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EX-32.1 - EXHIBIT 32.1 - Vitality Biopharma, Inc.v446573_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - Vitality Biopharma, Inc.v446573_ex31-1.htm







 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 



 

 



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2016

 



 

 



TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File Number: 000-53832

 

VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

(Exact name of registrant as specified in its charter)

 



 

 

Nevada

 

75-3268988

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization )

 

 

 

 

 

1901 Avenue of the Stars, 2nd Floor

 

 

Los Angeles, CA

 

90067

(Address of principal executive offices)

 

(Zip Code)

  



(530) 231-7800

Registrant’s telephone number, including area code

  

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

     

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 



 

 

   Large accelerated filer

Accelerated filer

 

 

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of August 12, 2016, there were 11,997,878 shares of the registrant’s common stock outstanding.


 



 

 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

Quarterly Report on Form 10-Q

For the Quarterly Period Ended

June 30, 2016

 

INDEX

 



 

PART I - FINANCIAL INFORMATION

 

 

Item 1. Financial Statements (unaudited)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

21 

Item 4. Controls and Procedures

21 

 

 

PART II - OTHER INFORMATION

22 

 

 

Item 1. Legal Proceedings

22 

Item 1A. Risk Factors

23 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

22 

Item 6. Exhibits

24 

 

 

SIGNATURES

25 

 





 




 



PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

 

VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

CONDENSED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2016 AND 2015

(Unaudited)

 



 

CONDENSED UNAUDITED BALANCE SHEETS

2

 

 

CONDENSED UNAUDITED STATEMENTS OF OPERATIONS

3

 

 

CONDENSED UNAUDITED STATEMENTS OF STOCKHOLDERS’ DEFICIT

4

 

 

CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS

5

 

 

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

6



 








 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

CONDENSED BALANCE SHEETS

 





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

June 30, 2016

 

 

March 31, 2016



 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

 

$

20,481 

 

 

$

95,433 

Accounts receivable, net

 

 

39,203 

 

 

 

30,396 

Inventory

 

 

6,470 

 

 

 

6,470 

Deposit

 

 

3,058 

 

 

 

2,500 



 

 

 

 

 

 

 

Total Assets

 

$

69,212 

 

 

$

134,799 



 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

232,953 

 

 

$

244,937 

Accounts payable - related party

 

 

13,800 

 

 

 

6,900 

Derivative liability

 

 

335,802 

 

 

 

401,127 



 

 

 

 

 

 

 

Total liabilities

 

 

582,555 

 

 

 

652,964 



 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

Common stock, par value $0.001 per share;

 

 

 

 

 

 

 

1,000,000,000 shares authorized; 10,561,708 and 7,911,708 shares issued and outstanding, respectively

 

 

10,562 

 

 

 

7,912 

Shares issuable, 588,236 and 999,700 shares, respectively

 

 

100,000 

 

 

 

99,970 

Additional paid-in-capital

 

 

12,332,059 

 

 

 

11,890,512 

Accumulated deficit

 

 

(12,955,964)

 

 

 

(12,516,559)

Total stockholders’ deficit

 

 

(513,343)

 

 

 

(518,165)

Total liabilities and stockholders’ deficit

 

$

69,212 

 

 

$

134,799 

 

The accompanying notes are an integral part of these condensed financial statements.

 








 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

Three Months Ended June 30,



 

2016

 

 

2015



 

 

 

 

 

 

 

Revenue

 

$

46,377 

 

 

$

61,915 

Cost of goods sold

 

 

25,119 

 

 

 

24,033 

Gross profit

 

 

21,258 

 

 

 

37,882 



 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

General and administrative

 

 

327,874 

 

 

 

741,596 

Rent and other related party costs

 

 

6,900 

 

 

 

10,900 

Research and development

 

 

110,315 

 

 

 

183,525 

Total operating expenses

 

 

445,089 

 

 

 

936,021 



 

 

 

 

 

 

 

Loss from operations

 

 

(423,831)

 

 

 

(898,139)



 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Change in fair value of derivative liability

 

 

(14,953)

 

 

 

1,113,801 

Interest expense

 

 

(621)

 

 

 

(68)

Total other income, net

 

 

(15,574)

 

 

 

1,113,733 

Net income (loss)

 

$

(439,405)

 

 

$

215,594 



 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

  Basic

 

$

(0.04)

 

 

$

0.03 

  Diluted

 

$

(0.04)

 

 

$

0.03 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

  Basic

 

 

10,069,358 

 

 

 

7,568,760 

  Diluted

 

 

10,069,358 

 

 

 

7,778,760 

 

The accompanying notes are an integral part of these condensed financial statements.

 








 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED JUNE 30, 2016 AND 2015

 (Unaudited)

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

 

Shares

 

 

Amount

 

 

Additional Paid-in-Capital

 

 

Accumulated Deficit

 

 

Common Stock, Issuable

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance- March 31, 2016

 

 

7,911,708 

 

 

$

7,912 

 

 

$

11,890,512 

 

 

$

(12,516,559)

 

 

$

99,970 

 

$

(518,165)

Issuance of common stock and warrants

 

 

2,650,000 

 

 

 

2,650 

 

 

 

262,350 

 

 

 

 

 

 

 

(99,970)

 

 

165,030 

Amortization of common stock issued to employees with vesting terms

 

 

 

 

 

 

 

 

 

 

24,000 

 

 

 

-

 

 

 

-

 

 

24,000 

Fair value of vested stock options

 

 

-

 

 

 

-

 

 

 

39,905 

 

 

 

-

 

 

 

-

 

 

39,905 

Extinguishment of derivative liability

 

 

 

 

 

 

 

 

 

 

80,278 

 

 

 

 

 

 

 

 

 

 

80,278 

Fair value of vested warrants granted to employees

 

 

 

 

 

 

 

 

 

 

35,014 

 

 

 

 

 

 

 

-

 

 

35,014 

Common stock issuable upon exercise of warrants, 588,236 shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,000 

 

 

100,000 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(439,405)

 

 

 

-

 

 

(439,405)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance- June 30, 2016 (unaudited)

 

 

10,561,708 

 

 

$

10,562 

 

 

$

12,332,059 

 

 

$

(12,955,964)

 

 

$

100,000 

 

$

(513,343)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 






 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

Three Months Ended June 30,



 

2016

 

 

2015



 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

Net income (loss)

 

$

(439,405)

 

 

