{"url_path":"/sec/essi/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**","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":1907,"has_tables":true,"body_markdown":"**ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n \n\nThe following discussion and analysis should be read in conjunction with the Company’s audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed elsewhere in this Annual Report on Form 10-K.\n\n \n\nThe 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.\n\n \n\n**Overview**\n\n \n\nEco 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.\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\n**Results of Operations**\n\n \n\n*Comparison of Fiscal Years Ended January 31, 2026 and 2025*\n\n \n\n**Revenue and Cost of Revenue**\n\n \n\nDuring the fiscal years ended January 31, 2026 and 2025, the Company generated no revenue and incurred no costs of revenue.\n\n \n\n \n\n13\n\n*Table of Contents*\n\n \n\n**Operating Expenses**\n\n \n\nThe following table summarizes operating expenses for the fiscal years ended January 31, 2026 and 2025:\n\n \n\n**Operating Expenses**\n\n \n\n**FY2026**\n\n \n\n \n\n**FY2025**\n\n \n\n \n\n**Variance**\n\n \n\nManagement and consulting fees\n\n \n$502,000\n \n\n \n$503,281\n \n\n \n$(1,281)\n\nAccounting, audit and legal fees\n\n \n\n \n101,290\n \n\n \n\n \n140,554\n \n\n \n\n \n(39,264)\n\nResearch and development\n\n \n\n \n307,867\n \n\n \n\n \n331,578\n \n\n \n\n \n(23,711)\n\nGeneral and administrative expenses\n\n \n\n \n47,195\n \n\n \n\n \n49,726\n \n\n \n\n \n(2,531)\n\n**Total operating expenses**\n\n \n**$****958,352**\n \n\n \n**$****1,025,139**\n \n\n \n**$****(66,787****)**\n\n \n\nManagement and consulting fees remained relatively consistent year over year. During fiscal 2026, certain consulting agreements expired and were not renewed.\n\n \n\nAccounting, audit and legal fees decreased during fiscal 2026 primarily due to lower accounting and audit-related expenditures compared to the prior fiscal year.\n\n \n\nResearch 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.\n\n \n\nGeneral and administrative expenses remained relatively consistent year over year.\n\n \n\nThe Company recorded operating losses of $958,352 and $1,025,139 during the fiscal years ended January 31, 2026 and 2025, respectively.\n\n \n\n**Other Income (Expense)**\n\n \n\n \n\n14\n\n*Table of Contents*\n\n \n\nThe following table summarizes other income and expense for the fiscal years ended January 31, 2026 and 2025:\n\n \n\n**Other Income (Expense)**\n\n \n\n**FY2026**\n\n \n\n \n\n**FY2025**\n\n \n\nInterest expense\n\n \n$(124,613)\n \n$(76,549)\n\nGain on debt forgiveness\n\n \n\n \n343,833\n \n\n \n\n \n—\n \n\nGain on debt settlement\n\n \n\n \n10,181,351\n \n\n \n\n \n—\n \n\n**Total other income (expense)**\n\n \n**$****10,400,571**\n \n\n \n**$****(76,549****)**\n\n \n\nInterest expense during fiscal 2026 primarily related to convertible notes, loans payable, and accrued default interest associated with the Robbins LLP promissory note.\n\n \n\nDuring 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.\n\n \n\n**Net Income (Loss)**\n\n \n\nAs 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.\n\n \n\n**Liquidity and Capital Resources**\n\n \n\nThe following table summarizes selected balance sheet information as of January 31, 2026 and 2025:\n\n \n\n**Selected Financial Data**\n\n \n\n**January 31, 2026**\n\n \n\n \n\n**January 31, 2025**\n\n \n\nCash\n\n \n$32,699\n \n\n \n$2,817\n \n\nPrepaid expenses\n\n \n\n \n38,125\n \n\n \n\n \n4,455\n \n\nTotal current assets\n\n \n\n \n70,824\n \n\n \n\n \n7,272\n \n\nIntangible assets\n\n \n\n \n100,000\n \n\n \n\n \n100,000\n \n\nTotal liabilities\n\n \n\n \n1,194,853\n \n\n \n\n \n16,669,544\n \n\nWorking capital deficit\n\n \n\n \n(1,124,029)\n \n\n \n(16,662,272)\n\nAccumulated deficit\n\n \n\n \n(69,284,053)\n \n\n \n(78,726,272)\n\n \n\nThe significant reduction in liabilities and accumulated deficit during fiscal 2026 was primarily attributable to the Company’s debt settlement and debt forgiveness transactions completed on January 31, 2026.\n\n \n\n \n\n15\n\n*Table of Contents*\n\n \n\nAs of January 31, 2026, the Company had limited cash resources and continued to experience negative cash flows from operations. The Company’s operations have historically been funded through related party loans, convertible notes, equity issuances, and other financing arrangements.\n\n \n\n**Cash Flows**\n\n \n\nThe following table summarizes cash flows for the fiscal years ended January 31, 2026 and 2025:\n\n \n\n**Cash Flow Activity**\n\n \n\n**FY2026**\n\n \n\n \n\n**FY2025**\n\n \n\nNet cash used in operating activities\n\n \n$(367,781)\n \n$(319,829)\n\nNet cash used in investing activities\n\n \n\n \n—\n \n\n \n\n \n—\n \n\nNet cash provided by financing activities\n\n \n\n \n397,663\n \n\n \n\n \n320,540\n \n\n \n\nNet cash used in operating activities during fiscal 2026 primarily reflected ongoing operating expenses associated with software development, consulting, professional fees, and general corporate activities.