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EX-32.1 - Vitality Biopharma, Inc.ex32-1.htm
EX-31.1 - Vitality Biopharma, Inc.ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended December 31, 2017

 

[  ] 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.

(Exact name of registrant as specified in its charter)

 

Nevada   75-3268988

(State or other jurisdiction of

incorporation or organization )

 

(I.R.S. Employer

Identification No.)

 

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[X] 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 [X] 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 [X]

Emerging growth company [  ]

 

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

 

As of February 14, 2018, there were 24,200,147 shares of the registrant’s common stock outstanding.

 

 

 

 

 

 

VITALITY BIOPHARMA, INC.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended

December 31, 2017

 

INDEX

 

PART I - FINANCIAL INFORMATION 3
   
Item 1. Financial Statements (unaudited) 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
Item 4. Controls and Procedures 25
   
PART II - OTHER INFORMATION 27
   
Item 1. Legal Proceedings 27
Item 1A. Risk Factors 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 6. Exhibits 28
   
SIGNATURES 29

 

2

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

 

VITALITY BIOPHARMA, INC.

CONDENSED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(Unaudited)

 

CONDENSED UNAUDITED BALANCE SHEETS 4
   
CONDENSED UNAUDITED STATEMENTS OF OPERATIONS 5
   
CONDENSED UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY 6
   
CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS 7
   
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS 8

 

3

 

 

VITALITY BIOPHARMA, INC.

CONDENSED BALANCE SHEETS

 

   December 31, 2017   March 31, 2017 
   (unaudited)     
Assets          
           
Current Assets          
Cash  $1,362,710   $1,152,766 
Accounts receivable, net   13,460    19,198 
Prepaid expenses   3,058    3,058 
Prepaid expenses, related party   2,600    - 
           
Total Assets  $1,381,828   $1,175,022 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities          
Accounts payable and accrued liabilities  $197,492   $373,696 
Accrued compensation – officers and directors   -    151,667 
Accounts payable - related party   -    34,500 
Derivative liability   201,836    240,791 
           
Total liabilities   399,328    800,654 
           
Stockholders’ Equity          
Common stock, par value $0.001 per share; 1,000,000,000 shares authorized; 24,200,147 and 22,215,180 shares issued and outstanding, respectively   24,000    22,214 
Additional paid-in-capital   21,941,286    18,088,093 
Accumulated deficit   (20,982,786)   (17,735,939)
Total stockholders’ equity   982,500    374,368 
Total liabilities and stockholders’ equity  $1,381,828   $1,175,022 

 

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

 

4

 

 

VITALITY BIOPHARMA, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended
December 31,
   Nine Months Ended
December 31,
 
   2017   2016   2017   2016 
                 
Revenue  $19,305   $39,682   $77,324   $131,947 
Cost of goods sold   16,976    19,930    54,942    65,942 
Gross profit   2,329    19,752    22,382    66,005 
                     
Operating expenses:                    
General and administrative   619,312    669,574    1,894,984    1,685,527 
Rent and other related party costs   7,800    6,900    23,100    20,700 
Research and development   562,504    255,334    1,390,100    483,638 
Total operating expenses   1,189,616    931,808    3,308,184    2,189,865 
                     
Loss from operations   (1,187,287)   (912,056)   (3,285,802)   (2,123,860)
                     
Other income (expense)                    
Change in fair value of derivative liability   (54,686)   (1,587,854)   38,955    (1,980,592)
Interest expense   -    (64)   -    (780)
Total other income (expense)   (54,686)   (1,587,918)   38,955    (1,981,372)
                     
Net loss  $(1,241,973)  $(2,499,974)  $(3,246,847)  $(4,105,232)
                     
Net loss per common share                    
Basic and Diluted  $(0.05)  $(0.17)  $(0.14)  $(0.34)
Weighted average number of common shares outstanding                    
Basic and Diluted   23,034,347    14,776,759    22,752,010    12,191,740 

 

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

 

5

 

 

VITALITY BIOPHARMA, INC.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED DECEMBER 31, 2017

(Unaudited)

 

           Additional         
   Common Stock   Paid-in   Accumulated     
Description  Shares   Amount   Capital   Deficit   Total 
                     
Balance- March 31, 2017   22,215,180   $22,214   $18,088,093   $(17,735,939)  $374,368 
Issuance of common stock and warrants   1,599,999    1,600    2,388,399        2,389,999 
Fair value of common stock issued to employee and director   200,000        309,183        309,183 
Fair value of vested stock options           842,121        842,121 
Fair value of common stock issued for services   184,968    186    313,490        313,676 
Net loss               (3,246,847)   (3,246,847)
                          
Balance- December 31, 2017 (unaudited)   24,200,147   $24,000   $21,941,286   $(20,982,786)  $982,500 

 

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

 

6

 

 

VITALITY BIOPHARMA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine Months Ended
December 31,
 
   2017   2016 
         
Operating activities          
Net loss  $(3,246,847)  $(4,105,232)
Adjustments to reconcile net loss to net cash used in operating activities          
Fair value of vested stock options   842,121    581,510 
Fair value of vested restricted common stock   309,183    235,499 
Change in fair value of derivative liability   (38,955)   1,980,592 
Fair value of common stock issued for services   313,676    276,000 
Changes in operating assets and liabilities:          
Accounts receivable   5,738    (1,791)
Prepaid expenses, related party   (2,600)   - 
Deposit   -    (558)
Accounts payable and accrued liabilities   (327,871)   129,653 
Accounts payable - related party   (34,500)   20,700 
Net cash used in operating activities   (2,180,055)   (883,627)
           
Financing activities          
Proceeds from sale of common stock, net   2,389,999    165,030 
Proceeds from exercise of warrants   -    777,000 
Net cash provided by financing activities   2,389,999    942,030 
           
Net increase in cash   209,944    58,403 
           
Cash - beginning of period   1,152,766    95,433 
Cash - end of period  $1,362,710   $153,836 
           
Supplemental disclosure of cash flow information:          
Cash paid during the period for:          
Interest  $-   $780 
Income taxes  $-   $- 
           
Non-cash activities:          
Extinguishment of derivative liability  $-   $1,907,160 

 

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

 

7

 

 

VITALITY BIOPHARMA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(Unaudited)

 

1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Vitality Biopharma, Inc. (the “Company”, “we”, “us” or “our”), was incorporated in the State of Nevada on June 29, 2007. The Company’s fiscal year end is March 31.

 

In 2015, the Company developed a new class of cannabinoids known as cannabosides, which were discovered through application of the Company’s proprietary enzymatic bioprocessing technologies originally developed for stevia sweeteners. In 2016, the Company received approvals from the U.S. Drug Enforcement Administration (the “DEA”) and the State of California to initiate studies and manufacturing scale-up at its research and development facilities in order to develop cannabosides as pharmaceutical products.

 

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, for the nine months ended December 31, 2017, the Company incurred a net loss of $3,246,847 and used cash in operating activities of $2,180,055. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s March 31, 2017 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and/or raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due. We estimate that as of December 31, 2017 we have sufficient funds to operate the business for the next nine months. In December 2017, the Company issued an aggregate of 933,332 shares of our common stock and warrants to purchase 466,667 shares of our common stock to certain investors for net proceeds of approximately $1,395,000 and in July 2017, the Company issued an aggregate of 666,667 shares of our common stock and warrants to purchase 333,334 shares of our common stock to certain investors for net proceeds of approximately $995,000. We will require additional financing to fund our planned future operations, including the continuation of our ongoing research and development efforts, licensing or acquiring new assets, and researching and developing any potential patents and any further intellectual property that we may acquire. Further, 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.

 

8

 

 

Basis of Presentation of Unaudited Condensed Financial Information

 

The unaudited condensed financial statements of the Company for the three and nine months ended December 31, 2017 and 2016 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, 2017 was derived from the Company’s audited financial statements as of and for the year ended March 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 28, 2017. These financial statements should be read in conjunction with that report.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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. Significant estimates and assumptions by management include, among others, reserves for accounts receivable, the fair value of equity instruments issued for services, and assumptions used in the valuation of derivative liabilities and the valuation allowance for deferred tax assets, and the accrual of potential liabilities.

 

Financial Assets and Liabilities Measured at Fair Value

 

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by 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 the quoted prices in active markets, that are observable either directly or indirectly.
   
Level 3 Unobservable inputs based on the Company’s assumptions.

 

The fair value of the derivative liabilities of $201,836 and $240,791 at December 31, 2017 and March 31, 2017, respectively, were valued using Level 2 inputs.

 

The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

 

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 models to value the derivative instruments at inception and on subsequent valuation dates through the December 31, 2017, 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.

 

9

 

 

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 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 a Black-Scholes-Merton 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.

 

The Company periodically issues unvested (“restricted”) shares of its common stock to employees as equity incentives. The Company’s restricted stock vests upon the satisfaction of a recipient’s service condition, which is satisfied over a period of years. The restricted shares vest over certain period and remain subject to forfeiture if vesting conditions are not met. The Company values the shares based on the price per share of the Company’s shares at the date of grant and recognizes the value as compensation expense ratably over the vesting period.

 

Basic and Diluted Loss Per Share

 

Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Shares of restricted stock subject to vesting are included in basic weighted average common shares outstanding from the time they vest. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

 

   Nine months ended 
   December 31, 2017   December 31, 2016 
Options   3,216,710    2,427,488 
Warrants   1,164,422    4,045,163 
Total   4,381,132    6,472,651 

 

Research and Development

 

Research and development costs consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s treatments and product candidates. Research and development costs are expensed as incurred.

 

10

 

 

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. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, ASU 2016-20, and ASU 2017-05, all of which clarify certain implementation guidance within ASU 2014-09. 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. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the quarter beginning April 1, 2018.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases. This update will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements and related disclosures.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have an impact on the Company’s financial statements and related disclosures because the conversion feature of the Company’s warrants have features other than down round provisions that require current accounting treatment and classification.

 

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. DERIVATIVE LIABILITY

 

In May 2015, the Company issued certain warrants which included an anti-dilution provision that allows for the automatic reset of the exercise price of the warrants upon future sale of the Company’s common stock, warrants, options, convertible debt or any other equity-linked securities at an issuance, exercise or conversion price below the current exercise price of the warrants. In addition, the Company determined that the warrants can be settled for cash at the holders’ option in a future fundamental transaction, as defined. As a result of the anti-dilution and fundamental transaction provisions, the Company determined that the conversion feature of the warrants should be separated from the host contract, be recognized as a derivative liability, and re-measured at each reporting period with the change in value reported in the statement of operations.

 

11

 

 

At March 31, 2017, the balance of the derivative liabilities was $240,791. During the nine months ended December 31, 2017, the Company recorded a decrease in derivative liability of $38,955. At December 31, 2017, the balance of the derivative liabilities was $201,836.

