What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 287 added, 382 removed, 243 unchanged (73% of the section changed)

1 unchanged sentence

INNOVATIONS, INC.

FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2023 AND 2022

CONSOLIDATED UNAUDITED BALANCE SHEETS AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022

NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

INNOVATIONS, INC.

BALANCE SHEETS

September 30,

March 31, 2023 (unaudited)

December 31, 2022

Current Assets

Cash and cash equivalents

Unbilled receivables

Accounts receivable

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Long-term Assets

Operating lease asset

Equipment, net of accumulated depreciation

Total long-term assets

Liabilities and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current Liabilities

Accounts payable and accrued liabilities

Accounts payable

Current portion of long-term debt

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Total current liabilities

Long-term Debt

Long-term Liabilities

Long-term debt, net of current portion

Operating lease liability

Total long-term debt

Total liabilities

Stockholders’ Equity (Deficit)

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, as of 9/30/22 and 12/31/21, respectively

78,116,814 and 78,116,814 shares issued and outstanding, respectively

Additional paid-in-capital

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( 50,212,854 )

Total stockholders’ equity (deficit)

Total Liabilities and Stockholders’ Equity (Deficit)

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

accompanying notes to the consolidated financial statements.

1 unchanged sentence

STATEMENTS OF OPERATIONS

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Cost of services

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Loss from operations

( 1,064,870 )

( 1,774,445 )

Other income (expense):

Gain on extinguishment of liabilities

Gain on loan forgiveness

Interest expense

Total other income (expenses), net

$ ( 119,616 )

$ ( 504,358 )

Total other income (expense)

$ ( 226,860 )

$ ( 447,974 )

Basic and diluted loss per common share

Weighted average number of common shares outstanding:

Basic and diluted

Net loss per share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

accompanying notes to the consolidated financial statements.

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STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Number of shares

Additional Paid-in Capital

Accumulated Deficit

Three Months Ended September 30, 2022

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Balance as of June 30, 2022

$ ( 50,031,838 )

Shares issued for cash

Balance as of September 30, 2022

$ ( 50,151,454 )

Three Months Ended September 30, 2021

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Balance as of June 30, 2021

$ ( 48,039,944 )

Shares issued for cash

Balance as of September 30, 2021

$ ( 48,544,302 )

Nine Months Ended September 30, 2022

MONTHS ENDED MARCH 31, 2023 AND 2022

Three months ended March 31, 2023 (Unaudited)

Number of shares

Additional Paid-in Capital

Paid-in Capital

Accumulated Deficit

Balance as of December 31, 2021

$ ( 49,140,678 )

$ ( 381,641 )

Shares issued for cash

Shares issued in exchange for Range

Balance – December 31, 2022

$ ( 50,212,854 )

Balance as of March 31, 2023 (Unaudited)

$ ( 50,439,714 )

Balance as of September 30, 2022

$ ( 50,439,714 )

Nine Months Ended September 30, 2021

Three months ended March 31, 2022 (Unaudited)

Number of shares

Additional Paid-in Capital

Paid-in Capital

Accumulated Deficit

Balance as of December 31, 2020

Balance – December 31, 2021

$( 49,140,678 )

Shares issued for cash

Cancellation of common shares

Fair value of vested stock options

Balance as of March 31, 2022 (Unaudited)

$ ( 49,588,652 )

$ ( 829,615 )

Balance as of September 30, 2021

$ ( 49,588,652 )

3 unchanged sentences

STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended March 31,

Cash flows from operating activities:

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$ ( 447,974 )

Adjustments to reconcile net loss to net cash used in operating activities:

Fair value of vested stock options

Gain on extinguishment of liabilities

Operating lease expense

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Changes in operating assets and liabilities:

Unbilled receivables

Accounts receivable

Forgiveness of PPP loan

Prepaid expense

Prepaid expense and other current assets

Accounts payable and accrued liabilities

Operating lease liability

Net cash used in operating activities

( 1,503,046 )