$

215,594 

Adjustments to reconcile net income (loss) to net cash used in operating activities

 

 

 

 

 

 

 

Fair value of vested stock options

 

 

39,905 

 

 

 

119,764 

Amortization of common stock issued to employees with vesting terms

 

 

24,000 

 

 

 

59,234 

Change in fair value of derivative liability

 

 

14,953 

 

 

 

(1,113,801)

Fair value of common stock issued for services

 

 

-

 

 

 

115,000 

Fair value of vested warrants granted to employees

 

 

35,014 

 

 

 

77,031 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(8,807)

 

 

 

18,267 

Deposit

 

 

(558)

 

 

 

-

Advance payment on related party lease

 

 

-

 

 

 

(2,300)

Accounts payable and accrued liabilities

 

 

(11,984)

 

 

 

25,801 

Accounts payable - related party

 

 

6,900 

 

 

 

(1,000)

Net cash used in operating activities

 

 

(339,982)

 

 

 

(486,410)



 

 

 

 

 

 

 



 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Proceeds from common stock issuable

 

 

100,000 

 

 

 

-

Proceeds from sale of common stock, net

 

 

165,030 

 

 

 

1,291,574 

Net cash provided by financing activities

 

 

265,030 

 

 

 

1,291,574 



 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

(74,952)

 

 

 

805,164 



 

 

 

 

 

 

 

Cash and cash equivalent - beginning of period

 

 

95,433 

 

 

 

389,730 

Cash and cash equivalent - end of period

 

$

20,481 

 

 

$

1,194,894 



 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

363 

 

 

$

68 

Income taxes

 

$

-

 

 

$

-



 

 

 

 

 

 

 

Non-cash activities:

 

 

 

 

 

 

 

Fair value of warrants issued with common stock recorded as derivative liability

 

$

-

 

 

$

1,694,651 

Extinguishment of derivative liability

 

$

80,278 

 

 

$

-

 

The accompanying notes are an integral part of these condensed financial statements.

 








 



VITALITY BIOPHARMA, INC.

(formerly Stevia First Corp.)

NOTES TO CONDENSED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2016

(Unaudited)



1. BUSINESS AND BASIS OF OPERATIONS   

 

Vitality Biopharma, Inc. (the “Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Nevada on June 29, 2007. In December 2015, we discovered novel pharmaceutical applications of our glycosylation technology for producing cannabinoid prodrugs and we have recently changed our operational focus towards pharmaceutical development of the cannabinoid prodrugs.  On July 15, 2016, the holders of a majority of our outstanding common stock and our Board of Directors approved 1) a name change whereby our name changed from Stevia First Corp. to Vitality Biopharma, Inc., 2) a reverse split of our outstanding common shares whereby each 10 shares of common stock will be exchanged for 1 share of common stock and 3) an increase in the number of shares of authorized common stock from 525,000,000 to 1,000,000,000.  These changes became effective on July 20, 2016.  All share and per share information contained in this Quarterly Report, including these unaudited condensed financial statements, has been adjusted to reflect these changes as if it had occurred in the earliest period presented.



Going Concern

 

These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses and utilized cash in operations since inception resulting in stockholders’ deficit of $513,343 as of June 30, 2016, and further losses are anticipated in the development of its business. These factors raise substantial doubt about the Company's ability to continue as a going concern. As a result, the Company’s independent registered public accounting firm, in their report on the Company’s March 31, 2016 audited financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and/or raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due. We estimate that we will have sufficient funds to operate the business for the 6 months after June 30, 2016. These estimates could differ if we encounter unanticipated difficulties, in which case our current funds may not be sufficient to operate our business for that period.  In addition, our estimates of the amount of cash necessary to operate our business may prove to be wrong, and we could spend our available financial resources much faster than we currently expect.

 

We do not have any firm commitments for future capital.  We will need to raise additional funds in order to continue operating our business and pursue and execute our planned research and development and commercial operations. We do not presently have, nor do we expect in the near future to have, sufficient or consistent revenue to fund our business from our operations, and will need to obtain significant funding from external sources. Since inception, we have funded our operations primarily through equity and debt financings, and we expect to continue to rely on these sources of capital in the future. However, if we raise additional funds by issuing equity or convertible debt securities, our existing stockholders’ ownership will be diluted, and obtaining commercial loans 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 technology or other intellectual property that could result in our receipt of only a portion of any revenue that may be generated from a partnered product or business. Further, these or other sources of capital may not be available on commercially reasonable or acceptable terms when needed, or at all.  If we cannot raise the money that we need in order to continue to operate and develop our business, we will be forced to delay, scale back or eliminate some or all of our operations.  If any of these were to occur, there is a substantial risk that our business would fail and our stockholders could lose all of their investment.

 

Basis of Presentation of Unaudited Condensed Financial Information




 

The unaudited condensed financial statements of the Company for the three months ended June 30, 2016 and 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, applied on a consistent basis, and pursuant to the requirements for reporting on Form 10-Q and the requirements of Regulation S-K and Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete audited financial statements.  However, the information included in these financial statements reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year or any future annual or interim period.  The balance sheet information as of March 31, 2016 was derived from the audited financial statements as of and for the year ended March 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 24, 2016. These financial statements should be read in conjunction with that report.





2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP 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. The more significant estimates and assumptions by management include, among others, the fair value of equity instruments issued for services, and assumptions used in the valuation of our outstanding derivative liabilities.

 

Accounts Receivable

 

The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

 

The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At June 30, 2016, and March 31, 2016, the allowance for doubtful accounts and returns and discounts was approximately $17,500.

 

Financial Assets and Liabilities Measured at Fair Value

 

The Company accounts for the fair value of financial instruments in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) topic 820, “Fair Value Measurements and Disclosures” (ASC 820), formerly SFAS No. 157 “Fair Value Measurements”. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.



Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:

 

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3

Unobservable inputs based on the Company’s assumptions.

 


 

The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts payable and accrued liabilities, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company uses Level 2 inputs for its valuation methodology for the warrant derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.

 

At June 30, 2016 and March 31, 2016, the Company’s balance sheet includes the fair value of derivative liabilities that were measured using level 2 measurements. The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC 815.

 

Derivative Financial Instruments

 

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the June 30, 2016 reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

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.

 

Stock-Based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic of the FASB ASC, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's statements of operations. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

Basic and Diluted Loss Per Share




 

The Company’s computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss) available to common stockholders by the weighted average number of common shares during the period. Shares of restricted stock subject to vesting are included in basic weighted average common shares outstanding from the time they vest. Diluted EPS reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income (loss) of the Company. In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period.



As of June 30, 2016 potentially dilutive securities include options to acquire 892,500 shares of common stock and warrants to acquire 9,702,713 shares of common stock. At June 30, 2015 potentially dilutive securities include options to acquire 830,000 shares of common stock and warrants to acquire 2,502,704 shares of common stock.  The basic and fully diluted shares for the three months ended June 30, 2016 are the same because the inclusion of the potential shares would have had an anti-dilutive effect.  Diluted net income per common share for the three months ended June 30, 2015 was calculated based on an increased number of shares that would be outstanding as follows:







 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

Three Months Ended June 30,



 

2016

 

 

2015



 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net income (loss)

 

$

(439,405)

 

 

$

215,594 



 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted average shares outstanding (basic)

 

 

10,069,358 

 

 

 

7,568,760 

Effect of dilutive stock options

 

 

 -

 

 

 

210,000 

Weighted average shares outstanding (diluted)

 

 

10,069,358 

 

 

 

7,778,760 



 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

  Basic

 

$

(0.04)

 

 

$

0.03 

 Diluted

 

$

(0.04)

 

 

$

0.03 



 

 

 

 

 

 

 



Recent Accounting Pronouncements



In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers.  ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.  ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract.  The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.  ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.  Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein.  Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.




 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements.  ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter.  Early adoption is permitted.  The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.



In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases.  ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018.  Early adoption is permitted.  A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.  The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.



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 consolidated financial statements



3. DERIVATIVE LIABILITY

 

Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The warrants issued to purchasers and placement agent in June 2013 and September 2014, and the warrants issued to investors in May 2015, do not have fixed settlement provisions because their exercise prices will be lowered if the Company issues securities at lower prices in the future or have other variable provisions. The Company was required to include the reset provisions in order to protect the holders of the warrants from the potential dilution associated with future financings, and a fundamental transaction provision, which require a revaluation of the liabilities. In accordance with the FASB authoritative guidance, the warrants have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

As of March 31, 2016  and June 30, 2016, the derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following assumptions:

 

Warrants:

 





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

June 30, 2016

 

 

March 31, 2016

 

Exercise Price

 

$

2.00 - 4.25

 

 

$

3.00 - 4.50

 

Stock Price

 

$

0.50 

 

 

$

0.70 

 

Risk-free interest rate

 

 

0.48 - 0.86

%

 

 

0.19 - 1.04

%

Expected volatility

 

 

126.31 

%

 

 

105.06 - 124.77

%

Expected life (in years)

 

 

1.25 - 3.9 years

 

 

 

0.1 - 4.2 years

 

Expected dividend yield

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Fair Value:

 

$

335,802 

 

 

$

401,127 

 



 

 

 

 

 

 

 

 

 

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of


 

the warrants was determined by the expiration dates of the warrants. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

 

Certain warrants included in the March 31, 2016 derivative balance expired in May 2016 and were therefore extinguished from the derivative balance at June 30, 2016.  For the three months ended June 30, 2016, the Company recorded an increase in fair value of the derivative liability of $14,953. As of June 30, 2016, the aggregate fair value of the derivative liabilities was $335,802.



4. EQUITY

    

Equity Financing



In May 2016, the Company entered into a securities purchase agreement providing for the issuance and sale by the Company to the purchasers, in a private placement, of an aggregate of 2,650,000 shares of the Company’s common stock (collectively, the “Shares”) and Warrants to purchase up to an aggregate of 7,950,000 shares of the Company’s common stock,(the “Warrants”, and the shares issuable upon exercise of the Warrants, collectively, the “Warrant Shares”), at a price of $0.10 per Share (the “Offering”). The Warrants have an exercise price of $0.17 per share and expire six months from the date of issuance.  The Offering closed on May 4, 2016.  The aggregate proceeds to the Company from the sale of the Shares and Warrants was $265,000.



In addition, 999,700 shares of common stock valued at $99,970 were issued during the period that were previously reflected as common stock, issuable.



Common stock issued to employees for services with vesting terms

The Company has issued shares of common stock to employees and directors that vest over time. These shares of common stock were valued based upon the market price of the Company’s common stock at the dates of grant and determined the aggregate fair values to be of approximately $683,000.  The allocable portion of the aggregate fair values of these shares of common stock that vested during the three months ended June 30, 2016 and 2015 amounted to $24,000 and $59,234, respectively, and were recognized as an expense in the accompanying statements of operations during the periods then ended.  As of June 30, 2016, approximately $43,000 of these awards remains unvested and will be amortized as compensation costs in future years.

Shares of restricted stock granted above are subject to forfeiture to the Company or other restrictions that will lapse in accordance with a vesting schedule determined by our Board.  In the event a recipient’s employment or service with the Company terminates, any or all of the shares of common stock held by such recipient that have not vested as of the date of termination under the terms of the restricted stock agreement are forfeited to the Company in accordance with such restricted grant agreement.



The following table summarizes restricted common stock activity:







 

 



 

Number of Shares

Non-vested shares, March 31, 2016

 

175,833 

    Granted

 

-

    Vested

 

(2,500)

    Forfeited

 

-

Non-vested shares, June 30, 2016

 

173,333 














 

5. STOCK OPTIONS

 

Pursuant to the terms of the 2012 Stock Incentive Plan, the exercise price for all equity awards issued under the 2012 Stock Incentive Plan is based on the market price per share of the Company’s common stock on the date of grant of the applicable award.

