0001493152-20-021242.txt : 20201113 0001493152-20-021242.hdr.sgml : 20201113 20201113111510 ACCESSION NUMBER: 0001493152-20-021242 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 36 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201113 DATE AS OF CHANGE: 20201113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Earth Science Tech, Inc. CENTRAL INDEX KEY: 0001538495 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 454267181 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55000 FILM NUMBER: 201309886 BUSINESS ADDRESS: STREET 1: 8000 NW 31ST STREET, UNIT 19 CITY: DORAL STATE: FL ZIP: 33122 BUSINESS PHONE: (305) 615-2118 MAIL ADDRESS: STREET 1: 8000 NW 31ST STREET, UNIT 19 CITY: DORAL STATE: FL ZIP: 33122 FORMER COMPANY: FORMER CONFORMED NAME: Ultimate Novelty Sports Inc. DATE OF NAME CHANGE: 20111230 10-Q 1 form10q.htm

  

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2020

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ___________

 

Commission file number: 000-55000

 

EARTH SCIENCE TECH, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   80-0931484

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

8000 NW 31st Street, Unit 19

Doral, FL 33122

(Address of principal executive offices) (zip code)

 

(305) 615-2118

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer [  ] Accelerated filer [  ]
  Non-accelerated filer [X] Smaller reporting company [X]
  Emerging growth company [  ]    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

As of November 13, 2020, there were 43,981,481 shares of registrant’s common stock outstanding.

  

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I. FINANCIAL INFORMATION
     
ITEM 1. Financial Statements (Unaudited) F-2
  Balance Sheets as of September 30, 2020 and March 31, 2020 F-2
  Statements of Operations for the Three & Six Months Ended September 30, 2020 and 2019 F-3
  Statements of Changes in Shareholders Equity the Six Months Ended September 30, 2020 F-4
  Statements of Cash Flows for the Six Months Ended Septmeber 30, 2020 and 2019 F-5
  Notes for the Financial Statements F-6-F-14
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 11
ITEM 4. Controls and Procedures 11
     
PART II. OTHER INFORMATION  
     
ITEM 1. Legal Proceedings 12
ITEM 1A. Risk Factors 14
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
ITEM 3. Defaults Upon Senior Securities 14
ITEM 4. Mine Safety Disclosures 14
ITEM 5. Other Information 14
ITEM 6. Exhibits 14
     
SIGNATURES 15

 

2

 

 

Table of Contents

 

Report of Independent Registered Public Accounting Firm F-
 
Consolidated Financial Statements and Notes  
   
Balance Sheets as of September 30, 2020 and March 31,2020 F-2
 
Statements of Operations for the three months and six months ended September 30, 2020 and 2019 F-3
   
Statements of Changes in Shareholders’ Equity the six months ended September 30, 2020 F-4
   
Statements of Cash Flows for the six months ended September 30, 2020 and 2019 F-5
   
Notes for the Financial Statements F-6

 

F-1

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   September 30   March 31, 
   2020   2020 
ASSETS          
Current Assets:          
Cash  $31,060   $30,723 
Accounts Receivable(net allowance of $101,404 and 101,404 respectively )  $25,998   $38,933 
Prepaid expenses and other current assets   10,000    54 
Inventory   36,091    63,448 
Total current assets   103,149    133,058 
           
Property and equipment, net   2,594    4,133 
           
Other Assets:          
Patent, net        
Rou Asset   25,105    11,170 
Deposits   6,191    6,191 
Total other assets   31,296    17,361 
Total Assets  $137,039   $154,552 
           
LIABILITIES AND STOCKHOLDERS’S EQUITY          
           
Current Liabilities:          
Accounts payable  $83,892   $82,228 
Accrued expenses  $191,935   $154,552 
PPP Loan  $31,750   $ 
SBA EDIL Loan  $106,800   $ 
Accrued settlement   3,994,523    231,323 
Interest Payable-Conv Notes-GHS   23,713    9,648 
Int Payable-Promissory Note-GHS   6,337    3,630 
Convertible Note 1-GHS   51,372    76,927 
Convertible Note 2-GHS   88,596    88,596 
Convertible Note 3-GHS   88,825    88,825 
Convertible Note 4-GHS   88,894    88,894 
Convertible Note 5-GHS   55,000    55,000 
Promissory Note-GHS   30,000    30,000 
Lease Liability Current   25,105    11,170 
Notes payable - related parties   59,558    59,558 
Total current liabilities   4,926,300    980,351 
Long Term Liabilities          
           
Total liabilities   4,926,300    980,351 
           
Commitments and contingencies          
           
Stockholders’ (Deficit) Equity:          
           
Convertible preferred stock with liquidation preference, par value of $0.001 pre share,10,000,000 shares authorized: 5,200,000 issued and outstanding        
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 42,150,391 and 37,813,092 shares issued and outstanding as of September 30, 2020 and March 31, 2020 respectively   42,152    37,814 
Additional paid-in capital   28,137,878    28,050,192 
Accumulated deficit   (32,969,291)   (28,913,805)
Total stockholders’ (Deficit)Equity   (4,789,261)   (825,799)
Total Liabilities and Stockholders’ (Deficit) Equity  $137,039   $154,552 

 

F-2

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

  

   For the three   For the three   For the six   For the six 
   Months Ended   Months Ended   Months Ended   Months Ended 
   September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019 
                 
Revenue  $26,551   $139,648   $98,631   $367,283 
Cost of revenues   13,116    84,942    61,241    199,451 
Gross Profit   13,435    54,706    37,390    167,832 
                     
Operating Expenses:                    
                     
Compensation - officers   82,048    58,087    120,375    107,875 
Officer Compensation Stock       52,800        142,590 
Employee Compensation Stock                
Marketing   460    12,194    5,455    32,817 
General and administrative   74,020    121,362    148,417    328,484 
Loss on disposal of assets                
Professional fees   7,400    13,500    8,055    30,291 
Bad Debt Expense                
Litigation Expense           3,763,200     
Cost of legal proceedings   5,000    16,333    13,275    65,355 
Research and development       18,000    9,000    40,113 
Total operating expenses   168,928    292,276    4,067,777    747,693 
                     
Loss from operations   (155,493)   (237,570)   (4,030,387)   (579,693)
                     
Other Income (Expenses)                    
Interest expense   (1,191)   (1,191)   (2,382)   (2,382)
Int Exp-Convertible Note 1-GHS   (1,732)   (1,385)   (3,677)   (4,249)
Int Exp-Convertible Note 2-GHS   (2,264)   (1,406)   (4,504)   (46,138)
Int Exp-Convertible Note 3-GHS   (2,270)   (1,406)   (4,515)   (59,176)
Int Exp-Convertible Note 4-GHS   (2,271)   (1,406)   (4,518)   (58,824)
Int Exp Promissory Note 5-GHS   (1,406)   (5,321)   (2,796)   (5,321)
Interest Expense-Promissory Note-GHS   (1,361)   (605)   (2,707)   (1,204)
Interest income   -    -    -    - 
Total other income (expenses)   (12,495)   (12,720)   (25,099)   (177,294)
                     
Net loss before income taxes   (167,988)   (250,290)   (4,055,486)   (756,987)
                     
Income taxes   -    -    -    - 
                     
Net loss  $(167,988)  $(250,290)  $(4,055,486)  $(756,987)
                     
Net loss per common share:                    
Loss per common share-Basic and Diluted  $(000)  $(000)  $(0000)  $(0000)

 

F-3

 

 

EARTH SCIENCE TECH. INC, AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

FOR THREE MONTHS ENDED September 30, 2020 AND 2019

 

   Common Stock   Preferred Stock   Additional Paid-in   Accumalated     
Description  Shares   Amount   Shares   Amount   Capital   Deficit   Total 
Balance March 31, 2019   25,205,400    52,206    5,200,000    5,200    27,449,487    (27,713,552)   (206,659)
                                    
Common stock issued for cash                               
Common stock issued for services                               
Common stock issued for officer compensation   123,000    123              89,667         89,790 
Common stock issued for employee compensation                               
BCF intrinsic value on Convertible Note 2-GHS                       38,372           
BCF intrinsic value on Convertible Note 3-GHS                       52,067           
BCF intrinsic value on Convertible Note 4-GHS                       52,067           
Net Loss                            (506,697)   (506,697)
                                    
Balance June 30, 2019   52,328,400   $52,329   $5,200,000   $5,200   $27,681,660   $(28,220,249)   (481,060)
                                    
Common stock issued for cash   237,500    237              94,763         95,000 
Common stock issued for services                                   
Common stock issued for officer compensation   120,000    120              52,680         52,800 
Common stock issued for Conversion of Note   237,993    238              118,758         118,996 
Common stock returned to company                                   
Net Loss                           $(250,290)   (250,290)
                                    
Balance September 30, 2019   52,923,893    52,924    5,200,000   $5,200   $27,947,861   $(28,470,539)   (464,554)
                                    
Common stock issued for cash   447,371    448              42,018         42,466 
Common stock issued for services                                   
Common stock issued for officer compensation                                   
Common stock issued for Conversion of Note   200,000    200              14,500         14,700 
Adjustment to 8/19/19 conversion rate on 237,993 shares issued to GHS                       (59,498)        (59,498)
Common stock returned to company                                   
Net Loss                            (180,896)   (180,896)
                                    
Balance December 31, 2019   53,371,264   $53,572   $5,200,000   $5,200   $27,944,881   $(28,651,435)   (647,782)
Common stock issued for cash   2,41,828    2,242              82,111         84,353 
Common stock issued for services                                   
Common stock issued for officer compensation                                   
Common stock issued for employee compensation        -              -         - 
Common stock returned to company                                   
Common stock Cancellation-Majorca 1/24/20   (18,000,000)   (18,000)             18,000           
Preferred stock Cancellation-Majorca 1/24/20             (5,200,000)   (5,200)   5,200           
Net Loss                            (262,370)   262,370 
                                    
Balance March 31, 2020   37,813,092   $37,814             $28,050,192   $(28,913,805)   (825,799)
                                    
Common stock issued for cash   1,973,787    1,974              38,618         40,592 
Common stock issued for services                                   
Common stock issued for officer compensation                                   
Common stock issued for Conversion of Note                                   
Common stock returned to company                                   
Net Loss                           $(3,887,498)   (3,887,498)
                                    
Balance June 30, 2020   39,786,879    39,788             $28,088,810   $(32,801,303)   (4,672,705)
                                    
Common stock issued for cash   863,512    864              19,068         19,932 
Common stock issued for services                                   
Common stock issued for officer compensation                                   
Common stock issued for Conversion on Note   1,500,000    1,500              30,000         31,500 
Common stock returned to company                                   
Net Loss                            (141,888)   (141,888)
                                    
Net Loss   42,150,391    42,152              28,137,878    (32,943,191)   (4,763,161)

 

F-4

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the Six   For the Six 
   Months Ended   Months Ended 
   September 30, 2020   September 30, 2019 
Cash Flow From Operating Activities:          
Net loss   (4,055,486)   (756,987)
Adjustments to reconcile net loss to net cash from operating activities:          
Stock-based compensation       142,590 
Stock issued for services        
Intrinsic value of Conv Notes-Addtl Paid-in-Capital       142,506 
Depreciation and amortization   1,539    3,623 
Changes in operating assets and liabilities:          
Increase/Decrease in deposits        
Increase/Decrease in prepaid expenses and other current assets   2,989    33,083 
Decrease/Increase in inventory   27,257    28,090 
Increase in other assets          
Increase in accrued settlement   3,763,200     
Increase in accounts payable   168,814    22,306 
Net Cash Used in Operating Activities   (91,687)   (384,789)
           
Investing Activities:          
Purchases of property and equipment        
Patent expenditures        
Net Cash Used in Investing Activities        
           
Financing Activities:          
Proceeds from issuance of common stock   60,524    95,000 
Proceeds from notes payable- related party        
Proceeds from Convertible Notes   31,500    220,000 
Intrinsic value of Conv Notes-Addtl Paid-in-Capital        
Officer Compensation Stock        
Repayment of advances from related party        
Net Cash Provided by Financing Activities   92,024    315,00 
           
Net Decrease in Cash   337    (69,789)
           
Cash - Beginning of year   30,723    127,524 
Cash - End of year   31,060    57,735 

 

F-5

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 1 — Organization and Nature of Operations

 

Earth Science Tech, Inc. (“ETST” or the “Company”) was incorporated under the laws of the State of Nevada on April 23, 2010. ETST 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 illnesses and the quality of life for consumers worldwide. The Company sells its products through its retail store located in Coral Gables Florida and through the internet. ETST is currently 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 and aging. ETST products include vitamins, minerals, herbs, botanicals, personal care products, homeopathies, functional foods, and other products. These products are marketed in various formulations and delivery forms including capsules, tablets, soft gels, chewables, liquids, creams, sprays, powders, and whole herbs. During 2015, ETST entered into a license and distribution agreement to provide its Cannabidiol oil to retailers in the vaping industry.

 

Note 2 — Summary of Significant Accounting Policies

 

Basis of presentation

 

The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied.

 

Principles of consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Earth Science Tech Inc, Nutrition Empire Co. Ltd., Earth Science Vapor, Earth Science Pharmaceutical Inc.,Kannabidioid Inc.

 

All intercompany balances and transactions have been eliminated on consolidation.

 

F-6

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 2 — Summary of Significant Accounting Policies (Continued)

 

Use of estimates and assumptions

 

The preparation of the condensed 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 periods.

 

The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves 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.

 

Carrying value, recoverability and impairment of long-lived assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent, 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 asset’s 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 Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, is included in operating expenses.

 

F-7

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 2 — Summary of Significant Accounting Policies (Continued)

 

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 ASC 850 for the identification of related parties and disclosure of related party transactions.

 

Pursuant to this ASC 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 825-10-15, 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 ASC 450 to account 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. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. 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 Company’s 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 Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

F-8

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 2 — Summary of Significant Accounting Policies (Continued)

 

Revenue recognition

 

The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

 

The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the considerations to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize when or as the Company satisfies a performance obligation.

 

The Company recognizes its retail store revenue at point of sale, net of sales tax.

 

Inventories

 

Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary 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.

 

Research and development

 

Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general.

 

F-9

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 2 — Summary of Significant Accounting Policies (Continued)

 

Net loss per common share

 

The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations 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 September 30, 2020 the Company has zero warrants that are anti-dilutive and not included in the calculation of diluted loss per share.

 

Cash flows reporting

 

The Company follows ASC 230 to report cash flows. This standard 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 this standard 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 separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard.

 

Stock based compensation

 

The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock- based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred.

 

The Company accounts for transactions in which service are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50.

 

Property and equipment

 

Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:

 

Leasehold improvements    Shorter of useful life or term of lease
Signage   5 years
Furniture and equipment   5 years
     
Computer equipment   5 years

 

The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.

 

F-10

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 3 — Going Concern

 

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. At September 30, 2020, the Company had negative working capital, an accumulated deficit of $32,969,291 and was in negotiations to extend the maturity date on notes payable that are in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient to pay its obligations and support the Company’s 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 may 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 Company’s ability to further implement its business plan and generate sufficient revenues.

 

The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Note 4 - Commitments and Contingencies

 

Legal Proceeding

 

On January 11, 2019, the Company received notice that Strongbow Advisors, Inc. and Robert Stevens (“Stevens”, and together with Strongbow, the “Receiver”) had been appointed by the Nevada District Court, as Receiver for the Registrant in Case No. A-18-784952-C (the “Order).

 

The Company sought the appointment of the Receiver after it found itself in an imminent danger of insolvency following the issuance by an arbitration panel of an award (the “Award”) in the sum of $3,994,522 in favor of Cromogen Biotechnology Corporation (“Cromogen”) in the matter entitled Cromogen Biotechnology Corporation vs. Earth Science Tech, Inc. (the “Cromogen Litigation”). The Nevada District Court found that the Company was in fact insolvent and ordered the appointment of the Receiver.

 

The Award consisted of a sum for breach of contract against the Company in the amount of $120,265.00, a sum for costs and fees against the Company in the amount of $111,057.00 and a sum for the claim of tortuous interference and conversion against the Company in the amount of $3,763,200.00. The District Court in Florida had confirmed the Award granted by the arbitration panel, denying however, the award of fees that the arbitration panel had granted Cromogen.

 

Earth Science Tech, Inc. appealed this decision but Cromogen prevailed in No. 19-10118, United States Court of Appeals for the Eleventh Circuit on April 14, 2020. The Receiver subsequently allowed Cromogen status as an unsecured creditor in the estate. As of the date of this filing the Company remains in danger of insolvency if a plan of reorganization is not subsequently approved by the court that adequately resolves the Cromogen unsecured debt or Cromogen agrees to a settlement. Previous attempts to settle the amounts with Cromogen have been fruitless.

 

As part of the impact of the receivership, the Court issued a Writ of Injunction or “Blanket Stay” covering the Company and its assets during the time that the Company is in receivership. As a result of the “Blanket Stay” the Company’s estate is protected from creditors and interference with its administration is prevented while the Company’s financial issues are being fully analyzed and resolved. As part of this process, creditors will be notified and required to provide claims in writing under oath on or before the deadline stated in the notice provided by the Receiver or those claims will be barred under NRS §78.675. The Blanket Stay will remain in place unless otherwise waived by the Receiver, or it is vacated by the Court or alternatively, lifted by the Court, upon a “motion to lift stay” duly made and approved by the Nevada District Court.

 

F-11

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 4 - Commitments and Contingencies (Continued) 

 

The appointment of the Receiver was approved unanimously by the Board and by a majority of the Company’s shareholders. Strongbow and Stevens were selected because of their reputation in helping (i) companies restructure and (ii) to execute on their business plans, albeit under a debt and capital structure that allows them to succeed. Stevens and Strongbow assist companies by helping them raise the capital needed not only to pay debts, but build and grow their businesses. The Receiver, however, is an agent of the court, and will be independent and neutral in managing the Company’s operations and trying to preserve the Company’s value for the creditors and shareholders.

 

There are a number of possible outcomes to the receivership, including settlement and payment to creditors, reorganization, or liquidation. The Receiver was tasked by the Court with bringing to a final settlement all of the unfinished business of the Company. Towards that end, the Receiver is allowed, under Section 3(p) of the Order, to borrow money, incur debt, and issue stock, debentures and other financial instruments. The Receiver intends to use the proceeds from our initial sale of shares to GHS to pay and settle the Company’s debts, while preserving the value of its assets for the benefit of its shareholders. If the Receiver is not successful in mitigating the Company’s liabilities, or otherwise, the Company’s results could be materially adversely impacted and the Company may be forced to liquidate its business.

 

On November 7, 2019 the Receiver for Earth Science Tech, Inc., a Nevada corporation (the “Company”) filed a motion for preliminary injunction against Majorca Group Ltd. in the 8th Judicial District in Clark County, Nevada. The filing requests a show cause hearing whereby the Company will request the Court grants it motion to cancel certain shares and class of stock and to nullify certain amendments of the Articles of Incorporation. Specifically, the Company is asking that Majorca Group Ltd. be restricted from selling, transferring, converting, encumbering, hypothecating, obtaining loans against or in any fashion or in any way transferring their shares of common and preferred stock in the Company. Additionally the motion seeks a Freezing Injunction over any broker, bank, any financial institution, attorney, or agent holding shares of the Company as well as any proceeds from shares of the Company.

 

On January 27, 2020 Earth Science Tech, Inc., a Nevada corporation (the “Company”) reached a confidential settlement with Majorca Group, Ltd (“Majorca”). The Receiver will withdraw its motion for injunction over the Majorca common and preferred shares. The Settlement Agreement provides that Majorca Group, Ltd. and all relevant parties will, within 10 days of execution of the settlement agreement, return 18,000,000 common shares and 5,200,000 Series A Preferred Stock held by Majorca for cancellation. The Series A Preferred Stock class will be cancelled completely. The remaining 6,520,000 common shares held by Majorca is subject to lockup agreement and thereafter, sales will be made only pursuant to a limited strict bleed-out agreement administered by a third party.

 

On May 19, 2020 to effect a holding company reorganization (the “Delaware Reorg”), which will result in a newly formed Delaware corporation, ETST Holdings, Inc., (“ETST Delaware “), owning all the capital stock of Earth Science Tech, Inc. ETST Delaware will initially be a direct, wholly owned subsidiary of Earth Science Tech, Inc. Pursuant to the Delaware Reorg, a newly formed entity (“Merger Sub”), a direct, wholly owned subsidiary of ETST Delaware and an indirect, wholly owned subsidiary of Earth Science Tech, Inc., will merge with and into Earth Science Tech, Inc., with Earth Science Tech, Inc. surviving as a direct, wholly owned subsidiary of ETST Delaware. Each share of each class of Earth Science Tech, Inc. stock issued and outstanding immediately prior to the ETST Delaware Merger will automatically convert into an equivalent corresponding share of ETST Delaware stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Earth Science Tech, Inc. stock being converted. Accordingly, upon consummation of the ETST Delaware Merger, Earth Science Tech, Inc.’s current stockholders will become stockholders of ETST Delaware. The stockholders of Earth Science Tech, Inc. will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of their shares in the ETST Delaware Merger.

