RANGE IMPACT, INC. 10-K

Item 9A. Controls and Procedures 46 Evaluation of Disclosure Controls and Procedures We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to management, including our principal officers, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022 and have concluded that our disclosure controls and procedures were effective as of December 31, 2022. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15. Internal control over financial reporting is defined in Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act as a process designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. Management conducted an assessment of the Company’s internal control over financial reporting as of December 31, 2022 based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (COSO). Based on the assessment, management concluded that, as of December 31, 2022, the Company’s internal controls over financial reporting were effective. Changes in Internal Control over Financial Reporting There are no changes in our internal control over financial reporting during the year ended December 31, 2022, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 47 PART III Item 10. Directors, Executive Officers and Corporate Governance Set forth below is certain information regarding our current directors and executive officers: Name Position Age Director/Executive Officer Since Edward Feighan (2)(3) Chairman of the Board of Directors 75 November 2018 Richard Celeste (1)(2)(3) Director 85 January 2019 Michael Cavanaugh Director and Chief Executive Officer 48 November 2018 / May 2019 Richard McKilligan Chief Financial Officer and Counsel 59 May 2019 Dr. Brandon Zipp Chief Science Officer 41 September 2020 (1) Member of Audit Committee (2) Member of Compensation Committee (3) Member of Nomination and Corporate Governance Committee Business Experience The following is a brief account of the education and business experience of our current directors and executive officers: Edward Feighan, Chairman, is currently the Chairman and CEO of Covius LLC, a privately-held firm providing a range of services to the mortgage securitization industry. Mr. Feighan has been an owner and Director of Continental Heritage Insurance Company, an early leader in the cannabis insurance market which provides surety bonds and other insurance solutions to the emerging cannabis markets, for more than twenty years. Previously, Mr. Feighan served as Chairman and CEO of ProCentury Insurance Corporation (NASDAQ: PROS) from its IPO in 2004 until the sale of the company to another public insurance group in 2008. In 1996, Mr. Feighan was the founding CEO of Century Business Services (NYSE: CBZ). Mr. Feighan held elective office in Cleveland, Ohio for twenty consecutive years from 1973 to 1993. After being elected to three terms in the Ohio House of Representatives from 1973 to 1979, Mr. Feighan served a four-year term as a Cuyahoga County Commissioner in the State of Ohio. Subsequently, Mr. Feighan served five terms as a Member of the United States House of Representatives from 1983 to 1993. During those ten years, Mr. Feighan served on the U.S. House Judiciary Committee and Foreign Affairs Committee. Mr. Feighan earned his law degree from Cleveland State University in 1978. The Board believes Mr. Feighan’s extensive operational and executive experience with growth companies pursuing business combination transactions, as well as his fundraising and regulatory insight and public service experience, provides the Company a critical voice and perspective as the Company continues to develop its business and grow its operations. Richard Celeste, Director, is a consultant and Founding Chair and Member of the Board of the US Olympic Museum (Colorado Springs, CO), Chair of the Board of Global Communities (Silver Spring, MD), Chair of Organic India Pvt Ltd. (India), and Chair of Organic India USA (Boulder, CO). In addition, Mr. Celeste serves on the Boards of Battelle for Kids (Columbus, OH), The Gates Family Foundation (Denver, CO), and Fabindia Ltd. (India). Mr. Celeste served as the Director of the Peace Corps from 1979-1981, as Governor of Ohio from 1983 to 1991, and as the United States Ambassador to India from 1997 to 2001. Mr. Celeste also served as the President of Colorado College from 2002-2011. The Board believes Mr. Celeste’s fundraising and regulatory insight and public service experience provides the Company a critical voice and perspective as the Company continues to develop its business and grow its operations. 48 Michael Cavanaugh, Chief Executive Officer and Director, is currently the Chief Investment Officer of Tower 1 Partnership, LLC, an investment firm focused on private and public investments in a variety of industries and manager of several affiliated investment partnerships. In 2018, Mr. Cavanaugh was Managing Director and Chief Financial Officer of Kaulig Companies, a single-member family office with interests in private equity, real estate and wealth management. From 2016 to 2018, Mr. Cavanaugh was Managing Director of Conway MacKenzie, a national turnaround consulting firm, where he established and managed the firm’s Cleveland, Ohio office and provided interim management and restructuring services to distressed and underperforming businesses. From 2006 to 2009 and 2011 to 2015, Mr. Cavanaugh was an executive with Resilience Capital Partners, a private equity firm focused on special situation control equity investments, where he served in several capacities, including as a Partner and member of the firm’s Investment Committee and as an officer and director of numerous portfolio companies. Mr. Cavanaugh received a B.A. from Columbia University in 1996, an M.B.A. from the University of Michigan Business School in 2003, and a J.D. from the University of Michigan Law School in 2003. The Board believes Mr. Cavanaugh’s extensive executive management experience and financial, legal and capital raising expertise will be valuable to the Company as it continues to develop its business and grow its operations. Richard McKilligan, Chief Financial Officer and Counsel, joined the Company in April 2012 as Controller, Counsel and Secretary. Mr. McKilligan is also a director of Bristol Investment Fund, Ltd, a private investment fund. He served as Chief Financial Officer, General Counsel and Secretary of Research Solutions, Inc. (NASDAQ: RSSS) from 2007 to 2011 and Chief Compliance Officer and Counsel to Bristol Capital Advisors, LLC, an SEC-registered investment adviser, from 2006 to 2008. Mr. McKilligan earned his law degree from Cornell Law School, his MBA from the University of Chicago Booth School of Business, and his undergraduate degree in Accountancy from the University of Illinois at Urbana-Champaign. He is a member of the State Bar of California, the New York State Bar Association and the Florida Bar. Dr. Brandon Zipp, Chief Science Officer, joined the Company in December 2012 as Staff Scientist. Dr. Zipp became Director of Research and Development in 2014, and was appointed as Chief Science Officer in 2020. Dr. Zipp received a Ph.D. in Biochemistry and Molecular Biology and a B.S. in Molecular and Cellular Biology from the University of California at Davis. Term of Office In accordance with our Bylaws, our directors are elected at each annual meeting of stockholders and serve until the next annual meeting of stockholders or until their successor has been duly elected and qualified, or until their earlier death, resignation or removal. Director Independence Pursuant to its charter, the Nomination and Corporate Governance Committee reviews the independence of each director annually and makes recommendations to the Board based on its findings. During these reviews, the Nomination and Corporate Governance Committee is to consider transactions and relationships between each director (and his or her immediate family and affiliates) and the Company and our management in order to determine whether any such transactions or relationships are inconsistent with a determination that the director was independent under the independence standards established by the Board from time to time and under the applicable rules of any applicable stock exchange, except to the extent permitted by such rules. While the Nomination and Corporate Governance Committee did not conduct its annual review of director independence in 2022, the Board has determined that all of our directors are independent other than Mr. Cavanaugh, our Chief Executive Officer. Accordingly, our Board of Directors is comprised of a majority of independent directors. Board and Committee Meetings The Board of Directors held four meetings during the year ended December 31, 2022. The directors also, on occasion, communicate informally to discuss the affairs of the Company and, when appropriate, take formal action by written consent of all of the directors, in accordance with our Certificate of Incorporation, Bylaws and Nevada law. Our Board has three standing committees: the Audit Committee, the Compensation Committee and the Nomination and Corporate Governance Committee. Members of such committees met formally and informally from time to time throughout the year ended December 31, 2022 on committee matters, with the Audit Committee holding four meetings, the Compensation Committee holding one meeting, and the Nomination and Corporate Governance Committee holding no meetings. Each director attended, in person or by telephone, at least 75% of the meetings of the Board and any committee of which he or she was a member. 