![]() "Professional fees increased to $6,521,016 for the year ended Septemfrom $4,829,038 for the same period ended September 30, 2019. However, we cannot verify this as fact, therefore these constitute “yellow flags” for me and are key risks that investors need to be aware of. Having a low amount of R&D would be worrying for a company whose competitive advantage lies in its software platforms. Unfortunately, research and development is not broken out into its own separate item or disclosed in the notes. The product development expense is also pretty low, but it’s entirely possible that engineering salaries are a part of payroll expenses. I am particularly not a fan of these large professional fee payments for consulting and legal. The increase in expenses for the year was mainly due to increases in professional fees and payroll expenses. In fiscal 2020, the company had an operating loss of -$15.1 million, an improvement of only $1.5 million from 2019 despite the doubling of revenue. Like most growth companies, CleanSpark is operating at a loss. This puts the company at the higher end of a P/S ratio of about 44x. While this revenue growth may seem impressive, note that it is coming from a relatively low base compared to expectations as the company’s market cap is about $440 million. CleanSpark’s revenue grew by 122% to $10.0 million from $4.5 million the prior year. The company missed on revenue projections for Q3 and Q4 which is a bit worrying for a high growth company but showed decent full-year results. The company recently ended its fiscal year (September 2020) and the results were decent but not great. Plaid: Middleware used by Controls and IoT Product Companies to participate in load shifting programs.Canvas: Middleware used by Grid Operators and Aggregators to administrate load shifting programs.mPulse Platform: Patented, proprietary controls platform that enables integration and optimization of multiple energy sources. ![]() mVSO Platform: Energy modeling software for microgrid design and sales.The total microgrid market is expected to be around $40 billion by 2028 with capacity at 20 GW representing an annual growth of 21.4%.Īccording to the 10-K, the company essentially has these software platforms summarized below: However, there are certain developments in recent years that make the microgrid solution more feasible, namely the large decreases of solar panel costs and significant improvements in battery storage. This company has been around for a while yet never made any meaningful revenue or net income. The microgrid architecture has the advantages of possibly being greener, being able to disconnect from the main grid to avoid total power outage, and more efficient. So, the theory is every individual house/building could generate power from renewable sources for not only its own consumption but also contribute power to other end users via a web of multiple microgrids. You can only generate electricity from these sources when the sun is shining or the wind is blowing. This ties to cleaner more renewable energy due to the somewhat unreliable nature of wind and solar. Microgrid just means a small, freestanding grid”. So, what exactly is a microgrid? According to Vox, “ a grid is any combination of power sources, power users, wires to connect them, and some sort of control system to operate it all. Specifically, the company’s software platforms “ make microgrids happen” by providing end-to-end intelligent energy monitoring and controls, microgrid design software, energy market communications, and management solutions. Just a brief background on the company, CleanSpark is a software and control technology solutions provider for the energy industry, specifically targeting microgrids. Imperfect information is just a fact with high-growth small-cap investing. I stumbled upon CleanSpark ( NASDAQ: CLSK) recently, and while I do have some concerns, I believe the explosive growth potential of its microgrid business outweighs the potential risks. I like adding a few speculative stocks to a diversified portfolio to improve returns and I've had a pretty good run recently, so I figured why not continue my research into high-growth small-cap stocks.
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