 

At December 31, 2017 and March 31, 2017, the derivative liabilities were valued using a probability weighted Black-Scholes-Merton pricing model with the following assumptions:

 

    December 31, 2017     March 31, 2017  
Conversion feature:                
Risk-free interest rate     1.50-1.89 %     0.19 %
Expected volatility     123 %     125 %
Expected life (in years)     .5 to 2.5 years       1 to 3 years  
Expected dividend yield            
                 
Fair Value:                
Conversion feature   $ 201,836     $ 240,791  

 

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 date 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.

 

3. STOCKHOLDERS’ EQUITY

 

Equity Financing

 

On December 12, 2017, the Company entered into a securities purchase agreement providing for the issuance and sale by the Company of 933,332 shares of the Company’s common stock and warrants to purchase up to 466,667 shares of the Company’s common stock, at a price of $1.50 per share. After deducting for fees and expenses, the net proceeds to the Company from the sale of the shares and warrants were approximately $1,395,000.

 

On July 26, 2017, the Company entered into a securities purchase agreement providing for the issuance and sale by the Company of 666,667 shares of the Company’s common stock and warrants to purchase up to 333,334 shares of the Company’s common stock, at a price of $1.50 per share. After deducting for fees and expenses, the net proceeds to the Company from the sale of the shares and warrants were approximately $995,000.

 

Common stock issued to employees with vesting terms

 

The Company has issued shares of common stock to employees and directors that vest over time. The fair value of these stock awards are based on the market price of the Company’s common stock on the dates granted, and are amortized over vesting terms ranging up to three years.

 

At March 31, 2017, the accumulated vested balance of stock awards was $310,710. In December 2017, the Company issued an aggregate of 200,000 shares of its common stock to an officer and a director of the Company, with aggregate fair value of $362,000 at the grant date, which vest over a period of 14 months from the date of the grant. During the nine months ended December 31, 2017, we recorded expense related to the fair value of stock awards that vested of $309,183. At December 31, 2017, the amount of unvested compensation related to these awards is approximately $463,000, and will be recorded as expense over 1 year.

 

12

 

 

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     Balance  
Non-vested shares, April 1, 2017   1,436,170   $ 718,085  
Granted   200,000     362,000  
Vested   (718,085 )   (309,183 )
Forfeited        
Non-vested shares, December 31, 2017   918,085   $ 770,902  

 

Common stock issued for services

 

During the nine months ended December 31, 2017, the Company issued a total of 184,968 shares of common stock to three consultants as payment for services and recorded expense of $313,676 based on the fair value of the Company’s common stock at the issuance dates.

 

4. STOCK OPTIONS

 

A summary of the Company’s stock option activity during the nine months ended December 31, 2017 is as follows:

 

   Shares   Weighted
Average
Exercise Price
 
Balance outstanding at March 31, 2017   2,820,489   $1.27 
Granted   470,000    1.76 
Exercised         
Expired   (48,779)   0.55 
Cancelled   (25,000)   0.96 
Balance outstanding at December 31, 2017   3,216,710   $1.39 
Balance exercisable at December 31, 2017   1,584,083   $1.28 

 

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A summary of the Company’s stock options outstanding and exercisable as of December 31, 2017 is as follows:

 

    Number of
Options
    Weighted
Average
Exercise Price
    Weighted
Average Grant-
date Stock Price
 
Options Outstanding, December 31, 2017     1,664,542     $ 0.50     $ 0.50  
      128,000     $ 0.96     $ 0.96  
      130,000     $ 1.00     $ 10.00  
      7,500     $ 1.50     $ 1.50  
      100,000     $ 1.59     $ 1.59  
      370,000     $ 1.81     $ 1.81  
      647,500     $ 2.00 – 2.79     $ 2.00 – 2.79  
      123,334     $ 3.10 – 3.80     $ 3.10 – 3.80  
      45,834     $ 4.00 – 4.70     $ 4.00 – 4.70  
      3,216,710                  
Options Exercisable, December 31, 2017     855,415     $ 0.50     $ 0.50  
      75,750     $ 0.96     $ 0.96  
      130,000     $ 1.00     $ 10.00  
      7,500     $ 1.50     $ 1.50  
      346,250     $ 2.00 – 2.79     $ 2.00 – 2.79  
      123,334     $ 3.10 – 3.80     $ 3.10 – 3.80  
      45,834     $ 4.00 – 4.70     $ 4.00 – 4.70  
      1,584,083                  

 

In the nine months ended December 31, 2017, the Company granted an aggregate of 470,000 options to purchase shares of the Company’s common stock with exercise prices ranging from $1.59 to $1.81 per share to five employees and two directors, that expire ten years from the date of grant. The options issued to the two directors have a vesting period of one year and the options issued to employees all have vesting periods of 24 months. The fair value of each option award was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate between 123.13% and 124.88%, (ii) discount rate between 2.33% and 2.265%, (iii) zero expected dividend yield, and (iv) expected life of 6 years, which is the average of the term of the options and their vesting periods. The total fair value of these option grants at their grant dates was approximately $740,000.

 

During the nine months ended December 31, 2017, we expensed total stock-based compensation related to stock options of $842,121, and the remaining unamortized cost of the outstanding stock-based awards at December 31, 2017 was approximately $1,497,000. This cost will be amortized on a straight line basis over a weighted average remaining vesting period of 2 years. At December 31, 2017, the 3,216,710 outstanding stock options had an intrinsic value of approximately $2,659,000.