49 Attendance at Annual Meeting Although the Company does not have a policy with respect to attendance by members of the Board of Directors at its annual meeting of stockholders, all directors are encouraged to attend. Committees General . The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee, and a Nomination and Corporate Governance Committee. Audit Committee . Mr. Celeste is currently the sole member of our Audit Committee. Our Board has determined that Mr. Celeste is independent within the meaning of applicable SEC rules and qualifies as an audit committee financial expert, as such term is defined in Item 407(d)(5)(ii) of SEC Regulation S-K. The Audit Committee has oversight responsibilities for, among other things: the preparation of our financial statements; oversight of our financial reporting and disclosure processes; the administration, maintenance and review of our system of internal controls regarding accounting compliance; the appointment of our independent registered public accounting firm and review of its qualifications and independence; the review of reports, written statements and letters from our independent registered public accounting firm; and our compliance with legal and regulatory requirements in connection with the foregoing. Compensation Committee . The Compensation Committee currently consists of Messrs. Feighan and Celeste, with Mr. Feighan serving as Chairman. Our Board has determined that Messrs. Feighan and Celeste meet the definition of a “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, as amended, the requirements of Section 162(m) of the Internal Revenue Code for “outside directors.” The duties of our Compensation Committee include, without limitation: reviewing, approving and administering our compensation programs and arrangements to ensure that they are effective in attracting and retaining key employees and reinforcing business strategies and objectives; determining the objectives of our executive officer compensation programs and the specific objectives relating to CEO compensation, including evaluating the performance of the CEO in light of those objectives; approving the compensation of our other executive officers and our directors; review and recommend for approval by the Board the frequency with which the Company should submit to the stockholders an advisory vote on the compensation of the Company’s named executive officers, taking into account any prior stockholder advisory vote on the frequency with which the Company shall hold a stockholder advisory vote on compensation of the Company’s named executive officers; and administering our as-in-effect incentive-compensation and equity-based plans. In making its compensation decisions and recommendations (other than with respect to the compensation of our Chief Executive Officer), the Compensation Committee takes into account the recommendation of our Chief Executive Officer. Other than giving his recommendation, our Chief Executive Officer does not participate in the Compensation Committee’s decisions regarding his own compensation. Nomination and Corporate Governance Committee . The Nomination and Corporate Governance Committee of our Board of Directors currently consists of Messrs. Feighan and Celeste, with Mr. Feighan serving as Chairman. The responsibilities of the Nomination and Corporate Governance Committee include, without limitation: assisting in the identification of nominees for election to our Board of Directors, consistent with approved qualifications and criteria; determining the composition of the Board of Directors and its committees; recommending to the Board of Directors the director nominees for the annual meeting of stockholders; establishing and monitoring a process of assessing the effectiveness of the Board of Directors; developing and overseeing a set of corporate governance guidelines and procedures; and overseeing the evaluation of our directors and executive officers. In considering potential new directors, the Committee may review individuals from various disciplines and backgrounds. Among the qualifications to be considered in the selection of candidates are broad experience in business, finance or administration; familiarity with the Company’s industry; and prominence and reputation. Our Board of Directors does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. Our Board of Directors does not have a policy with regard to the consideration of diversity in identifying director candidates, but our Board of Directors believes that the backgrounds and qualifications of its directors, considered as a whole, should provide a composite mix of experience, knowledge, and abilities that will allow our Board of Directors to fulfill its responsibilities. The Board does not currently use an independent search firm in identifying candidates for service on the Board. 50 Board Leadership Structure Mr. Feighan serves as Chairman of the Board, a position he has held since November 2019. The Company has determined its current structure to be most effective as the Chairman serves as a liaison between its directors and management and helps to maintain communication and discussion among the Board and management, while allowing the CEO to focus on the execution of business strategy, growth and development. The Chairman serves in a presiding capacity at Board meetings and has such other duties as are determined by the Board from time to time. The Board’s Role in Risk Oversight Our Board oversees the Company’s risk management efforts by reviewing information provided by management in order to oversee risk identification, risk management, and risk mitigation strategies. Our Board committees assist the Board in overseeing our material risks by focusing on risks related to the particular area of concentration of that committee. For example, our Compensation Committee oversees risks related to our executive compensation plans and arrangements, our Audit Committee oversees the financial reporting, internal control and related-party transaction risks, and our Nomination and Corporate Governance Committee oversees risks associated with the business conduct of the Company. Each committee reports its discussions of the applicable relevant risks at such Board meetings as appropriate. The full Board of Directors incorporates the insight provided by these reports into its overall risk management analysis. Communications with Directors Stockholders may communicate their concerns directly to the entire Board of Directors or specifically to non-management directors. Such communication can be confidential or anonymous, if so designated, and may be submitted in writing to the following address: Board of Directors Malachite Innovations, Inc. c/o Richard McKilligan, Corporate Secretary 200 Park Avenue, Suite 400 Cleveland, Ohio 44122 All communications received as described above will be opened by our Secretary for the sole purpose of determining whether the contents constitute a communication to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the director or directors to whom it is addressed. In the case of communications to our Board of Directors or to any group of directors, our Secretary will make sufficient copies of the contents to send to each addressee. Compensation Committee Interlocks and Insider Participation During the year ended December 31, 2022, none of our executive officers or directors was a member of the board of directors of any other company where the relationship would be construed to constitute an interlocking relationship (as described in Item 407(e)(iii) of SEC Regulation S-K). Code of Business Conduct and Ethics The Company’s Code of Business Conduct and Ethics applies to all of its employees, including its Chief Executive Officer and its Chief Financial Officer. The Code of Business Conduct and Ethics and all Committee charters are posted on the Company’s website at https://malachiteinnovations.com/wp-content/uploads/2021/10/Malachite-Innovations-Code-of-Business-Conduct.pdf Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of our equity securities (the “Reporting Persons”) to file with the SEC reports on Forms 3, 4 and 5 concerning their ownership of and transactions in our common stock and other equity securities. 51 Based solely on a review of SEC filings and other procedures performed as deemed necessary, we believe that all Reporting Persons complied with these requirements during the year ended December 31, 2022, except that each of our reporting officers and directors failed to file a timely Form 4 reporting their receipt of options to purchase the Company’s common stock under the under the Malachite Innovations, Inc. 2021 Stock Incentive Plan on November 30, 2022 as reported in a Form 5 filed by each such reporting officer and director on March 31, 2023. Item 11. Executive Compensation The following table summarizes all compensation recorded by us during the year ended December 31, 2022, the nine months ended December 31, 2021 and the year ended March 31, 2021 for (i) our current principal executive officer and principal financial officer, and (ii) our next most highly compensated executive officer other than our principal executive officer and principal financial officer serving as an executive officer at the end of our 2022 fiscal year and whose total compensation exceeded $100,000 during the year ended December 31, 2022. Summary Compensation Table Name Period Ending Salary ($) Option Awards (non-cash) (1) Total ($) Michael Cavanaugh, Chief Executive Officer (2) (principal executive officer) Year Ended 12/31/22 236,000 111,300 347,300 Transition Period Ended 12/31/21 177,000 110,102 287,102 Fiscal Year Ended 3/31/21 256,000 113,489 369,489 Richard McKilligan, Chief