10-Q

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 June 30, 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 August 9, 2017, there were 23,265,180 shares of the registrant’s common stock outstanding.

VITALITY BIOPHARMA, INC.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended

June 30, 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 MONTHS ENDED JUNE 30, 2017 AND 2016

(Unaudited)

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

3 

VITALITY BIOPHARMA, INC.

CONDENSED BALANCE SHEETS

	June 30, 2017			March 31, 2017
	(unaudited)
Assets
Current Assets
Cash	$	530,602		$	1,152,766
Accounts receivable, net		25,332			19,198
Prepaid expenses		3,058			3,058
Total Assets	$	558,992		$	1,175,022
Liabilities and Stockholders’ Equity (Deficiency)
Current Liabilities
Accounts payable and accrued liabilities	$	306,783		$	373,696
Accrued compensation – officers and directors		151,667			151,667
Accounts payable - related party		22,000			34,500
Derivative liability		265,403			240,791
Total liabilities		745,853			800,654
Stockholders’ Equity (Deficiency)
Common stock, par value $0.001 per share; 1,000,000,000 shares authorized; 22,265,180 and 22,215,180 shares issued and outstanding, respectively		22,264			22,214
Additional paid-in-capital		18,633,167			18,088,093
Accumulated deficit		(18,842,292	)		(17,735,939	)
Total stockholders’ equity (deficiency)		(186,861	)		374,368
Total liabilities and stockholders’ equity (deficiency)	$	558,992		$	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 June 30,
	2017			2016
Revenue	$	27,043		$	46,377
Cost of goods sold		20,486			25,119
Gross profit		6,557			21,258
Operating expenses:
General and administrative		673,789			327,874
Research and development		407,009			110,315
Rent - related party		7,500			6,900
Total operating expenses		1,088,298			445,089
Loss from operations		(1,081,741	)		(423,831	)
Other income (expenses)
Change in fair value of derivative liability		(24,612	)		(14,953	)
Interest expense		—			(621	)
Total other expenses, net		(24,612	)		(15,574	)
Net loss	$	(1,106,353	)	$	(439,405	)
Net loss per common share
Basic and diluted	$	(0.05	)	$	(0.04	)
Weighted average number of common shares outstanding
Basic and diluted		22,255,290			10,069,358

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

5 

VITALITY BIOPHARMA, INC.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY)

THREE MONTHS ENDED JUNE 30, 2017 AND 2016

(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
Fair value of vested restricted common stock						102,584		—			102,584
Fair value of vested stock options		—		—		342,540		—			342,540
Fair value of common stock issued for services		50,000		50		99,950		—			100,000
Net loss		—		—		—		(1,106,353	)		(1,106,353	)
Balance- June 30, 2017 (unaudited)		22,265,180	$	22,264	$	18,633,167	$	(18,842,292	)	$	(186,861	)

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

6 

VITALITY BIOPHARMA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended June 30,
	2017			2016
Operating activities
Net loss	$	(1,106,353	)	$	(439,405	)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of vested stock options		342,540			39,905
Amortization of common stock issued to employees with vesting terms		102,584			24,000
Fair value of common stock issued for services		100,000			—
Change in fair value of derivative liability		24,612			14,953
Fair value of vested warrants granted to employees		—			35,014
Changes in operating assets and liabilities:
Accounts receivable		(6,134	)		(8,807	)
Deposit		—			(558	)
Accounts payable and accrued liabilities		(66,913	)		(11,984	)
Accounts payable - related party		(12,500	)		6,900
Net cash used in operating activities		(622,164	)		(339,982	)
Financing activities
Proceeds from common stock issuable		—			100,000
Proceeds from sale of common stock, net		—			165,030
Net cash provided by financing activities		—			265,030
Net decrease in cash		(622,164	)		(74,952	)
Cash and cash equivalents - beginning of period		1,152,766			95,433
Cash and cash equivalent - end of period	$	530,602		$	20,481
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	—		$	363
Income taxes	$	—		$	—
Non-cash activities:
Extinguishment of derivative liability	$	—		$	80,278

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

7 

VITALITY BIOPHARMA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 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.

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 three months ended June 30, 2017, the Company incurred a net loss of $1,106,353 and used cash in operating activities of $622,164. 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. 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 June 30, 2017 we have sufficient funds to operate the business for the next 6 months. 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 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 months ended June 30, 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 $265,403 and $240,791 at June 30, 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 June 30, 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 number 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. 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:

	Three months ended
	June 30, 2017		June 30, 2016
Options		2,820,489		892,500
Warrants		372,421		9,702,713
Total		3,192,910		10,595,213

Research and Development

Research and development costs consist primarily of fees paid to consultants and outside service providers, patent fees and costs, and other expenses relating to the acquisition, design, development and testing of the Company’s 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 Company plans to adopt ASU 2017-11 in the third quarter of 2017. 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.

11 

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.

At March 31, 2017, the balance of the derivative liabilities was $240,791. During the three months ended June 30, 2017, the Company recorded an increase in derivative liability of $24,613. At June 30, 2017, the balance of the derivative liabilities was $265,403.