 

5. WARRANTS

 

At December 31, 2017, warrants to purchase common shares were outstanding as follows:

 

    Shares     Weighted
Average
Exercise Price
 
Balance at March 31, 2017     372,421     $ 2.79  
Granted     800,001       2.00  
Exercised            
Expired     (8,000 )   $ 3.40  
Balance outstanding and exercisable at December 31, 2017     1,164,422     $ 2.19  

 

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In conjunction with the December 2017 Offering (see Note 3), the Company granted to investors warrants to purchase up to 466,667 shares of the Company’s common stock. The warrants were exercisable immediately, have an exercise price of $2.00 per share, and expire on the three year anniversary of the date of issuance. The exercise price of the warrants is subject to adjustment for standard anti-dilution provisions, such as stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders. The exercisability of the warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99% or 9.99% of the Company’s common stock.

 

In conjunction with the July 2017 Offering (see Note 3), the Company granted to investors warrants to purchase up to 333,334 shares of the Company’s common stock. The warrants were exercisable immediately, have an exercise price of $2.00 per share, and expire on the three year anniversary of the date of issuance. The exercise price of the warrants is subject to adjustment for standard anti-dilution provisions, such as stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders. The exercisability of the warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99% or 9.99% of the Company’s common stock.

 

At December 31, 2017, the 1,164,422 outstanding warrants had no intrinsic value.

 

6. RELATED PARTY OBLIGATIONS

 

On April 23, 2012, the Company entered into a lease agreement with One World Ranches, which is jointly-owned by Dr. Avtar Dhillon, the Chairman of the Company’s Board of Directors, and his wife, to rent the space being used as the Company’s principal office and laboratory facility. The original term of the lease was from May 1, 2012 to May 1, 2017. In May 2017, the Company extended the lease through May 1, 2020. Our rent payments thereunder were $2,300 per month until May 1, 2017 and increased to $2,600 per month on May 1, 2017. Aggregate payments under the lease for the nine months ended December 31, 2017 and 2016 were $25,700 and $20,700, respectively.

 

7. LEGAL AND OTHER PROCEEDINGS

 

On August 19, 2016, we filed a resale registration statement on Form S-1 (“Form S-1”) with the SEC to register 2,650,000 shares of our common stock and 7,950,000 shares of our common stock issuable upon exercise of certain warrants. We received a letter from the Washington D.C. office of the SEC dated December 10, 2016, stating that the staff of the SEC was conducting a Section 8(e) examination with respect to this Form S-1 and that the Division of Corporate Finance would not take any further action on the Form S-1 while the examination was pending. We received subpoenas to produce documents dated December 14, 2016, and January 23, 2017, and a further subpoena for testimony and any supplemental production of documents dated June 5, 2017. The document requests were primarily in connection with this matter. We have complied with all document requests and the Company’s CEO will provide testimony when the SEC schedules such testimony, which we believe will be sometime before the end of September 2018.

 

As of December 31, 2017, we had accrued approximately $11,000 in legal fees related to the SEC examination.

 

8. SUBSEQUENT EVENTS

 

In February 2018, the Company issued a total of 75,000 shares of common stock to one consultant as payment for services and recorded expenses of $144,000 based on the fair value of the Company’s common stock at the issuance date.

 

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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, 2017 filed on June 28, 2017, 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 28, 2017.

 

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, and 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.

 

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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 narcotic bowel syndrome, a form of severe opiate-induced bowel dysfunction.

 

Vitality Biopharma has developed a new class of cannabinoid pharmaceuticals known as cannabosides, which were discovered in 2015 through application of the company’s proprietary enzymatic bioprocessing technologies originally developed for stevia sweeteners. Cannabosides are cannabinoid glycoside “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.

 

Cannaboside prodrugs are intended to reduce or eliminate the psychoactivity of cannabinoids while providing amplified therapeutic effects. Upon oral delivery, cannaboside prodrugs pass through the digestive tract and release active cannabinoids within the large intestine or colon. This could enable cannabinoids such as tetrahydrocannabinol (THC) to be restricted to the gastrointestinal tract, minimizing entry into the bloodstream or brain, and enabling targeted delivery for the treatment of gastrointestinal disorders. Targeted delivery of cannabinoids with limited psychoactivity may be especially useful for treatment of pediatric conditions. Cannaboside prodrugs are also more stable and far more water soluble than cannabinoids, which enables them to be readily formulated within a pill or capsule.

 

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, cannabidiol (CBD), cannabidivarin (CBDV), and other phytocannabinoids and endocannabinoids. Upon successful patent prosecution, protection would extend until 2035 and be available in all major markets worldwide. In addition, we have filed patent applications that seek to protect claims on the novel vanilloid glycoside compounds that target the TRPV receptors for mediating pain relief, methods of use for TRPV1 agonists to effect neural repair, and based on findings in early 2017, for methods to use cannabinoids to treat gut dysbiosis and drug-resistant C.difficile infections, which colonize the large intestine. We aim to develop and approve our proprietary molecules as pharmaceuticals using a low-risk regulatory strategy that is available for prodrugs, and to amplify the benefits that have been seen in independent clinical trials describing the use of cannabinoids for treatment of neurological and inflammatory conditions.