 

A summary of the Company’s stock option activity for the three months ended June 30, 2016 is presented below:

 





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

Shares

 

 

Weighted Average Exercise Price

Balance at March 31, 2016

 

 

907,500 

 

 

$

3.30 

Granted

 

 

-

 

 

 

-

Exercised

 

 

-

 

 

 

-

Cancelled

 

 

(15,000)

 

 

 

3.40 

Balance outstanding at June 30, 2016

 

 

892,500 

 

 

$

2.86 

Balance exercisable at June 30,2016

 

 

717,501 

 

 

$

2.99 

 



At June 30, 2016, options to purchase common shares were outstanding as follows:  

 





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



 

Number of options

 

 

Weighted Average Exercise Price

 

 

Weighted Average Grant-date Stock Price



 

 

 

 

 

 

 

 

 

 

 

Options Outstanding, June 30, 2016

 

 

130,000 

 

 

$

1.00 

 

 

$

10.00 



 

 

10,000 

 

 

$

1.50 

 

 

$

0.40 



 

 

287,500 

 

 

$

2.00 - 2.70

 

 

$

2.00 - 2.70



 

 

205,000 

 

 

$

3.10 - 3.80

 

 

$

3.10 - 3.80



 

 

200,000 

 

 

$

4.00 - 4.70

 

 

$

4.00 - 4.70



 

 

60,000 

 

 

$

5.10 

 

 

$

5.10 



 

 

892,500 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Options Exercisable, June 30,2016

 

 

130,000 

 

 

$

1.00 

 

 

$

10.00 



 

 

2,500 

 

 

$

1.50 

 

 

$

0.40 



 

 

157,500 

 

 

$

2.00 - 2.70

 

 

$

2.00 - 2.70



 

 

171,668 

 

 

$

3.10 - 3.80

 

 

$

3.10 - 3.80



 

 

195,833 

 

 

$

4.00 - 4.70

 

 

$

4.00 - 4.70



 

 

60,000 

 

 

$

5.10 

 

 

$

5.10 



 

 

717,501 

 

 

 

 

 

 

 

 

 

During the three months ended June 30, 2016 and 2015, we expensed total stock-based compensation related to vesting stock options of $39,905 and $119,764, respectively, and the remaining unamortized cost of the outstanding stock options at June 30, 2016 was $263,460. This cost will be amortized on a straight line basis over a weighted average remaining vesting period of 2 years and will be adjusted for subsequent changes in estimated forfeitures. Future option grants will increase the amount of compensation expense that will be recorded.

 

The intrinsic values of all outstanding and exercisable stock options at June 30, 2016 were approximately $0 and $0, respectively, and $130,000 and $130,000, respectively, at June 30, 2015.




 

6. WARRANTS

 

At June 30, 2016, warrants to purchase common shares were outstanding as follows:

 





 

 

 

 

 

 

 



 

 

 

 

 

 

 



 

Shares

 

 

Weighted Average Exercise Price

Balance at March 31, 2016

 

 

2,002,718 

 

 

$

3.50 

Granted

 

 

7,950,000 

 

 

 

0.17 

Exercised

 

 

-

 

 

 

-

Expired

 

 

(250,000)

 

 

$

4.00 

Balance outstanding and exercisable at June 30, 2016

 

 

9,702,718 

 

 

$

0.55 







Warrants issued in equity financing

 

In May 2016, the Company entered into a securities purchase agreement with the purchasers identified therein providing for the issuance and sale by the Company to the purchasers, in a private placement, of an aggregate of 2,650,000 and Warrants to purchase up to an aggregate of 7,950,000 shares of the Company’s common stock.  The Warrants have an exercise price of $0.17 per share and expire six months from the date of issuance.



Warrants issued to employees



On August 25, 2014, we entered into employment agreements with two new employees, pursuant to which, these employees became entitled to receive warrants to purchase an aggregate of 440,000 shares of the Company’s common stock as discussed in Note 8. These warrants have an exercise price of $3.00, and a term of ten years from issue date. Vesting terms of these warrants are as follows: (i) warrants to purchase 80,000 shares of common stock vested immediately at their grant date with a fair value of $201,680, which was recorded as an expense during the year ended March 31, 2015, (ii) warrants to purchase 200,000 shares of common stock have vesting terms ranging from one year to three years with a fair value of $504,204 upon grant date, which is being amortized over their vesting terms, of which $35,014 were recorded as an expense during the three months ended June 30, 2016, and (iii) warrants to purchase 160,000 shares of common stock vest upon achievement of certain milestones under the distribution agreement (See Note 8). The remaining unamortized  cost of the outstanding warrants at June 30, 2016 was approximately $21,000.

 

The aggregate intrinsic value of all of the outstanding and exercisable warrants at June 30, 2016 and March 31, 2016 was approximately $2,623,500 and  $0, respectively.



Cash received in advance of exercise of warrants



During the three months ended June 30, 2016, the Company received $100,000 of proceeds from holders of warrants to acquire 588,236 shares of common stock.  As of June 30, 2016, the Company has not yet received the notice of exercise from the holders, and therefore, had not issued the shares of stock and had reflected the $100,000 proceeds received as common stock issuable in the Company’s condensed statement of stockholders’ deficit herein.

 

7. RELATED PARTY TRANSACTIONS AND LEASE OBLIGATIONS 

Related party lease obligations

 

On April 23, 2012, the Company entered into a lease agreement (the “Carlson Lease”) with One World Ranches, LLC (“One World Ranches”), which is jointly-owned by Dr. Avtar Dhillon, the Chairman of the Board of Directors of the Company, and his wife, Diljit Bains, pursuant to which the Company has agreed to lease from One World Ranches certain office and laboratory space located at 5225 Carlson Road, Yuba City, California. The Carlson Lease


 

began on May 1, 2012 and expires on May 1, 2017, and the Company’s rent payments thereunder are $2,300 per month. The Company has paid $1,500 as a refundable security deposit under the Carlson Lease.



Aggregate payments under the above lease for the three months ended June 30, 2016 and 2015 were $0 and $10,900, respectively.

 

8. DISTRIBUTION AND LICENSE AGREEMENTS

 

Related to our legacy stevia business products and technologies, on August 25, 2014, we entered into a distribution agreement where Qualipride International (“Qualipride”) agreed to provide stevia products to the Company at its cost, plus up to 2% for handling costs and up to a 5% sales commission.  The Company will account for such costs as such sales are made, or as such other direct costs are incurred. During the year ended March 31, 2016, neither any sales were made nor were other direct costs incurred pursuant to the terms of the distribution agreement.  Concurrently, we also entered into a technology license agreement with Qualipride, Mr. Dong Yuejin and Mr. Guo Yuxiao in which we obtained an exclusive license outside China to use Qualipride’s proprietary methods and designs for stevia extraction and purification facilities.  The Company will account for the potential costs of such license and obligation once adequate financing has been received to finance facility construction contemplated within the agreement, if such financing occurs.  During the three months ended June 30, 2016, the Company did not receive any financing pursuant to the terms of the license agreement.   