At June 30, 2017 and March 31, 2017, the derivative liabilities were valued using a probability weighted Black-Scholes-Merton pricing model with the following assumptions:

	June 30, 2017			March 31, 2017
Conversion feature:
Risk-free interest rate		1.14-1.55	%		0.19	%
Expected volatility		127	%		125	%
Expected life (in years)		1 to 3 years			1 to 3 years
Expected dividend yield		—			—
Fair Value:
Conversion feature	$	265,403		$	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 (DEFICIENCY)

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 $952,466. During the three months ended June 30, 2017, we recorded expense related to the fair value of stock awards that vested of $102,504. At June 30, 2017, the amount of unvested compensation related to these awards is approximately $307,750, 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
Non-vested shares, April 1, 2017		1,436,170
Granted		—
Vested		—
Forfeited		—
Non-vested shares, June 30, 2017		1,436,170

Common stock issued for services

During the three months ended June 30, 2017, the Company issued a total of 50,000 shares of common stock to one consultant as payment for services and recorded expenses of $100,000 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 three months ended June 30, 2017 is as follows:

	Shares		Weighted Average Exercise Price
Balance outstanding at March 31, 2017		2,820,489	$	1.27
Granted		—
Exercised		—
Expired		—
Cancelled		—
Balance outstanding at June 30, 2017		2,820,489	$	1.27
Balance exercisable at June 30, 2017		1,006,876	$	1.50

A summary of the Company’s stock options outstanding and exercisable as of June 30, 2017 is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Grant- date Stock Price
Options Outstanding, June 30, 2017		1,710,821	$	0.50	$	0.50
		153,000	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		10,000	$	1.50	$	1.50
		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
		2,820,489
Options Exercisable, June 30, 2017		427,708	$	0.50	$	0.50
		37,500	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		7,5000	$	1.50	$	1.50
		235,000	$	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
		1,006,876

During the three months ended June 30, 2017, we expensed total stock-based compensation related to stock options of $342,540, and the remaining unamortized cost of the outstanding stock-based awards at June 30, 2017 was approximately $740,000. This cost will be amortized on a straight line basis over a weighted average remaining vesting period of 2 years. At June 30, 2017, the 2,820,489 outstanding stock options had an intrinsic value of approximately $3,050,000.

13 

5. WARRANTS

At June 30, 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		—		—
Exercised		—		—
Expired			$	—
Balance outstanding and exercisable at June 30, 2017		372,421	$	2.79

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 three months ended June 30, 2017 and 2016 were $7,500 and $6,900, respectively.

7. COMMITMENTS

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 December 2017.

As of June 30, 2017, we had accrued approximately $44,000 in legal fees related to the SEC examination.

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8. SUBSEQUENT EVENTS

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 “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 July 28, 2017. The aggregate proceeds to the Company from the sale of the Shares and Warrants was approximately $995,000.

In July 2017, we issued options to purchase 30,000 shares of our common stock to a consultant with a fair value of $50,127 at grant date. These options have an exercise price of $1.79 per share and expire ten years from the date of issuance. The fair value of these options granted to the consultants was estimated using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 126.91%, (ii) discount rate of 2.20 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years. The fair value of the option grants to the consultants will be recalculated each quarter and will be amortized over 24 months as the options vest based on their fair value at the end of each quarterly reporting period.

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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.

Cannabosides are more stable and soluble than cannabinoids, and upon oral delivery, cannabinoids pass through the digestive tract and release within the large intestine or colon. This enables targeted delivery of cannabinoids for the treatment of gastrointestinal disorders. Cannabosides enable the reduction or elimination of systemic delivery of tetrahydrocannibinol (THC) into the bloodstream and brain, reducing psychoactive side effects, and enabling higher concentrations of compounds to be used for treatment of pain and inflammation. Targeted delivery with limited psychoactivity may be especially useful for treatment of pediatric conditions. Because passage of cannabosides through the digestive tract is likely to occur over several hours or longer, there is a sustained or delayed release of cannabinoids, which may provide patients with long-lasting or overnight relief, a desirable attribute that is unavailable with medical marijuana or with current cannabinoid pharmaceutical formulations.

We have produced more than 25 novel cannabosides so far and have patent applications that include composition of matter claims for prodrugs of cannabinoids that have been studied extensively in clinical trials worldwide, including THC, 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 composition of matter claims on vanilloid glycoside compounds that target the TRPV receptors, which mediate pain relief, and on the use of TRPV1 agonists for effecting neural repair. 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 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 inflammatory bowel disease as well as 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 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.

We plan to complete preclinical studies necessary to commence clinical trials in 2017, which will focus initially on evaluating the clinical pharmacokinetics and safety of cannabosides, and to then evaluate their utility for treatment of inflammatory bowel disease and narcotic bowel syndrome. We plan to conduct additional preclinical studies also, which will evaluate the utility of cannabosides as a chronic therapy for treatment of additional conditions such as neuropathic pain, irritable bowel syndrome, colorectal cancer, C. difficile infections, muscle spasticity in multiple sclerosis, and opiate-induced bowel dysfunction.

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 glycoside prodrugs. Prodrugs are medications or compounds metabolized by the body into a pharmacologically active drug. We have patents pending for more than 25 of these novel pharmaceutical compositions including prodrugs of THC, CBD, and CBDV, which are cannabinoids that are either marketed and approved as pharmaceutical products today, or that are 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.

VITA-100 is an oral cannabinoid formulation containing cannabosides that is being developed for acute treatment of inflammatory bowel disease and narcotic bowel syndrome. VITA-210 is an or cannabinoid formulation containing cannabosides being investigated in preclinical studies for chronic administration, and which may be applied towards treatment of neuropathic pain, irritable bowel syndrome, colorectal cancer, C. difficile infections, muscle spasticity in multiple sclerosis, and opioid-induced bowel dysfunction.

