{"url_path":"/sec/essi/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 LEGAL PROCEEDINGS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-09","source_url":"https://www.sec.gov/Archives/edgar/data/1490873/0001477932-26-003725-index.html","accession_number":"0001477932-26-003725","cik":"0001490873","ticker":"ESSI","issuer_name":"ECO SCIENCE SOLUTIONS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1490873/0001477932-26-003725-index.html","primary_entity_key":"0001490873","primary_entity_name":"ECO SCIENCE SOLUTIONS, INC."},"word_count":642,"has_tables":true,"body_markdown":"**ITEM 3. LEGAL PROCEEDINGS**\n\n \n\nOn September 21, 2020, the United States District Court for the District of Hawaii issued an order in the action captioned In re Eco Science Solutions, Inc. Shareholder Derivative Litigation, Lead Civil No. 1:17-cv-00530-LEW-WRP (D. Haw.), preliminarily approving a proposed settlement. On December 3, 2020, the Court entered an Order and Final Judgment approving the settlement.\n\n \n\n \n\n10\n\n*Table of Contents*\n\n \n\nPursuant to the settlement, among other things:\n\n \n\n·\n\nJeffery Taylor resigned as Chairman of the Board and Don Taylor resigned as Chief Financial Officer and director of the Company;\n\n·\n\nA. Carl Mudd was appointed to serve as Chairman of the Board and Ombudsman;\n\n·\n\ncertain former shareholders returned an aggregate of 140,000 shares of common stock to treasury for cancellation, after giving effect to the Company’s May 4, 2026 1-for-25 reverse stock split;\n\n·\n\nthe Company issued 56,000 restricted shares of common stock to Robbins LLP, after giving effect to the May 4, 2026 reverse stock split;\n\n·\n\nthe Company entered into a promissory note payable to Robbins LLP in the principal amount of $350,000; and\n\n·\n\ndebt totaling $1,500,000 owed to Phenix Ventures LLC was forgiven and cancelled.\n\n \n\nPursuant to the settlement and related governance reforms, on December 23, 2020, the Company appointed A. Carl Mudd to serve as Chairman of the Board and Ombudsman. Mr. Mudd’s role includes assisting the Company with implementation and monitoring of certain governance reforms, board oversight, corporate governance matters, compliance-related initiatives, and coordination between management and the Board of Directors.\n\n \n\nIn connection with his appointment, the Company entered into a Board Advisory Agreement with Mr. Mudd pursuant to which he is entitled to receive an advisory fee of $10,000 per month. Due to the Company’s limited liquidity, a substantial portion of such fees has historically been accrued. As disclosed in the accompanying consolidated financial statements, a portion of accrued fees owing to Mr. Mudd was settled through the issuance of common stock during the year ended January 31, 2026.\n\n \n\nPursuant to the settlement, the Company also agreed to implement certain governance reforms and compliance-related initiatives, including matters relating to board oversight, governance policies, audit committee functions, internal controls, and related governance procedures. As of January 31, 2026, the Company has implemented certain of these governance reforms, including the appointment of Mr. Mudd as Chairman and Ombudsman, Board oversight of financial reporting and audit functions, and adoption of an Insider Trading Policy. Implementation of additional governance reforms, including establishment of a formal audit committee charter, remains ongoing and is dependent, in part, upon the Company’s financial resources and operational development. On May 22, 2026, the Board of Directors adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees of the Company in satisfaction of the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. The Company continues to evaluate the status of its compliance with the settlement-mandated governance reforms.\n\n \n\n*Robbins LLP Promissory Note.  As described above, the Company issued a $350,000 promissory note to Robbins LLP in connection with the 2020 shareholder derivative settlement. The Robbins LLP promissory note is in default. As disclosed in Note 6 to the accompanying consolidated financial statements, the Company has accrued default interest on the Robbins LLP promissory note and continues to evaluate its alternatives with respect to satisfaction of the note. The Company is not currently aware of any pending litigation by Robbins LLP to collect the principal amount or accrued interest under the note. See also Item 13 — Certain Relationships and Related Transactions, and Director Independence.*\n\n \n\nOther than as described above, the Company is not currently a party to any material pending legal proceeding, and management is not aware of any material proceedings contemplated against the Company. The Company may from time to time become involved in legal proceedings arising in the ordinary course of business."}