10-Q: Eco Science Solutions Reports Q2 2025 Losses, Going Concern Doubt

Sentiment:

Quarterly Report 15 September 2025 1:13 PM

📋All filings for Eco Science Solutions, INC

Eco Science Solutions Inc. reported a net loss of $262,843 for the three months ended July 31, 2025, and a working capital deficit of $17.20 million, raising substantial doubt about its ability to continue as a going concern.

Delay expectedImplementation of several governance reforms (e.g., D&O insurance, appointment of two new independent directors, creation of a board-level governance committee, adoption of written corporate governance guidelines and a code of ethics, creation of an investor relations officer, appointment of a Chief Accounting Officer, creation of a written whistleblower policy, adoption of a clawback policy, adoption of enhanced conflicts policies and practices, establishment of documentation of policies and financial reporting checklist, annual assessment of internal controls, provision of continuing director education and employee compliance training, establishment of board oversight of company expenditures) has been delayed due to lack of revenue and financing.The company has been unable to settle invoices from Take2L for $1,001,310 for technology development and services, indicating a significant payment delay.A balance of $21,051 remains due and payable for abandoned office space from 2018, representing a long-standing payment delay.Multiple notes payable are in default, signifying delays in debt repayment.

Capital raiseThe company anticipates continuing to rely on related party and third-party loans and equity sales of common shares and/or shares for services rendered to fund its business operations.The continuation of the company as a going concern is explicitly dependent upon its ability to raise equity or debt financing.Management has obtained additional funding in the most recently completed fiscal year, but there is no guarantee that this will continue.

Worse than expectedThe company continues to report no revenue for the current and comparative periods.Net loss for the three months ended July 31, 2025, increased to $(262,843) from $(249,095) in the prior year.The working capital deficit and accumulated deficit have worsened, indicating a deteriorating financial position.Management explicitly states "substantial doubt regarding the Company's ability to continue as a going concern," highlighting severe financial distress.Multiple notes payable are in default, reflecting ongoing financial obligations that cannot be met.Disclosure controls and procedures were deemed "not effective," indicating internal control weaknesses.Several critical governance reforms from a 2020 legal settlement remain unimplemented due to lack of funding, suggesting a failure to meet commitments.

Summary

Reported a net loss of $(262,843) for the three months ended July 31, 2025, compared to $(249,095) for the same period in 2024.
Reported a net loss of $(536,264) for the six months ended July 31, 2025, compared to $(543,708) for the same period in 2024.
Generated no revenue for both the three and six months ended July 31, 2025, and 2024.
Had a working capital deficit of $17.20 million and an accumulated deficit of $79.26 million as of July 31, 2025.
Cash balance as of July 31, 2025, was $3,098.
Total liabilities as of July 31, 2025, were $17,203,119.
The wholly-owned subsidiary, Ga-Du Corporation, was dissolved on April 3, 2025.
Multiple notes payable, including those to related parties, are in default.
A significant portion of operating expenses consists of management and consulting fees, many of which remain unpaid and are accruing.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with no revenue, a growing accumulated deficit, and explicit going concern doubt. Its reliance on related-party funding and inability to implement critical governance reforms highlight significant operational and financial instability, indicating a very negative outlook.

Positives

Net loss for the six months ended July 31, 2025, slightly improved to $(536,264) from $(543,708) in the prior year.
Accounting, audit, and legal fees decreased for the six-month period to $37,790 in 2025 from $67,310 in 2024, mainly due to a substantial decrease in accounting and audit fees.
The company continues to process upgrades to its Herbo software suite.
OTC Markets began quotation of shares on the Pink Sheets on December 6, 2024, and FINRA completed Form 211 processing on February 7, 2025, allowing brokers to resume market making.
As part of governance reforms from a 2020 legal settlement, one new independent Director has been appointed, an Audit Committee has been appointed (consisting solely of Mr. Mudd), existing compensation plans have been terminated, dealings with third-party stock promoters have ceased, the company's website is maintained, and Counsel has been engaged.

