Name: Forza Innovations Inc Q2 2020 Earnings Call
Start: 2020-02-14T00:00:00.000Z

Executive Summary

Q2 2020 (quarter ended December 31, 2019) revenue was $133,923, gross margin 44%, gross profit $58,597, and EBITDA $49,971; net loss was $(44,371), driven in part by $70,000 of non-cash stock compensation and one-time startup costs for the new Florida facility .
Sequentially, revenue declined ~5% from Q1 2020 ($140,951 ) to Q2 2020 ($133,923 ) as facility launch expenses weighed on results; gross profit increased by ~$11K on higher dollar gross despite lower margin .
Management emphasized positive cash flows and operational ramp at the new Florida facility, citing increased fixed assets and production commencement; nine-month adjusted EBITDA through March 31, 2020 was $122,746, indicating improving scale .
No sell-side consensus estimates or earnings call transcript were available; comparison to expectations is not possible (S&P Global consensus unavailable due to missing mapping) .

What Went Well and What Went Wrong

Positive cash flows and EBITDA for Q2 2020: “We are happy to announce that we had positive cash flows and EBITDA recorded was $ 49,971 for the quarter.”
Operational ramp: “Opening our new Florida facility and making it fully operational” with production activities commenced and expected positive impact in subsequent quarters .
Asset growth and capacity expansion: Total assets at December 31, 2019 were $733,506; investments in new machinery and rigging to onboard the Florida facility .

Net loss in Q2 2020 of $(44,371), primarily impacted by $70,000 non-cash stock compensation and launch-related expenses .
Sequential revenue decline from Q1 2020 to Q2 2020 ($140,951 → $133,923) amid transitional costs for the new facility .
Margin compression: Gross margin decreased from 66% in Q1 2020 to 44% in Q2 2020, reflecting startup costs and mix effects during the ramp .

Metric	Q1 2020 (Sep 30, 2019)	Q2 2020 (Dec 31, 2019)	Q3 2020 (Mar 31, 2020)
Revenue ($USD)	$140,951	$133,923	$163,782
Gross Margin (%)	66%	44%	40%
Gross Profit ($USD)	$47,473	$58,597	$65,724
EBITDA ($USD)	$36,196	$49,971	N/A (company disclosed 9M adjusted EBITDA)
Operating Income (Loss) ($USD)	$17,227	$(39,220)	N/A
Net Income (Loss) ($USD)	$7,481	$(44,371)	N/A (9M net loss disclosed in non-GAAP table)

Metric	9M FY 2020
Revenues ($USD)	$438,656
Adjusted EBITDA ($USD)	$122,746
Net Loss ($USD)	$(172,422)
Interest Expense ($USD)	$21,226
Depreciation ($USD)	$49,553
Debt Discount Amortization ($USD)	$62,500
Loss on Issuance of Convertible Debt ($USD)	$75,000
Stock Compensation Expense ($USD)	$46,889

Not disclosed; the company reports consolidated results without segment detail .

KPI	Q1 2020	Q2 2020	Q3 2020
Total Assets ($USD)	$726,348	$733,506	$897,479
Net Cash Used in Investing ($USD)	$121,762 (Q1)	Not disclosed (Q2)	Not disclosed (Q3)

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Sales (Revenue)	FY 2020	$1.0M	>$2.0M	Raised
Adjusted EBITDA	FY 2020	Not quantified	“Much stronger compared to prior results”	Raised (qualitative)
Quarterly Guidance (Q2 2020)	Q2 2020	Not provided	Not provided	Maintained (no update)

No earnings call transcript was available for Q2 2020; themes below reflect press release narratives.

Topic	Previous Mentions (Q1 2020)	Current Period (Q2 2020)	Q3 2020 Update	Trend
Florida facility ramp	New equipment purchases; investing cash outflows; operational setup underway	Opening and making facility fully operational; one-time rigging/logistics/machinery costs	Onboarding milestone achieved; production commenced; headcount increased	Improving capacity and scaling
Customer mix/credit risk	Ceased business with high credit-risk major customer; added new customers	Not specifically referenced	Not referenced; focus on ramp	Stabilizing post customer exit
Non-GAAP focus (Adjusted EBITDA)	EBITDA $36,196; stock comp $4,935	EBITDA $49,971; stock comp $70,000	9M Adjusted EBITDA $122,746; 9M stock comp $46,889	Elevated non-cash items; improving adjusted profit
Capex and fixed assets	Significant capex ($121,762) and new equipment	One-time rigging/logistics/machinery purchases	Fixed assets increased with new machinery/equipment	Continued investment and asset growth
Revenue guidance (FY)	Raised FY 2020 revenue outlook to >$2M	No quarterly guidance update	No update observed	Raised FY outlook; quarterly status unchanged

“We are happy to announce that we had positive cash flows and EBITDA recorded was $ 49,971 for the quarter.”
“Our results for the quarter ending December 31, 2019 were slightly impacted as we achieved a big milestone in opening our new Florida facility… Production activities have commenced out of this new facility and expect to bring a positive impact in the next two quarters.”
“Our results for the quarter ending March 31, 2020 were slightly impacted as we achieved a big milestone in onboarding our new Florida facility… Production activities have commenced, our headcount has also increased out of this new facility and expect to bring a positive impact.”
“We made a difficult decision to cease doing business with a major customer after they became a high credit risk… We have since gained several new customers.”

No earnings call transcript was available; no Q&A or analyst interaction to report for Q2 2020 .

Wall Street consensus (S&P Global/Capital IQ) for Q2 2020 was unavailable due to missing CIQ mapping for FORZ; therefore, we cannot assess beats/misses versus estimates .
Given absence of estimates and call, near-term model revisions will hinge on confirmed run-rate post facility ramp and non-cash charges trajectory .

The quarter reflected transitional costs from the new Florida facility; despite margin compression, gross profit dollars increased and EBITDA was positive, signaling underlying operating leverage .
Sequential revenue dipped (~5%) from Q1 to Q2, but Q3 revenue improved to $163,782 as the facility onboarding progressed, supporting ramp momentum .
Non-cash stock compensation materially affected GAAP net loss in Q2; monitor trajectory of stock comp and other non-GAAP adjustments as the business scales .
FY 2020 organic revenue guidance was raised to >$2M previously; execution on capacity and demand conversion will be the primary driver of credibility against this target .
Lack of sell-side coverage and no earnings call reduce visibility; focus on operational KPIs (revenues, margins, adjusted EBITDA) and asset growth as leading indicators .
Near-term trading setups likely hinge on evidence of sustained revenue acceleration and margin normalization as startup costs fade; watch subsequent disclosures for confirmation .
Medium-term thesis depends on the company’s ability to scale production efficiently, maintain customer diversification, and manage investment outlays without dilutive financing, per management’s prior commentary on operating discipline .