Financial Officer (3) (principal financial officer) Year Ended 12/31/22 180,000 37,100 217,100 Transition Period Ended 12/31/21 135,000 15,828 150,828 Fiscal Year Ended 3/31/21 185,000 34,198 219,198 Dr. Brandon Zipp, Chief Science Officer (4) Year Ended 12/31/22 180,000 37,100 217,100 Transition Period Ended 12/31/21 135,000 13,319 148,319 (1) The method used and the assumptions made to calculate the fair value of option awards included in this table are described in Footnote 5 of the financial statements and the accompanying notes for the year ended December 31, 2022 and the nine months ended December 31, 2021 appearing elsewhere in this Annual Report. (2) Based on the fair value of (i) an option to purchase 500,000 shares of common stock with an exercise price of $0.35 per share, granted in May 2019, (ii) an option to purchase 250,000 shares of common stock with an exercise price of $0.30 per share, granted in June 2019, (iii) an option to purchase 350,000 shares of common stock with an exercise price of $0.277 per share, granted in December 2021, and (iv) an option to purchase 750,000 shares of common stock with an exercise price of $0.18 per share, granted in November 2022. (3) Based on the fair value of (i) an option to purchase 75,000 shares of common stock with an exercise price of $1.81 per share, granted in December 2017, (ii) an option to purchase 250,000 shares of common stock with an exercise price of $0.30 per share, granted in June 2019, (iii) an option to purchase 150,000 shares of common stock with an exercise price of $0.277 per share, granted in December 2021, and (iv) an option to purchase 250,000 shares of common stock with an exercise price of $0.18 per share, granted in November 2022. (4) Based on the fair value of (i) an option to purchase 500,000 shares of common stock with an exercise price of $0.35 per share, granted in May 2019, and (ii) an option to purchase 150,000 shares of common stock with an exercise price of $0.277 per share, granted in December 2021, and (iv) an option to purchase 250,000 shares of common stock with an exercise price of $0.18 per share, granted in November 2022. 52 Outstanding Equity Awards at December 31, 2022 Option Awards Number of securities underlying unexercised option Option Exercise Option Expiration Grant Date Exercisable Unexercisable Price ($) Date Michael Cavanaugh (1) 5/8/2019 500,000 - 0.35 5/8/2029 6/27/2019 250,000 - 0.30 6/27/2029 12/10/2021 350,000 - 0.277 12/10/2031 11/30/2022 750,000 0.18 11/30/2032 Richard McKilligan (2) 7/18/2016 370,234 - 0.50 7/18/2026 6/27/2019 250,000 - 0.30 6/27/2029 12/10/2021 150,000 - 0.277 12/10/2031 11/30/2022 250,000 0.18 11/30/2032 Brandon Zipp (3) 7/18/2016 370,234 - 0.50 7/18/2026 5/8/2019 500,000 - 0.35 5/8/2029 12/10/2021 150,000 - 0.277 12/10/2031 11/30/2022 250,000 0.18 11/30/2032 (1) Granted under the Company’s Equity Incentive Plan, the awards consist of (i) an option to purchase 500,000 shares of common stock, 250,000 of which became fully exercisable in May 2020 and 250,000 of which became fully exercisable in May 2021, (ii) an option to purchase 250,000 shares of common stock, 125,000 of which became fully exercisable in June 2020 and 125,000 of which became fully exercisable in June 2021, (iii) an option to purchase 350,000 shares of common stock, all of which became fully exercisable in December 2021, and (iv) an option to purchase 750,000 shares of common stock all of which became fully exercisable in November 2022. (2) Granted under the Company’s Equity Incentive Plan, the awards consist of (i) an option to purchase 370,234 shares of common stock, all of which became fully exercisable in July 2018, (ii) an option to purchase 250,000 shares of common stock, 125,000 of which became fully exercisable in June 2020 and 125,000 of which became fully exercisable in June 2021, and (iii) an option to purchase 150,000 shares of common stock, all of which became fully exercisable in December 2021, and (iv) an option to purchase 250,000 shares of common stock all of which became fully exercisable in November 2022. (3) Granted under the Company’s Equity Incentive Plan, the awards consist of (i) an option to purchase 370,234 shares of common stock, all of which were became fully exercisable in July 2018, (ii) an option to purchase 500,000 shares of common stock, 250,000 of which became fully exercisable in May 2020, and 250,000 of which became fully exercisable in May 2021, and (iii) an option to purchase 150,000 shares of common stock, all of which became fully exercisable in December 2021, and (iv) an option to purchase 250,000 shares of common stock all of which became fully exercisable in November 2022. Compensation of Directors Directors receive a combination of cash and equity awards as compensation for their service. There are no additional fees paid for meetings attended although our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors and committees. 53 Director Compensation Table The following table shows compensation paid to our non-employee directors during the year ended December 31, 2022: Name Fees earned or paid in cash Option awards (non-cash) (1) All other compensation Total Richard Celeste (1) $ 36,000 $ 37,100 $ - $ 73,100 Edward Feighan (1) $ 136,000 $ 37,100 - $ 173,100 (1) As of December 31, 2022, the aggregate number of stock and option awards held by each of our non-employee directors was as follows: (i) Mr. Celeste held an option award to purchase 500,000 shares of our common stock with an exercise price of $0.35 per share, an option to purchase 250,000 shares of our common stock with an exercise price of $0.277 per share, and an option to purchase 250,000 shares of our common stock with an exercise price of $0.18 per share, all of which are fully vested, and (ii) Mr. Feighan held an option award to purchase 500,000 shares of our common stock with an exercise price of $0.35 per share, an option to purchase 250,000 shares of our common stock with an exercise price of $0.30 per share, and an option to purchase 250,000 shares of our common stock with an exercise price of $0.277 per share, and an option to purchase 250,000 shares of our common stock with an exercise price of $0.18 per share, all of which are fully vested. The method used and the assumptions made to calculate the fair value of the options are described in Footnote 5 of the financial statements and the accompanying notes for the year ended December 31, 2022 and the nine months ended December 31, 2021 appearing elsewhere in this Annual Report. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth certain information regarding the beneficial ownership of our common stock by (i) each person who, to our knowledge, beneficially owns more than 5% of our common stock, (ii) each of our directors and named executive officers, and (iii) all of our current executive officers and directors as a group. Unless otherwise indicated in the footnotes to the following table, the address of each person named in the table is: c/o Malachite Innovations, Inc., 200 Park Avenue, Suite 400, Cleveland, Ohio 44122. Shares of our common stock subject to options, warrants or other rights currently exercisable or exercisable within 60 days after December 31, 2022, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the person holding such options, warrants, convertible notes or other rights, but are not deemed outstanding for computing the beneficial ownership percentage of any other person. Name of Beneficial Owner Number of Shares Beneficially Owned Percentage Beneficially Owned (1) Directors and Named Executive Officers: Edward Feighan (2) 3,940,917 5.0 Richard Celeste (3) 1,000,000 1.3 Michael Cavanaugh (4) 2,729,791 3.5 Richard McKilligan (5) 1,030,234 1.3 Dr. Brandon Zipp (6) 1,334,234 1.7 All Directors and Executive Officers as a Group (5 persons) 10,035,176 12.8 Joseph LoConti (7) 20,053,730 25.7 Indemnity National Insurance Company (8) 13,333,333 17.1 (1) Based on 78,116,814 shares of our common stock issued and outstanding as of March 30, 2023. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. 54 (2) Includes (i) 502,500 shares of the Company’s common stock acquired in connection with a Securities Purchase Agreement dated October 19, 2018, (ii) 100,376 shares of the Company’s common stock acquired in connection with a Share Exchange Agreement dated October 19, 2018, (iii) 1,402,813 shares of the Company’s common stock acquired in connection with an a mendment dated January 18, 2019 to the Securities Purchase Agreement dated October 19, 2018 , and (iv) options to purchase 1,250,000 shares of common stock, all of which are fully vested. Also includes (x) 167,500 shares of the Company’s common stock acquired by The Feighan Family Fund, LLC (the “Feighan Fund”), an entity beneficially owned by Mr. Feighan in connection with a Securities Purchase Agreement dated October 19, 2018, (y) 50,124 shares of the Company’s common stock acquired by the Feighan Fund in connection with a Share Exchange Agreement dated October 19, 2018, and (z) 467,604 shares of the Company’s common stock acquired by the Feighan Fund in connection with an a mendment dated January 18, 2019 to the Securities Purchase Agreement dated October 19, 2018. (3) Represents options to purchase 1,000,000 shares of common stock, all of which are fully vested. (4) Includes (i) 50,000 shares of the Company’s common stock acquired in connection with a Securities Purchase Agreement dated October 19, 2018, (ii) 257,500 shares of the Company’s common stock acquired in connection with a Share Exchange Agreement dated October 19, 2018, (iii) 572,291 shares of the Company’s common