Under employment agreements related to the distribution and license agreements, Mr. Dong and Mr. Guo are entitled to receive an aggregate of 240,000 restricted shares of our common stock (see Note 5) and warrants to purchase up to an aggregate of 440,000 shares of our common stock (see Note 7). An aggregate of 40,000 shares of our restricted common stock and warrants to purchase up to an aggregate of 80,000 shares of our common stock vested immediately upon issuance. An aggregate of 100,000 shares of our restricted common stock and warrants to purchase up to an aggregate of 200,000 shares of our common stock have vesting terms ranging from one to three years.  An aggregate of 100,000 shares of our restricted common stock will be issued and warrants to purchase up to an aggregate of 160,000 shares of our common stock will vest once we achieve certain financial and operational milestones.  The Company will account for the costs of the 100,000 shares of common stock and warrants to purchase up to an aggregate of 160,000 shares of common stock, at the time their issuance becomes probable.

The distribution, license and employment agreements are all scheduled to terminate in August 2016, and the Company does not intend to renew or restructure them unless it obtains significant new strategic partnering interest or supply contracts from multinational ingredient or beverage companies related to its stevia products or technologies.  

 

9. SUBSEQUENT EVENTS

In July 2016, we issued options to purchase 1,525,703 shares of our common stock to six employees and one director with a fair value of $365,330 which will be amortized over 24 months as the options vest.  The fair value of these options granted was estimated using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 126.34%, (ii) discount rate of 1.60 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years.  These options have an exercise price of $0.50 per share and expire ten years from the date of issuance.

In July 2016, we issued options to purchase 185,118 shares of our common stock to two consultants with a fair value of $44,326 at grant date.  These options have an exercise price of $0.50 per share and expire ten years from the date of issuance. The fair value of these options granted to the consultants was estimated using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 126.34%, (ii) discount rate of 1.60 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years. The fair value of the option grants to the consultants will be recalculated each quarter and will be amortized over 24 months as the options vest based on their fair value at the end of each quarterly reporting period.

In July 2016, we issued 1,436,170 shares of restricted common stock to our Chief Executive Officer and the Chairman of our board of directors with a fair value of $718,085, which will be amortized over 20 months as the shares vest.


 




 



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

As used in this discussion and analysis and elsewhere in this Quarterly Report, the “Company”, “we”, “us” or “our” refer to Vitality Biopharma, Inc., a Nevada corporation.

 

Cautionary Statement

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Financial Statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 filed on June 24, 2016, and the related audited financial statements and notes included therein.

 

Certain statements made in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These risks and uncertainties include: general economic and financial market conditions; our ability to obtain additional financing as necessary; our ability to continue operating as a going concern; any adverse occurrence with respect to our business or; results of our research and development activities that are less positive than we expect ; our ability to bring our intended products to market; market demand for our intended products; shifts in industry capacity; product development or other initiatives by our competitors; fluctuations in the availability of raw materials and costs associated with growing raw materials for our intended products; poor growing conditions for the stevia plant; other factors beyond our control; and the other risks described under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on June 24, 2016.



Although we believe that the expectations and assumptions reflected in the forward-looking statements we make are reasonable, we cannot guarantee future results, levels of activity or performance. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed by any forward-looking statements. As a result, readers should not place undue reliance on any of the forward-looking statements we make in this report. Forward-looking statements speak only as of the date on which they are made. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

Company Overview

 

We were incorporated in the State of Nevada on June 29, 2007 under the name Legend Mining Inc. 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.” Also on October 10, 2011, we effected a seven for one forward stock split of authorized, issued and outstanding common stock. As a result, our authorized capital was increased from 75,000,000 shares of common stock with a par value of $0.001 to 525,000,000 shares of common stock with a par value of $0.001,  and issued and outstanding shares of common stock increased from 7,350,000 to 51,450,000. In February 2012, we substantially changed our management team, added other key personnel.  In December 2015, we discovered novel pharmaceutical applications of our glycosylation technology for producing cannabinoid prodrugs and we have recently changed our operational focus towards pharmaceutical development of the cannabinoid prodrugs.  On July 15, 2016, the holders of a majority of our outstanding common stock and our Board of Directors approved 1) a name change whereby our name changed from Stevia First Corp. to Vitality Biopharma, Inc., 2) a reverse split of our outstanding common shares whereby each 10 shares of common stock will be exchanged for 1


 

share of common stock and 3) an increase in the number of shares of authorized common stock from 525,000,000 to 1,000,000,000.  These changes became effective on July 20, 2016.

 

Plan of Operations

 

Business Overview



Vitality Biopharma is unlocking the power of cannabinoids for the treatment of serious neurological and inflammatory disorders, such as inflammatory bowel disease and multiple sclerosis.

In 2014, sales of medical marijuana were estimated at $2.57 billion, and are estimated to grow to $10.2 billion in five years due to legalization and increasing recognition of its therapeutic utility, within the medical community.  Pharmaceutical versions of cannabinoids have been marketed in the U.S. for more than a decade, which hold the same therapeutic potential, yet their sales have lagged behind, with sales of synthetic cannabinoids pharmaceuticals in the U.S. estimated at only $133 million in 2014 by IMS Health.  Cannabinoid pharmaceuticals that are currently approved or in development by other companies have well known limitations, such as poor oral bioavailability, which translates into erratic and potentially unsafe dosing as well as a short duration of action, which means that current treatments must be administered repeatedly throughout the day, and that there is no overnight relief.

Vitality Biopharma has developed a new class of cannabinoid glycoside prodrugs, known as cannabosides, to overcome these limitations, and to ultimately provide a compelling oral cannabinoid pharmaceutical that we expect physicians will be eager to prescribe, and that patients will prefer over use of medical marijuana.  Cannabosides were discovered in 2015 through application of the company’s proprietary enzymatic taste modification technologies that were originally developed for stevia sweeteners.

Cannabosides are cannabinoid “prodrugs,” which means that they are medications or compounds that, after administration, are converted within the body into a pharmacologically active drug, which already has a long history of clinical investigation and use.  A classic prodrug example is Aspirin, acetylsalicylic acid, which was first made by Felix Hoffmann at Bayer in 1897 and is a synthetic prodrug of salicylic acid.  Because there already exists independent verification of the active drug’s safety and efficacy, prodrugs may receive marketing approval more quickly than others, and in some cases may receive drug approvals through completion of small clinical studies evaluating bioequivalence or bioavailability.  At the same time, a prodrug can have many commercial advantages, including that they can be proprietary and patentable compositions of matter, unlike cannabinoids themselves, or older pharmaceutical formulations where patent protection has already expired.

