RANGE IMPACT, INC. 10-Q

Item 1. Financial Statements MALACHITE INNOVATIONS, INC. CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022 4 CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022 5 CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022 6 CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022 7 NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS 8 3 MALACHITE INNOVATIONS, INC. CONSOLIDATED BALANCE SHEETS September 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Current Assets Cash and cash equivalents $ 1,026,286 $ 442,369 Accounts receivable 2,897,234 981,385 Unbilled receivables 49,148 - Prepaid expenses 103,082 884 Total current assets 4,075,750 1,424,638 Long-term Assets Equipment, net of accumulated depreciation 12,268,855 6,045,514 Land 1,531,758 - Buildings, net of accumulated depreciation 196,729 - Property, plant and equipment, net 196,729 - Goodwill 751,421 751,421 Deposits 19,976 8,892 Total long-term assets 14,768,739 6,805,827 Total Assets $ 18,844,489 $ 8,230,465 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 924,282 $ 233,808 Current portion of long-term debt 2,511,380 1,319,201 Line of credit 1,900,000 - Total current liabilities 5,335,662 1,553,009 Long-term Liabilities Long-term debt, net of current portion 5,891,557 3,738,013 Total long-term debt 5,891,557 3,738,013 Total liabilities 11,227,219 5,291,022 Stockholders’ Equity Common stock, par value $ 0.001 per share; 1,000,000,000 shares authorized; 87,516,815 and 78,116,814 shares issued and outstanding, respectively 87,517 78,117 Additional paid-in-capital 54,528,530 53,074,180 Accumulated deficit ( 46,998,777 ) ( 50,212,854 ) Total stockholders’ equity 7,617,270 2,939,443 Total Liabilities and Stockholders’ Equity $ 18,844,489 $ 8,230,465 See accompanying notes to the consolidated financial statements. 4 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues $ 5,455,633 $ 1,547,258 $ 12,468,787 $ 2,186,617 Cost of services 2,597,867 1,189,475 8,116,918 1,763,882 Gross profit 2,857,766 357,783 4,351,869 422,735 Operating expenses: General and administrative 1,057,055 449,041 2,419,001 1,147,308 Research and development 140,840 106,744 354,461 340,297 Total operating expenses 1,197,895 555,785 2,773,462 1,487,605 Income (loss) from operations 1,659,871 ( 198,002 ) 1,578,407 ( 1,064,870 ) Other income: Gain on bargain purchase 1,875,150 - 1,875,150 - Interest expense ( 135,467 ) ( 31,049 ) ( 244,101 ) ( 55,341 ) Interest income 4,621 - 4,621 - Gain on loan forgiveness - 109,435 - 109,435 Total other income, net 1,744,304 78,386 1,635,670 54,094 Net income (loss) $ 3,404,175 $ ( 119,616 ) $ 3,214,077 $ ( 1,010,776 ) Basic and diluted income (loss) per common share $ 0.04 $ ( 0.00 ) $ 0.04 $ ( 0.02 ) Weighted average number of common shares outstanding: Basic and diluted 83,531,308 77,084,205 80,742,455 64,740,745 See accompanying notes to the consolidated financial statements. 5 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Number of Shares Amount Paid-in Capital Accumulated Deficit Total Three months ended September 30, 2023 Common Stock Additional Number of Shares Amount Paid-in Capital Accumulated Deficit Total Balance as of June 30, 2023 80,850,148 $ 80,850 $ 53,517,367 $ ( 50,402,952 ) $ 3,195,265 Shares issued for cash 6,666,667 6,667 993,333 - 1,000,000 Fair value of vested stock options - - 17,830 - 17,830 Net income - - - 3,404,175 3,404,175 Balance as of September 30, 2023 87,516,815 $ 87,517 $ 54,528,530 $ ( 46,998,777 ) $ 7,617,270 Three months ended September 30, 2022 Common Stock Additional Number of Shares Amount Paid-in Capital Accumulated Deficit Total Balance as of June 30, 2022 76,450,147 $ 76,450 $ 52,432,587 $ ( 50,031,838 ) $ 2,477,199 Shares issued for cash 1,666,667 1,667 248,333 - 250,000 Net loss - - - ( 119,616 ) ( 119,616 ) Balance as of September 30, 2022 78,116,814 $ 78,117 $ 52,680,920 $ ( 50,151,454 ) $ 2,607,583 Nine months ended September 30, 2023 Common Stock Additional Number of Shares Amount Paid-in Capital Accumulated Deficit Total Balance as of December 31, 2022 78,116,814 $ 78,117 $ 53,074,180 $ ( 50,212,854 ) $ 2,939,443 Shares issued for cash 9,400,001 9,400 1,400,600 - 1,410,000 Fair value of vested stock options - - 53,750 - 53,750 Net income - - - 3,214,077 3,214,077 Balance as of September 30, 2023 87,516,815 $ 87,517 $ 54,528,530 $ ( 46,998,777 ) $ 7,617,270 Nine months ended September 30, 2022 Common Stock Additional Number of Shares Amount Paid-in Capital Accumulated Deficit Total Balance as of December 31, 2021 51,450,147 $ 51,450 $ 48,707,587 $ ( 49,140,678 ) $ ( 381,641 ) Balance 51,450,147 $ 51,450 $ 48,707,587 $ ( 49,140,678 ) $ ( 381,641 ) Shares 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 Net loss - - - ( 1,010,776 ) ( 1,010,776 ) Net income ( loss) - - - ( 1,010,776 ) ( 1,010,776 ) Balance as of September 30, 2022 78,116,814 $ 78,117 $ 52,680,920 $ ( 50,151,454 ) $ 2,607,583 Balance 78,116,814 $ 78,117 $ 52,680,920 $ ( 50,151,454 ) $ 2,607,583 See accompanying notes to the consolidated financial statements. 6 MALACHITE INNOVATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2023 2022 Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ 3,214,077 $ ( 1,010,776 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Gain on bargain purchase ( 1,875,150 ) - Fair value of vested stock options 53,750 - Depreciation 1,069,845 187,923 Changes in operating assets and liabilities: Accounts receivable ( 1,915,848 ) 554,181 Unbilled receivables ( 49,148 ) ( 161,263 ) Forgiveness of PPP loan - ( 109,435 ) Prepaid expense and other current assets ( 102,198 ) 3,000 Accounts payable and accrued liabilities 690,475 ( 31,966 ) Deposits ( 11,084 ) ( 200 ) Net cash provided by (used in) operating activities 1,074,719 ( 568,536 ) Cash flows from investing activities: Equipment purchases ( 1,134,417 ) ( 1,243,329 ) Cash paid in consideration for Collins Building acquisition ( 1,000,000 ) - Long-term debt issued for Collins Building acquisition ( 4,035,250 ) - Cash paid for acquisition of land ( 976,858 ) - Cash acquired in acquisition of Range Environmental Resources - 15,827 Cash paid for acquisition of Range Environmental Resources - ( 750,000 ) Net cash used in investing activities ( 7,146,525 ) ( 1,977,502 ) Cash flows from financing activities: Issuance of shares for cash 1,410,000 3,250,000 Proceeds from notes issued in acquisition of Collins Building 4,035,250 - Proceeds from long-term debt 383,202 923,309 Repayment of long-term debt ( 1,072,729 ) ( 158,815 ) Proceeds from (payoff of) line of credit 1,900,000 ( 350,000 ) Net cash provided by financing activities 6,655,723 3,664,494 Net increase in cash and cash equivalents 583,917 1,118,456 Cash and cash equivalents – beginning of period 442,369 38,343 Cash and cash equivalents – end of period $ 1,026,286 $ 1,156,799 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 244,101 $ 55,341 Forgiveness of PPP loan - 109,435 Stock issued for acquisition - 750,000 Income taxes - - See accompanying notes to the consolidated financial statements. 7 MALACHITE INNOVATIONS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (Unaudited) 1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Malachite Innovations, Inc. (the “Company”, “we”, “us”, “our” or “Malachite”), was incorporated in the State of Nevada on June 29, 2007. Malachite is a public 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 several complementary 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 strategic opportunities that are expected to make a positive impact on the people-planet ecosystem and generate strong investment returns for our shareholders. Originally founded in 2007 as Legend Mining Inc., the Company began operations as a mineral extraction exploration business focused on Canadian gold reserves, but failed to secure any mineral reserves to execute its strategy. In 2011, the Company changed its name to Stevia First Corp., relocated its operations to California, and pursued a new strategy focused on developing stevia-based sweetener additives for the food and beverage industry by using a novel glycosylation process it developed to chemically attach glucose molecules to stevia molecules. In 2015, due a lack of commercial viability of its glycosylated stevia product, the Company changed its name to Vitality Biopharma, Inc. and used the same glycosylation process to develop non-psychoactive glycosylated cannabinoids for the treatment of chronic inflammatory conditions of the gastrointestinal tract. In October 2021, the Company changed its name to Malachite Innovations, Inc. and created 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 impact investing operating businesses. I n 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. In August 2023, the Company acquired Collins Building & Contracting, Inc., a West Virginia corporation (“Collins Building”). Collins Building is an environmental services business that primarily focuses on the reclamation of abandoned mine land sites in West Virginia. 8 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 nine months ended September 30, 2023, the Company recorded net income of $ 3,214,077 and the Company’s operating activities provided $ 1,074,719 of cash. 