What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-01 compared with 2023-05-15 · 176 added, 157 removed, 549 unchanged (38% of the section changed)

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publicly any forward-looking statements for any reason.

otherwise provided in this Quarterly Report, references to the “Company,” “we,” “us”, and “our”

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

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

Mining Inc.” to “Stevia First Corp.” On July 15, 2016, our Board of Directors and shareholders approved a name change

to “Vitality Biopharma, Inc.” On October 1, 2021, we completed a merger with our wholly-owned subsidiary, Malachite Innovations,

Inc., whereby we changed our name from “Vitality Biopharma, Inc.” to “Malachite Innovations, Inc.”

Innovations, Inc.

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

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

As of August 1, 2023, we employed 38 full-time employees and engaged various consultants and professional service firms to provide us

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

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The Stream Mitigation Banking segment did not have significant

operations in the three months ended March 31, 2023.

operations in the three months ended June 30, 2023.

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

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incidental to the reclamation and repurposing of mine sites.

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

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

Approximately 82% of those coal mines were located in Appalachia (which

comprises the Appalachian Mountains and is commonly known as the cultural region in the Eastern United States stretching from the southern

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

According to the EIA, there were approximately three times as many coal

mines in the United States in 2008 (compared to 2020) with approximately 89% located in Appalachia.

The precipitous decline in the number

of operating coal mines since 2008 is due to various supply, demand and regulatory factors, including a reduction in demand for coal

as a source of electricity due to the increased use of natural gas and renewable energy, an increase in coal production costs due to

inflation and the dearth of cost-effective locations remaining for mining, and a more stringent and costly regulatory environment, all

of which have resulted in an increasingly difficult market for coal producers.

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

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

Approximately 82% of those coal mines were located in

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

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

According to the EIA, there were

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

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

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

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

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

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

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significant land reclamation and water restoration services.

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

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

(i) to ensure

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

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

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

passed in 1977.

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surety bond insurers after 1977.

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

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

As of March 30, 2023,

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

27 employees in West Virginia.

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

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

As of June 30, 2023, approximately one

year later, the businesses had four reclamation customers, 60 pieces of owned and financed equipment, and 29 employees in West Virginia.

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

For the partial year period from May 11, 2022 to December 31, 2022, the Range Reclamation Entities had revenues of approximately

$4.8 million.

For the first quarter of 2023, the Range Reclamation Entities had revenues of approximately $3.0 million.

Reclamation Entities have also made a significant investment in recruiting, retaining and rewarding employees, including providing

new benefits such as health insurance, paid time off, vacation days, 401K retirement plan, and job advancement training.

Reclamation Entities’ employees are their most valuable asset, and therefore we are committed to building a best-in-class

culture and financially rewarding our talented, hard-working employees so that we can maximize the good we can do for our people and

their families.

For the partial year period from May

11, 2022 to December 31, 2022, the Range Reclamation Entities had revenues of approximately $4.8 million.

For the first six months of

2023, the Range Reclamation Entities had revenues of approximately $6.9 million.

The Range Reclamation Entities have also made a significant

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

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

The Range Reclamation Entities’ employees are their most valuable

asset, and therefore we are committed to building a best-in-class culture and financially rewarding our talented, hard-working employees

so that we can maximize the good we can do for our people and their families.

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

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

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

seek to add additional people, equipment and technologies to support these ambitious growth goals to ensure we successfully execute our

value creation plans for the Company and our shareholders.

expanding their market share with existing coal mining customers reclamation bond insurers, and the DEP of each state in Appalachia for

AML projects, adding new coal mining and non-coal mining customers, and collaborating with the Company’s other operating businesses

to generate incremental sales opportunities.

We will seek to add additional people, equipment and technologies to support these ambitious

growth goals to ensure we successfully execute our value creation plans for the Company and our shareholders.

Products and Solutions

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estimated to be approximately $12.0 million.

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

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

to advance VBX-100 through Phase III clinical trials.

The Company is actively seeking to raise the necessary funding to advance our leading drug

candidate, VBX-100.

If we are successful in raising the necessary capital and advancing VBX-100 through Phase II clinical studies, then

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

capital to advance VBX-100 through Phase III clinical trials.

Investing Strategy

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

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

contracting and reclamation industries.

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

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

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

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

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

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

Furthermore, Foundation Software will allow

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

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

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

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

quarter of 2023.

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

construction, contracting and reclamation industries.

Foundation Software offers the Company several enhanced features critical to

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

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

employee tracking on job sites, time and materials, utilization, and billing, (iv) job costing and profitability reporting segmented

by customers, job types and location, and (v) numerous real-time management dashboard and key performance indicator reports that

will allow management to closely monitor the performance of each Portfolio Company and react on a timely basis to business

opportunities and issues.

Furthermore, Foundation Software will allow the Company and its Portfolio Companies to more readily scale

operations and efficiently and cost-effectively support the anticipated growth of each business.

Company completed converting all

of the Company accounting system operations from QuickBooks to Foundation Software during the second quarter of 2023.

of Operations

Months Ended March 31, 2023 and March 31, 2022

The Company’s revenue

during the three months ended March 31, 2023 was $3,014,887 and its gross profit was $649,002.

The Company had no revenue or gross

profit during the three months ended March 31, 2022 as all of the Company’s revenue was generated by the Range Reclamation

Entities acquired in May 2022 and Range Security, which began operating during the first quarter of 2023.

Our net loss during the

three months ended March 31, 2023 was $226,860 compared to a net loss of $447,974 for the three months ended March 31, 2022 (a

decrease of $221,114).

the three months ended March 31, 2023, we incurred general and administrative expenses in the aggregate amount of $726,048, compared

to $317,941 incurred during the three months ended March 31, 2022 (an increase of $408,107).

General and administrative expenses generally

include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, marketing, consulting

costs and travel expenses.

The largest increase related to the general and administrative expenses incurred by our Environmental

Services segment of $409,485 during the three months ended March 31, 2023.

addition, during the three months ended March 31, 2023, we incurred research and development costs of $106,177, compared to $125,730

during the three months ended March 31, 2022 (a decrease of $19,553).

This decrease resulted from a decrease in legal fees, which decreased

to $11,291 during the three months ended March 31, 2023, from $31,617 during the three months ended March 31, 2022.

During the three months ended

March 31, 2023, we recorded total net other expense in the amount of $43,637, compared to total net other expense of $4,303 recorded during

the three months ended March 31, 2022 (an increase of $39,334).

All of this difference was attributable to higher interest expense during

the three months ended March 31, 2023.

Months Ended June 30, 2023 and June 30, 2022

revenue during the three months ended June 30, 2023 was $3,998,267 and our gross profit was $845,101 (representing a 21% gross

profit margin) compared to revenue during the three months ended June 30, 2022 of $639,359 and gross profit of $64,952 (representing

a 10% gross profit margin).

the three months ended June 30, 2023, we incurred general and administrative expenses in the aggregate amount of $635,898 compared

to $380,326 incurred during the three months ended June 30, 2022 (an increase of $255,572).

General and administrative expenses

generally include corporate overhead, salaries for administrative and management personnel and other related compensation costs,

financial and administrative contracted services, marketing, consulting costs and travel expenses.

These costs include the

operations of the Range Reclamation Entities, which were acquired in May 2022.

The majority of the increase in general and

administrative expenses relates to salaries which increased to $257,081 during the three months ended June 30, 2023, as compared to

$116,553 during the three months ended June 30, 2022 (an increase of $140,528) as a result of the hiring of additional administrative and management personnel in connection with the expansion

of the Company’s business operations.

addition, during the three months ended June 30, 2023, we incurred research and development costs of $107,444, compared to $107,823

during the three months ended June 30, 2022 (a decrease of $379).