Negatives

No revenue was generated for the three and six months ended July 31, 2025, and 2024.
Net loss increased for the three months ended July 31, 2025, to $(262,843) from $(249,095) in 2024.
The working capital deficit of $17.20 million and accumulated deficit of $79.26 million as of July 31, 2025, continue to grow.
Management explicitly states "substantial doubt regarding the Company's ability to continue as a going concern."
Many notes payable, including those to related parties, are in default.
Disclosure controls and procedures were deemed "not effective" as of July 31, 2025.
Several critical governance reforms from a 2020 legal settlement remain unimplemented due to lack of funding, including D&O insurance, appointment of two new independent directors, creation of a board-level governance committee, adoption of written corporate governance guidelines and a code of ethics, creation of an investor relations officer, appointment of a Chief Accounting Officer, and various policy adoptions.
The company relies heavily on loans and advances from its CEO and CFO, Mr. Michael Rountree, to fund operations.
An amount of $1,001,310 remains due and payable to Take2L for technology development and services, with no payments made in the last 18 months.
A balance of $21,051 remains due and payable for abandoned office space from 2018.

Risks

The company has not generated significant revenues to date and its continuation as a going concern is dependent upon continued financial support from shareholders, ability to raise equity or debt financing, and attainment of profitable operations.
Factors such as inflation, the war in Ukraine, and climate change may have serious adverse impacts on domestic and foreign economies, potentially reducing consumer spending and affecting the company's operations.
Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities, and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the company's business.
There is no assurance that additional capital will be available to the company on acceptable terms or that this equity line will be available when needed.
The current economic downturn may make it difficult to find new capital sources for the company should they be required.
The company's disclosure controls and procedures were not effective as of July 31, 2025, indicating a risk of material information not being recorded, processed, summarized, or reported timely.
Failure to implement all agreed-upon governance reforms from the 2020 legal settlement due to lack of funding could expose the company to further risks.

Future Outlook

The company anticipates continuing to rely on related party and third-party loans and equity sales of common shares and/or shares for services rendered to fund business operations due to ongoing operational shortfalls. It expects to incur costs to expand and develop its Herbo software suite. The ability to raise necessary financing will depend on many factors, and there is no assurance that additional capital will be available on acceptable terms or that this equity line will be available when needed. Without additional capital, the company's continuation as a going concern is unlikely.

Management Comments

"We currently have no revenue and are actively seeking users of our software; 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."
"Currently a significant portion of our total operating expenses are from management and consultant fees."
"Several costs have been incurred in order to bring our regulatory product to market, including programming of technology, build out of needed infrastructure for customers including sand-boxes, build out of training materials including educational and instructional videos which are housed within our website, generation of marketing materials, as well as efforts to meet, and present, our product before various regulators in various jurisdictions, both foreign and domestic."
"The Company has insufficient funds to meet its ongoing operations and is currently funded through loans and advances from our CEO and CFO, Mr. Michael Rountree."
"Without realization of additional capital, it would be unlikely for the Company to continue as a going concern."
"Mr. Rountree continues to fund the Company with his personal funds and once the Company begins generating revenue or secures financing, 15% will be put aside [for governance reforms]."
"In the event that the Company does not begin to generate income, or secure financing, the Company will fail."

Industry Context

Eco Science Solutions operates in the specialized eco-friendly technology sector, focusing on providing ERP and financial services platforms (Herbo and Herbo Pay) for regulated, cash-intensive industries such as cannabis, CBD, gaming, firearm, and oil and gas. While these niche markets offer growth potential, the company's current state of no revenue and heavy reliance on related-party funding suggests it is significantly behind in commercialization compared to more established or better-funded competitors in these complex and compliance-heavy sectors. The market demands robust, reliable, and compliant solutions, and the company's financial instability poses a significant challenge to gaining market traction.

