Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2019 | Aug. 16, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Earth Science Tech, Inc. | |
Entity Central Index Key | 0001538495 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 52,283,400 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Current Assets: | ||
Cash | $ 34,828 | $ 127,524 |
Accounts Receivable (net allowance of $128,420 and 128,420 respectively ) | 105,797 | 70,934 |
Prepaid expenses and other current assets | 6,018 | 33,751 |
Inventory | 164,023 | 161,309 |
Total current assets | 310,666 | 393,518 |
Property and equipment, net | 9,794 | 11,362 |
Other Assets: | ||
Patent, net | ||
Rou Asset | 25,719 | |
Deposits | 6,191 | 6,191 |
Total other assets | 31,910 | 6,191 |
Total Assets | 352,370 | 411,071 |
Current Liabilities: | ||
Accounts payable | 101,022 | 98,109 |
Accrued expenses | 99,979 | 85,440 |
Accrued settlement | 231,323 | 231,323 |
Promissory Note-GHS | 30,000 | 30,000 |
Lease Liability Current | 21,985 | |
Notes payable - related parties | 59,558 | 59,558 |
Total current liabilities | 829,696 | 617,730 |
Long Term Liabilities | ||
Lease Liability-Long Term | 3,734 | |
Total Long Term Liabilities | 3,734 | |
Total liabilities | 833,430 | 617,730 |
Commitments and contingencies | ||
Stockholders' (Deficit) Equity: | ||
Convertible preferred stock with liquidation preference, par value of $0.001 pre share,10,000,000 shares authorized: 5,200,000 issued and outstanding | 5,200 | 5,200 |
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 52,328,400 and 52,205,400 shares issued and outstanding as of June 30, 2019 and March 31, 2019 respectively | 52,329 | 52,206 |
Additional paid-in capital | 27,681,660 | 27,449,487 |
Accumulated deficit | (28,220,249) | (27,713,552) |
Total stockholders' (Deficit)Equity | (481,060) | (206,659) |
Total Liabilities and Stockholders' (Deficit) Equity | 352,370 | 411,071 |
Convertible Notes-GHS [Member] | ||
Current Liabilities: | ||
Interest Payable | 6,726 | |
Promissory Note-GHS [Member] | ||
Current Liabilities: | ||
Interest Payable | 803 | |
Convertible Note 1-GHS [Member] | ||
Current Liabilities: | ||
Convertible Note | 113,300 | 113,300 |
Convertible Note 2-GHS [Member] | ||
Current Liabilities: | ||
Convertible Note | 55,000 | |
Convertible Note 3-GHS [Member] | ||
Current Liabilities: | ||
Convertible Note | 55,000 | |
Convertible Note 4-GHS [Member] | ||
Current Liabilities: | ||
Convertible Note | $ 55,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Net allowance of accounts receivable | $ 128,420 | $ 128,420 |
Convertible preferred stock with liquidation preference, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock with liquidation preference, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock with liquidation preference, shares issued | 5,200,000 | 5,200,000 |
Convertible preferred stock with liquidation preference, shares outstanding | 5,200,000 | 5,200,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 52,328,400 | 52,205,400 |
Common stock, shares outstanding | 52,328,400 | 52,205,400 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 227,635 | $ 166,891 |
Cost of revenues | 114,509 | 107,482 |
Gross Profit | 113,126 | 59,409 |
Operating Expenses: | ||
Compensation - officers | 49,788 | 57,442 |
Officer Compensation Stock | 89,790 | 98,000 |
Employee Compensation Stock | 20,182 | |
Marketing | 20,623 | 29,267 |
General and administrative | 207,122 | 171,435 |
Donations | ||
Loss on disposal of assets | ||
Professional fees | 16,791 | 9,976 |
Bad Debt Expense | ||
Cost of legal proceedings | 49,022 | 125,994 |
Research and development | 22,113 | 65,245 |
Total operating expenses | 455,249 | 577,541 |
Loss from operations | (342,123) | (518,132) |
Other Income (Expenses) | ||
Interest expense | (1,191) | (1,191) |
Interest income | ||
Total other income (expenses) | (164,574) | (1,191) |
Net loss before income taxes | (506,697) | (519,323) |
Income taxes | ||
Net loss | (506,697) | (519,323) |
Convertible Note 1-GHS [Member] | ||
Other Income (Expenses) | ||
Interest expense | (2,864) | |
Convertible Note 2-GHS [Member] | ||
Other Income (Expenses) | ||
Interest expense | (44,732) | |
Convertible Note 3-GHS [Member] | ||
Other Income (Expenses) | ||
Interest expense | (57,770) | |
Convertible Note 4-GHS [Member] | ||
Other Income (Expenses) | ||
Interest expense | (57,418) | |
Promissory Note-GHS [Member] | ||
Other Income (Expenses) | ||
Interest expense | $ (599) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Mar. 31, 2018 | $ 46,150 | $ 5,200 | $ 25,326,876 | $ (25,498,207) | $ (119,981) |
Balance, shares at Mar. 31, 2018 | 46,150,207 | 5,200,000 | |||
Common stock issued for cash | $ 5,180 | 1,559,014 | 1,564,194 | ||
Common stock issued for cash, shares | 5,180,093 | ||||
Common stock issued for services | $ 75 | 57,345 | 57,420 | ||
Common stock issued for services, shares | 75,000 | ||||
Common stock issued for officer compensation | $ 495 | 423,559 | 424,054 | ||
Common stock issued for officer compensation, shares | 494,500 | ||||
Common stock issued for employee compensation | $ 31 | 24,052 | 24,083 | ||
