CLS Holdings USA, Inc (OTCQB: CLSH)(CSE: CLSH) released its 2019 calendar year-end statement for CLS Nevada, not long after the company reported its quarterly earnings on January 14. The company said in a statement that it was “forecasting CLS Nevada 2020 revenue of $17 million and positive EBITDA of $4 million.”
The company’s total revenue for the last three months ending in November was $3 million and for the past six months was $5.9 million. The net loss for the most recent quarter was $1.2 million, which was down from the net loss of $2.6 million for the same time period in 2018. In the recent statement, the company said that it saw a 26.10% increase in total net revenue of $996.673.18 vs. $790,396.21 in Dec. 2018.
“We saw the number of transactions increase at our Oasis Cannabis dispensary from 115,768 in 2018 to 203,127 in 2019, an increase of 75%. We did this while substantially increasing our gross margin, becoming EBITDA positive and experiencing exceptional revenue growth.”
The company’s recent filing wrote, “Although our revenues are expected to grow as we expand our operations, our revenues only recently exceeded our Oasis and City Trees operating costs and we do not yet exceed our Oasis and City Trees operating costs and corporate overhead.”
How Will It Get There?
The company will need to hustle if it wants to hit that $17 million goal. CLS said that it plans to increase sales by 100% at City Trees by eliminating low return on investment SKUs, re-branding and increasing visibility through better marketing channels. That includes expanding the Oasis Cannabis parking lot and vault to allow it to efficiently serve 1250 customers a day. The company also wants to create new revenue streams by offering advertising opportunities to brands and partners.
Andrew Glashow, President and COO of CLS Holdings, stated: “In general, 2019 has been a watershed year for us, and our Nevada operations have seen massive traffic expansion, which has led to impressive results. Internally generated cash flow provides the basis for continued expansion.
“Since coming on board as President and COO, our team has accomplished a lot in a short amount of time. We are thankful to the regulatory authorities for their commitment to a safe, robust cannabis market and their approval of our state-of-the-art North Las Vegas extraction facility, which allows us to produce some of the most unique, safest, high-quality products in the industry.”
The company said in its last filing that “During fiscal 2020, we will likely require additional capital to cover our projected corporate-level cash flow deficits, the implementation of our business plan, including the expansion of our Nevada operation, and the development of other revenue sources, including the closing of the IGH Option Agreement.”
The statement went on to say, “Although we believe we will be successful in raising the capital required to close this acquisition, we have not entered into any definitive agreements with respect to such fundraising and there can be no assurances that we will be able to raise the necessary funds. We may also pursue additional acquisitions in the next twelve months but we have not entered into any definitive agreements with respect to either additional acquisitions or the capital necessary to finance them.”
Over the next year, CLS said it expects to expand its Nevada processing facility to utilize its patented technology. “Phase 2 of our expansion plan, the substantial expansion of our grow facility in Nevada, is on hold as we monitor and evaluate wholesale marijuana prices, supply, and demand. We hold an option to purchase IGH for a purchase price that includes $35 million in cash, which we plan to fund with the proceeds of future equity sales, warrant exercise proceeds and/or loans.