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Cash acquired in acquisition of Range Environmental Resources

Equipment purchases

( 1,243,329 )

Cash paid for acquisition of Range Environmental Resources

Net cash used in investing activities

( 1,977,502 )

Cash flows from financing activities:

Issuance of shares for cash

Proceeds from long-term debt

Payoff of SBA disaster loan

Payoff of line of credit

Net cash provided by financing activities

Net increase (decrease) in cash

( 1,384,046 )

Repayment of long-term debt

Proceeds from line of credit

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents - beginning of period

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Cash paid during the period for:

Forgiveness of PPP loan

Stock issued for acquisition

accompanying notes to the consolidated financial statements.

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TO CONSOLIDATED FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2023 AND 2022

BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Innovations, Inc.

(the “Company”) was incorporated in the State of Nevada on June 29, 2007.

(the “Company”, “we”, “us”, “our” or “Malachite”),

was incorporated in the State of Nevada on June 29, 2007.

Malachite is a public holding company dedicated to improving the health and

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

Malachite owns and operates a balanced

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

focus on economically disadvantaged communities.

Malachite takes an opportunistic approach to impact investing by leveraging its competitive

advantages and looking at solving old problems in new ways.

Malachite seeks to thoughtfully allocate its capital into ventures that are

expected to make a positive impact on the people-planet ecosystem and generate strong investment returns for our shareholders.

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

changed its name to Stevia First Corp and pursued a new strategy focused on developing stevia-based additives for the food and beverage

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

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but without their unwanted psychoactive side effects.

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

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

and reorganized its corporate structure and created the following

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and (ii) Daedalus Ecosciences, Inc., a Nevada corporation (“Daedalus”)

Graphium plans to focus its business activities on the health and wellness of people, with a particular focus on advancing the Company’s

broad portfolio of over 100 glycosylated cannabinoid prodrugs.

Daedalus plans to focus its business activities on the health and wellness

of the planet through ESG investments, with a particular focus on deploying technological innovations and eco-friendly solutions to remedy

difficult environmental situations in economically challenged communities.

which was formed to serve as a holding company for the Company’s future impact investing operating businesses.

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

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

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

for natural, commercial, agricultural or recreational use.

The Range Entities’ water restoration services seek to improve rivers,

streams and discharges through novel and innovative treatment applications to help customers meet their various regulatory standards

and requirements.

The Range Entities also provide environmental consulting services to customers typically in connection with land reclamation

and water restoration projects and as an additional value-add service, sells water treatment chemicals manufactured by third parties

to their customers.

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.

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, Inc.,

Pristine Stream Ventures, Inc., Range Security Resources, Inc.

and Graphium.

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 nine

months ended September 30, 2022, the Company incurred a net loss of $ 1,010,776 and used $ 568,536 of cash in the Company’s operating

As reflected in the accompanying financial statements, during the three

months ended March 31, 2023, the Company incurred a net loss of $ 226,860 and $ 675,796 of cash was provided by the Company’s operating

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

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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 September 30, 2022, that it has sufficient funds to operate the business for 18 months given its cash balance

of $ 1,156,799 , line of credit availability of $ 1,000,000 , the availability of $4,830,050 under its $5,000,000 equity financing line via

an executed securities purchase agreement, and revenues being generated by the Range 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.

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.

The Company estimates, as of March 31, 2023, that it has sufficient funds to operate the business for 12 months given its cash balance

of $ 229,018 , line of credit availability of $ 900,000 , 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

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.

of Presentation

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

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

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

Range Environmental Resources, Inc.

and Range Natural Resources, Inc., and have been prepared in accordance with accounting principles

generally accepted in the United States of America.

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., Aether Credit Ventures, Inc., NextGen AgriTech, Inc., and Daedalus Ecosciences, Inc.

(merged into Malachite Innovations,

on December 31, 2022), and have been prepared in accordance with accounting principles generally accepted in the United States of

Intercompany balances and transactions have been eliminated in consolidation.

