ETST 10-K & 10-Q changes, risk factors and insider trading
Earth Science Tech, Inc. · OTC · Pharmaceutical Preparations · CIK 1538495 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Health and Wellness sector”
Removed heading “Risks Related to Peaks, RxCompound, Mister Meds Business, DOC, and Villas”
Removed heading “The conduct of affiliated healthcare providers may expose us to liability and reputational harm. Our reputation and legal standing may be affected by the actions of healthcare professionals affiliated with Peaks, DOC, Villas, RxCompound, or Mister Meds. Any unethical or noncompliant conduct may result in legal exposure or loss of trust in our platform.”
Removed heading “Trading in our common stock on the Pink Exchange has been subject to wide fluctuations.”
Largest changes
“Furthermore, facilitating medical consultations exposes us to inherent clinical risks. We may face vicarious liability, medical malpractice claims, or reputational damage arising from the clinical decisions, conduct, or omissions of the independent providers utilizing the MOC Teledoc platform. Additionally, we must ensure our operational relationship with MOC Teledoc strictly adheres to varying state-specific Corporate Practice of Medicine (CPOM) doctrines, which prohibit non-physician entities from interfering with the independent clinical judgment of licensed medical professionals. …”see in full comparison
“The conduct of affiliated healthcare providers may expose us to liability and reputational harm. Our reputation and legal standing may be affected by the actions of healthcare professionals affiliated with Peaks, DOC, Villas, RxCompound, or Mister Meds. Any unethical or noncompliant conduct may result in legal exposure or loss of trust in our platform.”see in full comparison
“Trading in our common stock on the Pink Exchange has been subject to wide fluctuations.”see in full comparison
“Risks Related to Peaks, RxCompound, Mister Meds Business, DOC, and Villas”see in full comparison
Avenvi’s performance is closely tied tosee in full comparisonETST’sthe Company’s strategic direction. As Avenvi manages physical infrastructure and real estate investments for Earth Science Tech, Inc., changes in ETST’s strategicprioritiespriorities, capital allocation, or liquidity—suchasmaydecisions surrounding the $5 million share repurchase program—maydirectly affect Avenvi’s development operations and financial outcomes.
Full comparison: every changed paragraph (18)
Risks Related to Health and Wellness sector
Risks
Related to Peaks, RxCompound, Mister Meds Business, DOC, and Villas
We
operate in a nascent and rapidly evolving market that may be difficult to predict. Our core business model, particularly through Peaks,
DOC, and Villas, operates in emerging areas of telehealth and wellness. The competitive landscape is dynamic and includes risks related to
to regulatory changes, industry consolidation, and shifts in consumer behavior, all of which may affect demand forecasting and business
planning.
Our reliance on MOC Teledoc, our affiliated healthcare provider network, exposes us to risks related to provider recruitment, retention, clinical liability, and complex regulatory compliance. MOC Teledoc, a subsidiary operating under Peaks, manages our proprietary telemedicine platform and network of affiliated doctors to facilitate telehealth consultations. Our continued growth and ability to seamlessly fulfill prescriptions depend heavily on recruiting, retaining, and effectively managing qualified, state-licensed healthcare professionals within this network. If we encounter difficulties in expanding the MOC Teledoc network, or if we experience high turnover among affiliated providers, our capacity to handle patient volume could be severely constrained, directly impacting revenue.
Furthermore, facilitating medical consultations exposes us to inherent clinical risks. We may face vicarious liability, medical malpractice claims, or reputational damage arising from the clinical decisions, conduct, or omissions of the independent providers utilizing the MOC Teledoc platform. Additionally, we must ensure our operational relationship with MOC Teledoc strictly adheres to varying state-specific Corporate Practice of Medicine (CPOM) doctrines, which prohibit non-physician entities from interfering with the independent clinical judgment of licensed medical professionals. Any regulatory scrutiny or legal challenges regarding the operational independence or classification of these physicians could result in significant fines, costly mandatory restructuring, or severe disruptions to our telehealth operations.
The
conduct of affiliated healthcare providers may expose us to liability and reputational harm. Our reputation and legal standing may be
affected by the actions of healthcare professionals affiliated with Peaks, DOC, Villas, RxCompound, or Mister Meds. Any unethical or
noncompliant conduct may result in legal exposure or loss of trust in our platform.
