x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2015
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Or
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 1 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
|
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45-4267181
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(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
|
|
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C1702 Costa Del Sol
Boca Raton, Fl.
|
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33432
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company x
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Class
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Outstanding as of August 19, 2015
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Common Stock, $0.001 par value
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38,554,829
|
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Page
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PART I - FINANCIAL INFORMATION
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|
|
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Item 1. Financial Statements.
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F-1 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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F-2 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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F-3 |
Item 4. Controls and Procedures.
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F-4 |
PART II - OTHER INFORMATION
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|
|
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Item 1. Legal Proceedings.
|
20 |
Item 1A. Risk Factors.
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20 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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20 |
Item 3. Defaults Upon Senior Securities.
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21 |
Item 4. Mine Safety Disclosures.
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21 |
Item 5. Other Information.
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21 |
Item 6. Exhibits.
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21 |
SIGNATURES
|
22 |
Contents
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Page (s)
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Condensed Consolidated Balance Sheets at June 30, 2015 (Unaudited) and March 31, 2015
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F-1
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Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2015 and 2014 (Unaudited)
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F-2
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2015 and 2014 (Unaudited)
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F-3
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Notes to the Condensed Consolidated Financial Statements
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F-4
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June 30,
|
March 31,
|
|||||||
2015
|
2015
|
|||||||
Current Assets:
|
(Unaudited)
|
|||||||
Cash
|
$
|
181,361
|
$
|
324,378
|
||||
Accounts Receivable
|
1,899
|
|||||||
Prepaid expenses
|
45,577
|
125,379
|
||||||
Inventory
|
307,785
|
235,588
|
||||||
Total current assets
|
536,622
|
685,345
|
||||||
Fixed Assets
|
70,917
|
65,854
|
||||||
Other Assets:
|
||||||||
Patent, net
|
28,571
|
29,078
|
||||||
Deposits
|
32,309
|
17,211
|
||||||
Total other assets
|
60,880
|
46,289
|
||||||
Total Assets
|
$
|
668,419
|
$
|
797,488
|
||||
LIABILITIES AND STOCKHOLDERS'S EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
72,027
|
$
|
88,655
|
||||
Notes payable - related parties
|
59,558
|
59,558
|
||||||
Total current liabilities
|
131,585
|
148,213
|
||||||
Total liabilities
|
131,585
|
148,213
|
||||||
Stockholders' Equity:
|
||||||||
Preferred shares, par value $0.001 per share,
|
||||||||
10,000,000 shares authorized; 5,200,000 and 5,200,000 shares issued
|
||||||||
and outstanding as of June 30, 2015 and March 31, 2015
|
||||||||
respectively
|
5,200
|
5,200
|
||||||
Common stock, par value $0.001 per share, 75,000,000
|
||||||||
shares authorized; 38,544,829 and 38,229,829 shares
|
||||||||
issued and outstanding as of June 30, 2015 and March 31, 2015
|
||||||||
respectively
|
38,545
|
38,230
|
||||||
Additional paid-in capital
|
22,059,798
|
21,766,964
|
||||||
Accumulated deficit
|
(21,566,709
|
)
|
(21,161,119
|
)
|
||||
