have used cannabinoids

to activate the endocannabinoid system to provide relief for numerous chronic and debilitating ailments, including inflammation,

pain, anxiety, depression, and cancer.

However, THC, a commonly-used cannabinoid with significant therapeutic benefit, is

psychoactive and intoxicating, and therefore its use has many practical, and in some cases legal, limitations.

Nevertheless, many

patients with chronic health conditions, including gastrointestinal inflammation, continue to use cannabinoids because current

pharmaceutical offerings do not provide adequate therapeutic relief or result in unwanted side effects.

novel scientific discovery was the development of a proprietary enzymatic bioprocessing technology that adds one or more glucose molecules

to a cannabinoid, resulting in our proprietary glycosylated cannabinoid compounds.

Our glycosylated cannabinoids act as prodrugs that

achieve targeted delivery of the bioactive cannabinoids within the body once they are activated.

Prodrugs are compounds that, after administration,

are metabolized into a pharmacologically active drug and are often designed to improve drug properties and reduce known or expected toxicities

and adverse side effects.

The advantages of our glycosylated cannabinoid prodrugs 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.

have learned through our animal studies that glucose bound to cannabinoid molecules are inactive and poorly absorbed from the intestines,

allowing the combined molecule to reach the large intestine where glycoside hydrolase enzymes cleave the glucose and the cannabinoid

is released in a targeted and restricted manner.

Further, we have learned through our animal studies that a 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, we anticipate our glycosylated

cannabinoid prodrug will provide the anti-inflammatory benefits of low-dose THC while avoiding the psychoactive and intoxicating properties

that hinder the broader pharmaceutical use of THC.

Initially, we are targeting the $20 billion inflammatory bowel disease (“IBD”)

market in the United States, which is composed of patients suffering from ulcerative colitis and Crohn’s disease, both chronic

and debilitating conditions with no cure.

We also believe our glycosylated cannabinoids could also be used to treat other indications,

including, among others, irritable bowel syndrome (“IBS”), anxiety, depression, autism and cancer.

using our proprietary enzymatic bioprocessing technologies, our research team has developed a novel family of over 100 glycosylated cannabinoid

These glycosylated cannabinoids 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

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)

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,

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.

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.

Our pre-clinical development plan, which includes dose

range finding studies, GLP toxicology studies, pharmacokinetic studies and other pre-clinical research, is anticipated to be completed

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

a strategic partnership.

After our satisfactory completion of all of the prerequisite pre-clinical in vitro and in vivo

studies, an Investigational New Drug (IND) application would be filed with the U.S.

Food and Drug Administration (FDA) and, upon

receiving FDA approval, we would initiate our Phase 1 clinical trial, subject to the Company securing sufficient additional funding or

entering into a strategic partnership.

addition to our research and development activities related to our THC-glycoside compounds, we are expanding and diversifying our research

and development activities to include the potential safety, efficacy and commercialization of our patented CBD-glycoside compounds.

has well-known anti-anxiety, anti-inflammatory and anti-microbial properties, but unlike THC, CBD is non-psychoactive and non-intoxicating.

By glycosylating CBD, we can create CBD-glucose compounds that may enable a targeted and concentrated delivery of CBD in the gastrointestinal

Currently we are evaluating the optimal CBD-glycoside delivery mechanism, which may include an aqueous drink formulation since

our glycosylation process significantly improves the water solubility of the CBD molecule.

Processing Methods

Company originally developed its proprietary enzymatic bioprocessing technologies to attach glucose molecules to the molecules of stevia

as part of our activities in the stevia processing industry.

We then expanded the application of this proprietary technology to attach

glucose molecules to cannabinoids, including THC and CBD.

We may pursue additional opportunities to develop new products utilizing

this proprietary technology.

Currently, our intellectual property is comprised of the following patents:

(i) Cannabinoid

Glycoside Prodrugs and Methods of Synthesis:

Patent filed in 2016 and granted in 2021 for the invention of novel glycosylated cannabinoids

and methods of targeted delivery for the treatment of gastrointestinal disorders, including IBD and IBS, (ii) Antimicrobial Compositions

Comprising Cannabinoids and Methods of Using the Same:

Patent filed in 2018 and granted in 2021 for the use of cannabinoids as antibiotics

for the treatment of Clostridioides difficile , (iii) Novel Cannabinoid Glycosides and Uses Thereof:

Patent filed in 2020 and in

prosecution for additional novel cannabinoid glycosides and includes research data supporting the improved characteristics and commercial

production strategies for these new molecules, and (iv) Continuous Enzymatic Perfusion Reactor System:

Patent filed in 2021 and in prosecution

for our improved reactor system for the efficient enzymatic glycosylation of hydrophobic small molecules, including cannabinoids.

believe our intellectual property portfolio of glycosylated cannabinoids possess significant value and, as a result, we have allocated

substantial resources to ensure that our U.S.

and international patents are properly filed and successfully prosecuted.

As our research

efforts involving glycosylated cannabinoids continue to progress, we plan to file additional patents to further expand our growing family

of intellectual property assets and create long-term value for our shareholders.

research team has performed 23 animal studies to test the safety, efficacy and dosing levels of our glycosylated cannabinoids, which

have provided us with favorable scientific data and the opportunity to further refine our drug development plan.

We have performed

two industry standard colitis disease mouse models:

(i) TNBS model in 2017 and 2018 that generated favorable colitis prevention

data, and (ii) DSS model in 2021 that generated favorable colitis treatment data.

In 2021, we received a letter from the Food and

Drug Administration’s (“FDA”) Office of Orphan Products Development stating that we have been granted Orphan Drug

Designation for our glycosylated cannabinoid VBX-100 for the treatment of pediatric ulcerative colitis.

An Orphan Drug Designation

provides several benefits, including fee waivers, tax credits, fast tracking of regulatory processes, and seven years of market

to our development of pharmaceutical products, we are subject to extensive regulation by the FDA

3 unchanged sentences

Drug Enforcement Administration (“DEA”).

If we expand our clinical research, product development or commercialization

activities outside of the United States in the future, we anticipate that we would then be subject to additional regulation by the applicable

foreign jurisdictions and governing bodies, which may have different requirements.

FDA is the main regulatory body that controls pharmaceutical and biologic drugs in the United States, with additional layers of regulation

from other federal, state and local agencies.

The Federal Food, Drug, and Cosmetic Act governs most of the requirements for the development

and marketing of our pharmaceutical products.

The FDA’s drug approval process is extensive, generally including:

pre-clinical animal

studies of drug safety, efficacy and dosing, submission and approval of an IND application, clinical studies

in humans to determine safety, efficacy and dosing (Phase 1 –

3 studies), submission and approval of a New Drug Application (NDA),

and additional post-approval requirements.

Failure to comply with any FDA-requirements may result in the FDA refusing to approve our

DEA establishes procedures and monitors research and development activities of “controlled substances”

subject to the Controlled

Substances Act.

Our research and development activities focus on cannabinoids, particularly THC and CBD derived from the cannabis plant,

which the DEA has classified as Schedule I substances.

Schedule I substances are defined as drugs with no currently accepted medical

use and a high potential for abuse.

In May 2019, the DEA informed us that it had determined that they consider our VBX-100 prodrug a

Schedule I substance.

As a result, any developing, testing, manufacturing, or clinical studies involving our VBX-100 prodrug, and by

inference potentially all of our THC-glycoside molecules, are required to be properly licensed by the DEA and adhere to strict diversion

control standards.

Our current research and development efforts involving our THC-glycoside molecules are conducted at our Rocklin laboratory,

which holds a DEA-issued Controlled Substance Registration Certificate for “Research”

that expires on May 31, 2022

and is renewable on an annual basis.

Our research and development activities are also approved by and operated in compliance with the

State of California’s Research Advisory Panel, which is a division of the California Department of Justice that oversees research

performed within the state using DEA Schedule I and II substances.

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.

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.

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

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

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.

September 2015, we filed our first provisional U.S.

patent application entitled “Cannabinoid Glycoside Prodrugs and Methods of

Synthesis”, which described novel CBD-glycosides and THC-glycosides along with methods of production through enzymatic biosynthesis.

In October 2015, we filed our second provisional U.S.

patent application that added CBDV-glycosides as additional cannabosides,

plus added numerous methods of use claims for our cannabinoid-glycosides.

In July 2016, we filed our third provisional U.S.

patent application

that greatly expanded on the cannabinoid substrates for glycosylation by adding (i) the phytocannabinoid cannabinol (CBN), (ii) the endocannabinoids

anandamide, 2-AG, 1-AG, and synaptamide, and (iii) the vanilloids capsaicin, vanillin, and curcumin.

In September 2016, one year after

the filing of our first provisional patent, our non-provisional cannabinoid glycoside patent was filed, which included all prior material

plus additional data derived from our ongoing research and laboratory studies.

Also, in September 2016, we filed an expanded international

patent application under the Patent Cooperation Treaty system, which included 79 patent claims covering nearly 200 individual compounds,

including our THC and CBD prodrugs.

In March and April 2018, this application was filed for national and regional prosecution in major

pharmaceutical markets worldwide, including the United States, Canada, Mexico, Europe, China, Japan, Australia, New Zealand and Brazil.

May 2017, we filed a U.S.

patent application entitled “Antimicrobial Compositions Comprising Cannabinoids and Methods of Using

the Same”, which described compositions and methods of use involving cannabinoid-glycosides that provide antimicrobial activity

to treat microbial infections in the intestines, including Clostridioides difficile ( C.

diff ) infections.

In May 2018, one year after the filing of the provisional U.S.

patent, we filed a non-provisional U.S.

patent for the use of cannabinoid-glycosides

to deliver cannabinoids to the gastrointestinal tract to treat C.

diff infections.

January 2020, the USPTO granted our first patent entitled “Kaurenoic Acid Glycoside Precursors and Methods of Synthesis”,

which demonstrates the validity of our glycosylation platform to produce novel and patentable glycoside molecules and serves as a foundational

building block for the Company’s subsequent research of glycosylated cannabinoids.

March 2020, we filed an international patent application under the Patent Cooperation Treaty system entitled “Novel Cannabinoid

Glycosides and Uses Thereof”

that expands upon our 2016 patent filings covering glycosylated cannabinoids.

Our new 2020 patent

filings cover additional novel CBD and THC-glycosides and include research data supporting the improved characteristics and commercial

production strategies for these new molecules.

In December 2020, we filed

a provisional U.S.

patent application entitled “Continuous Enzymatic Perfusion Reactor System”, which described our improved

reactor system for the efficient enzymatic glycosylation of hydrophobic small molecules, including cannabinoids.

believe our intellectual property portfolio of cannabinoid-glycosides possess significant value and, as a result, we have allocated substantial

resources to ensure that our U.S.

and international patents are properly filed and successfully prosecuted.

As our research efforts involving

cannabinoid-glycosides continue to progress, we plan to develop and file additional patents to cover compositions of matter, methods

of production and methods of use to further expand our growing family of intellectual property assets and create long-term value for

our shareholders.

Company operates in a highly competitive and dynamic market environment, frequently against much larger and better capitalized competitors.

Currently, the Company’s cannabinoid prodrug development program competes against many well-capitalized, multinational pharmaceutical

drug manufacturers that are developing, producing and marketing pharmaceutical drugs for the treatment of IBD and IBS.

Additionally,

an increasing number of cannabinoid drug manufacturers are entering the market with cannabinoid-based drug development programs to treat

a wide range of diseases, which could include IBD and IBS.

Our expectation is that competition from traditional pharmaceutical drug developers

and non-traditional cannabinoid-based drug developers will continue to increase over the next 12 months.

Relisting and Going Concern

November 7, 2018, the SEC temporarily suspended the trading of the Company’s common stock on the OTC marketplace.

The Company’s

common stock resumed trading with limited liquidity on the grey market on November 21, 2018.

Grey market stocks are not traded or quoted

on an exchange or inter-dealer quotation system, but are reported by broker-dealers to their self-regulatory organization who, in turn,

distribute the trade data to market data vendors and financial websites.

On March 9, 2021, the Financial Industry Regulatory Authority

(“FINRA”) processed a Form 211 application relating to the initiation of priced quotations of the Company’s common

stock, and commencing on March 10, 2021, the Company’s common stock was quoted on the OTC Link ATS.