stock acquired in connection with an a mendment dated January 18, 2019 to the Securities Purchase Agreement dated October 19, 2018 , and (iv) options to purchase 1,850,000 shares of common stock, all of which are fully vested. (5) Includes (i) a grant of 10,000 shares of restricted common stock, which is fully vested, and (ii) options to purchase 1,020,234 shares of common stock, all of which are fully vested. (6) Includes (i) 64,000 shares of common stock, 14,000 of which represent a grant of restricted common stock, which is fully vested, and (ii) options to purchase 1,270,234 shares of common stock, all of which are fully vested. (7) This information is based solely on the Form 4 filed on August 26, 2021, and Amendment No. 3 to Schedule 13D filed on May 27, 2022. Joseph LoConti has reported the sole power to vote and dispose of 7,256,584 shares of the Company’s common stock and the shared power to vote and dispose of 19,463,813 shares of the Company’s common stock, 6,666,667 of which are warrant shares. Mr. LoConti’s address is 200 Park Avenue, Suite 400, Orange Village, Ohio 44122. (8) This information is based solely on the Form 13G filed on June 1, 2022. Indemnity National Insurance Company has reported the sole power to vote and dispose of 26,666,666 shares of the Company’s common stock, 13,333,333 of which are warrant shares. Indemnity National Insurance Company’s address is 238 Bedford Way, Franklin, Tennessee 37064. Item 13. Certain Relationships and Related Transactions, and Director Independence Transactions with Related Persons During the year ended December 31, 2022 and the nine months ended December 31, 2021, and through the filing of this Annual Report, there have been no transactions, and there are no currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material interest. Director Independence Our Board of Directors has determined that Messrs. Feighan and Celeste would qualify as “independent” as that term is defined by Nasdaq Listing Rule 5605(a)(2). Mr. Cavanaugh would not qualify as “independent” because he currently serves as our Chief Executive Officer. 55 Item 14. Principal Accounting Fees and Services Independent Registered Public Accounting Firm’s Fee Summary The following table provides information regarding the fees billed to us by Meaden & Moore, Ltd., our independent registered public accounting firms, for services rendered in the year ended December 31, 2022 and the nine months ended December 31, 2021. All fees described below were approved by our Board of Directors: For the year ended December 31, 2022 For the nine months ended December 31, 2021 Audit Fees $ 143,200 $ 48,500 Tax Fees 13,671 29,921 All Other Fees 1,900 - Total Fees $ 158,771 $ 78,421 Audit Fees. The fees identified under this caption were for professional services rendered by Meaden & Moore, Ltd. for the audit of our annual financial statements. The fees identified under this caption also include fees for professional services rendered by Meaden & Moore, Ltd. for the review of the financial statements included in our quarterly reports on Forms 10-Q. In addition, the amounts include fees for services that are normally provided by the auditor in connection with regulatory filings and engagements for the years identified. Audit-Related Fees. The fees identified under this caption consist of assurance and related services reasonably related to the performance of the audit or review of financial statements and not reported under the caption “ Audit Fees ”. We incurred no such fees during the year ended December 31, 2022 and the nine months ended December 31, 2021. Tax Fees. Tax fees consist principally of assistance related to tax compliance and reporting. All Other Fees . These fees consist primarily of accounting consultation fees related to potential collaborative agreements. We incurred no such fees during the nine months ended December 31, 2021. Pre-Approval Policies and Procedures Our Audit Committee’s charter requires our Audit Committee to pre-approve all audit and permissible non-audit services to be performed for the Company by our independent registered public accounting firm, giving effect to the “de minimis” exception for ratification of certain non-audit services allowed by the applicable rules of the SEC, in order to assure that the provision of such services does not impair the auditor’s independence. Since the establishment of our Audit Committee on August 24, 2012, the Audit Committee approved in advance all services provided by our independent registered public accounting firm. All engagements of our independent registered public accounting firm for 2012 entered into prior to the establishment of the Audit Committee were pre-approved by the Board of Directors. 56 PART IV Item 15. Exhibits, Financial Statement Schedules (a) (1) The financial statements filed as a part of this Annual Report are as follows: Report of Independent Registered Public Accounting Firm (PCAOB ID 314) F-2 Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 F-4 Consolidated Statements of Operations for the year ended December 31, 2022 and the nine months ended December 31, 2021 F-5 Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2022 and the nine months ended December 31, 2021 F-6 Consolidated Statements of Cash Flows for the year ended December 31, 2022 and the nine months ended December 31, 2021 F-7 Notes to Consolidated Financial Statements F-8 (2) Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) The exhibits filed with this Annual Report are set forth in the Exhibit Index included at the end of this Annual Report, which is incorporated herein by reference. Item 16. Form 10-K Summary None. 57 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MALACHITE INNOVATIONS, INC. Date: March 31, 2023 By: /s/ Michael Cavanaugh Michael Cavanaugh Chief Executive Officer (Principal Executive Officer) KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael Cavanaugh as his or her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report is signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Michael Cavanaugh Chief Executive Officer and Director March 31, 2023 Michael Cavanaugh (Principal Executive Officer) /s/ Edward Feighan Director March 31, 2023 Edward Feighan /s/ Richard Celeste Director March 31, 2023 Richard Celeste 58 EXHIBIT INDEX 2.1 Agreement and Plan of Merger, dated September 14, 2011, by and between Stevia First Corp. and Legend Mining Inc. (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2011.) 3.1.1 Articles of Incorporation of Stevia First Corp. (Incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-1 filed with the SEC on August 6, 2008 (File No. 333-152830).) 3.1.2 Certificate of Amendment of Articles of Incorporation of Vitality Biopharma, Inc. (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on July 19, 2016.) 3.1.3 Articles of Merger, effective October 10, 2011 (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2011.) 3.1.4 Certificate of Change, effective October 10, 2011 (Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 14, 2011.) 3.1.5 Articles of Merger, dated as of September 30, 2021, (Incorporated by reference to Exhibit 2.1.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 12, 2021.) 3.2.1. Bylaws of Stevia First Corp. (Incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-1 filed with the SEC on August 6, 2008 (File No. 333-152830).) 3.2.2 Certificate of Amendment of Bylaws of Stevia First Corp. (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on February 7, 2012.) 3.2.3. Bylaws of Malachite Innovations, Inc., effective as of November 10, 2021 (Incorporated by reference to Exhibit 3.2.3 to the registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 15, 2021.) 10.2 Securities Purchase Agreement, dated October 19, 2018 by and among Vitality Biopharma, Inc., and the Purchasers listed on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2018.) 10.3 Securities Exchange Agreement, dated October 19, 2018 by and among Vitality Biopharma, Inc., and the Shareholders listed on the signature pages thereto (Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2018.) 10.4 Amendment to Securities Purchase Agreement, dated as of January 18, 2019 by and among Vitality Biopharma, Inc. and the Investors listed on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on January 22, 2019.) 10.5 Separation Agreement and Release, dated May 8, 2019, by and between the registrant and Robert Brooke. (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 14, 2019.) 10.6# Third Amendment to Vitality Biopharma, Inc. 2012 Stock Incentive Plan (Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 14, 2019.) 10.7# Employment Agreement between the Company and Dr. Brandon Zipp, dated September 24, 2020 (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on September 25, 2020.) 10.8# Employment Agreement between the Company and Richard McKilligan, dated September 24, 2020 (Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on September 25, 2020.) 10.9 Securities Purchase Agreement, dated as of August 19, 2021, by and between the registrant, Triton Funds, LP and Triton Funds, LLC (Incorporated by reference to Exhibit 10.9 to the registrant’s Registration Statement on Form S-1 filed with the SEC on August 31, 2021 (File No. 333-259010). 10.10 Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 filed with the SEC on August 31, 2021 (File No. 333-259010). 10.11# Vitality Biopharma, Inc. 2021 Stock Incentive Plan (Incorporated by reference to Exhibit 99.1 to the registrant’s Registration Statement on Form S-8 filed with the SEC on September 3, 2021.) 21.1* Subsidiaries 23.1* Consent of Meaden & Moore, Ltd. 23.3* Power of Attorney (included on the signature page to this Annual Report.) 31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities and Exchange Act of 1934 31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities and Exchange Act of 1934 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith # Management contract or compensatory plan or arrangement. 59 Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 314 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4 Consolidated Statements of Operations for the year ended December 31, 2022 and the nine months ended December 31, 2021 F-5 Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2022 and nine months ended December 31, 2021 F-6 Consolidated Statements of Cash Flows for the year ended December 31, 2022 and the nine months ended December 31, 2021 F-7 Notes to Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Malachite Innovations, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Malachite Innovations, Inc. (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2022 and the nine months ended December 31, 2021, and the related notes and schedules (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022 and the nine months ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F- 2 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Going Concern: The Company has experienced recurring losses from operations and negative cash flows from operations which raise substantial doubt about its ability to continue as a going concern. However, management believes the substantial doubt is alleviated, based on the acquisition of a revenue-generating subsidiary and additional debt financing via a revolving credit facility, that provides the Company with enough funds to ensure continuing operations as a stand-alone entity for a period of at least one year from the issuance of these consolidated financial statements. We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s future cash flows and the risk of bias in management’s judgments and assumptions in their determination. The evaluation of certain assumptions used in the Company’s estimate of its cash inflows and outflows used in its forecasted model of liquidity for at least 12 months beyond the date of the issuance of the consolidated financial statements involved a high degree of subjective auditor judgment. Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: ● We gained an understanding of the internal controls over the Company’s going concern evaluation, including the inputs and assumptions used in forecasted results. ● We assessed whether the Company’s determination that there is no substantial doubt about the entity’s ability to continue as a going concern was adequately disclosed, including adequate disclosure of detail related to management’s plan. ● We tested the reasonableness of the forecasted operating expenses, including uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the consolidated financial statement issuance date. This testing included inquiries with management, testing of revenue transactions, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors, and consideration of the Company’s relationships with its financing partners. /s/ Meaden & Moore, Ltd MEADEN & MOORE, LTD. We have served as the Company’s auditor since 2021. Cleveland, Ohio March 31, 2023 F- 3 MALACHITE INNOVATIONS, INC. CONSOLIDATED BALANCE SHEETS December 31 2022 2021 Assets Current Assets Cash and cash equivalents $ 442,369 $ 38,343 Accounts receivable 981,385 - Prepaid expenses 884 3,884 Total current assets 1,424,638 42,227 Long-term Assets Equipment, net of accumulated depreciation 6,045,514 - Goodwill 751,421 - Deposits 8,892 8,692 Total long-term assets 6,805,827 8,692 Total Assets $ 8,230,465 $ 50,919 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 233,808 $ 82,560 Current portion of long-term debt 1,319,201 - Line of credit - 350,000 Total current liabilities 1,553,009 432,560 Long-term Liabilities Long-term debt, net of current portion 3,738,013 - Total long-term debt 3,738,013 - Total liabilities 5,291,022 432,560 Stockholders’ Equity Common stock, par value $ 0.001 per share; 1,000,000,000 shares authorized; 78,116,814 and 51,450,147 shares issued and outstanding, respectively 78,117 51,450 Additional paid-in-capital 53,074,180 48,707,587 Accumulated deficit ( 50,212,854 ) ( 49,140,678 ) Total stockholders’ equity (deficit) 2,939,443 ( 381,641 ) Total Liabilities and Stockholders’ Equity $ 8,230,465 $ 50,919 The accompanying notes are an integral part of these consolidated financial statements. F- 4 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2022 Nine Months Ended December 31, 2021 Revenues $ 4,832,278 $ - Cost of services 3,439,026 - Gross profit 1,393,252 - Operating Expenses: General and administrative 2,022,882 1,413,774 Research and development 470,803 298,925 Total operating expenses 2,493,685 1,712,699 Loss from operations ( 1,100,433 ) ( 1,712,699 ) Other income (expense): Gain on loan forgiveness 109,435 - Interest expense ( 81,178 ) - Other income (expense) - ( 270 ) Total other income (expense) 28,257 ( 270 ) Net loss $ ( 1,072,176 ) $ ( 1,712,969 ) Net loss per share – basic and diluted $ ( 0.02 ) $ ( 0.03 ) Weighted average number of common shares outstanding – basic and diluted 68,112,248 50,968,292 The accompanying notes are an integral part of these consolidated financial statements. F- 5 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY YEAR ENDED DECEMBER 31, 2022 AND THE NINE MONTHS ENDED DECEMBER 31, 2021 Additional Common Stock Paid-in- Accumulated Shares Amount Capital Deficit Total Balance, March 31, 2021 50,840,147 $ 50,840 $ 48,240,263 $ ( 47,427,709 ) $ 863,394 Cancellation of shares ( 140,000 ) ( 140 ) 140 - - Shares and warrants issued for cash 750,000 750 169,200 - 169,950 Fair value of vested stock options - - 297,984 - 297,984 Net Loss - - - ( 1,712,969 ) ( 1,712,969 ) Balance, December 31, 2021 51,450,147 $ 51,450 $ 48,707,587 $ ( 49,140,678 ) $ ( 381,641 ) Shares and warrants issued for cash 21,666,667 21,667 3,228,333 - 3,250,000 Shares issued in exchange for Range 5,000,000 5,000 745,000 - 750,000 Fair value of vested stock options - - 393,260 - 393,260 Net Loss - - - ( 1,072,176 ) ( 1,072,176 ) Balance, December 31, 2022 78,116,814 $ 78,117 $ 53,074,180 $ ( 50,212,854 ) $ 2,939,443 The accompanying notes are an integral part of these consolidated financial statements. F- 6 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2022 Nine Months Ended December 31, 2021 Cash flows from operating activities: Net loss $ ( 1,072,176 ) $ ( 1,712,969 ) Adjustments to reconcile net loss to net cash used in operating activities: Fair value of vested stock options 393,260 297,984 Depreciation 395,543 - Changes in operating assets and liabilities: Accounts receivable ( 91,466 ) - Forgiveness of PPP loan ( 109,435 ) - Prepaid expense and other current assets 3,000 ( 689 ) Accounts payable and accrued liabilities ( 122,304 ) 49,120 Deposits ( 200 ) 810 Net cash used in operating activities ( 603,778 ) ( 1,365,744 ) Cash flows from investing activities: Cash acquired in acquisition of Range Environmental Resources 15,827 - Equipment purchases ( 5,813,057 ) - Cash paid for acquisition of Range Environmental Resources ( 750,000 ) - Net cash used in investing activities ( 6,547,230 ) - Cash provided by financing activities: Proceeds from issuance of common shares and warrants 3,250,000 169,950 Proceeds from long-term debt 5,091,177 350,000 Repayment of long-term debt ( 277,328 ) - Payoff of SBA disaster loan ( 158,815 ) - Payoff of line of credit ( 350,000 ) - Net cash provided by financing activities 7,555,034 519,950 Net increase (decrease) in cash and cash equivalents 404,026 ( 845,794 ) Cash and cash equivalents - beginning of period 38,343 884,137 Cash and cash equivalents - end of period $ 442,369 $ 38,343 Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $ - $ 2,400 Supplemental non-cash investing and financing activities: Shares issued for acquisition $ 750,000 $ - Long-term debt from Range Reclamation Entities acquisition $ 243,365 $ - Forgiveness of PPP loan $ ( 109,435 ) - Cancellation of shares $ - $ ( 140 ) The accompanying notes are an integral part of these consolidated financial statements. F- 7 MALACHITE INNOVATIONS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2022 AND THE NINE MONTHS ENDED DECEMBER 31, 2021 1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Malachite Innovations, Inc. (the “Company”, “we”, “us” or “our”), was incorporated in the State of Nevada on June 29, 2007. Originally founded in 2007 as Legend Mining Inc., the Company began operations as a mineral extraction exploration business. In 2011, the Company changed its name to Stevia First Corp and pursued a new strategy focused on developing stevia-based additives for the food and beverage industry. In 2015, the Company changed its name to Vitality Biopharma, Inc. and pursued a new strategy focused on developing cannabinoid-based prodrugs anticipated to treat inflammatory conditions of the gastrointestinal tract by unlocking the therapeutic properties of cannabinoids but without their unwanted psychoactive side effects. In October 2021, the Company changed its name to Malachite Innovations, Inc. and reorganized its corporate structure and created the following two wholly-owned operating subsidiaries: (i) Graphium Biosciences, Inc., a Nevada corporation (“Graphium”), into which the Company contributed all of its drug development assets; and (ii) Daedalus Ecosciences, Inc., a Nevada corporation (“Daedalus”) which was formed to serve