10-K: Earth Science Tech Reports Soaring Revenue and Profit Growth Driven by Strategic Acquisitions and Healthcare Expansion

Earth Science Tech, Inc. announced a significant increase in revenue and net income for the fiscal year ended March 31, 2025, fueled by strategic acquisitions and expansion in its healthcare and real estate sectors.

Summary

• Revenue for the fiscal year ended March 31, 2025, surged to $33,117,624, a 177% increase from $11,953,635 in the prior year.
• Gross profit increased by 210% to $24,300,136 in fiscal year 2025, up from $7,828,496 in fiscal year 2024, with gross margin improving from 65% to 73%.
• Net income for fiscal year 2025 reached approximately $3,253,635, a substantial increase from $812,139 in fiscal year 2024.
• Earnings per common share (basic and diluted) rose to $0.011 in fiscal year 2025 from $0.003 in fiscal year 2024.
• The company's cash position increased to $1,473,228 as of March 31, 2025, compared to $697,721 in the previous year.
• Total assets grew to $7,066,721 as of March 31, 2025, from $3,881,336 in the prior year.
• Strategic acquisitions included Mister Meds, Avenvi, Las Villas Health Care, DOConsultations, and an 80% interest in MagneChef, diversifying operations across compounding pharmaceuticals, telemedicine, real estate, and direct-to-consumer products.
• The company repurchased 14,583,916 shares of its common stock for $1,465,837.70 during the fiscal year ended March 31, 2025, with 14,633,916 shares cancelled.
• Operating expenses, including salaries, general and administrative, bank charges, and advertising, significantly increased due to company growth and expansion.
• Internal control over financial reporting was deemed ineffective as of March 31, 2025, due to the number of adjustments from the audit.

Sentiment

Score: 8

Explanation: The company demonstrates strong financial performance with significant revenue and net income growth, improved gross margins, and strategic acquisitions that expand its market presence. The share repurchase program also indicates management's confidence. However, substantial increases in operating expenses and identified internal control weaknesses present areas for improvement and potential future challenges.

Positives

• Achieved a 177% increase in revenue, reaching $33,117,624 for the fiscal year ended March 31, 2025.
• Reported a 210% increase in gross profit to $24,300,136, with gross margin improving from 65% to 73% due to increased buying power.
• Net income grew by 312% to $3,253,635 for fiscal year 2025, demonstrating enhanced profitability.
• Earnings per share (basic and diluted) increased from $0.003 to $0.011.
• Successfully executed a share repurchase program, buying back 14,583,916 shares for $1,465,837.70, indicating confidence in company value and returning capital to shareholders.
• Expanded its portfolio through strategic acquisitions of Mister Meds, Avenvi, Las Villas Health Care, DOConsultations, and MagneChef, diversifying revenue streams and market reach.
• Increased cash position to $1,473,228, reflecting strong cash generation from operating activities.
• Significantly increased property and equipment by approximately $1,200,000 to expand operations, including a new 5,000 sq. ft. facility for Mister Meds with advanced sterile compounding capabilities.
• Does not anticipate needing any future financing, suggesting financial self-sufficiency for planned growth.

Negatives

• Salaries expense increased by 224% to $14,115,643, reflecting significant growth in employee count.
• Office/General and Administrative Expenses saw a substantial increase of 2388% to $4,154,838.
• Advertising & marketing expenses rose by 3214% to $836,860, driven by efforts to promote online sales.
• Bank charges increased by 152% to $1,066,577, primarily due to higher merchant fees associated with increased sales.
• Total current liabilities increased from $1,486,522 to $3,146,305.
• Internal control over financial reporting was deemed ineffective as of March 31, 2025, due to the number of adjustments from the audit, indicating potential weaknesses in financial processes.
• The common stock is quoted on the OTC Pink Market, which may result in less liquidity, less coverage by security analysts and news media, and lower prices compared to national exchanges.
• The Series B Preferred stock structure concentrates voting power with the CEO, Giorgio R. Saumat, limiting other investors' ability to influence important transactions.