Comparison to Industry Standards

The company's complete lack of revenue and substantial accumulated deficit ($79.26 million) are significantly below industry standards for a publicly traded software company, which typically demonstrate revenue growth and a clear path to profitability.
A cash balance of $3,098 is critically low and indicates severe liquidity issues, contrasting sharply with the healthy cash positions of operational software companies, even smaller ones.
The heavy reliance on related-party loans and the default status of multiple notes payable are major red flags, not characteristic of financially sound public companies like Salesforce (CRM) or Oracle (ORCL), or even smaller, specialized ERP providers.
The inability to implement several basic corporate governance reforms due to lack of funds is a significant deviation from best practices and regulatory expectations for public companies, unlike well-governed industry peers.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Secretary	Mr. S. Randall Oveson	Mr. Michael Rountree	April 2, 2025	Resignation of Mr. Oveson and appointment of Mr. Rountree by the Board of Directors.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Subsidiary Dissolution	The wholly-owned subsidiary, Ga-Du Corporation, was dissolved upon filing a Certificate of Dissolution/Withdrawal with the state of Nevada.	April 3, 2025	Simplifies the corporate structure but reclassifies associated liabilities to the parent company, impacting its balance sheet.
Governance Reforms (Partial Implementation)	As part of a 2020 legal settlement, the company committed to various governance reforms. Partially implemented reforms include the appointment of one new independent Director, the appointment of an Audit Committee (consisting solely of Mr. Mudd), the termination of existing compensation plans, the cessation of dealings with third-party stock promoters, the maintenance of the company's website, and the engagement of Counsel. Several other reforms remain unimplemented due to lack of funding.	Ongoing since December 3, 2020	While some positive steps have been taken, the significant number of unimplemented reforms due to financial constraints indicates ongoing weaknesses in corporate governance and a failure to fully meet settlement obligations, potentially increasing regulatory and investor scrutiny.

Legal Proceedings

Shareholder Derivative Litigation (In re Eco Science Solutions, Inc. Shareholder Derivative Litigation Lead Civil No. 1:17-cv-00530-LEW-WRP (D. Haw.)): A settlement was preliminarily approved on September 21, 2020, and an order issued on December 3, 2020. The settlement involved resignations of former officers, cancellation of 3,500,000 common shares from certain shareholders, issuance of 1,400,000 restricted common stock to Robbins LLP for attorney fees, a $350,000 promissory note to Robbins LLP, forgiveness of $1,500,000 debt by Phenix Ventures LLC, and a commitment to dedicate 15% of revenue/financing to governance reforms. Most items have been implemented, but the 15% dedication and several governance reforms are pending due to lack of funds.

Related Party Transactions

Total related party payables were $2,868,761 as of July 31, 2025, and notes payable, short-term, related party were $4,115,545.
Mr. Michael Rountree (CEO, CFO, COO, President, Treasurer) was recorded $125,000 in management and consulting fees for the six months ended July 31, 2025, all of which remain unpaid. He had $1,565,000 in accrued and unpaid salary as of July 31, 2025. He funded $10,291 for company expenses during the six months ended July 31, 2025, and was owed total expenses of $333,174 as of July 31, 2025. Promissory notes totaling $162,763 were issued to Rountree Consulting (controlled by Mr. Rountree) during the six months ended July 31, 2025, with several notes currently in default.
Mr. Don Lee Taylor (former CFO, Director of Festivals) had $426,450 in accrued and unpaid salary as of July 31, 2025, and a $13,000 note payable that is in default.
Mr. Jeffery Taylor (former CEO, President, Secretary, Director) had $44,721 in accrued and unpaid salary as of July 31, 2025.
Ms. Jennifer Taylor (sister of former officers) had $166,000 in accrued and unpaid consulting fees as of July 31, 2025.
Ms. Meredith Rountree (sister of CEO) had $161,250 in accrued and unpaid consulting fees as of July 31, 2025.
Mr. L. John Lewis (former CEO of Ga-Du) had $240,000 in accrued and unpaid salary as of July 31, 2025 (reflected as a liability held on divestiture), and a $170,000 note payable that is in default.
Mr. S. Randall Oveson (former COO of Ga-Du) had $240,000 in accrued and unpaid salary as of July 31, 2025 (reflected as a liability held on divestiture).
Mr. Andy Tucker (consultant) had $240,000 in accrued and unpaid salary as of July 31, 2025 (reflected as a liability held on divestiture).
Mr. Carl Mudd (Chairman of the Board, Ombudsman) was owed $550,000 in accrued and unpaid advisory fees as of July 31, 2025.