Common stock issued for employee compensation, shares | 30,600 | ||||
Common stock returned to company | |||||
Common stock duplicated to be cancelled | $ 275 | (275) | |||
Common stock duplicated to be cancelled, shares | 275,000 | ||||
BCF Intrinsic value on Convertible Note 1-GHS | 58,916 | ||||
Net Loss | (2,215,345) | (2,215,345) | |||
Balance at Mar. 31, 2019 | $ 52,206 | $ 5,200 | 27,449,487 | (27,713,552) | (206,659) |
Balance, shares at Mar. 31, 2019 | 52,205,400 | 5,200,000 | |||
Common stock issued for cash | |||||
Common stock issued for cash, shares | |||||
Common stock issued for services | |||||
Common stock issued for services, shares | |||||
Common stock issued for officer compensation | $ 123 | 89,667 | 89,790 | ||
Common stock issued for officer compensation, shares | 123,000 | ||||
Common stock issued for employee compensation | |||||
Common stock issued for employee compensation, shares | |||||
Common stock returned to company | |||||
BCF Intrinsic value on Convertible Note 2-GHS | 38,372 | ||||
BCF Intrinsic value on Convertible Note 3-GHS | 52,067 | ||||
BCF Intrinsic value on Convertible Note 4-GHS | 52,067 | ||||
Net Loss | (506,697) | (506,697) | |||
Balance at Jun. 30, 2019 | $ 52,329 | $ 5,200 | $ 27,681,660 | $ (28,220,249) | $ (481,060) |
Balance, shares at Jun. 30, 2019 | 52,328,400 | 5,200,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Cash Flow From Operating Activities: | |||
Net loss | $ (506,697) | $ (519,323) | $ (2,215,345) |
Adjustments to reconcile net loss to net cash from operating activities: | |||
Stock-based compensation | 89,790 | 118,183 | |
Stock issued for services | 29,100 | ||
Intrinsic value of Conv Notes-Addtl Paid-in-Capital | 142,506 | ||
Depreciation and amortization | 1,568 | 2,105 | |
Changes in operating assets and liabilities: | |||
Increase/Decrease in deposits | |||
Increase/Decrease in prepaid expenses and other current assets | 14,339 | (30,171) | |
Decrease/Increase in inventory | (2,714) | 2,494 | |
Increase in other assets | |||
Increase in accrued settlement | |||
Increase in accounts payable | 3,512 | 60,040 | |
Net Cash Used in Operating Activities | (257,696) | (337,572) | |
Investing Activities: | |||
Purchases of property and equipment | |||
Patent expenditures | |||
Net Cash Used in Investing Activities | |||
Financing Activities: | |||
Proceeds from issuance of common stock | 443,050 | ||
Proceeds from notes payable- related party | |||
Proceeds from Convertible Notes | 165,000 | ||
Intrinsic value of Conv Notes-Addtl Paid-in-Capital | |||
Officer Compensation Stock | |||
Repayment of advances from related party | |||
Net Cash Provided by Financing Activities | 165,000 | 443,050 | |
Net Decrease in Cash | (92,696) | 105,478 | |
Cash - Beginning of year | 127,524 | 72,038 | 72,038 |
Cash - End of year | $ 34,828 | $ 177,516 | $ 127,524 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Note 1 — Organization and Nature of Operations Earth Science Tech, Inc. (“ETST” or the “Company”) was incorporated under the laws of the State of Nevada on April 23, 2010. ETST is a unique biotechnology company focused on researching and developing innovative hemp extracts and making them accessible worldwide. ETST plans to be a supplier of high quality hemp oil enriched with high-grade CBD. ETST’s primary goal is to advance different high quality hemp extracts with a broad profile of cannabinoids and additional natural molecules found in industrial hemp and to identify their distinct properties. Our missions are to educate the public on the many and varied nutritional and health benefits of CBD-rich hemp oil, to optimize purity in formulation, and to find new product delivery systems. Our corporate strategy in developing our operations is as follows. To design and produce CBD enhanced nutraceutical products for sale to the general public. We intend to create high-grade CBD-rich hemp oil and other CBD containing products unique to the current market in the nutraceuticals industry. We believe that our formulations will set us apart from competing products for promoting health. We have formulated and produced our initial CBD products, intended for, subject to performance, treating various symptoms of diseases and ailments or for overall health. The Company plans to expand manufacturing and marketing of these CBD products with expansion of products over the next five years. To offer a wide selection of health and nutrition products through online, clinics, pharmacies, and in-store retail. Through our wholly owned subsidiary, we plan to continue expanding retail sales of nutritional supplements through online, clinics, pharmacies, and in-store sales. Our product selection includes many high-quality supplement brands, and includes our proprietary CBD-rich hemp oil. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Basis of presentation The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. Principles of consolidation The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Nutrition Empire, Inc., Cannabis Therapeutics, Inc. and Earth Science Pharmaceutical Inc. Earth Science Foundation, Inc. is a non-profit favored entity of the Company focused on developing its role as a world leader in the CBD space, expanding its work in the pharmaceutical and medical device sectors. Earth Science Pharmaceutical (“ESP”) is a wholly-owned subsidiary of ETST committed to the development of low cost, non-invasive diagnostic tools, medical devices, testing processes and vaccines for sexually transmitted infec-tions and/or diseases. ESP’s CEO and chief science officer, Dr. Michel Aubé, is leading the Company’s research and development efforts. The Company’s first medical device, Hygee TM , is a home kit designed for the detection of STIs, such as chlamydia, from a self-obtained gynecological specimen. ESP is working to develop and bring to market medical devices and vaccines that meet the specific needs of women. Cannabis Therapeutics (“CTI”) is a wholly-owned subsidiary of ETST poised to take a leadership role in the devel-opment of new, leading-edge cannabinoid-based pharmaceutical and nutraceutical products. CTI is invested in research and development to explore and harness the medicinal power of cannabidiol. The company is focused on developing treatments for breast and ovarian cancers, as well as two generic CBD based pharmaceutical drugs. Nutrition Empire Inc. (“NE”) was established in 2014 as a supplement retail store offering products such as; sports nutrition, at the time Earth Science Tech, Inc.'s High Grade CBD Oil and nutraceutical/bioceutical line. In early 2017 the Company decided to relinquish the retail store to allocate its capital and time to further pursue its success-ful industrial hemp CBD products through its growing wholesale accounts. Since the closing of Nutrition Empire in 2017, the wholly owned subsidiary has been dormant and kept for potential acquisitions or projects. Earth Science Foundation (“ESF”) is a favored entity of ETST, effectively being a non-profit organization on Feb-ruary 11, 2019 and is structured to accept grants and donations to conduct further studies and help donate ETST’s effective CBD products to those in need. All intercompany balances and transactions have been eliminated on consolidation. Use of estimates and assumptions The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Carrying value, recoverability and impairment of long-lived assets The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, are included in operating expenses. On June 4, 2019 the Company discontinued its patents based upon the advice of IP counsel. IP counsel indicated that only one patent application had a reasonable chance of being granted and based upon this advice the Company determined that it would discontinue this approach of using the patent process to protect product formulations in general and rather, revert to proprietary formulae and trade secrets to protect its intellectual property (unless it was clear from the beginning of the process that the formula was patentable. As a result, on June 4, 2019, the company wrote down or otherwise impaired approximately $27,000 in legal fees that had previously been attributed to its Patents and took a corresponding write-off to “impairment expense.” Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. Related parties The Company follows ASC 850 for the identification of related parties and disclosure of related party transactions. Pursuant to this ASC related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. Commitments and contingencies The Company follows ASC 450 to account for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Revenue recognition The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures. The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation. The Company recognizes its retail store revenue at point of sale, net of sales tax. Inventories Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value. Cost of Sales Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments. Shipping and Handling Costs The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues. Research and development Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general. Income taxes The Company follows ASC 740 in accounting for income taxes. Deferred tax assets and liabilities are determined based on the estimated future tax effects of net operating loss carry forwards and temporary differences between the tax bases of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance for its deferred tax assets when management concludes that it is not more likely than not those assets will be recognized. 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. As of March 31, 2019 the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $6,150,613. This loss is allowed to be offset against future income until the year 2039 when the NOL’s will expire. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through March 31, 2019. The change in the valuation allowance for the years ended March 31, 2019 and 2018 was an increase of $0 and $0, 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 subsequent to the ownership change. Net loss per common share The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. As of June 30, 2019 the Company has no warrants that are anti-dilutive and not included in the calculation of diluted loss per share. Cash flows reporting The Company follows ASC 230 to report cash flows. This standard classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by this standard to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard. Stock based compensation The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred. The Company accounts for transactions in which service are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50. Property and equipment Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows: Leasehold improvements Shorter of useful life or term of lease Signage 5 years Furniture and equipment 5 years Computer equipment 5 years The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations. Recently issued accounting pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede Topic 605, Revenue Recognition, in addition to other industry-specific guidance, once effective. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal- versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. Intangible Assets In October 2014, the Company acquired a patent that is being amortized over its useful life of fifteen years in accordance with ASC 350, “Intangibles - Goodwill and Other”. The Company purchased the patent through a cash payment of $25,000. Additionally, the Company capitalized patent fees of $26,528. The Company’s balance of intangible assets on the condensed consolidated balance sheet net of accumulated amortizations $0 and $38,740.00 as of March 31, 2019 and March 31, 2018, respectively. Amortization expense related to the intangible assets was $4,406.00 and $4,406.00, respectively for the years ended March 31, 2019 and 2018, respectively. For the year ended March 31, 2019, all patents were impaired and written off due to changes in accounting principles. $34,334 were written off to Patent impairment expenses. Reclassification Certain amounts from the prior period have been reclassified to conform to the current period presentation. |
Going Concern
Going Concern | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 — Going Concern The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. At June 30, 2019, the Company had negative working capital, an accumulated deficit of $28,129,860 and was in negotiations to extend the maturity date on notes payable that are in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern. While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient to pay its obligations and support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues may provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Related Party Balances and Tran
Related Party Balances and Transactions | 3 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Balances and Transactions | Note 4 - Related Party Balances and Transactions Kannabidioid, Inc. is currently in development stage and has had no related party revenue from Earth Science Tech, Inc. for the three months ended June 30, 2019. On January 11, 2019, Robert Stevens was appointed by the Nevada District Court as Receiver for the Company in Case No. A-18-784952-C. As approved by the Nevada District Court, Strongbow Advisors, Inc., an entity controlled by Robert Stevens (“Strongbow”), is compensated at a rate of $400 per hour for his services as the Company’s Receiver. During the three months ended June 30, 2019, $130,900.37 has been paid to Strongbow as compensation for Mr. Stevens’ services as the Company’s Receiver. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Note 5 – Stockholders’ Equity During the three months ended June 30, 2019 and 2018, the Company issued 0 and 1,674,786 common shares for cash of $0.00 and $488,332 respectively. During the three months ended June 30, 2019 and 2018, the Company issued 0 and 40,000 common shares for services at a fair value of $0.00 and $29,100 respectively. During the three months ended June 30, 2019 and 2018, the Company issued 123,000 and 122,500 common shares with a fair value of $0.73 and $0.80, respectively to officers as compensation. During the three months ended June 30, 2019, the Company did not issue any common shares to employees. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 — Commitments and Contingencies Legal Proceedings On January 11, 2019, the Company received notice that Strongbow Advisors, Inc. and Robert Stevens (“Stevens”, and together with Strongbow, the “Receiver”) had been appointed by the Nevada District Court, as Receiver for the Registrant in Case No. A-18-784952-C (the “Order). The Company sought the appointment of the Receiver after it found itself in an imminent danger of insolvency following the issuance by an arbitration panel of an award (the “Award”) in the sum of $3,994,522.5 million in favor of Cromogen Biotechnology Corporation (“Cromogen”) in the matter entitled Cromogen Biotechnology Corporation vs. Earth Science Tech, Inc. (the “Cromogen Litigation”). The Nevada District Court found that the Company was in fact insolvent and ordered the appointment of the Receiver. The Award consisted of a sum for breach of