as a holding company for the Company’s future ESG operating businesses. In May 2022, Daedalus acquired Range Environmental Resources, Inc., a West Virginia corporation (“Range Environmental”) and Range Natural Resources, Inc., a West Virginia corporation (“Range Natural” and together with Range Environmental, the “Range 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, sells water treatment chemicals manufactured by third parties to their customers. Range Natural also provides resource mining services for customers incidental to the reclamation and repurposing of mine sites. On December 31, 2022, Daedalus was merged into Malachite Innovations, Inc., leaving Malachite Innovations, Inc., as the parent company with full ownership of all of its wholly-owned operating subsidiaries, including the Range Reclamation Entities, Terra Preta, Pristine Stream, Range Security and Graphium. Going Concern The 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. The 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 Range Reclamation Entities. Although 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. F- 8 Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Graphium Biosciences, Inc., Range Environmental Resources, Inc., Range Natural Resources, Inc., Terra Preta, Inc., Pristine Stream Ventures, Inc., Range Security Resources, Inc., Daedalus Ecosciences, Inc. (merged into Malachite Innovations, Inc. on December 31, 2022), and Vitality Healthtech, Inc. (dissolved in May 2021), and have been prepared in accordance with accounting principles generally accepted in the United States of America. Intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year end is December 31. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”. The core principle of the revenue standard is that a company should recognize revenue by analyzing the following five steps; (1) identify the contract with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) each performance obligation is satisfied. The Company primarily invoices customers and recognizes revenue on a periodic basis for equipment and labor hours provided to a customer on a particular job based on an agreed-upon hourly rate sheet or a fixed amount for a project. The Company also invoices customers and recognizes revenue for equipment mobilization fees and materials and supplies required to complete a project. The Company invoices for the sales of chemicals and recognizes 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. All revenue is recognized at a point in time. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. From time to time, the Company’s cash account balances exceed the balances covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances. Accounts Receivable Trade accounts receivable are stated at the amount management expects to collect from the balances outstanding at the end of each fiscal period reflected in the consolidated balance sheets. Based on management’s assessment, it has concluded that losses on balances outstanding as of those dates will be immaterial and, therefore, no allowances were recorded for the year ended December 31, 2022 or the nine months ended December 31, 2021. Accounts receivable were $ 981,385 at December 31, 2022. There were no accounts receivable balances at December 31, 2021 or March 31, 2021. No bad debt expense was accrued in either the year ended December 31, 2022 or the nine months ended December 31, 2021 and there is no allowance for doubtful accounts as of December 31, 2022 or December 31, 2021. Equipment Equipment is carried at cost. Expenditures for maintenance and repairs are charged to cost of services. Additions and betterments are capitalized. The cost and related accumulated depreciation of equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reflected in the current year’s earnings. F- 9 SCHEDULE OF EQUIPMENT December 31, 2022 December 31, 2021 Equipment $ 6,637,814 $ - Accumulated depreciation 592,300 - Net book value 6,045,514 - Depreciation expense $ 395,543 $ - The Company provides for depreciation of equipment using the straight-line method for both financial reporting and federal income tax purposes over the estimated six-year useful lives of the equipment. The Company assesses the recoverability of its equipment by determining whether the depreciation of the assets over their remaining lives can be recovered through projected future cash flows generated by the assets. There were no assets identified for impairment. Delivery Costs Delivery costs are classified as cost of sales. Goodwill Goodwill is tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not (i.e., a likelihood greater than 50%) that the intangible asset is impaired. Income Taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized as income (loss) in the period that includes the enactment date. Leases The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. The Company had no lease commitments for longer than one year as of December 31, 2022. The laboratory space lease in Rocklin, California was renewed in March 2022 and ends on March 31, 2023. Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The Company recognizes the fair value of stock-based compensation within its Consolidated Statements of Operations with classification depending on the nature of the services rendered. F- 10 The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. Basic and Diluted Loss Per Share Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted unless they are antidilutive. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE December 31, 2022 December 31, 2021 Options 9,392,544 6,882,544 Warrants 22,313,335 646,668 Total 31,705,879 7,529,212 Patents and Patent Application Costs Although the Company believes that its patents and underlying technology have continuing value, the amount of future benefits to be derived from the patents is uncertain. Accordingly, patent costs are expensed as incurred. Research and Development Research and development costs consist primarily of fees paid to consultants and outside service providers, patent fees and costs, and other expenses relating to the acquisition, design, development and testing of the Company’s treatments and product candidates. Research and development costs are expensed as incurred. Fair Value of Financial Instruments FASB ASC 825, “Financial Instruments” requires that the Company disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable and long-term debt. The carrying amounts reported in the balance sheets for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value. Segments As of October 1, 2021, we began operating under two segments: (i) Graphium Biosciences, Inc., a wholly-owned subsidiary of the Company, reports the operating results of our cannabinoid drug development segment, which 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, and (ii) the Range Reclamation Entities, which are wholly-owned subsidiaries of the Company, report the operating results of the Environmental Services segment, which provides land reclamation, water restoration and environmental consulting services to mining and non-mining customers . Three other operating business segments (i) Biochar Products and Solutions, (ii) Stream Mitigation Banking, and (iii) Environmental Security Services, began operations in the first quarter of 2023. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing, and distribution processes. F- 11 Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. 2. ACQUISITION OF RANGE ENVIRONMENTAL RESOURCES AND RANGE NATURAL RESOURCES In May 2022, the Company and its wholly-owned subsidiary, Daedalus Ecosciences, Inc., entered into a share purchase agreement with Range Environmental Resources, Inc. (“Range Environmental”), and Range Natural Resources, Inc. (“Range Natural”, and collectively with Range Environmental, the “Range Reclamation Entities”), and the two (2) shareholders of the Range Reclamation Entities (the “Range Shareholders”) (the “Share Purchase Agreement”), under which the Company issued a total of 10,000,000 shares of the Company’s common stock to the Range Shareholders and Daedalus Ecosciences paid cash consideration of $ 1,000,000 to the Range Shareholders for 80 % of the outstanding common stock of each of the Range Reclamation Entities. Subsequent to entering into the Share Purchase Agreement, the Company discovered that Joshua Justice, one of the Range Shareholders (“Justice”), made certain misrepresentations in the Share Purchase Agreement. On July 12, 2022, the Company entered into a Separation Agreement, by and among the Company, Daedalus Ecosciences, the Range Reclamation Entities, and Justice and his spouse (the “Separation Agreement”) pursuant to which Justice: a) acknowledged that his employment with the Range Reclamation Entities was terminated for cause effective June 30, 2022; b) returned the 5,000,000 shares of the Company’s common stock that had been issued to him under the terms of the Share Purchase Agreement; c) transferred his 10% interest in each of the Range Reclamation Entities to Daedalus Ecosciences; and d) paid Daedalus Ecosciences cash in an amount of $250,000. As a result, only 5,000,000 of the Company’s common stock issued to the Range Shareholders is considered to have been issued in exchange for 90% of the outstanding common stock of each of the Range Reclamation Entities . Subsequently, on October 11, 2022, Daedalus Ecosciences and Jeremy Starks, the remaining Range Shareholder (“Starks”), entered into a share purchase agreement, effective as of May 11, 2022 (the “Starks Agreement”), pursuant to which Starks exchanged his 10 % common stock