Executive Summary

Q2 FY2021 delivered headline profitability driven by non-cash warrant-related gains: net income was $8.99M with diluted EPS of $0.08; revenues grew 42% sequentially to $3.28M, primarily from Banner Midstream’s commodities segment .
Gross margin compressed to 28% from 52% in Q1 FY2021 due to crude inventory dynamics; Adjusted EBITDA was a loss of $2.22M despite positive EBITDA of $10.54M on non-cash items .
Management highlighted momentum on a potential uplisting to Nasdaq and a strategic focus on expanding oil and gas operations; cash ended at $1.66M and equity improved to $17.79M YoY from a deficit a year ago .
Near-term operational catalyst: funded commitment (~$4.7M) to drill an initial deep horizontal Austin Chalk well, setting up activity into early CY2021; no formal numerical guidance issued .

What Went Well and What Went Wrong

What Went Well

Strong sequential revenue growth (+42% q/q) on commodities (oil & gas services, transportation) after the Banner Midstream acquisition: “We continue to drive strong growth… evidenced by a 42% sequential increase in revenue” – CEO Randy May .
Equity position improved materially YoY to $17.79M vs prior-year deficit of ($1.87M), aided by capital raises and conversions; cash increased to $1.66M from $0.45M YoY .
Operational expansion across leases and assets (Rabb Resources acquisition; lease assignment over 1,600 acres; additional OGML properties), building the commodity asset base .

What Went Wrong

Core profitability remains challenged: Adjusted EBITDA of ($2.22M) in Q2 despite headline net income; operating expenses elevated with SG&A at $4.38M .
Gross margins compressed to 28% from 52% in Q1, reflecting inventory mix effects and commodity cost pressures .
Liquidity tight: working capital deficit of ($6.73M); reliance on external funding and warrant exercises; material weakness in internal controls (segregation of duties) persists .

Financial Results

Metric	Q2 FY2019 (Sep 2019)	Q1 FY2021 (Jun 2020)	Q2 FY2021 (Sep 2020)
Revenue ($USD Millions)	$0.04	$2.31	$3.28
Gross Profit ($USD Millions)	$0.03	$1.22	$0.95
Gross Margin (%)	63%	52%	28%
Net Income ($USD Millions)	($4.39)	($21.18)	$8.99
Diluted EPS ($USD)	($0.07)	($0.23)	$0.08
EBITDA ($USD Millions)	($4.24)	($20.10)	$10.54
Adjusted EBITDA ($USD Millions)	($1.74)	$0.06	($2.22)

Segment revenue breakdown:

Segment Revenue ($USD Millions)	Q2 FY2019	Q1 FY2021	Q2 FY2021
Commodities (Banner Midstream)	$0.00	$2.22	$3.17
Financial Services	$0.03	$0.09	$0.10
Technology (Zest Labs)	$0.02	$0.00	$0.00

KPIs and balance metrics:

KPI	Q2 FY2019	Q1 FY2021	Q2 FY2021
Cash And Equivalents ($USD Millions)	$0.45	$1.79	$1.66
Stockholders’ Equity ($USD Millions)	($1.87)	($2.68)	$17.79
Oil & Gas Properties (Net, $USD Millions)	N/A	$6.00	$11.41
Working Capital Deficit ($USD Millions)	N/A	($21.81)	($6.73)

Notes:

Q2 FY2021 positive net income was driven by non-cash “other income” (e.g., $14.95M gain on exchange of warrants and $1.01M change in fair value of derivative liabilities), offset by higher interest expense and conversion losses .
Adjusted EBITDA backs out volatile non-operating/non-cash items, showing underlying loss in Q2 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Drilling/Completion Funding (Austin Chalk)	Expected Jan 2021	N/A	Company committed to fund ~$4.7M for initial deep horizontal well; escrow by commencement	New operational commitment
Uplisting to Nasdaq	Ongoing (as of Nov 9, 2020)	Application under review	“We continue to pursue an uplist… application is currently active and under review”	Maintained pursuit
Corporate Cash Flow Goal	Near-term	N/A	“Focused on… generating positive cash flow at the company level and achieving a material increase in oil production per day”	Qualitative target (no numeric range)

No formal revenue/EPS, margin, OpEx, tax rate or dividend guidance was issued in Q2 FY2021 filings/press materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2020/Q1 FY2021)	Current Period (Q2 FY2021)	Trend
Oil & gas expansion, lease acquisitions	Banner Midstream acquisition (Mar 27, 2020) and initial asset buys in June 2020; OGML build to $6.00M	Further acquisitions in Aug–Sep (Rabb Resources; 1,600+ acre lease); OGML up to $11.41M	Accelerating build-out
Uplisting efforts	Pursuit noted; capital raises via warrants/options in Q1 FY2021	Application active; management confidence in uplist positioning	Continues
COVID-19 operational impact	Minimal direct P&L impact; remote work/process constraints highlighted	Not material to P&L; continued operational/filing logistics challenges	Stable impact
Liquidity and funding	Working capital deficit ($21.81M) and reliance on warrant exercises/PPP funds	Deficit narrowed to ($6.73M); continued external funding and escrow need for drilling	Improving but tight
Internal controls	Material weakness (segregation of duties) disclosed	Material weakness persists	Unchanged

Management Commentary

“We continue to drive strong growth across our operations, as evidenced by a 42% sequential increase in revenue for our fiscal second quarter of 2021.” – Randy May, CEO .
“We continue to pursue an uplist to the Nasdaq Capital Market, and our application is currently active and under review… focused on strategically investing in the growth of our oil and gas business.” – Randy May, CEO .
Non-GAAP emphasis: Management uses EBITDA and Adjusted EBITDA to evaluate core results and provided reconciliations, cautioning on limitations of non-GAAP measures .

Q&A Highlights

No Q2 FY2021 earnings call transcript was available in the document set; therefore, no Q&A highlights or clarifications can be provided [ListDocuments returned none for transcripts in Nov 2020].

Estimates Context

Wall Street consensus (S&P Global) estimates for Q2 FY2021 EPS and revenue were unavailable via S&P Global due to missing company mapping (tool error: Missing CIQ company mapping for ROI). As a result, we cannot provide a beat/miss analysis versus consensus for this quarter.

Key Takeaways for Investors

Revenue trajectory is improving post-acquisition, with commodities (oil & gas services/transport) driving sequential growth; segment mix now heavily commodities (97%+ of Q2 revenue) .
Headline net income and EBITDA were driven by non-cash warrant/derivative revaluation gains; Adjusted EBITDA negative indicates core operations remain subscale and cost-laden .
Gross margin compression and elevated SG&A underscore execution needs to translate asset build into sustainable margins and cash generation .
Liquidity remains constrained despite YoY equity improvement; near-term capital commitments (Austin Chalk drilling ~$4.7M) add funding urgency and operational focus .
Uplisting pursuit could catalyze investor attention and access to capital, but hinges on continued operational progress and control remediation .
Asset base doubled in OGML properties from Q1 to Q2 ($6.00M → $11.41M), positioning for future production but adding execution/commodity price risk .
Without available Street estimates, focus on internal milestones: drilling execution, margin stabilization, Adjusted EBITDA improvement, and liquidity management over the next 1–2 quarters .

RiskOn International, Inc. (ROI)·Q2 2021 Earnings Summary