contract against the Company in the amount of $120,265.00, a sum for costs and fees against the Company in the amount of $111,057.00 and a sum for the claim of tortuous interference and conversion against the Company in the amount of $3,763,200.00. The District Court in Florida had confirmed the Award granted by the arbitration panel, denying however, the award of fees that the arbitration panel had granted Cromogen. The Cromogen Litigation is now on appeal and the Company is optimistic about its prospects on appeal. Nevertheless, the outcome remains speculative and so notwithstanding its prospects for success on appeal, and faced with such a large judgment and the imminent danger of insolvency, the Company determined that it was in the best interest of its shareholders and creditors to seek protection under receivership and the appointment of a receiver. As of the date of this prospectus, the Company remains insolvent as the outcome of the Cromogen Litigation remains speculative. As part of the impact of the receivership, the Court issued a Writ of Injunction or “Blanket Stay” covering the Company and its assets during the time that the Company is in receivership. As a result of the “Blanket Stay” the Company’s estate is protected from creditors and interference with its administration is prevented while the Company’s financial issues are being fully analyzed and resolved. As part of this process, creditors will be notified and required to provide claims in writing under oath on or before the deadline stated in the notice provided by the Receiver or those claims will be barred under NRS §78.675. The Blanket Stay will remain in place unless otherwise waived by the Receiver, or it is vacated by the Court or alternatively, lifted by the Court, upon a “motion to lift stay” duly made and approved by the Nevada District Court. The appointment of the Receiver was approved unanimously by the Board and by a majority of the Company’s shareholders. Strongbow and Stevens were selected because of their reputation in helping (i) companies restructure and (ii) to execute on their business plans, albeit under a debt and capital structure that allows them to succeed. Stevens and Strongbow assist companies by helping them raise the capital needed not only to pay debts, but build and grow their businesses. The Receiver, however, is an agent of the court, and will be independent and neutral in managing the Company’s operations and trying to preserve the Company’s value for the creditors and shareholders. There are a number of possible outcomes to the receivership, including settlement and payment to creditors, reorganization, or liquidation. The Receiver was tasked by the Court with bringing to a final settlement all of the unfinished business of the Company. Towards that end, the Receiver is allowed, under Section 3(p) of the Order, to borrow money, incur debt, and issue stock, debentures and other financial instruments. The Receiver intends to use the proceeds from our initial sale of shares to GHS to pay and settle the Company’s debts, while preserving the value of its assets for the benefit of its shareholders. If the Receiver is not successful in mitigating the Company’s liabilities, or otherwise, the Company’s results could be materially adversely impacted and the Company may be forced to liquidate its business. Lease Agreements On August 14, 2017, the Company entered into an office lease covering its new Doral, Florida headquarters, with landlord Doral Flex. The Lease term is for 37 months commencing on September 1, 2017 and ending on September 30, 2020. The monthly rent, including sales tax is $1,990, $2,056 and $2,124 for the years ending 9/30/2018, 9/30/2019 and 9/30/2020 respectively. A deposit of $6,191 was tendered to secure the lease. Rent expense for the three months and nine months ended June 30, 2019 were $6,804 and $6,611 respectively. We believe that our existing facilities are suitable but we may require additional space to accommodate our growing organization. We believe such space will be available on commercially reasonable terms. We lease all our office space used to conduct our business. We adopted ASC 842 effective January 1, 2019. For contracts entered into on or after the effective date, at the inception of a contract we assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. All our operating leases are comprised of office space leases. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. |
Balance Sheet and Income Statem
Balance Sheet and Income Statement Footnotes | 3 Months Ended |
Jun. 30, 2019 | |
Balance Sheet And Income Statement Footnotes | |
Balance Sheet and Income Statement Footnotes | Note 7 — Balance Sheet and Income Statement Footnotes A c As of June 30, 2019, ROU Asset was $25,719 and Lease Liability-Current and Lease Liability-Long Term were $21,985 and $3,734 respectively. Accounts payable are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities Accrued expenses of $99,979 as of June 30, 2019 mainly represent, $24,979 of accrued interest on notes payable and accrued payroll for Michael Aube for $75,000. General and administrative expenses were $207,122 and $171,435 for June 30, 2019 and 2018 respectively. For the three months ended June 30, 2019, the majority comprised of receiver admin fee in the amount of $115,940.45 and accounting and audit fees of $37,800. The remainder of, $53,382 was for employee compensation, rent, and other expenses. Professional fees were $16,791 for the three months ended June 30, 2019. The bulk of these expenses were paid to Strongbow. Legal expenses were $49,022 for the three months ended June 30, 2019. These expenses include filing fees related to the Company becoming fully reporting with the SEC and filing of a Registration Statement on Form S-1. Research and development were $22,113 for the three months ended June 30, 2019. These expenses were for new products being developed. Interest expense was $164,574 and $1,191 for three months ended June 30, 2019 and 2018. Interest expense for three months ended June 30, 2019 was mainly $162,784 for Convertible Notes-GHS. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 — Subsequent Events None |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The Company’s accounting policies used in the presentation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. |
Principles of Consolidation | Principles of consolidation The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-owned subsidiaries. The subsidiaries include Nutrition Empire, Inc., Cannabis Therapeutics, Inc. and Earth Science Pharmaceutical Inc. Earth Science Foundation, Inc. is a non-profit favored entity of the Company focused on developing its role as a world leader in the CBD space, expanding its work in the pharmaceutical and medical device sectors. Earth Science Pharmaceutical (“ESP”) is a wholly-owned subsidiary of ETST committed to the development of low cost, non-invasive diagnostic tools, medical devices, testing processes and vaccines for sexually transmitted infec-tions and/or diseases. ESP’s CEO and chief science officer, Dr. Michel Aubé, is leading the Company’s research and development efforts. The Company’s first medical device, Hygee TM , is a home kit designed for the detection of STIs, such as chlamydia, from a self-obtained gynecological specimen. ESP is working to develop and bring to market medical devices and vaccines that meet the specific needs of women. Cannabis Therapeutics (“CTI”) is a wholly-owned subsidiary of ETST poised to take a leadership role in the devel-opment of new, leading-edge cannabinoid-based pharmaceutical and nutraceutical products. CTI is invested in research and development to explore and harness the medicinal power of cannabidiol. The company is focused on developing treatments for breast and ovarian cancers, as well as two generic CBD based pharmaceutical drugs. Nutrition Empire Inc. (“NE”) was established in 2014 as a supplement retail store offering products such as; sports nutrition, at the time Earth Science Tech, Inc.'s High Grade CBD Oil and nutraceutical/bioceutical line. In early 2017 the Company decided to relinquish the retail store to allocate its capital and time to further pursue its success-ful industrial hemp CBD products through its growing wholesale accounts. Since the closing of Nutrition Empire in 2017, the wholly owned subsidiary has been dormant and kept for potential acquisitions or projects. Earth Science Foundation (“ESF”) is a favored entity of ETST, effectively being a non-profit organization on Feb-ruary 11, 2019 and is structured to accept grants and donations to conduct further studies and help donate ETST’s effective CBD products to those in need. All intercompany balances and transactions have been eliminated on consolidation. |
Use of Estimates and Assumptions | Use of estimates and assumptions The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s significant estimates and assumptions include the fair value of financial instruments; the accrual of the legal settlement, the carrying value recoverability and impairment, if any, of long-lived assets, including the estimated useful lives of fixed assets; the valuation allowance of deferred tax assets; stock based compensation, the valuation of the inventory reserves and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. |
Carrying Value, Recoverability and Impairment of Long-lived Assets | Carrying value, recoverability and impairment of long-lived assets The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC’) 360 to evaluate its long-lived assets. The Company’s long-lived assets, which include property and equipment and a patent are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events. Impairment of changes, if any, are included in operating expenses. On June 4, 2019 the Company discontinued its patents based upon the advice of IP counsel. IP counsel indicated that only one patent application had a reasonable chance of being granted and based upon this advice the Company determined that it would discontinue this approach of using the patent process to protect product formulations in general and rather, revert to proprietary formulae and trade secrets to protect its intellectual property (unless it was clear from the beginning of the process that the formula was patentable. As a result, on June 4, 2019, the company wrote down or otherwise impaired approximately $27,000 in legal fees that had previously been attributed to its Patents and took a corresponding write-off to “impairment expense.” |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. |
Related Parties | Related parties The Company follows ASC 850 for the identification of related parties and disclosure of related party transactions. Pursuant to this ASC related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
Commitments and Contingencies | Commitments and contingencies The Company follows ASC 450 to account for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. This may result in contingent liabilities that are required to be accrued or disclosed in the financial statements. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. |
Revenue Recognition | Revenue recognition The Company follows and implemented ASC 606, Revenue from Contracts with Customers for revenue recognition. Although the new revenue standard is expected to have an immaterial effect, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures. The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation. The Company recognizes its retail store revenue at point of sale, net of sales tax. |
Inventories | Inventories Inventories consist of various types of nutraceuticals and bioceuticals at the Company’s retail store and main office. Inventories are stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value. |
Cost of Sales | Cost of Sales Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments. |
Shipping and Handling Costs | Shipping and Handling Costs The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues. |
Research and Development | Research and development Research and development costs are expensed as incurred. The Company’s research and development expenses relate to its engineering activities, which consist of the design and development of new products for specific customers, as well as the design and engineering of new or redesigned products for the industry in general. |
Income Taxes | Income taxes The Company follows ASC 740 in accounting for income taxes. Deferred tax assets and liabilities are determined based on the estimated future tax effects of net operating loss carry forwards and temporary differences between the tax bases of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance for its deferred tax assets when management concludes that it is not more likely than not those assets will be recognized. 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. As of March 31, 2019 the Company has not recorded any unrecognized tax benefits. Interest and penalties related to liabilities for uncertain tax positions will be charged to interest and operating expenses, respectively. The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $6,150,613. This loss is allowed to be offset against future income until the year 2039 when the NOL’s will expire. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through March 31, 2019. The change in the valuation allowance for the years ended March 31, 2019 and 2018 was an increase of $0 and $0, 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 subsequent to the ownership change. |
Net Loss Per Common Share | Net loss per common share The Company follows ASC 260 to account for earnings per share. Basic earnings per common share calculations are determined by dividing net results from operations by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share calculations are determined by dividing net results from operations by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. As of June 30, 2019 the Company has no warrants that are anti-dilutive and not included in the calculation of diluted loss per share. |
Cash Flows Reporting | Cash flows reporting The Company follows ASC 230 to report cash flows. This standard classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by this standard to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports separately information about investing and financing activities not resulting in cash receipts or payments in the period pursuant this standard. |
Stock Based Compensation | Stock based compensation The Company follows ASC 718 in accounting for its stock based compensation to employees. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price of the Company’s common stock as of the date in which the obligation for payment of service is incurred. The Company accounts for transactions in which service are received from non-employees in exchange for equity instruments based on the fair value of the equity instrument exchanged in accordance with ASC 505-50. |
Property and Equipment | Property and equipment Property and equipment is recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows: Leasehold improvements Shorter of useful life or term of lease Signage 5 years Furniture and equipment 5 years Computer equipment 5 years The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations. |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede Topic 605, Revenue Recognition, in addition to other industry-specific guidance, once effective. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal- versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. |
Intangible Assets | Intangible Assets In October 2014, the Company acquired a patent that is being amortized over its useful life of fifteen years in accordance with ASC 350, “Intangibles - Goodwill and Other”. The Company purchased the patent through a cash payment of $25,000. Additionally, the Company capitalized patent fees of $26,528. The Company’s balance of intangible assets on the condensed consolidated balance sheet net of accumulated amortizations $0 and $38,740.00 as of March 31, 2019 and March 31, 2018, respectively. Amortization expense related to the intangible assets was $4,406.00 and $4,406.00, respectively for the years ended March 31, 2019 and 2018, respectively. For the year ended March 31, 2019, all patents were impaired and written off due to changes in accounting principles. $34,334 were written off to Patent impairment expenses. |
Reclassification | Reclassification Certain amounts from the prior period have been reclassified to conform to the current period presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment Estimated Useful Lives | Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows: Leasehold improvements Shorter of useful life or term of lease Signage 5 years Furniture and equipment 5 years Computer equipment 5 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jun. 04, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Impairement of legal fees | $ 27,000 | |||
Unrecognized tax benefits | ||||
Net operating loss carry forwards | $ 6,150,613 | |||
Net operating loss carry forwards expiration date | The year 2039 when the NOL's will expire. | |||
Change in the valuation allowance | 0 | $ 0 | ||
Payments to acquire patents | $ 25,000 | |||
Capitalized patent fees | 26,528 | |||
Intangible assets | 38,740 | |||
Amortization expense | 4,406 | $ 4,406 | ||
Patent impairment expenses | $ 34,334 | |||
Warrants [Member] | ||||
Antidilutive securities amount |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Leasehold Improvements [Member] | |
Property and Equipment, Estimated Useful Lives | Shorter of useful life or term of lease |
Signage [Member] | |
Property and Equipment, Useful Life | 5 years |
Furniture and Equipment [Member] | |
Property and Equipment, Useful Life | 5 years |
Computer Equipment [Member] | |
Property and Equipment, Useful Life | 5 years |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (28,220,249) | $ (27,713,552) |
Related Party Balances and Tr_2
Related Party Balances and Transactions (Details Narrative) - USD ($) | Jan. 11, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
Compensation fee per hour | $ 400 | $ 16,791 | $ 9,976 |
Mr. Stevens [Member] | |||
Payment of consulting fees | 130,900 | ||
Kannabidioid, Inc [Member] | |||
Revenue from related parties |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Common stock issued for cash | $ 1,564,194 | ||
Common stock issued for services | $ 57,420 | ||
Common Stock [Member] | |||
Common stock issued for cash, shares | 1,674,786 | 5,180,093 | |
Common stock issued for cash | $ 488,332 | $ 5,180 | |
Common stock issued for services, shares | 40,000 | 75,000 | |
Common stock issued for services | $ 29,100 | $ 75 | |
Common stock issued for officer compensation, shares | 123,000 | 122,500 | 494,500 |
Common stock issued for officer compensation, fair value | $ 0.73 | $ 0.80 | |
Common stock issued for employee compensation, shares | 30,600 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jan. 11, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 |
Rent including sales tax | $ 1,990 | ||||||
Deposits | $ 6,191 | $ 6,191 | |||||
Rent expenses | $ 6,804 | $ 6,611 | |||||
Forecast [Member] | |||||||
Rent including sales tax | $ 2,124 | $ 2,056 | |||||
Cromongen Biotechnology Corporation [Member] | |||||||
Amount of breach of contract to be accrued | $ 3,994,523 | ||||||
Breach of contract amount | 120,265 | ||||||
Costs and fees amount | 111,057 | ||||||
Conversion value | $ 3,763,200 |
Balance Sheet and Income Stat_2
Balance Sheet and Income Statement Footnotes (Details Narrative) - USD ($) | Jan. 11, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 |
Net allowance of accounts receivable | $ 128,420 | $ 128,420 | ||
Allowance for accounts receivable percentage | 40.00% | |||
ROU Asset | $ 25,719 | |||
Lease liability current | 21,985 | |||
Lease liability long term | 3,734 | |||
Accrued expenses | 99,979 | $ 85,440 | ||
Accrued interest | 24,979 | |||
General and administrative expenses | 207,122 | $ 171,435 | ||
Admin fee | 115,940 | |||
Accounting and audit fees | 37,800 | |||
Employee compensation rent and other expenses | 53,382 | |||
Professional fees | $ 400 | 16,791 | 9,976 | |
Legal fees | 49,022 | 125,994 | ||
Research and development expense | 22,113 | 65,245 | ||
Interest expense | 164,574 | $ 1,191 | ||
Convertible Notes-GHS [Member] | ||||
Interest expense | 162,784 | |||
Michael Aube [Member] | ||||
Accrued payroll | $ 75,000 |