Hydreight Technologies Inc.

Good afternoon, everyone. Thank you so much for joining us. This is Hydrate Technologies Q2 investor webinar. We're going to go over the earnings today that were just released. So we'll just give it a few moments while we let everyone join as I see people still joining in the weight room. If you do have any questions, please don't hesitate to put them in that Q&A section. And we are going to be keeping this webinar to that 30 minutes. So Yeah, we're going to get through it pretty fast. But if you do have additional questions that we don't get to, please send them to our investor relations email at ir.hydrate.com. I'll also put that in the chat section for you. And just a reminder that we will be going over Just a reminder to take a look at our forward-looking statement as we will like to remind everyone that today's presentation will include forward-looking statements. The statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties. that could cause actual results to differ materially from those projected. So forward-looking statements may include but are not limited to statements about our growth strategies, product development, financial performance, regulatory outlook, and market opportunities. So we do not undertake any objection to update these statements except as required by applicable securities law. So for a full discussion of risk factors and uncertainties, please refer to our filings that are available on CDAR+. under Hydric Technologies there. And I will pass it off to Shane for you, our CEO, Shane Madden.

Thank you, Abby. Hi, everybody. As the great Conor McGregor once said, say what you're going to do and go out and do it. So that's how I would describe 2025 so far, especially Q2. Obviously, we have some new shareholders here from the activity for the last few weeks. So I will go over kind of a high level again. I know some people have heard me talk about this to the point of nausea, but we'll go over it one more time and then we'll circle back to Q2 and some other exciting things. But Q2 essentially for me has been just an organic evolution of the first two verticals that we've talked talked about for a while um we're quite confident in you know um the growth that we communicated at the start of the year on those verticals um we've established them very well um our mode is very high and we've obviously extrapolated that into the third vertical which we'll talk about which is the bell of the ball the girl that everybody wants to date right now uh vsdh1 so High level again for anybody that's new. Hydrate Technologies essentially attempted to capture three key areas of the healthcare industry in the United States. We came at it from a compliance perspective, building tech on top of three key areas that we had identified that the healthcare industry was going to go. Obviously, there's been a couple of accelerators between COVID and the Olympic craze that have shone a light on the need and validated the direction of the company in many ways. Our first was mobile health and wellness, which is known as our Hydrate nursing platform. First business to allow nurses to work as independent contractors, allow them to monetize their credentials in a never before done way. We were first movers, still are. No company has attempted to have a 50 state medical mobile workforce. So that was our first vertical. The second vertical was addressing the non-traditional doctor's office. So health and wellness facilities that are providing true health care, a myriad of services, but it's true health care requiring oversight from a medical director, physician network, access to compliant pharmaceuticals. and obviously there's a tech component to be able to marry all of those but again everything needs to be built off of compliancy the third vertical which again we'll go into shortly is the direct to consumer self-administer again first movers in terms of a model we didn't want to be another runner in that space we wanted to basically be the home for healthcare in that space allowing a wide range of different types of businesses, whether it was a business with a large amount of clients in the greater health and wellness space that just weren't structured to be in the medical side of things, or whether it was people who had structured their business but structurally could only do a few treatments or a few states or had structured themselves actually uncompliantly during relaxed laws and everything in between. The goal with that third vertical is, of course, to be the Shopify for healthcare in a sense. Instead of being another player, we want to have 5,000, 10,000 businesses all operating on our medical network, our tech, our pharmacy through that third vertical. So high level, that's what Hydrate Technologies is. The overall market spend is 5 trillion, as everybody has heard me talk about today in the US. 90% of that is what's called chronic care management, which essentially means it's preventable. And there's only three areas this can go. So individualized health care is where this movement is going. controlling one's own wellness um the awareness has shifted between um what happened during covet but also the um the ozempic monjaro craze as i call it because two years ago nobody knew what a glp-1 was or a self-administered service at home um even to extrapolate away from the glp-1 space into the peptides and the sexual health and the And the hair care, nobody knew that existed. Now half of the US are saying they'd like to try a self administered at home service. So the awareness is there, which is obviously a huge piece of positioning yourself as an offering. So as a company, 50 state medical company that has addressed three different areas of this $5 trillion market. We're positioned very, very uniquely because our mode is compliance. We're not a nice to have in any of the three verticals. We're a must have if you want to be compliant. Obviously, we've married that with tech to make the connection with the customer. Yeah, that's where Hydra technology set out to go, and that's where we're there. Q2, and I'm going to pass it to Vihit to go into some numbers right now, but Q2 for us was, for me, nothing majorly exciting there, but it was just more of a validation of the first two verticals, execution from the team. We've been putting a lot of work into strengthening the departments for growth, for the growth that we know is coming, and I feel that was a an excellent performance in Q2 and validation of what we've built. So I'm just going to pass it over to Vahid to go into some numbers.