Risks
Related to AvenviAsset BusinessManagement
Avenvi’s
performance is closely tied to ETST’sthe Company’s strategic direction. As Avenvi manages physical infrastructure and real estate investments
for Earth Science Tech,
Inc., changes in ETST’s strategic prioritiespriorities, capital allocation, or liquidity—such asmay decisions surrounding the $5 million share
repurchase program—maydirectly affect Avenvi’s
development operations and financial outcomes.
Reputational
risks may result from underperformance or mismanagement. Failure to meet development expectations or mismanagement of capital—especially
in relation to ETST’sthe Company’s resources—may result in reputational damage or increased scrutiny from shareholders and
regulators.
We
may be unable to protect our intellectual property rights, including those associated with Magne.MagneChef. The MagneMagneChef product line depends
on patented
technologies and trademarked branding. Failure to enforce or maintain these rights may result in loss of exclusivity, brand
dilution, dilution,
or increased competition.
Product
liability or safety issues related to MagneMagneChef could result in reputational harm or legal exposure. If any Magne product is found to
be be
defective, unsafe, or misused, we may face product recalls, regulatory inquiries, litigation, or consumer dissatisfaction that adversely
impacts sales and brand equity.
MagneMagneChef
operates in a competitive consumer goods market with limited barriers to entry. Larger companies with established distribution, pricing
power, or marketing budgets may limit our ability to gain or maintain market share.
Shifts
in consumer behavior may impact demand for MagneMagneChef products. Changes in household spending patterns, cooking trends, or consumer preferences
could reduce demand and impact overall product performance.
Evolving
telemedicine regulations create compliance uncertainty. As telehealth laws continue to evolve across jurisdictions, we must adapt to
inconsistent requirements around prescribing, physician licensure, patient consent, and recordkeeping.record keeping. Failure to keep pace with these
changes may limit our geographic reach or lead to regulatory violations.
Our compounding pharmacy operations rely on regulatory exemptions that are subject to strict and evolving FDA interpretation, particularly regarding drug shortages. RxCompound and Mister Meds operate under Section 503A of the FDCA, which provides exemptions from standard FDA drug approval processes provided certain conditions are met, including restrictions on compounding drugs that are ‘essentially a copy’ of commercially available products. We rely on the FDA’s drug shortage list to legally compound certain high-demand medications. If the FDA removes key active pharmaceutical ingredients from the shortage list, alters its enforcement discretion, or determines that our customized formulations do not demonstrate sufficient clinical difference from mass-market drugs, our pharmacies could be forced to immediately halt production of highly profitable product lines, which would materially and adversely affect our revenue.
We
may be unable to adequately protect our intellectual property rights. Our success depends in part on our ability to protect proprietary
technologies, trademarks, trade secrets, and other intellectual property associated with our brands, including Magne.MagneChef. If we fail
to adequately
secure or enforce our rights, we may lose competitive advantages, experience brand dilution, or face increased competition.
Trading
in our common stock on the Pink Exchange has been subject to wide fluctuations.
Our
common stock is currently quoted only on the OTC PinkOTCID Marketplace, which may have an unfavorable impact on our stock price and liquidity.
Management's Discussion & Analysis (MD&A)
Removed heading “NON-GAAP FINANCIAL MEASURES”
Largest changes
“The Company does not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future material effect on the Company’s financial condition, results of operations, liquidity, capital expenditures, or capital resources.”see in full comparison
“We use Adjusted EBITDA internally to evaluate our performance and make financial and operational decisions that are presented in a manner that adjusts from their equivalent GAAP measures or that supplements the information provided by our GAAP measures. Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation expense, amortization expense, interest and income tax expense, minus income tax benefit), further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. …”see in full comparison
“We use Adjusted EBITDA in communicating certain aspects of our results and performance, including in this Annual Report, and believe that Adjusted EBITDA, when viewed in conjunction with our GAAP results and the accompanying reconciliation, can provide investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. …”see in full comparison
“The decrease occurred despite the Company’s operational growth and expansion of its workforce and was primarily attributable to voluntary modifications to compensation arrangements by the Company’s Chief Executive Officer, CEO, and Chief Operating Officer, COO, who elected to rescind portions of their previously agreed compensation and implemented interim compensation adjustments, approved by the Board of Directors. These reductions more than offset increases in personnel costs associated with headcount growth during the period.”see in full comparison
“The Company’s current operations include compounding pharmaceuticals, telemedicine and real estate development through its wholly owned subsidiaries: RxCompoundStore.com, LLC (“RxCompound”), Peaks Curative, LLC (“Peaks”), Avenvi, LLC (“Avenvi”), Mister Meds, LLC (“Mister Meds”), and Earth Science Foundation, Inc. (“ESF”). Subsequent to the reporting period, the Company acquired 100% of Las Villas Health Care, Inc. (“Villas”), DOConsultations, LLC (“DOC”), and an 80% interest in MagneChef (“Magne”).”see in full comparison
Full comparison: every changed paragraph (55)
ETST operates as a diversified holding company focused on the health and wellness sector. The Company’s principal operating strategy is to build a vertically integrated healthcare platform that combines compounding pharmacy operations, telemedicine platforms, clinical support, and direct-to-patient fulfillment. The Company’s healthcare operations are supported by investments in real estate and asset management activities and a consumer products business.
The core of the Company’s value proposition is the seamless integration of patient care, from consultation to fulfillment. This is achieved through the synergy of specialized subsidiaries. The Company’s primary operating businesses include:
Health and wellness
Asset Management and Other
The
Company’s current operations include compounding pharmaceuticals, telemedicine and real estate development through its wholly owned
subsidiaries: RxCompoundStore.com, LLC (“RxCompound”), Peaks Curative, LLC (“Peaks”), Avenvi, LLC (“Avenvi”),
Mister Meds, LLC (“Mister Meds”), and Earth Science Foundation, Inc. (“ESF”). Subsequent to the reporting period,
the Company acquired 100% of Las Villas Health Care, Inc. (“Villas”), DOConsultations, LLC (“DOC”), and an 80%
interest in MagneChef (“Magne”).
RxCompound,
based in Miami, Florida, is a fully licensed compounding pharmacy authorized to fulfill prescriptions in the following states and territories:
Arizona, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Maine, Maryland, Minnesota, Missouri, Nevada, New Jersey, New
York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Utah, Wisconsin and Puerto Rico. RxCompound is actively pursuing licensure
in the remaining U.S. states.
Peaks
is a telemedicine referral platform offering asynchronous consultations for Peaks-branded compounded medications prepared at RxCompound
and Mister Meds. The platform operates in states where either pharmacy is licensed. Through the development of its own healthcare provider
network, MyOnlineConsultation.com, and ongoing licensure expansion for both pharmacies, Peaks aims to offer services nationwide.
Avenvi
is a diversified real estate company engaged in development, asset management, and financing. With a growing portfolio of real estate
holdings, Avenvi provides turnkey solutions from development to end-user financing. It also manages investment activities for ETST and
oversees the Company’s ongoing $5 million share repurchase program.
Mister
Meds, acquired on October 1, 2024, is in Abilene, Texas. The pharmacy received full compounding licensure in March 2025. It operates
out of a 5,000 sq. ft. facility owned by Avenvi and includes advanced sterile compounding capabilities with both positive and negative
pressure environments, as well as hazardous drug handling. Mister Meds is currently applying for licensure in states not yet serviced
by RxCompound.
ESF,
a 501(c)(3) nonprofit organization incorporated on February 11, 2019, is the charitable arm of ETST. ESF accepts grants and donations
to assist individuals who need financial support for prescription costs at both RxCompound and Mister Meds.
Villas
is a brick-and-mortar healthcare facility dedicated to the Spanish speaking community. Our expert-led services include advanced sexual
health treatments, and customized solutions to enhance physical performance. We combine compassionate, personalized care with clear,
trustworthy education — empowering you to take control of your health with confidence.
DOC
was born with a passion to modernize the availability and delivery of home therapies. DOConsultations providers tailor a medication plan
around your health and wellness goals and follow up with our patients to ensure results, while our partner pharmacies conveniently ship
directly to your door.
MagneChef
is a direct-to-consumer retail brand. Utilizing its patents and intellectual properties, the company aims to develop new products that
can be marketed and sold online. Currently, the company has developed products for cooking. MagneChef is in the process of expanding
its product line for new offerings that incorporate its intellectual property.
We generated sales of $35,695,614 and gross profit of $25,488,057, representing a gross margin of 71% for the year ended March 31, 2026, compared to product sales of $33,117,624 and gross profit of $24,300,136, representing a gross margin of 73% for the year ended March 31, 2025.
