NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 1: NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS
The Company was incorporated in the state of Nevada on December 8, 2009 under the name Pristine Solutions, Inc.
Headquartered in Miami, Florida, Eco Science Solutions, Inc., a Nevada corporation, is charged with the research and exploration of eco-friendly technology and properties. On February 14, 2014, the Company changed its name to Eco Science Solutions, Inc. (OTC Pink Sheets:ESSI).
On November 4, 2013, through the Agreements for the License of Intellectual Property "(the "License Agreements"), the Company acquired an exclusive license to the EcoFlora Spark Plug (the “EcoFlora Plug”), a unique product with technology for which the US Patent and Trademark Office (“USPTO”) issued Patent #8,853,925 on October 7, 2014. Effective August 28, 2015, the License Agreements were terminated.
On August 31, 2015, the Company executed an Asset Purchase Agreement dated August 28, 2015 (the "Purchase Agreement") with Kensington Marketing, Inc., a Nevada corporation, to acquire a certain technology application known as “Stay Hydrated.” In exchange for the technology application, the Company issued 1,500,000 restricted shares of the Company's common stock, valued at $150,000.
On January 11, 2016, the Company cancelled the agreement with Kensington Marketing, cancelled 1,500,000 shares of Common Stock issued to Kensington Marketing, and returned the “Stay Hydrated” application the Company acquired in exchange for the 1,500,000 shares.
On January 1, 2016, the Company entered into a technology licensing and marketing support agreement with Separation Degrees – One, Inc. (“SDOI”) that will result in the development, licensing and management of on-going technology solutions and marketing campaigns for ESSI’s initiatives. Additionally, the Company entered into an Asset Purchase Agreement with SDOI wherein the Company acquired a proprietary messaging and customer relationship management software platform from SDOI.
On January 11, 2016, the Company’s Board of Directors (the “Board”) authorized the creation of 1,000 shares of Series A Voting Preferred Stock. The holder of the shares of the Series A Voting Preferred Stock has the right to vote those shares of the Series A Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series A Voting Preferred Stock is equal to and counted as 10 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval. The Series A Voting Preferred Stock will not be convertible into Common Stock.
The Company will issue to SDOI 1,000 Series A Preferred Shares to SDOI in consideration for the Licensing Agreement along S-8 shares to cover monthly service charges related to the technology license agreement. In addition, the Company agreed to issue 500,000 shares of common stock as consideration for the Asset Purchase Agreement with SDOI.
The Company will continue to operate, research and explore eco friendly technology, social media initiatives and applications that generate revenue through advertisements connected to the social media channels as well as downloads of the application and sales of actual goods from the Company’s operating sites.
NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "ESSI" shall mean Eco Science Solutions, Inc., unless otherwise indicated.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 1: NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS (cont’d)
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at January 31, 2016, the Company had a working capital deficit of $633,795 and an accumulated deficit of $9,816,583. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
The financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Basis of Presentation
These consolidated financial statements and related notes are prepared in accordance with generally accepted accounting principles in the United States and are expressed in US dollars. The Company’s fiscal year end is January 31.
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and Cash Equivalents
|
The Company considers all highly liquid instruments with maturity of three months or less at the time of purchase to be cash equivalents. As of January 31, 2016 and January 31, 2015, respectively, the Company had cash, but no cash equivalents.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
Technology and licensing rights (Intangible assets)
Technology and licensing rights are recorded at cost and capitalized, and are reviewed for impairment at a minimum of once per year or whenever events or changes in circumstances suggest a need for evaluation.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. During the year ended January 31, 2016 the Company impaired $3,500 in long-lived assets relative to the acquisition of a communications platform. In fiscal 2015 there was no impairment of long-lived assets.
Fair Value Measurements
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
and ASC 825,
Financial Instruments
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
Level 3
|
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
The Company’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 605,
Revenue Recognition
. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured. As of January 31, 2016, no revenue has been recognized, as the Company has not commenced operations.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
Cost of Revenue
Costs of revenue consist of the direct expenses incurred in order to generate revenue. Such costs are recorded as incurred. Our cost of revenue will consist consists primarily of fees associated with the operation of our social media venues and fulfillment of specific customer advertising campaigns related to our downloadable apps.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718,
Share-Based Payments
, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earning per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Recently issued accounting pronouncements
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis that meant to clarify the consolidation reporting guidance in GAAP. This guidance is to be applied using a retrospective method or a modified retrospective method, as outlined in the guidance, and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early application is permitted. The Company has adopted the guidance and the adoption of this standard did not have an impact on the Company's consolidated financial position or results of operations.
In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires an entity to present debt issuance costs related to a debt liability as a direct deduction from the debt liability rather than as an asset. ASU 2015-03 is effective retrospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2015. As the Company does not currently have any debt obligations, the adoption of this standard will not impact the presentation of certain financial statement line items within the Company's balance sheets, results of operations, and related disclosures.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting Measurement-Period Adjustments, which eliminates the requirement for an entity to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is completed. ASU 2015-16 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2015. The adoption of this standard will not have an impact on the Company's financial position and results of operations.
In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred income taxes. The amendments in ASU 2015-17 require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in the update. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, and may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The adoption of this standard will not have an impact on the Company's financial position.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This new standard provides guidance on how entities measure certain equity investments and present changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. ASU 2016-01 is effective for fiscal years beginning after December 31, 2017. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company's financial statements and disclosures.
NOTE 3: INTANGIBLE ASSETS
On August 31, 2015, the Company executed an Asset Purchase Agreement with Kensington Marketing, Inc., a Nevada corporation, dated August 28, 2015 (the "Purchase Agreement"), to purchase a certain technology application known as “Stay Hydrated.” In exchange for the technology application, the Company issued 1,500,000 restricted shares of the Company's common stock on December 9, 2015, valued at $150,000.
On January 11, 2016, the Company cancelled the agreement with Kensington Marketing, cancelled 1,500,000 shares of Common Stock issued to Kensington Marketing, and returned the “Stay Hydrated” application the Company acquired in exchange for the 1,500,000 shares.
A loss of $150,000 with respect to the divestiture and cancelation of the technology rights agreement was recognized in the profit and loss account.
2.
|
Communications Platform - Separation Degrees – One, Inc.
|
On January 1, 2016, the Company entered into a technology licensing and marketing support agreement with Separation Degrees – One, Inc. (“SDOI”) that will result in the development, licensing and management of on-going technology solutions and marketing campaigns for ESSI’s initiatives. Additionally, the Company entered into an Asset Purchase Agreement with SDOI wherein the Company acquired a proprietary messaging and customer relationship management software platform from SDOI.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 3: INTANGIBLE ASSETS (cont’d)
2.
|
Communications Platform - Separation Degrees – One, Inc. (continued)
|
Under the terms of the agreements, the Company will issue to SDOI 1,000 shares of the Company’s
Series A Voting Preferred Stock.
The Series A Voting Preferred Stock has the right to vote those shares of the Series A Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series A Voting Preferred Stock is equal to and counted as 10 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval.
The Company obtained a third party valuation in respect of the issuance of the Series A Voting Preferred stock and recorded a technology licensing and marketing expense of $35,500 in respect of the valuation report. The third party valuation report was based on the following inputs as at January 1, 2016: (1) price per share of common stock of $0.007; (2) 28,426,349 common shares outstanding; 1,000 Series A Preferred shares issued 1/1/16; (3) A 17.5% premium over the combined common share value for the voting preferences; (4)
284,291,916,349 total voting shares and 284,263,490,000 voting rights represented 99.99% of the total.
As of January 31, 2016,
1,000
Series A Voting Preferred Stock had not yet been issued and the Company recorded $35,500 as
liabilities for issuance of shares on the balance sheet.
Further under the terms of the aforementioned technology licensing and marketing support agreement, the Company agreed to the issuance and DWAC of $35,000 worth of S-8 shares in ESSI Common Stock (issued at a 30% discount to the market close on the date of payment due (the 1
st
of every month), or a share price of $0.01 whichever is greater), to SDOI for ongoing monthly project and planned technical development/maintenance, production and staging server administration, ongoing marketing services and monthly advertising management. The shares are to be issued on or before the 1
st
business day of each calendar month.
As of January 31, 2016, $35,000 worth of S-8 shares had not yet been issued and the Company recorded $35,000 as
liabilities for issuance of common shares on the balance sheet.
On January 4, 2016 the Company entered into a further agreement with SDOI for the purchase of a discrete communications software platform, including custom developed libraries, the consideration for which was the issuance of 500,000 shares of common stock.
The Company recorded the fair market value of $3,500 in respect of the software platform on the date of the agreement as intangible assets on the Company’s balance sheet.
As at fiscal year end the Company evaluated the asset for impairment and determined
recovery of the value of the asset was indeterminate during the present stage of the Company’s execution of its business plan. As a result we recorded an impairment
loss of $3,500 which was recognized in the profit and loss account.
As of January 31, 2016,
500,000 shares of common stock had not yet been issued and the Company recorded $3,500 as
liabilities for issuance of shares on the balance sheet.
NOTE 4: PREPAID EXPENSES
Prepaid expenses consist of certain compensation expense paid in advance of its due date. As of January 31, 2016 and January 31, 2015, $1,000 and $0 has been prepaid, to be expensed in the next month, and is included in related party transactions (Note 6).
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 5: NOTES PAYABLE
As of January 31, 2016 notes payable consists of an unsecured convertible promissory note in the remaining sum of $232,450 (January 3, 2015 - $236,350). The note bears interest at a rate of 6% per annum, is due January 31, 2017, and is convertible into the Company’s common stock at a rate of $0.003 per share.
During the fiscal year ended January 31, 2016, the holder of the note assigned $100,000 to an arms length third party who converted $3,900 of principal into 1,300,000 shares of the Company’s common stock at a rate of $0.003 per share.
As of January 31, 2016 and January 31, 2015, the Company has accrued $44,680 and $30,499, respectively, in interest on the convertible note payable.
|
NOTE 6: RELATED PARTY TRANSACTIONS
|
As of January 31, 2016 and January 31, 2015, related parties are due a total of $316,088 and $244,295, respectively
.
|
|
January 31, 2016
|
|
|
January 31, 2015
|
|
|
|
|
|
|
|
|
Related party payable compensation (2)
|
|
$
|
18,333
|
|
|
$
|
58,250
|
|
|
|
|
|
|
|
|
|
|
Notes payable for loans to the Company (1)
|
|
|
-
|
|
|
|
22,000
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable for cash proceeds received(1)
|
|
|
251,045
|
|
|
|
164,045
|
|
Convertible notes payable for unpaid compensation (3)
|
|
|
59,000
|
|
|
|
-
|
|
Less: unamortized discount (3)
|
|
|
(12,290
|
)
|
|
|
-
|
|
Total convertible notes payable, net of unamortized discount
|
|
|
297,755
|
|
|
|
164,045
|
|
Total related party loans
|
|
|
297,755
|
|
|
|
186,045
|
|
Total related party transactions
|
|
$
|
316,088
|
|
|
$
|
244,295
|
|
Related party convertible notes payable consists of the following unsecured convertible promissory notes:
|
|
|
|
|
|
|
|
|
Description
|
|
Principal
|
|
|
Interest Rate
|
|
Conversion Rate
|
Maturity Date
|
|
|
|
|
|
|
|
|
|
Note Payable (1)
|
|
$
|
251,045
|
|
|
|
5%
|
|
FMV
|
On demand with 90 days written notice
|
|
|
|
|
|
|
|
|
|
|
|
Note Payable (3)
|
|
$
|
59,000
|
|
|
|
6%
|
|
80% of FMV
|
10/01/2017
|
Less: unamortized discount (3)
|
|
|
(12,290
|
)
|
|
|
|
|
|
|
Note Payable, net of unamortized discount
|
|
$
|
46,710
|
|
|
|
|
|
|
|
(1)
|
During the fiscal year ended January 31, 2016, a company controlled by the Company’s former Chairman of the Board and majority director contributed an additional $65,000 in proceeds to the demand convertible note payable on the same terms and conditions, and modified note to include the $22,000 in short term notes so that the principal balance of the convertible note payable as at the fiscal year ended January 31, 2016 totaled $251,045.
|
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 6: RELATED PARTY TRANSACTIONS (continued)
(2)
|
Effective December 17, 2015, Mr. Jeffery Taylor was appointed to serve as Chief Executive Officer of the Company and Mr. Don Lee Taylor was appointed to serve as Chief Financial Officer of the Company. On December 21, 2015 the Company entered into employment agreements with Mr. Jeffery Taylor and Mr. Don Lee Taylor for a period of 24 months, where after the contract may be renewed in one year terms at the election of both parties. Jeffery Taylor shall receive an annual gross salary of $115,000 and Don Lee Taylor shall receive an annual gross salary of $105,000 payable in equal installments on the last day of each calendar month and which may be accrued until such time as the Company has sufficient cash flow to settle amounts payable. Further under the terms of the respective agreements all inventions, innovations, improvements, know-how, plans, development, methods, designs, analyses, specifications, software, drawings, reports and all similar or related information (whether or not patentable or reduced to practice) which relate to any of the Company’s actual or proposed business activities and which are created, designed or conceived, developed or made by the Executive during the Executive’s past or future employment by the Company or any Affiliates, or any predecessor thereof (“Work Product”), belong to the Company, or its Affiliates, as applicable. During the year ended January 31, 2016, the Company accrued management fees in the amount of $9,583 to Mr. Jeffery Taylor and $8,750 to Mr. Don Lee Taylor. As of January 31, 2016, the Company had not made any cash payments regarding the fees, leaving a total of $18,333 on the balance sheet as related party accounts payable.
|
(3)
|
On October 1, 2015 the Company issued its former President a convertible promissory note in the principal amount of $59,000 for unpaid compensation. The note bears interest at a rate of 6% per annum, matures on October 1, 2017, and contains a repayment provision which permits the holder to convert the debt into the Company's common stock at a rate of 80% of the fair market value of the common stock on the date of conversion. The conversion discount of 20% of FMV results in a beneficial conversion feature. As a result, the difference between the conversion rate and the market rate of $14,750 on the date of the transaction has been classified as a discount on the note. As of January 31, 2016, the Company expensed $2,460 as amortization of the debt discount which is included as interest expense. As of January 31, 2016, $12,290 of unamortized discount remains, and will be amortized over the next 20 months.
|
As of January 31, 2016 and January 31, 2015, the Company has accrued $16,053 and $4,306, respectively, in interest on related party loans.
NOTE 7: COMMON STOCK
Common Stock
The total number of authorized shares of common stock that may be issued by the Company is 650,000,000 shares with a par value of $0.0001.
On March 15, 2015, in accordance with his 2014 Employment Agreement, the Company issued 250,000 shares of restricted common stock, valued at $100,000, to its then President for cash in the amount of $250. As a result, additional paid in capital was reduced by $24,750.
On July 15, 2015, in accordance with his 2014 Employment Agreement, the Company issued 250,000 shares of restricted common stock, valued at $100,000, to its then President for cash in the amount of $250. As a result, additional paid in capital was reduced by $24,750.
On September 3, 2015, 4,966,667 shares of the Company’s issued and outstanding common stock were cancelled by the certificate holder. As a result of this transaction, the shares were returned to treasury, and the total issued and outstanding shares of common stock was reduced to 26,176,334 shares.
On October 28, 2015, in accordance with his 2014 Employment Agreement, the Company issued 250,000 shares of restricted common stock, valued at $100,000, to its then President for cash in the amount of $250. As a result, additional paid in capital was reduced by $24,750.
On December 9, 2015, in accordance with a certain Asset Purchase Agreement dated August 28, 2015, the Company issued 1,500,000 shares of restricted common stock, valued at $150,000.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 7: COMMON STOCK (continued)
On November 19, 2015, in accordance with his 2015 Employment Agreement, the Company issued 500,000 shares of restricted common stock, valued at $40,000, to its then President for cash in the amount of $500. As a result, additional paid in capital was reduced by $49,500.
On January 11, 2016, the Company cancelled the agreement with Kensington Marketing, cancelled 1,500,000 shares of Common Stock issued to Kensington Marketing, and returned the “Stay Hydrated” application the Company acquired in exchange for the 1,500,000 shares.
On January 12, 2016, $3,900 of principal amount was converted into 1,300,000 shared of the Company’s common stock at a rate of $0.003 per share.
As of January 31, 2016 and January 31, 2015, respectively, 28,226,349 and 30,643,001 shares of the Company’s common stock were issued and outstanding.
Series A Voting Preferred Shares
On January 11, 2016, the Company’s Board of Directors (the “Board”) authorized the creation of 1,000 shares of Series A Voting Preferred Stock. The holder of the shares of the Series A Voting Preferred Stock has the right to vote those shares of the Series A Voting Preferred Stock regarding any matter or action that is required to be submitted to the shareholders of the Company for approval. The vote of each share of the Series A Voting Preferred Stock is equal to and counted as 10 times the votes of all of the shares of the Company’s (i) common stock, and (ii) other voting preferred stock issued and outstanding on the date of each and every vote or consent of the shareholders of the Company regarding each and every matter submitted to the shareholders of the Company for approval. The Series A Voting Preferred Stock will not be convertible into Common Stock.
NOTE 8:STOCK OPTIONS
The following table represents the number of options currently outstanding under the 2012 Employee Stock Option Plan:
Options Outstanding
|
|
|
|
|
|
|
|
|
Remaining
|
|
Exercise Price
|
|
Weighted
|
|
|
Number of
|
Contractual Life
|
|
times Number
|
|
Average
|
Exercise Price
|
|
Shares
|
(in years)
|
|
of Shares
|
|
Exercise Price
|
|
|
|
|
|
|
|
|
|
$
|
0.10
|
|
5,000,000
|
1.60
|
|
$
|
500,000
|
|
$0.10
|
$
|
0.25
|
|
1,500,000
|
1.60
|
|
|
375,000
|
|
$0.25
|
|
|
|
6,500,000
|
|
|
$
|
875,000
|
|
$0.20
|
|
|
|
|
|
|
|
Options Activity
|
|
|
|
|
Weighted
|
|
|
|
Number
|
|
|
Average
|
|
|
|
of Shares
|
|
|
Exercise Price
|
|
Outstanding at January 31, 2015
|
|
|
6,500,000
|
|
|
$
|
0.20
|
|
Issued
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Expired / Cancelled
|
|
|
-
|
|
|
|
-
|
|
Outstanding at January 31, 2016
|
|
|
6,500,000
|
|
|
$
|
0.20
|
|
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 8:STOCK OPTIONS (continued)
As of January 31, 2016 and January 31, 2015, the Company has granted a total of 6,500,000 options to purchase common stock shares. In connection with the options granted, a total of $2,665,000 has been recorded as deferred compensation, of which $153,750 and $205,000 has been expensed during the fiscal year ended January 31, 2016 and the year ended January 31, 2015, respectively. There remains $0 and $153,250 of deferred compensation as of January 31, 2016 and January 31, 2015, respectively.
Subsequent to the fiscal year end, in accordance with the terms of the underlying option agreements, upon the termination of services to the Company by the consultant and the officer holding the options, all outstanding stock options expired unexercised 90 days thereafter.
NOTE 9: RESTRICTED STOCK AWARDS
On February 15, 2014, in connection with a certain Employment Agreement dated November 15, 2013, its then President was awarded the right to purchase 400,000 shares of the Company’s restricted common stock (the “Restricted Stock Units”, “RSUs”) at a per share price of $0.001 (the “2013 Stock Award”). The 2013 Stock Award, valued at $640,000, vested periodically over the period beginning February 15, 2014 through November 15, 2014, at 100,000 RSUs per vesting period. During the year ended January 31, 2015, the Company recorded deferred compensation in the amount of $640,000, which has been fully expensed in the current year for the 400,000 RSUs vested through January 31, 2015.
On November 15, 2014, in connection with a certain Employment Agreement dated November 15, 2014, its then President was awarded the right to purchase 1,000,000 shares of the Company’s restricted common stock at a per share price of $0.001 (the “2014 Stock Award”). The 2014 Stock Award, valued at $400,000, vests periodically over the period beginning November 15, 2014 through November 15, 2015, at 250,000 RSUs per vesting period.
On November 1, 2015, the Company entered into a new Employment Agreement with its then President (the “2015 Employment Agreement”). The Employment Agreement is for a term of one (1) year, and includes compensation in the amount of $36,000 per year, compensation for certain travel expenses, and grants a right to purchase 2,000,000 shares of the Company’s common stock at par, which vest quarterly beginning November 1, 2015, at 500,000 shares per vesting period through August 1, 2016 (the “2015 Stock Award”). In connection with the 2015 Stock Award, $160,000 has been recorded as deferred compensation, to be amortized over the next 9 months.
As of January 31, 2016 and January 31, 2015, the Company has awarded a total of 2,000,000 and 1,400,000 Restricted Stock Units, respectively. In connection with the Stock Awards, a total of $1,200,000 has been recorded as deferred compensation, of which $340,000 and $740,000 has been expensed during the fiscal year ended January 31, 2016 and the fiscal year ended January 31, 2015, respectively. Upon the former President’s resignation as an officer and director, effective December 17, 2015, all unvested stock awards were immediately cancelled.
The following table represents the number of Restricted Stock Units awarded (the "Stock Awards"):
Restricted Stock Units Activity
|
|
|
|
|
Weighted
|
|
|
|
Number
|
|
|
Average
|
|
|
|
of RSUs
|
|
|
Exercise Price
|
|
Outstanding at January 31, 2014
|
|
|
-
|
|
|
|
-
|
|
Awarded
|
|
|
1,400,000
|
|
|
$
|
0.001
|
|
Exercised / Vested
|
|
|
(650,000
|
)
|
|
$
|
0.001
|
|
Expired / Cancelled
|
|
|
-
|
|
|
|
-
|
|
Outstanding at January 31, 2015
|
|
|
750,000
|
|
|
$
|
0.001
|
|
Awarded
|
|
|
2,000,000
|
|
|
$
|
0.001
|
|
Exercised / Vested
|
|
|
(1,250,000
|
)
|
|
$
|
0.001
|
|
Expired / Cancelled
|
|
|
1,500,000
|
|
|
|
-
|
|
Outstanding at January 31, 2016
|
|
|
-
|
|
|
$
|
0.001
|
|
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 10: INCOME TAXES
The components of the net change in deferred tax asset at January 31, 2016 and January 31, 2015, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:
|
|
|
|
|
|
|
|
|
January 31, 2016
|
|
|
January 31, 2015
|
|
|
|
|
|
|
|
|
Income (loss) before taxes
|
|
$
|
(833,706
|
)
|
|
$
|
(1,090,336
|
)
|
Statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
Computed expected tax payable (recovery)
|
|
$
|
(283,600
|
)
|
|
$
|
(370,600
|
)
|
Non-deductible expenses
|
|
|
300
|
|
|
|
––
|
|
Change in valuation allowance
|
|
|
283,300
|
|
|
|
370,600
|
|
Reported income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The significant components of the cumulative deferred income tax assets and liabilities at January 31, 2016 and January 31, 2015, are as follows:
|
|
|
|
|
|
|
|
|
January 31, 2016
|
|
|
January 31, 2015
|
|
Deferred tax assets
:
|
|
|
|
|
|
|
Net operating loss carry forward
|
|
$
|
3,275,800
|
|
|
$
|
2,990,600
|
|
Non-deductible expenses
|
|
|
1,900
|
|
|
|
-
|
|
Less valuation allowance
|
|
|
(3,273,900
|
)
|
|
|
(2,990,600
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE 11: SUBSEQUENT EVENTS
On February 1, 2016 the Company entered into a Consulting Agreement for certain marketing and administrative expertise where under we will pay $1,000 per month for a term of six months, with automatic six month renewal terms, and issue 100,000 shares of restricted stock as additional compensation.
On February 26, 2016 the Company announced it had canceled 1,000,000 shares of common stock, as part of a stock buyback program designed to increase current shareholder value by repurchasing and retiring existing outstanding common stock.
On March 7, 2016, the Company dismissed its independent registered public accounting firm, Seale & Beers, CPAs. Seale & Beers and approved the engagement of BF Borgers, CPA PC as the Company’s new independent registered public accounting firm.
ECO SCIENCE SOLUTIONS, INC.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2016
NOTE 11: SUBSEQUENT EVENTS (cont'd)
On March 18, 2016, Mike Hogue was issued a total of 100,000 shares of common stock in relation to a consulting agreement. The shares were valued at market on the date of the contract, February 1, 2016, for a total of $250,000.
On March 22, 2016 we entered into a two-year lease commencing April 1, 2016 for a total of 253 square feet of office and 98 square feet of reception space. Monthly base rent for the period April 1, 2016 to March 31, 2017 is $526.50 per month and increases to $552.83 per month for the subsequent year ending March 31, 2018. Operating costs for the first year of the lease are estimated at $258.06 per month. The Company has remitted a security deposit in the amount of $817.24 in respect of the lease. Further our officers and directors have executed a personal guarantee in respect of the aforementioned lease agreement.
On April 1, 2016 the Company filed a Form S-8 to register 5,000,000 shares of Common Stock, $0.00001 par value per share, under its 2016 Equity Incentive Plan.
On April 6, 2016 the Company issued a total of 1,200,000 shares of common stock valued at $0.01 per share in relation to a consulting agreement with SDOI.
On May 9, 2016 the Company issued 596,884 shares of common stock to an unrelated third party in respect to the assignment of the remaining balance of a convertible note in the principal amount of $96,100. Upon assignment the conversion terms of the note were amended from $0.003 per share to a 40% discount to market based on the date immediately prior to the notice of conversion. As a result the shares were issued in full settlement of the principal value of the note at 0.161 per share.