Thank you, Shane. Hi, everyone. I appreciate everyone joining the webinar. As promised, we tried and we did file earlier than, you know, before end of the period that we had time to do and sort of, you know, earning call right away to provide updates. Before I go to the Q2, I'd like to walk everyone through the trend, the trend of the business. Because when you were talking about the SaaS company as a software, as a service that has recurring revenue, Trend is a lot more important than having revenue from one point. Because you may do a great Q2 or Q3 or Q4, but then the trend is there. And that's what we're focusing on. The trend on the revenue, the trend on profit, on margins, and what it takes for us to take us where we want to go. In 2020, the business got into action. Obviously, there was few years before that to create such infrastructure and framework to be able to do that. The first two verticals that we had took us from about a million to last year, our top line revenue, about over 22 million. We didn't have the third vertical last year. I'd like to remind everyone, the VSDH1 that right now is in full speed and we're fulfilling the numbers, we're surpassing the numbers, is a brand new business. A business that contains legal compliancy, technology, multiple different dependent factor, doctor network, medical directions, pharmacies, and all that. Not only it went live, but also is generating revenue, real revenue for the business that is helping the revenue of the business goes in higher and higher in the very first year that is in action. So that's why the trend is the key. That's why not only we invested it, not only we created it as such infrastructure and technology, but also is in action and is working. When we started this year for the first two verticals, we're expecting and projecting based on the evidence that we had in hand that we're going to have about 27.5% growth with our first two verticals that would have shown the graph like this. That again, it's based on the historical data that we're going on. In the meantime, we're also focusing on our adjusted EBITDA. in 2020 2021 2022 and 2023 we finance our own growth we paid to create the legal structure to create a technology and update the technology without borrowing any money without uh you know raising any money after going public But at the same time, we're looking at our bottom line to see if it's going to be positive, to be a real business. We could achieve that in 2024. And in 2025, we continue doing that not only in the adjusted perspective, but from the gap perspective as well. Same thing with the cash flow. So the reason I went back is for you to see the trend, the trend of the business. It's not like you go down one quarter, the next quarter you go up. Then when we walked into the 2025, we walked into 2025, we had a very strong Q1. We surpassed our projections from the revenue perspective. We could end up being gap positive. We finished a life offering successfully, $1.55, have enough cash in the bank. And then we walked into the Q2. Our goal at the beginning of the Q2 that was communicated with everyone, you know, when we send the release out, was focusing on the revenue, focusing on the number of the orders coming in, continue focusing on our profitability, trying to add more product, including a genetic test into our offering. And then also looking at some talking acquisitions or investment. The investment that is purposeful is not an investment that just for sake of doing the investment that we're going to do that. An investment that is going to help either with the revenue or with the margin. If it helps with either of those, that's what we're looking for. Now, we didn't want to be a company that keeps sending a release out on the LOIs and not completing that. We send a binding LOI release out around the 503A, but that was after, I would say, a handful of advanced conversation with other players in the market or have some sort of agreement with them, but they failed in the due diligence side of it. We walked into the Q2, the Q2 with that focus, we continued having the same growth. We could have, you know, we achieved, we surpassed the growth percentage that we're looking for. Not only we focused on the VSDH1 to make sure that we can onboard our clients. And again, I'd like to remind you, that's a brand new business. So you can do so much planning based on the evidence in hand. But the nature of the beast is you have to adjust, you have to monitor, adjust and move forward. We learned so many things as we pushed it through, but we try to keep the goal that we have for end of the year consistent. We had to make a lot of adjustments from the onboarding perspective, from going and focus on the businesses that they have the orders and make it easy for them to come through our system by being modular if somebody wants to use the whole thing or one module or two modules at the end of the day bringing them through and and serving their customers um so all that was was was learning but we grew as we and met the expectations that we had as we learn and we as we adjust Q2, we finished strong, our revenue was higher than expected, ended up being cashflow positive again. Now being a cashflow positive and also having money in the bank, everyone would have asked, why do you need to launch a convertible notes if you have that all in hand? And we couldn't talk about these when we launched it because the financial was not out, but we're gonna add more coloring to that and the reason for that. So Q2 from the GAAP perspective, We had about 5 million revenue. Our top line was about 7 million revenue. Cash flow positive now. In Q3, we're investing heavily into the company on some of the areas that is going to expedite the growth of the company and the VSDH1. in Q3 and Q4. We had some major hire that we brought on board, people that they have a very extensive experience in different areas that can help us, including marketing. One of the things that we've been working hard in the last 45 days to create our own marketing agency as a subsidiary in the hydrate to help every single business that goes on the VSDH1 that they need the marketing help. That's the biggest challenge that we see they're dealing with. We invested heavily into the technology and we're constantly adding more. We made it modular, we're adding more features, new versions is coming out. We invested heavily into our product. We invested heavily into the scalability of our company in every single department. So we are investing as