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 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 September 30, 2023, that it has sufficient funds to operate the business for 12 months given its cash balance of $ 1,026,286 , line of credit availability of $ 100,000 , 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 change 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. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries 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. 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, stone and other products and recognizes revenue when the products are delivered to the customer’s designated site or when control of these products is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. Sales and other taxes that the Company collects concurrent with revenue producing activities are excluded from revenue. 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. 9 The Company recognizes revenue from contracts for financial reporting purposes over time. Progress toward completion of the Company’s contracts is measured by the percentage of cost incurred to date compared to estimated total costs for each contract. This method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change significantly within the near term. 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 three months ended September 30, 2023 or the three months ended September 30, 2022. Accounts receivable were $ 2,897,234 and $ 981,385 at September 30, 2023 and December 31, 2022, respectively. No bad debt expense was accrued in either the three months ended September 30, 2023 or the three months ended September 30, 2022 and there is no allowance for doubtful accounts as of September 30, 2023 or December 31, 2022. Unbilled Receivables Unbilled receivables represent revenue that has been recognized on projects for which billings have not been presented to the customer because the amounts were earned but not billable at the balance sheet date. Property and Equipment Property and 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. SCHEDULE OF EQUIPMENT September 30, 2023 December 31, 2022 Equipment $ 13,926,936 $ 6,637,814 Buildings 199,500 - Property and equipment, gross 199,500 - Accumulated depreciation ( 1,660,852 ) ( 592,300 ) Net book value 12,465,584 6,045,514 Depreciation expense $ 1,069,845 $ 395,543 The Company provides for depreciation of property and 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 property 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 impairment. 10 Land Land is carried at cost. The Company assesses the recoverability of its land by determining whether the cost of the land can be recovered through projected future cash flows generated by the land. No land was 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. As of September 30, 2023, the Company had no material lease commitments. 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. 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. 11 Basic and Diluted Income (Loss) Per Share Basic income (loss) per share is computed by dividing the net income (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 income (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 income (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 September 30, 2023 December 31, 2022 Options 9,862,544 9,392,544 Warrants 25,046,669 22,313,335 Total 34,909,213 31,705,879 Anti-dilutive loss per share 34,909,213 31,705,879 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 glycosylated cannabinoid drug 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 September 30, 2023, the Company has five operating business segments: (i) Range Reclaim, (ii) Range Water, (iii) Range Security, (iv) Range Land, and (v) Drug Development. Previously, beginning in October 2021, the Company began operating under two segments: (i) Graphium Biosciences, Inc., which reports the operating results of our broad portfolio of glycosylated cannabinoid prodrugs that are being developed to unlock the rebalancing effects of the endocannabinoid system to address numerous chronic inflammatory conditions, and (ii) the Range Reclamation Entities, which report the operating results of the Range Reclaim segment, which provides land reclamation, water restoration and incidental mining to mining and non-mining customers throughout Appalachia . The Range Water, Range Security and Range Land business segments began operations in 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 and major customers. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; geographic location of operation; nature of products and services; and procurement, manufacturing, and distribution processes. 