The increase in product sales for the year ended March 31, 2026, was primarily driven by higher demand for compounded medications across the Company’s platforms, including increased prescription volumes generated through the Company’s telemedicine channels and customer portals. Growth was supported by continued expansion of the Company’s integrated platform, which connects patient intake, prescribing, and fulfillment.
Gross profit increased in absolute dollars; however, gross margin decreased from 73% to 71%. The decline in gross margin was primarily attributable to lower average selling prices resulting from competitive market conditions and changes in product mix.
Additionally, cost of goods sold increased proportionally at a higher rate than revenue, driven by factors such as ingredient cost variability, fulfillment-related costs, and pricing strategies implemented to support volume growth. Management continues to monitor pricing, supplier costs, and product mix in order to optimize margins while maintaining competitive positioning and supporting demand.
We
had product sales of $33,117,624 and a gross profit of $24,300,136, representing a gross margin of 73% for the year ended March 31, 2025,
compared with product sales of $11,953,635 and a gross profit of $7,828,496 representing a gross margin of 65% in year end March 31,
2024. The revenue increase in the year ended on March 31, 2025, compared with the year ended on March 31, 2024, is primarily due to an
increase in the demand for compounded medications.
The
Gross Margin increase is driven by the Company’s subsidiaries’ increased buying power, which provides the ability to negotiate
better prices on raw active ingredient products.
For
the year ended March 31, 2025, the Company had a net income of approximately $3,272,000 compared to a net income from continuing operations
of approximately $812,000 for the year ended March 31, 2024.
Salaries expense decreased from $14,115,643 for the year ended March 31, 2025, to $13,776,033 for the year ended March 31, 2026.
The decrease occurred despite the Company’s operational growth and expansion of its workforce and was primarily attributable to voluntary modifications to compensation arrangements by the Company’s Chief Executive Officer, CEO, and Chief Operating Officer, COO, who elected to rescind portions of their previously agreed compensation and implemented interim compensation adjustments, approved by the Board of Directors. These reductions more than offset increases in personnel costs associated with headcount growth during the period.
Selling, general and administrative expenses decreased from $4,154,838 for the year ended March 31, 2025, to $3,571,448 for the year ended March 31, 2026. The decrease was primarily attributable to process improvements and efficiency initiatives implemented across the Company’s operations, as management continued to optimize administrative functions and cost structures. These improvements resulted in lower operating overhead, despite the Company’s continued growth during the period.
SalariesInsurance
expense increasedtotaled from $4,358,917$168,353 for the fiscal year ended March 31, 2024,2026, compared to $14,115,643$180,281 for the fiscal year ended March 31, 2025. The
decrease companywas has
experiencedprimarily significantattributable growth and thereforeto the needCompany toobtaining increasecomparable employeeinsurance countcoverage toat supportlower operationspremium andrates administration.during the current
fiscal year.
Lease cost totaled $180,753 for the fiscal year ended March 31, 2026, compared to $98,434 for the fiscal year ended March 31, 2025. The increase was primarily attributable to a new lease entered into during the fiscal year ended March 31, 2026.
Marketing expenses totaled $2,840,553 for the year ended March 31, 2026, an increase of $2,003,693 from $836,860 for the year ended March 31, 2025. The increase was primarily attributable to expanded digital marketing initiatives, including higher spending on social media platforms and search engine advertising, aimed at driving online sales growth, increasing customer acquisition, and supporting higher prescription volumes across the Company’s telemedicine and e-commerce channels.
Bank charges were $1,006,026 during the twelve months ended March 31, 2026, and $1,066,577 during the twelve months ended March 31, 2025.
Legal and professional fees totaled $221,179 for the year ended March 31, 2026, a decrease of $84,753 from $305,932 for the year ended March 31, 2025. The decrease was primarily attributable to lower legal and consulting costs incurred during the period, including reduced reliance on external professional services compared to the prior year.
Management is not aware of any pending or threatened legal proceedings that would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
For the year ended March 31, 2026, the Company had a net income of approximately $3,600,000 compared to a net income of approximately $3,250,000 for the year ended March 31, 2025.
Selling,
general and administrative expenses increased from $166,976 to $4,154,976, this increase was necessary and anticipated as the company
experienced exponential growth.
Marketing
expenses totaled $836,860 for the twelve months ended March 31, 2025, an increase of $811,577 from $25,283 for the twelve months ended
March 31, 2024. This increase is primarily related to the Company promoting online sales through social media marketing and search engines.
Bank
charges were $1,066,577, this is related to merchant fees, associated with the increase in sales.
Legal
and professional fees totaled $305,932 for the twelve months ended March 31, 2025, a decrease of $1,468,250 from $1,774,182 for the prior
period ended March 31, 2024. The decrease in legal and professional fees is due to reclassification of territory managers fees to the
category of selling, general and administrative.
Interest
expensesexpense decreasedwas to$16,327 $21,189 induring the Fiscalfiscal Yearyear Endingending March 31, 2025,2026, compared with $67,207$21,189 induring Fiscalfiscal Yearyear Endingending March 31, 2024.2025.
NON-GAAP
FINANCIAL MEASURES
We
use Adjusted EBITDA internally to evaluate our performance and make financial and operational decisions that are presented in a manner
that adjusts from their equivalent GAAP measures or that supplements the information provided by our GAAP measures. Adjusted EBITDA is
defined by us as EBITDA (net income (loss) plus depreciation expense, amortization expense, interest and income tax expense, minus income
tax benefit), further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. We use Adjusted EBITDA
because we believe it clearly highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial
measures, since Adjusted EBITDA eliminates from our results specific financial items that have less bearing on our core operating performance.
We
use Adjusted EBITDA in communicating certain aspects of our results and performance, including in this Annual Report, and believe that
Adjusted EBITDA, when viewed in conjunction with our GAAP results and the accompanying reconciliation, can provide investors with greater
transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone.
In addition, we believe the presentation of Adjusted EBITDA is useful to investors in making period-to-period comparison of results because
the adjustments to GAAP are not reflective of our core business performance.
Adjusted
EBITDA is not presented in accordance with, or as an alternative to, GAAP financial measures and may be different from non-GAAP measures
used by other companies. We encourage investors to review the GAAP financial measures included in this Annual Report, including our consolidated
financial statements, to aid in their analysis and understanding of our performance and in making comparisons.
A
summary of our changes in cash flows & Statement of Financial Position for the years endedending March 31, 2025,2026, and 2024,2025, is provided
below:
Equity
investments are reported at fair value, totaling $645,438.$1,360,040 as of March 31, 2026, and $645,438 as of March 31, 2025.
The Company completed construction of a residential property during the period, which is currently available for sale, at a total capitalized cost of $371,684.
The
Company made two deposits on future acquisitions of Magnefuse, LLC, Las Villas Health Care, LLC and Doconsultation, LLC, in the amount
of $280,000, and additionally the Company has prepaid its insurance for the year.
As
of March 31, 2025,2026, the Company made an additional purchasepurchases of equipment of approximately $1,200,000,$760,000, to expand its operations.
The Company had approximately $1,150,000 in accrued expenses and other current liabilities as of March 31, 2026, compared to approximately $2,320,000 as of March 31, 2025.
Accrued
expenses and other payables include approximately $1,800,000 in officer compensation, $150,000 payroll, $97,000 merchant accrual, $68,000
in credit card debt payable and approximately $88,000 income tax payable. Total current liabilities increased from $1,486,522 to $3,146,305.
LongTotal
termcurrent liabilities decreased from $145,509$3,146,305 to $69,305.$1,928,573.
Long term liabilities decreased from $69,305 as of March 31, 2025, to $0 as of March 31, 2026.
The
Company had a StockholdersStockholders’ Equity of $3,851,111as$7,040,764 as of March 31, 2025,2026, compared to $2,249,305$3,851,111 of Stockholders Equity as of March
31, 2024.
2025. This improvement is primarily due to net income available to common stockholders of $3,253,635.approximately $3,630,000.
The
Company’s net cash provided by operating activities was $4,372,390$1,940,863 for the twelve months endingended March 31, 2025,2026, andcompared $1,206,241to $4,372,390
for the twelve months ending March 31, 2024.2025.
During
the Fiscal Year ending March 31, 2025,2026, the Company repurchased $1,465,891$471,410 of its common stock,stock 14,633,916and 4,023,296 shares were cancelled,retired andduring
1,045,296the werefiscal heldyear in treasury as ofending March 31, 2025.2026.
The Company believes its current cash flow from operations will be sufficient to fund its anticipated operating and capital requirements for the next 12 months, and we do not presently anticipate needing to raise additional dilutive financing.
The
company does not anticipate needing any future financing.
The
company has assessed the impact of recent pronouncements on the preparation of Consolidated Financial StatementsStatements, and their impact has
been disclosed in note 2.
