SALT LAKE CITY: CleanSpark, Inc. (Nasdaq: CLSK)("the "Company"), an advanced software and controls technology solutions company, focused on solving modern energy challenges, today reported results for its fiscal year ended September 30, 2020.Financial Highlights As the Company forecasted a year ago, CleanSpark more than doubled our annual revenues, with fiscal 2020 revenue exceeding $10.0 million, an increase of 122% from $4.5 million for the prior year. These results represent the third consecutive year in which revenues more than doubled. Gross Margin increased 21.1% to $2.12 million compared 14.9% and $0.67 million to the prior year. Loss from operations improved by $1,470,729 compared to the prior year. Net loss improved by $2,770,780 compared to the prior year. Non-GAAP net loss for the fiscal year ended September 30, 2020 totaled $466,000 or $(0.03) per basic and diluted share, compared to income of $106,000 or $0.01 per basic and diluted share in the same year-ago period. Operational successes resulted in raising $44 million in funding over the last 12 months. These funding transactions are expected to provide long-term financial stability for the foreseeable future as the company moves towards profitability. 2020 Operational Highlights CleanSpark successfully uplisted to the Nasdaq Capital Market in January 2020 The Company improved corporate governance and oversight by appointing two new independent board members and the creation of a fully independent audit and compensation committee. CleanSpark further developed its reliable, talented and goal-oriented management team, including the promotion of Zach Bradford as its Chief Executive Officer, the appointments of Lori Love, as Chief Financial Officer, Amer Tadayon as Chief Revenue Officer, and Marty Weishaar as VP of Marketing. The Company's co-founder and former CEO, Matthew Schultz assumed new duties as the Executive Chairman. Our team has now grown to 62 full-time staff members as of December 16, 2020. During our fiscal year, we completed successful acquisitions of GridFabric and p2klabs. Both acquired companies are cashflow-positive and provide us with entirely new verticals for growth. We implemented new sales and marketing initiatives resulting in significant increases in overall revenues, contracted backlog, and proposal pipeline. CleanSpark, Inc. and ReJoule were jointly awarded a $2.9 Million grant from the California Energy Commission with support from the Ford Motor Company for second-life EV battery deployments. The first joint deployment is expected to occur in the next quarter. The Company announced a microgrid development agreement with International Land Alliance. According to the terms of the contract, CleanSpark is expected to provide microgrid power solutions to more than 400 unique residential resort properties.
Financial Summary
Revenues
The Company recognized more than $10.0 million in revenues during the year ended September 30, 2020, as compared with $4.5 million in revenues for the year ended September 30, 2019. For the year ended September 30, 2020 and 2019 our revenue was derived from two business segments: Energy Segment – Consisting of our CleanSpark, LLC., CleanSpark Critical Power Systems, Inc. and GridFabric, LLC lines of business, this segment provides services, equipment and software to the energy industry. The income from our Energy Segment is the result of contracts to sell switchgear equipment, perform engineering and design services, and provide software for distributed energy and microgrid systems. Digital Agency Segment – The Company's wholly owned subsidiary p2klabs, Inc. provides design, software development and other technology-based consulting services. Our Energy business segment contributed $9.0 million or 90% of consolidated revenue in fiscal 2020, compared to $4.5 million or 100% of consolidated revenue in the same year-ago period. The Company's digital agency segment generated services revenue from our p2klabs subsidiary, acquired in January 2020. This segment contributed $1.0 million or 10% of consolidated revenue in 2020. Gross Profit Our gross profit for the year ended September 30, 2020 was $2.12 million or 21.1% of revenue, as compared with gross profits of $0.6 million or 14.9% of revenue for the year ended September 30, 2019. The increase in gross margin was largely driven by increased high-margin revenues derived from our software services and related revenue. Operating Expenses Our 2020 operating expenses were approximately the same as our operating expenses for the same period in 2019. Operating expenses as a percentage of revenue improved to 122% in 2020 versus 381% in the prior year. Other (expense) The Company's total other expenses in the year ending September 30, 2020 totaled approximately $(8.2) million as compared to $(9.5) million in 2019. The Company experienced significant non-cash expenses related to interest and capital expenses associated with prior financing agreements. We do not anticipate experiencing the same type of expenses in 2021. For the year ending September 30, 2020, net loss attributable to common stockholders on a GAAP basis totaled $23.3 million or $(2.44) per share in 2020 compared to a loss of $26.1 million or $(6.25) per share in 2019. Non-GAAP figures Adjusted EBITDA, a non-GAAP term, resulted in negative $4.91 million in 2020, as compared to negative $4.35 million in 2019. Non-GAAP net loss attributable to common stockholders totaled $4.93 million or a loss of $(0.52) per share in 2020, as compared to $4.89 million or a loss of $(1.17) per share in 2019. Working capital Cash and cash equivalents totaled $3.1 million as of September 30, 2020, as compared to $7.8 million on September 30, 2019. Just after our fiscal year end, on October 9, 2020, the Company closed an underwritten offering and received gross proceeds of $40 million, before deducting underwriting expenses and fees. The company believes its current cash position and other available funds provide it with sufficient liquidity to meet its cash requirements for current operations and to continue to fund its growth. The Company's form 10-K and accompanying audited financial statements are available at www.sec.gov and the Company website at https://ir.cleanspark.com/sec-filings/ Management-Commentary "This was an excellent year for CLSK, despite challenging economic conditions resulting from the COVID-19 pandemic. Fortunately, the impact of the COVID pandemic on CleanSpark has been relatively minimal to date. From an operations perspective, we successfully transitioned our workforce to a remote model for the majority of the year. Fortunately, prior to the start of 'stay at home' orders, we already had more than 50% of our workforce working remotely full-time or part-time. Additionally, all remote staff members were equipped with the required equipment to make the transition from office to home rather seamless. As a result, we experienced minimal internal disruption to our business, while productivity continues to remain high. Additionally, the Company successfully adapted our software delivery model to support remote commissioning. These strategic improvements will benefit us well beyond the end of the pandemic by reducing global deployment expenses. In the short term, the adaptation of these parameters significantly decreased the impact of the virus on deployments. Our focus has been on maintaining consistency in the timely delivery of our products; increasing our sales efforts, enhancing the features and functionality of our software products as well as the completion of accretive acquisitions. The acquired companies provide immediate profitable and scalable revenues; and lastly, strengthening our balance sheet by raising more than $40 million in working capital. Our reported backlog at the end of our prior fiscal year of $6.4 million, consisting of contracted revenue not yet delivered. Following the successful execution of those contracts, the current contracted backlog remains strong at approximately $6.5 million as of the date of this filing. Our current proposal pipeline is approximately $25.0 million, an increase from roughly $10.0 million we had as recently as the close of our fiscal year on September 30, 2020. This increase is directly attributable to our newly expanded sales team. We expect our proposal closing rate to accelerate as COVID-19 vaccines begin to be made available to the public in the coming quarters. We believe our increase in backlog demonstrates the pent-up demand for resilient, distributed energy solutions as the pandemic nears a close," stated Zach Bradford, CleanSpark's CEO. Outlook The Company expects the somewhat cyclical nature of our business to continue. As an example, approximately 10% of our fiscal 2020 revenue was realized in the quarter ending December 31, 2020. We anticipate this trend will continue in fiscal 2021 and we forecast that our second and third fiscal quarters will again be our strongest. We expect to generate $20 million in revenue related to our current business segments and we expect the recent acquisition of ATL Data Center to contribute a minimum of $8 million in additional Bitcoin-based (BTC-USD) revenues for 2021. We are working diligently to expand the data center capacity allowing us to further increase these initial estimates, but the company's guidance will remain somewhat conservative until the expansion has been completed and we have sufficient data to forecast a firm outlook. Finally, we have not measured the potential additional value expected to be derived from the demonstration of our energy technologies within the data center for additional microgrid deployment and sales opportunities. |
