Earth Science Tech (ETST) Risk Analysis

Because of the limited trading market for our common stock and because of the possible price volatility, shareholders may not be able to sell their shares of common stock when desired. The inability to sell Securities in a rapidly declining market may substantially increase the risk of loss because of such illiquidity and because the price for our Securities may suffer greater declines because of our price volatility. Certain factors, some of which are beyond our control, which may cause our share price to fluctuate significantly include, but are not limited to the following: ¦ variations in our quarterly operating results;     ¦ loss of a key relationship or failure to complete significant transactions;     ¦ additions or departures of key personnel; and     ¦ fluctuations in stock market price and volume. Additionally, in recent years the stock market in general, and the personal care markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies' common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on shareholders' investments in our stock.

Our shares as penny stocks, are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell our company's securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and furnishing monthly account statements. These rules apply to companies whose shares are not traded on a national stock exchange, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the Securities and Exchange Commission. These rules require brokers who sell "penny stocks" to persons other than established customers and "accredited investors" to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in such penny stocks. These rules may discourage or restrict the ability of brokers to sell our shares of common stock and may affect the secondary market for our shares of common stock. These rules could also hamper our ability to raise funds in the primary market for our shares of common stock.

Investors' interests in our Company will be diluted and investors may suffer dilution in their net book value per share when we issue additional shares. We are authorized to issue 750,000,000 shares of common stock, $0.001 par value per share. As of March 31, 2022 there were 53,851,966 shares issued and outstanding and as of June 30, 2022 there were 53,851,966 shares of our common stock issued and outstanding. We anticipate that all or at least some of our future funding, if any, will be in the form of equity financing from the sale of our common stock. If we do sell more common stock, investors' investment in our company will likely be diluted. Dilution is the difference between what investors pay for their stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in our company's common stock could seriously decline in value.

On January 11, 2019, the Company received notice that Strongbow Advisors, Inc., and Robert Stevens had been appointed by the Nevada District Court, as Receiver for the Registrant in Case No. A-18-784952-C. The company sought the appointment of the Receiver after it found itself in an imminent danger of insolvency following the issuance by an arbitration panel of an award in the sum of $3,994,522.5 million in favor of Cromogen Biotechnology Corporation in the matter entitled Cromogen Biotechnology Corporation vs. Earth Science Tech, Inc. The Award consisted of a sum for breach of contract against the Company in the amount of $120,265, a sum for costs and fees against the Company in the amount of $111,057 and a sum for the claim of tortuous interference and conversion against the Company in the amount of $3,763,200. The District Court in Florida had confirmed the Award granted by the arbitration panel, denying however, the award of fees that the arbitration panel had granted Cromogen. The Cromogen Litigation has now been settled for $585,885.90 under terms that involve monthly payments. If we default on the payment terms, the total amount due would be substantially greater, however the Cromogen matter has been resolved to management's satisfaction. Although the appointment of the Receiver was approved unanimously by the Board and by a majority of the Company's shareholders. Strongbow and Stevens were selected because of their representation of their practice and reputation for helping (i) companies restructure and (ii) to execute on their business plans, albeit under a debt and capital structure that allows them to succeed. Stevens and Strongbow assist companies by helping them raise the capital needed not only to pay debts, but build and grow their businesses. A receiver, however, is an agent of the court, and needs be independent and neutral in managing the Company's operations and trying to preserve the Company's value for the creditors and shareholders. Notwithstanding the forgoing, when the motion to intervene was initiated by one of the Company's major shareholders, the Receiver proposed a plan of liquidation to the Court which the Court rejected. As that litigation progressed, what began as a concern about the Receiver's transparency turned to concerns about that Receiver's certifications both to the Company's Auditor and in the Periodic Reports that were filed with the SEC. The Receiver fired the Company's President and its CFO resigned because of requests made by the Receiver that the CFO considered inappropriate. Initially, because of a high six figure invoice presented by the Receiver to covered time periods beginning with the Receiver's appointment until the time the statement was presented to the court and because there was nobody left in management to evaluate or otherwise challenge its treatment, it was both management and the auditor's position that restatements of the financial statements was going to be required. However, with the discharge and removal of that Receiver and the appointment of Mr. Leonard by the Court Order doing so had the specific direction to the successor receiver to investigate any potential conversion, fraud or embezzlement and to claw-back the same if found, as well as to review the Receiver's claimed fees and those received as part of his investigation. Management believes that the evidence will support a denial of the most recent statement presented by Stevens and Strongbow, and depending on that outcome and what is determined by the successor receiver, it may not be necessary for the Company to restate its financial statements and amend its periodic reports filed with the SEC. There are a number of possible outcomes to the receivership, including settlement and payment to creditors, reorganization, or, although management believes it unlikely at this juncture, liquidation. The stated intent of the successor receiver is to reorganize the Company, pay or settle the Company's debts and emerge from receivership. Management and a number of shareholders were concerned about a lack of transparency in the amount of administrative expenses on the part of the Receiver and as a result, a motion to intervene was filed in the Nevada District Court culminating it the discharge and removal of the original Receiver. The Receiver was replaced by William Leonard upon the Order of the Nevada District Court on August 27, 2021. The successor receiver is investigating a number of issues during the period of the prior Receiver's appointment. If the successor receiver does not mitigate the impact or otherwise settle or restructure the Company's liabilities, the Company's results could be materially adversely impacted and the Company may be forced to liquidate its business. As part of the receivership, the Court issued a Writ of Injunction or "Blanket Stay" covering the Company and its assets during the time that the Company is in receivership. As a result of the "Blanket Stay" the Company's estate is protected from creditors and interference with its administration is prevented while the Company's financial issues are being fully analyzed and resolved. As part of this process, creditors were notified and required to provide claims in writing under oath on or before the deadline stated in the notice provided by the Receiver and those claims not made before the deadline were barred under NRS §78.675. The Blanket Stay will remain in place unless otherwise waived by the Receiver, or it is vacated by the Court or alternatively, lifted by the Court, upon a "motion to lift stay" duly made and approved by the Nevada District Court.

Our common stock is currently quoted for public trading on the Pink Exchange. The trading price of our common stock has been subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.