Earth Science Tech, Inc. (ETST) Earnings Call Transcript & Summary

Yes. Okay. The next question is, I understand the company is now and complex, but is it possible to have the Qs and the Ks come out sooner. By the comp we see it as shareholders, the numbers of sale and something may have changed, it really affects whether I want to buy more stock or not.

And that's still such for you. Okay. We're a small company, and we have a lean accounting and finance department. And we believe that allocated national resources to only filed a few days sooner the Qs and the K is unlikely to add any benefit to our shareholders compared to [indiscernible]. That said, we will continue to work as efficient as possible and try to file as soon as possible when it makes us.

Okay. All right. The next question is, what's the impact of Zozi? Is it immediate?

Okay. Yes. Zozi, to be honest, it's a build, right? It's taken us a long time to get to where -- just to get it to get it licensed. Hence, why it took us so long to do the acquisition, right, because the website we had originally done like 2 years ago. It's still a build from here. The Zozi and Maduvo both, we're just getting started with them. So I would not say the impact is going to be immediate. I think a lot of people have were -- I've spoken to ask questions about the APIs. It's important to know that it's a veterinary wholesale. And we have picked up some veterinary business since Zozi. However, it's important to note that Zuzi is limited to buying only 30% of its API to be human. So it's going to have a limited effect on our purchasing and our margin at the pharmacy. It's not as big in the fact that some people are expecting. It will have some effect, but it's not as big as some people were expecting. Really, we truthfully are trying to unlock a whole new business, right? We're trying to go after the bets. And ideally, and we have picked up some clinics, like I said recently, and ideally introduced a peptide business into animals. Sorry, revenue compounded peptides into [indiscernible].

Okay. The next question is looking at the landscape over the next 12 to 24 months, what does the Board view as ETST's strongest economic moat or competitive advantage that will allow us to capture market share from traditional legacy competitors.

All right. So I think our strongest economic moat, our competitive advantage is built down to the tech, the team and the people in general, the techniques that we put forth in the different ways that we they use 1 business to feed into another. A perfect example is Zozi that Giorgio talking about. We're using that to couple to unlock the market of the compounds with the in the pharmacies that we do own Mr. Meds and our compound store, Modovo coming down in California. Mr. Meds is another great asset that we have, which allows us to do not just regular non-sterile -- sorry, the nonhazardous compounds that we do here in Miami, but it also adds a big value. So the mix, the product mix, along with the peak products, I think those all give us the -- definitely an advantage and definitely have more -- that's what I'm looking for here more. We're more diversified than most of our competitors.

Okay. And the next question is, how is the company actively leveraging new technology to drive down costs, improve operational efficiencies and expand profit margins within the pharmacy and telemedicine platforms.

I'm going to let Chris Rose, our Technology Officer or Chief Technology Officer respond to that.

Okay. Thanks. The short answer is that we build now instead of buy supported by advancements in and our leverage of AI. We built our own ETST-wide software and data platform that ties together the three pharmacies, our curative telehealth business and are my online consultation doctor network into one system. So adding a new pharmacy, clinic partner or anything is as easy as a quick configuration change. Inside the platform, we've automated clerical work workflow processes in the background leading to operational efficiencies. We've added invoicing shipping, inventory purchasing, pricing and other management functions also baked into the new platform. And now it's become something that we can offer to other clinics as a white label service. Our lean development team has built all of this at unprecedented pace by leveraging AI tools. We've taught it to -- we've taught our own engineering best practices and procedures, and it worked alongside our team within guardrails, thousands of automation tests, human reviews on every release. Just to help you visualize the pace since April, we've released 266 production software releases. So in August, that's an average of 4.5 releases for every day. every working day. So leaning into AI has enabled us to change our technology tools to become not only a way to improve efficiency, but as a strategic differentiator, offering new products and services.

Okay. The next question is, could management elaborate on the strict no equity compensation policy and explain how protecting the share structure makes ETST more attractive as we prepare to up list and market ourselves to larger institutional investors?

Okay. So that no equity compensation policy is something that is -- that's my doing. So I'll take a full responsibility. I'm going to -- a lot of people who know me know that I am an investor. I started off with ETST as an investor. I did not start off as a CEO here. That was kind of the little wrench that was thrown along the way. And I've taken that role throughout, I guess. Yes, but no, I think it does make us good because it -- I think if you're uplist, if you're an investor to know that you're not being diluted that all the shares that the company has or that management has or whatever -- they bought management didn't get -- has never been granted any shares, right? We've all had to buy our own shares, including myself. And now on the flip side to that policy becomes a part where you get into the compensation because you don't have a stock-based compensation, now you're telling the people who work here, we're going to pay you more because you're going to need to go buy those shares that you want. The equity that you want from the equity you want from us to take the cash that we're paying you if you want more -- or you want a piece of the company, go buy it on the open market. And I think that helps us support the stock price, create some additional liquidity and then ultimately let the person who's getting that -- those funds decide what they want to do with their own money because that's the thing. And the other -- and the last thing I will point out that it does is, I mean, it makes our Ernesto's job a little bit easier, right? And the auditor's job is a little bit easier. If we had a stock-based compensation plan at the size that we are, I think it would just make the reporting more difficult. And I don't think we need to do anything that's already difficult enough to run our company. And so I just think keeping it as simple as we can. And analytical that way, not do anything that complicates things.

Okay. And the last question we have today is, could management share some of the strategic initiatives or upcoming catalysts being put in place to drive peaks into its next major phase of growth?

