CLS Holdings USA, Inc. (OTCQB:CLSH)(CSE:CLSH) reported that its fiscal year-end 2020 total revenues were $11,917,629 an increase over fiscal year 2019’s total revenue of $8,459,048. The company also reported a net loss $30 million versus last year’s net loss of $27 million. The loss was attributed to a large non-cash impairment charge on goodwill as a result of the decline in the company’s stock price.
“Because our stock price provides a basis for our enterprise value, this decline meant that we were required to write-down the value of this intangible asset by $25,185,003, a one-time write-down that has not occurred in prior fiscal years. This devaluation is not reflective of any tangible loss of assets, and our working capital remains sound.”
CEO Jeff Binder said, “In spite of the competitive landscape in Nevada we were able to grow revenue and increase our gross profit margins. Our “People Power Profits” mantra is paying dividends and I am proud that all our employees have been provided a safe working environment during these challenging times. We are a local company who will continue to provide our community with a robust menu of safe cannabis products at fair price points.”
CLS did point out that excluding the charge, its net loss would have been $5,472,970, an improvement of $22,146,087, or 80.18% compared to the fiscal year 2019 net loss.
The company said that it has seen a growth in sales at the Oasis dispensary despite a brief downturn in sales at the beginning of the COVID-19 pandemic. The company shifted to expanded delivery and curbside sales which contributed to the ability to achieve net revenue growth in an otherwise uncertain environment. The statement read, “Our continued improvements in inventory purchasing and implementation of new processes also led to a 16% expansion in gross margin to 50% in the fiscal year 2020 from 43% in the prior fiscal year. Improvements to our manufacturing division have also been successfully implemented, marked by the completion of an expansive innovation and extraction lab at City Trees in April 2020.”
Expenses dropped from $26 million in 2019 to $8.7 million in 2020. The company said it cut professional fees and trimmed parent company costs. Gross margins expanded 16% to 50% as compared to 43% in fiscal year 2019. The total number of customers served increased 70.48% from 134,009 in fiscal year 2019 to 228,458.