ownership of the Range Reclamation Entities for 10 % of the Cash Dividends and Sale Proceeds (as both terms are defined in the Starks Agreement) of the Range Reclamation Entities, as a result of which, the Range Reclamation Entities are now wholly-owned subsidiaries of Daedalus Ecosciences and the Range Reclamation Entities are reported as wholly-owned indirect subsidiaries of the Company in the financial statements made part of this Form 10-Q. No other changes were made to the consideration received by Starks as part of the Share Purchase Agreement and he remains as President of each of the Range Reclamation Entities. The Company accounted for the transaction as a business combination in accordance ASC 805 “Business Combinations”. The Company has performed an allocation of the purchase price paid for the assets acquired and the liabilities assumed. The fair values of the assets acquired are set forth below. The allocation of the purchase price is based on management’s estimates. SCHEDULE OF BUSINESS ACQUISITION ALLOCATION OF PURCHASE PRICE F- 12 Fair value of assets acquired: Cash $ 15,827 Accounts receivables 889,919 Property and equipment 628,000 Goodwill 751,421 Total assets acquired 2,285,167 Fair value of liabilities assumed ( 785,167 ) Purchase price $ 1,500,000 Cash consideration 750,000 Common stock consideration 750,000 Total purchase price $ 1,500,000 Acquisition transaction costs incurred $ 20,592 Goodwill has an assigned value of $ 751,421 and represents the value of the Range Reclamation Entities’ brand reputation, customer base and employee relations. 3. GOODWILL Goodwill increased to $ 751,421 at December 31, 2022. There had been no goodwill at December 31, 2021. The increase in goodwill was driven by the addition of the Range Reclamation Entities in the period and represents the value of the Range Reclamation Entities’ employee relations . Goodwill by reportable segment is as follows: SCHEDULE OF GOODWILL December 31, 2022 December 31, 2021 Range Reclamation Entities: Beginning Balance $ - $ - Acquisitions 751,421 - Adjustments - - Ending Balance $ 751,421 $ - 4. EQUITY Issuance of Common Stock and Warrants In May 2022, the Company entered into two securities purchase agreements providing for the issuance and sale by the Company of (i) 20,000,000 shares of the Company’s common stock (the “May Shares”) at a price of $ 0.15 per share and (ii) warrants to purchase up to an additional 20,000,000 shares of the Company’s common stock (the “May Warrants”, and the shares issuable upon exercise of the Warrants, the “May Warrant Shares”) at a price of $ 0.60 per share. The May Warrants expire on May 10, 2027. The aggregate proceeds to the Company from the sale of the May Shares and May Warrants was $ 3,000,000 . In May 2022, the Company purchased 90% of the outstanding common stock of each of the Range Reclamation Entities for a combination of Company shares and cash, as described in Note 2. Only 5,000,000 of the Company’s common stock issued to the Range Shareholders is considered outstanding as of December 31, 2022, in order to reflect the effects of the Separation Agreement. In August 2022, the Company entered into a securities purchase agreement providing for the issuance and sale by the Company of (i) 1,666,667 shares of the Company’s common stock (the “August Shares”) at a price of $ 0.15 per share and (ii) warrants to purchase up to an additional 1,666,667 shares of the Company’s common stock (the “August Warrants”, and the shares issuable upon exercise of the Warrants, the “August Warrant Shares”) at a price of $ 0.60 per share. The August Warrants expire on August 26, 2027. The aggregate proceeds to the Company from the sale of the August Shares and August Warrants was $ 250,000 . F- 13 5. STOCK OPTIONS Stock options issued during the year ended December 31, 2022 During the year ended December 31, 2022, the Company granted to directors, advisors, and employees options to purchase an aggregate of 2,650,000 shares of the Company’s common stock with exercise prices of $ 0.18 per share that expire ten years from the date of grant, and vested upon grant. The fair value of each option award was estimated on the date of grant using the Black-Scholes-Merton Option Pricing model based on the following assumptions: (i) volatility rate of 277.5 %, (ii) discount rate of 3.82 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years, which is the average of the term of the options and their vesting periods. The total fair value of the option grants to employees at their grant dates was approximately $ 393,260 , all of which was allocated to general and administrative expenses during the year ended December 31, 2022. Stock options issued during the nine months ended December 31, 2021 During the nine months ended December 31, 2021, the Company granted to directors and employees options to purchase an aggregate of 1,150,000 shares of the Company’s common stock with exercise prices of $ 0.277 per share that expire ten years from the date of grant, and vested upon grant. The fair value of each option award was estimated on the date of grant using the Black-Scholes-Merton Option Pricing model based on the following assumptions: (i) volatility rate of 385.62 %, (ii) discount rate of 1.25 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years, which is the average of the term of the options and their vesting periods. The total fair value of the option grants to employees at their grant dates was approximately $ 251,455 , all of which was allocated to general and administrative expenses during the nine months ended December 31, 2021. During the nine months ended December 31, 2021, we cancelled options to purchase 265,000 shares of common stock that had been issued to two employees under the prior stock incentive plan. These options were exchanged for options to purchase 242,256 shares of common stock and the new options are included in the options to purchase 1,150,000 shares of common stock described above. During the year ended December 31, 2022 and the nine months ended December 31, 2021, total stock-based compensation expense related to vested stock options was $ 393,260 and $ 297,984 , respectively. At December 31, 2022, there was no remaining unamortized cost of the outstanding stock-based awards. A summary of the Company’s stock option activity during the year ended December 31, 2022 and the nine months ended December 31, 2021 is as follows: SUMMARY OF STOCK OPTION ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at March 31, 2021 5,997,544 $ 0.91 Granted 1,150,000 0.277 Exchanged ( 265,000 ) Exercised - - Expired - - Forfeited - - Balance outstanding at December 31, 2021 6,882,544 $ 0.69 Granted 2,650,000 0.18 Exercised - - Expired ( 140,000 ) 1.12 Forfeited - - Balance outstanding at December 31, 2022 9,392,544 $ 0.54 Balance exercisable at December 31, 2022 9,392,544 $ 0.54 At December 31, 2022, the 9,392,544 outstanding stock options had no intrinsic value. F- 14 A summary of the Company’s stock options outstanding and exercisable as of December 31, 2022 is as follows: SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE Number of Options Weighted Average Exercise Price Weighted Average Grant- date Stock Price Options Outstanding and exercisable, December 31, 2022 2,650,000 $ 0.18 $ 0.18 1,150,000 $ 0.277 $ 0.277 750,000 $ 0.30 $ 0.30 2,000,000 $ 0.35 $ 0.35 1,664,542 $ 0.50 $ 0.50 128,000 $ 0.96 $ 0.96 350,834 $ 1.50 - 1.95 $ 1.50 - 1.95 597,500 $ 2.00 - 2.79 $ 2.00 - 2.79 83,334 $ 3.10 - 3.80 $ 3.10 - 3.80 18,334 $ 4.00 - 4.70 $ 4.00 - 4.70 9,392,544 6. WARRANTS A summary of warrants to purchase common stock issued during the year ended December 31, 2022 and the nine months ended December 31, 2021 is as follows: SCHEDULE OF WARRANTS ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at March 31, 2021 146,668 $ 3.00 Granted 500,000 0.32 Exercised - - Expired - - Balance outstanding at December 31, 2021 646,668 $ 1.08 Granted 21,666,667 0.60 Exercised - - Expired - - Balance outstanding and exercisable at December 31, 2022 22,313,335 $ 0.61 At December 31, 2022, the 22,313,335 outstanding stock warrants had no intrinsic value and at December 31, 2021, the 646,668 outstanding stock warrants had no intrinsic value. 7. NOTES PAYABLE Range Environmental was granted a loan (the “PPP loan”) from United Bank for $ 109,435 on March 9, 2021, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan had a maturity date of March 9, 2023 and bore interest at a rate of 1 % per annum, with the first six months of interest deferred. On August 19, 2022, Range Environmental received notice that the U.S. Small Business Administration (“SBA”) had reviewed the forgiveness application of Range Environmental’s PPP loan and provided forgiveness of the entire principal of the PPP loan plus accrued interest. The Company recognized a gain on forgiveness of the PPP loan of $ 109,435 during the year ended December 31, 2022. On June 17, 2020, Range Environmental was granted an SBA Disaster Loan in the amount of $ 150,000 with an interest rate of 3.75 % per annum. On September 14, 2022, the Company paid the entire balance due on this loan of $ 162,575 , including $ 12,575 in accrued interest. The Company had no notes payable outstanding as of December 31, 2022. F- 15 8. LINE OF CREDIT In November 2022, the Company secured a line of credit with a bank with a limit of $ 1,000,000 . The line of credit has a maturity date of November 30, 2023 , and bears interest at one percent ( 1 %) above the prime rate. As of December 31, 2022, the balance due under the line of credit was $ 0 . 