 

A key part of our strategy will be to take advantage of a more efficient U.S. Food and Drug Administration (FDA) review and approval process that is available for prodrugs, which reduces the need for large and expensive clinical trials. Expedited regulatory processes may be 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, and so existing clinical data may be submitted to drug regulatory agencies as supporting evidence of our compounds’ safety and efficacy.

 

We are initially developing our cannabosides drug formulations for treatment of gastrointestinal disorders, including inflammatory bowel disease, irritable bowel syndrome, and narcotic bowel syndrome, a severe form of opiate-induced abdominal pain.

 

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For inflammatory bowel disease (IBD), there have been independently-conducted preclinical and clinical studies that have demonstrated the benefit of cannabinoids, and many U.S. states now permit the use of medical marijuana for IBD, including for treatment of Crohn’s disease or ulcerative colitis patients. Independently-run retrospective clinical studies have found that in 56 patients who used cannabinoids with IBD that 83.9% of patients reported improvement in abdominal pain and 76.8% of patients reported improvement in abdominal cramping. In addition, in a prospective trial that was independently-managed and placebo-controlled, it was found that 45% of Crohn’s disease patients achieved remission through only 8 weeks of treatment. Patients reported improvements in sleep and appetite with no significant side effects, and some patients were able to eliminate use of corticosteroids and opiate pain medications. Patients experienced benefits with cannabis treatment despite being non-responders to traditional front-line and second-line IBD therapies, such as corticosteroids, immunomodulators, and biologic TNF-alpha inhibitors.

 

In early 2017, we obtained new data about the anti-cancer and anti-microbial properties of cannabinoids, including evidence that cannabinoids provide cytotoxicity against cell lines of colorectal cancer and C.difficile, a drug-resistant microbial infection that colonizes the large intestine. Both colorectal cancer and C.difficile infections are more prevalent in IBD patients than in the general population.

 

Narcotic bowel syndrome (NBS) is a severe form of opiate-induced abdominal pain. In studies, more than half (58%) of opiate users have reported chronic abdominal pain. When opiate-induced abdominal pain is overlooked or misdiagnosed, potentially due to common gastrointestinal side effects like opiate-induced constipation, it may lead to a vicious cycle of dose escalation. While seeking pain relief, increasing the dose of opiate medications could lead both to worsening abdominal pain and to more severe drug addiction. Studies have reported that approximately 6% of opiate users have NBS, and that patients afflicted with this disorder report a quality-of-life that is worse than patients with quadriplegia. Independent preclinical studies have reported that endogenous opioid peptides may play a role within the intestinal tract in the development of inflammation, and that they act in a synergistic manner to cannabinoids for pain relief, meaning that cannabinoids could enable opiate dose reduction without sacrificing pain relief. Independent clinical studies have confirmed this effect, where it was reported that cannabis provides additional pain relief to patients taking stable doses of opiates for chronic pain management. Independent clinical studies have also found that treatment regimens for narcotic bowel syndrome are ineffective, as 45.8% of patients were shown to return to using narcotics within only three months following treatment.

 

Our primary operations are based in Yuba City, California, where we originally developed our proprietary bioprocessing methods. The Company’s research and development facilities include laboratories and a manufacturing suite that will be used for pharmaceutical-grade production of cannabosides for clinical trials. These facilities have been registered with and approved by the DEA as well as the State of California.

 

Product Pipeline

 

Our pipeline includes drug formulations of cannabosides, which are cannabinoid glycosides that we are developing as small molecule pharmaceutical products. 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 currently under investigation in independent clinical trials. 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.

 

Cannaboside prodrugs are designed to deliver a variety of benefits including:

 

  1. Administration of cannabinoids in a convenient oral formulation;
     
  2. Targeted delivery of cannabinoids without any psychoactivity or intoxication, which can be achieved through gut-restricted prodrugs that are released in the colon or large intestine and that avoid entry into the bloodstream or brain;
     
  3. Improved solubility, leading to oral formulations that are easy to manufacture and that improve the tolerability of cannabinoid products through reduction or removal of harsh organic solvents;
     
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  4. Improved stability, preventing conversion of CBD to unwanted byproducts including THC in the acidic stomach environment, or preventing other forms of unwanted degradation or drug metabolism, therefore enabling higher doses of cannabinoids to be administered orally; and
     
  5. Delayed release, enabling long-lasting and overnight relief for patients, rather than having to administer treatment repeatedly throughout the day and requiring additional sleep aids.

 

VITA-100 is an oral cannabinoid formulation containing THC-glycosides that is being developed for acute treatment of inflammatory bowel disease (inducing disease remission), irritable bowel syndrome, and narcotic bowel syndrome. VITA-210 is an oral cannabinoid formulation containing cannabosides being investigated in preclinical studies for chronic (long-term) administration, and which is being developed for chronic treatment of inflammatory bowel disease (maintaining disease remission), irritable bowel syndrome, opiate-induced bowel dysfunction, C. difficile infections, and colorectal cancer. The company is developing additional cannabinoid product formulations, and these development efforts will be guided by the results of observational clinical studies that will be conducted by the company or through company collaborators. These observational studies will be designed to treat serious neurological conditions including treatment of complex, refractory, or neuropathic pain (cannabis substitution therapy for opioid painkillers).