Company’s fiscal year end is December 31.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

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assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

more significant estimates and assumptions by management include, among others, assumptions used in valuing assets acquired in business

acquisitions, reserves for accounts receivable, assumptions used in valuing equity instruments issued for services, the valuation allowance

for deferred tax assets, and accruals for potential liabilities.

Actual results could differ from those estimates.

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

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

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

amount is due.

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

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

The Company also invoices

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

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

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

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

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

results could differ from those estimates.

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.

The Company also invoices customers for the provision of environmental security services on an agreed-upon

hourly rate for each project.

All revenue is recognized at a point in time.

and Cash Equivalents

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

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

or September 30, 2021.

as of those dates will be immaterial and, therefore, no allowances were recorded for the three months ended March 31, 2023 or the three

months ended March 31, 2022.

Accounts receivable were $ 1,233,532 and $ 981,385 at March 31, 2023 and December 31, 2022, respectively.

No bad debt expense was accrued in either the three months ended March 31, 2023 or the three months ended March 31, 2022 and there is

no allowance for doubtful accounts as of March 31, 2023 or December 31, 2022.

is carried at cost.

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loss is reflected in the current year’s earnings.

September 30,

SCHEDULE OF EQUIPMENT

March 31, 2023

December 31, 2022

Accumulated depreciation

Net book value

Depreciation expense

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

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

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

There were no assets identified for

Value of Financial Instruments

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

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

The carrying amounts

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

ASC 842 “Leases” requires the Company to determine whether a contract is, or contains, a lease at inception.

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.

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.

costs are classified as cost of sales.

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.

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

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

Company determines whether a contract is, or contains, a lease at inception.

Right-of-use assets represent the Company’s right

to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments

arising from the lease.

Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present

value of unpaid lease payments over the lease term.

The Company uses its incremental borrowing rate based on the information available

at lease commencement in determining the present value of unpaid lease payments.

The Company had no lease commitments for longer than

one year as of March 31, 2023.

The laboratory space lease in Rocklin, California was renewed in March 2023 and ends on March 31, 2024.

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 FASB ASC 718 “Compensation-Stock Compensation”

whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line

basis over the vesting period.

Recognition of compensation expense for non-employees is in the same period and manner as if the Company

had paid cash for the services.

The Company recognizes the fair value of stock-based compensation within its Consolidated Statements

of Operations with classification depending on the nature of the services rendered.

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.

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

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

September 30,

March 31, 2023

December 31, 2022

Anti-dilutive loss per

and Patent Application Costs

the Company believes that its patents and underlying technology have continuing value, the future benefits to be derived from

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.

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costs are expensed as incurred.

of October 1, 2021, the Company began operating under two segments:

(i) Graphium Biosciences, Inc., a wholly-owned subsidiary of the

Company, will report the operating results of its health and wellness innovations serving people, with a particular focus on advancing

its broad portfolio of over 100 glycosylated cannabinoid prodrugs, and (ii) Daedalus Ecosciences, Inc., a wholly-owned subsidiary of

the Company, will report the operating results of its health and wellness innovations serving the planet, with a particular focus on

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

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

as the Chief Executive Officer of the Company, who reviews operating results to make decisions about allocating resources and assessing

performance for the entire Company.

Existing guidance, which is based on a management approach to segment reporting, establishes requirements

to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers,

Value of Financial Instruments

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

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

The carrying amounts

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

of March 31, 2023, the Company has five

operating business segments:

(i) Environmental Services, (ii) Biochar Products and Solutions,

(iii) Stream Mitigation Banking, (iv) Environmental Security Services, and (v) Cannabinoid Drug Development.

In October 2021, the Company 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 .

The Biochar Products and Solutions, Stream Mitigation Banking, and Environmental Security

Services business segments began operations in the first quarter of 2023.

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.

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ASU 2016-13 is effective for the Company

beginning April 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.

beginning January 1, 2023, and early adoption is permitted.

This did not have a material effect on the Company’s financial position,

results of operations, or cash flows.