Total stockholders' equity
|
536,834
|
649,275
|
||||||
Total Liabilities and Stockholder's Equity
|
$
|
668,419
|
$
|
797,488
|
For the Three Months
Ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Revenue
|
$
|
81,608
|
$
|
-
|
||||
Cost of Revenues
|
50,663
|
-
|
||||||
Gross Profit
|
30,945
|
-
|
||||||
Operating Expenses:
|
||||||||
Marketing Expense
|
285,056
|
87,500
|
||||||
Compensation - officers
|
30,000
|
50,000
|
||||||
General and administrative
|
112,445
|
52,438
|
||||||
Professional fees
|
7,867
|
31,839
|
||||||
Total operating expenses
|
435,368
|
221,777
|
||||||
Loss from Operations
|
(404,423
|
)
|
(221,777
|
)
|
||||
Other Income (Expenses)
|
||||||||
Interest expense
|
(1,191
|
)
|
-
|
|||||
Interest income
|
24
|
26
|
||||||
Total other income (expenses)
|
(1,167
|
)
|
26
|
|||||
Net loss before provision for income taxes
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(405,590
|
)
|
(221,751
|
)
|
||||
Provision for income taxes
|
-
|
-
|
||||||
Net loss
|
$
|
(405,590
|
)
|
$
|
(221,751
|
)
|
||
Loss per common share:
|
||||||||
Loss per common share - Basic and Diluted
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$
|
(0.01
|
)
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$
|
(0.01
|
)
|
||
Weighted Average Common Shares Outstanding:
|
||||||||
Basic and Diluted
|
38,274,986
|
35,586,003
|
For the Three Months
Ended June 30,
|
||||||||
2015
|
2014
|
|||||||
Cash Flow From Operating Activities:
|
||||||||
Net loss
|
$
|
(405,590
|
)
|
$
|
(221,751
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Stock-based compensation
|
291,583
|
102,750
|
||||||
Depreciation and amortization
|
2,456
|
-
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in deposits
|
(15,098
|
)
|
(23,046
|
)
|
||||
Decrease in prepaid expenses
|
58,495
|
87,500
|
||||||
Increase in inventory
|
(72,197
|
)
|
-
|
|||||
Increase in accounts payable
|
(16,632
|
)
|
4,162
|
|||||
Increase in accounts receivable
|
(1,899
|
)
|
-
|
|||||
Net Cash Used in Operating Activities
|
(158,882
|
)
|
(50,385
|
)
|
||||
Investing Activities:
|
||||||||
Fixed asset purchases
|
(7,012
|
)
|
(974
|
)
|
||||
Net Cash Used in Investing Activities
|
(7,012
|
)
|
(974
|
)
|
||||
Financing Activities:
|
||||||||
Proceeds from issuance of common stock
|
22,877
|
219,000
|
||||||
Proceeds from notes payable-related party
|
-
|
20,953
|
||||||
Repayments of advances from related party
|
-
|
(166,511
|
)
|
|||||
Net Cash Provided by Financing Activities
|
22,877
|
73,442
|
||||||
Net Increase (Decrease) in Cash
|
(143,017
|
)
|
22,083
|
|||||
Cash - Beginning of Period
|
324,378
|
376,704
|
||||||
Cash - End of Period
|
$
|
181,361
|
$
|
398,787
|
||||
Supplemental disclosure of non cash investing & financing actvities:
|
||||||||
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
||||
Cash paid for interest expense
|
$
|
-
|
$
|
-
|
Common Stock
|
Preferred Stock
|
Additional
Paid-in |
Accumulated
Deficit |
Total
|
||||||||||||||||
Description
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||
Balance - March 31, 2015
|
38,229,829
|
$ |
38,230
|
5,200,000
|
$ |
5,200
|
$ |
21,766,964
|
$ |
(21,161,119
|
)
|
$ |
649,275
|
|||||||
Common stock issued for cash
|
30,500
|
30
|
-
|
22,847
|
-
|
22,877
|
||||||||||||||
Shares for services
|
284,500
|
285
|
269,987
|
270,272
|
||||||||||||||||
Net loss for the three months
ended June 30, 2015
|
(405,590
|
)
|
(405,590
|
)
|
||||||||||||||||
Balance - June 30, 2015
|
38,544,829
|
$ |
38,545
|
5,200,000
|
$ |
5,200
|
$ |
22,059,798
|
$ |
(21,566,709
|
)
|
$ |
536,834
|
Level 1
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
Level 2
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
Level 3
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Warrants
Outstanding |
Exercise
Price |
Contractual
Life (Years) |
|
Warrants outstanding–March 31, 2015
|
333,332
|
.75
|
.9
|
Warrants exercised – 2015
|
0
|
0
|
0
|
Balance, June 30, 2015
|
333,332
|
$.75
|
.67
|
Number of Warrants Outstanding
|
Exercise Price
|
Remaining Contractual Life (Years)
|
||
333,332
|
$0.75
|
.67
|
|
June 30, 2015
|
March 31, 2015
|
||||||
|
||||||||
Sign
|
$
|
6,500
|
$
|
6,500
|
||||
Furniture and Equipment
|
8,521
|
1,509
|
||||||
Software
|
974
|
974
|
||||||
Leasehold improvements
|
51,300
|
51,300
|
||||||
Architectural and Design
|
8,700
|
8,700
|
||||||
|
75,995
|
68,983
|
||||||
Less accumulated depreciation
|
(5,078
|
)
|
(3,129
|
)
|
||||
|
$
|
70,917
|
$
|
65,854
|
Three Months
Ended
June 30,
2015
|
Three Months
Ended
June 30,
2014
|
|||||||
Marketing
|
$
|
285,056
|
$
|
87,500 -
|
||||
Professional fees
|
7,867
|
31,839
|
||||||
Officer compensation
|
30,000
|
50,000
|
||||||
General and administrative
|
112,735
|
52,438
|
||||||
$
|
435,368
|
$
|
221,777
|
Working Capital
|
June 30,
2015
|
March 31,
2015
|
||||||
Current Assets
|
$
|
536,622
|
$
|
685,345
|
||||
Current Liabilities
|
$
|
(131,585
|
)
|
$
|
(148,213
|
)
|
||
Working Capital
|
$
|
405,037
|
$
|
537,132
|
|
Three Months
Ended
June 30, 2015 |
Three Months
Ended
June 30, 2014 |
||||||
Cash used in operating activities
|
$
|
(158,882
|
)
|
$
|
(50,385
|
)
|
||
Cash used in investing activities
|
$
|
(7,012
|
)
|
$
|
(974
|
)
|
||
Cash provided by financing activities
|
$
|
22,877
|
$
|
73,442
|
||||
Net increase (decrease) in cash
|
$
|
(143,017
|
)
|
$
|
22,083
|
EXHIBIT
NUMBER
|
DESCRIPTION | |
3.1
|
|
Articles of Incorporation. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on February 1, 2012.
|
3.2
|
|
Bylaws. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on February 1, 2012.
|
4.2
|
Subscription Agreement. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on February 1, 2012.
|
|
10.1
|
Promissory Note, President. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on May 24, 2012.
|
|
10.2
|
Consulting Agreement, C.E.O. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on May 24, 2012.
|
|
10.3
|
Consulting Agreement, C.F.O. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on May 24, 2012.
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
32.1
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
32.2
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C 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 Document **
|
|
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. |
** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
Date: August 19, 2015
|
|
Earth Science Tech, Inc.
|
|
By:
|
/s/ Matthew J. Cohen
|
|
|
|
Matthew J. Cohen
|
|
|
|
Chief Executive Officer (Principal Executive Officer)and Chief Financial Officer
|
SIGNATURES
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ Matthew J. Cohen
|
|
C.E.O. and C.F.O.
|
|
August 19, 2015
|
Matthew J. Cohen
|
|
|
|
|
1. | I have reviewed this quarterly report on Form 10-Q of Earth Science Tech, Inc. for the three months ended June 30, 2015; |
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 controls 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
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. |
Dated: August 19, 2015
|
By:
|
/S/ Matthew J. Cohen
|
|
Matthew J. Cohen
|
|||
President, CEO
|
|||
Secretary, Treasurer, and Director
|
1. | I have reviewed this quarterly report on Form 10-Q of Earth Science Tech, Inc. for the three months ended June 30, 2015; |
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 controls 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
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. |
Dated: August 19, 2015
|
By:
|
/S/ Matthew J. Cohen
|
|
Matthew J. Cohen
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer)
|
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company |
Dated: August 19, 2015
|
By:
|
/S/ Matthew J. Cohen
|
|
Matthew J. Cohen
|
|||
Chief Executive Officer
|
(3) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(4) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: August 19, 2015
|
By:
|
/S/ Matthew J. Cohen
|
|
Matthew J. Cohen
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer)
|
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3. Going concern |
3 Months Ended |
---|---|
Jun. 30, 2015 | |
Notes to Financial Statements | |
Going concern | Note 3 Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at June 30, 2015, a net loss and net cash used in operating activities for the fiscal period then ended.
While the Company is attempting to generate sufficient revenues, the Companys cash position may not be sufficient enough to support the Companys daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
2. Summary of significant accounting policies |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 | |||||||||||
Notes to Financial Statements | |||||||||||
Summary of significant accounting policies |
Note 2 Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited condensed consolidated interim financial statements includes the accounts of the Company, Nutrition Empire Inc. and Earth Science Tech Vapor One, Inc. as of June 30, 2015. As of June 30, 2014 the unaudited condensed consolidated financial statements include all of the accounts of the Company and it wholly owned subsidiary Nutrition Empire.
The unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements for the year ended March 31, 2015 contained in the Companys Annual Report on Form 10K filed with the SEC on August 5, 2015. The results of operations for the three months ended June 30, 2015, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending March 31, 2016.
We operate through two wholly owned subsidiaries which provide products, marketing and distribution. As of December 2014, Nutrition Empire was opened as a brick and mortar retail store that provides health, wellness, sports nutrition and dietary supplement products at competitive prices. In March 2015, the Company created Earth Science Tech Vapor One, Inc., a license and distribution company allowing us entry in the maturing marketplace of the vaping industry. Our licensing relationship gives us the market mobility, allowing us to capture the emerging market offering our CBD oil to our retail partners as demand emerges
All intercompany balances and transactions have been eliminated on consolidation.
Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 reporting period.
The Companys significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment, if any, of long-lived assets, including the values assigned to and the estimated useful lives of fixed assets; income tax rate, income tax provision and valuation allowance of deferred tax assets; stock based compensation, valuation of inventory and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (Paragraph 820-10-35-37) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency ` to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amount of the Companys financial assets and liabilities, such as cash, prepaid expenses, deposits, accounts payable and accrued expenses approximate their fair value because of the short maturity of those instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not however practical to determine the fair value of advances from stockholders due to their related party nature.
Carrying value, recoverability and impairment of long-lived assets
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Companys long-lived assets, which include office equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the assets expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Companys overall strategy with respect to the manner or use of the acquired assets or changes in the Companys overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Companys stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.
Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 8251015, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of Judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Companys consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows.
Revenue recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of products. Persuasive evidence of an arrangement is demonstrated via invoice; products are considered provided when the product is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.
Inventories
Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. Provisions have been made to reduce excess or obsolete inventories to their net realizable value.
Cost of Sales
Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments.
Shipping and Handling Costs
The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues.
Income taxes
The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Net loss per common share
The Company follows ASC Topic 260 to account for earnings per share. Basic earnings per common share (EPS) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
As of June 30, 2015 and June 30, 2014, the Company has 333,332 and 0, respectively warrants that are anti-dilutive and not included in the calculation of diluted earnings per share.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (Indirect method) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Recently issued accounting pronouncements
We have reviewed all new accounting pronouncements and do not expect any new pronouncements or guidance to have an impact on our results of operations or financial position:
In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. We are currently evaluating the impact of this new guidance on the Companys consolidated financial statements.
In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.
In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. We do not expect the adoption of this guidance to have a material impact on the consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material effect on the consolidated financial statements. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.
Intangible Assets
In accordance with FASB ASC 350-25, Intangibles - Goodwill and Other, In October 2014, the Company acquired a patent that is being amortized over its useful life of fifteen years. The Company purchased the patent through a cash payment of $25,000. Additionally, the Company capitalized patent fees of $5,430. The Company's balance of intangible assets on the balance sheet net of accumulated amortization is $28,571 and $29,078 at June 30, 2015 and March 31, 2015, respectively. Amortization expense related to the intangible assets was $507 and $0, respectively for the three months ended June 30, 2015 and June 30, 2014.
