Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations for the years ended March 31, 2026, and March 31, 2025, should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. 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.

OVERVIEW

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

	●	RxCompoundStore.com: Multi-state (Florida based) sterile/non-sterile compounding for specialized therapies; providers and patients needing access beyond retail chains.
	●	Mister Meds: Multi-state (Texas based) sterile/hazardous compounding center; Texas patients and referring clinicians; fast TX dispensing and hub for nearby states.
	●	Peaks Curative: Frictionless asynchronous consults funneling to licensed pharmacies; digitally engaged patients seeking convenience.
	●	DOConsultations: Virtual care brand for home-based therapies; patients wanting guided telehealth with ongoing follow-up.
	●	Villas Health Care: Brick-and-mortar healthcare facility designed to expand patient access.

Asset Management and Other

	●	Avenvi: 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 $10 million share repurchase program.
	●	MagneChef: 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.

RESULTS OF OPERATIONS

The following tables set forth summarized cost of revenue information for the year ended March 31, 2026, and for the year ended March 31, 2025, respectively.

		For the Year Ending March 31,
		2026				2025				$ Change				% Change
Revenue		$	35,695,614			$	33,117,624			$	2,577,990				8	%
Cost of goods sold			10,207,557				8,817,488				1,390,069				16	%
Gross Profit			25,488,057				24,300,136				1,187,921				5	%

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.

OPERATING EXPENSES

		For years ended March 31,
		2026				2025				$ Change				% Change
Salaries, wages and benefits			13,776,033				14,115,643				(339,610	)			-2	%
Office/General and Administrative Expenses			3,571,448				4,154,838				(583,390	)			-14	%
Bank Charges			1,006,026				1,066,577				(60,551	)			-6	%
Advertising & marketing			2,840,553				836,860				2,003,693				239	%
Legal & Professional Fees			221,179				305,932				(84,753	)			-28	%
Insurance			168,353				180,281				(11,928	)			-7	%
Operating lease cost			180,753				98,434				82,318				83	%
Depreciation and Amortization			284,396				53,951				230,445				427	%
Utilities			130,790				39,661				91,129				229	%
Total operating expenses			22,179,531			$	20,852,178			$	1,327,353				6	%
Other income/expenses
Dividend Income			15,458				9,141				6,317				69	%
Net realized gain on sale of investments			671,528				300,162				371,366				124	%
Unrealized Gain/Loss of fair value changes of investments			(957,118	)			(365,661	)			(591,457	)			162	%
Other			67,194				-				67,194				100	%
Interest Expenses			(16,327	)			(21,189	)			4,862				-23	%
Net Income before taxes			3,089,261				3,370,410				(281,149	)			-8	%
Income Taxes			(511,676	)			116,776				(628,452	)			-538	%
Net Income			3,600,937				3,253,635				347,302				11	%
Net loss attributed to non controlling interest			-29,839				-				-29,839				-100	%
Net Income available to common stockholders'		$	3,630,776			$	3,253,635				377,141				12	%

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.

Insurance expense totaled $168,353 for the fiscal year ended March 31, 2026, compared to $180,281 for the fiscal year ended March 31, 2025. The decrease was primarily attributable to the Company obtaining comparable insurance coverage at lower premium rates 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.

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 on continuing operations going forward.

INTEREST EXPENSE

Interest expense was $16,327 during the fiscal year ending March 31, 2026, compared with $21,189 during fiscal year ending March 31, 2025.

INCOME TAX

Estimated taxes were calculated using the 2026 federal tax rate of 21%. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

BALANCE SHEETS & CASH FLOWS STATEMENTS

		As of March 31,
		2026				2025
ASSETS:
Current Assets
Cash		$	796,797			$	1,473,228
Accounts Receivable, net			356,054				129,064
Equity securities at fair value			1,360,040				645,438
Inventory			682,059				503,938
Long lived assets, available for sale			371,684				-
Prepaid Expenses and other current assets			154,480				358,837
Total Current Assets			3,721,114				3,110,505
Non-Current Assets
Property and Equipment, net			1,517,888				1,384,110
Right of use asset, net			95,317				172,429
Intangible assets, net			208,170				96,885
Deferred tax asset, net			772,294				-
Goodwill			2,654,554				2,302,792
TOTAL ASSETS		$	8,969,337			$	7,066,721
LIABILITIES AND EQUITY:
Liabilities
Accounts Payable		$	681,925			$	492,352
Accrued Expenses and other current liabilities			1,150,442				2,322,022
Operating lease obligations			96,206				121,851
Current portion of long-term debt- other			-				30,592
Short-term business loans			-				179,488
Total Current Liabilities			1,928,573				3,146,305
Long-Term Liabilities
Lease Liability			-				37,878
Loans and Obligations			-				31,427
Total Long-Term Liabilities			-				69,305
Total Liabilities			1,928,573				3,215,610
Stockholders' Equity
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding as of March 31, 2026, and March 31, 2025, respectively			1,000				1,000
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 291,324,607 shares issued and outstanding as of March 31, 2026, and 295,347,903 issued and 294,302,607 outstanding as of March 31, 2025			291,324				295,348
Additional Paid in Capital			30,826,352				31,480,143
Accumulated Deficit			(24,108,199	)			(27,738,975	)
Treasury Stock, at cost (0 and 1,045,296 shares at March 31, 2026, and March 31, 2025, respectively)			-				(186,405	)
Total Stockholders' Equity			7,010,477				3,851,111
Non-Controlling Interest			30,287				-
Total Equity			7,040,764				3,851,111
TOTAL LIABILITIES AND EQUITY		$	8,969,337			$	7,066,721

A summary of our changes in cash flows & Statement of Financial Position for the years ending March 31, 2026, and 2025, is provided below:

The Company had $796,797 in Cash as of March 31, 2026, compared to $1,473,228 as of March 31, 2025.

The Company had $682,059 inventory and $356,054 in accounts receivable as of March 31, 2026, compared to $503,938 and $129,064 as of March 31, 2025.

Equity investments are reported at fair value, totaling $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.

As of March 31, 2026, the Company made additional purchases of equipment of approximately $760,000, to expand its operations.

The Company had $681,925 in Accounts Payable as of March 31, 2026, compared to $492,352 as of March 31, 2025.

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.

Total current liabilities decreased from $3,146,305 to $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 Stockholders' Equity of $7,040,764 as of March 31, 2026, compared to $3,851,111 of Stockholders Equity as of March 31, 2025. This improvement is primarily due to net income available to common stockholders of approximately $3,630,000.

STATEMENT OF CASH FLOWS

		For the Years Ending March 31,
		2026				2025
Net cash provided by operating activities		$	1,940,863			$	4,372,390
Net cash used in investing activities			(1,904,377	)			(1,881,350	)
Net cash used in financing activities			(712,917	)			(1,715,533	)
Net increase (decrease) in cash and cash equivalents			(676,431	)			775,507
Cash and cash equivalents at beginning of the period			1,473,228				697,721
Cash and cash equivalents at end of the period		$	796,797			$	1,473,228

CASH FLOWS FROM OPERATING ACTIVITIES

The Company's net cash provided by operating activities was $1,940,863 for the twelve months ended March 31, 2026, compared to $4,372,390 for the twelve months ending March 31, 2025.

CASH FLOWS FROM INVESTING ACTIVITIES

During the twelve months ending March 31, 2026, and March 31, 2025, the Company used $1,904,377 in investing activities and $1,881,350, respectively.

CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash used in financial activities during the twelve months ended March 31, 2026, was $712,917, primarily due to the repurchase of the Company's stock.

During the Fiscal Year ending March 31, 2026, the Company repurchased $471,410 of its common stock and 4,023,296 shares were retired during the fiscal year ending March 31, 2026.

FUTURE FINANCING

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.

STOCK BASED COMPENSATION

The Company did not issue any stock-based compensation during the fiscal year ended March 31, 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

The company has assessed the impact of recent pronouncements on the preparation of Consolidated Financial Statements, and their impact has been disclosed in note 2.

OFF- BALANCE SHEET ARRANGEMENTS

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.