These costs consist primarily of the salary of our Chief Science

Officer, rent for our Rocklin lab space, patent-related legal fees, and consulting fees.

the three months ended June 30, 2023, we recorded total net other expense of $64,997 (all of which was interest expense),

compared to total net other expense recorded during the three months ended June 30, 2022 of $19,989 (all of which was

interest expense).

This increase of $45,008 in interest expense during the three months ended June 30, 2023 was attributable to the increased amount of debt used to finance equipment purchased by the Range Reclamation

net income during the three months ended June 30, 2023 was $36,762 compared to a net loss of $443,186 during the three months ended June

30, 2022 (an improvement of $479,948).

Months Ended June 30, 2023 and June 30, 2022

revenue during the six months ended June 30, 2023 was $7,013,154 and our gross profit was $1,494,103 (representing a 21% gross

profit margin), compared to revenue during the six months ended June 30, 2022 of $639,359 and gross profit of $64,952 (representing

a 10% gross profit margin).

the six months ended June 30, 2023, we incurred general and administrative expenses in the aggregate amount of $1,361,946 compared

to $698,267 incurred during the six months ended June 30, 2022 (an increase of $663,679).

The majority of the increase in general

and administrative costs relates to increased salary expense which increased to $431,334 during the six months ended June 30, 2023

as compared to $116,553 during the six months ended June 30, 2022 (an increase of $314,781), legal fees which increased to $207,639

during the six months ended June 30, 2023, as compared to $71,253 during the six months ended June 30, 2022 (an increase of

$136,386), and insurance costs, which increased to $312,122 during the six months ended June 30, 2023 as compared to $99,187 during

the six months ended June 30, 2022 (an increase of $212,935) as a result of the insurance related to the increases in the equipment assets and the number of employees of the

Range Reclamation Entities.

addition, during the six months ended June 30, 2023, we incurred research and development costs of $213,621, compared to $233,553

during the six months ended June 30, 2022 (a decrease of $19,932).

This decrease primarily resulted from a decrease in

legal fees related to research and development, offset by an increase in professional fees related to

research and development.

the six months ended June 30, 2023, we recorded total net other expense of $108,634 (all of which was interest expense),

compared to total net other expense recorded during the six months ended June 30, 2022 of $24,292 (all of which was interest

This increase of $84,342 in interest expense during the six months ended June 30, 2023 was attributable to the increased amount of debt used to finance equipment purchased by the Range Reclamation Entities.

net loss during the six months ended June 30, 2023 was $190,098 compared to a net loss of $891,160 during the six months ended June 30,

2022 (an improvement of $701,062).

and Capital Resources

have incurred losses since inception resulting in an accumulated deficit of $50,402,952.

As of March 31, 2023, we had total

current assets of $1,463,434, primarily comprised of cash in the amount of $229,018 and accounts receivable of $1,233,532.

31, 2023 we had total current liabilities of $2,159,789, consisting of accounts payable of $1,034,427 and the current portion of long-term

debt in the amount of $1,025,362.

As a result, on March 31, 2023, the Company had negative working capital of $(696,355).

of June 30, 2023, we had total current assets of $2,809,964, primarily comprised of cash in the amount of $359,564, accounts receivable

of $1,273,635 and unbilled receivables of $1,129,046.

As of June 30, 2023, we had total current liabilities of $3,062,401, consisting

of outstanding amounts on our lines of credit of $1,200,000, accounts payable of $772,892 and the current portion of long-term debt of $1,089,509.

As a result, on June 30, 2023, the Company had negative working capital of $252,437.

At December 31, 2022,

the Company had negative working capital of $128,371.

of March 31, 2023, the Company had long-term assets of $7,197,869, comprised of net equipment assets of $6,437,556, goodwill of $751,421,

of June 30, 2023, the Company had long-term assets of $6,905,516, comprised of net equipment assets of $6,134,119, goodwill of $751,421,

and deposits of $19,976.