 

The ETST Delaware Merger was conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations. Effective upon the consummation of the ETST Delaware Merger, ETST Delaware will adopt an amended and restated certificate of incorporation and amended and restated bylaws that are identical to those of Earth Science Tech, Inc. immediately prior to the consummation of the ETST Delaware Merger, except for the change of the name of the corporation as permitted by Section 251(g). Furthermore, the conversion will occur automatically without an exchange of stock certificates. Stock certificates previously representing shares of a class of Earth Science Tech, Inc. stock will represent the same number of shares of the corresponding class of ETST Delaware stock after the ETST Delaware Merger. Following the consummation of the ETST Delaware Merger shares of our Common Stock will continue to trade on the under the symbol ETST on the OTC Markets. 

 

F-12

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 4 - Commitments and Contingencies (Continued)

 

We lease all our office space used to conduct our business. We adopted ASC 842 effective January 1, 2019. For contracts entered into on or after the effective date, at the inception of a contract we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

 

Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. All our operating leases are comprised of office space leases.

 

For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

 

Lease Agreements

 

On August 14, 2017, the Company entered into an office lease covering its new Doral, Florida headquarters, with landlord Doral Flex. The Lease term is for 37 months commencing on September 1, 2017 and ending on September 30, 2020. The monthly rent, including sales tax is $1,990, $2,056 and $2,124 for the years ending 9/30/2018, 9/30/2019 and 9/30/2020 respectively. A deposit of $6,191 was tendered to secure the lease. Rent expense for the three months ended September 30, 2020 was $6,995.

 

F-13

 

 

EARTH SCIENCE TECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

 

 

Note 5 - Balance Sheet and Income Statement Footnotes

 

Accounts receivable represent normal trade obligations from customers that are subject to normal trade collection terms, without discounts or rebates. If collection is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Notwithstanding, these collections, the Company periodically evaluates the collectability of accounts receivable and considers the need to establish an allowance for doubtful debts based upon historical collection experience and specifically identifiable information about its customers. As of September 30, 2020, the Company had allowances of $101,404. The Company used an allowance of 40% of receivables over 90 days to charge bad debt expense.

 

Accounts payable are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities

 

Accrued expenses of $191,935 as of September 30, 2020 mainly represent $30,935 of accrued interest on notes payable and accrued payroll for Michel Aube and Nickolas Tabraue for $161,000.

 

As September 30, 2020, ROU Asset was $25,105 and Lease Liability-Current was $25,105.

 

Convertible Note 1-GHS resulted in a conversion on 8/28/20 reducing principal balance from $76,927 to $ 51,372. 1,500,000 shares of common stock were issued to satisfy $25,555 in principal and $5,945 in interest for a total of $31,500.

 

On July 27, 2020 a SBA loan was established for $106,800 at a rate of 3.75% per annum for 30 years. A monthly payment of $521 including principal and interest will begin 7/27/21.

 

General and administrative expenses were $74,020 and $121,362 for the three months ended September 30, 2020 and 2019 respectively and $148,417 and $328,484 for the six months ended September 30, 2020 and 2019 respectively. For the three months ended September 30, 2020, the majority comprised of receiver admin fees in the amount of $18,950 and accounting fees of $27,800. The remainder of, $27,270 was for employee compensation, rent, and other expenses. For the six months ended September 30, 2020 the majority comprised of receiver admin fees in the amount of $48,950 and accounting fees of $37,800. The remainder of $61,667 was for employee compensation, rent and other expenses.

 

Professional fees were $7,400 for the three months ended September 30, 2020. The bulk of these expenses were paid to OTC Markets in the amount of $6,500.

 

Cost of legal proceedings was $5,000 for the three months ended September 30, 2020. Legal expenses were for corporate attorney fees.

 

Interest expense was $12,495 and $12,720 for three months ended September 30, 2020 and 2019. Interest expense for three months ended September 30, 2020 was mainly $11,304 for Convertible Notes-GHS.

 

Note 6 - Subsequent Events

 

There were no subsequent events.

 

F-14

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following section, Management’s Discussion and Analysis, should be read in conjunction with Earth Science Tech Inc.’s financial statements and the related notes thereto and contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of many factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report filed on Form 10-Q.

 

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Registration Statement filed on Form 10-12g and our Annual Report filed on Form 10-K for the fiscal year ended March 31, 2020, as well as our Quarterly report filed on Form 10-Q for the period ending June 30, 2020.

 

OVERVIEW

 

The Company offers high-grade full spectrum cannabinoid oil on the market. There are positive results in studies on breast cancer and immune cells through the University of Central Oklahoma, in addition to studies through DV Biologics that prove the Company’s CBD oil formulation lowers cortisol and functions as a neuro-protectant, with positive result case studies through key health organizations. ETST formulates, markets and distributes the CBD oil used for its studies to the public, offering the most effective quality of CBD on the market.

 

Our favored division effectively became a non-profit organization on February 11, 2019 and is structured to accept grants and donations to conduct further studies and help donate EST’s effective CBD products to those in need.

 

We expect to realize revenue from our consumer products business segment to fund our working capital needs. However, in order to fund our pharmaceutical product development efforts, we will need to raise additional capital either through the issuance of equity and/or the issuance of debt. In the event we are unable to fund our drug development efforts, we may need to curtail or delay such activity.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with the Company’s Board of Directors, management has identified the following accounting policies that it believes are key to an understanding of its financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

 

3

 

 

Basis of Presentation

 

The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Nutrition Empire, Inc., Cannabis Therapeutics, Inc., Earth Science Pharmaceutical Inc., and a non-profit favored entity Earth Science Foundation. (all intercompany balances and transactions have been eliminated on consolidation.)

 

Use of Estimates and Assumptions

 

The preparation of the condensed 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 periods.

 

The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves 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.

 

Carrying Value, Recoverability and Impairment of Long-Lived Assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent 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 asset’s 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.

 

4

 

 

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 Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, are included in operating expenses.

 

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 ASC 850 for the identification of related parties and disclosure of related party transactions. Pursuant to this ASC 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 825-10-15, 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 ASC 450 to account 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. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. 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 Company’s 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 Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

Revenue Recognition

 

The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

 

5

 

 

The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation.

 

The Company recognizes its retail store revenue at point of sale, net of sales tax.

 

Inventories

 

Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary 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.

 

Research and Development

 

Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general.

 

Net Loss Per Common Share

 

The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations 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 September 30, 2020 the Company had no warrants issued or outstanding.

 

Cash Flows Reporting

 

The Company follows ASC 230 to report cash flows. This standard 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 this standard 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 separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard.

 

6

 

 

Stock Based Compensation

 

The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred.

 

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50.

 

Property and Equipment

 

Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:

 

Leasehold improvements   Shorter of useful life or term of lease
     
Signage   5 years
Furniture and equipment   5 years
Computer equipment   5 years

 

The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.

 

Liquidity and Capital Resources.

 

For the Six-Month Period Ended September 30, 2020 versus September 30, 2019

 

During the six months ended September 30, 2020, net cash used in the Company’s operating activities totaled $(91,687) compared to $(384,789) during the six months ended September 30, 2019. During the six months ended September 30, 2020, net cash used in investing activities totaled $0.00 compared to $0.00 provided by investing activities during the six months ended September 30, 2019. During the six months ended September 30, 2020, net cash provided by financing activities totaled $92,024 compared to $315,000 from financing activities during the six months ended September 30, 2019. During the six months ended September 30, 2020, net cash increased $337 as compared to the decrease of $(69,789) during the six months ended September 30, 2019.

 

At September 30, 2020, the Company had cash of $31,060, accounts receivable of $25,998, inventories of $36,091 and prepaid expenses of $10,000 that comprised the Company’s total current assets totaling $103,149. The Company’s property and equipment at September 30, 2020 had a net book value of $2,594.

 

Promissory Note-GHS was initiated 2/28/19 for $30,000. Interest on the unpaid balance will accrue at the rate of 8% per annum, calculated on the basis 365-day year and actual days elapsed until the entire outstanding balance and all interest ff accrued thereon has been repaid in full. Full payment on this Note will be due and payable on or before November 28, 2019.This note is at default and will continue accruing at the rate of 18%.

 

Convertible Note 2-GHS issued 4/2/19 for cash received $50,000, face amount $55,000 will accrue at a rate of 10% on a 360-day year. Maturity date is December 26, 2019.This note is at default and will continue accruing at the rate of 10%. This note is at default and will continue accruing at the rate of 10%.

 

Convertible Note 3-GHS issued 5/15/19 for cash received $50,000, face amount $55,000 will accrue at a rate of 10% on a 360-day year. Maturity date is February 15, 2020. This note is at default and will continue accruing at the rate of 10%.

 

Convertible Note 4-GHS issued 6/07/19 for cash received $50,000, face amount $55,000 will accrue at a rate of 10% on a 360-day year. Maturity date is March 15, 2020. This note is at default and will continue accruing at the rate of 10%.

 

Convertible Note 5-GHS issued 9/09/19 for cash received $50,000, free amount $55,000 will accrue at a rate of 10% on a 360-day year. Maturity date is June 9, 2020. This note is at default and will continue accruing at the rate of 10%.

 

7

 

 

At September 30, 2020, the Company had total liabilities of $4,926,300 of which $3,994,523 was held as a reserved for the settlement of its lawsuit with Cromogen (See Part II Other Information, Item 1. Legal Proceedings). Notwithstanding this reserve, the Company is optimistic, between its appeal of the judgment confirming the arbitration award and being in receivership, that the amount that it may ultimately be required to pay will be substantially less that the reserve contingency currently carried in its liabilities and/or that any payment that it may ultimately be required to pay may be structured by the receiver so as not to unduly burden or interfere with the Company’s business operations. Additionally, the Company’s legal expenses associated with the Cromogen matter decreased from $16,333 at September 30, 2019 to $5,000 at September 30, 2020 as there was less activity in the matter due to the Company being in receivership. The Company does not anticipate the costs of Cormogen litigation to remain at the levels they have been over the last two quarters because all that remains for the Company is the appeal. However, the anticipated decrease in legal costs associated with the Cromogen matter may be offset by the expenses of being in receivership where we will be responsible for the legal fees and costs incurred by the receiver; and in any event, regardless of the increase in one expense compared to the decrease in another, the Company believes that on balance, the net benefit to it that will result from the receivership will substantially outweigh the associated costs. The Company had no other long-term liabilities, commitments or contingencies. Other than anticipated increases in costs due to the expenses of being in receivership and the legal expenses associated therewith; together with the overall increase in expenses associated with a growing business and expanding operations, the Company does not anticipate a relative increase in any other expenses. The Company’s management is not aware of any other known trends, events or uncertainties which may affect the Company’s future liquidity except for a certain amount of uncertainty associated with being in receivership and to a certain extent, its dispute with Cromogen.

 

At September 30, 2020, the Company had a stockholders’ equity totaling $(4,789,261) compared to an equity of $(825,799) for the period ending September 30, 2019.

 

RESULTS OF OPERATIONS

 

For the Three Months Ended September 30, 2020 versus September 30, 2019

 

The Company’s revenue for the three months ended September 30, 2020 was $26,551 compared to September 30, 2019 revenue totaling $139,648. The decrease in revenue is primarily attributed to inventory constraints as well as available supply of acceptable raw material the Company requires and the Covid-19 pandemic causing major store accounts to close down.

 

The Company incurred operating expenses for the three months ended September 30, 2020 totaling $168,928, compared to $292,276 during the three months ended September 30, 2019. The decrease in operating expenses can be attributed to the Company suspending its R&D activities to focus on expanding sales of current products.

 

Officer compensation for the three months ended September 30, 2020 was $82,048 in cash and $0.00 in stock based compensation compared to $58,087 in cash and $52,800 in stock based compensation during the three months ended September 30, 2019.

 

The Company incurred marketing expenses of $460 during the three months ended September 30, 2020, compared to $12,194 during the three months ended September 30, 2019. The decrease in marketing expenses can be attributed to the Company reducing marketing costs and utilizing existing marketing materials.

 

The Company incurred general and administrative expenses of $74,020, during the three months ended September 30, 2020, compared to $121,362 during the three months ended September 30, 2019. The decrease in general and administration expenses was due to many services being suspended due to the Covid-19 pandemic.

 

The Company paid professional fees of $7,400, during the three months ended September 30, 2020, compared to $13,500 during the three months ended September 30, 2019. The reduction in professional fees was due to timing and general cost savings.

 

The Company incurred costs of legal proceedings of $5,000 during the three months ended September 30, 2020, compared to $16,333 during the three months ended September 30, 2019. The decrease in 2020 is a result of the Company being in receivership with the additional fees and legal expenses through Strongbow and the legal and professional advisors for the Receivership Estate, and expenses through general and administration.

 

The Company incurred research and development expenses of $0.00 during the three months ended September 30, 2020, compared to $18,000 during the three months ended September 30, 2019. The decrease in 2020 is associated with the Company moving the HygeeTM medical device out of R&D phase and discontinuing CBD patent applications, (See Part I Note 2 Carrying value, recoverability and impairment of long-lived assets). The Company determined to suspend current R&D based on core needs of the business of the Company and to preserve cash.

 

The Company generated a net loss from continuing operations for the three ended September 30, 2020 and 2019 of approximately $167,988 and $250,290, respectively. As of September 30, 2020 and March 31, 2020, the Company had current assets of $137,039 and $154,552, respectively, which included the following as of September 30, 2020: cash and cash equivalents of approximately $31,060; inventory of $36.091; accounts receivable of $25,998 (net of $128,420 in allowances.) and prepaid expenses of $10,000; Compared to; and the following as of March 31, 2020 cash and cash equivalents of approximately $30,723; inventory of $63,348; accounts receivable of $38,933 (net of $111,301 in allowances); and prepaid expenses of $54.

 

8

 

 

The Company’s Plan of Operation for the Next Twelve Months.

 

The Company’s auditors have expressed doubt as to our ability to continue as a going concern in part, because at September 30, 2020, the Company had negative working capital, an accumulated deficit of $32,969,291 and a note payable that has passed its maturity date and although the holder has been willing to forbear on collection activities, there is no formal written forbearance agreement and the holder could commence collections at any time if it so wished. We believe this is unlikely given the relative size of the note valued at $59,558 compared with the value of the note holder’s 6,700,000 shares of Common Stock. Additionally, our Current Liabilities have historically exceeded our Current Assets; and as of September 30, 2020 that trend was continued with our Current Liabilities of $4,926,300 exceeding our Current Assets of $137,039 by $4,789,261. While this trend is certainly has not been part of the Company’s objectives, management does not see it as particularly significant because in considering our Current Liabilities, $59,558 of them are represented in a related party note held by a “friendly” creditor who is also a large shareholder. In addition, the Current Liabilities also include the Accrued Settlement amount of $3,994,523. As stated, we believe that the related party note holder will continue to forgo immediate payment until we are in a better cash position to make payment and will otherwise cooperate with the receiver in structuring payment terms. Thus, while it is listed as a Current Liability, it operates more closely as a long-term liability and may ultimately be negotiated and converted into equity.

 

The Accrued Settlement represents nearly half of our Current Liabilities and at $3,994,523 it’s accrual represents a contingency reserve made for the unfavorable arbitration award that was confirmed and reduced to a judgment in the Company’s dispute with Cromogen (See Part II Item 1 Legal Proceedings.). So, while the Company was not ultimately successful in its motion before the arbitration panel or before the court in seeking to have the award recalculated (based upon the mathematical error described.) However the Company, nevertheless, continues to have what it believes is more than one solid basis to successfully challenge the award / judgment on appeal and the matter is now on appeal. Additionally, the Company has since been put into receivership and with the appointment of the receiver a Blanket Stay was ordered by the Court. As such, its assets are not be subject to levy by any of the Company’s creditors. Further, if any of the Company’s creditors fails to make their claim(s) for amounts they claim due in a timely manner, after the receiver gives notice, those claims not timely made will be barred from later collecting and those amounts would no longer be recorded in the Company’s financial statements as Liabilities. The receiver has a wide degree of discretion in restructuring the estate of the Company and in how it manages the various creditors’ claims. In general, it may accept a claim, deny the claim or accept a claim in part and deny it in part; and in so doing, the receiver will consider the fairness to the parties affected, and the reasonableness of each claim. This includes Cromogen’s claim, regardless of the fact that its claim is based on a judgment. Thus, while we are ultimately optimistic about our prospects for success on appeal, as stated we are in receivership and as such, are afforded the protections of the Blanket Stay and all of the tools available to the receiver in his capacity, no assurances can be given that the appeal or the receiver’s decisions will be what we would view as “beneficial.” Although, we are confident that we will emerge from receivership, in any event, in a better position for our shareholders than we entered into it.

 

9

 

 

Regardless of the forgoing issues, the Company will require additional debt or equity financing for its operations as currently conducted. However the Company believes its margins are sufficiently high that management feels, it could curtail a number of other costs and expenses, if necessary, that would enable it to continue its operations on a more limited basis - selling industrial hemp based CBD and full-spectrum oils. However, the research and development we intend to pursue will require additional funding such that in order to maintain our operations at their current level (building for expansion, R&D, and the roll-out of our MSN-2 Device), we will require additional debt or equity financing in addition to the grants we have been able to secure. If we are unable to secure such additional financing we would not be able to continue our operations as we have historically, with the research and development and accelerated product launches. As mentioned , our increase in marketing has provided us with additional sales opportunities that we believe will significantly increase our sales in the current year; and with our margins at approximately 41.17% together with increasingly larger inventory turns, our working capital would build quickly, if we are: a.) not continuing to fund R&D and having to meet other expenses nor b.) having to meet the R&D and other expenses with proceeds from additional financing; in each case, at an expense rate that is faster than our sales allow. This would then allow us to sustain operations without additional funding over the next 12 months if we were to reduce our operations and focus only on CBD and full-spectrum precuts; at which point, we could then begin with R&D and other expenses.

 

Alternatively we could raise additional funds to meet the anticipated R&D and other expenses while we allow the sales from our existing products to become self sustaining. This last path is our currently intended path to additional revenue. In fact, our receiver intends to assist us in raising additional funds to meet our obligations and to fund expansion of our business and operations. Among the financing possibilities presented by the receiver are the sale of Receivers’ Certificates, an existing shareholder rights offering and a combination of debt and registered equity placed with an institutional investor. The proceeds from any financing will be used to meet the expenses of the receiver’s ongoing fees and costs associated with the administration of the estate, meeting creditors allowed claims and working capital for the Company’s ongoing operations, expansion and pursuit of its business plan.

 

Historically we have been able to fully fund operations from a combination of operations and through additional sales of our common stock; and even though we are in receivership, we have no reason to believe that we will not be able to continue doing so since we have a strong base of existing shareholders who are committed to our vision for the Company, they have historically demonstrated a willingness to purchase shares of stock when they are offered and the receiver intends to offer and in fact, has an additional exemption available to it that may be more desirable to them. If these shareholders were to cease purchasing shares when offered, if we or our receiver were unable to secure other sources of debt or equity financing, or if we or our receiver were unable to secure any or sufficient financing and on terms that are acceptable to us collectively, we would not be able to continue operations as currently planned. Rather, we would need to curtail our research and development, scale back operations and only focus on meeting the CBD and full-spectrum sales. But even then if we curtailed operations, depending on whether we continued to incur unforeseen expenses, the receiver’s costs of administration of the estate were larger than expected or we otherwise generally incurred higher than expected expenses, we may not have sufficient capital to meet our current operating needs (including the receiver’s costs of administration of the estate). However we do have sufficient resources over the short and long term with scaled back expenses and R&D so that after several turns of inventory we believe we would then be able to meet the costs of administration and resume our R&D and operations as planned. Additional funding primarily allows us to meet the additional costs associated with the receiver’s administration of the estate and to expedite our business plan. During the periods ending September 30, 2019 and June 30, 2018 the Company has met its capital requirements through a combination of operating activities and through external financing through the sale of its restricted common stock and convertible notes. We intend to continue the sales of our common stock and believe that by becoming a fully reporting company we have been able to attract additional investors, at smaller discounts to the current market price and from generally higher market prices, which is resulting in less dilution to existing investors than was the case while we were not a reporting company subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.

 

10

 

 

ITEM 3. QUANTITATIVE AND QUALITATATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Although our management has not formally carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), because of the relatively thin management structure that the Company currently maintains, we believe that our Principal Executive Officer and Principal Financial Officer have sufficient timely information to allow them to make necessary disclosures in a timely manner.

 

Based on this informal evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of June 30, 2018.

 

Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control and Financial Reporting

 

There were no other changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

11

 

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On January 11, 2019, the Company received notice that Strongbow Advisors, Inc. and Robert Stevens (“Stevens”, and together with Strongbow, the “Receiver”) had been appointed by the Nevada District Court, as Receiver for the Registrant in Case No. A-18-784952-C (the “Order).

 

The Company sought the appointment of the Receiver after it found itself in an imminent danger of insolvency following the issuance by an arbitration panel of an award (the “Award”) in the sum of $3,994,522 in favor of Cromogen Biotechnology Corporation (“Cromogen”) in the matter entitled Cromogen Biotechnology Corporation vs. Earth Science Tech, Inc. (the “Cromogen Litigation”). The Nevada District Court found that the Company was in fact insolvent and ordered the appointment of the Receiver.

 

The Award consisted of a sum for breach of contract against the Company in the amount of $120,265.00, a sum for costs and fees against the Company in the amount of $111,057.00 and a sum for the claim of tortuous interference and conversion against the Company in the amount of $3,763,200.00. The District Court in Florida had confirmed the Award granted by the arbitration panel, denying however, the award of fees that the arbitration panel had granted Cromogen.

 

Earth Science Tech, Inc. appealed this decision but Cromogen prevailed in No. 19-10118, United States Court of Appeals for the Eleventh Circuit on April 14, 2020. The Receiver subsequently allowed Cromogen status as an unsecured creditor in the estate. As of the date of this filing the Company remains in danger of insolvency if a plan of reorganization is not subsequently approved by the court that adequately resolves the Cromogen unsecured debt or Cromogen agrees to a settlement. Previous attempts to settle the amounts with Cromogen have been fruitless.

 

As part of the impact of the receivership, the Court issued a Writ of Injunction or “Blanket Stay” covering the Company and its assets during the time that the Company is in receivership. As a result of the “Blanket Stay” the Company’s estate is protected from creditors and interference with its administration is prevented while the Company’s financial issues are being fully analyzed and resolved. As part of this process, creditors will be notified and required to provide claims in writing under oath on or before the deadline stated in the notice provided by the Receiver or those claims will be barred under NRS §78.675. The Blanket Stay will remain in place unless otherwise waived by the Receiver, or it is vacated by the Court or alternatively, lifted by the Court, upon a “motion to lift stay” duly made and approved by the Nevada District Court.

 

The appointment of the Receiver was approved unanimously by the Board and by a majority of the Company’s shareholders. Strongbow and Stevens were selected because of their reputation in helping (i) companies restructure and (ii) to execute on their business plans, albeit under a debt and capital structure that allows them to succeed. Stevens and Strongbow assist companies by helping them raise the capital needed not only to pay debts, but build and grow their businesses. The Receiver, however, is an agent of the court, and will be independent and neutral in managing the Company’s operations and trying to preserve the Company’s value for the creditors and shareholders.

 

There are a number of possible outcomes to the receivership, including settlement and payment to creditors, reorganization, or liquidation. The Receiver was tasked by the Court with bringing to a final settlement all of the unfinished business of the Company. Towards that end, the Receiver is allowed, under Section 3(p) of the Order, to borrow money, incur debt, and issue stock, debentures and other financial instruments. The Receiver intends to use the proceeds from our initial sale of shares to GHS to pay and settle the Company’s debts, while preserving the value of its assets for the benefit of its shareholders. If the Receiver is not successful in mitigating the Company’s liabilities, or otherwise, the Company’s results could be materially adversely impacted and the Company may be forced to liquidate its business.

 

12

 

 

On November 7, 2019 the Receiver for Earth Science Tech, Inc., a Nevada corporation (the “Company”) filed a motion for preliminary injunction against Majorca Group Ltd. in the 8th Judicial District in Clark County, Nevada. The filing requests a show cause hearing whereby the Company will request the Court grants it motion to cancel certain shares and class of stock and to nullify certain amendments of the Articles of Incorporation. Specifically, the Company is asking that Majorca Group Ltd. be restricted from selling, transferring, converting, encumbering, hypothecating, obtaining loans against or in any fashion or in any way transferring their shares of common and preferred stock in the Company. Additionally the motion seeks a Freezing Injunction over any broker, bank, any financial institution, attorney, or agent holding shares of the Company as well as any proceeds from shares of the Company.

 

On January 27, 2020 Earth Science Tech, Inc., a Nevada corporation (the “Company”) reached a confidential settlement with Majorca Group, Ltd (“Majorca”). The Receiver will withdraw its motion for injunction over the Majorca common and preferred shares. The Settlement Agreement provides that Majorca Group, Ltd. and all relevant parties will, within 10 days of execution of the settlement agreement, return 18,000,000 common shares and 5,200,000 Series A Preferred Stock held by Majorca for cancellation. The Series A Preferred Stock class will be cancelled completely. The remaining 6,520,000 common shares held by Majorca is subject to lockup agreement and thereafter, sales will be made only pursuant to a limited strict bleed-out agreement administered by a third party.

 

On May 19, 2020 to effect a holding company reorganization (the “Delaware Reorg”), which will result in a newly formed Delaware corporation, ETST Holdings, Inc., (“ETST Delaware “), owning all the capital stock of Earth Science Tech, Inc. ETST Delaware will initially be a direct, wholly owned subsidiary of Earth Science Tech, Inc. Pursuant to the Delaware Reorg, a newly formed entity (“Merger Sub”), a direct, wholly owned subsidiary of ETST Delaware and an indirect, wholly owned subsidiary of Earth Science Tech, Inc., will merge with and into Earth Science Tech, Inc., with Earth Science Tech, Inc. surviving as a direct, wholly owned subsidiary of ETST Delaware. Each share of each class of Earth Science Tech, Inc. stock issued and outstanding immediately prior to the ETST Delaware Merger will automatically convert into an equivalent corresponding share of ETST Delaware stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Earth Science Tech, Inc. stock being converted. Accordingly, upon consummation of the ETST Delaware Merger, Earth Science Tech, Inc.’s current stockholders will become stockholders of ETST Delaware. The stockholders of Earth Science Tech, Inc. will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of their shares in the ETST Delaware Merger.

 

The ETST Delaware Merger was conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations. Effective upon the consummation of the ETST Delaware Merger, ETST Delaware will adopt an amended and restated certificate of incorporation and amended and restated bylaws that are identical to those of Earth Science Tech, Inc. immediately prior to the consummation of the ETST Delaware Merger, except for the change of the name of the corporation as permitted by Section 251(g). Furthermore, the conversion will occur automatically without an exchange of stock certificates. Stock certificates previously representing shares of a class of Earth Science Tech, Inc. stock will represent the same number of shares of the corresponding class of ETST Delaware stock after the ETST Delaware Merger. Following the consummation of the ETST Delaware Merger shares of our Common Stock will continue to trade on the under the symbol ETST on the OTC Markets.

 

13

 

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three months ended September 30, 2020, the Company issued 0 shares of its common stock for $0.00, in transactions that were exempt from registration under the Securities Act of 1933, as amended pursuant to Section 4(2) and/or Rule 506 promulgate under Regulation D. No gain or loss was recognized on the issuances.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

31.1   Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2   Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1   Certifications of Chief Executive Officer pursuant to 18 U.S.C. SEC. 1350 (Section 906 of Sarbanes-Oxley Act of 2002) +
32.2   Certifications of Chief Financial Officer pursuant to 18 U.S.C. SEC. 1350 (Section 906 of 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 *

 

14

 

 

SIGNATURES

 

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

 

 

RECEIVER FOR EARTH SCIENCE TECH, INC.

CASE NO. A-18-784952-C

STRONGBOW ADVISORS, INC.

   
Dated: November 13, 2020 By: /s/ Robert Stevens
    Robert Stevens
     
  Its: Reciever

 

  EARTH SCIENCE TECH, INC.
   
Dated: November 13, 2020 By: /s/ Nickolas S. Tabraue
    Nickolas S. Tabraue, under the supervision and direction of Robert Stevens and Strongbow Advisors, Inc., receiver for Earth Science Tech, Inc. Case No. A-18-784952-C
     
  Its: CEO, President, Director, & Chairman

 

15

 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

 

I, Nickolas S. Tabraue and Robert Stevens as Receiver for Earth Science Tech, Inc. in Case No. A-18-784952-C, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Earth Science Tech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

RECEIVER FOR EARTH SCIENCE TECH, INC.

CASE NO. A-18-784952-C

STRONGBOW ADVISORS, INC.

   
Dated: November 13, 2020 By: /s/ Robert Stevens
    Robert Stevens
     
  Its: Receiver

 

  EARTH SCIENCE TECH, INC.
   
Dated: November 13, 2020 By: /s/ Nickolas S. Tabraue
    Nickolas S. Tabraue, under the supervision and direction of Robert Stevens and Strongbow Advisors, Inc., receiver for Earth Science Tech, Inc. Case No. A-18-784952-C
     
  Its: CEO, President, Director, & Chairman

 

 
EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

 

I, Wendell Hecker Robert Stevens as Receiver for Earth Science Tech, Inc. in Case No. A-18-784952-C, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Earth Science Tech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

RECEIVER FOR EARTH SCIENCE TECH, INC.

CASE NO. A-18-784952-C

STRONGBOW ADVISORS, INC.

   
Dated: November 13, 2020 By: /s/ Robert Stevens
    Robert Stevens
     
  Its: Reciever

 

  EARTH SCIENCE TECH, INC.
   
Dated: November 13, 2020 By: /s/ Wendell Hecker
    Wendell Hecker, under the supervision and direction of Robert Stevens and Strongbow Advisors, Inc., receiver for Earth Science Tech, Inc. Case No. A-18-784952-C
     
  Its: Chief Financial Officer

 

 
EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Earth Science Tech, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nickolas S. Tabraue and Robert Stevens as Receiver for Earth Science Tech, Inc. in Case No. A-18-784952-C, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

(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 result of operations of the Company.

 

 

RECEIVER FOR EARTH SCIENCE TECH, INC.

CASE NO. A-18-784952-C

STRONGBOW ADVISORS, INC.

   
Dated: November 13, 2020 By: /s/ Robert Stevens
    Robert Stevens
     
  Its: Reciever

 

  EARTH SCIENCE TECH, INC.
   
Dated: November 13, 2020 By: /s/ Nickolas S. Tabraue
    Nickolas S. Tabraue, under the supervision and direction of Robert Stevens and Strongbow Advisors, Inc., receiver for Earth Science Tech, Inc. Case No. A-18-784952-C
     
  Its: CEO, President, Director, & Chairman

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Earth Science Tech, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wendell Hecker and Robert Stevens as Receiver for Earth Science Tech, Inc. in Case No. A-18-784952-C, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

(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 result of operations of the Company.

 

 

RECEIVER FOR EARTH SCIENCE TECH, INC.

CASE NO. A-18-784952-C

STRONGBOW ADVISORS, INC.

   
Dated: November 13, 2020 By: /s/ Robert Stevens
    Robert Stevens
     
  Its: Receiver

 

  EARTH SCIENCE TECH, INC.
   
Dated: November 13, 2020 By: /s/ Wendell Hecker
    Wendell Hecker, under the supervision and direction of Robert Stevens and Strongbow Advisors, Inc., receiver for Earth Science Tech, Inc. Case No. A-18-784952-C
     
  Its: Chief Financial Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
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6 Months Ended
Sep. 30, 2020
Nov. 13, 2020
Cover [Abstract]    
Entity Registrant Name Earth Science Tech, Inc.  
Entity Central Index Key 0001538495  
Document Type 10-Q  
Document Period End Date Sep. 30, 2020  
Amendment Flag false  
Current Fiscal Year End Date --03-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   43,981,481
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2021  
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Consolidated Balance Sheets - USD ($)
Sep. 30, 2020
Mar. 31, 2020
Current Assets:    
Cash $ 31,060 $ 30,723
Accounts Receivable(net allowance of $101,404 and 101,404 respectively ) 25,998 38,933
Prepaid expenses and other current assets 10,000 54
Inventory 36,091 63,448
Total current assets 103,149 133,058
Property and equipment, net 2,594 4,133
Other Assets:    
Patent, net
Rou Asset 25,105 11,170
Deposits 6,191 6,191
Total other assets 31,296 17,361
Total Assets 137,039 154,552
Current Liabilities:    
Accounts payable 83,892 82,228
Accrued expenses 191,935 154,552
PPP Loan 31,750
SBA EDIL Loan 106,800
Accrued settlement 3,994,523 231,323
Promissory Note-GHS 30,000 30,000
Lease Liability Current 25,105 11,170
Notes payable - related parties 59,558 59,558
Total current liabilities 4,926,300 980,351
Long Term Liabilities    
Total liabilities 4,926,300 980,351
Commitments and contingencies  
Stockholders' (Deficit) Equity:    
Convertible preferred stock with liquidation preference, par value of $0.001 pre share,10,000,000 shares authorized: 5,200,000 issued and outstanding
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 42,150,391 and 37,813,092 shares issued and outstanding as of September 30, 2020 and March 31, 2020 respectively 42,152 37,814
Additional paid-in capital 28,137,878 28,050,192
Accumulated deficit (32,969,291) (28,913,805)
Total stockholders' (Deficit)Equity (4,789,261) (825,799)
Total Liabilities and Stockholders' (Deficit) Equity 137,039 154,552
Convertible Notes-GHS [Member]    
Current Liabilities:    
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Promissory Note-GHS [Member]    
Current Liabilities:    
Interest Payable-Conv Notes-GHS 6,337 3,630
Convertible Note 1-GHS [Member]    
Current Liabilities:    
Convertible Note 51,372 76,927
Convertible Note 2-GHS [Member]    
Current Liabilities:    
Convertible Note 88,596 88,596
Convertible Note 3-GHS [Member]    
Current Liabilities:    
Convertible Note 88,825 88,825
Convertible Note 4-GHS [Member]    
Current Liabilities:    
Convertible Note 88,894 88,894
Convertible Note 5-GHS [Member]    
Current Liabilities:    
Convertible Note $ 55,000 $ 55,000
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Consolidated Balance Sheets (Parenthetical) - USD ($)
Sep. 30, 2020
Mar. 31, 2020
Statement of Financial Position [Abstract]    
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Convertible preferred stock with liquidation preference, par value $ 0.001 $ 0.001
Convertible preferred stock with liquidation preference, shares authorized 10,000,000 10,000,000
Convertible preferred stock with liquidation preference, shares issued 5,200,000 5,200,000
Convertible preferred stock with liquidation preference, shares outstanding 5,200,000 5,200,000
Common stock, par value $ 0.001 $ 0.001
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Common stock, shares outstanding 42,150,391 37,813,092
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Consolidated Statements of Operations - USD ($)
3 Months Ended 6 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
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Cost of revenues 13,116 84,942 61,241 199,451
Gross Profit 13,435 54,706 37,390 167,832
Operating Expenses:        
Compensation - officers 82,048 58,087 120,375 107,875
Officer Compensation Stock 52,800 142,590
Employee Compensation Stock
Marketing 460 12,194 5,455 32,817
General and administrative 74,020 121,362 148,417 328,484
Loss on disposal of assets
Professional fees 7,400 13,500 8,055 30,291
Bad Debt Expense
Litigation Expense 3,763,200
Cost of legal proceedings 5,000 16,333 13,275 65,355
Research and development 18,000 9,000 40,113
Total operating expenses 168,928 292,276 4,067,777 747,693
Loss from operations (155,493) (237,570) (4,030,387) (579,693)
Other Income (Expenses)        
Interest expense (1,191) (1,191) (2,382) (2,382)
Interest income
Total other income (expenses) (12,495) (12,720) (25,099) (177,294)
Net loss before income taxes (167,988) (250,290) (4,055,486) (756,987)
Income taxes
Net loss $ (167,988) $ (250,290) $ (4,055,486) $ (756,987)
Net loss per common share:        
Loss per common share-Basic and Diluted $ 0 $ 0 $ 0 $ 0
Convertible Note 1-GHS [Member]        
Other Income (Expenses)        
Interest expense $ (1,732) $ (1,385) $ (3,677) $ (4,249)
Convertible Note 2-GHS [Member]        
Other Income (Expenses)        
Interest expense (2,264) (1,406) (4,504) (46,138)
Convertible Note 3-GHS [Member]        
Other Income (Expenses)        
Interest expense (2,270) (1,406) (4,515) (59,176)
Convertible Note 4-GHS [Member]        
Other Income (Expenses)        
Interest expense (2,271) (1,406) (4,518) (58,824)
Promissory Note 5-GHS [Member]        
Other Income (Expenses)        
Interest expense (1,406) (5,321) (2,796) (5,321)
Promissory Note-GHS [Member]        
Other Income (Expenses)        
Interest expense $ (1,361) $ (605) $ (2,707) $ (1,204)
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Consolidated Statements of Stockholders' (Deficit) Equity - USD ($)
Common Stock [Member]
Preferred Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Total
Balance at Mar. 31, 2019 $ 52,206 $ 5,200 $ 27,449,487 $ (27,713,552) $ (206,659)
Balance, shares at Mar. 31, 2019 25,205,400 5,200,000      
Common stock issued for cash
Common stock issued for cash, shares      
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation $ 123 89,667 89,790
Common stock issued for officer compensation, shares 123,000      
Common stock issued for employee compensation
Common stock issued for employee compensation, shares      
BCF intrinsic value on Convertible Note 2-GHS 38,372
BCF intrinsic value on Convertible Note 3-GHS 52,067
BCF intrinsic value on Convertible Note 4-GHS 52,067
Net Loss (506,697) (506,697)
Balance at Jun. 30, 2019 $ 52,329 $ 5,200 27,681,660 (28,220,249) (481,060)
Balance, shares at Jun. 30, 2019 52,328,400 5,200,000      
Balance at Mar. 31, 2019 $ 52,206 $ 5,200 27,449,487 (27,713,552) (206,659)
Balance, shares at Mar. 31, 2019 25,205,400 5,200,000      
Net Loss         (756,987)
Balance at Sep. 30, 2019 $ 52,924 $ 5,200 27,947,861 (28,470,539) (464,554)
Balance, shares at Sep. 30, 2019 52,923,893 5,200,000      
Balance at Jun. 30, 2019 $ 52,329 $ 5,200 27,681,660 (28,220,249) (481,060)
Balance, shares at Jun. 30, 2019 52,328,400 5,200,000      
Common stock issued for cash $ 237 94,763 95,000
Common stock issued for cash, shares 237,500      
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation $ 120 52,680 52,800
Common stock issued for officer compensation, shares 120,000        
Common stock issued for employee compensation $ 238 118,758 118,996
Common stock issued for employee compensation, shares 237,993        
Common stock returned to company
Net Loss (250,290) (250,290)
Balance at Sep. 30, 2019 $ 52,924 $ 5,200 27,947,861 (28,470,539) (464,554)
Balance, shares at Sep. 30, 2019 52,923,893 5,200,000      
Common stock issued for cash $ 448 42,018 42,466
Common stock issued for cash, shares 447,371        
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation
Common stock issued for officer compensation, shares      
Common stock issued for Conversion on Note $ 200 14,500 14,700
Common stock issued for Conversion on Note, shares 200,000        
Adjustment to 8/19/19 conversion rate on 237,993 shares issued to GHS (59,498) (59,498)
Net Loss (180,896) (180,896)
Balance at Dec. 31, 2019 $ 53,572 $ 5,200 27,944,881 (28,651,435) (647,782)
Balance, shares at Dec. 31, 2019 53,371,264 5,200,000      
Common stock issued for cash $ 2,242 82,111 84,353
Common stock issued for cash, shares 241,828        
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation
Common stock issued for officer compensation, shares      
Common stock issued for employee compensation
Common stock issued for employee compensation, shares      
Common stock Cancellation-Majorca 1/24/20 $ (18,000) 18,000
Common stock Cancellation-Majorca 1/24/20, shares (18,000,000)        
Preferred stock Cancellation-Majorca 1/24/20 $ (5,200) 5,200
Preferred stock Cancellation-Majorca 1/24/20, shares (5,200,000)      
Net Loss (262,370) 262,370
Balance at Mar. 31, 2020 $ 37,814 28,050,192 (28,913,805) (825,799)
Balance, shares at Mar. 31, 2020 37,813,092        
Common stock issued for cash $ 1,974 38,618 40,592
Common stock issued for cash, shares 1,973,787        
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation
Common stock issued for officer compensation, shares      
Common stock issued for Conversion on Note
Common stock issued for Conversion on Note, shares      
Common stock returned to company
Net Loss (3,887,498) (3,887,498)
Balance at Jun. 30, 2020 $ 39,788 28,088,810 (32,801,303) (4,672,705)
Balance, shares at Jun. 30, 2020 39,786,879        
Balance at Mar. 31, 2020 $ 37,814 28,050,192 (28,913,805) (825,799)
Balance, shares at Mar. 31, 2020 37,813,092        
Net Loss         (4,055,486)
Balance at Sep. 30, 2020 $ 42,152 28,137,878 (32,943,191) (4,789,261)
Balance, shares at Sep. 30, 2020 42,150,391        
Balance at Jun. 30, 2020 $ 39,788 28,088,810 (32,801,303) (4,672,705)
Balance, shares at Jun. 30, 2020 39,786,879        
Common stock issued for cash $ 864 19,068 19,932
Common stock issued for cash, shares 863,512        
Common stock issued for services
Common stock issued for services, shares      
Common stock issued for officer compensation
Common stock issued for officer compensation, shares      
Common stock issued for Conversion on Note $ 1,500 30,000 31,500
Common stock issued for Conversion on Note, shares 1,500,000        
Common stock returned to company
Net Loss (141,888) (167,988)
Balance at Sep. 30, 2020 $ 42,152 $ 28,137,878 $ (32,943,191) $ (4,789,261)
Balance, shares at Sep. 30, 2020 42,150,391        
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical)
Aug. 18, 2019
shares
Statement of Stockholders' Equity [Abstract]  
Common stock issued for conversion of note, shares 237,993
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.20.2
Consolidated Statements of Cash Flows - USD ($)
6 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash Flow From Operating Activities:    
Net loss $ (4,055,486) $ (756,987)
Adjustments to reconcile net loss to net cash from operating activities:    
Stock-based compensation 142,590
Stock issued for services
Intrinsic value of Conv Notes-Addtl Paid-in-Capital 142,506
Depreciation and amortization 1,539 3,623
Changes in operating assets and liabilities:    
Increase/Decrease in deposits
Increase/Decrease in prepaid expenses and other current assets 2,989 33,083
Decrease/Increase in inventory 27,257 28,090
Increase in other assets  
Increase in accrued settlement 3,763,200
Increase in accounts payable 168,814 22,306
Net Cash Used in Operating Activities (91,687) (384,789)
Investing Activities:    
Purchases of property and equipment
Patent expenditures
Net Cash Used in Investing Activities
Financing Activities:    
Proceeds from issuance of common stock 60,524 95,000
Proceeds from notes payable- related party
Proceeds from Convertible Notes 31,500 220,000
Intrinsic value of Conv Notes-Addtl Paid-in-Capital
Officer Compensation Stock
Repayment of advances from related party
Net Cash Provided by Financing Activities 92,024 31,500
Net Decrease in Cash 337 (69,789)
Cash - Beginning of year 30,723 127,524
Cash - End of year $ 31,060 $ 57,735
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.20.2
Organization and Nature of Operations
6 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Nature of Operations

Note 1 — Organization and Nature of Operations

 

Earth Science Tech, Inc. (“ETST” or the “Company”) was incorporated under the laws of the State of Nevada on April 23, 2010. ETST 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 illnesses and the quality of life for consumers worldwide. The Company sells its products through its retail store located in Coral Gables Florida and through the internet. ETST is currently 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 and aging. ETST products include vitamins, minerals, herbs, botanicals, personal care products, homeopathies, functional foods, and other products. These products are marketed in various formulations and delivery forms including capsules, tablets, soft gels, chewables, liquids, creams, sprays, powders, and whole herbs. During 2015, ETST entered into a license and distribution agreement to provide its Cannabidiol oil to retailers in the vaping industry.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.20.2
Summary of Significant Accounting Policies
6 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

 

Basis of presentation

 

The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied.

 

Principles of consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Earth Science Tech Inc, Nutrition Empire Co. Ltd., Earth Science Vapor, Earth Science Pharmaceutical Inc.,Kannabidioid Inc.

 

All intercompany balances and transactions have been eliminated on consolidation.

 

Use of estimates and assumptions

 

The preparation of the condensed 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 periods.

 

The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves 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.

 

Carrying value, recoverability and impairment of long-lived assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent, 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 asset’s 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 Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, is included in operating expenses.

 

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 ASC 850 for the identification of related parties and disclosure of related party transactions.

 

Pursuant to this ASC 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 825-10-15, 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 ASC 450 to account 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. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. 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 Company’s 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 Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

Revenue recognition

 

The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

 

The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the considerations to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize when or as the Company satisfies a performance obligation.

 

The Company recognizes its retail store revenue at point of sale, net of sales tax.

 

Inventories

 

Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary 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.

 

Research and development

 

Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general.

 

Net loss per common share

 

The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations 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 September 30, 2020 the Company has zero warrants that are anti-dilutive and not included in the calculation of diluted loss per share.

 

Cash flows reporting

 

The Company follows ASC 230 to report cash flows. This standard 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 this standard 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 separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard.

 

Stock based compensation

 

The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock- based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred.

 

The Company accounts for transactions in which service are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50.

 

Property and equipment

 

Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:

 

Leasehold improvements    Shorter of useful life or term of lease
Signage   5 years
Furniture and equipment   5 years
     
Computer equipment   5 years

 

The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Going Concern
6 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
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. At September 30, 2020, the Company had negative working capital, an accumulated deficit of $32,969,291 and was in negotiations to extend the maturity date on notes payable that are in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient to pay its obligations and support the Company’s 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 may 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 Company’s ability to further implement its business plan and generate sufficient revenues.

 

The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Commitments and Contingencies
6 Months Ended
Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 4 - Commitments and Contingencies

 

Legal Proceeding

 

On January 11, 2019, the Company received notice that Strongbow Advisors, Inc. and Robert Stevens (“Stevens”, and together with Strongbow, the “Receiver”) had been appointed by the Nevada District Court, as Receiver for the Registrant in Case No. A-18-784952-C (the “Order).

 

The Company sought the appointment of the Receiver after it found itself in an imminent danger of insolvency following the issuance by an arbitration panel of an award (the “Award”) in the sum of $3,994,522 in favor of Cromogen Biotechnology Corporation (“Cromogen”) in the matter entitled Cromogen Biotechnology Corporation vs. Earth Science Tech, Inc. (the “Cromogen Litigation”). The Nevada District Court found that the Company was in fact insolvent and ordered the appointment of the Receiver.

 

The Award consisted of a sum for breach of contract against the Company in the amount of $120,265.00, a sum for costs and fees against the Company in the amount of $111,057.00 and a sum for the claim of tortuous interference and conversion against the Company in the amount of $3,763,200.00. The District Court in Florida had confirmed the Award granted by the arbitration panel, denying however, the award of fees that the arbitration panel had granted Cromogen.

 

Earth Science Tech, Inc. appealed this decision but Cromogen prevailed in No. 19-10118, United States Court of Appeals for the Eleventh Circuit on April 14, 2020. The Receiver subsequently allowed Cromogen status as an unsecured creditor in the estate. As of the date of this filing the Company remains in danger of insolvency if a plan of reorganization is not subsequently approved by the court that adequately resolves the Cromogen unsecured debt or Cromogen agrees to a settlement. Previous attempts to settle the amounts with Cromogen have been fruitless.

 

As part of the impact of the receivership, the Court issued a Writ of Injunction or “Blanket Stay” covering the Company and its assets during the time that the Company is in receivership. As a result of the “Blanket Stay” the Company’s estate is protected from creditors and interference with its administration is prevented while the Company’s financial issues are being fully analyzed and resolved. As part of this process, creditors will be notified and required to provide claims in writing under oath on or before the deadline stated in the notice provided by the Receiver or those claims will be barred under NRS §78.675. The Blanket Stay will remain in place unless otherwise waived by the Receiver, or it is vacated by the Court or alternatively, lifted by the Court, upon a “motion to lift stay” duly made and approved by the Nevada District Court.

 

The appointment of the Receiver was approved unanimously by the Board and by a majority of the Company’s shareholders. Strongbow and Stevens were selected because of their reputation in helping (i) companies restructure and (ii) to execute on their business plans, albeit under a debt and capital structure that allows them to succeed. Stevens and Strongbow assist companies by helping them raise the capital needed not only to pay debts, but build and grow their businesses. The Receiver, however, is an agent of the court, and will be independent and neutral in managing the Company’s operations and trying to preserve the Company’s value for the creditors and shareholders.

 

There are a number of possible outcomes to the receivership, including settlement and payment to creditors, reorganization, or liquidation. The Receiver was tasked by the Court with bringing to a final settlement all of the unfinished business of the Company. Towards that end, the Receiver is allowed, under Section 3(p) of the Order, to borrow money, incur debt, and issue stock, debentures and other financial instruments. The Receiver intends to use the proceeds from our initial sale of shares to GHS to pay and settle the Company’s debts, while preserving the value of its assets for the benefit of its shareholders. If the Receiver is not successful in mitigating the Company’s liabilities, or otherwise, the Company’s results could be materially adversely impacted and the Company may be forced to liquidate its business.

 

On November 7, 2019 the Receiver for Earth Science Tech, Inc., a Nevada corporation (the “Company”) filed a motion for preliminary injunction against Majorca Group Ltd. in the 8th Judicial District in Clark County, Nevada. The filing requests a show cause hearing whereby the Company will request the Court grants it motion to cancel certain shares and class of stock and to nullify certain amendments of the Articles of Incorporation. Specifically, the Company is asking that Majorca Group Ltd. be restricted from selling, transferring, converting, encumbering, hypothecating, obtaining loans against or in any fashion or in any way transferring their shares of common and preferred stock in the Company. Additionally the motion seeks a Freezing Injunction over any broker, bank, any financial institution, attorney, or agent holding shares of the Company as well as any proceeds from shares of the Company.

 

On January 27, 2020 Earth Science Tech, Inc., a Nevada corporation (the “Company”) reached a confidential settlement with Majorca Group, Ltd (“Majorca”). The Receiver will withdraw its motion for injunction over the Majorca common and preferred shares. The Settlement Agreement provides that Majorca Group, Ltd. and all relevant parties will, within 10 days of execution of the settlement agreement, return 18,000,000 common shares and 5,200,000 Series A Preferred Stock held by Majorca for cancellation. The Series A Preferred Stock class will be cancelled completely. The remaining 6,520,000 common shares held by Majorca is subject to lockup agreement and thereafter, sales will be made only pursuant to a limited strict bleed-out agreement administered by a third party.

 

On May 19, 2020 to effect a holding company reorganization (the “Delaware Reorg”), which will result in a newly formed Delaware corporation, ETST Holdings, Inc., (“ETST Delaware “), owning all the capital stock of Earth Science Tech, Inc. ETST Delaware will initially be a direct, wholly owned subsidiary of Earth Science Tech, Inc. Pursuant to the Delaware Reorg, a newly formed entity (“Merger Sub”), a direct, wholly owned subsidiary of ETST Delaware and an indirect, wholly owned subsidiary of Earth Science Tech, Inc., will merge with and into Earth Science Tech, Inc., with Earth Science Tech, Inc. surviving as a direct, wholly owned subsidiary of ETST Delaware. Each share of each class of Earth Science Tech, Inc. stock issued and outstanding immediately prior to the ETST Delaware Merger will automatically convert into an equivalent corresponding share of ETST Delaware stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Earth Science Tech, Inc. stock being converted. Accordingly, upon consummation of the ETST Delaware Merger, Earth Science Tech, Inc.’s current stockholders will become stockholders of ETST Delaware. The stockholders of Earth Science Tech, Inc. will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of their shares in the ETST Delaware Merger.

 

The ETST Delaware Merger was conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations. Effective upon the consummation of the ETST Delaware Merger, ETST Delaware will adopt an amended and restated certificate of incorporation and amended and restated bylaws that are identical to those of Earth Science Tech, Inc. immediately prior to the consummation of the ETST Delaware Merger, except for the change of the name of the corporation as permitted by Section 251(g). Furthermore, the conversion will occur automatically without an exchange of stock certificates. Stock certificates previously representing shares of a class of Earth Science Tech, Inc. stock will represent the same number of shares of the corresponding class of ETST Delaware stock after the ETST Delaware Merger. Following the consummation of the ETST Delaware Merger shares of our Common Stock will continue to trade on the under the symbol ETST on the OTC Markets. 

 

We lease all our office space used to conduct our business. We adopted ASC 842 effective January 1, 2019. For contracts entered into on or after the effective date, at the inception of a contract we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

 

Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. All our operating leases are comprised of office space leases.

 

For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

 

Lease Agreements

 

On August 14, 2017, the Company entered into an office lease covering its new Doral, Florida headquarters, with landlord Doral Flex. The Lease term is for 37 months commencing on September 1, 2017 and ending on September 30, 2020. The monthly rent, including sales tax is $1,990, $2,056 and $2,124 for the years ending 9/30/2018, 9/30/2019 and 9/30/2020 respectively. A deposit of $6,191 was tendered to secure the lease. Rent expense for the three months ended September 30, 2020 was $6,995.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Balance Sheet and Income Statement Footnotes
6 Months Ended
Sep. 30, 2020
Balance Sheet And Income Statement Footnotes  
Balance Sheet and Income Statement Footnotes

Note 5 - Balance Sheet and Income Statement Footnotes

 

Accounts receivable represent normal trade obligations from customers that are subject to normal trade collection terms, without discounts or rebates. If collection is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Notwithstanding, these collections, the Company periodically evaluates the collectability of accounts receivable and considers the need to establish an allowance for doubtful debts based upon historical collection experience and specifically identifiable information about its customers. As of September 30, 2020, the Company had allowances of $101,404. The Company used an allowance of 40% of receivables over 90 days to charge bad debt expense.

 

Accounts payable are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities

 

Accrued expenses of $191,935 as of September 30, 2020 mainly represent $30,935 of accrued interest on notes payable and accrued payroll for Michel Aube and Nickolas Tabraue for $161,000.

 

As September 30, 2020, ROU Asset was $25,105 and Lease Liability-Current was $25,105.

 

Convertible Note 1-GHS resulted in a conversion on 8/28/20 reducing principal balance from $76,927 to $ 51,372. 1,500,000 shares of common stock were issued to satisfy $25,555 in principal and $5,945 in interest for a total of $31,500.

 

On July 27, 2020 a SBA loan was established for $106,800 at a rate of 3.75% per annum for 30 years. A monthly payment of $521 including principal and interest will begin 7/27/21.

 

General and administrative expenses were $74,020 and $121,362 for the three months ended September 30, 2020 and 2019 respectively and $148,417 and $328,484 for the six months ended September 30, 2020 and 2019 respectively. For the three months ended September 30, 2020, the majority comprised of receiver admin fees in the amount of $18,950 and accounting fees of $27,800. The remainder of, $27,270 was for employee compensation, rent, and other expenses. For the six months ended September 30, 2020 the majority comprised of receiver admin fees in the amount of $48,950 and accounting fees of $37,800. The remainder of $61,667 was for employee compensation, rent and other expenses.

 

Professional fees were $7,400 for the three months ended September 30, 2020. The bulk of these expenses were paid to OTC Markets in the amount of $6,500.

 

Cost of legal proceedings was $5,000 for the three months ended September 30, 2020. Legal expenses were for corporate attorney fees.

 

Interest expense was $12,495 and $12,720 for three months ended September 30, 2020 and 2019. Interest expense for three months ended September 30, 2020 was mainly $11,304 for Convertible Notes-GHS.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events
6 Months Ended
Sep. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

Note 6 - Subsequent Events

 

There were no subsequent events.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.20.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Basis of Presentation

Basis of presentation

 

The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied.

Principles of Consolidation

Principles of consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Earth Science Tech Inc, Nutrition Empire Co. Ltd., Earth Science Vapor, Earth Science Pharmaceutical Inc.,Kannabidioid Inc.

 

All intercompany balances and transactions have been eliminated on consolidation.

Use of Estimates and Assumptions

Use of estimates and assumptions

 

The preparation of the condensed 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 periods.

 

The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves 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.

Carrying Value, Recoverability and Impairment of Long-lived Assets

Carrying value, recoverability and impairment of long-lived assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent, 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 asset’s 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 Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, is included in operating expenses.

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.

Related Parties

Related parties

 

The Company follows ASC 850 for the identification of related parties and disclosure of related party transactions.

 

Pursuant to this ASC 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 825-10-15, 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

Commitments and contingencies

 

The Company follows ASC 450 to account 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. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. 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 Company’s 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 Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Revenue Recognition

Revenue recognition

 

The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

 

The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the considerations to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize when or as the Company satisfies a performance obligation.

 

The Company recognizes its retail store revenue at point of sale, net of sales tax.

Inventories

Inventories

 

Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value.

Cost of Sales

Cost of Sales

 

Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments.

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.

Research and Development

Research and development

 

Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general.

Net Loss Per Common Share

Net loss per common share

 

The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations 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 September 30, 2020 the Company has zero warrants that are anti-dilutive and not included in the calculation of diluted loss per share.

Cash Flows Reporting

Cash flows reporting

 

The Company follows ASC 230 to report cash flows. This standard 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 this standard 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 separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard.

Stock Based Compensation

Stock based compensation

 

The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock- based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred.

 

The Company accounts for transactions in which service are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50.

Property and Equipment

Property and equipment

 

Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:

 

Leasehold improvements    Shorter of useful life or term of lease
Signage   5 years
Furniture and equipment   5 years
     
Computer equipment   5 years

 

The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.20.2
Organization and Nature of Operations (Tables)
6 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Schedule of Property and Equipment Estimated Useful Lives

Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:

 

Leasehold improvements    Shorter of useful life or term of lease
Signage   5 years
Furniture and equipment   5 years
     
Computer equipment   5 years
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.20.2
Summary of Significant Accounting Policies (Details Narrative)
6 Months Ended
Sep. 30, 2020
shares
Warrants [Member]  
Antidilutive securities amount 0
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details)
6 Months Ended
Sep. 30, 2020
Leasehold Improvements [Member]  
Property and Equipment, Estimated Useful Lives Shorter of useful life or term of lease
Signage [Member]  
Property and Equipment, Useful Life 5 years
Furniture and Equipment [Member]  
Property and Equipment, Useful Life 5 years
Computer Equipment [Member]  
Property and Equipment, Useful Life 5 years
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.20.2
Going Concern (Details Narrative) - USD ($)
Sep. 30, 2020
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Accumulated deficit $ (32,969,291) $ (28,913,805)
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Commitments and Contingencies (Details Narrative) - USD ($)
3 Months Ended
Jan. 27, 2020
Jan. 11, 2019
Aug. 14, 2017
Sep. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Sep. 30, 2018
Lease term agreement     37 months        
Rent including sales tax       $ 2,124   $ 2,056 $ 1,990
Deposits       6,191 $ 6,191    
Rent expenses       $ 6,995      
Cromongen Biotechnology Corporation [Member]              
Amount of breach of contract to be accrued   $ 3,994,522          
Breach of contract amount   120,265          
Costs and fees amount   111,057          
Conversion value   $ 3,763,200          
Majorca Group Ltd [Member]              
Discription of confidential settlement On January 27, 2020 Earth Science Tech, Inc., a Nevada corporation (the "Company") reached a confidential settlement with Majorca Group, Ltd ("Majorca"). The Receiver will withdraw its motion for injunction over the Majorca common and preferred shares. The Settlement Agreement provides that Majorca Group, Ltd. and all relevant parties will, within 10 days of execution of the settlement agreement, return 18,000,000 common shares and 5,200,000 Series A Preferred Stock held by Majorca for cancellation. The Series A Preferred Stock class will be cancelled completely. The remaining 6,520,000 common shares held by Majorca is subject to lockup agreement and thereafter, sales will be made only pursuant to a limited strict bleed-out agreement administered by a third party.            
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Balance Sheet and Income Statement Footnotes (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Aug. 28, 2020
Jul. 27, 2020
Aug. 18, 2019
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Aug. 27, 2020
Mar. 31, 2020
Allowance for accounts receivable       $ 101,404   $ 101,404     $ 101,404
Allowance for accounts receivable, percentage           40.00%      
Accrued expenses       191,935   $ 191,935     154,552
Accrued interest       30,935   30,935      
ROU Asset       25,105   25,105     11,170
Lease liability current       25,105   25,105     $ 11,170
Principal amount $ 31,500                
Common stock issued for Conversion on Note, shares     237,993            
General and administrative expenses       74,020 $ 121,362 148,417 $ 328,484    
Admin fee       18,950   48,950      
Accounting fees       27,800   37,800      
Employee compensation rent and other expenses       27,270   61,667      
Professional fees       7,400 13,500 8,055 30,291    
Payment of professional fees       6,500          
Legal fees       5,000 16,333 13,275 65,355    
Interest expense       1,191 1,191 2,382 2,382    
Convertible Note 1-GHS [Member]                  
Principal amount $ 51,372             $ 76,927  
Common stock issued for Conversion on Note, shares 1,500,000                
Principal $ 25,555                
Principal interest $ 5,945                
Interest expense       1,732 $ 1,385 3,677 $ 4,249    
SBA Loan [Member]                  
Principal amount   $ 106,800              
Intrest rate   3.75%              
Loan term   30 years              
Monthly payment   $ 521              
Convertible Notes-GHS [Member]                  
Interest expense       11,304          
Michael Aube [Member]                  
Accrued payroll       161,000   161,000      
Nickolas Tabraue [Member]                  
Accrued payroll       $ 161,000   $ 161,000      
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