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public

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(“Range Natural”, and

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

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

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

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

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.

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

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On July 12, 2022, the Company entered into a Separation Agreement, by

and among the Company, Daedalus Ecosciences, the Range Entities, and Justice and his spouse (the “Separation Agreement”)

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 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

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

and d) paid Daedalus Ecosciences cash

in an amount of $250,000.

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

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

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;

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,

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purchase agreement, effective as of May 11, 2022 (the “Starks Agreement”), pursuant to which Starks exchanged his 10 % common

stock ownership of the Range Entities for 10 % of the Cash Dividends and Sale Proceeds (as both terms are defined in the Starks Agreement)

of the Range Entities, as a result of which, the Range Entities are now wholly-owned subsidiaries of Daedalus Ecosciences and the Range

Entities are reported as wholly-owned indirect subsidiaries of the Company in the financial statements made part of this Form 10-Q.

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 Entities.

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.

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

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

OF BUSINESS ACQUISITION ALLOCATION OF PURCHASE PRICE

SCHEDULE OF BUSINESS ACQUISITION ALLOCATION OF PURCHASE PRICE

Fair value of assets acquired:

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Acquisition transaction costs incurred

has an assigned value of $ 751,421 and represents the value of the Range Entities’ brand reputation,

customer base and employee relations.

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

There had been no goodwill at December 31, 2021.

The increase in goodwill was driven by

the addition of the Range Entities in the period and represents the value of the Range Entities’

has an assigned value of $ 751,421 and represents the value of the Range Reclamation Entities’

brand reputation, customer base and employee relations.

is $ 751,421 at March 31, 2023 and at December 31, 2022.

The goodwill as of both dates represents the value

of the Range Reclamation Entities’ employee relations .

Goodwill by reportable segment is as follows:

September 30,

ESG Operations Segment:

SCHEDULE OF GOODWILL

March 31, 2023

December 31, 2022

Environmental Services:

Beginning Balance

Ending Balance

of Common Stock and Warrants

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

shares of the Company’s common stock (the “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 .

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 .

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

and cash, as described in Note 2.

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

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

STOCK OPTIONS

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

SCHEDULE OF STOCK OPTION ACTIVITY

options issued during the three months ended March 31, 2023 and the three months ended March 31, 2022

stock options were granted to directors, advisors, and employees during the three months ended March 31, 2023 or the three months ended

March 31, 2022.

the three months ended March 31, 2023 and the three months ended March 31, 2022, the Company recorded no stock-based compensation expense

related to vested stock options.

At March 31, 2023, there was no remaining unamortized cost of the outstanding stock-based awards.

summary of the Company’s stock option activity during the three months ended March 31, 2023 is as follows:

SUMMARY OF STOCK OPTION ACTIVITY

Exercise Price

Balance outstanding at December 31, 2022

Balance outstanding at September 30, 2022

Balance exercisable at September 30, 2022

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

Balance outstanding at March 31, 2023

Balance exercisable at March 31, 2023

March 31, 2023, the 9,392,544 outstanding stock options had no intrinsic value.

summary of the Company’s stock options outstanding and exercisable as of March 31, 2023 is as follows:

SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Exercise Price

Average Grant-

date Stock Price

Options Outstanding, September 30, 2022

$ 1.50 – 1.95

$ 2.00 – 2.79

$ 3.10 – 3.80

$ 4.00 – 4.70

Options Exercisable, September 30, 2022

Number of Options

Weighted Average Exercise Price

Weighted Average Grant- date Stock Price

Options Outstanding and exercisable, March 31, 2023

$ 1.50 - 1.95

6 unchanged sentences

$ 4.00 - 4.70

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

At September 30, 2022, the 6,742,544 outstanding

stock options had no intrinsic value.

summary of the Company’s warrant activity during the nine months ended September 30, 2022 is as follows:

summary of warrants to purchase common stock issued during the three months ended March 31, 2023 is as follows:

SCHEDULE OF WARRANTS ACTIVITY

1 unchanged sentence

Balance outstanding at December 31, 2022

Expired/Cancelled

Balance outstanding and exercisable at September 30, 2022

September 30, 2022, the 22,313,335 outstanding stock warrants had no intrinsic value.