The Company is currently seeking

approval to obtain Depository Trust Company eligibility for the Company’s common stock.

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

During the year ended March 31, 2021,

the Company incurred a net loss of $880,851 and used $1,605,076 of cash in our operating activities.

These factors raise substantial

doubt about the Company’s ability to continue as a going concern for the next twelve months from the date that the financial statements

are issued which are a part of this Annual Report on Form 10-K.

In addition, the Company’s independent registered public accounting

firm, in their report on the Company’s March 31, 2021 audited financial statements, raised substantial doubt about the Company’s

ability to continue as a going concern.

No assurance can be given that any future financing or capital, if needed, will be available

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

If we cannot raise the capital or financing we need

to continue our operations, our business could fail.

of May 18, 2021, we employed three full-time employees, including one research professional working in our office and laboratory

space in Rocklin, California.

We also have engaged the services of scientific and regulatory consultants to assist with our research

and development activities, which is an approach that provides us with flexible and highly-experienced resources to advance our clinical

efforts while maintaining a relatively lower and variable overhead cost structure.

corporate headquarters is a leased office located at 1901 Avenue of the Stars, 2 nd Floor, Los Angeles, California 90067.

office and laboratory space at 2224A Sierra Meadows Drive, Rocklin, California 95677 requires a lease payment of approximately $2,700

per month under a lease agreement that expires on March 31, 2022.

We believe our current facilities are adequate to support our corporate

strategy over the next 12 months.

Our research and development activities focus on cannabinoids,

particularly THC and CBD derived from the cannabis plant, which the DEA has classified as Schedule I substances.

Schedule I substances

are defined as drugs with no currently accepted medical use and a high potential for abuse.

In May 2019, the DEA informed us that it

had determined that they consider our VBX-100 prodrug a Schedule I substance.

As a result, any developing, testing, manufacturing, or

clinical studies involving our VBX-100 prodrug, and by inference potentially all of our THC-glycoside molecules, are required to be properly

licensed by the DEA and adhere to strict diversion control standards.

are working closely with a third-party contract research organization to develop a detailed drug development plan to advance our leading

drug candidate, VBX-100, through Phase II clinical trials by the end of 2025, subject to receipt of sufficient funding, which is currently

estimated to be approximately $10.5 million.

If we are successful in advancing VBX-100 through Phase II clinical studies, then we would

seek to maximize shareholder value by either selling our drug development assets to a strategic purchaser or raising additional capital

to advance VBX-100 through Phase III clinical trials.

Investing Strategy

impact investing strategy aims to improve the health and wellness of people and the planet, while also generating long-term sustainable

financial returns for our shareholders.

We believe that doing well and doing good are not mutually exclusive, and that an impact investing

strategy can balance the environmental, social and economic needs of people and the planet while also generating attractive risk-adjusted

financial returns for shareholders.

impact investing strategy provides an opportunity for our dedicated team to address pressing environmental, social and economic challenges,

such as climate change, air and water pollution, educational inequality and economic disparity, through the development of technology-based

By actively directing investment capital towards businesses that are working to create positive environmental, social and

economic outcomes, our impact investing strategy can meaningfully contribute to an improved people-planet ecosystem and a healthier and

happier way of life.

have a particular interest in providing environmental and social solutions in economically-disadvantaged regions of the United

Initially, the Company is targeting the Appalachian region, which is home to communities with some of the most disadvantaged

income, education and employment demographics in the United States.

Our ambitious strategy is to allocate investment capital and

build operating businesses that provide positive environmental and social impact in the disadvantaged coal communities of

Appalachia to maximize the good we can do for people and the planet.

Investing Process

Company maintains a rigorous investment process comprised of sourcing, underwriting, acquiring or originating, growing, and exiting impact

investing opportunities.

Our executive management team is responsible for the construction, execution, and continued refinement of our

impact investing process, which relies upon the decades of experience of our executive management team and a periodic review, evaluation

and adoption of best practices employed in the direct investment and private equity industry.

impact investing process starts with identifying and evaluating potential investment opportunities.

We use a variety of sources to

identify potential impact investments, including our extensive network of industry contacts, third party intermediaries and

proprietary research performed by our executive management team.