Risks

• Results of operations and key metrics may fluctuate quarterly and annually, potentially failing to meet analyst or investor expectations.
• Inability to expand the scope of offerings, including products, services, healthcare providers, and treatable conditions, could materially and adversely affect business.
• Failure to successfully market to new customers and retain existing ones, or evolving privacy, healthcare, or other laws limiting marketing activities, could harm the business.
• Operating in highly competitive markets against large, well-established healthcare providers and retailers with significant resources may limit effective competition.
• Failure to effectively maintain, promote, and enhance the brand in a cost-effective manner could harm business and competitive advantage.
• Pharmacy business subjects the company to additional healthcare laws and regulations, increasing compliance and regulatory obligations.
• Non-compliance with applicable healthcare and other governmental regulations could lead to substantial penalties and require operational restructuring.
• Evolving government regulations and enforcement activities may increase costs or adversely affect results of operations.
• Security breaches, data loss, and other disruptions could compromise sensitive information, expose to liability, and adversely affect business and reputation.
• Potential exposure to legal proceedings and litigation, including intellectual property disputes, which are costly to defend.
• Requirement for additional capital to support business growth, which might not be available on acceptable terms, if at all.
• The Series B Preferred stock structure concentrates voting power with the CEO, limiting other investors' influence.
• The market price of common stock may be volatile.
• Limited operating history and evolving business model make it difficult to evaluate current performance or predict future results.
• Misuse or mismanagement of social media and influencer marketing may expose the company to reputational and regulatory risk.
• Offerings failing to achieve or maintain market acceptance could adversely affect financial performance.
• Operating in a nascent and rapidly evolving market that may be difficult to predict, with risks related to regulatory changes, industry consolidation, and shifts in consumer behavior.
• Technological innovations and alternative solutions may reduce demand for services.
• The conduct of affiliated healthcare providers may expose the company to liability and reputational harm.
• Poor customer support may damage reputation and financial performance.
• Acquisitions and strategic investments could fail to deliver expected benefits and may introduce additional risks.
• Macroeconomic conditions may negatively affect demand for services.
• Mobile experience is critical to user engagement and retention, and issues could impair customer base growth.
• Reliance on uninterrupted internet and mobile network access to operate the platform.
• Failures, delays, or breaches by vendors may impair ability to provide services or maintain operational continuity.
• Supply chain disruptions could affect product availability and customer satisfaction.
• Reliance on third-party payment processors and compliance with evolving payment regulations.
• Inaccurate or ineffective pricing strategies could hinder competitiveness.
• Business depends on the leadership team's continuity and expertise.
• Growth relies on attracting and retaining skilled employees.
• Reliance on centralized inventory locations (Miami, Florida and Abilene, Texas) for order fulfillment, with disruption risks.
• Market volatility could affect Avenvi's real estate asset values and returns.
• Avenvi's development projects carry execution and cost risks.
• Limited access to financing could constrain Avenvi's growth.
• Avenvi's performance is closely tied to ETST's strategic direction, including decisions on the share repurchase program.
• Regulatory compliance burdens for real estate may increase costs or delay projects.
• Shifts in real estate demand may affect project success.
• Reputational risks may result from underperformance or mismanagement of Avenvi.
• Inability to protect intellectual property rights, including those associated with MagneChef, could result in loss of exclusivity or increased competition.
• Product liability or safety issues related to MagneChef could result in reputational harm or legal exposure.
• MagneChef operates in a competitive consumer goods market with limited barriers to entry.
• Shifts in consumer behavior may impact demand for MagneChef products.
• Noncompliance with federal or state healthcare laws could result in civil or criminal penalties.
• Changes in healthcare policy and reimbursement structures could impact the business model.
• Pharmacy operations are subject to heightened regulatory scrutiny.
• Evolving telemedicine regulations create compliance uncertainty.
• Privacy and data protection laws may impose additional burdens.
• Future regulatory developments may increase compliance costs or restrict operations.
• Third parties may infringe on intellectual property or challenge its validity.
• Claims alleging intellectual property infringement could lead to litigation or financial liabilities.
• Litigation or regulatory investigations could materially impact operations.
• Inadequate insurance against certain legal risks.
• Settlement obligations or adverse rulings could affect financial results.
• History of net losses and anticipated increasing expenses, with no guarantee of maintaining profitability.
• Requirements of being a public company straining resources and diverting management's attention.
• Inaccurate estimates or judgments relating to significant accounting policies could adversely affect results.
• Adverse tax laws or regulations could be enacted or applied, increasing tax liability.
• Certain U.S. state tax authorities may assert a state nexus and seek to impose state and local income taxes.
• Regulation of penny stocks by SEC and FINRA may discourage tradability of securities.
• Florida law, Articles of Incorporation, and bylaws provide for indemnification of officers and directors at company expense, potentially hurting shareholder interests.
• No intention to pay cash dividends, meaning gain on investment relies solely on stock price increase.
• Difficulty reselling shares due to penny stock rules.
• Issuance of additional shares of common stock could lead to substantial dilution.
• FINRA sales practice requirements may limit a stockholder's ability to buy and sell stock.