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We believe that through a process called glycosylation, the solubility and stability of a drug can be significantly improved. Cannabinoid glycoside prodrugs and their use in drug formulations that we are currently developing are designed to enable significant benefits, including:

1.	Administration of cannabinoids in a convenient oral formulation;
2.	Targeted delivery of compounds to specific tissues or organs, especially targeted delivery of cannabinoids to the colon or large intestine, which can reduce or eliminate the delivery of psychoactive compounds into the bloodstream and brain;
3.	Improved solubility, leading to oral formulations that are easy to manufacture and that improve the taste of products through reduction or removal of harsh organic solvents;
4.	Improved stability, preventing conversion of CBD to unwanted byproducts including THC in the acidic stomach environment, or other forms of degradation, and therefore enabling higher doses 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.

Drug	Treatment Indications	Status
Cannabosides - VITA-100	Inflammatory Bowel Disease, Narcotic Bowel Syndrome, Clostridium Difficile Infections	Phase 1a/1b Trial Expected to Initiate in 2017
Cannabosides - VITA-210	Neuropathic Pain, Irritable Bowel Syndrome, Colorectal Cancer, Muscle Spasticity in Multiple Sclerosis & Rare White Matter Disorders, Opiate-Induced Bowel Dysfunction	Phase 1 Trial Expected to Initiate in 2017
Additional Cannabosides Formulations	Epilepsy, Schizophrenia, Huntington’s disease, Guillain-Barré	Preclinical

We also have licensed intellectual property that seeks to protect methods for treatment of multiple sclerosis and demyelinating disorders using TRPV1 agonists. These compounds may be tested either as standalone agents or in combination with our cannaboside drug formulations in order to establish treatment regimens that provide regenerative effects for patients with serious neurological and inflammatory conditions.

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.

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Cannabinoids are known to be effective anti-inflammatory and neuroprotective agents, and as of 2016, U.S. states containing 87% of the U.S. population have enacted medical marijuana laws to permit access to medical cannabis for treatment of a variety of conditions, including at least use of CBD, which is not intoxicating. The approved disease indications include ones directly related to the drug indications we are targeting, as well as many others. The list includes chronic pain, inflammatory bowel disease, epilepsy, wasting disorders, multiple sclerosis and muscle spasticity disorders, glaucoma, cirrhosis, Alzheimer’s disease, nausea, traumatic brain injury, Parkinson’s disease, HIV/AIDS, Huntington’s disease, and more. Cannabinoid pharmaceuticals are increasingly being approved as well, including primarily synthetic and botanical extracts of the two major constituents of Cannabis sativa, which are THC and CBD. Dronabinol is a synthetic THC drug that has been approved for treating nausea and for stimulating appetite. Nabiximols is a blend of two cannabinoids, THC and CBD, which has been approved in more than 20 countries for treatment of muscle spasticity in multiple sclerosis, and also for treatment of cancer pain in certain countries.

CBD is not intoxicating, has established antianxiety and antipsychotic effects, and beyond its inclusion in nabiximols, is also being investigated independently by clinical researchers as a stand-alone agent for epilepsy, schizophrenia, inflammatory bowel disease, opiate dependence, and a variety of other neurological and inflammatory conditions. We intend to obtain marketing authorizations in one or more of these disease indications, while focusing initially on inflammatory bowel disease and narcotic bowel syndrome.

Short Term Development Targets

● Complete preclinical efficacy and toxicology trials to support clinical development of cannabosides

● Complete additional preclinical efficacy and pharmacology studies of cannabosides and cannaboside drug formulations that support lead drug indications as well as novel therapeutic applications

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

● Obtain regulatory approval for first-in-man clinical studies to evaluate the pharmacokinetics of cannabosides, and to obtain preliminary data about their efficacy for providing relief of key symptoms that are common to inflammatory bowel disease and narcotic bowel syndrome

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. See “Intellectual Property” in this report for a further discussion.

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 June 30, 2017 and June 30, 2016

Our net loss during the three months ended June 30, 2017 was $1,106,353 compared to a net loss of $439,405 for the three months ended June 30, 2016. During the three months ended June 30, 2017, we generated $27,043 in revenue and $6,557 in gross profit, compared to $46,377 in revenue and $21,258 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. We expect such sales to continue at approximately the rate during the 2017 period.

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During the three months ended June 30, 2017, we incurred general and administrative expenses in the aggregate amount of $673,789 compared to $327,874 incurred during the three months ended June 30, 2016 (a decrease of $345,915. 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 increase in general and administrative costs in the period relates to stock-based compensation costs which increased to $545,124 in the period ending June 30, 2017, as compared to $98,919 in the period ending June 30, 2016.

In addition, during the three months ended June 30, 2017, we incurred research and development costs of $407,009, compared to $110,315 during the three months ended June 30, 2016 (an increase of $296,694). This decrease resulted from increased laboratory and consulting expenses during the 2017 period.

During the three months ended June 30, 2017, we incurred related party rent and other costs totaling $7,500 compared to $6,900 incurred during the three months ended June 30, 2016.

This resulted in a loss from operations of $1,081,741 during the three months ended June 30, 2017 compared to a loss from operations of $423,831 during the three months ended June 30, 2016.

During the three months ended June 30, 2017, we recorded total net other income (expense) in the amount of $(24,612), compared to total net other income (expense) recorded during the three months ended June 30, 2016 in the amount of $(15,574). During the three months ended June 30, 2017, we recorded an expense related to the change in fair value of derivatives of $24,612, compared to an expense of $14,953 during the 2016 quarter. This resulted in a net loss of $1,106,353 during the three months ended June 30, 2017 compared to a net loss of $439,405 during the three months ended June 30, 2016.