12 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 was effective for the Company beginning January 1, 2023. This did not have a material effect on the Company’s financial position, results of operations, or 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 COLLINS BUILDING & CONTRACTING On August 31, 2023, the Company entered into a stock purchase agreement with the owner of Collins Building & Contracting, Inc. (“Collins Building”), pursuant to which the owner agreed to sell all of the outstanding common stock of Collins Building to the Company in exchange for (a) cash consideration of $1,000,000, (b) a five-year secured promissory note in the principal amount of $2,000,000, bearing interest at 7.0% per annum (the “First Promissory Note”), and (c) a two-year secured promissory note in the principal amount of $2,035,250, bearing interest at 8.25% per annum (the “Second Promissory Note”). The First Promissory Note is secured by the acquired real property and quarry infrastructure, and the Second Promissory Note is secured by the acquired equipment. 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. Because the fair values exceeded the purchase price, we recognized a gain on the purchase of $ 1,875,150 . The allocation of the purchase price is based on management’s estimates. SCHEDULE OF BUSINESS ACQUISITION ALLOCATION OF PURCHASE PRICE Fair value of assets acquired: Equipment $ 6,156,000 Land 554,900 Buildings 199,500 Total assets acquired 6,910,400 Less: Gain on bargain purchase price ( 1,875,150 ) Purchase price $ 5,035,250 Cash consideration 1,000,000 Long-term notes issued to the seller 4,035,250 Total purchase price $ 5,035,250 Acquisition transaction costs incurred $ 167,212 3. 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 “Range Share Purchase Agreement”), pursuant to which the Company issued a total of 10,000,000 shares of the Company’s common stock to the Range Shareholders and paid cash consideration of $ 1,000,000 to the Range Shareholders in exchange for 80 % of the outstanding common stock of each of the Range Reclamation Entities. Subsequent to entering into the Range Share Purchase Agreement, the Company discovered that Joshua Justice, one of the Range Shareholders (“Justice”), made certain misrepresentations in the Range 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 Range Share Purchase Agreement; c) transferred his 10% interest in each of the Range Reclamation Entities to Daedalus Ecosciences; and d) paid 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. 13 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 the merger of Daedalus Ecosciences into Malachite as of December 31, 2022, the Range Reclamation Entities are reported as wholly-owned 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 Range Share Purchase Agreement and he remains as President of each of the Range Reclamation Entities. The Company accounted for the above transactions 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 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. 4. GOODWILL Goodwill was $ 751,421 at September 30, 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: SCHEDULE OF GOODWILL September 30, 2023 December 31, 2022 Environmental Services: Beginning Balance $ 751,421 $ - Acquisitions - 751,421 Adjustments - - Ending Balance $ 751,421 $ 751,421 5. EQUITY Issuance of Common Stock and Warrants On April 11, 2023, the Company entered into securities purchase agreements providing for the issuance and sale by the Company of (i) 2,733,334 shares of the Company’s common stock (the “April Shares”) at a price of $ 0.15 per share and (ii) warrants to purchase up to an additional 2,733,333 shares of the Company’s common stock (the “Warrants”, and the shares issuable upon exercise of the Warrant, the “Warrant Shares”) at a price of $ 0.60 per share. The Warrants expire on April 11, 2028. The aggregate proceeds to the Company from the sale of the April Shares and Warrants were approximately $ 400,000 . 14 On August 24, 2023, the Company entered into a securities purchase agreement providing for the issuance and sale by the Company of 6,666,667 shares of the Company’s common stock (the “August Shares”) at a price of $0.15 per share. After deducting for fees and expenses, the aggregate net proceeds from the sale of the August Shares were approximately $ 1,000,000 . 