Cannabosides are more stable and soluble than cannabinoids, so there is less risk of non-psychotropic cannabidiol (“CBD”) being converted to psychotropic THC in the acidic stomach environment, which may cause unwanted side effects in pediatric epilepsy patients, or in any medical treatment where oral CBD is used, and especially when oral CBD is administered at high dose.  Cannabosides enable the passage of cannabinoids through the digestive tract and their eventual release within the large intestine or colon, which enables targeted delivery of cannabinoids for treatment of gastrointestinal diseases.  This may enable the reduction or elimination of systemic delivery of THC into the bloodstream and brain, reducing psychoactive side effects, and enabling higher concentrations of compounds to be used for treatment of pain and inflammation within the colonBecause passage of cannabosides through the digestive tract is likely to occur over several hours or longer, there is a sustained or delayed release of cannabinoids, which can also provide patients with long-lasting or overnight relief, a desirable attribute that is unavailable with medical marijuana or with current cannabinoid pharmaceutical formulations.

We have produced more than 25 novel cannabosides so far and have patent applications that include composition of matter claims for prodrugs of cannabinoids that have been studied extensively in clinical trials worldwide, including THC, CBD, and CBDV.  The Company aims to develop and approve these proprietary molecules as pharmaceuticals using a low-risk regulatory strategy that is available for prodrugs, and to ultimately deliver to the market pharmaceuticals that are highly differentiated both from medical marijuana and from current cannabinoid drugs.


 

A key part of our strategy will be to take advantage of a more efficient FDA review and approval process that is available for prodrugs, which reduces the need for large and expensive clinical trials.   This expedited regulatory process is available for our cannabosides because in the U.S. and internationally there have already been many independent preclinical and clinical studies completed using the reference cannabinoid drugs we are studying.

We are initially developing our cannaboside pharmaceutical products for symptomatic relief of pain, cramping, and muscle spasticity in that is the result of serious neurological and inflammatory conditions, such as inflammatory bowel disease and multiple sclerosis.  There is extensive clinical evidence supporting the potential efficacy of cannabinoids for treatment of each of these indications, including through clinical trials conducted by independent investigators. 

We plan to complete preclinical studies necessary in order to launch multiple clinical trials in 2017 in order to evaluate the clinical pharmacokinetics of cannabosides, as well as their potential for providing symptomatic relief of abdominal pain and cramping.  WE also plan to obtain preliminary data about the regenerative potential of cannabosides, both when administered alone and in combination with other medications

Our primary operations are based in Yuba City, California, where we originally developed our proprietary bioprocessing methods.  The Company’s facilities include laboratories and a manufacturing suite for GMP production, which will be used for pharmaceutical-grade production of products to be tested initially in clinical trials, and these facilities will be registered with the U.S. FDA and DEA.

 

Our Operations

 

Product Development Plans



For each of the pharmaceutical products in our pipeline, the active cannabinoid pharmaceutical agents have either been independently approved by regulatory bodies, or are now in late-stage clinical trials, and there is extensive clinical data already available related to drug safety and effectiveness.  Because of this, the Company will in general benefit from the increased familiarity of clinical investigators and regulators with these compounds, which may enable abbreviated paths towards clinical testing and eventual approval of its pharmaceutical products..

Cannabinoids are known to be effective anti-inflammatory and neuroprotective agents, and as of 2015, more than 20 U.S. states have enacted medical marijuana laws to permit access to marijuana for treatment of a variety of conditions.  The approved conditions include chronic pain, inflammatory bowel disease, epilepsy, wasting disorders, multiple sclerosis and muscle spasticity disorders, glaucoma, cirrhosis, Alzheimer’s disease, nausea, traumatic brain injury, Parkinson’s disease, HIV/AIDS, Huntington’s disease, and more.  Cannabinoid pharmaceuticals are increasingly being approved as well, including primarily synthetic and botanical extracts of the two major constituents of Cannabis sativa, which are THC and CBD.  Dronabinol is a synthetic THC drug that has been approved for treating nausea and for stimulating appetite.  Nabiximols is a blend of two cannabinoids, THC and CBD, which has been approved in more than 20 countries for treatment of muscle spasticity in multiple sclerosis, and also for treatment of cancer pain in certain countries. 

CBD is not psychoactive, has established antianxiety and antipsychotic effects, and beyond its inclusion in nabiximols, is also being investigated as a stand-alone agent for epilepsy, schizophrenia, substance abuse, inflammatory bowel disease, and a variety of other neurological and inflammatory conditions.  We intend to obtain marketing authorizations for our cannaboside drug formulations in one or more of these disease indications.

Short Term Development Targets



·

Complete additional pharmacokinetic studies and additional preclinical efficacy trials to support clinical development of cannabosides

·

Complete the manufacture of cannaboside formulations that will be used in initial clinical studies


 

·

Obtain regulatory approval for first-in-man clinical studies to evaluate the pharmacokinetics of cannabosides, and to obtain preliminary data about their efficacy for providing symptomatic relief related to neurological and inflammatory disorders

·

Obtain regulatory approval to begin manufacturing of pharmaceutical-grade cannabinoids, in order to support future clinical trials and for marketing authorizations both by the U.S. FDA



We believe that our long-term commercial success and profit potential depends in large part on our ability to develop and advance proprietary cannabinoid prodrugs that are strongly differentiated from both medical marijuana and existing cannabinoid drugs, and to do this more quickly, efficiently and effectively than our competitors.  Another critical factor that will determine our success is our ability to obtain and enforce patents, maintain protection of trade secrets, and operate our business without infringing the proprietary rights of third parties. As a result, we are dedicated to the continued development and protection of our intellectual property portfolio. See “Intellectual Property” in this report for a further discussion.

Product Pipeline



Our pipeline includes drug formulations of cannabosides, which are cannabinoid glycoside prodrugs.   Prodrugs are medications or compounds metabolized by the body into a pharmacologically active drug.  We have patents pending for more than 25 of these novel pharmaceutical compositions including prodrugs of THC, CBD, and CBDV, which are cannabinoids that are either marketed and approved as pharmaceutical products today, or that are under investigation in independent clinical trials currently.  Prodrugs can optimize the marketability of a drug because they can be patented and proprietary, and yet still be approved through an abbreviated regulatory pathway.  VITA-100 is an oral cannabinoid formulation containing cannabosides that is being developed for treatment of inflammatory bowel disease.  VITA-210 is a cannabinoid glycoside prodrug being developed primarily for treatment of pain and muscle spasticity in multiple sclerosis, inflammatory bowel syndrome and other disorders.