Long-Lived Assets
The Companys long-lived assets are reviewed for impairment in accordance with the guidance of the FASB ASC 360-10, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Through June 30, 2015, the Company had not experienced impairment losses on its long-lived assets. |
Statement of Shareholders' Equity - 3 months ended Jun. 30, 2015 - USD ($) |
Common Stock |
Preferred Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total |
---|---|---|---|---|---|
Beginning Balance, Shares at Mar. 31, 2015 | 38,229,829 | 5,200,000 | |||
Beginning Balance, Amount at Mar. 31, 2015 | $ 38,230 | $ 5,200 | $ 21,766,964 | $ (21,161,119) | $ 649,275 |
Common stock issued for cash, Shares | 30,500 | ||||
Common stock issued for cash, Amount | $ 30 | 22,847 | 22,877 | ||
Common stock issued for services, Shares | 284,500 | ||||
Common stock issued for services, Amount | $ 285 | 269,987 | 270,272 | ||
Net loss | $ (405,590) | (405,590) | |||
Ending Balance, Shares at Jun. 30, 2015 | 38,544,829 | 5,200,000 | |||
Ending Balance, Amount at Jun. 30, 2015 | $ 38,545 | $ 5,200 | $ 22,059,798 | $ (21,566,709) | $ 536,834 |
6. Stock Purchase Warrants (Details) - Jun. 30, 2015 - $ / shares |
Total |
---|---|
Stock Purchase Warrants Details | |
Warrants Outstanding | 333,332 |
Exercise Price | $ .75 |
Contractual Life (Years) | 8 months 2 days |
9. Fixed Assets (Details) - USD ($) |
Jun. 30, 2015 |
Jun. 30, 2014 |
---|---|---|
Property And Equipment Details | ||
Sign | $ 6,500 | $ 6,500 |
Furniture and Equipment | 8,521 | 1,509 |
Software | 974 | 974 |
Leasehold improvements | 51,300 | 51,300 |
Architectural and Design | 8,700 | 8,700 |
Property and Equpment, Gross | 75,995 | 68,983 |
Less accumulated depreciation | (5,078) | (3,129) |
Fixed assets-Total | $ 70,917 | $ 65,854 |
1. Organization and operations |
3 Months Ended |
---|---|
Jun. 30, 2015 | |
Notes to Financial Statements | |
Organization and operations |
Note 1 Organization and Operations
Earth Science Tech, Inc.
Earth Science Tech, Inc. (the Company) was incorporated under the laws of the State of Nevada on April 23, 2010. EST is a unique biotechnology company focused on cutting edge nutraceuticals and bioceuticals designed to excel in industries such as health, wellness, nutrition, supplement, cosmetic and alternative medicine to improve the quality of life for consumers worldwide. EST is dedicated in providing natural alternatives to prescription medications that help improve common disorders and illnesses. EST is focused on delivering nutritional and dietary supplements that help with treating symptoms such as: chronic pain, joint pain, inflammation, seizures, high blood pressure, memory loss, depression, weight management, nausea, aging and overall wellness. This may include products such as vitamins, minerals, herbs, botanicals, personal care products, homeopathics, functional foods, and other products. These products will be in various formulations and delivery forms including capsules, tablets, soft gels, chewables, liquids, creams, sprays, powders, and whole herbs.
Change in control
On March 24, 2014 the Company issued 25 million shares to Majorca Group, LTD. See Note 5 below for details. As a result of the foregoing, there was a change in control of the Company on March 24, 2014.
|
Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2015 |
Mar. 31, 2015 |
---|---|---|
Balance Sheets Parenthetical | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 38,554,829 | 38,229,829 |
Common stock, outstanding | 38,554,829 | 38,229,829 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 5,200,000 | 5,200,000 |
Preferred stock, shares outstanding | 5,200,000 | 5,200,000 |
11. Subsequent events |
3 Months Ended |
---|---|
Jun. 30, 2015 | |
Notes to Financial Statements | |
Subsequent events | Note 11-Subsequent Events
On July 21, 2015 the Company filed a lawsuit in Palm Beach County, Florida, case number 29929286 for a claim of $100,000 against its former CEO, Dr. Harvey Katz, asserting many counts such as Breach of Contract, Unjust Enrichment, Negligence, Conspiracy and Conversion. At this juncture both parties are in settlement discussions.
On July 21, 2015, pursuant to a subscription agreement, the Company issued 9,500 common shares.
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2015 |
Aug. 19, 2015 |
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Document And Entity Information | ||
Entity Registrant Name | Earth Science Tech, Inc. | |
Entity Central Index Key | 0001538495 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 38,554,829 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
2. Summary of significant accounting policies (Policies) |
3 Months Ended | ||||||||||
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Jun. 30, 2015 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Basis of presentation | Basis of presentation
The accompanying unaudited condensed consolidated interim financial statements includes the accounts of the Company, Nutrition Empire Inc. and Earth Science Tech Vapor One, Inc. as of June 30, 2015. As of June 30, 2014 the unaudited condensed consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary Nutrition Empire.
The unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements for the year ended March 31, 2015 contained in the Companys Annual Report on Form 10K filed with the SEC on August 5, 2015. The results of operations for the three months ended June 30, 2015, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending March 31, 2016.
We operate through two wholly owned subsidiaries which provide products, marketing and distribution. As of December 2014, Nutrition Empire was opened as a brick and mortar retail store that provides health, wellness, sports nutrition and dietary supplement products at competitive prices. In March 2015, the Company created Earth Science Tech Vapor One, Inc., a license and distribution company allowing us entry in the maturing marketplace of the vaping industry. Our licensing relationship gives us the market mobility, allowing us to capture the emerging market offering our CBD oil to our retail partners as demand emerges
All intercompany balances and transactions have been eliminated on consolidation. |
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Use of estimates and assumptions | Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 reporting period.
The Companys significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment, if any, of long-lived assets, including the values assigned to and the estimated useful lives of fixed assets; income tax rate, income tax provision and valuation allowance of deferred tax assets; stock based compensation, valuation of inventory and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. |
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Fair value of financial instruments | Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (Paragraph 820-10-35-37) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency ` to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amount of the Companys financial assets and liabilities, such as cash, prepaid expenses, deposits, accounts payable and accrued expenses approximate their fair value because of the short maturity of those instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not however practical to determine the fair value of advances from stockholders due to their related party nature. |
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Carrying value, recoverability and impairment of long-lived assets | Carrying value, recoverability and impairment of long-lived assets
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Companys long-lived assets, which include office equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the assets expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Companys overall strategy with respect to the manner or use of the acquired assets or changes in the Companys overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Companys stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. |
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Cash and cash equivalents | Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. |
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Related parties | Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 8251015, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
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Commitments and contingencies | Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of Judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Companys consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows.
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Revenue recognition | Revenue recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of products. Persuasive evidence of an arrangement is demonstrated via invoice; products are considered provided when the product is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. |
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Inventories | Inventories
Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. Provisions have been made to reduce excess or obsolete inventories to their net realizable value. |
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Cost of Sales | Cost of Sales
Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments. |
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Shipping and Handling Costs | Shipping and Handling Costs
The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues. |
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Income taxes | Income taxes
The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. |
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Net loss per common share | Net loss per common share
The Company follows ASC Topic 260 to account for earnings per share. Basic earnings per common share (EPS) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
As of June 30, 2015 and June 30, 2014, the Company has 333,332 and 0, respectively warrants that are anti-dilutive and not included in the calculation of diluted earnings per share.
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Cash flows reporting | Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (Indirect method) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. |
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Recently issued accounting pronouncements | Recently issued accounting pronouncements
We have reviewed all new accounting pronouncements and do not expect any new pronouncements or guidance to have an impact on our results of operations or financial position:
In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. We are currently evaluating the impact of this new guidance on the Companys consolidated financial statements.
In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.
In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. We do not expect the adoption of this guidance to have a material impact on the consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material effect on the consolidated financial statements. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
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Intangible Assets | Intangible Assets
In accordance with FASB ASC 350-25, Intangibles - Goodwill and Other, In October 2014, the Company acquired a patent that is being amortized over its useful life of fifteen years. The Company purchased the patent through a cash payment of $25,000. Additionally, the Company capitalized patent fees of $5,430. The Company's balance of intangible assets on the balance sheet net of accumulated amortization is $28,571 and $29,078 at June 30, 2015 and March 31, 2015, respectively. Amortization expense related to the intangible assets was $507 and $0, respectively for the three months ended June 30, 2015 and June 30, 2014. |
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Long-Lived Assets | Long-Lived Assets
The Companys long-lived assets are reviewed for impairment in accordance with the guidance of the FASB ASC 360-10, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Through June 30, 2015, the Company had not experienced impairment losses on its long-lived assets. |
Statements of Operations - USD ($) |
3 Months Ended | |
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Jun. 30, 2015 |
Jun. 30, 2014 |
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Statements Of Operations | ||
Revenue | $ 81,608 | |
Cost of Revenues | 50,663 | |
Gross Profit | 30,945 | |
Operating Expenses: | ||
Marketing Expense | 285,056 | $ 87,500 |
Compensation - officers | 30,000 | 50,000 |
General and administrative | 112,445 | 52,438 |
Professional fees | 7,867 | 31,839 |
Total operating expenses | 435,368 | 221,777 |
Loss from Operations | (404,423) | $ (221,777) |
Interest expense | (1,191) | |
Interest income | 24 | $ 26 |
Total other income (expenses) | (1,167) | 26 |
Net Loss before provision for income taxes | $ (405,590) | $ (221,751) |
Provision for income taxes | ||
Net loss | $ (405,590) | $ (221,751) |
Loss Per Common Share: | ||
Loss per common share - Basic and Diluted | $ (0.01) | $ (0.01) |
Weighted Average Common Shares Outstanding: | ||
Basic and Diluted | 38,274,986 | 35,586,003 |
6. Stock Purchase Warrants |
3 Months Ended | ||||||||||||||||||||||||||
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Jun. 30, 2015 | |||||||||||||||||||||||||||
Stock Purchase Warrants | |||||||||||||||||||||||||||
Stock Purchase Warrants | Note 6 Stock Purchase Warrants
During the year ended March 31, 2015, the Company issued 333,332 warrants (each warrant is exercisable into one share of Company restricted common stock at $0.75) in connection with the issuance of an equity investment.
