Executive Summary

Q3 2023 revenue was $0.191M, down sharply year over year from $0.493M, with gross profit of $0.098M and a small operating loss of $0.014M . Net income of $1.051M was driven by a non-cash derivative gain tied to debt/warrant fair value changes, not by operating performance .
Product mix skewed to non-machine sales ($0.153M) vs machine sales ($0.038M), reflecting weak equipment demand and reliance on consumables .
Liquidity remained tight with cash of $0.146M and deferred revenue (near-term backlog) of $0.853M; management warned it needs additional financing over the next 12 months, raising going concern risk .
Post-quarter, the company amended debt agreements and disclosed it was no longer in default—an important de-risking step that could catalyze sentiment if execution improves .

What Went Well and What Went Wrong

What Went Well

Debt amendments eliminated defaults after quarter-end (“no longer in default”), reducing immediate credit risk .
Operating discipline: opex fell to $0.112M from $0.398M YoY, compressing the operating loss to $0.014M versus $0.336M YoY .
Management highlighted the driver of reported net income: “Derivative gain…due to the fair value change of the debt and warrants driven by the stock price change” in Q3; transparency on non-cash impacts is helpful for investors .

What Went Wrong

Demand pressure: total Q3 sales fell 61% YoY to $0.191M; machine sales plunged to $0.038M (from $0.225M), suggesting weak capex from customers in cannabis markets .
Customer concentration risk increased: four customers accounted for 44%, 16%, 11%, and 10% of revenue in Q3, magnifying volatility risk .
Going concern and liquidity strain: cash was $0.146M; management stated it anticipates needing additional financing to continue as a going entity over the next 12 months, and litigation over defective cartridges remains unresolved .

Financial Results

P&L Comparison (three months; oldest → newest)

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD)	$492,891	$628,425	$402,610	$190,747
Cost of Sales ($USD)	$431,454	$405,312	$247,589	$92,610
Gross Profit ($USD)	$61,437	$223,113	$155,021	$98,137
Operating Expenses ($USD)	$397,563	$243,623	$142,350	$111,839
Operating Income ($USD)	$(336,126)	$(20,510)	$12,671	$(13,702)
Net Income ($USD)	$(318,423)	$55,429	$(1,645,346)	$1,050,657
Basic EPS ($USD)	$(0.00)	$0.00	$(0.02)	$0.01
Diluted EPS ($USD)	$(0.00)	$(0.00)	$(0.02)	$(0.00)

Narrative highlights

Net income swung positive on derivative gains ($1.078M), while core operations remained loss-making; interest expense was $0.040M and other income $0.026M .

Segment/Disaggregation (sales; oldest → newest)

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Machine Sales ($USD)	$225,335	$343,000	$105,000	$38,000
Non-Machine Sales ($USD)	$267,556	$285,425	$297,610	$152,747
Total Sales ($USD)	$492,891	$628,425	$402,610	$190,747

KPIs and Balance-Sheet Signals (period-end; oldest → newest)

Metric	Q1 2023	Q2 2023	Q3 2023
Cash and Cash Equivalents ($USD)	$194,849	$98,114	$145,534
Deferred Revenue ($USD)	$912,358	$740,591	$853,384
Derivative Liability ($USD)	$368,612	$1,900,759	$822,719
Accounts Payable & Accrued ($USD)	$579,810	$669,882	$698,221

Guidance Changes

No formal numerical guidance was provided for revenue, margins, OpEx, or other line items in Q3 2023 filings or 8-K; management instead disclosed financing needs and debt amendments .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q4 onward	None	None	Maintained (no guidance)
Margins	FY/Q4 onward	None	None	Maintained (no guidance)
OpEx	FY/Q4 onward	None	None	Maintained (no guidance)
Liquidity/Financing	Next 12 months	N/A	“We anticipate… additional financing to continue as an ongoing entity”	New disclosure emphasis
Debt Status	Post-quarter (Oct 31, 2023)	In default on certain loans	“No longer in default” following amendments	Raised/Improved

Earnings Call Themes & Trends

No Q3 2023 earnings call transcript or investor call materials were found; themes below reflect MD&A disclosures across Q1–Q3.

Topic	Previous Mentions (Q1 2023)	Previous Mentions (Q2 2023)	Current Period (Q3 2023)	Trend
Liquidity/Going Concern	Going concern risk; cash $0.195M; financing needed	Going concern risk; cash $0.098M	Going concern risk; cash $0.146M; financing needed	Persistent constraint
Customer Concentration	29%, 18%, 18% of revenue from top 3 customers	38%, 26%, 12% top 3 customers	44%, 16%, 11%, 10% top 4 customers	Concentration rising
Legal/Regulatory	Supplier lawsuit (defective cartridges)	Supplier lawsuit (defective cartridges)	Supplier lawsuit (defective cartridges)	Unresolved risk
Product Performance (Machine vs Non-Machine)	Machine $0.343M vs non-machine $0.285M	Machine $0.105M vs non-machine $0.298M	Machine $0.038M vs non-machine $0.153M	Machines weakening
Cost Structure/OpEx	Opex $0.244M	Opex $0.142M	Opex $0.112M	Improving discipline
Debt/Derivatives	Convertible notes default; derivative fair value $0.369M	Default continues; derivative $1.901M	Post-Q debt amendments; derivative $0.823M	Default resolved post-Q

Management Commentary

Demand and revenue: “Total revenue during the three months ended September 30, 2023 was $190,747 (comprised of machine sales of $38,000 and non-machine sales of $152,747), compared to… $492,891” .
Profit drivers: “Derivative gain, a non-cash item, was $1,078,040 during the three months ended September 30, 2023, due to the fair value change of the debt and warrants driven by the stock price change…” .
Liquidity outlook: “We anticipate that we will need additional financing to continue as an ongoing entity over the next 12 months” .
Backlog visibility: “$853,384 in revenue is expected to be recognized… related to performance obligations… expected to recognize all… in the next twelve months” .
Post-quarter debt status: “On October 31, 2023, the Company entered into amendment agreements… Following this event, the Company is no longer in default on the loans” .

Q&A Highlights

No Q3 2023 earnings call transcript was available; no Q&A themes or clarifications could be assessed [ListDocuments result: no earnings-call-transcript found].

Estimates Context

S&P Global/Capital IQ consensus estimates were unavailable for JKSM; we attempted retrieval but there is no CIQ mapping for this ticker (no coverage). As a result, we cannot provide comparisons to Street estimates for Q3 2023 or FY 2023 [SpgiEstimatesError from GetEstimates].

Key Takeaways for Investors

Reported net income was a non-operational artifact of derivative accounting; core operations were loss-making with materially lower sales—focus on underlying demand trajectory rather than GAAP net income optics .
Machine sales weakness is acute; sustaining revenue depends on consumables/accessories and converting deferred revenue into shipments over the next year .
Liquidity is tight and financing is necessary; monitor near-term capital raises, debt renegotiations, and cash conversion from backlog to mitigate going concern risk .
Post-quarter debt amendments and cured defaults reduce immediate credit stress; if coupled with revenue stabilization, this could be a sentiment catalyst .
Customer concentration and ongoing litigation increase execution volatility; diversification and legal resolution would reduce tail risks .
Operating expense controls are improving; maintaining discipline while re-accelerating sales is key to restoring sustainable profitability .
With no formal guidance and no Street coverage, trading likely hinges on near-term order flows and financing disclosures—watch for backlog conversion and any equipment demand recovery in upcoming quarters .

Jacksam Corp (JKSM)·Q3 2023 Earnings Summary