The Company does not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future material effect on the Company’s financial condition, results of operations, liquidity, capital expenditures, or capital resources.
What changed in the latest 10-Q
Risk Factors
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“We are a smaller reporting company, as defined by 17 CFR § 229.10(f)(1). We do not consider the impact of inflation and changing prices as having a material effect on our net sales and revenues and on income from our operations for the previous two years or from continuing operations going forward.”see in full comparison
“The following section, Management’s Discussion and Analysis, should be read in conjunction with Earth Science Tech, Inc.’s financial statements and the related notes thereto and contains forward-looking statements that involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. …”see in full comparison
“The following discussion of our financial condition and results of operations for the period ended June 30, 2026, and June 30, 2025, should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. …”see in full comparison
“The following discussion should be read in conjunction with the company’s unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. …”see in full comparison
“The decrease occurred despite the Company’s operational growth and workforce expansion and was primarily attributable to voluntary modifications to the compensation arrangements of the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”). These executives agreed to rescind portions of their previously approved compensation and accept interim compensation adjustments, as approved by the Board of Directors. …”see in full comparison
“Total liabilities increased to $3,009,743 as of June 30, 2026, from $1,928,573 as of March 31, 2026, representing an increase of $1,081,173, or 56%. The increase was primarily due to the Company’s strategy of leveraging its purchasing capacity to obtain more favorable vendor pricing and support improved gross margins. To a lesser extent, recognition of operating lease liabilities related to a new operating lease was also a factor. The increase was not attributable to any new loan commitments, and the Company remained free of long-term debt as of June 30, 2026.”see in full comparison
Full comparison: every changed paragraph (43)
The following discussion of our financial condition and results of operations for the period ended June 30, 2026, and June 30, 2025, should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements due to several factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
The
following section, Management’s Discussion and Analysis, should be read in conjunction with Earth Science Tech, Inc.’s financial
statements and the related notes thereto and contains forward-looking statements that involve risks and uncertainties, such as statements
of the Company’s plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are
forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,”
“target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,”
“may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking
statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual
results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of many
factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring
after the date of this Report filed on Form 10-Q.
The
following discussion should be read in conjunction with the company’s unaudited consolidated financial statements and related notes
and other financial data included elsewhere in this report. See also the notes to the Company’s consolidated financial statements
and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Registration
Statement filed on Form 10-12g and the Company’s Annual Report filed on Form 10-K for the fiscal year ended March 31, 2025, as
well as the Company’s Quarterly report filed on Form 10-Q for the fiscal quarter ended December 31, 2025.
As of the date of this filing, the Company has aggressively expanded its state licensure, allowing its pharmacy and telehealth services to reach a near-national footprint.
Strategic Asset Management & Infrastructure
ETST operates as a diversified holding company focused on the health and wellness sector. The Company’s principal operating strategy is to build a vertically integrated healthcare platform that combines compounding pharmacy operations, telemedicine platforms, clinical support, and direct-to-patient fulfillment. The Company’s healthcare operations are supported by investments in real estate and asset management activities and a consumer products business.
The core of the Company’s value proposition is the seamless integration of patient care, from consultation to fulfillment. This is achieved through the synergy of specialized subsidiaries. The Company’s primary operating businesses include:
Health and wellness
Asset Management and Other
The
Company operates as a strategic holding company, focused on value creation through the acquisition, operational optimization, and management
of its operating businesses. The company executes this strategy via its wholly owned subsidiaries: RxCompoundStore.com, LLC (“RxCompound”),
Peaks Curative, LLC (“Peaks”), Avenvi, LLC (“Avenvi”), Mister Meds, LLC (“Mister Meds”), and Las
Villas Health Care., Inc. (“Villas”), DOConsultations, LLC. (“DOC”), Earth Science Foundation, Inc. (“ESF”),
and 75% interest of MagneChef (“Magne”).
RxCompound,
based in Miami, Florida, is a fully licensed compounding pharmacy authorized to fulfill prescriptions in the following states and territories:
Alabama, Arizona, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Maine, Maryland,
Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico,
Rhode Island, South Carolina, Texas, Utah, Virginia, and Wisconsin. RxCompound is actively pursuing licensure in the remaining
U.S. states.
Peaks
is a telemedicine referral platform offering asynchronous consultations for Peaks-branded compounded medications prepared at RxCompound
and Mister Meds. The platform operates in states where either pharmacy is licensed. Through the development of its own healthcare provider
network, MyOnlineConsultation.com, and ongoing licensure expansion for both pharmacies, Peaks aims to offer services nationwide.
Avenvi
is a diversified real estate company engaged in development, asset management, and financing. With a growing portfolio of real estate
holdings, Avenvi provides turnkey solutions from development to end-user financing. It also manages investment activities for ETST and
oversees the Company’s ongoing $5 million share repurchase program.
Mister
Meds, acquired on October 1, 2024, is in Abilene, Texas. The pharmacy received full compounding licensure in March 2025. It operates
out of a 5,000 sq. ft. facility owned by Avenvi and includes advanced sterile compounding capabilities with both positive and negative
pressure environments, as well as hazardous drug handling. Mister Meds is currently applying for licensure in states not yet serviced
by RxCompound.
Villas
is a brick-and-mortar healthcare facility dedicated to the Spanish speaking community. Our expert-led services include advanced sexual
health treatments, and customized solutions to enhance physical performance. We combine compassionate, personalized care with clear,
trustworthy education—empowering you to take control of your health with confidence.
DOC
was born with a passion to modernize the availability and delivery of home therapies. DOConsultations providers tailor a medication plan
around your health and wellness goals and follow up with our patients to ensure results, while our partner pharmacies conveniently ship
directly to your door.
ESF,
a 501(c)(3) nonprofit organization incorporated on February 11, 2019, is the charitable arm of ETST. ESF accepts grants and donations
to assist individuals who need financial support for prescription costs at both RxCompound and Mister Meds.
MagneChef
is a direct-to-consumer retail brand. Utilizing its patents and intellectual properties, the company aims to develop new products that
can be marketed and sold online. Currently, the company has developed products for cooking. MagneChef is in the process of expanding
its product line for new offerings that incorporate its intellectual property.
The
following tables set forth summarizedsummarize cost of revenue information for the three and nine months ended DecemberJune 31,30, 2025,2026, and 20242025:
Revenue increased by $265,589, or 3%, to $9,025,779, compared with $8,760,190 in the prior-year period. Cost of goods sold increased by $81,095, or 3%, to $2,750,510, consistent with the increase in revenue. As a result, gross profit increased by $184,494, or 3%, to $6,275,269. Gross margin remained stable at approximately 70% for both periods.
We
had product sales of $26,197,596 and a gross profit of $19,213,769 representing a gross margin of 73%, compared with product sales of
$24,440,600 and a gross profit of $17,763,988 representing a gross margin of 72% during the nine months ended December 31, 2024.
During
the three months ended December 31, 2025, the Company had sales of $8,386,779 and gross profit of $6,399,010 for gross of margin of 76%,
compared to sales of $7,352,635, gross profit of $5,086,873 and gross margin of 69% for the three months ended December 31, 2024.
Salaries expense decreased by $583,915, or 15%, to $3,217,201 during the three months ended June 30, 2026, compared with $3,801,116 during the three months ended June 30, 2025.
The decrease occurred despite the Company’s operational growth and workforce expansion and was primarily attributable to voluntary modifications to the compensation arrangements of the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”). These executives agreed to rescind portions of their previously approved compensation and accept interim compensation adjustments, as approved by the Board of Directors. The resulting reductions more than offset the increased personnel costs associated with headcount growth during the period, which supports the Company’s continued expansion strategy.
General and administrative expenses increased modestly to $1,050,032 from $980,172 for the three months ended June 30, 2026, due to operational growth.
Advertising and marketing expenses totaled $850,004 for the three months ended June 30, 2026, compared with $633,926 for the three months ended June 30, 2025, representing an increase of $216,078, or 34%. Advertising and marketing expenditures remained significant, reflecting the Company’s continued execution of its strategic marketing initiatives to support sales of newly developed and existing products, primarily through its telemedicine platform, in a highly competitive market.
For
the three months ended December 31, 2025, salaries expense decreased to $2,931,244 from $3,297,826 and for the nine months ended December
31, 2025 it increased $415,049 General
and administrative expenses increased to $914,029 from $104,179 for the three months ended December 31, 2025 and decreased $713,562 during
the nine months ended December 31, 2025.