The net loss during the three months ended June 30, 2017 compared to the net loss for the three months ended June 30, 2016 is attributable primarily to the higher stock based compensation and research and development costs in the 2017 period.

Liquidity and Capital Resources

As of June 30, 2017, we had total current assets of $558,992, which was comprised mainly of cash of $530,602. Our total current liabilities as of June 30, 2017 were $745,853 and consisted of accounts payable and accrued liabilities of $306,783, accrued compensation owed to officers and directors of $151,667 and accounts payable to a related party of $22,000, and derivative liability of $265,403. The derivative liability is a non-cash item related to certain of our outstanding warrants as of June 30, 2017. As a result, on June 30, 2017, we had working capital deficit of $186,861.

We have not yet received significant revenues from sales of products or services, and have recurring losses from operations. We have incurred losses since inception resulting in stockholders’ deficit of $186,861 as of June 30, 2017, and further losses are anticipated in the development of our business. These factors raise substantial doubt about our ability to continue as a going concern. Our financial statements included in this report have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. The continuation of our Company as a going concern is dependent upon our Company attaining and maintaining profitable operations and raising additional capital. The financial statements included in this report do not include any adjustments relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations.

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Due to the uncertainty of our ability to meet our current operating expenses and capital expenses as noted above, in their report on our annual financial statements for the year ended March 31, 2017, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. We estimate that we will have sufficient funds to operate the business for the 6 months after June 30, 2017. 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.

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 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 “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 July 28, 2017. The aggregate proceeds to the Company from the sale of the Shares and Warrants was approximately $995,000.

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 December 2017..

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Net Cash Used in Operating Activities

We have not generated positive cash flows from operating activities. For the three months ended June 30, 2017, net cash used in operating activities was $622,164 compared to net cash used in operating activities of $339,982 for the three months ended June 30, 2016. This increase was primarily attributable to an increase in research and development costs. Net cash used in operating activities during the three months ended June 30, 2017 consisted primarily of a net loss of $1,106,353, offset by $545,124 related to stock-based compensation and change in fair value of derivative liability of $24,612. Net cash used in operating activities during the three months ended June 30, 2016 consisted primarily of a net loss of $439,405, offset by $98,919 related to stock-based compensation and change in fair value of derivative liability of $14,953.

Net Cash Used in Investing Activities

During the three months ended June 30, 2017 and June 30, 2016, no net cash was used in or provided by investing activities.

Net Cash Provided By Financing Activities

During the three months ended June 30, 2017, no net cash was used in or provided by financing activities compared to net cash provided by financing activities of $265,030 for the three months ended June 30, 2016. Net cash provided by financing activities during the three months ended June 30, 2016 and was attributable to the sale of common stock and warrants.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

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

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. The more significant estimates and assumption by management include, among others, the fair value of shares issued for services, the fair value of options and warrants, and assumptions used in the valuation of our outstanding derivative liabilities.

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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 June 30, 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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive and financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on this evaluation, our principal executive and financial officer concluded that as of June 30, 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 June 30, 2017 are fairly presented, in all material respects, in accordance with GAAP.

Description of Material Weaknesses and Management’s Remediation Initiatives

As of the date of this report, our remediation efforts continue related to each of the material weaknesses that we have identified in our internal control over financial reporting and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below, as and when resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following is a list of the material weaknesses identified by management as of June 30, 2017:

(1) Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the three months ended June 30, 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.

25 

Changes in Internal Control over Financial Reporting

We are currently considering adding additional independent members to our board of directors and adding accounting personnel to our staff in connection with the ongoing efforts to remediate the material weaknesses described above, but no specific progress has been made on these goals or other remediation efforts during the three months ended June 30, 2017. As a result, there were no changes in our internal control over financial reporting during the three months ended June 30, 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.

26 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

Please refer to the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on June 28, 2017.

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

None.

27 

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 July 27, 2017.)
10.1	Securities Purchase Agreement, dated July 26, 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 July 27, 2017.)
10.2	Registration Rights Agreement, dated July 26, 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 July 27, 2017.)
10.3	Lease Renewal Agreement, dated May 1, 2017, by and between the registrant and One World Ranches LLC.*
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.

28 

SIGNATURES

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

VITALITY BIOPHARMA, INC.
By:	/s/ Robert Brooke
	Robert Brooke
	Chief Executive Officer
	(Principal Executive Officer and Principal Financial and Accounting Officer)
Date: August 10, 2017

29 

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 July 27, 2017.)
10.1	Securities Purchase Agreement, dated July 26, 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 July 27, 2017.)
10.2	Registration Rights Agreement, dated July 26, 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 July 27, 2017.)
10.3	Lease Renewal Agreement, dated May 1, 2017, by and between the registrant and One World Ranches LLC.*
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 

EX-10.3

Exhibit 10.3 

RENEWAL OF LEASE AGREEMENT

This Renewal of Lease Agreement (“Renewal”) is entered into and made effective as of May 1, 2017, by and between One World Ranches LLC, a California limited liability company (“Lessor”), and Vitality Biopharma, Inc.

WHEREAS, Lessor and Lessee entered into a lease agreement dated April 23, 2012 (the “Lease”);

WHEREAS, the Lease will expire on May 1, 2017; and

WHEREAS, the Lessor and Lessee wish to extend the term of the Lease.

NOW THEREFORE, in consideration of the mutual agreements and promises set forth herein, Lessor and Lessee agree as follows:

1. The term of the Lease is extended from May 1, 2017 to May 1, 2020.

2. The monthly rent shall be increased to $2,600.00 beginning on May 1, 2017 during the term of the Lease.

3. Except as expressly modified herein, all of the terms of the Lease are unchanged and remain in full force and effect.

The parties have executed and entered into this Lease on the date and year first above written.