Stakeholder Impact

**Shareholders**: Face significant dilution risk from potential future equity raises. Existing shareholders are exposed to substantial uncertainty due to the explicit going concern doubt, continued lack of revenue, and increasing accumulated deficit. The company's trading on Pink Sheets indicates low liquidity and high investment risk.
**Employees/Management**: Key management, particularly CEO Michael Rountree, is personally funding operations and accruing significant unpaid salaries and expenses, indicating high personal financial risk and potential conflicts of interest. Other former officers and consultants also have substantial accrued unpaid fees.
**Creditors**: Many notes payable are in default, and the company has significant related-party payables and other outstanding invoices (e.g., Take2L), indicating a high credit risk and a strong likelihood of delayed or non-payment.
**Customers**: Potential customers for the Herbo and Herbo Pay platforms face considerable uncertainty regarding the company's long-term viability and its ability to provide consistent service, support, and ongoing development, given its severe financial distress.

Next Steps

Actively seek users for the Herbo software.
Mr. Rountree will pursue opportunities with state legislatures in states where cannabis is legal.
Mr. Rountree will actively search for businesses that would benefit from using the Herbo ERP and HerboPay financial software.
Continue to incur costs to expand and develop the Herbo software suite of offerings.
Seek ongoing capital by way of loans, sale of equity, and/or convertible notes to cover operational overhead.
Implement remaining governance reforms as funding becomes available and revenue is generated.