A summary of the change in stock purchase warrants for the period ended June 30, 2015 are as follows:
The balance of outstanding and exercisable common stock warrants at June 30, 2015 is as follows:
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5. Stockholders’ Equity |
3 Months Ended |
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Jun. 30, 2015 | |
Notes to Financial Statements | |
Stockholders’ Equity |
Note 5 Stockholders Equity
Shares authorized
Upon formation the total number of shares for all classes of stock which the Company is authorized to issue preferred stock in the amount of ten million (10,000,000), par value $.001 per share and issue common stock in the amount of seventy-five million (75,000,000), par value $.001 per share.
Common stock
In April 2015 the Company issued 275,000 common shares to Royal Palm Consulting Services, LLC at a fair value of $0.95 to for consulting services for a period of three months. (see note 4)
During the quarter ended June 30, 2015, the Company issued 5,000 common shares with a fair value of $4,750 to an officer for services rendered. (see note 4)
During the quarter ended June 30, 2015, the Company issued 4,500 common shares with fair value of $4,275 for consulting services rendered.
During the quarter ended June 30, 2015, the Company issued 30,500 common shares for cash of $22,875. |
8. Prepaid Expenses (Details Narrative) - USD ($) |
3 Months Ended | |
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Jun. 30, 2015 |
Jun. 30, 2014 |
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Prepaid Expenses Details Narrative | ||
Common stock issued to consultants | 0 | 50,000 |
Fair value of common stock issued to consultants | $ 0 | $ 87,500 |
Unamortized Prepaid expenses | $ 45,577 | $ 66,884 |
6. Stock Purchase Warrants (Table Text Block) |
3 Months Ended | ||||||||||||||||
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Jun. 30, 2015 | |||||||||||||||||
Stock Purchase Warrants Table Text Block | |||||||||||||||||
Schedule of stock purchase warrants |
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Schedule of outstanding and exercisable common stock warrants |
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9. Fixed Assets |
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FixedAssetsAbstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Assets | Note 9 Fixed Assets
At June 30, 2015 and March 31, 2015, fixed assets consisted of the following:
Depreciation expense for the three months ended June 30, 2015 and 2014 was $1,949 and $0, respectively.
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7. Reclassification |
3 Months Ended |
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Jun. 30, 2015 | |
Reclassification | |
Relcassification | Note 7-Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation. |
8. Prepaid Expenses |
3 Months Ended |
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Jun. 30, 2015 | |
Prepaid Expenses | |
Prepaid Expenses | Note 8 Prepaid Expenses
Prepaid Expenses represents the unamortized costs for the use of certain consultants pursuant to agreements executed and retainer for professional services during the fiscal year ending March 2015. In consideration for these services, under certain consulting agreements, the Company issued 0 and 50,000 shares of common stock to consultants with fair value of $0 and $87,500 during the three month period ended June 30, 2015 and the year ended March 31, 2015, respectively. The unamortized prepaid expense was $45,577 and $66,884 at June 30, 2015 and March 31, 2015, respectively. |
10. Commitments |
3 Months Ended |
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Jun. 30, 2015 | |
Commitments | |
Commitments | Note 10-Commitments
Legal Proceedings
Earth Science Tech, Inc. (the Company) is presently engaged in a legal controversy with one of its suppliers, Cromogen, Cromogens principals and a related company. Cromogen did not perform in accordance with its contract for supplying hemp oil in terms of timing, quality and consistency in the opinion of the company as a result of which the company notified Cromogen. At the same time and because the commitment to arbitrate extends only to the companies involved, the company has filed a legal action in the courts of Florida in which the principals of Cromogen have been named as Defendants and wherein fraud is alleged in connection with Cromogens representations regarding the formulation and quality of the hemp oil it supplied and damages sought accordingly. (It is to be noted that, although the lack of performance by Cromogen has engendered litigation, the company has secured alternative sources for hemp oil and will mitigate its damages to the extent possible as a practical and legal matter). Cromogen, under the terms of the contract, demurred and filed for arbitration. That arbitration, in its very early stages, is now pending in New York (as the contract provided). Cromogen is claiming alleged damages of a direct and consequential nature. The company will be counterclaiming for damages sustained as a proximate result of deficient and defective performance. As of the date of this filing, management believes that the Company will not incur any damages therefore no expense accrual is necessary.