 

Products   Treatment Indications   Status
         
Cannabosides - VITA-100   Inflammatory Bowel Disease (inducing remission), Irritable Bowel Syndrome, Narcotic Bowel Syndrome   Phase 1a/1b Trial to be completed in 1st Half of 2018
         
Cannabosides - VITA-210   Inflammatory Bowel Disease (maintaining remission), Irritable Bowel Syndrome, Opiate-induced Bowel Dysfunction, C. difficile Infections, Colorectal Cancer   Preclinical
         
Additional Cannabinoid Formulations   Complex/Refractory or Neuropathic Pain (Substitution therapy for opioid painkillers), Huntington’s disease, Multiple Sclerosis & Rare White Matter Disorders, Guillain-Barré   Observational clinical studies to initiate in 1st Half of 2018

 

Our Operations

 

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, we 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 our pharmaceutical products.

 

Short Term Development Targets

 

We plan to complete all necessary preclinical studies for VITA-100 and to conduct a Phase 1a/1b clinical trial in the first half of 2018. This first-in-man clinical study will focus primarily on evaluating the clinical pharmacokinetics, safety, and tolerability of cannabosides, and it will also provide a preliminary evaluation of effects on pain, cramping, and gastrointestinal motility. We plan to conduct additional preclinical studies on our proprietary cannaboside drug formulations also, which are designed to evaluate and further explore their utility for treatment of additional conditions, such as colorectal cancer.

 

We are also developing additional cannabinoid formulations geared towards treatment of complex or refractory pain, for use within cannabis substitution therapy for opioid painkillers, and for the treatment of serious neurological conditions. The cannabinoid formulations and existing cannabinoid products that we plan to study may eventually be developed internally either as standalone products or used in combination with our cannaboside drug formulations. We plan to initiate observational studies in the 1st half of 2018 in order to assess the benefits of existing cannabinoid products for one or more treatment indications, including complex, refractory, or neuropathic pain (substitution therapy for opioid painkillers), opiate-induced bowel dysfunction, Huntington’s disease, Guillain-Barré syndrome, or multiple sclerosis. The results from these observational studies on existing cannabinoid products will be used to guide selection of appropriate treatment indications for our proprietary cannaboside pharmaceutical formulations, and to help develop additional internal intellectual property related to the use of cannabinoids for treatment of these conditions. In these observational studies, which may be coordinated by Vitality as well as through company collaborators, we intend to evaluate use of cannabinoids both as standalone agents as well as examine their use in combination with other therapies in order to help identify treatment regimens that provide maximal benefit to patients.

 

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Short-term development targets include:

 

  Complete remaining preclinical efficacy and toxicology studies to support clinical development of cannabosides
     
  Obtain regulatory approval for and initiate a Phase 1a/1b first-in-man clinical trial of VITA-100, a cannaboside prodrug containing THC-glycosides
     
  Complete additional preclinical efficacy and pharmacology studies of cannabosides and cannaboside drug formulations that support lead drug indications as well as novel therapeutic applications
     
  Obtain regulatory approval for and initiate observational clinical studies of existing cannabinoid therapies, focused on cannabis substitution therapy for opioid painkillers in chronic pain and treatment of serious neurological conditions

 

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 cannabis 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.

 

In September and October 2015, the Company filed two U.S. patent applications, titled “Cannabinoid Glycoside Prodrugs and Methods of Synthesis.” In September 2016, an expanded international application was filed under the Patent Cooperation Treaty system, which includes 79 patent claims to almost 200 individual compounds, including but not limited to the prodrugs of delta-9-tetrahydrocannabinol, the primary psychoactive component of medical cannabis, as well as the non-psychotropic compounds cannabidiol and cannabidivarin.

 

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. We have 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 intend to sustain these operations and technologies in a manner that is cash-flow neutral or better and to commercialize them primarily through new out-licensing arrangements or strategic partnerships.

 

Results of Operations

 

Three Months Ended December 31, 2017 and December 31, 2016

 

Our net loss during the three months ended December 31, 2017 was $1,241,973 compared to a net loss of $2,499,974 for the three months ended December 31, 2016. During the three months ended December 31, 2017, we generated $19,305 in revenue and $2,329 in gross profit, compared to $39,682 in revenue and $19,752 in gross profit for the 2016 period. Our revenue in each of the periods presented is earned from the sale of research diagnostic testing `kits and chemicals. In May 2014, we purchased the assets of a Percipio Biosciences, Inc., which produced and sold these products, and which we continue to sell under their existing brand names. These products are sold primarily to research universities and companies in the United States and through a network of research product distributors internationally. The tests enable measurement by life science researchers of biomarkers of inflammation and oxidative signaling and stress. The kits and products include antibodies, enzymes, as well as specialty chemicals. We expect such sales to continue at approximately the rate during the 2017 period.

 

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During the three months ended December 31, 2017, we incurred general and administrative expenses in the aggregate amount of $619,312 compared to $669,574 incurred during the three months ended December 31, 2016 (a decrease of $50,262). 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 a biotechnology company, 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 $182,087 in the period ending December 31, 2017, as compared to $294,646 in the period ending December 31, 2016 (a decrease of $112,559), offset by professional fees which increased to $160,000 in the period ending December 31, 2017, as compared to $72,375 in the period ending December 31, 2016 (an increase of $87,625).In addition, during the three months ended December 31, 2017, we incurred research and development costs of $562,504, compared to $255,334 during the three months ended December 31, 2016 (an increase of $307,170). This increase resulted from increased laboratory and consulting expenses during the 2017 period as we focus on preparation for clinical trials.

 

During the three months ended December 31, 2017, we incurred related party rent and other costs totaling $7,800 compared to $6,900 incurred during the three months ended December 31, 2016 (an increase of $900). This resulted from an increase in the monthly office rent during the 2017 period.

 

This resulted in a loss from operations of $1,187,287 during the three months ended December 31, 2017 compared to a loss from operations of $912,056 during the three months ended December 31, 2016.

 

During the three months ended December 31, 2017, we recorded total net other expenses in the amount of $54,686, compared to total net other expenses recorded during the three months ended December 31, 2016 in the amount of $1,587,918. During the three months ended December 31, 2017, we recorded a loss related to the change in fair value of derivatives of $54,686, compared to a loss of $1,587,854 during the 2016 quarter. This resulted in a net loss of $1,241,973 during the three months ended December 31, 2017, compared to a net loss of $2,499,974 during the three months ended December 31, 2016.

 

The decrease in net loss during the three months ended December 31, 2017 compared to the net loss for the three months ended December 31, 2016 is attributable primarily to the larger loss related to the change in fair value of derivatives recorded during the 2016 quarter.

 

Nine Months Ended December 31, 2017 and December 31, 2016

 

Our net loss during the nine months ended December 31, 2017 was $3,246,847 compared to a net loss of $4,105,232 for the nine months ended December 31, 2016. During the nine months ended December 31, 2017, we generated $77,324 in revenue and $22,382 in gross profit from sales of certain research products, compared to $131,947 in revenue and $66,005 in gross profit from sales of certain research products during the nine months ended December 31, 2016. Our revenue in each of the periods presented is earned from the sale of research diagnostic testing kits and chemicals. In May 2014, we purchased the assets of a Percipio Biosciences, Inc., which produced and sold these products, and which we continue to sell under their existing brand names. These products are sold primarily to research universities and companies in the United States and through a network of research product distributors internationally. The tests enable measurement by life science researchers of biomarkers of inflammation and oxidative signaling and stress. The kits and products include antibodies, enzymes, as well as specialty chemicals. We expect such sales to continue at approximately the 2017 rate.

 

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During the nine months ended December 31, 2017, we incurred general and administrative expenses in the aggregate amount of $1,894,984 compared to $1,685,527 incurred during the nine months ended December 31, 2016 (an increase of $209,457). General and administrative expenses generally include corporate overhead, salaries and other compensation costs, costs of financial and administrative contracted services, marketing and consulting costs and travel expenses. A significant portion of these costs are related to the development of our organizational capabilities as a biotechnology company, including costs such as legal and advisory fees related to intellectual property development. The general and administrative expenses included stock-based compensation of $505,555 during the nine months ended December 31, 2017, as compared to stock-based compensation of $659,611 during the nine months ended December 31, 2016 (a decrease of $154,056), professional fees of $475,929 during the nine months ended December 31, 2017, as compared to professional fees of $313,424 during the nine months ended December 31, 2016 (an increase of $162,505), and legal fees of $82,839 during the nine months ended December 31, 2017, as compared to legal fees of $35,240 during the nine months ended December 31, 2016 (an increase of $47,599).

 

In addition, during the nine months ended December 31, 2017, we incurred research and development costs of $1,390,100 relating to research and development, compared to research and development costs of $483,638 during the nine months ended December 31, 2016 (an increase of $906,462). The increase resulted primarily from increased laboratory and consulting expenses during the 2017 period as we focus on preparation for clinical trials as well as increase in stock compensation expense in 2017 compared to 2016.

 

During the nine months ended December 31, 2017, we incurred related party rent and other costs totaling $23,100 compared to $20,700 incurred during the nine months ended December 31, 2016 (an increase of $2,400). This resulted from an increase in the monthly office rent during the 2017 period.

 

This resulted in a loss from operations of $3,285,802 during the nine months ended December 31, 2017 compared to a loss from operations of $2,123,860 during the nine months ended December 31, 2016.

 

During the nine months ended December 31, 2017, we recorded total other income (expense) in the amount of $38,955, compared to total other income (expense) recorded during the nine months ended December 31, 2016 in the amount of $(1,981,372). During the nine months ended December 31, 2017, we recorded a gain related to the change in fair value of derivative liabilities of $38,955, compared to a loss of $1,980,592 during the nine months ended December 31, 2016.

 

Liquidity and Capital Resources

 

As of December 31, 2017, we had total current assets of $1,381,828, which was comprised mainly of cash of $1,362,710. Our total current liabilities as of December 31, 2017 were $399,328 and consisted of accounts payable and accrued liabilities of $197,492 and derivative liability of $201,836. The derivative liability is a non-cash item related to certain of our outstanding warrants as of December 31, 2017. As a result, on December 31, 2017, we had working capital of $982,500.

 

We have not yet received significant revenues from sales of products or services, and have recurring losses from operations. 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. For the nine months ended December 31, 2017, the Company incurred a net loss of $3,246,847 and used cash in operating activities of $2,180,055. These factors raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s March 31, 2017 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. 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.

 

We estimate that we will have sufficient funds to operate the business for the nine months after December 31, 2017. In December 2017, the Company issued an aggregate of 933,332 shares of our common stock and warrants to purchase 466,667 of our common stock to certain investors for net proceeds of approximately $1,395,000 and in July 2017, the Company issued an aggregate of 666,667 shares of our common stock and warrants to purchase 333,334 of our common stock to certain investors for net proceeds of approximately $995,000. 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.

 

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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.

