Executive Summary

Q2 2020 revenue was $0.469M, with gross margin ~54.9% and diluted EPS of $0.0019; net income swung to $33.5K from a prior-year loss, reflecting recognition of deferred franchise fee revenue and fish brokerage activity .
Sequentially, revenue declined vs Q1 ($0.691M to $0.469M) and operating income compressed to near breakeven ($1.5K), as deferred revenue recognition tapered and legal/accounting costs increased .
Management disclosed termination of the PRC VIE (GZ WFH) due to loss of control/communication during COVID travel restrictions; operations will shift to Taiwan, with R&D and technology in the WFOE “not impacted” .
No formal guidance or earnings call transcript was filed; consensus estimates from S&P Global were unavailable, limiting beat/miss assessment. Near-term catalysts include VIE termination impacts and the Taiwan manufacturing shift .

What Went Well and What Went Wrong

What Went Well

Revenue mix benefited from recognition of deferred franchise fee and initiation of fish brokerage & distribution, driving gross profit to $257K and positive net income vs a loss last year: “no direct cost of the deferred revenue” in the period .
Customer advances rose to $0.606M, supporting near-term liquidity, while cash reached $0.345M, and management asserted no substantial doubt about going concern at quarter-end .
Management emphasized continuity of R&D: “The issues related to GZ WFH do not impact our recently announced 2nd Generation RAS tank systems. We own technology and R&D in the WFOE” .

What Went Wrong

Sequential operating performance softened: operating income fell from $225.8K in Q1 to $1.5K in Q2, as G&A rose and revenue declined; diluted EPS dropped from $0.0124 to $0.0019 .
Internal control weaknesses persisted (lack of audit committee, documentation, GAAP expertise, segregation of duties), with disclosure controls deemed ineffective in Q2 .
Strategic and operational risk increased with the announced termination of PRC VIE due to COVID-related oversight gaps and unresponsive regional team, introducing transition execution risk despite management’s confidence in R&D continuity .

Financial Results

Metric	Q2 2019	Q1 2020	Q2 2020
Revenue ($USD)	$11,262	$690,653	$469,078
Gross Profit ($USD)	$11,262	$398,138	$257,258
Gross Profit Margin %	100.0%	57.6% (398,138/690,653)	54.9% (257,258/469,078)
Operating Income ($USD)	$(165,767)	$225,826	$1,523
Net Income Attributable to Company ($USD)	$(137,295)	$219,318	$33,475
EPS (Basic) ($)	$(0.0111)	$0.0178	$0.0025
EPS (Diluted) ($)	$(0.0111)	$0.0124	$0.0019

YoY and QoQ comparison summary:

YoY: Revenue +$0.458M; diluted EPS improved from $(0.0111) to $0.0019 .
QoQ: Revenue −$0.222M; operating income −$224.3K; diluted EPS −$0.0105 .

Segment breakdown: No segments disclosed; revenue drivers noted as franchise fee recognition and fish brokerage/distribution plus after-sales service .

KPIs and balance sheet indicators:

KPI	Q2 2019	Q1 2020	Q2 2020
Cash and Equivalents ($USD)	N/A	$496,495	$344,781
Advance from Customers ($USD)	N/A	$514,877	$605,985
Deferred Revenue – current ($USD)	N/A	$259,116	$0
A/R Concentration (Top 3, %)	N/A	34.08%, 28.19%, 25.18%	36.36%, 30.07%, 26.86%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 2020	None provided	None provided	Maintained (no formal guidance)
Margins/OpEx/Tax	FY/Q2 2020	None provided	None provided	Maintained (no formal guidance)
Strategic update	Post-Q2	N/A	Termination of PRC VIE; shift ops to Taiwan	New disclosure (structural change)

Note: Company did not issue quantitative guidance; 8-K outlined strategic changes rather than financial targets .

Earnings Call Themes & Trends

No earnings call transcript filed for Q2 2020; themes based on MD&A and 8-K disclosures.

Topic	Previous Mentions (Q4 2019)	Previous Mentions (Q1 2020)	Current Period (Q2 2020)	Trend
COVID-19 operational impact	Not available	Expected negative impact to operating results	Ongoing disruption; remote oversight issues cited	Worsening oversight risk, ongoing demand disruption
Revenue drivers (franchise fee, brokerage)	Not available	Deferred franchise fee recognition; brokerage/distribution initiated	Continued recognition; brokerage/distribution; no direct cost to deferred fee	Sustained driver but decelerating sequentially
Supply chain/Manufacturing footprint	Not available	Not specifically discussed	Shift manufacturing/ops to Taiwan post-VIE termination	Strategic relocation
Internal controls	Not available	Material weaknesses; controls ineffective	Material weaknesses persist; controls ineffective	Persistent deficiencies
Regulatory/Structural (VIE)	Not available	VIE structure background in notes	VIE terminated due to loss of control; plan to amend 8-K with impacts	Structural shift and disclosure amendments pending

Management Commentary

“Revenue for the three months ended June 30, 2020 was $469,078… recognition of the deferred revenue from JC Development Co, Ltd’s franchise fee… fish brokerage & distribution… after-sales service” .
“Gross profit… increase was primarily because there was no direct cost of the deferred revenue from the franchise fee of JC Development Co, Ltd” .
“The issues related to GZ WFH do not impact our recently announced 2nd Generation RAS tank systems. We own technology and research and development in the WFOE…” .
“The spread of COVID-19… expected to negatively impact its operating results” .
Liquidity outlook: “We expect to obtain financing from shareholders or raise additional capital… demo sites in the US, Taiwan, Japan, and Thailand” .

Q&A Highlights

No Q2 2020 earnings call transcript was available; no Q&A themes or clarifications can be derived from filed materials [functions.ListDocuments returned none].

Estimates Context

Wall Street consensus (S&P Global) for Q2 2020 revenue and EPS was unavailable at the time of query; consequently, beat/miss analysis versus estimates cannot be performed. Values retrieved from S&P Global were unavailable due to data access limits.

Key Takeaways for Investors

Q2 profitability was achieved on a modest revenue base due to deferred franchise fee recognition and brokerage/distribution; sustainability into H2 depends on recurring sales rather than one-time deferrals .
Sequential softness and near-flat operating income reflect higher G&A and lower revenue; monitor expense discipline and the cadence of brokerage/distribution orders .
Structural risk elevated: termination of PRC VIE and relocation to Taiwan removes oversight issues but adds transition execution and regulatory complexity; watch for the promised 8‑K amendment with financial impacts .
Customer concentration in receivables remains high; collections and credit risk are critical KPIs given working capital needs .
Internal control weaknesses persist; governance and financial reporting improvements could be a prerequisite for broader investor acceptance and capital access .
With no formal guidance and unavailable consensus estimates, trading may be headline-driven around strategic updates (Taiwan shift, demo site progress) and filings (8‑K amendment) .
Medium-term thesis hinges on commercialization of RAS systems, brokerage scale-up, and resolving structural/governance issues to support growth and financing .

NOCERA, INC. (NCRA)·Q2 2020 Earnings Summary