CleanSpark Inc (OTCMKTS: CLSKD) is having a strong start to the trading session this morning, up nearly 2% after providing a corporate update. Here’s what’s going on:
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CLSKD Stock Gains On Corporate Update
In a press release issued early this morning, CleanSpark provided an update with regard to the comapny’s operations. In the note, a letter addressed to shareholders, the company said that it is building upon its strong foundation and believes that it is well positioned to continue to drive shareholder value.
A big part of this value drive has to do with an application filed with the NASDAQ in order to pursue listing on the exchange. The application was filed in late May. By mid-June, the company received initial clarification inquiries from the exchange with regard to the application.
At the moment, CLSKD is working to respond to these inquiries and is optimistic that it will receive approval for an uplist in the near future.
The comapny also said that it achieved a record-breaking quarter. In fact, for the quarter ended June 30, the company expects to report sales of more than $1.2 million, up substantially from $723,899 reported in the first three months of the year and from $262,907 reported in the last three months of last year, showing compounding growth in revenue.
Sales over the nine months ended June 30 are expected to come in at more than $2.1 million,representing a year over year growth rate of 450%!.
CLSKD also pointed to its $6.1 million back long that it believes will lead to yet another record breaking revenue run in the current quarter. The company also said that due to strong sales in software and software license agreements, it expects significant margin expansion.
CleanSpark went on to inform investors that on July 1, 2019, it launched a new product offering of the CleanSpark mVSO membership for energy devlopers. The product offering pairs Software as a Service and its engineering and analytics service offerings in a single package.
Moreover, the copany said that membership revenues are created through recurring monthly subscriptions. CLSKD explained that the future holds long-term recurring revenues derived from these activities as well as the software license agreement for its mPulse operating platform.
The company also said that it secured $20 million in financing that will support its various microgrid initiatives for commercial customers. Of course, the funding is key as it will accelerate the development and deployment of the company’s Distributed Energy Resource Solutions to commercial customers.
CLSKD went on to say that this financing sets a game-changing industry modle for bringing customized energy solutions to a rapidly growing number of commercial customers in motion. The model offer will help to increase the company’s revenues substantially while providing customers with low upfront costs and energy savings certainty.
Entering The Cannabis Space
Interestingly, CleanSpark seems to see incredible value in the cannabis sector, a sector in which it is starting to get its feet wet. As part of the update, the company announced partner referral agreements with two strategic cannabis partners in Canada and Colorado.
These partners are working to educate cannabis producers with regard to methods of saving energy to increase their bottom line using solutions provided by CLSKD. It is expected that the company will execute additional partnership referral agreements with a nationwide provider of Cannabis solutions.
It’s worth mentioning that since these partners are paid on commission, these types of agreements offer a low-cost solution for business development within the industry without exposure to regulatory risk.
With the high energy usage of cannabis growers in the United States and Canada, working within this realm offers a significant opportunity for CLSKD and its investors.
In a statement, Jacob Policzer, director of science and strategy at The Cannabis Conservancy, had the following to offer:
In almost every established market that’s been around for more than a couple of years, right now we recommend getting production costs down to $300/pound or below to stay competitive. That’s a steep curve from where it was a year or two ago. Getting costs down will be the biggest factor moving the cannabis industry towards energy efficiency and sustainable growing practices.
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The Bottom Line
The bottom line here is a simple one. CLSKD is executing in all areas. The company is seeing rapid growth as it continues to innovate. This growth is largely led by the cost savings that the company provides through its innovative technologies. Moreover, with an entrance in the cannabis space, the company now gives investors an ability to get their feet wet in the space while avoiding regulatory and other risks associated with doing so. All in all, CLSKD is a stock worth watching.
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