Employment Agreement
On April 15, 2014 the Company entered into an Employment Agreement with its Chief Executive Officer Harvey Katz. The Agreement calls for issuance of 100,000 restricted common shares per quarter to compensate his services. During the year ended March 31, 2015, the company issued 400,000 shares of common stock to its CEO for services at fair value at of $477,000 under the said employment agreement and paid cash of $57,000. The agreement was terminated on May 10, 2015.
In May 2015 the Company entered into an Employment Agreement with its CEO Matthew J. Cohen. The Agreement calls for an annual salary of $120,000 for the first and only year of the contract.
Consulting Agreements
During the year ended March 31, 2015, the Company issued 50,000 shares of common stock pursuant to Royal Palms consulting agreement. The shares were valued at fair value of $87,500. As of June 30, 2015 and March 31, 2015, the Company has amortized $41,923 and $20,616 as of June 30, 2015 and March 31, 2015, respectively. The remaining balance as of June 30, 2015 and March 31, 2015 is $45,577 and $66,884, respectively and is recorded as a prepaid expense.
On March 6, 2015, Earth Science Tech, Inc. entered into a License and Distribution Agreement with I Vape Vapor, Inc. a Minnesota corporation. The purpose of the License and Distribution Agreement is for Earth Science Tech, Inc. to license to I Vape Vapor, Inc. its use of Earth Science Techs Ultra-High Grade CBD Rich Hemp Oil, for use in I Vape Vapor, Inc.s E-Cigarettes within the United States of America, its territories and possessions only. I Vape Vapor shall pay for the bottling, formulating, flavoring, labels, and any other elements necessary to produce the finished e-liquid consumable with Earth Science Tech agreeing to reimburse I Vape Vapor for its costs off the top. After deduction of the respective cost elements of the parties and reimbursement thereof, the parties shall divide the net proceeds 50% to Earth Science Tech and 50% to I Vape Vapor except where sales have been originated, produced or referred by Earth Science Tech, in which case the division shall be 65% to Earth Science Tech and 35% to I Vape Vapor. For the three month period ended as of June 30, 2015 the Company recognized $10,850 in revenue. As of June 11, 2015, the licensee was in default and the Company terminated the agreement.
Lease Agreements
On July 18, 2014, the Companys wholly owned subsidiary, Nutrition Empire entered into a five year retail store lease agreement in Coral Gables, Florida commencing December 1, 2014 through November 30, 2019 for aggregate rent of $223,725 The amount is to be paid monthly over the term of the lease term. A deposit of $17,211 was tendered to secure the lease.
In April, 2015, the Company entered into an office lease covering its new Boca Raton, Florida headquarters. The lease term is for three years commencing on July 1, 2015. The monthly rent including sales tax is $1,908 and fixed at this amount for the next three years. A deposit of $3,816 was tendered to secure the lease.
Intellectual Property Agreements
The Company has secured a new provisional patent with the United States Patent and Trademark Office (USPTO) for Hemp Oil Enriched with CBD (Cannabidiol) and Hemp Oil Enriched with Proprietary Additives Pursuant to an Intellectual Property Exploitation Agreement, consideration of $25,000 was agreed upon for the execution of the assignment. The patent was filed on October 8, 2014 by the inventors Dr. Harvey Katz the former CEO of Earth Science Tech and Dr. Wei R. Chen the assistant dean of the College of Mathematics and Science at the University of Central Oklahoma (UCO). |
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