Executive Summary

Q1 2020 (quarter ended September 30, 2019) revenue declined 24% year over year to $140,951 on the loss of a former primary customer due to credit risk; gross profit was $47,473 and net income was $7,481 .
Sequentially, revenue fell modestly in Q2 2020 to $133,923 with a net loss of $(44,371) driven by non-cash stock compensation ($70,000) and a $40,000 loss on issuance of common stock; Q3 2020 revenue rebounded to $163,782 but net loss widened to $(135,532) on convertible note-related non-cash charges ($62,500 debt discount amortization; $75,000 loss) .
Balance sheet expanded with total assets at $897,479 by March 31, 2020, supported by capex and equipment additions; cash increased to $210,099 at Q3 while liabilities rose on loans and convertible debt .
No Wall Street consensus estimates available via S&P Global for FORZ; comparisons to estimates are unavailable. S&P Global consensus was not retrievable due to missing mapping (SPGI error).
Key stock-relevant catalysts: dependence on a few customers (62.5% of nine-month sales from top two customers), heavy reliance on related-party financing and convertible debt, and ongoing facility ramp with one-time costs that depressed margins in Q3 .

What Went Well and What Went Wrong

What Went Well

Facility ramp and capacity expansion: Management highlighted onboarding the new Florida facility and increased headcount, expecting positive impact as production commenced; “There were many onetime expenses... Production activities have commenced... expect to bring a positive impact” .
Sequential gross profit resilience: Despite Q1 revenue decline, gross profit held at $47,473; Q2 gross margin improved to $58,597 on lower cost of revenue, indicating cost discipline during the customer transition .
Liquidity improved: Cash increased to $210,099 by Q3 2020, aided by financing inflows, providing operational flexibility amid scale-up and non-cash charges .

What Went Wrong

Customer concentration and loss: Q1 revenue decline stemmed from ceasing business with a former primary customer due to credit risk; top two customers represented 62.5% of nine-month sales, elevating concentration risk .
Non-cash charges driving net losses: Q2 saw $70,000 stock compensation and a $40,000 loss on issuance of common stock; Q3 added $62,500 debt discount amortization and a $75,000 loss on issuance of convertible debt, materially impacting net income despite operating profit .
Increased leverage and related-party dependence: Total liabilities rose with bank loans, lines of credit, American Express loans, and a January 2020 10% convertible note; related-party LOC remained $122,729 principal with accrued interest, adding financing risk .

Financial Results

Revenue, Profitability, EPS, and Margins (oldest → newest)

Metric	Q1 2019	Q1 2020	Q2 2020	Q3 2020
Revenue ($USD)	$185,241	$140,951	$133,923	$163,782
Cost of Revenue ($USD)	$119,377	$93,478	$75,326	$98,058
Gross Profit ($USD)	$65,864	$47,473	$58,597	$65,724
Operating Income ($USD)	$31,651	$17,227	$780	$8,297
Net Income ($USD)	$22,607	$7,481	$(44,371)	$(135,532)
Diluted EPS ($USD)	$0.00	$0.00	$(0.00)	$(0.01)
Gross Margin %	35.6%	33.7%	43.7%	40.1%
Interest Expense ($USD)	$3,034	$6,944	$7,953	$6,329

Notes: Gross Margin % calculated from cited revenue and cost of revenue.

Non-GAAP (Company-reported) EBITDA and Adjusted EBITDA

Metric	Q1 2020	Q2 2020	Q3 2020	9M FY2020
EBITDA ($USD)	$36,196	$49,971	N/A	N/A
Adjusted EBITDA ($USD)	N/A	N/A	N/A	$122,746

Balance Sheet and Liquidity Snapshots

Metric	Jun 30, 2019	Dec 31, 2019	Mar 31, 2020
Cash And Equivalents ($USD)	$170,205	$116,990	$210,099
Total Assets ($USD)	$625,421	$733,506	$897,479
Total Liabilities ($USD)	$527,003	$588,978	$671,983
Line of Credit Balance ($USD)	$143,263	$125,824	$116,857
Loans Payable (Real Estate) ($USD)	$186,655	$181,600	$178,985
Convertible Note Payable (current portion net of discount) ($USD)	N/A	N/A	$62,500

KPIs and Customer Concentration

KPI	Q1 2020	Q2 2020 (6M)	Q3 2020 (9M)
Top Customer Sales %	33% and 37% (two largest)	22.4% and 57.4% (two largest)	62.5% and 18% (two largest)
Depreciation Expense ($USD)	$14,034	$31,516 (6M)	$49,553 (9M)
Capex / Purchase of Property & Equipment ($USD)	$121,762 (Q1 cash flow)	$158,886 (6M)	$227,090 (9M)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Sales (Revenue)	FY 2020	“Exceed $2 million”	No update provided in Q1–Q3 filings/PRs	Not reiterated / No update
Adjusted EBITDA	FY 2020	“Much stronger compared to FY2019” (directional)	No numerical update provided	Not reiterated / No update

Earnings Call Themes & Trends

Note: No earnings call transcript available for Q1 2020, Q2 2020, or Q3 2020 (none found) — themes synthesized from press releases and 10-Q MD&A.

Topic	Previous Mentions (Q1 2020)	Previous Mentions (Q2 2020)	Current Period (Q3 2020)	Trend
Customer Credit Risk / Demand	Ceased business with former primary customer; revenue down YoY	Continued impact; YoY revenue decline and net loss	Revenue up sequentially; losses driven by financing-related non-cash charges	Stabilizing demand; structural risk persists
Facility Ramp / Capex	New equipment purchases; production commenced	Opening Florida facility; operational with one-time costs	Onboarding Florida facility; one-time expenses; headcount increased	Capacity expansion ongoing
Financing / Leverage	Reliance on related-party LOC; bank loans outstanding	Added American Express loan; repaid equipment loan	Issued 10% convertible note; recognized BCF and losses; more Amex loans	Leverage and financing complexity increasing
Non-GAAP Use (Adj. EBITDA)	Quarterly EBITDA disclosed	Quarterly EBITDA disclosed	Adjusted EBITDA disclosed for nine months	Emphasis on non-GAAP persists
Concentration Risk	Two largest customers 33% & 37%	Two largest 22.4% & 57.4%	Two largest 62.5% & 18%	Elevated concentration risk

Management Commentary

Q1 2020 (President’s Commentary): “Our results for the quarter ending September 30, 2019 were slightly impacted as we made a difficult decision to cease doing business with a major customer after they became a high credit risk... purchased new equipment... expect to bring a positive impact in the next two quarters.”
Q2 2020 (Management Commentary): “We are happy to announce that we had positive cash flows and EBITDA recorded was $49,971 for the quarter... one-time expenses associated with opening our new Florida facility... logistics, rigging, new machinery purchases.”
Q3 2020 (Management Commentary): “We are happy to announce that we had positive cash flows and adjusted EBITDA recorded was $122,746 for the nine months ended March 31, 2020... many onetime expenses associated with getting the [Florida] facility operational including new machinery purchases.”

Q&A Highlights

No earnings call transcript located for Q1 2020; therefore no Q&A highlights are available (no transcript found for Q1 2020, Q2 2020, or Q3 2020) [ListDocuments returned none].

Estimates Context

Wall Street consensus estimates (S&P Global/Capital IQ) for FORZ could not be retrieved due to missing SPGI mapping for the ticker; as a result, beats/misses versus consensus are unavailable. S&P Global consensus was not accessible through the tool due to mapping error.

Key Takeaways for Investors

Sequential recovery in revenue from Q2 to Q3 2020 (+22.3%) is overshadowed by significant non-cash losses tied to convertible debt; monitor financing mix and potential future dilution from conversion features .
Customer concentration remains high (top two customers at 62.5% of nine-month sales), making demand shifts and credit quality of key accounts a central risk factor for quarterly volatility .
Facility ramp and capex investments are expanding capacity; expect near-term margin pressure from one-time setup costs with potential medium-term throughput and margin benefits as utilization improves .
Liquidity improved (cash $210,099) but leverage and related-party exposure are notable; watch covenant terms, interest burden, and additional borrowing (American Express loans, lines, convertible note) .
Guidance from October 2019 (“FY2020 organic sales > $2M”) was not updated; given nine-month revenue of $438,656, trajectory implies a material shortfall absent a step change in Q4; treat prior guidance as stale .
With no available S&P Global consensus, price-moving surprises will hinge on operational updates (customer wins/losses), financing developments, and evidence of margin normalization post-ramp rather than “beat/miss” narratives.
Short-term trading: sensitivity to financing headlines and customer updates; medium-term thesis depends on successful diversification of the customer base, scaling new capacity, and reducing reliance on high-cost/complex financing.

Forza Innovations Inc (FORZ)·Q1 2020 Earnings Summary