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Jacksam Corporation Reports Return to Adjusted EBITDA Breakeven in the Second Quarter 2022

Tuesday, August 16, 2022 8:30 AM
Topic:
Earnings

Recurring Cartridge Sales Increased 329% to $1.1 Million in the First Half 2022

NEWPORT BEACH, CA / ACCESSWIRE / August 16, 2022 / Jacksam Corporation dba Convectium (OTCQB:JKSM) ("Jacksam" or "Convectium" or the "Company"), a workflow automation Company focused on developing system solutions for the cannabis and CBD industry, today announced financial and operational results for the three and six months ended June 30, 2022.

Key Financial Highlights for Three Months Ended June 30, 2022 (Year-over-Year as Compared with the Three Months Ended June 30, 2021)

  • Revenue decreased 12% to $1.5 million; due to shipping delays from China
  • Cartridge revenue increased 132% to $0.3 million
  • Gross profit decreased 16% to $0.4 million
  • Operating expenses as a percentage of revenue declined to 34%, from 53%, reflecting continued focus on optimization
  • Operating loss decreased by 80% to $0.1 million
  • Adjusted EBITDA on a pro-forma basis was breakeven, if excluding one-time non-cash items
  • Net loss was $0.0 million, compared to $0.3 million net income
  • Cash balance at $0.4 million

Key Financial Highlights for Six Months Ended June 30, 2022 (Year-over-Year as Compared with the Six Months Ended June 30, 2021)

  • Revenue decreased 5% to $3.2 million; due to shipping delays from China
  • Cartridge revenue increased 329% to $1.1 million
  • Gross profit decreased 17% to $0.8 million
  • Operating expenses as a percentage of revenue declined to 28%, from 40%, reflecting continued focus on optimization
  • Operating loss decreased 80% to $0.1 million
  • Net loss was $0.0 million, compared to $0.3 million net income

Management Commentary

Mark Adams, Jacksam's Chief Executive Officer, commented, "We are pleased with our second quarter and first half 2022 results, given the headwinds in the cannabis industry and the challenges many of the producers are experiencing. Our sales pipeline remains strong and we are confident in our products and believe it's just a matter of when, not if, the industry returns to growth."

Adams, continued, "Our system sales declined primarily due to shipping delays from China and some customers pushing out, but not cancelling, their orders. Our recurring cartridge sales continue to ramp, as that revenue contributor grew 329% year-to-date to $1.1 million. On the cost side of our business, we continued to keep expenses low and operate efficiently, resulting in a further decline of operating expenses as a percentage of revenue to 34% and 28% for the second quarter and first of 2022, respectively. We look forward to returning to growth over the remainder of 2022 and into 2023, with an eye on profitability as we have optimized our operations for efficiency."

Financial Results for Three Months Ended June 30, 2022

  • Revenue for the three months ended June 30, 2022 decreased by $0.2 million, or 12%, to $1.5 million, compared to $1.7 million for the three months ended June 30, 2021. For the three months ended June 30, 2022, the breakdown of sales comprised of $1.2 million of system sales and $0.3 million of cartridge sales, compared to $1.5 million of system sales and $0.1 million of cartridge sales for the three months ended June 30, 2021.

Revenue for the three months ended June 30, 2022 was negatively impacted by the lockdown of major cities in China due to Covid-19, which caused shipping issues of systems from China to the U.S. This adversely impacted our ability to fulfill orders of our customers during the quarter. However, lower machine sales were offset by higher cartridge sales driven by our strong execution of strategic partnerships that drive recurring cartridge revenue.

  • Gross profit for the three months ended June 30, 2022 decreased by $0.1 million, or 16%, to $0.4 million, compared to $0.5 million for the three months ended June 30, 2021. Gross margin decreased to 29% for the three months ended June 30, 2022, as compared to 30% during the three months ended June 30, 2021.
  • Operating expenses for the three months ended June 30, 2022 decreased by $0.4 million, or 43%, to $0.5 million, compared to $0.9 million for the three months ended June 30, 2021. Operating expenses as a percentage of revenue decreased to 34% from 53% for the three months ended June 30, 2022, reflecting the Company's continued focus on operation optimization and efficiency. Management believes this ratio will decrease going forward as revenues continue to grow at a higher rate than operating expenses.
  • Operating loss for the three months ended June 30, 2022 decreased by $0.3 million, or 80%, to $0.1 million, compared to $0.4 million for the three months ended June 30, 2021.
  • Net loss for the three months ended June 30, 2022 was $0.0 million, compared to net income of $0.3 million for the three months ended June 30, 2021. Of note, net income for the three months ended June 30, 2021 included non-cash items totaling $0.7 million, made up of interest expense of $0.2 million, a derivative gain of $0.5 million and a gain on a settlement of a note payable of $0.3 million. The resulting EPS loss for the three months ended June 30, 2022, was ($0.00), as compared to an EPS profit of $0.00 for the three months ended June 30, 2022.
  • As of June 30, 2022, Jacksam had $0.4 million in cash, compared to $0.3 million on December 31, 2021.

Financial Results for Six Months Ended June 30, 2022

  • Revenue for the six months ended June 30, 2022 decreased by $0.2 million, or 5%, to $3.2 million, compared to $3.4 million for the six months ended June 30, 2021. For the six months ended June 30, 2022, the breakdown of sales comprised of $2.2 million of system sales and $1.1 million of cartridge sales, compared to $3.2 million of system sales and $0.2 million of cartridge sales for the six months ended June 30, 2021.
  • Gross profit for the six months ended June 30, 2022 decreased by $0.2 million, or 17%, to $0.8 million, compared to $1.1 million for the six months ended June 30, 2021. Gross margin decreased to 26% for the six months ended June 30, 2022, as compared to 30% during the six months ended June 30, 2021.
  • Operating expenses for the six months ended June 30, 2022 decreased by $0.5 million, or 34%, to $0.9 million, compared to $1.4 million for the six months ended June 30, 2021. Operating expenses as a percentage of revenue decreased to 28% from 40% for the six months ended June 30, 2022, reflecting the Company's continued focus on operation optimization and efficiency. Management believes this ratio will decrease going forward as revenues continue to grow at a higher rate than operating expenses.
  • Operating loss for the six months ended June 30, 2022 decreased by $0.1 million, or 80%, to $0.1 million, compared to $0.4 million for the six months ended June 30, 2021.
  • Net loss for the six months ended June 30, 2022 was $0.0 million, compared to net income of $0.3 million for the six months ended June 30, 2021. Of note, net income for the six months ended June 30, 2021 included non-cash items totaling $0.7 million, made up of interest expense of $0.5 million, a derivative gain of $1.1 million and a gain on a settlement of a note payable of $0.2 million. The resulting EPS loss for the six months ended June 30, 2022, was ($0.00), as compared to an EPS profit of $0.00 for the six months ended June 30, 2022.

About Jacksam Corporation dba Convectium

Jacksam Corporation dba Convectium (OTCQB: JKSM) designs and markets automated vape, POD and cartridge filling/capping systems for the cannabis and CBD industry. We are also a distributor of other CBD and cannabis automation solutions including the "PreRoll-ER" automated pre roll machine. Our automated equipment is designed and built in the U.S. and carries full UL certification in the U.S. Using Jacksam/Convectium's automated equipment, our customers increase output by up to 60 times over hand filling. Jacksam/Convectium is focused on helping our customers automate their workflow and quickly get custom branded products onto dispensary shelves. Over 250 companies, including many dominant brands and multi state operators (MSO's) in this industry, rely on Jacksam/Convectium for automation of their production and back office operations.

For additional information, please visit: https://www.convectium.com.

Safe Harbor Statement

This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential," or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, the Company's ability to retain the listing of its common stock on the OTCQB Market; the impact of the COVID-19 pandemic on our results of operations and our business. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission ("SEC"), including the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's website at www.sec.gov.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws.

Investors Contact:
[email protected]

SOURCE: Jacksam Corp.

Topic:
Earnings
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