9. EQUITY LINE In August 2021, the Company entered into a $ 5,000,000 equity line transaction with Triton Funds, LP (“Triton”) providing for the issuance and sale by the Company to Triton of a number of shares of the Company’s common stock having an aggregate value of up to $ 5,000,000 and warrants to purchase up to an equal number of shares of the Company’s common stock. In its sole discretion and subject to certain agreed upon funding conditions, the Company may submit, from time to time, notices obligating Triton to purchase shares with a value of up to $250,000 until the financing arrangement expires on December 31, 2022 or Triton has purchased the $5,000,000 of shares pursuant to the equity line transaction. On December 31, 2022, this equity line expired with $169,950 of the $5,000,000 available financing used. 10. INCOME TAXES The Company had no income tax expense for the year ended December 31, 2022 and the nine months ended December 31, 2021 due to its history of operating losses. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION Year Ended December 31, 2022 Nine Months Ended December 31, 2021 Federal statutory tax rate ( 21 )% ( 21 )% State tax rate, net of federal benefit ( 7 )% ( 7 )% Total federal and state tax rate ( 28 )% ( 28 )% Valuation allowance 28 % 28 % Effective tax rate - % - % Deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2022 December 31, 2021 Net deferred tax assets: Net operating loss carryforwards $ 6,690,000 $ 5,938,000 Stock-based compensation 3,514,000 3,284,000 Goodwill 202,000 - Research credits 86,000 64,000 Operating lease liability - - Gross deferred tax assets 10,492,000 9,286,000 Less: valuation allowance ( 9,174,000 ) ( 8,178,000 ) Total deferred tax assets 1,318,000 1,108,000 Deferred tax liabilities: Derivative income 1,108,000 1,108,000 Fixed assets 210,000 - Operating lease right-of-use asset - - Total deferred tax liabilities 1,318,000 1,108,000 Net deferred income tax assets (liabilities) $ - $ - The provisions of ASC Topic 740, Accounting for Income Taxes, require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. For the year ended December 31, 2022 and the nine months ended December 31, 2021, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was more likely than not that the net deferred tax assets were not fully realizable. Accordingly, the Company established a full valuation allowance against its net deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. During the year ended December 31, 2022 and the nine months ended December 31, 2021, the valuation allowance increased by $ 996,000 and $ 491,000 , respectively. F- 16 At December 31, 2022 and December 31, 2021, the Company had available Federal and state net operating loss carryforwards (“NOLs”) to reduce future taxable income. For Federal purposes, the amounts available were approximately $ 24.0 million and $ 22.8 million, respectively. For state purposes, approximately $ 23.4 million and $ 22.9 million was available at December 31, 2022 and December 31, 2021, respectively. The Federal carryforwards expire on various dates through 2042 and the state carryforwards expire through 2039 . Due to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carryforwards, the utilization of the Company’s NOLs may be limited as a result of changes in stock ownership. NOLs incurred subsequent to the latest change in control are not subject to the limitation. The Company’s operations are based in California and Ohio and it is subject to Federal, California and Ohio state income tax. Tax years after 2016 are open to examination by United States and state tax authorities. The Company adopted the provisions of ASC 740, which requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. ASC 740 also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions. As of December 31, 2022 and December 31, 2021, no liability for unrecognized tax benefits was required to be recorded or disclosed. 11. LONG-TERM DEBT OBLIGATIONS Long-term debt consists of debt on vehicles and equipment, which serves as the collateral. Interest rates range from 3.69 % to 9.95 % for 2022. The debt matures from 2023 through 2028. A summary of payments due under the long-term debt by year is as follows: SCHEDULE OF MATURITIES OF LONG TERM DEBT 2023 $ 1,319,201 2024 1,048,133 2025 862,958 2026 677,950 2027 638,957 2028 and later 510,015 Total long-term debt $ 5,057,214 12. MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK Sales to the Company’s largest customer were 72 % of total sales for the year ended December 31, 2022, respectively. Accounts receivable from the same customer were 62 % of total accounts receivable and unbilled receivables as of December 31, 2022. 13. COMMITMENTS AND CONTINGENCIES The Company received a letter in February 2021 from counsel for the Company’s director’s and officer’s insurance carrier (the “insurer”) demanding that the Company reimburse the insurer for sums advanced by the insurer to a former director of the Company as defense costs in connection with a claim purportedly arising under a previous directors and officers insurance policy. The Company believes it has no liability for this claim on the basis of, among other things, Nevada law, the Company’s governing documents and the language of the policy. Accordingly, as of December 31, 2022, no contingent liability has been recorded in the Company’s consolidated statements of financial condition for this matter. F- 17 14. SEGMENT INFORMATION ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services, categories, business segments and major customers in financial statements. The Company has five reportable segments that are based on the following business units: (i) Environmental Services, (ii) Biochar Products and Services, (iii) Stream Mitigation Banking, (iv) Environmental Security Services, and (v) Cannabinoid Drug Development. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. The Company operated two reportable business segments during the year ended December 31, 2022, the Cannabinoid Drug Development and Environmental Services segments. The other business segments began operating in 2023. ● Cannabinoid Drug Development – glycosylated cannabinoid drug development program ● Environmental Services – land reclamation, water restoration and environmental consulting services ● Biochar Products and Solutions - biochar product development and environmental solutions business ● Stream Mitigation Banking – mitigation banks to restore waterways and support economic development ● Environmental Security Services – security services on mines transitioning to next generation industries The Company had no inter-segment sales for the periods presented. Summarized financial information concerning the Company’s reportable segments is shown as below: SCHEDULE OF FINANCIAL INFORMATION OF REPORTABLE SEGMENT By Categories Drug Development Environmental Services Corporate Total For the year ended December 31, 2022 Drug Development Environmental Services Corporate Total Sales $ - $ 4,832,278 $ - $ 4,832,278 Gross profit - 1,393,252 - 1,393,252 Net income (loss) ( 470,803 ) 816,469 ( 1,417,842 ) ( 1,072,176 ) Total assets - 6,056,568 2,173,897 8,230,465 Depreciation - 395,543 - 395,543 Interest expense - 54,402 26,776 81,178 Tax expense - - - - Capital expenditures for long-lived assets $ - $ 5,813,057 $ - $ - F- 18 Drug Development Environmental Services Corporate Total For the nine months ended December 31, 2021 Drug Development Environmental Services Corporate Total Net Loss $ ( 298,925 ) $ ( 17,484 ) $ ( 1,396,560 ) $ ( 1,712,969 ) Net income (loss) $ ( 298,925 ) $ ( 17,484 ) $ ( 1,396,560 ) $ ( 1,712,969 ) Total assets 8,134 - 42,785 50,919 Depreciation - - - - Other expense - - 270 270 Tax expense - - - - Capital expenditures for long-lived assets $ - $ - $ - $ - 15. QUARTERLY DATA (UNAUDITED) Summarized financial information for each quarter during the year ended December 31, 2022 and the nine months ended December 31, 2021 is below: SUMMARY OF FINANCIAL INFORMATION QUARTERLY DATA Quarter ended March 31, 2022 Quarter ended June 30, 2022 Quarter ended September 30, 2022 Quarter ended December 31, 2022 Revenues $ - $ 639,359 $ 1,547,258 $ 2,645,661 Gross profit - 64,952 357,783 970,517 Loss from operations ( 443,671 ) ( 423,197 ) ( 198,002 ) ( 25,563 ) Net loss ( 447,974 ) ( 443,186 ) ( 119,616 ) ( 51,400 ) Net loss per share – basic and diluted ( 0.01 ) ( 0.01 ) - - Quarter ended June 30, 2021 Quarter ended September 30, 2021 Quarter ended December 31, 2021 Revenues $ - $ - - Gross profit - - - Income (loss) from operations ( 612,249 ) ( 504,361 ) ( 596,089 ) Net income (loss) ( 612,235 ) ( 504,358 ) ( 596,376 ) Net income (loss) per share – basic and diluted ( 0.01 ) ( 0.01 ) ( 0.01 ) 16. PRO FORMA DATA (UNAUDITED) In May 2022, the Company acquired the “Range Reclamation Entities, which primarily focus on the reclamation of former coal mines, and the remediation of non-compliant streams and waterways . The acquired business contributed revenue of $ 4,832,278 and net income of $ 816,469 for the period from May 12, 2022 to December 31, 2022. The following unaudited pro forma summary presents the consolidated information of the Company as if the acquisition had occurred on January 1, 2022: SCHEDULE OF PRO FORMA DATA INFORMATION Pro forma year ended December 31, 2022 Revenues $ 5,848,298 Gross profit 1,636,284 Net income (loss) ( 1,235,473 ) 17. SUBSEQUENT EVENTS In March 2023, the Company entered into a lease of our office and laboratory space at 2224A Sierra Meadows Drive, Rocklin, California 95677, which requires a lease payment of approximately $ 3,000 per month and expires on March 31, 2024 . F- 19