LESSOR:
One World Ranches LLC, a California Limited Liability Company
By:	/s/ Diljit Baines
	Diljit Bains, Member

LESSEE:
Vitality Biopharma, Inc., a Nevada Corporation
By:	/s/ Robert Brooke
	Robert Brooke, Chief Executive Officer

 2

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert Brooke , certify that:

1.	I have reviewed this report on Form 10-Q for the quarterly period ended June 30, 2017 of Vitality Biopharma, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2017

Name:	/s/ Robert Brooke
By:	Robert Brooke
Title:	Chief Executive Officer
	(Principal Executive Officer and Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Robert Brooke, the Chief Executive Officer of Vitality Biopharma, Inc. (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Quarterly Report on Form 10-Q for the period ended June 30, 2017, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

/s/ Robert Brooke

Robert Brooke

Chief Executive Officer

(Principal Executive Officer and

Principal Financial and Accounting Officer)

Date: August 10, 2017

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2017	Aug. 09, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	Vitality Biopharma, Inc.
Entity Central Index Key	0001438943
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		23,265,180
Trading Symbol	VBIO
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2017

XML

Condensed Balance Sheets - USD ($)	Jun. 30, 2017	Mar. 31, 2017
Current Assets
Cash	$ 530,602	$ 1,152,766
Accounts receivable, net	25,332	19,198
Prepaid expenses	3,058	3,058
Total Assets	558,992	1,175,022
Current Liabilities
Accounts payable and accrued liabilities	306,783	373,696
Accrued compensation - officers and directors	151,667	151,667
Accounts payable - related party	22,000	34,500
Derivative liability	265,403	240,791
Total liabilities	745,853	800,654
Stockholders’ Equity (Deficiency)
Common stock, par value $0.001 per share; 1,000,000,000 shares authorized; 22,265,180 and 22,215,180 shares issued and outstanding, respectively	22,264	22,214
Additional paid-in-capital	18,633,167	18,088,093
Accumulated deficit	(18,842,292)	(17,735,939)
Total stockholders’ equity (deficiency)	(186,861)	374,368
Total liabilities and stockholders’ equity (deficiency)	$ 558,992	$ 1,175,022

XML

Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Mar. 31, 2017
Balance Sheet Related Disclosures [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	22,265,180	22,215,180
Common stock, shares outstanding	22,265,180	22,215,180

XML

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenue	$ 27,043	$ 46,377
Cost of goods sold	20,486	25,119
Gross profit	6,557	21,258
Operating expenses:
General and administrative	673,789	327,874
Research and development	407,009	110,315
Rent - related party	7,500	6,900
Total operating expenses	1,088,298	445,089
Loss from operations	(1,081,741)	(423,831)
Other income (expenses)
Change in fair value of derivative liability	(24,612)	(14,953)
Interest expense		(621)
Total other expenses, net	(24,612)	(15,574)
Net loss	$ (1,106,353)	$ (439,405)
Net loss per common share
Basic and diluted	$ (0.05)	$ (0.04)
Weighted average number of common shares outstanding
Basic and diluted	22,255,290	10,069,358

XML

Condensed Statement of Changes in Stockholders' Equity (Deficiency) (Unaudited) - 3 months ended Jun. 30, 2017 - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Mar. 31, 2017	$ 22,214	$ 18,088,093	$ (17,735,939)	$ 374,368
Balance, shares at Mar. 31, 2017	22,215,180
Fair value of vested restricted common stock		102,584		102,584
Fair value of vested stock options		342,540		342,540
Fair value of common stock issued for services	$ 50	99,950		100,000
Fair value of common stock issued for services, shares	50,000
Net Loss			(1,106,353)	(1,106,353)
Balance at Jun. 30, 2017	$ 22,264	$ 18,633,167	$ (18,842,292)	$ (186,861)
Balance, shares at Jun. 30, 2017	22,265,180

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (1,106,353)	$ (439,405)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of vested stock options	342,540	39,905
Amortization of common stock issued to employees with vesting terms	102,584	24,000
Fair value of common stock issued for services	100,000
Change in fair value of derivative liability	24,612	14,953
Fair value of vested warrants granted to employees		35,014
Changes in operating assets and liabilities:
Accounts receivable	(6,134)	(8,807)
Deposit		(558)
Accounts payable and accrued liabilities	(66,913)	(11,984)
Accounts payable - related party	(12,500)	6,900
Net cash used in operating activities	(622,164)	(339,982)
Financing activities
Proceeds from common stock issuable		100,000
Proceeds from sale of common stock, net		165,030
Net cash provided by financing activities		265,030
Net decrease in cash	(622,164)	(74,952)
Cash and cash equivalents - beginning of period	1,152,766	95,433
Cash and cash equivalent - end of period	530,602	20,481
Cash paid during the period for:
Interest		363
Income taxes
Non-cash activities:
Extinguishment of derivative liability		$ 80,278

XML

Business Operations and Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Business Operations and Summary of Significant Accounting Policies

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.

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 three months ended June 30, 2017, the Company incurred a net loss of $1,106,353 and used cash in operating activities of $622,164. 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. 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 June 30, 2017 we have sufficient funds to operate the business for the next 6 months. 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 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.

Basis of Presentation of Unaudited Condensed Financial Information

The unaudited condensed financial statements of the Company for the three months ended June 30, 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 $265,403 and $240,791 at June 30, 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 June 30, 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.