As of March 31, 2023, the Company had long-term liabilities of $3,788,931, comprised of long-term debt, net of

As of June 30, 2023, the Company had long-term liabilities of $3,457,814, comprised of long-term debt, net of

current portion.

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of long-term debt, net of current portion.

Based on the Company’s current

corporate strategy, its net operating losses for the 12 months following March 31, 2023 are expected to be approximately $1,000,000, which

is comprised of general operating and research and development expenses which we expect to be partially offset by revenue generated by

the Range Reclamation Entities and Range Security.

Based on the Company’s cash balance of $229,018, $900,000 available

under its revolving credit line, and its estimated net operating losses of approximately $1,000,000 for the 12-month period ending March

31, 2024, the Company expects to have sufficient funds to operate its business over the next 12 months.

The Company expects to generate

positive cash flow from its operating businesses, other than its Cannabinoid Drug Development business, but may also seek additional financing

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

estimated total expenditures for the 12-month period ending March 31, 2024 could increase if we encounter unanticipated expenses in connection

on the Company’s current corporate strategy, we expect our general operating and cannabinoid-based drug development research

and development expenses to be substantially offset by revenue generated by the Range Reclamation Entities and Range Security.

We do not expect to generate significant operating income or losses over the 12 months following June 30, 2023.

Company’s current cash balance and $800,000 currently available under its revolving credit line ,

the Company expects to have sufficient funds to operate

its business over the next 12 months.

The Company expects to generate positive cash flow from its operating businesses other than its

Cannabinoid Drug Development business.

If additional capital is needed in excess of our current capital resources, we will explore

financing options to accelerate the funding and execution of our growth strategy and shareholder value creation plan.

estimated total expenditures for the 12-month period ending June 30, 2024 could increase if we encounter unanticipated expenses in connection

with operating our business as presently planned.

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If any of these were to occur, there is a substantial risk that our business would fail.

inception, we have primarily funded our operations through equity and debt financings.

Until such time as our operating businesses are

cash flow positive, we expect to continue funding our operations, at least in part, through equity and debt financings.

However, sources

of additional funds may not be available when needed, on acceptable terms, or at all.

If we issue equity or convertible debt securities

to raise additional funds or to fund, in whole or in part, acquisitions in furtherance of our business strategy, our existing stockholders

may experience substantial dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those

of our existing stockholders.

If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization,

requiring us to pay additional interest expenses.

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

our liabilities and future cash commitments.

If we pursue capital through alternative sources, such as collaborations or other similar

arrangements, we may be forced to relinquish rights to our proprietary glycosylated cannabinoid technology or other intellectual property

which, in turn, could result in our receipt of only a portion of any revenue that may be generated from a partnered product or business.

Moreover, regardless of the manner in which we seek to raise capital, we may incur substantial costs in those pursuits, including investment

banking fees, legal fees, accounting fees, printing and distribution expenses and other related costs.

Until such time as our operating businesses are cash flow positive, we

expect to continue funding our operations, at least in part, through equity and debt financings.

However, sources of additional funds

may not be available when needed, on acceptable terms, or at all.

If we issue equity or convertible debt securities to raise additional

funds or to fund, in whole or in part, acquisitions in furtherance of our business strategy, our existing stockholders may experience

substantial dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing

stockholders.

If we incur additional debt, we would incur additional interest expenses, and assuming those loans would be available, it

would increase our liabilities and future cash commitments.

If we pursue capital through alternative sources, such as strategic business

collaborations or other similar arrangements, we may be forced to relinquish rights to our proprietary glycosylated cannabinoid technology

or other intellectual property which, in turn, could result in our receipt of only a portion of any revenue that may be generated from

a partnered product or business.

Moreover, regardless of the manner in which we seek to raise capital, we may incur substantial costs

in those pursuits, including investment banking fees, legal fees and other related costs.

