ETST - Earth Science Tech Inc. (ETST) Q2 2023 Earnings Call Transcript

Earth Science Tech, Inc. (ETST)

Q2 2023 Earnings Conference Call

November 14, 2022 17:00 ET

Company Participants

Giorgio Saumat - Investor Relations

Nickolas Tabraue - Chief Executive Officer

Mario Tabraue - President

Presentation

Operator

Good day, everyone and welcome to today’s Earth Science Tech Second Quarter Fiscal 2023 Financial Results and Outlook. [Operator Instructions] Forward-looking statements are included within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategy, products and services, competitive position, growth opportunities, plans and objectives as management or future operations, listing of the CSE, including words such as anticipate, if, believe, plan, estimate, expect, intend, may, could, should, will and other similar expressions are forward-looking statements and involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from the anticipated results performance or achievements. We are under no obligation to and expressly disclaim any such obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.

It is now my pleasure to turn the conference over to Giorgio Saumat. Please go ahead.

Giorgio Saumat

Good afternoon, everyone. Thank you, guys for calling in. We are here to discuss ETST on the – I guess the most recent quarter, September 30, but I am sure that many people in the call are probably more interested in the subsequent events and what’s going on now.

So I am going to give a brief summary which was put in the PR that was released today. I am sorry give me one second, can you send in the link, he is asking me for it.

So, I am going to just discuss quickly, the past results, which are pretty simple, since the company was basically a shell during the last quarter. The company lost $228,000 and it had a cash balance at the end of September of $1,205. Those two pieces of information pretty much tell us why it is that I am here. And I will get into that a little bit later. So as you guys probably know or have read, we consummated our merger with our RxCompound store and with Peaks. And that is now the business that we are in. We are actually converted the company into a holding entity which will not be stopping with acquisition of Peaks and RxCompound, so we are actively looking at our further acquisitions.

With that said, I am just going to open it up, because for questions, since most of the past stuff is pretty simple in the queue. And I think the more meat, if you will, of this press release and the 10-Q is the forward-looking stuff. So with that moderator, we are happy to begin the Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Tom Ji asking, considering cash flow positive seems to be an important milestone. Do you have a timeline for achieving it?

Nickolas Tabraue

This is Nickolas Tabraue speaking. The easy answer is we honestly just don’t know. We don’t want to be held to any timeline, but we have accomplished a lot in the past few weeks, especially in the month of October. And we thought that what we recently achieved will have taken years, but we did with just a few short weeks. So, with our progress and our hard work, I mean it could be very, very soon hopefully on early to mid-next year. That’s pretty much an interesting…

Operator

Our next question comes from David Si asking. Will there be any independent directors on the Board?

Giorgio Saumat

Hi. So, when we are putting this forward, my thought process of the board, since I am the one who is choosing the board. But as we wanted to have – well the Board is – the makeup of the board is five men. So we wanted to have somebody in finance, which I think I said that still, we wanted someone operation and sales and Mario Tabraue, that’s his job mostly running the operations and the sales of RxCompound and Peaks. So we are adding obviously, he will be on the Board. As far as compliance, that’s what Nick has been doing through Earth Science Tech the whole time. So he would be on the board. And then the last two positions we have or we want to fill are one of a legal professional, which will be somebody independent and then ideally, a medical professional, a doctor, or someone of that sort. That being said, I have already interviewed or spoken to quite a few people in the community that are notable experience and could be a significant asset to the company. There is a lot of interest in those two positions. So, I have no doubt that we will be able to fill those two positions with some highly qualified well-respected people. When that will be? I can’t tell you exact dates, but my intention is to have those positions filled and announced by the end of December.

Operator

Our next question comes from Adrian R asking, is there enough cash on hand for your immediate future plans? And can you please discuss how the relationship is between Tabraue and Samaut since change of control?

Giorgio Saumat

Okay, Mario, why don’t you take the question about the cash on hand?

Mario Tabraue

Yes. So, we believe we have enough cash on hand to the operations right now, so get cash flow positive. We are continuing to move at the pace that we have been moving with definitely our balance sheet has been improved. And with the debt reducing, I feel that we do have enough cash on hand.

Nickolas Tabraue

Now that being said if there is another way or there is more efficient balance sheet reduction that we can do, I think the answer to that question is that it can change, but we do presently have it. However, I am actively working with other creditors to try to reduce the balance sheet a little more on the liability side.

Mario Tabraue

As far as our relationship goes…

Nickolas Tabraue

Yes. As far as the relationship it was a little rocky at first, given the situation that I was stepping into and the situation the company was in as mentioned at the beginning of the call, but I think the last few weeks we have made an incredible amount of progress both collectively and individually. I think we have all gotten stronger. We definitely have had – have created a mutual amount of respect and trust in each other. And I definitely expect that to continue, and to be quite honest, we are having a little bit of fun at this point.

Mario Tabraue

Yes, I would concur with the fun. As far as I know, you didn’t know what you are getting yourself into when someone steps in that way, but it’s – I think we are having some fun at this point.

Operator

Our next question comes from Robert Y asking, can you please explain the sterile room and its significance?

Nickolas Tabraue

I will let you, Mario.