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 number 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. 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:

	Three months ended
	June 30, 2017		June 30, 2016
Options		2,820,489		892,500
Warrants		372,421		9,702,713
Total		3,192,910		10,595,213

Research and Development

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

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 Company plans to adopt ASU 2017-11 in the third quarter of 2017. 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.

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Derivative Liability

3 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liability

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.

At March 31, 2017, the balance of the derivative liabilities was $240,791. During the three months ended June 30, 2017, the Company recorded an increase in derivative liability of $24,613. At June 30, 2017, the balance of the derivative liabilities was $265,403.

At June 30, 2017 and March 31, 2017, the derivative liabilities were valued using a probability weighted Black-Scholes-Merton pricing model with the following assumptions:

	June 30, 2017			March 31, 2017
Conversion feature:
Risk-free interest rate		1.14-1.55	%		0.19	%
Expected volatility		127	%		125	%
Expected life (in years)		1 to 3 years			1 to 3 years
Expected dividend yield		—			—
Fair Value:
Conversion feature	$	265,403		$	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.

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Stockholders' Equity (Deficiency)

3 Months Ended

Jun. 30, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity (Deficiency)

3. STOCKHOLDERS’ EQUITY (DEFICIENCY)

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 $952,466. During the three months ended June 30, 2017, we recorded expense related to the fair value of stock awards that vested of $102,504. At June 30, 2017, the amount of unvested compensation related to these awards is approximately $307,750, and will be recorded as expense over 1 year.

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

The following table summarizes restricted common stock activity:

	Number of Shares
Non-vested shares, April 1, 2017		1,436,170
Granted		—
Vested		—
Forfeited		—
Non-vested shares, June 30, 2017		1,436,170

Common stock issued for services

During the three months ended June 30, 2017, the Company issued a total of 50,000 shares of common stock to one consultant as payment for services and recorded expenses of $100,000 based on the fair value of the Company’s common stock at the issuance dates.

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Stock Options

3 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

4. STOCK OPTIONS

A summary of the Company’s stock option activity during the three months ended June 30, 2017 is as follows:

	Shares		Weighted Average Exercise Price
Balance outstanding at March 31, 2017		2,820,489	$	1.27
Granted		—
Exercised		—
Expired		—
Cancelled		—
Balance outstanding at June 30, 2017		2,820,489	$	1.27
Balance exercisable at June 30, 2017		1,006,876	$	1.50

A summary of the Company’s stock options outstanding and exercisable as of June 30, 2017 is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Grant- date Stock Price
Options Outstanding, June 30, 2017		1,710,821	$	0.50	$	0.50
		153,000	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		10,000	$	1.50	$	1.50
		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
		2,820,489
Options Exercisable, June 30, 2017		427,708	$	0.50	$	0.50
		37,500	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		7,5000	$	1.50	$	1.50
		235,000	$	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
		1,006,876

During the three months ended June 30, 2017, we expensed total stock-based compensation related to stock options of $342,540, and the remaining unamortized cost of the outstanding stock-based awards at June 30, 2017 was approximately $740,000. This cost will be amortized on a straight line basis over a weighted average remaining vesting period of 2 years. At June 30, 2017, the 2,820,489 outstanding stock options had an intrinsic value of approximately $3,050,000.

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Warrants

3 Months Ended

Jun. 30, 2017

Warrants and Rights Note Disclosure [Abstract]

Warrants

5. WARRANTS

At June 30, 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		—		—
Exercised		—		—
Expired			$	—
Balance outstanding and exercisable at June 30, 2017		372,421	$	2.79

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Related Party Obligations

3 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Obligations

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 three months ended June 30, 2017 and 2016 were $7,500 and $6,900, respectively.

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Commitments

3 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments

7. COMMITMENTS

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 December 2017.

As of June 30, 2017, we had accrued approximately $44,000 in legal fees related to the SEC examination.

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Subsequent Events

3 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

8. SUBSEQUENT EVENTS

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 “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 July 28, 2017. The aggregate proceeds to the Company from the sale of the Shares and Warrants was approximately $995,000.

In July 2017, we issued options to purchase 30,000 shares of our common stock to a consultant with a fair value of $50,127 at grant date. These options have an exercise price of $1.79 per share and expire ten years from the date of issuance. The fair value of these options granted to the consultants was estimated using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 126.91%, (ii) discount rate of 2.20 %, (iii) zero expected dividend yield, and (iv) expected life of 5 years. The fair value of the option grants to the consultants will be recalculated each quarter and will be amortized over 24 months as the options vest based on their fair value at the end of each quarterly reporting period.

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Business Operations and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Going Concern

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 three months ended June 30, 2017, the Company incurred a net loss of $1,106,353 and used cash in operating activities of $622,164. 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. 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 June 30, 2017 we have sufficient funds to operate the business for the next 6 months. 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 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.

Basis of Presentation of Unaudited Condensed Financial Information

Basis of Presentation of Unaudited Condensed Financial Information

The unaudited condensed financial statements of the Company for the three months ended June 30, 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

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

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 $265,403 and $240,791 at June 30, 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

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 June 30, 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.

Stock-Based Compensation

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 number 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 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. 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:

	Three months ended
	June 30, 2017		June 30, 2016
Options		2,820,489		892,500
Warrants		372,421		9,702,713
Total		3,192,910		10,595,213

Research and Development

Research and Development

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

Recent Accounting Pronouncements

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 Company plans to adopt ASU 2017-11 in the third quarter of 2017. 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.