we grow to make sure by end of the Q4, we achieve the numbers that we're looking for with the acceptable margin that we go through it. So our cash flow from the ops was over $200,000, cash in the bank about $6 million. That again, we're going to use it only on the growth and investment side. So when you look at the growth trend and the graph that we initially showed at the beginning of the year are the orange line and the blue line. Now, we're not changing our expectation from the company, from the perspective that we're going to change the numbers that we're hitting. But based on the trend that we have in the Q1 and Q2, just with the first two verticals, the trend is going to show the yellow and the gray line that is going to be higher than what we originally started the year with, that we're going to continue focusing on that. And we try to even... surpassed that in Q3 and Q4. Some of the major updates that we had For 2024, we focused a lot on rather than increasing the, while we're increasing the number of the nurses, but the main focus to be helping them to get more services. For them, instead of taking them, you know, three to five months going live, helping them to go live within 30 days. There were so many things from the service perspective that we try to improve that is paying off. In Q2 2025, the number of the new license holders, and again, keep in mind, every license holder in our nurse network that comes on board with us, they usually bring two or three other nurses to deliver the services. The license holders, we went up by 77% in compared to the Q2 2024. And that trend is continue going up. That it helps with the pharmacy orders, that helps with the services orders, that helps with our reach across 50 states because the nurse network is not only from the revenue perspective. We created that as part of our mobile clinical network that creating a white glove service for some of the second and third verticals that we haven't put it in place that is coming in Q4, and it's gonna make it easier for everyone to deliver those services. The pharmacy orders that from our second vertical, which is a white label, has gone up by almost 50%. Now, the nature of the pharmacy, sometimes you see the prices goes down a little bit, but again, for us, it's focused on the numbers. It's going up. Now, These numbers, we'll talk about this more, why now having ownership in the pharmacy is the key, because we focus on getting these orders coming in. We focus on creating the margin on every orders. We focus on creating the revenue from every three verticals. Again, I remind you on the model that we had in mind. Most of the SaaS companies won't make money from subscription because your A players pay only so much. B and C players either cancel or go out of the business. The way that they make money is mostly tying a service to your technology and platform. We see a lot of SaaS companies tying a payment processing. to the services. Now, in our case, we're trying to do that with the pharmaceutical sales and tie it to the compliancy and tie it to the IP that our doctor of the pharmacy, our chief medical officer, they put together these dosages, they put together these IPs that is produced only for our own clients. In the VSDH1, when we started at the VSDH1, we've grouped our customers into three groups. The group that they're brand new customers, that they have marketing budget, they have the customers, that they have members, but they don't have any pharmaceutical sales, and the customers that they come with ready to go orders. Those groups should have satisfied our goal for this year, the third group. However, it's a brand new business. We had to learn as we move forward. We're dealing with bringing over patient data. We made it modular to make it easy for them to come at any stage of the game into our flow. If it's a doctor network, if it's a pharmacy, if it's a medical direction, if it's end-to-end, to make it easy for them to come into everything, go through it. And it slowly bring them over through the migration plan. So that's the group that we came up with our entire year ago. We didn't even count on the first two as those two are growing as well, creating a marketing agencies in the support of the first two to help them to grow on all that. Within the June, July, August, internally, we had, you know, a matrix that we're going to hit to between 70 to 80,000 range within the first three months. The first month, We hit the numbers, we surpassed the numbers. July, we hit the numbers, surpassed the numbers. We went over 42,000 orders. August, same thing. We fulfilled the range that we have and surpassed that. The August, starting late July, because we keep adding more product into the pharmacy, Now we see a wide range of the products coming in from the order perspective. So we see some cheaper products that it wasn't in the original range of the revenue threshold that we have that again, it's a business that is coming in. So we're adjusting that. And one of the reasons that In August, we're surpassing our goals from the product sales perspective, but we're taking time to wait until end of the August to qualify them from the grouping them from the revenue perspective and tie them to our matrix. But at the end of the day, right now, we are focusing on the growth of this third vertical. We are focusing on number of the orders. We're focusing on the revenue secondarily after the number of the orders and thirdly, our margin. Because we get this trend going. This is the very first year of this business that if you get this wheel turning next year and the year after and the year after, this is going to be accumulated. Now, and we're gonna continue doing that in September. Just for you to know the focus of the company, Shane Madden, the CEO of the company, his main focus himself, directly working with the team and the top customers and the pharmacies on the VSDH-1, because the business is there. We already secured enough businesses to help us to get to our numbers and surpass that. But there is so much details into taking them live. It's on us to take these orders on our platform. It's not just the turning on and turning off the switch. It takes time for us to do that. And we want to make sure we don't sacrifice the quality over the time. But in the meantime, we hit our numbers. In the meantime, we bring the revenue. This quarter, as we promised, we launched a personalized genetic test and wellness that ties to our vision later. We're gonna talk about that on the acquisition