ESSI 10-K Review: A Deep Dive into Eco Science Solutions, Inc.

In this post, we dissect Eco Science Solutions, Inc.'s (ESSI) 2025 10-K filing, examining its business model, product offerings, financial performance, risk factors, and governance. Our goal is to provide you with a comprehensive view of ESSI and help you decide whether it deserves a spot in your portfolio.

Warren.AI 💰 2.0 / 10

1. Corporate Snapshot

• Name: Eco Science Solutions, Inc. (ESSI)
• Ticker: ESSI (OTC Pink)
• Incorporation: Nevada (2009), HQ in San Clemente, CA
• Shares Outstanding: 52.96 million common shares
• Preferred: 1,000 Series A Voting Preferred (unissued)
• Employees: 3 full-time; additional consultants

2. Business Overview

ESSI is a technology solutions provider focusing on regulated, cash-intensive industries—most notably cannabis, gaming, firearms, and oil & gas. Its two flagship offerings:

1. Herbo: A cloud-based ERP platform (SaaS) combining financial accounting, inventory management, CRM, point-of-sale, payroll, compliance, and e-commerce.
2. Herbo Pay: A financial services portal enabling cashless transactions, KYC, payment facilitation, and mobile payments.

All modules share a single login and are designed to address sector-specific compliance needs, especially cannabis.

3. Market Opportunity and Positioning

• Target Verticals: Cannabis (CBD/hemp), gaming, firearms & ammunition, oil & gas.
• Regulatory Edge: Provides end-to-end traceability and integrated accounting (including 280E compliance for cannabis).
• Competitive Landscape: Competes against point-solution vendors (100+ in cannabis vertical) and general SMB platforms (QuickBooks, Xero). ESSI differentiates through a unified, compliance-focused ERP + payments stack.

Regulatory Tailwinds—and Hazards

• Cannabis remains a Schedule I substance federally. Enforcement discretion (Cole Memo, Rohrabacher-Blumenauer) provides breathing room but no legal guarantee.
• Ongoing SAFE Banking Act gridlock keeps banking access limited, reinforcing demand for cashless solutions like Herbo Pay.
• Federal THC rescheduling or national de-scheduling (Schedule III review, STATES Act) would transform the opportunity.

4. Key November 2020 Derivative Settlement

A shareholder derivative suit (Ian Bell et al. v. ESSI) led to a settlement imposing governance reforms:

• Board Reconstitution: Resignation of Taylors; appointment of A. Carl Mudd (Ombudsman & Chairman).
• Share Cancellations: 3.5 million shares returned to Treasury.
• Debt Forgiveness: $1.5 million canceled.
• Attorney Fees: 1.4 million restricted shares + $350k promissory note to plaintiffs’ counsel.
• Governance Reforms: New independent directors, D&O insurance, audit & governance committees, ethics code, clawback policy, whistleblower policy—all contingent on available funds. 15% of future financing/revenue earmarked for these reforms.

Status: Mudd has implemented some reforms; others await financing.

5. Strategic Acquisitions

• 2021: Acquired Haiku’s enterprise accounting and CRM platform. 1.5 million restricted shares issued.
• 2023: Acquired eXPO Financial Services’ portal for $100k (8-month installment).

These assets power Herbo’s back-end capabilities and strengthen ESSI’s B2B2C & B2G ecosystem.

6. Financial Highlights (FY 2025 vs. FY 2024)

Metric	2025	2024
Revenue	$0	$0
Cost of Revenue	$0	$0
Operating Expenses	$1.025 M	$1.170 M
— Mgmt & Consulting	$0.503 M	$0.592 M
— R&D & Promotion	$0.332 M	$0.405 M
— Legal & Audit	$0.141 M	$0.126 M
Net Operating Loss	($1.025 M)	($1.170 M)
Interest Expense	($0.077 M)	($0.072 M)
Net Loss	($1.102 M)	($1.242 M)
Cash & Equivalents	$2,817	$2,106
Total Assets	$0.107 M	$0.102 M
Total Liabilities	$16.670 M	$15.563 M
Stockholders’ Deficit	($16.562 M)	($15.461 M)

• Working Capital: ($16.7 M) deficit.
• Accumulated Deficit: ($78.7 M).
• Going Concern: Substantial doubt. Operates on related-party loans & convertible notes; no cash-flow from operations.

7. Liquidity & Capital Structure

• Convertible Note: $1.408 M principal + $0.248 M conversion feature liability; 15% discount conversion feature; in default.
  - Related-Party Debt: $7.386 M (officers, directors, consultants).
  - Long-Term Debt: $2.960 M in various notes (1–6) in default.

Burn Rate: ~$320k monthly in operating expenses. Cash Runway: Days. Equity: 52.96 M common shares, 0 preferred issued.

8. Key Risk Factors

1. No Revenue: Zero commercial sales to date.
   2. Going Concern: Reliant on debt/equity raises; substantial working capital deficit.
   3. Regulatory Uncertainty: Cannabis legality remains in flux; federal enforcement risk.
   4. Governance & Litigation: Ongoing obligations under settlement; limited reforms due to funding.
2. Dilution Risk: Future equity raises highly likely.
   6. Competition: Dominated by entrenched ERP/SMB software and point-solutions.

9. Management & Board

• CEO/CFO/COO/President: Michael D. Rountree. 20+ years in tax & accounting, tech consulting, founder of Rountree Consulting.
• Ombudsman/Chairman: A. Carl Mudd (CPA, former CFO/COO of global firms; governance expert).
• Director: S. Randall Oveson (manufacturing, hospitality, finance professional).

Insider Control: ~21% held by management & board; top 3 shareholders ~27% combined.

10. SWOT Analysis

Strengths	Weaknesses
Proprietary, integrated ERP + payments	No revenues; heavy cash burn
Compliance-focused (280E, KYC)	Substantial liabilities; going concern
Vertical expertise	Reliance on related-party funding

Opportunities	Threats
Marijuana de-scheduling; federal reform	Federal enforcement risk
Expansion into other regulated verticals	Intense competition
Banking access if SAFE Act passes	Dilution via equity raises

11. Outlook & Investment Thesis

While ESSI’s core technology—an integrated, compliance-driven ERP + financial platform—addresses genuine pain points in high-risk industries, the company has yet to prove product–market fit, generate revenue, or control costs. Regulatory changes (cannabis rescheduling, SAFE Banking Act) could unlock opportunities, but legislative uncertainty remains high. Governance improvements mandated by litigation have yet to be fully funded or implemented, raising concerns about oversight.

Verdict: HIGH RISK / SPECULATIVE. Wait for proof of revenues and further governance milestones before investing.

12. Net Profit (Loss)

• FY 2025 Net Loss: ($1.102 M)
• FY 2024 Net Loss: ($1.242 M)

13. Conclusion & Investment Score

We assign ESSI an Investment Score of 2.0/10:

• 2.0 for strong product concept and proprietary integrations.
• Minuses for no revenue track record, weak liquidity, governance shortfalls, and high regulatory and execution risks.

Key Catalysts to Watch:

1. First commercial contracts and revenue.
2. Completion of governance reforms.
3. Legislative clarity on cannabis banking and taxation.
4. Additional capital raises on nondilutive terms.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice.