Sun Pacific Holding Corp. (SNPW)·Q3 2016 Earnings Summary

Executive Summary

• Q3 2016 calendar revenue reported at $192,540, up 106% sequentially from $93,102 in Q2; management expects Q4 revenue to surpass Q3, but the company remains unprofitable .
• There is a disclosure discrepancy: the press release’s “Q2 revenue $93,102” aligns to EXO product sales, whereas total company revenue in Q2 was $142,498 per the 10‑Q; no Q3 10‑Q was filed to reconcile totals .
• Liquidity and solvency risks persist: working capital deficit was $1,218,915 at Q2 end, with derivative liabilities rising to $3,279,605; auditors and management flagged going‑concern risks and material weaknesses in internal controls .
• Equity dilution accelerated: 4,689,169 shares issued since Oct 1 in debt conversions; total shares outstanding reached 88,273,675 as of Nov 14, 2016, increasing from 81,020,404 as of Q2 .
• Branding and distribution actions: EXO’s consumer website relaunch, new wholesale partners, and Aramark ODU campus license targeted growth; macro headwinds led to multiple Middle East franchise closures, pressuring royalties .

What Went Well and What Went Wrong

What Went Well

• EXO product momentum: sequential calendar revenue growth of 106% to $192,540, driven by EXO’s activewear expansion and site relaunch; CEO: “We are gearing up to surpass these figures for Q4 of 2016” .
• Wholesale and brand endorsements: added online retailers (e.g., Rogue Fitness, WOD Superstore) and signed/engaged athletes (e.g., Noah Ohlsen, Brooke Ence; Keanu Neal MOU) to widen reach .
• Channel expansion: Pizza Fusion license with Aramark to open on Old Dominion University campus (slated Oct 1, 2016), supporting longer‑term royalty opportunities .

What Went Wrong

• Profitability: “Although we have a 106% increase in revenue we are not yet profitable,” underscoring margin and scale challenges despite growth .
• Macro/regional pressure: Saudi and UAE store closures due to oil‑driven demand weakness reduced royalty income; Saudi units dropped to 3 from 7, UAE to 1 from 2 .
• Governance/solvency: material weaknesses in internal controls; derivative liabilities increased materially; working capital deficit widened, and management highlighted going‑concern issues .

Financial Results

Headline Metrics (Calendar Quarters)

Note: Q3 2016 total company revenue, EPS, and margins were not reported in filings; the 8‑K press release aggregates EXO sales under “revenue,” which differs from total revenue presented in 10‑Qs .

Segment Breakdown (Calendar Quarters)

KPIs and Balance Metrics

Prior-Year Context (YoY where available)

Guidance Changes

No guidance provided for margins, OpEx, OI&E, tax rate, dividends, or segment specifics in Q3 disclosures .

Earnings Call Themes & Trends

No Q3 earnings call transcript was filed for further thematic detail [ListDocuments results: 0 earnings-call-transcript for period].

Management Commentary

• CEO Vaughan Dugan: “This is only the beginning. We are gearing up to surpass these figures for Q4 of 2016, especially as we enter the Holiday season… EXO is in its infancy and fully expect it to continue to grow at a rapid pace.”
• President Randy Romano: “Although we have a 106% increase in revenue we are not yet profitable. Revenue is a good thing and eventually our profit will adjust to reflect greater prosperity for the company due to the growth.”
• Strategic positioning: Focus on expanding EXO’s product line and channels; licensing with Aramark to open at Old Dominion University .

Q&A Highlights

• No Q3 earnings call transcript or Q&A was filed; guidance commentary comes solely from the press release narrative .

Estimates Context

• Wall Street consensus (S&P Global/Capital IQ) for Q3 2016 appears unavailable for this OTC microcap; attempted retrieval returned errors and no estimates could be confirmed. In the absence of consensus, comparisons to estimates cannot be made [GetEstimates error].

Key Takeaways for Investors

• Revenue growth is real at the EXO product level (106% q/q to $192,540), but total company revenue and profitability for Q3 were not disclosed; the press release conflates “revenue” with EXO sales, while Q2 total revenue was higher than EXO sales alone, indicating a need for caution in interpreting headline growth .
• Profit remains negative per management, and liquidity risks are material (working capital deficit $1.22M at Q2 end; derivative liabilities $3.28M); expect continued dilution risk given recent share issuances for debt conversions (shares up to 88.27M) .
• Macro headwinds in Middle East franchise markets reduced royalties, muting the contribution from Pizza Fusion; near‑term royalty recovery is uncertain amid oil‑linked demand weakness .
• Execution levers: EXO’s website relaunch, wholesale expansion, and athlete endorsements can support sales cadence into Q4 (seasonal boost), but lack of detailed margin guidance limits confidence around profit inflection .
• Catalysts: Q4 holiday season sales and Aramark ODU opening could lift product and royalty lines; filings showing improved liquidity or reduced derivative exposure would be meaningful sentiment drivers .
• Data caution: Absence of a Q3 10‑Q and no call transcript reduces transparency; monitor subsequent filings for reconciliation of totals and updated guidance .
• Tactical stance: Any short‑term trading should account for headline PR‑driven momentum versus fundamental risks (going‑concern, control weaknesses, dilution), favoring nimble positioning around confirmed updates rather than extrapolating PR figures into broad valuation conclusions .