 

Sources of Capital

 

On December 12, 2017, 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, of an aggregate of 933,332 shares of the Company’s common stock (collectively, the “Shares”) and Warrants to purchase up to an aggregate of 466,667 shares of the Company’s common stock (the “Warrants”), at a price of $1.50 per share (the “Offering”). The Warrants have an exercise price of $2.00 per share, are exercisable immediately, expire on the three year anniversary of the date of issuance, and may be exercised on a cashless basis. The Offering closed on December 15, 2017. The aggregate proceeds to the Company from the sale of the Shares and Warrants was approximately $1,395,000. Pursuant to the terms of the Offering, we filed a registration statement on Form S-1 to register the resale of the Shares and the Warrants.

 

On July 26, 2017, 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, of an aggregate of 666,667 shares of the Company’s common stock (collectively, the “Shares”) and Warrants to purchase up to an aggregate of 333,334 shares of the Company’s common stock (the “Warrants”), at a price of $1.50 per share (the “July Offering”). The Warrants have an exercise price of $2.00 per share, are exercisable immediately, expire on the three year anniversary of the date of issuance, and may be exercised on a cashless basis. The July Offering closed on July 28, 2017. The aggregate proceeds to the Company from the sale of the Shares and Warrants was approximately $995,000. Pursuant to the terms of the July Offering, we filed a registration statement on Form S-1 to register the resale of the Shares and the Warrants. The registration statement on Form S-1 was declared effective on October 13, 2017.

 

On August 19, 2016, we filed a resale registration statement on Form S-1 (“Form S-1”) with the SEC to register 2,650,000 shares of our common stock and 7,950,000 shares of our common stock issuable upon exercise of certain warrants. We received a letter from the Washington D.C. office of the SEC dated December 10, 2016, stating that the staff of the SEC was conducting a Section 8(e) examination with respect to this Form S-1 and that the Division of Corporate Finance would not take any further action on the Form S-1 while the examination was pending. We received subpoenas to produce documents dated December 14, 2016, and January 23, 2017, and a further subpoena for testimony and any supplemental production of documents dated June 5, 2017. We have complied with all document requests and the Company’s CEO will provide testimony when the SEC schedules such testimony, which we believe will be sometime before the end of September 2018.

 

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Net Cash Used in Operating Activities

 

We have not generated positive cash flows from operating activities. For the nine months ended December 31, 2017, net cash used in operating activities was $2,180,055 compared to net cash used in operating activities of $883,627 for the nine months ended December 31, 2016. This increase was primarily attributable to increased net loss during the current period ended December 31, 2017. Net cash used in operating activities during the nine months ended December 31, 2017 consisted primarily of a net loss of $3,246,847 offset by $1,151,304 in aggregate stock compensation from vested stock options and common stock, and $313,676 of shares of stock issued for services. Net cash used in operating activities during the nine months ended December 31, 2016 consisted primarily of a net loss of $4,105,232 offset by a change in fair value of derivative liability of $1,980,592, $817,009 in aggregate stock-based compensation for vested stock options and common stock, and $276,000 for stock issued in exchange for services.

 

Net Cash Used in Investing Activities

 

During the nine months ended December 31, 2017 and December 31, 2016, no net cash was used in or provided by investing activities.

 

Net Cash Provided By Financing Activities

 

During the nine months ended December 31, 2017, net cash provided by financing activities was $2,389,999 compared to net cash provided by financing activities of $942,030 for the nine months ended December 31, 2016. Net cash provided by financing activities during the nine months ended December 31, 2017 was attributable to the net proceeds from sale of stock and warrants of $2,389,999. Net cash provided by financing activities during the nine months ended December 31, 2016 was attributable to $165,030 from the sale of common stock and warrants and $777,000 provided by the exercise of 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.

 

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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 December 31, 2017 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 1 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 December 31, 2017, 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, 2017. 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 December 31, 2017 are fairly presented, in all material respects, in accordance with GAAP.

 

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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 December 31, 2017:

 

(1) Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the nine months ended December 31, 2017, 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 December 31, 2017. As a result, there were no changes in our internal control over financial reporting during the nine months ended December 31, 2017, 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.

 

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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 Registration Statement on Form S-1 filed with the SEC on January 19, 2018.

 

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

 

In October 2017, we issued a total of 82,468 shares of our common stock to one consultant as compensation for services valued at $150,000. The issuance of this common stock, has not been registered under the Securities Act and the shares of common stock were issued in reliance on exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder based on the following facts: the consultant has represented that it is an accredited investor as defined in Regulation D and that it is acquiring the shares of common stock for its own account and not with a view to or for distributing or reselling the shares of common stock and that it has sufficient investment experience to evaluate the risks of the investment; the shares of commons stock were issued as restricted securities.

 

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Item 6. Exhibits

 

Exhibit
Number
  Description of Exhibit
     
4.1   Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
10.1   Securities Purchase Agreement, dated December 12, 2017 by and among Vitality Biopharma, Inc., and the Purchasers listed on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
10.2   Registration Rights Agreement, dated December 12, 2017, by and among Vitality Biopharma, Inc. and the Purchasers listed on the signature pages thereto (Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
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.

 

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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: February 14, 2018  
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EXHIBIT INDEX

 

Exhibit
Number
  Description of Exhibit
     
4.1   Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
10.1   Securities Purchase Agreement, dated December 12, 2017 by and among Vitality Biopharma, Inc., and the Purchasers listed on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
10.2   Registration Rights Agreement, dated December 12, 2017, by and among Vitality Biopharma, Inc. and the Purchasers listed on the signature pages thereto (Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2017.)
     
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.

 

30