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Business Operations and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

	Three months ended
	June 30, 2017		June 30, 2016
Options		2,820,489		892,500
Warrants		372,421		9,702,713
Total		3,192,910		10,595,213

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Derivative Liability (Tables)

3 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Valuation Assumptions for Derivative Liabilities

At June 30, 2017 and March 31, 2017, the derivative liabilities were valued using a probability weighted Black-Scholes-Merton pricing model with the following assumptions:

	June 30, 2017			March 31, 2017
Conversion feature:
Risk-free interest rate		1.14-1.55	%		0.19	%
Expected volatility		127	%		125	%
Expected life (in years)		1 to 3 years			1 to 3 years
Expected dividend yield		—			—
Fair Value:
Conversion feature	$	265,403		$	240,791

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Stockholders' Equity (Deficiency) (Tables)

3 Months Ended

Jun. 30, 2017

Stockholders' Equity Note [Abstract]

Schedule of Nonvested Restricted Stock Unit Activity

The following table summarizes restricted common stock activity:

	Number of Shares
Non-vested shares, April 1, 2017		1,436,170
Granted		—
Vested		—
Forfeited		—
Non-vested shares, June 30, 2017		1,436,170

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Stock Options (Tables)

3 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

A summary of the Company’s stock option activity during the three months ended June 30, 2017 is as follows:

	Shares		Weighted Average Exercise Price
Balance outstanding at March 31, 2017		2,820,489	$	1.27
Granted		—
Exercised		—
Expired		—
Cancelled		—
Balance outstanding at June 30, 2017		2,820,489	$	1.27
Balance exercisable at June 30, 2017		1,006,876	$	1.50

Schedule of Stock Options Outstanding and Exercisable

A summary of the Company’s stock options outstanding and exercisable as of June 30, 2017 is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Grant- date Stock Price
Options Outstanding, June 30, 2017		1,710,821	$	0.50	$	0.50
		153,000	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		10,000	$	1.50	$	1.50
		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
		2,820,489
Options Exercisable, June 30, 2017		427,708	$	0.50	$	0.50
		37,500	$	0.96	$	0.96
		130,000	$	1.00	$	10.00
		7,5000	$	1.50	$	1.50
		235,000	$	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
		1,006,876

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Warrants (Tables)

3 Months Ended

Jun. 30, 2017

Warrants and Rights Note Disclosure [Abstract]

Summary of Warrant Activity

At June 30, 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		—		—
Exercised		—		—
Expired			$	—
Balance outstanding and exercisable at June 30, 2017		372,421	$	2.79

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Business Operations and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Net loss	$ 1,106,353	$ 439,405
Net cash used in operating activities	$ 622,164	$ 339,982
Stock issued during period, shares, new issues	2,650,000
Warrants to purchase common stock	7,950,000
Fair value of derivative liabilities	$ 265,403		$ 240,791
July 2017 [Member] | Investors [Member]
Stock issued during period, shares, new issues	666,667
Warrants to purchase common stock	333,334
Proceeds from issuance of warrants	$ 995,000

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Business Operations and Summary of Significant Accounting Policies - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Antidilutive securities excluded from computation of earnings per share	3,192,910	10,595,213
Options [Member]
Antidilutive securities excluded from computation of earnings per share	2,820,489	892,500
Warrants [Member]
Antidilutive securities excluded from computation of earnings per share	372,421	9,702,713

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Derivative Liability (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative liabilities	$ 265,403	$ 240,791
Increase in derivative liabilities	$ 24,613

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Derivative Liability - Schedule of Valuation Assumptions for Derivative Liabilities (Details) - USD ($)	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Risk-free interest rate		0.19%
Expected volatility	127.00%	125.00%
Expected dividend yield	0.00%	0.00%
Fair Value of Derivative Liability	$ 265,403	$ 240,791
Minimum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Risk-free interest rate	1.14%
Expected life (in years)	1 year	1 year
Maximum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Risk-free interest rate	1.55%
Expected life (in years)	3 years	3 years

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Stockholders' Equity (Deficiency) (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accumulated vested balance of stock		$ 952,466
Fair value of stock awards that vested	$ 102,504
Stock-based compensation expense not yet recognized	$ 307,750
Stock-based compensation unvested compensation related to awards period	1 year
Common stock issued for services	$ 100,000
One Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock issued for services, shares	50,000
Common stock issued for services	$ 10,000

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Stockholders' Equity (Deficiency) - Schedule of Nonvested Restricted Stock Unit Activity (Details) - Restricted Stock [Member]	3 Months Ended
	Jun. 30, 2017 shares
Non-vested shares, Beginning Balance	1,436,170
Granted
Vested
Forfeited
Non-vested shares, Ending Balance	1,436,170

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Stock Options (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation	$ 342,540	$ 39,905
Unamortized cost of outstanding stock-based awards	$ 740,000
Weighted average remaining vesting period	2 years
Number of stock options outstanding, shares	2,820,489		2,820,489
Options outstanding, intrinsic value	$ 3,050,000

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Stock Options - Summary of Stock Option Activity (Details)	3 Months Ended
	Jun. 30, 2017 $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares, beginning balance outstanding | shares	2,820,489
Shares, Granted | shares
Shares, Exercised | shares
Shares, Expired | shares
Shares, Cancelled | shares
Shares, ending balance outstanding | shares	2,820,489
Shares, Balance exercisable | shares	1,006,876
Weighted Average Exercise Price, beginning balance outstanding | $ / shares	$ 1.27
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired | $ / shares
Weighted Average Exercise Price, Cancelled | $ / shares
Weighted Average Exercise Price, ending balance outstanding | $ / shares	1.27
Weighted Average Exercise Price, Balance exercisable | $ / shares	$ 1.50