Cash Used in Operating Activities

the three months ended March 31, 2023, net cash generated by operating activities was $675,796 compared to net cash used in

operating activities of $394,181 for the three months ended March 31, 2022.

This increase of $1,069,977 was primarily attributable

to a lower net loss of $226,860 during the three months ended March 31, 2023, compared to a net loss of $447,974 during the three

months ended March 31, 2022, as well as an increase in accounts payable of $800,619 during the three months ended March 31, 2023,

compared to an increase in accounts payable of $50,993 during the three months ended March 31, 2022, as well as depreciation expense

of $354,184 during the three months ended March 31, 2023, compared to $0 during the three months ended March 31, 2022.

provided by operating activities during the three months ended March 31, 2023 consisted of a net loss of $226,860 and an increase in

accounts receivable of $252,147, offset by an increase in accounts payable of $800,619 and depreciation expense of $354,184.

cash used in operating activities during the three months ended March 31, 2022 consisted primarily of a net loss of $447,974, offset

by an increase in accounts payable of $50,993.

the six months ended June 30, 2023, net cash used in operating activities was $398,399 compared to net cash used in operating

activities of $845,068 for the six months ended June 30, 2022.

This decrease of $446,669 was primarily attributable to a decrease in

the Company’s net loss of $190,098 during the six months ended June 30, 2023, compared to a net loss of $891,160 during the

six months ended June 30, 2022 and an increase of accounts payable of $539,084, offset by an increase in unbilled receivables of

$1,129,046 during the six months ended June 30, 2023.

Net cash used in operating activities during the six months ended June 30,

2022 consisted primarily of a net loss of $891,160 and an increase of unbilled receivables of $230,929 offset by an increase in

accounts payable of $192,628 and a decrease in accounts receivable of $273,412.

Cash Used in Investing Activities

the three months ended March 31, 2023, net cash used in investing activities was $746,226, which consisted of equipment purchased by

the Range Reclamation Entities, Terra Preta and Range Security.

No net cash was used in or provided by investing activities during the three months ended March 31, 2022.

the six months ended June 30, 2023, net cash used in investing activities was $784,515 compared to net cash used in investing

activities of $1,842,006 for the six months ended June 30, 2022.

Net cash used in investing activities during the six months ended

June 30, 2023 consisted of equipment purchases totaling $784,515.

Net cash used in investing activities during the six months ended

June 30, 2022 consisted primarily of equipment purchases totaling $1,107,833 and cash paid in connection with the acquisition of

Range Environmental of $750,000.

Cash Provided By Financing Activities

the three months ended March 31, 2023, net cash used in financing activities

was $142,921, compared to net cash provided from financing activities of $400,000 during the three months ended March 31, 2022.

used in financing activities for the three months ended March 31, 2023 consisted of proceeds of $383,202 from long-term debt, and proceeds

of $100,000 from a revolving credit line, offset by the repayment of long-term debt of $626,123.

The cash provided during the three months

ended March 31, 2022 was a result of proceeds of $400,000 from a revolving credit line.

the six months ended June 30, 2023, net cash provided by financing activities was $1,100,109 compared to net cash provided by financing

activities of $4,515,020 for the six months ended June 30, 2022.

Net cash provided by financing activities during the six months ended

June 30, 2023 consisted of $410,000 received from the issuance of common stock and warrants, proceeds of $383,093 from long-term debt

and $1,200,000 from revolving lines of credit, offset by repayments on long-term debt of $893,093.

Net cash provided by financing activities

during the six months ended June 30, 2022 consisted of $3,000,000 received from the issuance of common stock and warrants, proceeds of

$1,015,020 from long-term debt, and $500,000 from a revolving line of credit.

Sheet Arrangements

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goodwill at least annually or more frequently, if impairment indicators arise.

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:

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;

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.

(4) allocate the transaction price to the performance

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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis