UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023
| ☐ | ||
| TRANSITION REPORT | ||
Commission File Number: 333-179280
EARTH SCIENCE TECH, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)
| 80-0931484 | ||
(State or of | (I.R.S. Employer Identification No.) |
8950 SW 74th CT Suite 101 Miami, FL33156 (Address of principal executive offices) (zip code) (305)724-5684 ( |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock $0.001 par value | ETST | Over the Counter Bulletin Board |
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. files). Yes X ☒ No [ ]
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
| 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 June 30, 2023, there were Common and 1,000,000 Preferred shares outstanding of each of the issuer’s classes of commonregistrant’s stock as of the latest practicable date:outstanding.
| |
TABLE OF CONTENTS
| Page | ||
| PART I. FINANCIAL INFORMATION | ||
| ITEM 1. | Financial Statements (Unaudited) | F-1 |
| Balance Sheets as of June | ||
| F-1 | ||
| Statements of Operations for the Three Months Ended June 30, 2023, and 2022 | F-2 | |
| Statements of Changes in Shareholders Equity the Three Months Ended June 30, 2023 | F-3 | |
| Statements of Cash Flows for the Three Months Ended June 30, 2023, and 2022 | F-4 | |
| Notes for the Financial Statements | F-5 - F-15 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of | |
| Quantitative and Qualitative Disclosures | ||
| Controls and | ||
| PART | ||
| 12 | ||
| Risk Factors | 12 | |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of | |
| Defaults Upon Senior Securities | ||
| Mine Safety | ||
| Other | ||
| 14 | ||
| 2 |
December 31 2015 | March 31, 2015 | |||||||
| Current Assets: | (Unaudited) | |||||||
| Cash | $ | 123,811 | $ | 324,378 | ||||
| Prepaid expenses | ‐ | 101,619 | ||||||
| Inventory | 165,770 | 235,588 | ||||||
| Total current assets | 289,581 | 661,585 | ||||||
| Property and equipment , net | 71,290 | 65,854 | ||||||
| Other Assets: | ||||||||
| Patent, net | 27,556 | 29,078 | ||||||
| Deposits | 21,698 | 17,211 | ||||||
| Total other assets | 49,254 | 46,289 | ||||||
| Total Assets | $ | 410,125 | $ | 773,728 | ||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)/EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 208,817 | $ | 88,655 | ||||
| Notes payable ‐ related parties | 59,558 | 59,558 | ||||||
| Accrued settlement | 236,250 | ‐ | ||||||
| Total liabilities | 504,625 | 148,213 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ (Deficit)/Equity: | ||||||||
| Convertible preferred stock with liquidation preferencce, par value of $0.001 per share, 10,000,000 shares authorized; 5,200,000 shares issued and outstanding | 5,200 | 5,200 | ||||||
| Common stock, par value $0.001 per share, 75,000,000 shares authorized; 39,570,662 and 38,229,829 shares issued and outstanding as of December 31, 2015 and March 31, 2015 respectively | 39,571 | 38,230 | ||||||
| Additional paid‐in capital | 22,388,272 | 21,998,214 | ||||||
| Accumulated deficit | (22,527,543 | ) | (21,416,129 | ) | ||||
| Total stockholders’ (Deficit)/Equity | (94,500 | ) | 625,515 | |||||
| Total Liabilities and Stockholders'(Deficit)/Equity | $ | 410,125 | $ | 773,728 | ||||
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenue | $ | 173,995 | $ | 14,251 | $ | 371,046 | $ | 20,851 | ||||||||
| Cost of revenues | 96,453 | 15,416 | 288,372 | 19,998 | ||||||||||||
| Gross Profit (loss) | 77,542 | (1,165 | ) | 82,674 | 853 | |||||||||||
| Operating Expenses: | ||||||||||||||||
| Marketing | (17,045 | ) | 115,402 | 48,975 | 293,157 | |||||||||||
| Compensation ‐ officers | 67,000 | 231,000 | 112,542 | 356,000 | ||||||||||||
| General and administrative | 145,407 | (26,165 | ) | 415,777 | 78,456 | |||||||||||
| Professional fees | 11,350 | 198,971 | 221,027 | 241,348 | ||||||||||||
| Consulting Fees‐related party | ‐ | 7,072,000 | ‐ | 7,072,000 | ||||||||||||
| Cost of legal proceedings | 137,227 | ‐ | 392,227 | ‐ | ||||||||||||
| Research and development | ‐ | 2,681 | ‐ | 14,833 | ||||||||||||
| Total operating expenses | 343,939 | 7,593,889 | 1,190,548 | 8,055,794 | ||||||||||||
| Loss from Operations | (266,397 | ) | (7,595,054 | ) | (1,107,874 | ) | (8,054,941 | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest expense | (1,190 | ) | (3,443 | ) | (3,572 | ) | (3,443 | ) | ||||||||
| Interest income | ‐ | 45 | 32 | 110 | ||||||||||||
| Total other income (expenses) | (1,190 | ) | (3,398 | ) | (3,540 | ) | (3,333 | ) | ||||||||
| Net loss before income taxes | (267,587 | ) | (7,598,452 | ) | (1,111,414 | ) | (8,058,274 | ) | ||||||||
| Income taxes | ‐ | ‐ | ‐ | ‐ | ||||||||||||
| Net loss | $ | (267,587 | ) | $ | (7,598,452 | ) | $ | (1,111,414 | ) | $ | (8,058,274 | ) | ||||
| Loss per common share: | ||||||||||||||||
| Loss per common share ‐ Basic and Diluted | $ | (0.01 | ) | $ | (0.20 | ) | $ | (0.03 | ) | $ | (0.22 | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic and Diluted | 38,924,418 | 37,625,461 | 38,548,246 | 37,351,215 | ||||||||||||
For the Nine Months Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Cash Flow From Operating Activities: | ||||||||
| Net loss | $ | (1,111,414 | ) | $ | (8,058,274 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock‐based compensation | 161,650 | 7,860,051 | ||||||
| Depreciation and amortization | 9,225 | ‐ | ||||||
| Inventory impairment | 78,146 | ‐ | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) Decrease in deposits | (4,487 | ) | 111,589 | |||||
| Decrease in prepaid expenses | 58,494 | ‐ | ||||||
| Increase in inventory | (8,328 | ) | (197,828 | ) | ||||
| Increase in accounts payable and accrued liabilities | 120,163 | 25,616 | ||||||
| Increase in accrued settlement | 236,250 | ‐ | ||||||
| Net Cash Used in Operating Activities | (460,301 | ) | (258,846 | ) | ||||
| Investing Activities: | ||||||||
| Purchases of property and equipment | (13,140 | ) | (53,783 | ) | ||||
| Intangible asset purchases | ‐ | (25,000 | ) | |||||
| Net Cash Used in Investing Activities | (13,140 | ) | (78,783 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds from issuance of common stock | 272,874 | 299,000 | ||||||
| Proceeds from notes payable‐related party | ‐ | 20,953 | ||||||
| Repayments of advances from related party | ‐ | (166,511 | ) | |||||
| Net Cash Provided by Financing Activities | 272,874 | 153,442 | ||||||
| Net Decrease in Cash | (200,567 | ) | (184,187 | ) | ||||
| Cash ‐ Beginning of Period | 324,378 | 376,704 | ||||||
| Cash ‐ End of Period | $ | 123,811 | $ | 192,517 | ||||
| Supplement Disclosure of Non Cash Investing and Financing Activities: | ||||||||
| Reversal of prepaid expenses and additional paid in capital due to re-measurement of shares issued for web marketing services | $ | 43,125 | $ | - | ||||
Earth Science Tech, Inc. ("ETST"& Subsidiaries
Consolidated Balance Sheets
| June 30, 2023 | March 31, 2023 | |||||||
| ASSETS: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 91,989 | $ | 35,756 | ||||
| Inventory | 101,807 | 10,260 | ||||||
| Total current assets | 193,796 | 46,016 | ||||||
| Property and equipment, net | 120,399 | 143,213 | ||||||
| Right of use asset, net | 194,543 | 200,674 | ||||||
| Intangible assets, net | 133,613 | 137,819 | ||||||
| Goodwill | 2,110,368 | 2,164,480 | ||||||
| Other assets | - | - | ||||||
| Total Assets | $ | 2,752,719 | $ | 2,692,202 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 519,361 | $ | 517,137 | ||||
| Current portion of loans and obligations | 284,776 | 604,767 | ||||||
| Other payables | 111,751 | 117,193 | ||||||
| Current portion of operating lease obligations | 46,621 | 68,188 | ||||||
| Total current liabilities | 962,509 | 1,307,285 | ||||||
| Operating lease obligations; less current maturities | 96,743 | 96,743 | ||||||
| Loans and obligations; less current maturities | 204,408 | 204,408 | ||||||
| Total liabilities | 1,263,660 | 1,608,436 | ||||||
| Commitments and contingencies | - | |||||||
| Stockholders’ (Deficit) Equity: | ||||||||
| Preferred stock, par value $ per share, shares authorized; and shares issued and outstanding as of June 30, 2023, and June 30, 2022, respectively | 1,000 | 1,000 | ||||||
| Common stock, par value $ per share, shares authorized; and shares issued and outstanding as of June 30, 2023, and March 31, 2023, respectively | 314,552 | 282,612 | ||||||
| Additional paid-in capital | 31,766,199 | 31,303,138 | ||||||
| Accumulated deficit | (30,592,692 | ) | (30,502,984 | ) | ||||
| Total stockholders’ (Deficit) Equity | 1,489,059 | 1,083,766 | ) | |||||
| Total Liabilities and Stockholders’ Equity | $ | 2,752,719 | $ | 2,692,202 | ||||
| F-1 |
Earth Science Tech, Inc. & Subsidiaries
Consolidated Statements of Operations
| 2023 | 2022 | |||||||
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenues, net | $ | 219,934 | $ | - | ||||
| Cost of revenues | 71,165 | - | ||||||
| Gross Profit | 148,769 | - | ||||||
| Operating Expenses: | ||||||||
| Officer’s cash compensation | $ | 5,654 | $ | 31,250 | ||||
| Selling and marketing | $ | 11,376 | $ | - | ||||
| General and administrative | $ | 115,941 | $ | 142,997 | ||||
| Bad debt expense | $ | - | $ | - | ||||
| Licenses and fees | $ | 1,954 | $ | 512,725 | ||||
| Research and Development | $ | 6,817 | $ | - | ||||
| Legal and professional | $ | 18,420 | $ | 5,200 | ||||
| Depreciation and amortization | $ | 65,697 | $ | - | ||||
| Total operating expenses | $ | 225,859 | $ | 692,172 | ||||
| Loss from operations | (77,090 | ) | (692,172 | ) | ||||
| Other Income (Expenses): | ||||||||
| Other income | $ | - | 547,608 | |||||
| Interest expense | (12,618 | ) | (10,118 | ) | ||||
| Total other income (expenses) | (12,618 | ) | (10,118 | ) | ||||
| Net Profit/(Loss) before income taxes | (89,708 | ) | (154,682 | ) | ||||
| Income taxes | - | - | ||||||
| Net Profit/(Loss) | $ | (89,708 | ) | $ | (154,682 | ) | ||
| F-2 |
Earth Science Tech, Inc. & Subsidiaries
Consolidated Statements of Stockholders’ (Deficit) Equity
For Fiscal Quarters Ended June 30, 2023, and 2022
| Description | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Description | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||
| Balance at March 31, 2023 | 282,611,083 | $ | 282,612 | $ | 1,000,000 | 1,000 | $ | 31,303,138 | $ | (30,502,984 | ) | 1,083,766 | ||||||||||||||||
| Balance | 282,611,083 | $ | 282,612 | $ | 1,000,000 | 1,000 | $ | 31,303,138 | $ | (30,502,984 | ) | 1,083,766 | ||||||||||||||||
| Common stock issued for cash | 18,533,334 | 18,534 | 91,467 | |||||||||||||||||||||||||
| Common stock issued for Conversion on Note | 13,406,313 | 13,406 | 371,594 | |||||||||||||||||||||||||
| Net Profit/(Loss) | - | - | (89,708 | ) | (89,708 | ) | ||||||||||||||||||||||
| Balance at June 30, 2023 | 314,550,730 | $ | 314,552 | $ | 1,000,000 | 1,000 | $ | 31,766,199 | $ | (30,592,692 | ) | 1,489,059 | ||||||||||||||||
| Balance | 314,550,730 | $ | 314,552 | $ | 1,000,000 | 1,000 | $ | 31,766,199 | $ | (30,592,692 | ) | 1,489,059 | ||||||||||||||||
| F-3 |
Earth Science Tech, Inc. & Subsidiaries
Consolidated Statements of Cash Flows
| 2023 | 2022 | |||||||
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Profit/(Loss) | (89,708 | ) | (154,682 | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Stock-based compensation | - | - | ||||||
| Gain on payable settlement | - | - | ||||||
| Depreciation and amortization | 65,696 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Deposits | - | - | ||||||
| Prepaid expenses and other current assets | - | (250,000 | ) | |||||
| Inventory | (91,547 | ) | - | |||||
| Other current liabilities | - | - | ||||||
| Accrued settlement | - | 295,000 | ||||||
| Accounts payable and accrued expenses | 61,792 | (46,937 | ) | |||||
| Net cash used in operating activities | (53,767 | ) | (24,077 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | - | - | ||||||
| Net cash used in investing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 110,000 | - | ||||||
| Payments on debt obligations | - | - | ||||||
| Proceeds from loans and notes | - | 150,000 | ||||||
| Net Cash Provided by Financing Activities | 110,000 | 150,000 | ||||||
| Net increase (decrease) in cash and cash equivalents | 56,233 | (6,619 | ) | |||||
| Cash and cash equivalents at beginning of the period | 35,756 | 26,942 | ||||||
| Cash and cash equivalents at end of the period | 91,989 | 20,323 | ||||||
| Non-Cash Transactions | ||||||||
| Common stock issued on conversion of notes payable | 13,406,313 | - | ||||||
| F-4 |
EARTH SCIENCE TECH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(UNAUDITED)
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. ETST2010, and subsequently changed its domicile to the State of Florida on June 27, 2022. As of November 8, 2022, the Company is a unique biotechnology companyholding entity set to acquire companies with its current focus in the health and wellness industry. The Company is presently in compounding pharmaceuticals and telemedicine through its wholly owned subsidiaries RxCompoundStore.com, LLC. (“RxCompound”), Peaks Curative, LLC. (“Peaks”), and Earth Science Foundation, Inc. (“ESF”).
RxCompound is a complete compounding pharmacy. RxCompound is currently licensed to fulfill prescriptions in the states of Florida, New York, New Jersey, Delaware, Pennsylvania, Rhode Island, Nevada, Colorado, and Arizona. RxCompound is in the application process to obtain licenses in the remaining states in which it is not yet licensed to fulfill prescriptions.
Peaks is a telemedicine referral site 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. ETSTmen’s health. Peaks’ orders are exclusively fulfilled by RxCompound. Patients who order Peaks via monthly subscription receive their refills automatically. Currently, Peaks is currently focused on delivering nutritionalMen’s health, 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. This maymore specifically, ED. The company intends to expand offerings to include over the counter (“OTC”) (non-prescription) products such as vitamins, minerals, herbs, botanicals, personal care products, homeopathies, functional foods,supplements and other products. Thesetopicals. The OTC products will be custom manufactured or fulfilled through partnered companies under the Peaks brand and offered worldwide.
ESF is a favored entity of the Company, effectively being a non-profit organization that was incorporated on February 11, 2019, and is structured to accept grants and donations to help those in various formulations and delivery forms including capsules, tablets, soft gels, chewables, liquids, creams, sprays, powders, and whole herbs.
Note 2 — Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company, Nutrition Empire Inc. and Earth Science Tech Vapor One, Inc. (the "Company") as of December 31, 2015.
Principles of consolidation
The accompanying consolidated financial statements should be read in conjunction withinclude all the Company's audited financial statements for the year ended March 31, 2015 contained in the Company's Annual Report. on Form 10-K/A filed with the SEC on May 10, 2016. The results of operations for the nine months ended December 31, 2015, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ended March 31, 2016.
The Company’s acquisition of December 2014, Nutrition Empire, Inc.RxCompound was opened as a brick and mortar retail store that provides health, wellness, sports nutrition and dietary supplement products at competitive prices. In March 2015, the Company created Earth Science Tech Vapor One, Inc., a license and distribution company allowing us entry in the maturing marketplaceconsummated on November 8, 2022, along with Peaks; however, RxCompound completed its PCAOB audit on February 3, 2023 (“Acquisition Date”). Operating results of the vaping industry. Our licensing relationship gives us the market mobility, allowing us to capture the emerging market offering our Cannabidiol oil to our retail partners as demand emerges.
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.
| F-5 |
Carrying value, recoverability, and impairment of long-lived assets
The Company follows Financial Accounting Standards Board ("FASB"(“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company'sCompany’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'sasset’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'sCompany’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company'sCompany’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company'sCompany’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.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. As of June 30, 2023, and June 30, 2022, the Company has not experienced impairment losses on its long-lived assets.
Related parties
The Company follows ASC 850850-10, Related Parties, for the identification of related parties and disclosure of related party transactions.
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.
| F-6 |
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'sCompany’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'sCompany’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'sCompany’s business, financial position, and results of operations or cash flows.
Revenue recognition
Revenue is recognized at the point in time the funds to complete sale are recorded in the company’s bank account.
Inventories
The Company follows ASC 605 for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Cost of Sales
Components of costs of salesrevenues include product costs, shipping costs to customers, and any inventory adjustments.
Shipping and Handling Costs
Costs incurred by the Company includesfor shipping and handling fees billedare included in costs 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 revenueswell as the design and shipping and handling costsengineering of new or redesigned products for shipments to customers as cost of revenues.
Income taxes
The Company followsaccounts for income taxes under ASC 740, in accountingIncome Taxes. Under ASC 740, deferred tax assets and liabilities are recognized for income taxes.the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined based onmeasured using enacted tax rates expected to apply to taxable income in the estimated future tax effects of net operating loss carryforwards andyears in which those temporary differences between theare expected to be recovered or settled. The effect on deferred tax bases of assets and liabilities and their respective financial reporting amounts measured atof a change in tax rates is recognized in income in the current enactedperiod, which includes the enactment date. Deferred tax rates. The Company recordsassets are reduced by a valuation allowance for its deferred tax assets when, in the opinion of management, concludes that it is not more likely than not that suchsome portion of or all the deferred tax assets will not be recognized.realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
ASC 740 contains a two-step approach to recognizing and measuring uncertain tax positions. This first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.
| F-7 |
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.settlement. As of December 31, 2015 and March 31, 2015,June 30, 2023, the Company has notnot recorded any unrecognized tax benefits.
Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively.
Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses after certain ownership changes occur. The Section 382 limitation is based upon certain conclusions pertaining to the dates of ownership changes and the value of the Company on the dates of the ownership changes. It was determined that an ownership change occurred in October 2013 and March 2014. The amount of the Company’s net operating losses incurred prior to the ownership changes are limited based on the value of the Company on the date of the ownership change. Management has not determined the amount of net operating losses generated prior to the ownership change available to offset taxable income after the ownership change.
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 arecalculation is 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.
For the fiscal quarter ended June 30, 2023, shares issuable upon conversion of December 31, 2015convertible notes were anti-dilutive because of net loss and March 31, 2015, the Companyas such, their effect has 333,332 warrants that are anti-dilutive and not been included in the calculation of diluted net 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"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.
Goodwill
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. In conducting its annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. As of June 30, 2023, the Company recognized goodwill on the acquisition of its wholly owned subsidiaries; RxCompound and Peaks.
| F-8 |
The Company followsapplies the fair value method of ASC 718, Compensation-Stock Compensation, in accounting for its stock based compensation to employees. This standard statesstock-based compensation. These standards state 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.period, if any. The Company values stock based compensation atuses the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred.
Fair Value
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in accordance withan orderly transaction between market participants at the measurement date. ASC 505-50.
Level 1 — Quoted market prices for identical assets or liabilities in active markets or observable inputs;
Level 2 — Significant other observable inputs that can be corroborated by observable market data; and
Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data.
The carrying amounts of cash, accounts payable and other liabilities, accrued expenses and settlement payable approximate fair value because of the short-term nature of these items.
The fair value of the Company’s debt approximated the carrying value of the Company’s debt as of June 30, 2023, and June 30, 2022. Factors that the Company considered when estimating the fair value of its debt included market conditions, liquidity levels in the private placement market, variability in pricing from multiple lenders and terms of debt.
Property and equipment
Property and equipment is recordedare stated 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:
Recently issued accounting pronouncements
We have considered the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topicsimpact of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue Recognition — Construction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. following pronouncements:
In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update was originally effective for annual reporting periods beginning after December 15,February 2016, including interim periods within that reporting period. In August 2015, FASB issued ASU No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” which deferred the effective date ASU No. 2014-09 by one year to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
| F-9 |
In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (for “emerging growth companies” beginning after December 15, 2020). The Company has adopted this standard effective from January 1, 2021, and the adoption of this standard did not have any significant impact on the consolidated financial statements.
The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, which requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted (for “emerging growth companies” beginning after December 15, 2023). The Company has assessed the impact this standard will have on the Company’s consolidated financial statements. No material adjustments were required.
Update ASU 2021-10- Government Assistance (Topic 832)
In November 2021, the FASB issued guidance which requires business entities to disclose information about certain government assistance they receive. The amendments in this ASU should be applied prospectively with earlierUpdate are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application permitted as of the beginningamendments is permitted. An entity should apply the amendments in this Update either (1) prospectively to all transactions within the scope of an interimthe amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or annual reporting period.(2) retrospectively to those transactions. We are currently reviewing the provisionsdo not expect adoption of this ASUstandard to determine if there will be any impact onresult in additional disclosures within our resultsConsolidated Financial Statements.
Intangible assets
Intangible assets consist of operations, cash flows or financial condition.
| F-10 |
Reclassification
No restatement was $1,522 and $0, respectively for the nine months ended December 31, 2015 and 2014.
Note 3 — Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. At December 31, 2015,On June 30, 2023, the Company had negative working capital, an accumulated deficit of $22,527,543 and was in negotiations to extend the maturity date on notes payable that are in default. This raises a$30,592,692. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company as of November 8, 2022, became a holding entity set to acquire companies with its recent two acquisitions, RxCompound and Peaks both operating in the Company is attempting to generate sufficient revenues, the Company'shealth and wellness industry. The Company’s cash position may not be sufficient to pay its obligations and support the Company'sCompany’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 by acquiring companies 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'sCompany’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 — Related Party Balances and Transactions
Parties are considered to be related if one party has the Company evidenced by 8% uncollateralized notes payable due September 30, 2014.ability to control or exercise significant influence over the other party in making financial and operating decisions. Transactions with related parties have been disclosed in debt, acquisition, and officer’s compensation notes. As of December 31, 2015 and March 31, 2015,June 30, 2023, the Company had $59,558 of these notes payable which are in default. The Company is in current negotiations to extend the maturity of these notes for an additional 2 years. Interest expense for the nine months ended December 31, 2015 and 2014 was $3,572 and $3,443, respectively.
Note 5 — Stockholders’ Equity
During the nine monthsfiscal quarters ended December 31, 2014, $7,072,000 of consulting fees were paid by the Company to its majority stockholder Majorca Group, Ltd., in connection with services provided pursuant to a founder’s agreement. These fees were paid through the issuance of the Company’s preferred stock in prior periods.
During the quarter ended June 30, 2023, and 2022, the Company issued 200,000 fully vested and unrestricted common shares for two convertible notes with a fair valuecombined outstanding balance of $152,500 as compensation to an employee who became an officer in October 2015. Of the shares issued, 150,000 shares were for compensation earned by the employee at the rate of 50,000 shares per quarter during the quarters ended June 30, 2015, September 30, 2015 and December 31, 2015: and 50,000 shares as a bonus pursuant to the employee’s promotion to the position of chief operations officer during the quarter ended December 31, 2015. Compensation expense of $67,000 for the time he was an officer has been presented as compensation-officers, while compensation of $85,500 for the time he was an employee has been presented as general and administrative expense in the accompanying Condensed Consolidated Statement of Operations for the nine months December 31, 2015. The expense for the three-month period ended December 31, 2015 is $67,000 and is presented as compensation-officer.
Note 6 — Stock Purchase Warrants
Legal Proceedings
From time to time and in the year ended March 31, 2015, the Company issued 333,332 warrants to purchase common stockcourse of business, we may become involved in connection with the issuance of an equity investment. A summaryvarious legal proceedings seeking monetary damages and other relief. The amount of the change in stock purchase warrants for the nine months ended December 31, 2015 is as follows:
| Warrants Outstanding | Exercise Price | Remaining Contractual Life (Years) | |
| Warrants outstanding—March 31, 2015 | 333,332 | $.75 | .9 |
| Warrants issued | - | - | - |
| Warrants expired | - | - | - |
| Warrants exercised | - | - | - |
| Balance, December 31, 2015 | 333,332 | $.75 | .4 |
| Number of Warrants Outstanding | Exercise Price | Remaining Contractual Life (Years) |
| 333,332 | $0.75 | .4 |
| F-11 |
Employment and has recorded an estimated accrual based on the probability of an arbitration award and legal fees against the Company of $225,000 as of December 31, 2015.
The Company is a party to an employment agreement with its chief operations officer through October 9, 2016.CFO with $750 of compensation on a bi-weekly basis. The terms of the agreement requires the Company to pay its chief operations officer a monthly salary of $6,000 and 50,000 fully vested shares of the Company's common stock at the end of each quarter. This agreement is cancelable by either party giving thirty days'days’ notice.
No consulting agreement was signed during the fiscal quarters ended June 30, 2023, and June 30, 2022.
Note 7 — Property and Equipment
Schedule of Property And Equipment
| For the Fiscal Quarter Ended June 30, | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Equipment – cost | $ | 150,082 | $ | - | ||||
| Less: Accumulated depreciation | 29,683 | - | ||||||
| Property and Equipment, Net | $ | 120,399 | $ | - | ||||
Depreciation expense for the fiscal quarters ended June 30, 2023, and June 30, 2022, was $7,379 and $0, respectively.
During the fiscal quarter ended June 30, 2023, additions represented the Equipment acquired by RxCompound. It also obtained financing for TCA cleanroom Suite, Medisca Equipment from New Lane Finance and Spenser Capital Group, Inc. ("Developer"Equipment was purchased from original suppliers; however, financing was provided by the aforementioned lenders.
Weighted average remaining term was 5 years (approx.) and weighted average discount rate was 7%.
Note 8 — Leases
The Company treats a principal stockholdercontract as a lease when the contract conveys the right to use a physically distinct asset for cash compensation equal to 15%a period of certain net sales. Under the Agreement,time in exchange for consideration, or the Company engaged Majorca to assist withdirects the development and marketing of new product lines and to effect introductions of business prospects to the Company. This Agreement shall terminate on the 30th day of April, 2018 and is renewable for a second term of three years at the optionuse of the Developer by 60-day notice toasset and obtains substantially all the Company prior to the expirationeconomic benefits of the first term. There have been no commissions paid duringasset. These leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases with terms greater than 12 months. ROU assets represent the periods pursuantCompany’s right to this agreement.
The Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets. The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company elected the practical expedient to exclude short-term leases (leases with original terms of 12 months or less) from ROU asset and lease liability accounts.
RxCompoundStore.com, LLC entered into an officea lease covering its new Boca Raton, Florida headquarters.arrangement on May 26, 2022, whereby the subsidiary obtained the possession of the property located at 8950 SW 74th Court Suite 101, Miami, FL, 33156. The lease requires monthly payments of $7,453.37 for a term isof 36-months plus the single lump sum payment of $40,000 upon execution in June 2022. The facility consists in two offices, a sterile compounding cleanroom, a cooking room, a reception area, a fulfillment area, and storage for three years commencing on July 1, 2015.inventory. The monthly rent including sales tax is $1,908lease agreement does not contain any significant residual value guarantees or restrictive covenants but does contain a 3-year renewal option. The Company treated this lease arrangement as an operating lease and fixed at this amount for the next three years. A depositrecognized right of $3,816 was tendereduse asset and lease liability accordingly.
| F-12 |
Supplemental balance sheet information related to secure the lease.
Schedule of Supplemental Balance Sheet Related to Leases
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Right of use asset, net | $ | 194,543 | $ | - | ||||
| Operating lease liabilities | ||||||||
| Current | 46,621 | - | ||||||
| Non-current | 96,743 | - | ||||||
| Total Lease Liabilities | $ | 143,364 | $ | - | ||||
The components of lease cost were as follows:
Schedule of Lease Cost
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Depreciation | $ | 7,379 | $ | - | ||||
| Interest on lease obligation | 12,618 | - | ||||||
| Total lease cost | $ | 19,997 | $ | - | ||||
Lease term and 2014 was $48,219 and $8,463, respectively
Note 8-Subsequent Events
Intangible assets, consisted of the Company. Mr. Pavlikfollowing:
Schedule of Intangible Assets
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Telemedicine Property | $ | 15,585 | $ | - | ||||
| Web Properties | 17,985 | - | ||||||
| Goodwill – push down approach (A) | 100,043 | - | ||||||
| Accumulated Amortization | 58,318 | - | ||||||
| Net Balance | $ | 191,931 | $ | - | ||||
NOTE 10- GOODWILL
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in the business combinations. On November 08, 2022, the Company acquired 100% of the outstanding equity shares of RxCompoundStore.com, LLC and Peaks Curative, LLC against the share exchange consideration and recognized Goodwill.
SCHEDULE OF GOODWILL
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| RxCompound and Peaks | $ | 2,110,368 | $ | - | ||||
| Total | $ | 2,110,368 | $ | - | ||||
The Company conducted an impairment test as of June 30, 2023, and no indication of impairment was terminated as a resultidentified.
| F-13 |
Note 11 — Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of his refusalthe following:
Schedule of Accounts Payable and Accrued Expenses
| For the Fiscal Quarter Ended June 30, 2023 | ||||
| Accounts Payable (A) | $ | 179,738 | ||
| Accrued Expenses (B) | 77,752 | |||
| Accrued settlement (C) | 261,871 | |||
| Total | $ | 519,361 | ||
| (A) | Accounts Payable |
As of June 30, 2023, accounts payable included inventory under net 30 terms of $106,025, prior auditor fees of $39,804, RxCompound credit card balance of $30,327, and other payables of $3,582.
| (B) | Accrued Expenses |
As of June 30, 2023, accrued expenses included interest payable of $9,889 accrued payroll of $67,863.
| (B) | Accrued Settlement |
As of June 30, 2023, the company recognized unpaid accrued settlement of $56,871 and $205,000 against the claims of Rothchild and Strongbow Advisors. Rothchild’s last payment will be made in August 2023 to rescind certain matters related to a corporate opportunity that he entered intofully satisfy the settlement. Strongbow Advisors’ accrued settlement of $220,000 with a competitor during January 2016.maturity date of May 29, 2023, was amended on the maturity date, having its payment terms rescheduled. The new terms are as follows: payment of $15,000 upon execution of amended terms, followed by a 41-month period of installment payments of $5,000, commencing from September 01, 2023.
Note 12 — Debts
Notes payable and loans payable consisted of the following:
Schedule of Notes and Loans Payable
| For the Fiscal Quarter Ended June 30, | ||||||||||||
| Name | 2023 | 2022 | ||||||||||
| SBA Loan Payable | (1) | $ | 204,408 | $ | 104,519 | |||||||
| Revolving Promissory Note Payable | (2) | 250,000 | 250,000 | |||||||||
| Promissory Note Payable I | (3) | 30,000 | - | |||||||||
| Convertible Promissory Note Payable | (4) | - | 150,00 | |||||||||
| Advance Payable | (4) | - | 50,000 | |||||||||
| Promissory Note Payable II | (4) | - | 44,429 | |||||||||
| Notes payable – related parties | (4) | - | 87,402 | |||||||||
| Equipment Finance | Note-4 | 111,850 | - | |||||||||
| $ | 596,258 | $ | 686,350 | |||||||||
| F-14 |
(1) SBA Loan
On January 21, 2016, Matthew Cohen was appointed to interim Chief Executive OfficerJuly 27, 2020, the Holding Company executed a secured loan with the U.S. Small Business Administration (SBA) under the Economic Injury Disaster Loan program in the amount of $106,800. The loan is secured by all tangible and intangible assets of the Company and was appointedpayable over 30 years at an interest rate of 3.75 % per annum. Installment payments, including principal and interest, totaling $521.00 monthly, will begin twelve (12) months from the date of the Note, with the first payments applied to accumulated accrued interest.
On April 01, 2021, RxCompound executed a secured loan with the boardU.S. Small Business Administration (SBA) under the Economic Injury Disaster Loan program in the amount of directors. Mr. Cohen also acts as the interim Chief Financial Officer.
Installment payments due within a settlement agreement.
Following is the aggregate future long term SBA loan payments, as of June 30, 20162023:
Schedule of Aggregate Future Long Term SBA Loan Payments
| Amount | ||||
| Loan Payments | ||||
| Within year 1 | $ | 4,767 | ||
| Within year 2 | 4,947 | |||
| Within year 3 | 5,132 | |||
| Within year 4 | 5,325 | |||
| Thereafter | 184,237 | |||
| Total Loan Payments | 204,408 | |||
| Less: Current portion | (4,776 | ) | ||
| Non-Current portion | $ | 199,632 | ||
(2) Revolving Promissory Note
On August 31, 2021, the Company sold 419,284issued a revolving promissory note of $250,000 to Great Lakes Holding Group, LLC. Proceeds were received in two installments of $50,000 (Jan 28, 2022) and $200,000 (April 01, 2022), respectively. Interest is charged at the rate of 5%. Repayment of interest and principal will be made on or before January 01, 2024.
(3) Promissory Note I:
On May 12, 2023, the Company issued a promissory note of $30,000 to Irela Castillo at a 10% annum interest for two months. This promissory note was paid in full in the amount of $30,480 in the month of July 2023, after this June 30, 2023, 10-Q.
4) Opening Debt Obligations:
All other June 30, 2022, debt obligations of Issa - EL Cheikh and Mario Portella have been settled through the issue of and Common stock, respectively. VCAMJI IRREV. TRUST was converted for shares of common stock forstock. GHS Investments LLC (Promissory Note II) balance was net settled through the cash payment of $101,750.
Note 13 — Subsequent Events
The Company has evaluated subsequent events through July 26, 2023, which is the fourth quarter ending March 31, 2016, 50,000 sharesdate the financial statements were issued, and has concluded that no such events or transactions took place which would require adjustment to or disclosure in the financial statements, except for the following:
On July 15, 2023, Wendell Hecker resigned from his role as compensationChief Financial Officer (“CFO”) position with the Company. His resignation was not from a result of any disagreement with the Company or any other entity or any matter relating to the Chief Operations Officeroperations, policies (including accounting or financial policies) or practices of the Company.
On July 17, 2023, the Board of Directors of the Company appointed Gabrielle Schuster as the Company’s CFO, succeeding Wendell Hecker. Gabrielle Schuster will receive eight hundred seven dollars and seventy cents bi-weekly.
| F-15 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following section, Management’s Discussion and Associated Risks.
The following discussion should be read in conjunction with the company’s unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to the Company’s consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Registration Statement filed on Form 10-12g and the Company’s Annual Report filed on Form 10-K for the fiscal year ended March 31, 2023, as well as the Company’s Quarterly report filed on Form 10-Q for the fiscal quarter ended December 31, 2022.
OVERVIEW
The Company is a holding entity set to acquire companies with its current focus in the health and wellness industry. The Company is presently in compounding pharmaceuticals and telemedicine through its wholly owned subsidiaries RxCompound, Peaks, and ESF.
RxCompound is a compounding pharmacy that has historically focused on men’s health, specifically medical products directed at ED such as Tadalafil, and Sildenafil Citrate (the generic names for Cialis and Viagra, respectively) and longevity. Currently licensed to fulfill prescriptions in the states of Florida, New York, New Jersey, Delaware, Colorado, Rhode Island, Pennsylvania, Nevada, and Arizona. RxCompound is in the application process to obtain licenses in the remaining states in which it is not yet licensed to dispense prescriptions. Furthermore, RxCompound recently had its sterile compounding room approved to operate in late May 2023 to provide sterile products for injection.
Peaks is the telemedicine referral site facilitating asynchronous consultations for branded compound medications prepared at RxCompound. Peaks is currently positioned to prescribe to all 50 states utilizing third-party consultation services, but only able to fulfill prescriptions within RxCompound’s licensed states. Peaks will be able to fulfill more states as RxCompound becomes licensed in additional states.
ESF is a favored entity of ETST, effectively being a non-profit organization that was incorporated on February 11, 2019, and is structured to accept grants and donations to help those in need of assistance in paying for prescriptions.
| 3 |
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.
Basis of Presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
The accompanying consolidated financial statements include all the accounts of the Company and its wholly owned subsidiaries RxCompound, Peaks, and ESF.
The Company’s acquisition of RxCompound was consummated on November 8, 2022, along with Peaks; however, RxCompound completed its PCAOB audit on February 3, 2023 (“Acquisition Date”). Operating results of subsidiaries have been consolidated according to their acquisition dates. No intercompany transactions and balances were identified.
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas requiring significant estimates are impairment of goodwill, provision for taxation, useful life of depreciable assets, useful life of intangible assets, contingencies, and going concern assessment. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results could differ from those estimates.
Carrying Value, Recoverability, and Impairment of Long-Lived Assets
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 assets, if any, are included in operating expenses.
| 4 |
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. As of June 30, 2023, and June 30, 2022, the Company held a cash balance of $91,989 and $35,756, respectively.
Related Parties
The Company follows ASC 850-10, Related Parties, for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (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
Revenue is recognized at the point in time the funds to complete sale are recorded in the company’s bank account.
Inventories
The Company has its inventories stated at the lower of cost (on first in, first out (FIFO) method) or market value basis. A reserve is established if necessary to reduce excess or obsolete inventories to their realizable value. The stated cost consists of bulk ingredients used to compound finished products as well as finished products. Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated annually and are based on the Company’s business plan and from feedback from customers and the product development team.
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Cost of Revenues
Components of costs of revenues include product costs, shipping costs to customers, and any inventory adjustments.
Shipping and Handling Costs
The Company accounts shipping and handling costs to customers as cost of revenue.
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 calculation is 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.
For the fiscal quarter ended June 30, 2023, shares issuable upon conversion of convertible notes were anti-dilutive because of net loss and as such, their effect has not been included in the calculation of diluted net loss per share. No dilutive common shares in the comparative year.
Cash Flows Reporting
The Company follows ASC 230 to those statementsreport 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 elsewherein 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.
Goodwill
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. In conducting its annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. As of June 30, 2023, the Company recognized goodwill on the acquisition of its wholly owned subsidiaries; RxCompound and Peaks.
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Stock Based Compensation
The Company applies the fair value method of ASC 718, Compensation-Stock Compensation, in accounting for its stock-based compensation. These standards state that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period, if any. The Company uses the Black-Scholes option pricing model to determine the fair value of its stock, stock option and warrant issuance. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price, as well as assumptions regarding a few complex and subjective variables. These variables include the Company’s expected stock price, volatility over the term of the awards, actual employee exercise behaviors, risk-free interest rate and expected dividends. The company has no stock-based commitments outstanding as of June 30, 2023, and 2022.
Fair Value
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:
Level 1 — Quoted market prices for identical assets or liabilities in active markets or observable inputs;
Level 2 — Significant other observable inputs that can be corroborated by observable market data; and
Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data.
The carrying amounts of cash, accounts payable and other liabilities, accrued expenses and settlement payable approximate fair value because of the short-term nature of these items.
The fair value of the Company’s debt approximated the carrying value of the Company’s debt as of June 30, 2023, and June 30, 2022. Factors that the Company considered when estimating the fair value of its debt included market conditions, liquidity levels in the private placement market, variability in pricing from multiple lenders and terms of debt.
Property and Equipment
Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation on equipment is charged using a straight-line method over the estimated useful life of 5 years.
Intangible assets
Intangible assets consist of Peaks telemedicine platform, Holding Company’s web domains and goodwill recognized by RxCompound in stand-alone Financial Statements under the push down approach. Intangible assets with finite lives are amortized over the estimated useful life of five years and goodwill is amortized over the estimated life of 10 years. These assets are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We assess recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
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Reclassification
No restatement was made in comparative Consolidated Financial Statements. However, Certain amounts from the year ended March 31, 2023, have been reclassified to conform to this quarter ended June 30, 2023, report.
Results of Operations
The following tables set forth summarized cost of revenue information for the fiscal quarters ended June 30, 2023, and June 30, 2022:
| For the Fiscal Quarter Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 219,934 | $ | - | ||||
| Cost of revenues | 71,165 | - | ||||||
| Gross Profit/(Loss) | 148,769 | - | ||||||
We had product sales of $219,934 and a gross profit of $148,769, representing a gross margin of 67.64% in the fiscal quarter ended June 30, 2023, compared with product sales of $0 and a gross profit of $0, representing a gross margin of 0% in the fiscal quarter ended June 30, 2022. The revenue increase in the fiscal quarter ended June 30, 2023, compared with the fiscal quarter ended June 30, 2022, is primarily due to the acquisition of RxCompound and Peaks – see Item 2 Principal of Consolidation. RxCompound generated $170,532 in the month of June 2023 alone. This was primarily due to RxCompound’s completion of the integration of all product categories into its business, including hazardous hormonal creams and sterile injectable prescriptions.
For the fiscal quarter ended June 30, 2023, the Company had a loss from continuing operations of approximately $89,708 compared to a loss from continuing operations of approximately $22,410 for the fiscal quarter ended June 30, 2022. This increase in loss is primarily due to RxCompound’s increasing staff to facilitate the increase of compounding and orders, and amortization expense.
Operating Expenses
| Fiscal Quarter Ended June 30, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Compensation – officers | $ | 5,654 | $ | 31,250 | $ | (25,596 | ) | (452.71 | )% | |||||||
| Marketing | $ | 11,376 | $ | - | $ | 11,376 | 11,376 | % | ||||||||
| General and administrative | $ | 115,941 | $ | 142,997 | $ | (27,056 | ) | (23.34 | )% | |||||||
| Professional fees | $ | 16,420 | $ | 5.200 | $ | 11,220 | 68.33 | % | ||||||||
| Cost of legal proceedings | $ | 2,000 | $ | 512,725 | $ | (510,725 | ) | (25,526.25 | )% | |||||||
| Licenses and fees | $ | 1,954 | - | $ | 1,954 | 1,954 | % | |||||||||
| Amortization expense | $ | 58,318 | - | $ | 58,318 | 58,318 | % | |||||||||
| Research and Development | $ | 6,817 | - | $ | 6,817 | 6,817 | % | |||||||||
| Depreciation expense | $ | 7,379 | - | $ | 7,379 | 7,379 | % | |||||||||
| Total operating expenses | $ | 225,859 | $ | 692,172 | $ | (466,313 | ) | (206.46 | )% | |||||||
| Loss from operations | (77,090 | ) | (692,608 | ) | $ | 615,082 | 797.88 | % | ||||||||
| Other Income (Expenses): | ||||||||||||||||
| Other income | $ | - | 547,608 | (547,608 | ) | (547,608 | )% | |||||||||
| Interest expense | (12,618 | ) | (10,118 | ) | (2,500 | ) | 19.81 | % | ||||||||
| Total other income (expenses) | (12,618 | ) | 537,490 | (550,108 | ) | (4,359.71 | )% | |||||||||
| Net Profit/(Loss) before income taxes | (89,708 | ) | (154,682 | ) | (67,298 | ) | 75.02 | % | ||||||||
| Income taxes | - | - | - | - | ||||||||||||
| Net Profit/(Loss) | $ | (89,708 | ) | $ | (22,410 | ) | $ | (67,298 | ) | 75.02 | % | |||||
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Marketing expenses totaled $11,376 for the fiscal quarter ended June 30, 2023, an increase of $11,376 from $0 for the fiscal quarter ended June 30, 2022. This increase is due to a small budget to market the Company’s websites utilizing Google Ads.
Legal fees totaled $2,000 for the fiscal quarter ended June 30, 2023, a decrease of $510,725 from $512,725 for the fiscal quarter ended June 30, 2022.
Professional fees totaled $16,420 for the fiscal quarter ended June 30, 2023, an increase of $11,220 from $5,200 for the fiscal quarter ended June 30, 2022. This increase is due to RxCompound’s hiring consultants to assist on certifying and training for the sterile compounding room that began operating in the end of May 2023.
Research and development fees totaled $6,817 for the fiscal quarter ended June 30, 2023, an increase of $6,817 from $0 for the fiscal quarter ended June 30, 2022. This increase is due to the RxCompound experimenting on different formulations to compound.
Costs and Expenses - Costs of sales include the costs of manufacturing, packaging, warehousing, and shipping our products. As we develop and release additional products, we expect our costs of sales to increase.
General and administrative expenses decreased from $142,997 for the fiscal quarter ended June 30, 2022, to $115,941 for the fiscal quarter ended June 30, 2023.
We are a smaller reporting company, as defined by 17 CFR § 229.10(f)(1). We do not consider the impact of inflation and changing prices as having a material effect on our net sales and revenues and on income from our operations for the previous two years or from continuing operations going forward.
Interest Expense
Interest expense increased to $12,618 for the fiscal quarter ended June 30, 2023, compared with $10,118 for the fiscal quarter ended June 30, 2022.
Non-GAAP Financial Measures
We use Adjusted EBITDA internally to evaluate our performance and make financial and operational decisions that are presented in a manner that adjusts from their equivalent GAAP measures or that supplements the information provided by our GAAP measures. Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation expense, amortization expense, interest and income tax expense, minus income tax benefit), further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. We use Adjusted EBITDA because we believe it more clearly highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since Adjusted EBITDA eliminates from our results specific financial items that have less bearing on our core operating performance.
We use Adjusted EBITDA in communicating certain aspects of our results and performance, including in this Quarterly Report, on Form 10-Q. This Quarterly Report on Form 10-Q contains certain statementsand believe that are forward-looking withinAdjusted EBITDA, when viewed in conjunction with our GAAP results and the meaningaccompanying reconciliation, can provide investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the Private Securities Litigation Reform Actpresentation of 1995. Certain statements containedAdjusted EBITDA is useful to investors in making period-to-period comparison of results because the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statementsadjustments to GAAP are not historical facts, but rather are based on current expectations, estimates, assumptionsreflective of our core business performance.
Adjusted EBITDA is not presented in accordance with, or as an alternative to, GAAP financial measures and projections about our industry, business and futuremay be different from non-GAAP measures used by other companies. We encourage investors to review the GAAP financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussedmeasures included in other sections of this Quarterly Report, on Form 10-Q.including our consolidated financial statements, to aid in their analysis and understanding of our performance and in making comparisons.
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Cash Flow & Assets
A summary of someour changes in cash flows & assets for the fiscal quarters ended June 30, 2023, and June 30, 2022, is provided below:
| As of June 30, | ||||||||
| 2022 | ||||||||
| ASSETS: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 91,989 | $ | 20,323 | ||||
| Inventory | 101,807 | - | ||||||
| Total current assets | 193,796 | 20,323 | ||||||
| Due from RxCompound | - | 250,000 | ||||||
| Prepaid Acquisition Costs | -, | 20,323 | ||||||
| Property and equipment, net | 120,399 | - | ||||||
| Right of use asset, net | 194,543 | - | ||||||
| Intangible assets, net | 133,613 | - | ||||||
| Goodwill | 2,110,368 | - | ||||||
| Other assets | - | - | ||||||
| Total Assets | $ | 2,752,719 | $ | 320,323 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 519,361 | $ | 1,521,334 | ||||
| Current portion of loans and obligations | 284,776 | 706,979 | ||||||
| Other payables | 111,751 | - | ||||||
| Current portion of operating lease obligations | 46,621 | - | ||||||
| Total current liabilities | 962,509 | 2,228,313 | ||||||
| Operating lease obligations; less current maturities | 96,743 | - | ||||||
| Loans and obligations; less current maturities | 209,184 | 111,663 | ||||||
| Total liabilities | 1,263,660 | 2,339,976 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ (Deficit) Equity: | ||||||||
| Preferred stock, par value $0.001 per share, 1,000,000 shares authorized; 1,000,000 and 0 shares issued and outstanding as of June 30, 2023, and June 30, 2022, respectively | 1,000 | 1,000 | ||||||
| Common stock, par value $0.001 per share, 750,000,000 shares authorized; 314,881,821 and 53,851,966 shares issued and outstanding as of June 30, 2023, and June 30, 2022, respectively | 314,552 | 53,353 | ||||||
| Additional paid-in capital | 31,766,199 | 28,264,452 | ||||||
| Accumulated deficit | (30,592,692 | ) | (30,278,400 | ) | ||||
| Total stockholders’ (Deficit) Equity | 1,489,059 | (1,960,095 | ) | |||||
| Total Liabilities and Stockholders’ Equity | $ | 2,752,719 | $ | 320,323 | ||||
The Company had $91,989 in Cash for the fiscal quarter ended June 30, 2023, compared with $35,756 for the fiscal quarter ended June 30, 2022.
Assets’ position has been improved significantly on account of recognition of goodwill, acquisition of equipment by RxCompound and addition of right of use assets for lease agreement of premises. Peaks also added its telemedicine platform in intangibles.
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The Company had $179,738 in Accounts Payable for the fiscal quarter ended June 30, 2023, compared with $90,790 for the fiscal quarter ended June 30, 2022. The accounts payable were $106,025 in inventory under net 30 terms, $39,804 in prior auditor’s accrued fees being, $30,889 in RxCompound credit card, and the remainder in miscellaneous payables.
Accrued expenses totaled $77,752 for the fiscal quarter ended June 30, 2023, a decrease of $37,687 from $115,400 for the fiscal quarter ended June 30, 2022. The majority of the information containedaccrued expenses were $67,863 of payroll for Nickolas S. Tabraue and Wendell Hecker and the remainder in this Document. Unless the context requires otherwise, references in this document to "Earth Science Tech," "ETST," or the "Company" are to Earth Science Tech, Inc.
Long-term and short-term debt obligations have been reduced on settlement of outstanding claims against issue of shares.
The Company was incorporated underhad a Stockholders Equity of $1,489,059 for the lawsfiscal quarter ended June 30, 2023, compared with $1,083,766 of Stockholders Equity for the State of Nevada on April 23, 2010. The Companyfiscal quarter ended June 30, 2022. This improvement is a biotechnology company focused on delivering unique nutraceuticals, bioceuticalsprimarily due to Rxcompound’s increase in total assets and dietary supplements in the areas of health, wellness, sports and alternative medicine, Our products include cannabidiol ("CBD") hemp oil and other dietary supplements. ETST maintains a website at www.earthsciencetech.com.
Three Months Ended December 31, 2015 | Three Months Ended December 31, 2014 | |||||||
| Professional fees | $ | 11,350 | $ | 198,971 | ||||
| Consulting fees-related party | - | 7,072,000 | ||||||
| Marketing | (17,045 | ) | 115,402 | |||||
| Officer compensation | 67,000 | 231,000 | ||||||
| Cost of legal proceedings | 137,227 | - | ||||||
| Research and development | - | 2,681 | ||||||
| General and administrative | 145,407 | (26,165 | ) | |||||
| $ | 343,939 | $ | 7,593,889 | |||||
Nine Months Ended December 31, 2015 | Nine Months Ended December 31, 2014 | |||||||
| Professional fees | $ | 221,027 | $ | 241,348 | ||||
| Marketing | 48,975 | 293,157 | ||||||
| Consulting fees-related party | - | 7,072,000 | ||||||
| Officer compensation | 112,542 | 356,000 | ||||||
| Cost of legal proceedings | 392,227 | - | ||||||
| Research and development | - | 14,833 | ||||||
| General and administrative | 415,777 | 78,456 | ||||||
| $ | 1,190,548 | $ | 8,055,794 | |||||
| Working Capital | December 31, 2015 | March 31, 2015 | ||||||
| Current Assets | $ | 289,581 | $ | 661,585 | ||||
| Current Liabilities | $ | (504,625 | ) | $ | (148,213 | ) | ||
| Working Capital | $ | (215,044 | ) | $ | 513,372 | |||
Cash Flows
Operating Activities for the periods indicated, provides selectedfiscal quarters ended June 30, 2023, and June 30, 2022: the Company used cash flow information:
Nine Months Ended December 31, 2015 | Nine Months Ended December 31, 2014 | |||||||
| Cash used in operating activities | $ | (460,301 | ) | $ | (258,846 | ) | ||
| Cash used in investing activities | $ | (13,140 | ) | $ | (78,783 | ) | ||
| Cash provided by financing activities | $ | 272,874 | $ | 153,442 | ||||
| Net decrease in cash | $ | (200,567 | ) | $ | (184,187 | ) | ||
Cash Flows from Financing Activities
During the fiscal quarter ended June 30, 2023, the Company received $110,000 through the issue of common stock.
Proceeds of $30,000 were received through a promissory note from Irela Castillo on May 12, 2023, and was paid in full in July 2023.
Future Financing
As of June 30, 2023, the Company does not need any financing activitieswith the revenue being generated with RxCompound. If needed for expansion, the Company will seek financing with private investors through standard notes, discounted registered stock, and facilitated debt.
The Company’s Plan of $272,874Operation for the nine months ended December 31, 2015 was primarily the result of common stock issued.
The Company’s auditors have expressed doubt as to raise sufficient funding from the sale of our common stock or through a loan from outside sources to meet our future obligations. We do not have any arrangements in place for any future equity financing. This raises a substantial doubt about the Company’s ability to continue as a going concern.
The Company’s current liabilities have historically exceeded the Company’s Current Assets; and was in negotiations to extendas of June 30, 2023, that trend has ended with the maturity date on notes payable that are in default.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and areis not required to provide the information required under this item.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s 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 in Company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Although the Company’s management has not formally carried out an evaluation under the supervision and with the participation of our management, including chief executive officerthe Company’s Principal Executive Officer and chief operating officer, we have conducted an evaluationPrincipal Financial Officer, of the effectiveness of the design and operation of ourthe Company’s disclosure controls and procedures aspursuant 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, the Company believes that the Company’s 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, the Company’s principal executive and principal financial and accounting officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934,1934) were effective as of June 30, 2023.
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 endreliability of financial reporting and the period covered by this report. Based on thispreparation of financial statements for external purposes in accordance with accounting U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation our chief executive officer and chief operating officer concluded as of the evaluation date that our disclosure controls and procedures were not effective dueeffectiveness to future periods are subject to the Company's:
Changes in Internal Control overand Financial Reporting
There have beenwere no other changes in ourthe Company’s internal control over financial reporting that occuredoccurred during the Company’s most recent fiscal quarter ended December 31, 2015 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting, other than:
PART II –— OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to supply high quality hemp oil to the Company on a consistenttime and timely manner. In accordance with the arbitration clause stipulated by the contract, in the arbitration proceeding, the Company filed a counterclaimcourse of business, we may become involved in various legal proceedings seeking monetary damages and affirmative defenses to Cromogen’s claims for damages.other relief. The Company also filed a legal action in the courts of Florida against Cromogen, its principals and related companies, wherein fraud is alleged in connection with Cromogen’s representations regarding the formulation and qualityamount of the hemp oil supplied. The legal action in the Florida courts has been stayed by court order. The arbitration, is pending in New York City, as agreed in the contract. Cromogen has alleged damages of a direct and consequential nature. The Company filed a counterclaim for damages sustained as a proximate result of Cromogen’s deficient and defective performance. The Company made settlement offers to Cromogen. However,ultimate liability, if any, from such offers have been rejected. Due to the arbitration administrator's rules, the arbitration proceeding has been on hiatus since the end of January 2016.claims cannot be determined. As a result, no arbitration decision has been issued as of the date hereof, there are no legal claims currently pending or, to our knowledge, threatened against us or any of this filing. Management has consulted with legal counsel and has recorded an estimated accrual basedour officers or directors in their capacity as such or against any of our properties that, in the opinion of our management, would be likely to have a material adverse effect on the probabilityour financial position, results of an arbitration award and legal fees against the Company of $225,000 as of December 31, 2015.
ITEM 1A. RISK FACTORS.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and areis not required to provide the information under this item.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the Company's equity securities during thefiscal quarter ended December 31, 2015 that were not previously disclosed in a current report on Form 8-k.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. MINE SAFETY DISCLOSURES.
None
ITEM 5. OTHER INFORMATION.INFORMATION
None
| 13 |
ITEM 6. EXHIBITS
| 31.2 | Certifications of | |
| 32.1 | Certifications of | |
| 32.2 | Certifications of |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 thereuntohereunto duly authorized.
| EARTH SCIENCE TECH, INC. | ||
| Dated: July 27, 2023 | By: | /s/ |
| Its: | ||
| Dated: July 27, 2023 | By: | /s/ |
| Its: | Chief | |
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