side. We'll talk about that. We received some unpaid analyst coverage. We know more is coming. Our focus is quality. We've been super grateful with the analysts, with the banks, with the investors that we have behind us. We're not spending money on the typical promo marketing to just give it a hype. We take our time to spend time with the investors, Shafin, Shane, everyone in the team, try to meet new investors, share our story. Now from every three investors, maybe one of them will be interested in our story, but at least they're investors that we fall within their thesis. We're going to continue doing that. As you remember, for those of you who were with us for the past two years, last year, we didn't spend much time on that. We're focusing on building a business. We promised we're going to do it this year. We've already done that. We're sharing our plan for the rest of the quarter on different events that we're going to do, different investor conversations that we're going to go. So that's where we are. Now, we launched a 10 million convertible. Business is profitable. You have 6 million in the bank. Why do you need this convertible? It's a very good question. But again, sometimes because we're a publicly traded company has a lot of advantages, but trust me, they have some disadvantages. We cannot share everything going on in our head and in the company, and we have to follow the rules and regulations of the exchange and regulators. So at a time that we launched this, we saw our numbers, but we couldn't discuss that in details. We had to wait the financial to go out. Business from the operation perspective, we're good. We don't need money. Business is paying it for itself. However, this is the time that we look at the value of every dollar that is coming to the business. If a dollar into the business can lead to $10 in the business in the 12 months, 24 months, or 36 months, it's bad. based on the evidence, it's a good decision that we can take. So right now, based on the number of the orders that we're getting on BSDH1 across three verticals, and based on different pieces that we can see how quickly it can help with the revenue increase and margin increase, there are many investment and acquisition and growth drivers available in the market. It's every day counts with the level of the growth and the orders that we're seeing. So we wanted to make sure that we can take advantage of that, that if we have enough around us that we can use it for those purposes to support our growth, to see where we're going with that. As you've seen the numbers that have been filed, the business from operational perspective is not bleeding. We actually have enough cash in the bank and we keep adding to it. But we're looking at this in a long term and we're looking at this as a bigger picture, how we can, again, based on the best evidence, based on the best knowledge that we have, what can be done to add the maximum value for our investors and for our company. So we launched that with Canaccord, you know, other companies. banks and other firms is helping us with that through the whole process. And again, I think the closing is next week that we're going to do that. I think it's September 3rd, but please go back to the press release for more details. We focused on potential M&A and investments since late last year. But again, we don't wanna just spend money, even our shares on something that is not gonna add value. There are five or six areas that we're looking into for investment and acquisition. Pharmacy 503A, Pharmacy 503B. Shane will add more color into that. But it has two parts. It's not only about the margin. Margin is one thing. The second reason for that is the full control over the offering. We're not dependent to other players. And thirdly, we have this volume coming in. Right now, it adds value from the revenue and profit perspective in our balance sheet. Why not using the same, the very same orders and creating the assets in our balance sheet, creating an asset for our company? This is our orders that is going through. Yes, we make money off them. But why not also that to be part of an asset that is creating value for our business? We'll talk about this shortly. So 503A after... like again, I was at least eight or 10 serious conversation and handful of advanced conversation within those, we found the right group. We signed the binding LOI and we extended it outside it by five days because we've done a very extensive due diligence on the whole thing and we're closing it and we pushed it by five days, which is I think early next week. to to to to uh uh finalize that and then start on the 503 b side of it with them and the technology side we wanted to have a prescription software which we achieved that with the number one uh acquisition that we announced through the perfect script that is that ties to our point of sales and also cornering the break and motor will shane will add more more detail into that Point of sales, we've been talking about this. We have all these break-in motors coming on board that they're using us. If we can tie them to our technology in a way that they don't need any third player, not only we have full control, but also it's going to add a new revenue stream for us, which is the payment processing that we already secured the agent licenses to be able to do the payment processing. We just need to tie it to the point of sales. Also, we've been talking about AI and treatment plan on the technology side. AI is a cliche word nowadays. AI means nothing if you don't have the data and if you don't know how to monetize those. We have the data. One of the reasons that we wanted it to launch the genetic test was tying it to this one. And also treatment plan, again, Shane will add more colors into that. And also we want to have medications that we're going to put on our pharmacy and we own the IP. So these are the areas that we're focusing that the 10 million convertible and also supporting this from the operation perspective and supporting the existing growth is going to be used. From the technology perspective, we have started working on all these three internally. But if we find an opportunity that is going to fast track this one, that is going to go live and start generating revenue for the company, it makes sense for us to go that path and start getting it in action right away. So before I go any further into our capital market events, I'd like to pass it to Shane to add more colors into this one or the previous slide, which was about the updates.