Balance outstanding and exercisable at March 31, 2023

March 31, 2023, the 22,313,335 outstanding stock warrants had no intrinsic value.

NOTES PAYABLE

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

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

PPP loan 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.

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 extinguishment

of the PPP loan of $ 109,435 during the three and nine months ended September 30, 2022.

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.

Company had no notes payable outstanding as of September 30, 2022.

Company had no notes payable outstanding as of March 31, 2023.

LINE OF CREDIT

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

The line of credit

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

As of September 30, 2022, there

was no balance due under the line of credit.

August 2021, the Company entered into a $ 5,000,000 equity line transaction with Triton Funds, LP (“Triton”) providing for

the issuance and sale by the Company to Triton of a number of shares of the Company’s common stock having an aggregate value of

up to $ 5,000,000 and warrants to purchase up to an equal number of shares of the Company’s common stock.

In its sole discretion

and subject to certain agreed upon funding conditions, the Company may submit, from time to time, notices obligating Triton to purchase

shares with a value of up to $250,000 until the financing arrangement expires on December 31, 2022 or Triton has purchased the $5,000,000

of shares pursuant to the equity line transaction.

As of September 30, 2022, $ 4,830,050 was available under this equity line .

GAIN ON EXTINGUISHMENT OF ADVANCE

July 2018, the Company received a payment from a third party in the amount of $ 296,653 .

Since the Company has not been able to confirm

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

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

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

the nine months ended September 30, 2021.

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 March 31, 2023, the balance due under the line

of credit was $ 100,000 .

LONG-TERM DEBT OBLIGATIONS

2 unchanged sentences

debt matures from 2023 through 2028.

The aggregate amount of the debt was $ 1,166,674 at September 30, 2022, $ 396,939 of which is due

within one year of September 30, 2022, and $ 769,735 is due after September 30, 2023.

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

OF MATURITIES OF LONG TERM DEBT

2022 (due between 10/1/22 and 9/30/23)

2023 (due between 10/1/23 and 9/30/24)

2024 (due between 10/1/24 and 9/30/25)

2025 (due between 10/1/25 and 9/30/26)

2026 (due between 10/1/26 and 9/30/27)

2027 and later (due on or after 10/1/27)

2023 – due between April 1, 2023 and March 31, 2024

2024 – due between April 1, 2024 and March 31, 2025

2025 – due between April 1, 2025 and March 31, 2026

2026 – due between April 1, 2026 and March 31, 2027

2027 – due between April 1, 2027 and March 31, 2028

2028 and later – due between April 1, 2028 and thereafter

Total long-term debt

OPERATING LEASE

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

of 31 months.

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

The Company accounts for the lease

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

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

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

present value of lease payments over the lease term.

ROU assets represent the Company’s right to use an underlying asset for the

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

Generally, the implicit rate

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

value of lease payments.

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

credit rating would be.

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

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

OF COMPONENTS OF LEASE EXPENSE

September 30, 2022

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

Other Information

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

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

Average discount rate – operating leases

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

OF LEASES SUPPLEMENTAL BALANCE SHEET INFORMATION

At September 30,

Operating leases

Long-term right-of-use asset

Short-term operating lease liability

Long-term operating lease liability

Total operating lease liabilities

of the Company’s lease liabilities are as follows:

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Year Ending December 31

Operating Lease

2022 (remaining 3 months)

Total lease payments

Imputed interest/present value discount

Present value of lease liabilities

expenses related to leases with a duration of one year or less were $ 8,746 and $ 8,013 during the three months ended September 30, 2022

and September 30, 2021, respectively.

Lease expenses related to leases with a duration of one year or less were $ 25,417 and $ 23,733 during

the nine months ended September 30, 2022 and September 30, 2021, respectively.

MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK

to the Company’s largest customer were 74 % and 73 % of total sales for the three and nine months ended September 30, 2022, respectively.

receivable from the same customer were 61 % of total accounts receivable and unbilled receivables as of September 30, 2022.

to the Company’s largest customer were 89 % of total sales for the three months ended March 31, 2023.

receivable from the same customer were 95 % of total accounts receivable as of March 31, 2023.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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

the Company as defense costs in connection with a claim purportedly arising under a previous director’s and officer’s insurance

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 September 30, 2022, no contingent liability has been recorded

in the Company’s consolidated statements of financial condition for this matter.

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 March 31, 2023, no contingent liability has been recorded in the Company’s

consolidated statements of financial condition for this matter.

SEGMENT INFORMATION

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

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

customers in financial statements.

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

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

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

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

challenged communities

accordance with FASB ASC 820, the Company’s chief operating decision-maker has been identified as the Chief Executive Officer,

who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.

guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information

quarterly and to report annually entity-wide disclosures about products and services, major customers and the countries in which the

entity holds material assets and reports revenue.

All material operating units qualify for aggregation under FASB ASC 820 due to their

similar customer base and similarities in:

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 Solutions, (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

economic characteristics;

nature of products and services;

and procurement, manufacturing

and distribution processes.

and procurement, manufacturing and distribution processes.

The five reportable segments that result from applying the aggregation

criteria are as follows:

Environmental

Services – land reclamation, water restoration and environmental consulting services

Products and Solutions - biochar product development and environmental solutions business

Mitigation Banking – mitigation banks to restore waterways and support economic development

Environmental

Security Services – security services on mines transitioning to next generation industries

Cannabinoid Drug Development – glycosylated cannabinoid drug development

The Company operated two reportable

business segments during the three months ended March 31, 2022, the Cannabinoid Drug Development and Environmental Services segments.

The other business segments began operating in 2023.

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

1 unchanged sentence

OF FINANCIAL INFORMATION OF REPORTABLE SEGMENT

For the Three Months Ended September 30, 2022

Therapeutic Operations

Cost of services

Net income (loss)

$ ( 226,737 )

$ ( 119,616 )

Capital expenditures for long-lived assets

For the Nine Months Ended September 30, 2022

Cost of services

For the three months ended March 31, 2023

Environmental Services

Biochar Products and Solutions

Stream Mitigation Banking

Environmental Security Services

Drug Development

Net income (loss)

$ ( 824,198 )

$ ( 1,010,776 )

Capital expenditures for long-lived assets

For the Three Months Ended September 30, 2021

Therapeutic Operations

$ ( 436,520 )

$ ( 504,358 )

Interest expense

Capital expenditures for long-lived assets

For the Nine Months Ended September 30, 2021

Therapeutic Operations

For the three months ended March 31, 2022

Environmental Services

Drug Development

$ ( 125,730 )

1 unchanged sentence

$ ( 447,974 )

Interest expense

Capital expenditures for long-lived assets

SUBSEQUENT EVENTS

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

which Daedalus Ecosciences acquired Starks’ 10 % common stock ownership interest in the Range Entities.

As a result of this transaction,

Daedalus Ecosciences is the sole shareholder of the Range Entities.

No other changes were made to the consideration received by Starks

as part of the Share Purchase Agreement entered into on May 11, 2022, and he remains as President of each of the Range Entities.

April 2023, the Company entered into securities purchase agreements providing for the issuance and sale of (i) 2,733,334

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

per share and (ii) warrants to purchase up to an additional 2,733,334

shares of the Company’s common stock, at a price of $ 0.60

per share (“Warrants”).

After deducting for fees and expenses, the aggregate net proceeds from the sale of the Shares and Warrants was

approximately $ 400,000 .

In May 2023, the Company issued options to purchase 300,000 shares of the

Company’s common stock to a consultant.

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

What changed 10-Q

Item 1. Financial Statements