Key Dates

Date	Description
2009-12-08	Company incorporated in Nevada under the name Pristine Solutions, Inc.
2014-01-08	Company changed its name from Pristine Solutions, Inc. to Eco Science Solutions, Inc.
2015-12-17	Mr. Jeffery Taylor appointed Chief Executive Officer and President, and Mr. Don Lee Taylor appointed Chief Financial Officer.
2015-12-21	Company entered into employment agreements with Mr. Jeffery Taylor and Mr. Don Lee Taylor for 24 months.
2016-01-11	Mr. Jeffery Taylor appointed Secretary and to the Board of Directors; Mr. Don Taylor appointed to the Board of Directors. Board authorized the creation of 1,000 shares of Series A Voting Preferred Stock.
2016-02-17	Company issued promissory notes of $17,500 each to Mr. Jeffery Taylor and Mr. Don Lee Taylor.
2017-06-21	Company acquired 100% of the shares of capital stock of Ga-Du Corporation. Mr. Michael Rountree entered an employment agreement as Chief Operating Officer. Mr. L. John Lewis entered an employment agreement as Chief Executive Officer of Ga-Du. Mr. S. Randall Oveson entered an employment agreement as Chief Operating Officer of Ga-Du. Mr. Andy Tucker entered a consulting agreement.
2017-07-21	Company entered into a sublease for office space.
2017-10-31	Company entered into a convertible note for a total of $1,407,781.
2017-10-20	Mr. Ian Bell filed a shareholder derivative complaint (First Hawaii Complaint).
2017-11-01	Interest began accruing on the convertible note.
2018-01-11	Mr. Marc D Annunzio filed a shareholder derivative complaint (Second Hawaii Complaint).
2018-02-09	The First Hawaii Complaint and the Second Hawaii Complaint were consolidated.
2018-03-28	A third party purchased an additional $250,000 in notes from Rountree Consulting.
2018-07-31	Company issued promissory notes to Mr. Lewis to convert a payable amount to a note payable in the amount of $170,000.
2018-09-01	Take2L invoiced $350,000 to the Company for ongoing software development.
2018-09-12	Company received $14,422 from a third party (Note 5).
2018-11-01	Maturity Date for the convertible note.
2018-12-10	Plaintiffs in the Consolidated Hawaii Action filed their amended complaint.
2019-01-31	Company received $305,266 in total proceeds from a third party (Notes 4).
2020-09-21	United States District Court for the District of Hawaii issued an order preliminarily approving a proposed settlement in the shareholder derivative litigation.
2020-11-17	A hearing was held before the Honorable Leslie Kobayashi to approve terms of settlement.
2020-12-03	Order issued by the Honorable Leslie Kobayashi approving settlement terms.
2020-12-08	Company cancelled $1,500,000 of debt owing on Notes 3. Mr. Michael Rountree appointed interim CFO and Treasurer. Company entered into a Promissory Note in the amount of $350,000 with Robbins LLP.
2020-12-23	Company entered into a Board Advisory Agreement with Mr. Carl Mudd to serve as Chairman of the Board and Ombudsman.
2021-01-28	Company entered into an Asset Purchase Agreement with Haiku Holdings, LLC to purchase an enterprise software platform. Board of Directors accepted the resignation of Jeffery Taylor as Chief Executive Officer, effective January 31, 2021. Company entered into an Executive Employment Agreement with Michael Rountree as CEO and CFO. Company entered into a Debt Settlement and Share Purchase Agreement with Rountree Consulting, Inc.
2021-01-31	Company and Note holder entered into a consolidation of the principal sums of prior notes (Consolidated Note).
2022-02-01	Consolidated Note due date.
2022-10-06	Company's securities were revoked along with its trading symbol.
2023-01-17	Company accepted the resignation of Mr. Don Taylor as Director of Festivals and Mr. Jeffery Taylor as Director, President and Secretary.
2023-02-28	Formal termination date for employment contracts of Mr. Don and Mr. Jeffery Taylor.
2023-04-05	Company and eXPO Financial Services LLC entered into a Software Acquisition Agreement for the eXPO computer program.
2024-01-31	Software Acquisition Agreement for eXPO paid in full.
2024-12-06	OTC Markets began quotation of company shares on the OTC Markets Pink Sheets under the trading symbol ESSI.
2025-02-07	FINRA completed processing the company's Form 211, allowing brokers to resume publication of competing quotes and provide continuous market making.
2025-04-02	Mr. Oveson resigned as Secretary and Mr. Rountree was appointed Secretary of the Company.
2025-04-03	A Certificate of Dissolution/Withdrawal was filed with the state of Nevada, and Ga-Du Corporation was dissolved.
2025-07-31	End of the current quarterly reporting period.
2025-09-11	52,957,572 shares of the company's common stock were outstanding.
2025-09-15	Date of filing of this Form 10-Q.

Recommendation

strong sell

The company's financial position is extremely precarious, with explicit "substantial doubt" about its ability to continue as a going concern. It has generated no revenue, reported increasing losses for the quarter, and carries a massive accumulated deficit and working capital deficit. Operations are entirely dependent on personal funding from the CEO and related-party loans, with numerous debts already in default. The inability to implement critical corporate governance reforms due to lack of funds further highlights severe operational and financial instability. These factors indicate an unsustainable business model and a very high probability of further value erosion or potential bankruptcy, making it a strong sell for any seasoned investor.

Keywords

Eco Science Solutions, ESSI, Herbo, Herbo Pay, ERP platform, financial services, cannabis industry, CBD industry, regulated industries, software, technology, 10-Q, going concern, net loss, working capital deficit, related party transactions, corporate governance, software development

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.