Marketing
expenses totaled $708,511 for the three months ended December 31, 2025, and $346,109 for three months ended on December 31, 2024, this
$362,402 had been contemplated by management as part of the strategic plan to increase sales in newly acquired business units, during
the nine months ended December 31, 2025 marketing expense increased $1,571,008 and it is also contemplated as part of the Company’s
aggressive marketing campaign.
Bank
charges for the three months ended DecemberJune 31,30, 20252026, increased $39,783to this$262,906. This is directly related to credit card processing fees.fees and
volume of sales.
Legal
and professional fees totaled $56,022$131,912 for the three months ended DecemberJune 31,30, 2025,2026, andcompared $61,540with $73,119 for the three months ended DecemberJune
30, 31,2025, representing an increase of $58,793, or 80%. The increase was primarily attributable to higher audit-related fees incurred
2024, and legal expenses decreased $105,104 during the ninethree months ended DecemberJune 31,30, 2025.2026, because of the transition of audit firms.
We
are a smaller reporting company, as defined by 17 CFR § 229.10(f)(1). We do not consider the impact of inflation and changing prices
as having a material effect on our net sales and revenues and on income from our operations for the previous two years or from continuing
operations going forward.
Interest expense totaled $16,197 for the three months ended June 30, 2026, compared with $4,271 for the three months ended June 30, 2025, representing an increase of $11,926. The increase was attributable primarily to use of leverage as part of management’s investment strategy to enhance potential returns on the Company’s equity investments.
Interest
expense for the three months ended December 31, 2025, was $4,769 vs $6,290 in the three months ended December 31, 2024, and $16,335 vs
$11,097 during the nine months ended Dec 31 2025 and 2024 respectively.
The Company ended the quarter with total assets of $10,374,013, compared with $8,969,337 as of March 31, 2026, representing an increase of $1,404,676, or 16%. Management believes this growth positions the Company to continue pursuing its expansion initiatives and reflects its ongoing commitment to creating long-term shareholder value.
Total liabilities increased to $3,009,743 as of June 30, 2026, from $1,928,573 as of March 31, 2026, representing an increase of $1,081,173, or 56%. The increase was primarily due to the Company’s strategy of leveraging its purchasing capacity to obtain more favorable vendor pricing and support improved gross margins. To a lesser extent, recognition of operating lease liabilities related to a new operating lease was also a factor. The increase was not attributable to any new loan commitments, and the Company remained free of long-term debt as of June 30, 2026.
Total equity increased to $7,364,270 as of June 30, 2026, from $7,040,764 as of March 31, 2026, representing an increase of $323,506, or 5%. This increase was net of $392,191 used to repurchase and cancel shares of its common stock during the quarter. Excluding the effect of these repurchases, total equity increased by $715,697. The repurchases reduced the number of shares outstanding, potentially increasing each remaining shareholder’s proportionate ownership and earnings per share.
The
Company ended the quarter with $8,089,437 in total assets, which puts the company in a good position to continue to expand Total
liabilities decreased $929,179 from $3,215,610 to $2,286,431.
The
Stockholders’ Equity as of December 31, 2025, was $5,803,006, compared to $3,851,111 of Stockholders Equity as of March 31, 2025.
Net cash provided by operating activities was $707,131 for the three months ended June 30, 2026, compared with $339,376 for the prior-year period, representing an increase of $367,755, primarily driven by enhanced working capital management techniques.
Net
cash provided by operating activities for the nine months ended December 31, 2025, was $1,055,077, compared to $2,378,347 provided by
operating activities from the prior year period, While operating cash flows declined due to inventory build, an increase in accounts
receivable, and deposits made in reference to acquisitions management believes existing cash, expected operating cash flows, and investment
monetization are sufficient to fund operations and repurchase activity for at least the next twelve months.
Net
cash used in investing activities during the ninethree months ended DecemberJune 31,30, 20252026, was $1,443,736,$480,619, compared to $1,810,891$668,216 during the ninethree months
months ended DecemberJune 31,30, 2024.2025. The decrease was primarily driven by reinvestment of realized gains on equity securities and derivatives.
Net cash used in financing activities was $392,191 for the three months ended June 30, 2026, compared with $266,803 for the prior-year period. The increase of $125,388 was attributable entirely to cash used to repurchase and cancel shares of the Company’s common stock pursuant to its stock repurchase program, partially offset by the elimination of debt service obligations.
Net
cash used in financing activities during the nine months ended December 31, 2025 was $668,870.
ETST 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 ETST (13F)
None of the 59 investors we track reported a position in their latest 13F.