Do you want to -- Amina, before I hand that question over to Mario, I will get back to that first question after this one. Just so you know this is not the last one. I do want to address that last one because there are a lot of people who have asked me that personally.

So basically, if you've been listening to what everyone has been saying, it's the same thing over and over. It's our tech, it's our team, and it's our tech, our teams and our techniques. Ernesto has tried best to file his report early, but we're constantly putting out new plans, putting on technology. We recently actually slowed down some of the marketing that we had at peak because we're getting ready for what we hope to be successful marketing campaigns. We've put a lot of emphasis on having a structure that's going to be efficient. It's going to be scalable. And Chris and the IT team has done a great job of doing so. And you heard in some of the description on like how we're using our tech. So at this point, like I'm a firm believer in the each product. I think we have some very special things there. And I'm looking forward to putting this the right marketing behind it and letting that be one of the -- our main drivers of revenue.

And let me add. I'm going to add a little bit more color to it. So long -- I think Mario touched on a point, right? We have had to make some strategic decisions recently that just inevitably I want to hit a reset on expectations for shareholders. Sometimes we get punished. Mario and I discussed this all the time. We get punished because we did so well over the last couple of years that when we take the time to breathe and invest. And so we can get to the next stage of growth, and the phone starts ringing off the hook and the e-mail start coming. That's just the nature of the business. I mean we could go load up our balance sheet with debt. We could be doing going out there and raising toxic financing, and there's all those things we could be doing and maybe we can push through some of these things a little faster by hiring a massive workforce and all that. That's not my style. Since I remain my whole idea is that you operate the company and you grow it organically with your current cash flows and investments, and you're not going out there doing anything that hurts the shareholders. I think it's important that everybody knows how I value our success. I look at total assets versus total liabilities, right? And if you look at since the time I've been CEO, those -- that spread has continued to get higher and higher and higher. That's how I decide whether we're being successful. I'm not trying to decide based on -- is our P&L greater this quarter than that quarter. Is it -- like I just don't do that because when you're growing, when you're small like we are, and we're growing at the pace that we're growing, and you're doing the things that we're doing, you think that, that's unfair to put that on the operating team, like that constrains them already with the conservative constraints that I put on them on capital management and everything else. But I do make that clear to a certain extent, what Mario is trying to point out is that I gave them the green light as they were implementing as Chris and Mario are implementing this massive overhaul of not only peaks, Mr. Meds, [indiscernible], the [ Dooble ] like everything is getting overhauled, pretty much going live tomorrow morning. I did give them these 3 months and said, I'm not worried about anything else other than that we get it right. We need to get it right because that's what our growth, that's where our growth is going to come. Everybody -- this question really comes from people asking like, oh, you were so happy when you broke 2 million? And why haven't you continued to grow on that, like you kind of plateaued. Well, I think Chris would tell you, and you're more than welcome to say it, Chris, a big part of it is that the tech that we had for [indiscernible] have reached its capacity.

It wasn't scalable beyond where it was without hiring a bunch of additional people, and that was the conscious choice for us to say instead of throwing a bunch of bodies at it, let's kind of build the tech, so it can scale from not only this level but 5x, 10x or whatever into the future without needing all of that with automation in place and everything.

Yes. So that's an important thing that I would like to get out there. That message that we are definitely in that base. I mean, we're doing great. I'm very happy with the company. but I do want it to be understood. I do want that expectation out there that we're -- we have been spending June, July, August has been really 3 months of down to the ground, working 24/7 to get this technology stuff and that platform that Chris mentioned, so that all these businesses can scale and most obviously by pharmacy network, but for peaks as well. And now I'll take the last one, let my friend Jena [indiscernible] sent over. You want to read it again. I'll respond to it.

Georgia, you partially own a significant amount of ETST. Ultimately, the company is going to go in whatever direction you want to, where do you see the company and your role in it in 5 to 10 years?

Okay. You would have asked me that question 4 years ago, I would have given you a different answer. No, you're right. I do have a big position in the company by far the largest I invested in it because I believe in the management team, absent something crazy happening and anything is possible, right? But absent anything, crazy happening like I see myself here 5 to 10 years from now, I see myself playing the long game with Mario and the same team that we have here. And continue to grow our assets to liabilities ratios and really just watching this whole thing growth. I do believe that we should be on NASDAQ or New York Stock Exchange, barring the minimum bid price, we qualified. I think we're stronger than a lot of these companies are on NASDAQ. I think in my view, I believe we're putting together a master class of how a public company should be run. And to that end, I don't want to deviate from that. There will be time that it will be fast growth and good times that will be slow growth, but I certainly intend to be here for that time. Now what capacity, I think is probably quite the reason that this question is being asked. And that's going to depend on quite a few factors. I do have a lot personally going on my life. But aside from that, I do have -- my son does work at ETST, and hopefully, he'll be ready at some point to at least take the role of CEO, and I can keep the role of Chairman. I don't know when that will be, I'm not saying that, that will be any timing media. But I mean it's definitely a family of fair from my relationship with Mario and everybody else in this room. And I think that, that would be the only natural progression whenever that happens, and again, I said I don't expect that to happen anytime soon. whenever that does happen, though, I will stay as the Chairman of the Board, and I will stay by his side, and we will probably save the company a lot of money, a lot of money at least [indiscernible] the CEO. So they'll kind of get me at a cheaper price at that point. Is there anything else? Those are all the questions?

Yes. No additional questions.

Okay. There being no further business to come before the meeting and with the thanks of the Board and management for your continued support of Earth Science Tech. I declare this Annual Meeting of Shareholders adjourned. Thank you for everybody for attending, especially [indiscernible]. Thank you.