6. STOCK OPTIONS Stock options issued during the three months ended September 30, 2023 and the three months ended September 30, 2022 During the three months ended September 30, 2023, the Company granted options to an outside advisor to purchase 100,000 shares of the Company’s common stock with exercise prices of $ 0.1337 per share that expire five years from the date of grant. Options to purchase all 100,000 shares 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 273.24 %, (ii) discount rate of 4.27 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years, which is the term of the options. The total fair value of the option grants at their grant dates was approximately $ 13,340 which was allocated to general and administrative expenses during the three months ended September 30, 2023. No stock options were granted to directors, advisors, and employees during the three months ended September 30, 2022. During the three months ended September 30, 2023, total stock-based compensation expense related to vested stock options was $ 17,830 . During the three months ended September 30, 2022, the Company recorded no stock-based compensation expense related to vested stock options. At September 30, 2023, the remaining unamortized cost of the outstanding stock-based awards was approximately $ 31,430 and will be amortized on a straight-line basis over the remaining vesting period of 2 years. A summary of the Company’s stock option activity during the nine months ended September 30, 2023 is as follows: SUMMARY OF STOCK OPTION ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at December 31, 2022 9,392,544 $ 0.54 Granted 500,000 0.17 Exchanged - - Exercised - - Expired ( 30,000 ) 3.50 Forfeited - - Balance outstanding at September 30, 2023 9,862,544 $ 0.51 Balance exercisable at September 30, 2023 9,662,544 $ 0.52 At September 30, 2023, the 9,862,544 outstanding stock options had intrinsic value of $ 2,630 . 15 A summary of the Company’s stock options outstanding as of September 30, 2023 is as follows: SCHEDULE OF STOCK OPTION OUTSTANDING Number of Options Weighted Average Exercise Price Weighted Average Grant- Date Stock Price Options Outstanding, September 30, 2023 100,000 $ 0.1337 $ 0.1337 3,050,000 $ 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 53,334 $ 3.10 - 3.80 $ 3.10 - 3.80 18,334 $ 4.00 - 4.70 $ 4.00 - 4.70 9,862,544 A summary of the Company’s stock options outstanding and exercisable as of September 30, 2023 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, September 30, 2023 100,000 $ 0.1337 $ 0.1337 2,850,000 $ 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 53,334 $ 3.10 - 3.80 $ 3.10 - 3.80 18,334 $ 4.00 - 4.70 $ 4.00 - 4.70 9,662,544 7. WARRANTS A summary of warrants to purchase common stock issued during the nine months ended September 30, 2023 is as follows: SCHEDULE OF WARRANTS ACTIVITY Shares Weighted Average Exercise Price Balance outstanding at December 31, 2022 22,313,335 $ 0.61 Granted 2,733,334 0.60 Exercised - - Expired - - Balance outstanding and exercisable at September 30, 2023 25,046,669 $ 0.61 At September 30, 2023, the 25,046,669 outstanding stock warrants had no intrinsic value. 16 8. LINES OF CREDIT In November 2022, the Company secured a bank line of credit with a limit of $ 1,000,000 . The line of credit expires on November 30, 2023 and bears interest at one percent ( 1 %) above the prime rate ( 9.50 % at September 30, 2023). As of September 30, 2023, the balance due under the line of credit was $ 1,000,000 . In June 2023, the Range Reclamation Entities secured a separate bank line of credit with a limit of $ 1,000,000 . This line of credit is secured by all of the Range Reclamation Entities’ fixed assets. This line of credit expires on June 24, 2024 and bears interest at the prime rate ( 8.50 % at September 30, 2023). As of September 30, 2023, the balance due under this line of credit was $ 900,000 . 9. LONG-TERM DEBT OBLIGATIONS Long-term debt consists of debt on vehicles and equipment, which serves as the collateral, and debt issued as part of the acquisition of Collins Building. Interest rates range from 3.69 % to 9.95 % for 2023. 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 – due between October 1, 2023 and September 30, 2024 $ 2,511,380 2024 – due between October 1, 2024 and September 30, 2025 2,393,306 2025 – due between October 1, 2025 and September 30, 2026 1,193,289 2026 – due between October 1, 2026 and September 30, 2027 1,214,323 2027 – due between October 1, 2027 and September 30, 2028 1,024,390 2028 and later – due on October 1, 2028 and thereafter 66,249 Total long-term debt $ 8,402,937 10. MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK Sales to the Company’s two largest customers were 95 % and 93 % of total sales for the three months ended September 30, 2023 and the nine months ended September 30, 2023, respectively. Sales to the Company’s largest customer were 74 % and 73 % of total sales for the three and nine months ended September 30, 2022, respectively. Accounts receivable from one customer were 96 % of total accounts receivable and unbilled receivables as of September 30, 2023. Accounts receivable from the Company’s largest customer were 61 % of total accounts receivable and unbilled receivables as of September 30, 2022. 11. 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 September 30, 2023, no contingent liability has been recorded in the Company’s consolidated statements of financial condition for this matter. 17 12. 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) Range Reclaim, (ii) Range Water, (iii) Range Security, (iv) Range Land, and (v) 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 five reportable segments that result from applying the aggregation criteria are as follows: ● Range Reclaim – land reclamation, water restoration , incidental mining and land repurposing ● Range Water - biochar product development and water solutions business ● Range Security – security services on mine land being reclaimed and repurposed for non-fossil fuel uses ● Range Land – mine land being acquired, reclaimed and repurposed for non-fossil fuel uses ● Drug Development – glycosylated cannabinoid drug development program The Company operated two reportable business segments during the three and nine months ended September 30, 2022, the Drug Development and Range Reclaim segments. The other business segments began operating in 2023. 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 For the three months ended September 30, 2023 Range Reclaim Range Water Range Security Range Land Drug Development Corporate Total Sales $ 5,299,415 $ - $       156,218 $ - $ - $ - $ 5,455,633 Cost of services 2,514,503 - 83,364 - - - 2,597,867 Gross profit 2,784,912 - 72,854 - - - 2,857,766 Net income (loss) 4,048,527 ( 15,376 ) 50,555 - ( 140,840 ) ( 538,691 ) 3,404,175 Total assets 17,227,868 14,498 136,835 1,009,988 11,859 443,441 18,844,489 Depreciation 370,404 640 2,891 - - - 373,935 Interest expense 93,933 - - - - 41,534 135,467 Tax expense - - - - - - - Capital expenditures for long-lived assets $ 349,898 $ - $ - $ 976,858 $ - $ - $ 1,326,756 18 For the nine months ended September 30, 2023 Range Reclaim Range Water Range Security Range Land Drug Development Corporate Total Sales $ 12,170,394 $ - $ 298,393 $ - $ - $ - $ 12,468,787 Cost of services 7,957,216 - 159,702 - - - 8,116,918 Gross profit 4,213,178 - 138,691 - - - 4,351,869 Net income (loss) 4,669,092 ( 53,656 ) 71,000 - ( 354,461 ) ( 1,117,898 ) 3,214,077 Total assets 17,227,868 14,498 136,835 1,009,988 11,859 443,441 18,844,489 Depreciation 1,061,569 1,066 7,210 - - - 1,069,845 Interest expense 199,744 - 224 - - 44,133 244,101 Tax expense - - - - - - - Capital expenditures for long-lived assets $ 1,066,389 $ 15,350 $ 52,674 $ 976,858 $ - $ - $ 2,111,271 For the three months ended September 30, 2022 Range Reclaim Drug Development Corporate Total Revenue $ 1,547,258 $ - $ - $ 1,547,258 Cost of services 1,189,475 - - 1,189,475 Gross profit 357,783 - - 357,783 Net income (loss) 213,865 ( 106,744 ) ( 226,737 ) ( 119,616 ) Total assets 3,518,019 8,334 681,298 4,207,651 Capital expenditures for long-lived assets $ 135,495 $ - $ - $ 135,495 For the nine months ended September 30, 2022 Range Reclaim Drug Development Corporate Total Revenue $ 2,186,617 $ - $ - $ 2,186,617 Cost of services 1,763,882 - - 1,763,882 Gross profit 422,735 - - 422,735 Net income (loss) 153,719 ( 340,297 ) ( 824,198 ) ( 1,010,776 ) Total assets 3,518,019 8,334 681,298 4,207,651 Capital expenditures for long-lived assets $ 1,243,328 $ - $ - $ 1,243,328 19 13. PRO FORMA INFORMATION The unaudited pro forma sales and net income data gives effect to the acquisition of Collins Building as if it had occurred on January 1, 2023, the beginning of the Company’s 2023 fiscal year, and to the acquisition of the Range Entities as if it had occurred on January 1, 2022, the beginning of the Company’s 2022 fiscal year. SCHEDULE OF PRO FORMA DATA INFORMATION For the nine months ended September 30, 2023 Sales Net income Acquired companies - - Collins Building $ 1,787,675 $ 2,992,901 All other companies 12,600,670 1,462,527 Total $ 14,388,345 $ 4,455,428 For the nine months ended September 30, 2022 Sales Net loss Acquired companies - - Range Entities $ 2,186,617 $ ( 43,266 ) All other companies - ( 1,071,014 ) Total $ 2,186,617 $ ( 1,114,280 ) 14. SUBSEQUENT EVENTS On October 30, 2023, the Company entered into warrant exchange agreements with certain holders of warrants to exchange warrants to purchase a total of 21,733,334 shares of the Company’s common stock for an aggregate of 2,173,334 shares of the Company’s common stock. 20