\n\n \n\nNet cash provided by financing activities during fiscal 2026 primarily reflected proceeds from related party advances and loans.\n\n \n\n**Subsequent Events**\n\n \n\nReverse 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.\n\n \n\nMarch 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.\n\n \n\nOther 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.\n\n \n\n**Plan of Operations**\n\n \n\nThe Company intends to continue development, commercialization, and customer onboarding activities relating to the HERBO and HERBO Pay platforms. Management’s current operational focus includes:\n\n \n\n·\n\nexpansion of software functionality and integrations;\n\n·\n\nonboarding of initial customers;\n\n·\n\ndevelopment of recurring SaaS revenue opportunities;\n\n·\n\npayment and onboarding workflow expansion;\n\n·\n\noperational scalability;\n\n·\n\nenhancement of compliance-related functionality; and\n\n·\n\nobtaining additional working capital and financing resources.\n\n \n\n \n\n16\n\n*Table of Contents*\n\n \n\nThe 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.\n\n \n\nFuture 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.\n\n \n\n**Going Concern**\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\nThe accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments relating to the recoverability or classification of recorded assets or liabilities that may be necessary should the Company be unable to continue as a going concern.\n\n \n\n**Critical Accounting Policies and Estimates**\n\n \n\nThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses.\n\n \n\nManagement regularly evaluates estimates and assumptions relating to, among other matters:\n\n \n\n·\n\nvaluation of stock-based compensation;\n\n·\n\nfair value of equity instruments issued in debt settlements;\n\n·\n\nvaluation allowances for deferred tax assets;\n\n·\n\nrecoverability of long-lived assets and intangible assets;\n\n·\n\nbeneficial conversion features and derivative liabilities;\n\n·\n\naccruals and contingencies; and\n\n·\n\ngoing concern considerations.\n\n \n\nActual results may differ materially from these estimates.\n\n \n\n*Stock-Based Compensation*\n\n \n\nThe Company accounts for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation. Equity instruments issued for services are measured at the estimated fair value of the equity instruments issued or the fair value of the services received, whichever is more reliably measurable.\n\n \n\n*Convertible Debt and Beneficial Conversion Features*\n\n \n\nThe Company evaluates embedded conversion features within convertible instruments in accordance with ASC 815, Derivatives and Hedging, and ASC 470, Debt, to determine whether derivative accounting or beneficial conversion feature accounting is required.\n\n \n\n \n\n17\n\n*Table of Contents*\n\n \n\n*Stock Settled Debt*\n\n \n\nCertain convertible instruments historically contained provisions permitting conversion at fixed discounts to market prices of the Company’s common stock. In these instances, the Company recorded stock-settled debt representing the estimated value transferred through the conversion feature. As of January 31, 2026 and 2025, stock-settled debt included within convertible notes payable totaled $0 and $248,432, respectively.\n\n \n\n**Recently Issued Accounting Pronouncements**\n\n \n\nThe Company evaluates recently issued accounting pronouncements and standards updates issued by the Financial Accounting Standards Board (“FASB”).\n\n \n\nIn November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments require enhanced annual and interim disclosures regarding significant segment expenses. The Company adopted this guidance and the adoption did not have a material impact on the consolidated financial statements.\n\n \n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires expanded income tax disclosures, including additional disaggregation of effective tax rate reconciliations and income taxes paid. The Company adopted this guidance during fiscal 2026 and the adoption did not materially impact the consolidated financial statements.\n\n \n\nIn July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The Company early adopted this standard during fiscal 2026 and the adoption did not materially impact the consolidated financial statements.\n\n \n\n*Accounting Pronouncements Pending Adoption*\n\n \n\nIn December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. The Company is currently evaluating the impact of this standard on its consolidated financial statements.\n\n \n\nIn September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The Company is currently evaluating the impact of this standard on its consolidated financial statements.\n\n \n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. The Company is currently evaluating the impact of this standard on its consolidated financial statements."}