ESSI 10-K & 10-Q changes, risk factors and insider trading
Eco Science Solutions, Inc. · OTC · Retail-Miscellaneous Retail · CIK 1490873 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
As a smaller reporting company, the Company is not required to provide the information required by this Item. However, the Company's business involves significant risks, including but not limited to: the Company's ability to continue as a going concern; dependence on a single executive officer; material weaknesses in internal control over financial reporting; the federal illegality of cannabis; regulatory uncertainty regarding the Company's payment platform; absence of revenue; default on the Robbins LLP promissory note; potential limitations on net operating loss carryforwards under Section 382; and the Company's need for additional financing. Investors should carefully consider these and other risks, uncertainties, and factors described throughout this Annual Report on Form 10-K, including under “Forward-Looking Statements,” “Business,” "Legal Proceedings," and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Largest changes
“As a smaller reporting company, the Company is not required to provide the information required by this Item. …”see in full comparison
Full comparison: every changed paragraph (2)
As a smaller reporting company, the Company is not required to provide the information required by this Item. However, the Company's business involves significant risks, including but not limited to: the Company's ability to continue as a going concern; dependence on a single executive officer; material weaknesses in internal control over financial reporting; the federal illegality of cannabis; regulatory uncertainty regarding the Company's payment platform; absence of revenue; default on the Robbins LLP promissory note; potential limitations on net operating loss carryforwards under Section 382; and the Company's need for additional financing. Investors should carefully consider these and other risks, uncertainties, and factors described throughout this Annual Report on Form 10-K, including under “Forward-Looking Statements,” “Business,” "Legal Proceedings," and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Not required for a “smaller reporting company”.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of Fiscal Years Ended January 31, 2026 and 2025”
New heading “Revenue and Cost of Revenue”
New heading “Operating Expenses”
New heading “Other Income (Expense)”
New heading “Net Income (Loss)”
New heading “Subsequent Events”
New heading “Accounting Pronouncements Pending Adoption”
Removed heading “Contractual Obligations”
Removed heading “Off-Balance Sheet Arrangements”
Largest changes
“As at January 31, 2025 and January 31, 2024, the Company had $2,817 and $2,106 in cash, prepaid expenses of $4,455and $0 for total current assets of $7,272 and $2,106. There were no prepaid expenses at January 31, 2024. Prepaid expenses at January 31, 2025 of $4,455 are related to fees paid to OTC Markets. We reflect intangible assets in respect to software assets of $100,000 at January 31, 2025 and January 31, 2024. Total liabilities at January 31, 2025 and January 31, 2024 were $16,669,544 and $15,562,690 respectively. …”see in full comparison
“Factors which may impact the Company’s ongoing operations include inflation, the recent war in the Ukraine, climate change and others. These events may have serious adverse impact on domestic and foreign economies which may impact the Company’s operations as a result of a variety of factors including the potential for reduced consumer spending. The Company is unable to predict the ongoing impact of these factors on the Company’s financial operations.”see in full comparison
“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, 2025, the Company had a working capital deficit of $16,662,272 and an accumulated deficit of $78,726,272. The continuation of the Company as a going concern is dependent upon the continued financial support from its officers, directors and shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s future business. …”see in full comparison
The accompanying consolidated financial statementssee in full comparisonreflecthaveallbeenadjustmentspreparedconsisting of normal recurring adjustments, which, inassuming theopinionCompanyofwillmanagement,continueare necessary foras afairgoingpresentationconcernof the results for the periods shown. The consolidated financial statementsand do not include any adjustments relating to the recoverabilityandor classification of recordedassets,assets orthe amounts of and classification ofliabilities thatmightmay be necessaryin the eventshould the Companycannotbe unable to continueinasexistence.a going concern.
“The Company’s continuation as a going concern is dependent upon its ability to generate revenues from operations, obtain additional financing, and achieve profitable operations. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern.”see in full comparison
“Interest expense during fiscal 2026 primarily related to convertible notes, loans payable, and accrued default interest associated with the Robbins LLP promissory note.”see in full comparison
Full comparison: every changed paragraph (90)
The following discussion and analysis should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended January 31, 2025, and 2024, that appearincluded elsewhere in this report.Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflectinvolve the Company’s plans, estimatesrisks and beliefs.uncertainties. The Company’s actualActual results couldmay differ materially from those discussed in the forward-looking statements.statements Factorsas thata couldresult causeof orvarious contributefactors, to such differences include but are not limited toincluding those discussed below and elsewhere in this annualAnnual report.Report on Form 10-K.
The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in United States dollars. Unless otherwise indicated, all share and per share amounts presented herein have been retroactively adjusted to reflect the Company’s 1-for-25 reverse stock split effective May 4, 2026.
Overview
Eco Science Solutions, Inc. (“ESSI,” the “Company,” “we,” “our,” or “us”) is focused on the development and commercialization of enterprise software and financial technology solutions intended to support businesses operating in regulated and operationally complex industries.
The Company’s primary software platforms are HERBO, a cloud-based enterprise resource planning (“ERP”) and accounting platform, and HERBO Pay, an integrated payment and financial technology platform designed to support payment workflows, onboarding, transaction monitoring, and operational integration.
The Company is currently in the early stages of commercialization of its software platforms. During the fiscal years ended January 31, 2026 and 2025, the Company did not generate revenue. Subsequent to January 31, 2026, the Company commenced limited onboarding of initial paying customers and early-stage commercial implementation activities.
The Company’s operations have historically been funded primarily through related party advances, convertible notes, loans, and issuances of equity securities. During the year ended January 31, 2026, the Company completed substantial debt settlement transactions through the issuance of common stock, resulting in significant reductions in liabilities and the recognition of gains on debt settlement and extinguishment.
The Company’s consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Comparison of Fiscal Years Ended January 31, 2026 and 2025
Revenue and Cost of Revenue
Overview of Current Operations
Results of Operations for the years ended January 31, 2025, and 2024 During the fiscal years ended January 31, 2025,2026 and 2024,2025, the Company generated no revenue.revenue Costsand incurred no costs of revenue totaled $0 in fiscal 2025 and 2024, respectively.revenue.
Operating Expenses
The following table summarizes operating expenses for the fiscal years ended January 31, 2026 and 2025:
Management and consulting fees remained relatively consistent year over year. During fiscal 2026, certain consulting agreements expired and were not renewed.
Accounting, audit and legal fees decreased during fiscal 2026 primarily due to lower accounting and audit-related expenditures compared to the prior fiscal year.
Research and development expenses decreased during fiscal 2026 as the Company reduced certain development expenditures relating to enhancements and expansion of the HERBO software suite and related platform functionality.
General and administrative expenses remained relatively consistent year over year.
The Company recorded operating losses of $958,352 and $1,025,139 during the fiscal years ended January 31, 2026 and 2025, respectively.
Other Income (Expense)
The following table summarizes other income and expense for the fiscal years ended January 31, 2026 and 2025:
Interest expense during fiscal 2026 primarily related to convertible notes, loans payable, and accrued default interest associated with the Robbins LLP promissory note.
During fiscal 2026, the Company completed debt settlement transactions pursuant to which accrued liabilities, convertible notes, accounts payable, related party obligations, and accrued interest were settled through the issuance of common stock. For financial reporting purposes, the equity instruments issued in connection with these transactions were recorded at their estimated fair value on the date of issuance, resulting in the recognition of substantial gains on debt settlement and extinguishment.
Net Income (Loss)
As a result of the matters discussed above, the Company reported net income of $9,442,219 during the fiscal year ended January 31, 2026, as compared to a net loss of $1,101,688 during the fiscal year ended January 31, 2025. The increase was primarily attributable to gains recognized on debt settlement and debt forgiveness transactions completed during fiscal 2026.
The following table summarizes selected balance sheet information as of January 31, 2026 and 2025:
The significant reduction in liabilities and accumulated deficit during fiscal 2026 was primarily attributable to the Company’s debt settlement and debt forgiveness transactions completed on January 31, 2026.
As of January 31, 2026, the Company had limited cash resources and continued to experience negative cash flows from operations. The Company’s operations have historically been funded through related party loans, convertible notes, equity issuances, and other financing arrangements.
Cash Flows
The following table summarizes cash flows for the fiscal years ended January 31, 2026 and 2025:
Net cash used in operating activities during fiscal 2026 primarily reflected ongoing operating expenses associated with software development, consulting, professional fees, and general corporate activities.
Net cash provided by financing activities during fiscal 2026 primarily reflected proceeds from related party advances and loans.
Subsequent Events
Reverse Stock Split. On May 4, 2026, following stockholder authorization, the Company effected a 1-for-25 reverse stock split of its issued and outstanding common stock. The reverse stock split was processed by FINRA as effective on May 4, 2026. All share and per share amounts presented in this Annual Report on Form 10-K have been retroactively adjusted to reflect the reverse stock split.
March 9, 2026 Stockholder Consent. On March 9, 2026, the Company received the written consent of holders of a majority of the Company’s outstanding common stock authorizing the May 4, 2026 reverse stock split and related corporate actions.
Other than as described above and in Note 11 to the accompanying consolidated financial statements, the Company is not aware of any subsequent events that would require disclosure or adjustment to the consolidated financial statements as of January 31, 2026.
As at January 31, 2025 and 2024, the Company had $2,817 and $2,106 in cash and $4,455 and$0 in prepaid amounts for total current assets of $7,272 and $2,106, respectively.
During the fiscal years ended January 31, 2025, and 2024, the Company incurred total operating expenses of $1,025,139 and $1,170,023, respectively. Amounts expended on management and consulting fees reflect a decrease from $592,000 (2024) to $503,281 (2025) as certain consulting contracts expired in the current fiscal year and were not renewed. Amounts incurred for accounting, audit and legal fees totaled $140,554 in fiscal 2025 and $125,538 in fiscal 2024 mainly due to the fact that we incurred additional fees for accounting and audit review. During fiscal 2025 and 2024 research and development fees incurred were $331,578 and $404,865 respectively, as we incurred increased development costs in 2024 with respect to upgrades to our software suite and the addition of expanded offerings through the Herbo application. Other operating and general and administrative expenses remained relatively constant year over year at $49,726 in fiscal 2025 and $47,467 in fiscal 2024. Net operating losses totaled $1,025,139 and $1,170,023 in the years ended January 31, 2025 and 2024, respectively.
Currently a significant portion of our total operating expenses are from management and consultant fees. Several costs have been incurred in order to bring our regulatory product to market, including programming of technology, build out of needed infrastructure for customers including sand-boxes, build out of training materials including educational and instructional videos which are housed within our website, generation of marketing materials, as well as efforts to meet, and present, our product before various regulators in various jurisdictions, both foreign and domestic.
The Company recorded cumulative interest expense of $76,549 and $72,245 in respect of certain convertible notes and other loan agreements, respectively during fiscal 2025 and 2024, respectively. Total other expense in the year ended January 31, 2025 was $76,549 compared to other expense of $72,245 in the year ended January 31, 2024, all of which was related to interest expense.
The net loss in fiscal 2025 was $1,101,688, as compared to $1,242,268 in fiscal 2024, largely due to the decrease in expenditures on research and development and management and consulting fees in the current fiscal year.
The Company used net cash in operations of $319,829 and $358,683 respectively during the twelve-month periods ended January 31, 2025 and 2024, recorded $Nil in 2025 and $100,000 in 2024 as net cash used for investing activities which was related to the purchase of software in 2024 with no comparable item in fiscal 2024. The Company received cash from financing activities of $320,540 (2025) $460,263 (2024) as a result of proceeds from related party loans.
Plan of OperationOperations
The Company intends to continue development, commercialization, and customer onboarding activities relating to the HERBO and HERBO Pay platforms. Management’s current operational focus includes:
The Company expects to continue relying on related party funding, debt financing, equity issuances, and other external financing arrangements until sufficient recurring revenues can be generated from operations. There can be no assurance that the Company will be successful in obtaining additional financing on acceptable terms, or at all.
Future financing activities may result in dilution to existing stockholders, the issuance of additional equity securities, the incurrence of debt, or other financing arrangements that could adversely affect existing stockholders.
The Company changed the focus of its business at the close of fiscal 2016 to operate in the eco-friendly technology sector using social media sites and offering apps to generate advertising revenues and download fees, and to development certain enterprise software for the cannabis industry. During fiscal 2017 the Company laid the groundwork for income generation from these services by investing in ongoing development of its applications, websites and visibility in both the local and global market. The Company has invested heavily in advertising to allow its applications and ecommerce website visibility on a global stage. During fiscal 2018 we further added to our business portfolio with the acquisition of Ga-Du corporation and its in house software offerings.
Fiscal 2020 brought our first revenues from our acquired Herbo enterprise software and we expect to see increasing revenues from this suite of services as we focus on marketing to a larger more focused client base. In each of the years ended January 31, 2021, through 2025, the Company has continued to incur costs to expand and develop its Herbo software suite of offerings. The Company’s need for ongoing capital by way of loans, sale of equity and/or convertible notes is expected to continue during the current fiscal year until we can establish revenues from operations to cover all operational overhead. We have also had to rely heavily on loans from related parties in our most recently completed fiscal years as we worked to have our shares returned for quotation on the OTC Markets. There are no assurances additional capital will be available to the Company on acceptable terms or that this equity line will be available to us when needed.
Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company’s business, results of operations and financial condition. Any future funding might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available, might be dilutive.
The Company has incurred recurring operating losses and negative operating cash flows and has not yet generated significant recurring revenues from operations. As of January 31, 2026, the Company had a working capital deficit of $1,124,029 and an accumulated deficit of $69,284,053.
The Company’s continuation as a going concern is dependent upon its ability to generate revenues from operations, obtain additional financing, and achieve profitable operations. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern.
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, 2025, the Company had a working capital deficit of $16,662,272 and an accumulated deficit of $78,726,272. The continuation of the Company as a going concern is dependent upon the continued financial support from its officers, directors and 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.
Other factors
Factors which may impact the Company’s ongoing operations include inflation, the recent war in the Ukraine, climate change and others. These events may have serious adverse impact on domestic and foreign economies which may impact the Company’s operations as a result of a variety of factors including the potential for reduced consumer spending. The Company is unable to predict the ongoing impact of these factors on the Company’s financial operations.
The accompanying consolidated financial statements reflecthave allbeen adjustmentsprepared consisting of normal recurring adjustments, which, inassuming the opinionCompany ofwill management,continue are necessary foras a fairgoing presentationconcern of the results for the periods shown. The consolidated financial statementsand do not include any adjustments relating to the recoverability andor classification of recorded assets,assets or the amounts of and classification of liabilities that mightmay be necessary in the eventshould the Company cannotbe unable to continue inas existence.a going concern.
As at January 31, 2025 and January 31, 2024, the Company had $2,817 and $2,106 in cash, prepaid expenses of $4,455and $0 for total current assets of $7,272 and $2,106. There were no prepaid expenses at January 31, 2024. Prepaid expenses at January 31, 2025 of $4,455 are related to fees paid to OTC Markets. We reflect intangible assets in respect to software assets of $100,000 at January 31, 2025 and January 31, 2024. Total liabilities at January 31, 2025 and January 31, 2024 were $16,669,544 and $15,562,690 respectively. The Company has insufficient funds to meet its ongoing operations and is currently funded through loans and advances from our CEO and CFO, Mr., Michael Rountree. The Company has limited financial resources available outside loans from its officers and directors and funds it has previously obtained through use of convertible notes and loans from related parties. There can be no guarantee the Company will continue to receive proceeds from loans, related party advances or convertible notes sufficient to meet its ongoing operational overheads as we continue to implement our business plan. We did not report any revenue in fiscal 2025 or 2024 as we continued to enhance our software suite and we do not yet have resources to meet our operational shortfalls. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. As noted, additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. During the most recently completed fiscal year management has obtained additional funding with success, however there is no guarantee we will be able to continue to obtain financing if and when required. The current economic downturn may make it difficult to find new capital sources for the Company should they be required.
Future Financings
We anticipate continuing to rely on related party and third-party loans and equity sales of our common shares and/or shares for services rendered in order to continue to fund our business operations in the event of ongoing operational shortfalls. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any of additional sales of our equity securities or arrange for debt or other financing to fund our research and development activities.
Revenue
During fiscal 2020 we commenced operation of our Herbo enterprise software suite. The Herbo enterprise software is a customizable, all-in-one business software (SaaS) and resource for businesses across a suite of high-risk industries. Herbo provides the software, custom web development, operational training and support needed to plan and manage operations of a variety of business segments. There was no revenue recorded in the fiscal years ended January 31, 2025 or 2024.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six months ended July 31, 2026 and 2025”
Largest changes
“The Company recorded total other expenses of $21,048 during the six months ended July 31, 2026, consisting entirely of interest expense, compared to $39,071 during the six months ended July 31, 2025, which comprised interest expense of $19,295 and interest expense on related party obligations of $19,776. The decrease reflects the extinguishment, during the year ended January 31, 2026, of substantially all of the Company's interest-bearing obligations other than the $350,000 promissory note, which remains outstanding and in default.”see in full comparison
“During the six months ended July 31, 2026 and 2025, the Company incurred total operating expenses of $480,248 and $497,193, respectively, a decrease of $16,945. Management and consulting fees were $245,000 (2026) and $251,000 (2025). Research, development, and promotion expense decreased to $140,738 (2026) from $178,770 (2025), reflecting fewer hours allocated to the Company's software development in the current period. Legal, accounting and audit fees increased to $54,617 (2026) from $37,790 (2025) as a result of increased audit, accounting and legal costs incurred in the period. …”see in full comparison
During the three months endedsee in full comparisonAprilJuly30,31, 2026 and 2025, the Company incurred total operating expenses of$232,482$247,766 and$254,295,$242,898, respectively,aandecreaseincrease of$21,813.$4,868. Management and consulting fees were $122,500 (2026) and $125,500 (2025).and remained substantially unchanged between the comparative quarters. Research, development, and promotion expensedecreasedwasto $62,033$78,705 (2026),fromcompared$98,717to $80,053 (2025), reflectingfewera slight reduction in hours allocated to the Company's software development in the currentperiod.quarter. Legal, accounting and audit fees increased to$30,809$23,808 (2026) from$17,459$20,331 (2025),asreflectinga result of increased costs for audit,higher accounting andlegalaudit fees incurred in theperiod.current quarter. Office supplies and other general expensesweredecreased$11,584to $14,420 (2026),comparedfromto $12,619$17,014 (2025). The Company also recorded amortization expense of$5,556$8,333 (2026) and $nil (2025) following the commencement of amortization of its eXPO software intangible asset on March 1, 2026. That amortization accounts for the period-over-period increase in total operating expenses, which were otherwise $3,465 lower than in the comparative quarter.
“During the six months ended July 31, 2026, the Company generated net revenue of $2,205, compared to $nil during the six months ended July 31, 2025. The Company commenced limited revenue-generating operations through its Herbo Pay platform during the three months ended April 30, 2026, and revenue for the current six-month period comprised transaction and processing revenue earned on a net basis through that platform, together with design, testing and hosting fees. …”see in full comparison
“The net loss for the six months ended July 31, 2026 was $499,091, compared to a net loss of $536,264 for the six months ended July 31, 2025, a decrease of $37,173. The decrease reflects the $18,023 reduction in other expenses, the $16,945 decrease in total operating expenses and the $2,205 of revenue recognized in the current period.”see in full comparison
Full comparison: every changed paragraph (20)
During the three months ended April 30, 2026, theThe Company commenced limited revenue-generating operations through its Herbo Pay platform during the three months ended April 30, 2026. During the three and six months ended July 31, 2026, the Company recorded net revenue of $253.$1,952 and $2,205, respectively (three and six months ended July 31, 2025 - $nil). The Company remains in an early commercialization stage and continues to seek additional users of its software platforms.
Subsequent to the period end, effectiveEffective May 4, 2026, the Company completed a 1-for-25 reverse stock split of its issued and outstanding common stock. All share and per-share amounts in this quarterly report have been retroactively adjusted to reflect the reverse stock split for all periods presented.
Three months ended AprilJuly 30,31, 2026 and 2025
During the three months ended AprilJuly 30,31, 2026, the Company generated net revenue of $253,$1,952, compared to $nil during the three months ended AprilJuly 30,31, 2025. TheRevenue in the current quarter comprised transaction and processing revenue wasearned generatedon a net basis through the Company's Herbo Pay platform, whichtogether commencedwith revenue-generatingdesign, operationstesting duringand thehosting current quarter.fees. Customer deposits reflected on the Company’sCompany's balance sheets represent prefunded balances held for future platform usage and do not represent earned revenue until the related services are provided.
During the three months ended AprilJuly 30,31, 2026 and 2025, the Company incurred total operating expenses of $232,482$247,766 and $254,295,$242,898, respectively, aan decreaseincrease of $21,813.$4,868. Management and consulting fees were $122,500 (2026) and $125,500 (2025). and remained substantially unchanged between the comparative quarters. Research, development, and promotion expense decreasedwas to $62,033$78,705 (2026), fromcompared $98,717to $80,053 (2025), reflecting fewera slight reduction in hours allocated to the Company's software development in the current period.quarter. Legal, accounting and audit fees increased to $30,809$23,808 (2026) from $17,459$20,331 (2025), asreflecting a result of increased costs for audit,higher accounting and legalaudit fees incurred in the period.current quarter. Office supplies and other general expenses weredecreased $11,584to $14,420 (2026), comparedfrom to $12,619$17,014 (2025). The Company also recorded amortization expense of $5,556$8,333 (2026) and $nil (2025) following the commencement of amortization of its eXPO software intangible asset on March 1, 2026. That amortization accounts for the period-over-period increase in total operating expenses, which were otherwise $3,465 lower than in the comparative quarter.
The Company recorded total other expenses of $10,548$10,500 during the three months ended AprilJuly 30,31, 2026, consisting entirely of interest expense, compared to total other expenses of $19,126$19,945 during the three months ended AprilJuly 30,31, 2025.2025, which comprised interest expense of $9,807 and interest expense on related party obligations of $10,138. The decrease reflects the extinguishment, during the year ended January 31, 2026, of substantially all of the Company's interest-bearing obligations other than the $350,000 promissory note, which remains outstanding and in default.
The net loss for the three months ended AprilJuly 30,31, 2026 was $242,777,$256,314, compared to a net loss of $273,421$262,843 for the three months ended AprilJuly 30,31, 2025.2025, a decrease of $6,529. The decrease reflects the $9,445 reduction in other expenses and the $1,952 of revenue recognized in the current quarter, partially offset by the $4,868 increase in total operating expenses.
Six months ended July 31, 2026 and 2025
During the six months ended July 31, 2026, the Company generated net revenue of $2,205, compared to $nil during the six months ended July 31, 2025. The Company commenced limited revenue-generating operations through its Herbo Pay platform during the three months ended April 30, 2026, and revenue for the current six-month period comprised transaction and processing revenue earned on a net basis through that platform, together with design, testing and hosting fees. Customer deposits reflected on the Company's balance sheets represent prefunded balances held for future platform usage and do not represent earned revenue until the related services are provided.
During the six months ended July 31, 2026 and 2025, the Company incurred total operating expenses of $480,248 and $497,193, respectively, a decrease of $16,945. Management and consulting fees were $245,000 (2026) and $251,000 (2025). Research, development, and promotion expense decreased to $140,738 (2026) from $178,770 (2025), reflecting fewer hours allocated to the Company's software development in the current period. Legal, accounting and audit fees increased to $54,617 (2026) from $37,790 (2025) as a result of increased audit, accounting and legal costs incurred in the period. Office supplies and other general expenses were $26,004 (2026), compared to $29,633 (2025). The Company also recorded amortization expense of $13,889 (2026) and $nil (2025) following the commencement of amortization of its eXPO software intangible asset on March 1, 2026.
The Company recorded total other expenses of $21,048 during the six months ended July 31, 2026, consisting entirely of interest expense, compared to $39,071 during the six months ended July 31, 2025, which comprised interest expense of $19,295 and interest expense on related party obligations of $19,776. The decrease reflects the extinguishment, during the year ended January 31, 2026, of substantially all of the Company's interest-bearing obligations other than the $350,000 promissory note, which remains outstanding and in default.
The net loss for the six months ended July 31, 2026 was $499,091, compared to a net loss of $536,264 for the six months ended July 31, 2025, a decrease of $37,173. The decrease reflects the $18,023 reduction in other expenses, the $16,945 decrease in total operating expenses and the $2,205 of revenue recognized in the current period.
Statements of Cash Flows for the ThreeSix Months ended AprilJuly 30,31, 2026 and 2025
During the threesix months ended AprilJuly 30,31, 2026, the Company used net cash in operating activities of $24,866,$17,148, compared to $70,593$162,482 during the threesix months ended AprilJuly 30,31, 2025. Net cash used in operating activities during the current period reflected the net loss of $242,777,$499,091, adjusted for non-cash amortization of $5,556$13,889 and net increases in accounts payable and accrued expenses ($53,067$125,629), related party payables ($129,055$300,530), and customer deposits ($5,858$7,442), together with a decrease in prepaid expenses of $24,375.$36,250 and an increase in accounts receivable of $1,797.
The Company had no financing activities during the threesix months ended AprilJuly 30,31, 2026, compared to $69,475$162,763 of net cash provided by financing activities during the threesix months ended AprilJuly 30,31, 2025, which consisted of advances from related party loans.
As a result, cash decreased by $24,866$17,148 during the threesix months ended AprilJuly 30,31, 2026 (2025 –- aan decreaseincrease of $1,118$281), and the Company had cash of $7,833$15,551 at AprilJuly 30,31, 2026 (January 31, 2026 –- $32,699).
The Company continues to develop and commercialize its Herbo ERP and Herbo Pay software platforms for use by businesses operating in regulated and operationally complex industries. During the threesix months ended AprilJuly 30,31, 2026, the Company continued to incur costs to expand and develop its software suite and commencedcontinued limited revenue-generating operations. The Company's need for ongoing capital by way of loans, sales of equity and/or convertible notes is expected to continue during the current fiscal year until the Company is able to establish revenues from operations sufficient to cover its operational overhead. The Company has relied heavily on loans and advances from related parties in recent periods. There are no assurances additional capital will be available to the Company on acceptable terms, or at all.
These unaudited condensed consolidated 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 of AprilJuly 30,31, 2026, the Company had a working capital deficit of $1,406,185$1,654,166 and an accumulated deficit of $69,526,830.$69,783,144. 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.
As of AprilJuly 30,31, 2026 and January 31, 2026, the Company had $7,833$15,551 and $32,699 in cash, respectively, and total current assets of $21,583$19,223 and $70,824, respectively. As of AprilJuly 30,31, 2026 and January 31, 2026, the Company had an intangible asset, net, of $94,444$86,111 and $100,000, respectively, and total assets of $116,027$105,334 and $170,824, respectively. Total liabilities at AprilJuly 30,31, 2026 and January 31, 2026 were $1,427,768$1,673,389 and $1,239,788, respectively. The Company has insufficient funds to meet its ongoing operations and has historically been funded through loans and advances from its sole officer, Mr. Michael Rountree.
The Company's intangible asset consists of the eXPO software platform, which is recorded at cost and tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Amortization is recorded on a straight-line basis over the asset's estimated three-year useful life, commencing March 1, 2026, the date the asset was placed in service. No impairment was recognized during the threesix months ended AprilJuly 30,31, 2026.
ESSI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding ESSI (13F)
None of the 59 investors we track reported a position in their latest 13F.