Mario Tabraue

So the sterile room is hard to explain, I think, Google might explain it best. But in a nutshell, it’s an environment where we could compound medications and make sure they are germ free. Many of the injectables that you get from your regular pharmacy are done in sterile rooms. Actually all of them are. And adding this to our compound pharmacy is going to be an essential part to our growth, albeit it’s not an essential for the pharmacy, it is probably going to be our largest revenue generating book of business. Everybody wants injectables and it’s kind of been our Achilles heel till now. So, adding that as well as the hazardous room that we are going to be probably going live with prior to the sterile room. That’s also going to be a big help, we are going to be able to do what testosterone, progesterone creams, which is we have a lot of demand for and currently have to outsource. So, sterile is coming very soon and hazardous even sooner and we are looking forward to the growth.

Operator

Our next question comes from Kimberly T, asking what was the purpose for the last this quarter the company was a shell?

Nickolas Tabraue

Okay. Well, I think the – at the beginning, when the company came out of the receivership, they had some payment plans and things that they had to, I guess initially pay out. So, you start with that. And then there was also the development of – they were trying to develop the Peaks website and get the soft launch, which they did in July, this July. So, they were trying to get that and the development of that took some time and took some capital. And there was also, things that went out for expenses for rent, the new location and also the buyout of the previous tenants at this location.

Operator

Our next question comes from Kevin S, asking is RxCs Peaks licensed in all 50 states?

Mario Tabraue

So, we are not licensed in all 50 states. The pharmacy is currently working on additional licensing piece itself doesn’t need to be licensed. We do have a doctor network that is ready to go in the states that we plan to move into. But currently, Peaks is standing by waiting for our credentialing at our RxCompound Store. So, aside from Florida and New York, which are the ones we currently have right now, states will soon be coming onboard and we will go ahead and be updating that accordingly as they as they come live.

Operator

Our next question comes from Charles D, asking when the company is cash flow positive, what do you plan to do with excess cash?

Mario Tabraue

Okay. Who is going to take that one? Maybe you have taken that one?

Nickolas Tabraue

Yes. We are not there yet. We have discussed some ideas, but I think our best options once we have them and the Board members we have all five of us to discuss will be the best way to be utilizing the cash and will be cash flow positive. Will be pretty much the route we will go, because right now, there are many options, many ideas, but we are just focused on getting cash flow positive and also up lifting back to OTCQB, which is the first step to publish into higher tiers. But when it comes to utilizing the cash flow, the cash will be cash flow positive. There will be something that will be shared once we are there, as of now just want to get there.

Mario Tabraue

Let me let me add to that. I think that when we do get there. There is pretty much only two options in my mind at least, it’s either to fund future growth for increased shareholder value which is both are good options. When that time comes I think the decision will be based or will be considered with long-term shareholder values in mind. So, we will look at it when that time comes. But again like Nick said, our goal is to just get there as quickly as possible.

Operator

Our next question comes from Frank G, asking, can you give more details on OTCQB and timeline?

Mario Tabraue

That’s unique.

Nickolas Tabraue

Right now we are working on our audits for both RxCompound Store and Peaks Curative. We are based more currently out with those two audits. Peaks should be done relatively soon. Rx to follow within the month of January hopefully sooner. Once we have one of those two audits completed will file our super 8-K which will help us see the shorts as you currently have on OTC Markets and utilizing that PCAOB audit super 8-K. We are going to apply to be on OTCQB and also remedy the 211 portal that we are currently dealing with at the moment. So, we are looking to applying to OTCQB markets this year, and depending on the application process, hopefully OTCQB by the end of the year if not early next year 2023.

Mario Tabraue

Basically as soon as we possibly can.

Nickolas Tabraue

Yes.

Mario Tabraue

Let’s put it that way.

Nickolas Tabraue

But if there is some things that are just out of our control, so we are doing, it depends sometimes we are depending on other people.

Operator

So our next question comes from Chris A, asking what’s your plan for executive compensation?

Mario Tabraue

Alright. So, as part of this whole – I don’t know if you want to call it a takeover, but it’s what it is take over deal. Nick and Mario agreed to no executive compensation, at least up to the point where the company becomes cash flow positive. By the time the company is cash flow positive, I would expect to have a complete Board with independent members. And then I think we can make a decision on what the executive compensation will be with the input of those independent members. And that’s the only answer I can give. We are going to wait to see when we are cash flow positive. And I definitely want independent voices in the room to decide and to obviously, take care of all the shareholders interest.

Operator

And it appears we have no further questions at this time. I will turn the program back to the speakers for any additional or closing remarks.

Nickolas Tabraue

Does anybody want to add any other questions? So then, that’s it. Okay, well, then, if we are closing it up, what I will say is thank you to everybody, for your interest in this call. The one thing I will say to you, if you are a shareholder on this call, the best way to support the company is to be a customer. So, I will tell you, I mean, I personally, I do a lot of investing and I don’t invest in companies in which I don’t believe in their products and what they do. So, my recommendation would be at least, look at the website, look at RxCompound, look at Peaks. Peaks is going to have in the revamped website, there is going to be adding more products in the future. Right. So, there is going to be quite a few things done, that I think will open up other possibilities for people to be customers. And I certainly would expect for everybody to, as if you are a shareholder to please do your best to be one of our customers. That being said, RxCompound Store, let me be clear, is very innovative in what they are doing, their ability to have alternative forms of providing medications, specifically to the autism market, which they have discovered recently, and has turned out to be a pretty big deal. And of course, the ED market, which tends to – that’s their legacy strength.

So, I would just say stay tuned. Thank you guys for your support, and there is a lot more coming down the line and have a great night everybody.

Operator

This does conclude today’s program. Thank you for your participation and you may disconnect at any time.

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