Through a process called glycosylation, the solubility and stability of a drug can be significantly improved.  Cannabinoid glycoside prodrugs and their use in drug formulations that are currently under development at Vitality Biopharma are designed to enable significant benefits, including:



1.

Administration of cannabinoids in a convenient oral formulation;

2.

Improved solubility, leading to oral formulations that are easy to manufacture and that improve the taste of products through reduction or removal of harsh organic solvents;

3.

Targeted delivery of compounds to specific tissues or organs, especially targeted delivery of cannabinoids to the colon or large intestine for treatment of gastrointestinal disorders including inflammatory bowel disease, which may reduce the delivery of psychoactive THC into the bloodstream and brain;

4.

Improved stability, preventing conversion of CBD to unwanted byproducts including THC in the acidic stomach environment, or other forms of degradation, and therefore enabling higher doses of CBD to be administered orally without undesirable side effects; and

5.

Delayed release, enabling long-lasting relief of symptoms for patients, rather than having to administer treatment repeatedly throughout the day and requiring additional pharmaceuticals for overnight pain relief or as a sleep aid.



 

 

 

 

 

Drug

 

Treatment Indications

 

Status

Cannabosides - VITA-100

 

Inflammatory Bowel Disease

 

Phase 1/2 Trial Expected to Initiate in 2017


 

Cannabosides - VITA-210

 

Irritable Bowel Syndrome, Neuropathic Pain, Fibromyalgia, Muscle Spasticity in Multiple Sclerosis & Rare White Matter Disorders

 

Phase 1/2 Trial Expected to Initiate in 2017

Additional Cannabosides Formulations

 

Epilepsy, Schizophrenia, Huntington’s disease, Guillain-Barré

 

Preclinical



We also have licensed intellectual property that seeks to protect methods of use of certain FDA-approved drugs for treatment of multiple sclerosis and demyelinating disorders.  These drugs are being tested in combination with our cannaboside drug formulations in order to establish treatment regimens that provide regenerative effects for patients with serious neurological and inflammatory conditions. 

Additional Operations



Our glycosylation technology in the past was applied primarily to production of better tasting varieties of stevia through enzyme bioprocessing, which was developed in concert with additional technologies designed to improve the taste and yield of stevia sweetener derived from the stevia plant.  The company has an intellectual property portfolio related to stevia, as well as commercial operations related to the manufacture and sale of research products that commenced in 2014.  We also previously entered into a distribution agreement and licensing agreement with Qualipride, a stevia supplier located in China, in order to license rights to certain stevia production technologies.  The Company intends to sustain these operations and technologies in a manner that is cash-flow neutral or better, through a combination of restructuring of existing agreements and entering into new licensing arrangements or strategic partnerships.



Results of Operations

 

Three Months Ended June 30, 2016 and June 30, 2015

 

Our net loss during the three months ended June 30, 2016 was $(439,405) compared to net income of $215,594 for the three months ended June 30, 2015. During the three months ended June 30, 2016, we generated $46,377 in revenue and $21,258 in gross profit, compared to $61,915 in revenue and $37,882 in gross profit for the 2015 period. We expect such sales to continue at approximately this rate.

 

During the three months ended June 30, 2016, we incurred general and administrative expenses in the aggregate amount of $327,874 compared to $741,596 incurred during the three months ended June 30, 2015 (a decrease of $413,722. General and administrative expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, marketing, consulting costs and travel expenses. A significant portion of these costs are related to the development of our organizational capabilities as an agricultural biotechnology company engaged in the development of stevia products, including costs such as legal and advisory fees related to intellectual property development. The majority of the decrease in general and administrative costs in the period relates to stock-based compensation costs which decreased to $98,919 in the period ending June 30, 2016, as compared to $370,704 in the period ending June 30, 2015.

 

In addition, during the three months ended June 30, 2016, we incurred research and development costs of $110,315, compared to $183,525 during the three months ended June 30, 2015 (a decrease of $73,210). This decrease resulted from reduced equipment and consulting expenses during the 2016 period.

 

During the three months ended June 30, 2016, we incurred related party rent and other costs totaling $6,900 compared to $10,900 incurred during the three months ended June 30, 2015.

 


 

This resulted in a loss from operations of $423,831 during the three months ended June 30, 2016 compared to a loss from operations of $898,139 during the three months ended June 30, 2015.

 

During the three months ended June 30, 2016, we recorded total net other income (expense) in the amount of $(15,574), compared to total net other income (expense) recorded during the three months ended June 30, 2015 in the amount of $1,113,733. During the three months ended June 30, 2016, we recorded an expense related to the change in fair value of derivatives of $14,953, compared to a gain of $1,113,801 during the 2015 quarter. This resulted in a  net loss of $439,405 during the three months ended June 30, 2016 compared to net income of $215,594 during the three months ended June 30, 2015.

 

The net loss during the three months ended June 30, 2016 compared to the net income for the three months ended June 30, 2015 is attributable primarily to the large gain related to the change in fair value of derivatives in the 2015 period offset by lower operating expenses and lower research and development expenditures in the 2016 period.

 

Liquidity and Capital Resources

 

As of June 30, 2016, we had total current assets of $69,212, which was comprised mainly of cash of $20,481. Our total current liabilities as of June 30, 2016 were $582,555 and consisted of accounts payable and accrued liabilities of $246,753, and derivative liability of $335,802. The derivative liability is a non-cash item related to certain of our outstanding warrants as of June 30, 2016. As a result, on June 30, 2016, we had working capital deficit of $513,343.

 

We have not yet received significant revenues from sales of products or services, and have recurring losses from operations. We have incurred losses since inception resulting in stockholders’ deficit of $12,955,964 as of June 30, 2016, and further losses are anticipated in the development of our business. These factors raise substantial doubt about our ability to continue as a going concern. Our financial statements included in this report have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The financial statements included in this report do not include any adjustments relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.

 

Due to the uncertainty of our ability to meet our current operating expenses and capital expenses as noted above, in their report on our annual financial statements for the year ended March 31, 2016, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. We estimate that we will have sufficient funds to operate the business for the 6 months after June 30, 2016. We will require additional financing to fund our planned long-term operations. These estimates could differ if we encounter unanticipated difficulties, in which case our current funds may not be sufficient to operate our business for that period. In addition, our estimates of the amount of cash necessary to operate our business may prove to be wrong, and we could spend our available financial resources much faster than we currently expect.

 

We do not have any firm commitments for future capital. Significant additional financing will be required to fund our planned operations in future periods, including research and development activities relating to our principal product candidate, seeking regulatory approval of that or any other product candidate we may choose to develop, commercializing any product candidate for which we are able to obtain regulatory approval or certification, seeking to license or acquire new assets or businesses, and maintaining our intellectual property rights and pursuing rights to new technologies. We do not presently have, nor do we expect in the near future to have, revenue to fund our business from our operations, and will need to obtain significant funding from external sources. We may seek to raise such funding from a variety of sources. If we raise additional funds by issuing equity or convertible debt securities, our existing stockholders’ ownership will be diluted, and obtaining commercial loans 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 technology or other intellectual property that could result in our receipt of only a portion of any revenue that may be generated from a partnered product or business. Further, we may not be able to obtain additional financing from any of these sources on commercially reasonable or acceptable terms when needed, or at all. If we cannot raise the money that we need in


 

order to continue to operate and develop our business, we will be forced to delay, scale back or eliminate some or all of our operations. If any of these were to occur, there is a substantial risk that our business would fail and our stockholders could lose all of their investment.

 

Net Cash Used in Operating Activities

 

We have not generated positive cash flows from operating activities. For the three months ended June 30, 2016, net cash used in operating activities was $339,982 compared to net cash used in operating activities of $486,410 for the three months ended June 30, 2015. This decrease was primarily attributable to a decrease in the gain recognized related to the change in the fair value of derivatives. Net cash used in operating activities during the three months ended June 30, 2016 consisted primarily of a  net loss of $439,405, offset by $98,919 related to stock-based compensation and change in fair value of derivative liability of $14,953.    Net cash used in operating activities during the three months ended June 30, 2015 consisted primarily of net income of $215,594 and change in fair value of derivative liability of $1,113,801, offset by $371,029 related to stock-based compensation. 

 

Net Cash Used in Investing Activities

 

During the three months ended June 30, 2016 and June 30, 2015, no net cash was used in or provided by investing activities. 

 

Net Cash Provided By Financing Activities

 

During the three months ended June 30, 2016, net cash provided by financing activities was $265,030 compared to net cash provided by financing activities of $1,291,574 for the three months ended June 30, 2015. Net cash provided by financing activities during the three months ended June 30, 2016 and June 30, 2015 was attributable to the sale of common stock and warrants.  



Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to stockholders.  

 

Critical Accounting Policies

 

Our financial statements and accompanying notes included in this report have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from the estimates made by management.

 

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements included in this report:

 

Use of Estimates and Assumptions

 

The preparation of financial statements in conformity with U.S. GAAP 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. The more significant estimates and assumption by


 

management include, among others, the fair value of shares issued for services, the fair value of options and warrants, and assumptions used in the valuation of our outstanding derivative liabilities.

 



Stock-Based Compensation   

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic of the Financial Accounting Standards Board (FASB”) Accounting Standards Codification (“ASC”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's statements of operations. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

Derivative Financial Instruments

 

We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, we use a probability weighted average Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the June 30,  2016 reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

Recent Accounting Pronouncements



Please refer to Footnote 2 of the accompanying financial statements for management’s discussion of recent accounting pronouncements



 




 



 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive and financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on this evaluation, our principal executive and financial officer concluded that as of June 30, 2016, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our Company in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), including that such information is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosures . The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in our internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as previously disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2016. In light of the material weaknesses identified by management, we performed additional analyses and procedures in order to conclude that our condensed financial statements for the interim period ended June 30, 2016 are fairly presented, in all material respects, in accordance with GAAP.

 

Description of Material Weaknesses and Management’s Remediation Initiatives

 

As of the date of this report, our remediation efforts continue related to each of the material weaknesses that we have identified in our internal control over financial reporting and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below, as and when resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following is a list of the material weaknesses identified by management as of June 30, 2016:

 

(1) Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the three months ended June 30, 2016, we internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, there was a lack of review over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. This could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

 

(2) Insufficient corporate governance policies. The Company does not have a majority of independent members on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

 

Changes in Internal Control over Financial Reporting

 

We are currently considering adding additional independent members to our board of directors and adding accounting personnel to our staff in connection with the ongoing efforts to remediate the material weaknesses described above, but no specific progress has been made on these goals or other remediation efforts during the three 


 

months ended June 30, 2016. As a result , there were no changes in our internal control over financial reporting during the three months ended June 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

  

Inherent Limitations on Internal Control

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. In addition, projections of any evaluation of effectiveness to future periods are subject to risks that controls that are effective at one date may subsequently become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate.


 



 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently a party to and our properties are not currently the subject of any material pending legal proceedings the adverse outcome of which, individually or in the aggregate, would be expected to have a material adverse effect on our financial position or results of operations.

 

Item 1A. Risk Factors

 

Please refer to the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on June 24, 2016.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

In May 2016, the Company issued an aggregate of 2,650,000 shares of our common stock and warrants to purchase 7,950,000 of our common stock to certain investors and placement agents for net proceeds of approximately $265,000.  These shares were not initially registered under the Securities Act of 1933 (the “Securities Act”), and such securities were issued in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act in reliance on the following facts: the investors represented that each of them was an accredited investor as defined in the rules and regulations under the Securities Act and that each of them was acquiring the shares of our common stock for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, and the shares were issued as restricted securities.

 


 

Item 6. Exhibits

 



 

 

Exhibit
Number

 

Description of Exhibit

31.1

 

Certification of Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934*

32.1

 

Certification of Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) Pursuant to Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†

101.INS

 

XBRL Instance Document *

101.SCH

 

XBRL Taxonomy Extension Schema Document *

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase *

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document *

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document *

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document *

___________

* Filed herewith.

† Furnished herewith.

 








 



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

VITALITY BIOPHARMA, INC.

 



 

 

By:

/s/ Robert Brooke

 

 

Robert Brooke

 

 

Chief Executive Officer

 

 

(Principal Executive Officer and Principal Financial
and Accounting Officer)

 

 

 

 

Date:

August 16, 2016

 

 








 



EXHIBIT INDEX

 



 

 

Exhibit
Number

 

Description of Exhibit

31.1

 

Certification of Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934*

32.1

 

Certification of Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) Pursuant to Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002†

101.INS

 

XBRL Instance Document *

101.SCH

 

XBRL Taxonomy Extension Schema Document *

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase *

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document *

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document *

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document *

___________

* Filed herewith.

† Furnished herewith.