Each potential impact investment is evaluated based on its fit with

our corporate strategy, the individual risks and opportunities of each potential investment, and any synergies with our other impact

investments (“Portfolio Companies”).

This detailed due diligence review is aimed at identifying and addressing material

investment risks and opportunities to create long-term sustainable value for our shareholders.

Furthermore, our evaluation of each

potential impact investment incorporates, to the extent appropriate, consideration of environmental, social and governance

(“ESG”) and diversity, equity and inclusion (“DEI”) factors in the investment decision-making

impact investments are commonly structured as stock or asset acquisitions with transaction consideration in the form of cash and the

Company’s common stock so the former owners of impact investment acquisitions are properly aligned with our public

shareholders in the creation of future value.

Additionally, the Company has developed innovative business projects that fit within

our corporate strategy and have been allocated capital and resources to grow and increase shareholder value.

Each such organic

innovation has been developed within a newly-created, wholly-owned Portfolio Company (e.g., Terra Preta, Pristine Stream and Range

Security) so the executive management team can properly monitor the performance of each organic innovation and optimize

the allocation of capital and management resources to maximize the positive overall impact to the Company and its shareholders.

a potential impact investment is acquired, or an organic innovation is launched, our executive management team is responsible for closely

monitoring on a regular basis the performance of each investment.

Each Portfolio Company has an experienced management team that is responsible

for executing a value creation plan with active support, collaboration and input from the Company’s executive management team.

Our complementary hybrid approach to investment management enables the management teams of each Portfolio Company to manage the daily

operations of the business in a decentralized manner, while the executive management team of the Company serves as an active collaborator

to the management team of each Portfolio Company to ensure the value creation plan is being successfully executed and cross-pollination

of ideas, capabilities and synergies are achieved across each Portfolio Company.

We believe a balanced approach to individual management

and corporate governance provides Portfolio Company management teams with the freedom and autonomy to preserve their ownership mindset

while also providing the Company’s executive team with the optimal level of involvement in order to maximize the overall benefits

to the Company’s shareholders.

the value creation plan is executed for each Portfolio Company, the Company’s executive team, in consultation with the management

team of each Portfolio Company, will regularly evaluate the strategic options for the business, which could include additional investment

to fund strategic growth and expansion, maximizing current cash flow without further investments, or a potential exit to a strategic

or financial buyer.

This process of evaluating strategic options is dynamic and involves many considerations, including an evaluation

of the current and future market conditions, the Portfolio Company’s current and future financial performance, changes in the Portfolio

Company’s competitive advantages, macro and micro market conditions, and exit valuations.

Since the Company is structured as a

perpetual investment vehicle without predetermined hold periods, our executive management team possesses the flexibility to regularly

evaluate the risk-return profile of each Portfolio Company and make strategic decisions that maximize the investment returns and value

creation for the Company’s shareholders.

and Operation

Company is organized as a public holding company.

Currently, all Portfolio Companies are wholly-owned subsidiaries of the Company and

are consolidated in our financial reporting.

Company’s executive management team works closely with the management team of each Portfolio Company on strategy, operations and

financial matters.

The Company allocates the time and resources of several executives to support the operations of Portfolio Companies,

including accounting, insurance and human resources, to recognize operational efficiencies and cost savings resulting from the Company’s

larger scale.

Environmental,

Social and Governance

principles are central to our mission of improving the health and wellness of people and the planet.

Our impact investing strategy is

dedicated to pursuing opportunities that improve the long-term sustainability of our people-planet ecosystem, reverse the damaging effects

of climate change, and revitalize disadvantaged communities into next generation cities.

We believe that considering ESG principles,

along with the profit potential of an investment, enables our team to take a broader, more holistic approach to capital deployment by

considering a wide range of stakeholders, including shareholders, the environment and local communities.

believe our genuine commitment to ESG principles, which is at the heart of our impact investing strategy, truly differentiates our Company

from other businesses whose dedication to ESG principles is more peripheral.

We believe our strong commitment to ESG principles will

allow us to attract similarly-committed customers, suppliers, employees, financial partners, and federal, state and local partnerships

who are motivated by our shared sense of purpose and commitment to doing well by doing good.

Equity and Inclusion

employees are integral to fostering a culture of honesty, integrity and respect.