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Stock Options - Schedule of Stock Options Outstanding and Exercisable (Details) - $ / shares	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	2,820,489	2,820,489
Weighted average grant-date stock price, options outstanding
Number of options exercisable	1,006,876
Stock Options One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	1,710,821
Weighted average exercise price, options outstanding	$ 0.50
Weighted average grant-date stock price, options outstanding	$ 0.50
Number of options exercisable	427,708
Weighted average exercise price, options exercisable	$ 0.50
Weighted average grant-date stock price, options exercisable	$ 0.50
Stock Options Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	153,000
Weighted average exercise price, options outstanding	$ 0.96
Weighted average grant-date stock price, options outstanding	$ 0.96
Number of options exercisable	37,500
Weighted average exercise price, options exercisable	$ 0.96
Weighted average grant-date stock price, options exercisable	$ 0.96
Stock Options Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	130,000
Weighted average exercise price, options outstanding	$ 1.00
Weighted average grant-date stock price, options outstanding	$ 10.00
Number of options exercisable	130,000
Weighted average exercise price, options exercisable	$ 1.00
Weighted average grant-date stock price, options exercisable	$ 10.00
Stock Options Four [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	10,000
Weighted average exercise price, options outstanding	$ 1.50
Weighted average grant-date stock price, options outstanding	$ 1.50
Number of options exercisable	75,000
Weighted average exercise price, options exercisable	$ 1.50
Weighted average grant-date stock price, options exercisable	$ 1.50
Stock Options Five [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	647,500
Number of options exercisable	235,000
Stock Options Five [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	$ 2.00
Weighted average grant-date stock price, options outstanding	2.00
Weighted average exercise price, options exercisable	2.00
Weighted average grant-date stock price, options exercisable	2.00
Stock Options Five [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	2.79
Weighted average grant-date stock price, options outstanding	2.79
Weighted average exercise price, options exercisable	2.79
Weighted average grant-date stock price, options exercisable	$ 2.79
Stock Options Six [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	123,334
Number of options exercisable	123,334
Stock Options Six [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	$ 3.10
Weighted average grant-date stock price, options outstanding	3.10
Weighted average exercise price, options exercisable	3.10
Weighted average grant-date stock price, options exercisable	3.10
Stock Options Six [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	3.80
Weighted average grant-date stock price, options outstanding	3.80
Weighted average exercise price, options exercisable	3.80
Weighted average grant-date stock price, options exercisable	$ 3.80
Stock Options Seven [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding	45,834
Number of options exercisable	45,834
Stock Options Seven [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	$ 4.00
Weighted average grant-date stock price, options outstanding	4.00
Weighted average exercise price, options exercisable	4.00
Weighted average grant-date stock price, options exercisable	4.00
Stock Options Seven [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, options outstanding	4.70
Weighted average grant-date stock price, options outstanding	4.70
Weighted average exercise price, options exercisable	4.70
Weighted average grant-date stock price, options exercisable	$ 4.70

XML

Warrants - Summary of Warrant Activity (Details)	3 Months Ended
	Jun. 30, 2017 $ / shares shares
Warrants and Rights Note Disclosure [Abstract]
Shares, Outstanding Beginning Balance | shares	372,421
Shares, Granted | shares
Shares, Exercised | shares
Shares, Expired | shares
Shares, outstanding and exercisable Balance | shares	372,421
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 2.79
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired/Cancelled | $ / shares
Weighted Average Exercise Price, Outstanding and Ending Balance | $ / shares	$ 2.79

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Related Party Transactions and Lease Obligations (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	May 01, 2017	Apr. 23, 2012	Jun. 30, 2017	Jun. 30, 2016
Operating Leased Assets [Line Items]
Operating leases, net rent expense			$ 7,500	$ 6,900
Lease Agreement [Member] | One World Ranches [Member]
Operating Leased Assets [Line Items]
Lease description		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.
Payments for rent per month		$ 2,300
Lease expiration date	May 01, 2017
Increase payment for rent per month	$ 2,600

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Commitments (Details Narrative)	3 Months Ended
	Jun. 30, 2017 USD ($) shares
Commitments and Contingencies Disclosure [Abstract]
Accrued legal fees | $	$ 44,000
Stock issued during period, shares, new issues	2,650,000
Common stock issuable upon exercise of warrants	7,950,000

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Subsequent Events (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	Jul. 26, 2017	Jul. 31, 2017	Jun. 30, 2017	Mar. 31, 2017
Stock issued during period, shares, new issues			2,650,000
Warrants to purchase common stock			7,950,000
Exercise price of warrants			$ 2.79	$ 2.79
Number of option issued to purchase common stock
Exercise price, option granted
Stock option, award vesting period			1 year
Subsequent Event [Member]
Number of option issued to purchase common stock		30,000
Fair value of stock option grants		$ 50,127
Exercise price, option granted		$ 1.79
Stock option, volatility rate		126.91%
Stock option, discount rate		2.20%
Stock option, expected dividend yield		0.00%
Stock option, expected term		5 years
Stock option, award vesting period		24 months
Subsequent Event [Member] | Securities Purchase Agreement [Member]
Stock issued during period, shares, new issues	666,667
Warrants to purchase common stock	333,334
Stock issued price per share	$ 1.50
Exercise price of warrants	$ 2.00
Aggregate proceeds from sale of the shares and warrants	$ 995,000