Future Outlook

The company aims to expand its pharmacy and telehealth operations nationwide by pursuing additional state licensures for RxCompound and Mister Meds, and by developing its healthcare provider network, MyOnlineConsultation.com. Mister Meds is projected to begin operations in the second quarter of 2025. MagneChef is in the process of expanding its product line with new offerings incorporating its intellectual property. The company does not anticipate needing any future financing.

Management Comments

• 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.
• The company has experienced significant growth and therefore the need to increase employee count to support operations and administration.
• The increase in selling, general and administrative expenses was necessary and anticipated as the company experienced exponential growth.
• The increase in marketing expenses is primarily related to promoting online sales through social media marketing and search engines.
• The decrease in legal and professional fees is due to reclassification of territory managers' fees to the category of selling, general and administrative.
• The company does not anticipate needing any future financing.

Industry Context

Earth Science Tech operates as a diversified holding company across multiple competitive sectors: pharmaceutical compounding, telemedicine, real estate development, and direct-to-consumer products. In compounding pharmacies, it competes on licensure coverage, quality, turnaround times, and pricing, aiming to differentiate through its growing licensure footprint and integrated telehealth platforms. The telemedicine segment is rapidly evolving, with competition from national platforms and digital health startups, where the company differentiates with proprietary compounded medications. Its real estate arm, Avenvi, competes with local and national developers, leveraging in-house project development and investment oversight. MagneChef faces established brands in consumer goods, competing on innovation and patented features. Across all segments, the company emphasizes operational scalability, regulatory compliance, customer service, and innovation to navigate intensifying competitive pressures and evolving regulatory frameworks.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess performance against global industry benchmarks. Comparisons are made generally against 'large, well-established healthcare providers and more traditional retailers and pharmaceutical providers' or 'national telehealth platforms' without specific names or metrics.

Management Changes

Corporate Governance

Legal Proceedings

• As of March 31, 2025, there are no pending or, to management's knowledge, threatened legal actions against the company, its officers, or directors that are likely to have a material adverse effect on financial condition, results of operations, or cash flows.

Related Party Transactions

• Compensation for CEO Giorgio R. Saumat and COO Mario G. Tabraue is paid to their respective solely owned LLCs, Point96 Consulting, LLC and Tabraue Consulting, LLC.
• The company acquired Avenvi, LLC from Giorgio R. Saumat (CEO and Chairman) on October 1, 2024, for $1,058,788 and the assumption of a $400,000 short-term loan. The transaction was reviewed and approved by the Board of Directors.
• The company acquired Mister Meds from Mario G. Tabraue (COO and Director) on October 1, 2024, for $54,200. The transaction was reviewed and approved by the Board of Directors.
• Mister Meds operates out of a 5,000 sq. ft. facility owned by Avenvi LLC, which is a related party.

Stakeholder Impact

• Shareholders: Experienced significant share repurchases, leading to a reduction in outstanding shares and potentially increased value per share. Benefited from substantial increases in net income and earnings per share. However, face risks related to stock price volatility, potential future dilution from acquisitions, and concentrated voting power with the CEO.
• Employees: The company experienced significant growth, leading to a substantial increase in employee count and corresponding salaries expense, indicating job creation and expansion.
• Customers: Benefit from expanded access to compounding pharmaceuticals and telemedicine services through new acquisitions and ongoing licensure expansion. The Earth Science Foundation, Inc. (ESF) provides financial assistance for prescription costs, improving affordability for qualifying patients.
• Suppliers: Increased demand for compounded medications and operational expansion likely led to increased procurement from suppliers, potentially strengthening supplier relationships.
• Creditors: The company's improved financial health, including increased cash and net income, may enhance its creditworthiness, although total current liabilities also increased.

Next Steps

• Actively pursuing licensure in the remaining U.S. states for RxCompound and Mister Meds pharmacies.
• Peaks aims to offer services nationwide through the development of its own healthcare provider network, MyOnlineConsultation.com, and ongoing licensure expansion.
• Mister Meds is projected to begin operations in the second quarter of 2025.
• Mister Meds plans to apply for state licenses in markets where RxCompoundStore.com is not yet licensed.
• MagneChef is in the process of expanding its product line for new offerings that incorporate its intellectual property.
• The company will continue to improve its internal controls to ensure accurate and timely financial reporting.

Key Dates

Recommendation

Keywords

Pharmaceutical Compounding, Telemedicine, Real Estate Development, Direct-to-Consumer, Healthcare, Pharmacy, Acquisitions, Financial Performance, Revenue Growth, Net Income, Share Repurchase, Corporate Governance, Risk Management, SEC Filing, 10-K, ETST, RxCompoundStore, Peaks Curative, Avenvi, Mister Meds, MagneChef