We believe hiring, training, motivating and retaining

talented individuals is critical to the successful execution of our impact investing strategy.

Our employees are our single most important

seek to attract employees with different backgrounds and unique perspectives, and provide a safe environment for them to collaborate

in a respectful manner so our Company can benefit from their best collective thinking.

We believe a diverse, equitable and inclusive

workforce increases innovation and creativity, improves decision making, increases adaptability and flexibility, and improves stakeholder

Additionally, we believe these benefits will ultimately result in greater profits and an increase in long-term shareholder

Company is focused on a large and growing marketplace for impact investing and ESG business initiatives, and therefore, is anticipated

to face competition from a variety of operating businesses and investment funds who are developing business plans and operating strategies

to satisfy the increasing demands of these types of investments in the marketplace.

In almost all cases, these competitors are larger

and better capitalized operating businesses and investment funds.

Company competes on the basis of a number of factors, including access to capital, access to impact investing opportunities, recruitment

and retention of key personnel, market share with key customers, and supply relationships with critical vendors.

Our ability to continue

to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees.

inception, the Company and its subsidiaries have used QuickBooks as its general ledger accounting software.

However, given the significant

current and anticipated growth of its Portfolio Companies and the need for more robust information for management analysis and decision-making,

the Company has decided to transition all of its accounting software services from QuickBooks to Foundation Software.

Software, founded in Cleveland, Ohio in 1985, is specifically designed for service companies, particularly those in the construction,

contracting and reclamation industries.

Foundation Software offers the Company several enhanced features critical to the successful

execution of its value creation plan, including (i) general ledger accounting, including accounts payable, accounts receivable, inventory

and customer billing, (ii) equipment tracking on job sites, maintenance, utilization and depreciation, (iii) employee tracking on job

sites, time and materials, utilization, and billing, (iv) job costing and profitability reporting segmented by customers, job types and

location, and (v) numerous real-time management dashboard and key performance indicator reports that will allow management to closely

monitor the performance of each Portfolio Company and quickly react to business opportunities and issues.

Furthermore, Foundation Software

will allow the Company and its Portfolio Companies to quickly scale operations and efficiently and cost-effectively support the anticipated

growth of each business, thereby preventing our accounting and management systems from becoming a limiting factor to our growth initiatives.

Company has officially engaged Foundation Software as its new accounting software provider and is in the process of converting all of

the Company accounting system operations from QuickBooks to Foundation Software, which is expected to be completed during the second

quarter of 2023.

accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement

of liabilities and commitments in the normal course of business.

As reflected in the accompanying financial statements, during the year

ended December 31, 2022, the Company incurred a net loss of $1,072,176 and used $603,778 of cash in the Company’s operating activities.

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

the financial statements are issued.

The financial statements do not include any adjustments that might be necessary should the Company

be unable to continue as a going concern.

ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and/or

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

The Company estimates, as of December 31, 2022, that it has sufficient funds to operate the business for 12 months given its cash balance

of $442,369, line of credit availability of $1,000,000, and revenues being generated by the Company’s operating subsidiaries.

the Company’s existing cash balances are estimated to be sufficient to fund its currently planned level of operations, the Company

is actively seeking additional financing and other sources of capital to accelerate the funding and execution of its growth strategy

and value creation plan.

However, these estimates could differ if the Company encounters unanticipated difficulties, or if its estimates

of the amount of cash necessary to operate its business prove to be wrong, and the Company uses its available financial resources faster

than it currently expects.

No assurance can be given that any future financing or capital, if needed, will be available or, if available,

that it will be on terms that are satisfactory to the Company.

maintain a corporate website at:

www.vitality.bio.

Information contained on our website is not incorporated by reference in this Annual

We file reports with the Securities and Exchange Commission (SEC) and make available free-of-charge through our website our

annual reports, quarterly reports, current reports, proxy and information statements and amendments to those reports filed or furnished

pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act).

www.malachiteinnovations.com.

Information contained on our website is not incorporated by reference

in this Annual Report.

We file reports with the Securities and Exchange Commission (“SEC”) and make available free-of-charge

through our website our annual reports, quarterly reports, current reports, proxy and information statements and amendments to those

reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange

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-K

Item 1. Business