10-K: Eco Science Solutions Inc. Files 10-K, Reports No Revenue for Fiscal Year 2024

Eco Science Solutions Inc. reports a net loss of $1.24 million for fiscal year 2024 with no revenue, while continuing to develop its technology platform and address legal and financial challenges.

Summary

• Eco Science Solutions Inc. (ESSI) filed its annual report on Form 10-K for the fiscal year ended January 31, 2024.
• The company reported no revenue for both fiscal years 2024 and 2023.
• ESSI incurred a net loss of $1,242,268 in fiscal year 2024, compared to a net loss of $1,797,555 in fiscal year 2023.
• Operating expenses totaled $1,170,023 in 2024 and $1,731,409 in 2023, with significant costs related to management, consulting, and research and development.
• The company's accumulated deficit increased to $77,624,584 as of January 31, 2024.
• ESSI is focused on developing its Herbo ERP and HerboPay financial services platforms for regulated industries.
• The company is actively seeking users for its software and exploring opportunities in states where cannabis is legal.
• ESSI's common stock symbol was revoked in 2022 due to delinquent SEC filings, and the company is working to resume trading on the OTC Markets.
• The company has three employees, including executive officers and directors, and one special consultant under contract.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including no revenue, substantial losses, and a large accumulated deficit. While there are some positive developments in product development and strategic direction, the overall financial situation and regulatory hurdles create a negative outlook from an investment perspective.

Positives

• The company's net loss decreased in fiscal year 2024 compared to 2023, indicating some cost control.
• ESSI is actively developing its Herbo ERP and HerboPay platforms, which have potential in regulated industries.
• The company is pursuing opportunities to generate revenue by engaging with state legislatures and businesses.
• ESSI is working to relist its stock on the OTC Markets, which could improve liquidity for investors.

Negatives

• The company reported no revenue for both fiscal years 2024 and 2023.
• ESSI has a significant accumulated deficit of $77,624,584 as of January 31, 2024.
• The company's stock symbol was revoked in 2022 due to delinquent SEC filings.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficit of $15,560,584.

Risks

• The company's business activities may be deemed illegal under federal law due to its focus on the cannabis industry.
• ESSI may be subject to actions by law enforcement authorities, which could materially and adversely affect its business.
• The company has a limited operating history and has yet to achieve profitable operations.
• ESSI relies on additional financing to fund its operations, and there is no assurance that it will be able to raise additional funds.
• The company's outstanding loans are past due or payable in less than a year, which could lead to enforcement actions.
• The company may be subject to racketeering laws due to its receipt of funds from clients in the cannabis industry.
• The company has material weaknesses in its internal control over financial reporting.
• The company may find it difficult to attract senior management in the absence of Directors and Officers Insurance.
• The company may experience difficulties in managing growth.
• Undisclosed liabilities could arise of which the Company is currently unaware.
• The company may need additional capital that will dilute the ownership interest of investors.

Future Outlook

The company intends to continue developing and operating as a technology solutions provider servicing businesses that have complex financial accounting, inventory management, and sales tracking in both regulated and non-regulated verticals. The company will continue to enhance its enterprise initiatives focused on developing technologies that build upon its existing, proprietary financial accounting platform, coupled with data analytics, to help businesses to be more effective in their abilities to connect, market, and transact to businesses and sell directly to consumers.

Management Comments

• Mr. Rountree is pursuing opportunities with state legislature in states where cannabis is legal.
• Mr. Rountree is actively searching out businesses that would benefit from using the Herbo ERP and HerboPay financial software.
• Mr. Mudd will ensure compliance with corporate governance standards applicable to smaller reporting issuers, chair meetings of the Companys Board, shareholders and executive sessions of the Board, coordinate the activities of the directors of the Board, serve as a formal liaison between the Companys senior management and the directors of the Board, coordinate the activities of the Boards operating committees and assist management in maintaining effective communication with the Companys shareholders.

Industry Context

The company operates in the technology sector, providing software solutions for businesses in regulated industries, particularly the cannabis industry. The document highlights the challenges and opportunities in this sector, including regulatory hurdles, financial constraints, and the need for robust technology platforms. The company's focus on providing a comprehensive, end-to-end ERP solution positions it to potentially disrupt the technology sector within the cannabis industry.

Comparison to Industry Standards

• The company's lack of revenue and significant losses are not uncommon for early-stage technology companies, particularly those in emerging and highly regulated sectors like cannabis.
• Compared to established SMB accounting software providers like QuickBooks, Xero, FreshBooks, Zoho, and Wave, ESSI is in a very early stage of development and market penetration.
• The company's focus on providing a comprehensive, end-to-end ERP solution with proprietary financial accounting and inventory management capabilities differentiates it from many point-solution providers in the cannabis industry.
• The company's challenges in securing banking services and navigating federal regulations are typical for businesses in the cannabis industry, which is still federally illegal.
• The company's efforts to develop a regulatory offering that can be accessed by all industry parties, including regulators, is a unique approach compared to traditional tag tracking systems.

Management Changes

Corporate Governance

Legal Proceedings

• The company was involved in a shareholder derivative lawsuit, which was settled in 2020.
• The company was involved in a wage dispute with a former employee, which has been settled.
• The company was subject to an SEC order revoking the registration of its securities in 2022.
• The company is currently working to relist its stock on the OTC Markets.

Related Party Transactions

• The company has significant related party payables and notes payable to officers, directors, and their related entities.
• The company has employment agreements with officers and directors, which include accrued and unpaid salaries.
• The company has consulting agreements with related parties, which include accrued and unpaid fees.
• The company has entered into debt settlement agreements with related parties.

Stakeholder Impact

• Shareholders face significant risks due to the company's financial challenges and regulatory issues.
• Employees may be impacted by the company's financial instability and potential for restructuring.
• Customers may be affected by the company's ability to deliver its software solutions and maintain its operations.
• Creditors face the risk of non-payment due to the company's financial difficulties.
• Suppliers may be impacted by the company's ability to pay for goods and services.

Next Steps

• The company will continue to develop and enhance its Herbo ERP and HerboPay platforms.
• The company will actively seek users for its software and explore opportunities in states where cannabis is legal.
• The company will continue to work to resume trading on the OTC Markets.
• The company will continue to seek additional financing to fund its operations.
• The company will implement the remaining governance reforms as funding becomes available.

Key Dates

Keywords

Herbo ERP, HerboPay, cannabis, technology solutions, financial services, regulated industries, software platform, enterprise software, accounting, inventory management