March 19, 2019 — CleanSpark has made progress on leading-edge microgrid projects, products, and technology, recently:
It’s scheduled to complete its $900,000 contract with Bethel-Webcor JV by the end of March, completing a ‘turn-key advanced microgrid system’ at the U.S. Marine Corps Base Camp Pendleton. The contract has been in direct support of the United States Department of Navy’s Communication Information System (CIS) operations complex. CleanSpark has performed as a sub-contractor to the JV for the design and construction of the microgrid spanning multiple facilities with inter-connectivity at the U.S. Marine Corps Base Camp Pendleton project P-1132. This will be the first large scale project the will utilize mPulse 2.0.
Has continued to make progress on its executed agreement for a large scale commercial Microgrid with an S&P 500 Member Real Estate Investment Trust (REIT). The Agreement executed on October 2, 2018, is for $18.3 million and it provides for the Company to be compensated in stages, and each stage requires that our client provide written authorization to proceed. The agreement further requires that an additional Design Build Contract be executed for the construction portion of the project. As of the date of this release, $123,061 has been billed under the contract for consultation, engineering and permitting services, the balance of the microgrid installation contract will be completed in later stages. These additional stages also require our client to provide written authorization to proceed with the overall project. Due to separate construction projects currently planned and ongoing at the client’s facility the Company and the client have determined scope and timing changes are required. As such, the construction timeline is currently on hold while we are working with our client to address these changes. We expect these changes to potentially delay the date in which authorization to proceed with construction is obtained. We do not currently have a revised date for when we expect to receive authorization to proceed to the next stages. The expected changes to the system will also affect the total cost of the system. The Company is also investigating the option of owning the assets and executing an energy savings agreement with the Client, but these discussions are early stage. We will provide updates to our shareholders on the project status as more information is available.
Completed case-studies for the cannabis industry. We believe that the opportunity in the Cannabis market is unprecedented due to the high energy usage of these facilities in both the US and Canada. In many cases, our solution is capable of virtually eliminating the demand charges that can account for almost 50% of the utility charges for such a facility. The Cannabis market continues to grow at a rapid rate, and as a result of the significant and growing energy demands of the industry also continue to increase. We are currently focusing our marketing efforts on the largest users in the Cannabis market, the agricultural (grow) facilities. In addition to cost savings, the loss of power can be extremely detrimental to an agricultural (grow) facility’s production, and an extended outage can even cause a full loss, especially when the facility is growing a medically-certified crop. Energy resiliency is critical for these operations. We believe our solution will find a strong foothold in the market as many solutions currently available to the market provide either resiliency or energy savings but very few provide both. We believe that CleanSpark is strongly positioned to capitalize on this growing opportunity in 2019 and hope to be able to announce our first contract soon.
Announced the closing of definitive agreement to acquire the intellectual property and distribution chain of Pioneer Critical Power Inc (“PCPI”). Through this acquisition, the Company became the sole owner of strategic intellectual property held by PCPI. CleanSpark is utilizing its new intellectual property to expand into the switchgear equipment sales industry. The Company further acquired executed contracts which were unfulfilled as of the date of the acquisition, we expect these contracts will result in approximately $3.6 million in gross sales during the first two quarters of 2019. We have since executed additional contracts, and continue to increase our backlog, we will provide a separate update detailing these specific developments.
Concurrent with the acquisition, CleanSpark entered into a Contract Manufacturing Agreement, whereby Pioneer Power Solutions Inc. will exclusively manufacture parallel switchgear, automatic transfer switches and related control and circuit protective equipment for CleanSpark for a period of no less than eighteen months. This agreement will provide our customers with the certainty of manufacturing quality while also lowering the capital risks of CleanSpark by eliminating the high overhead and inventory exposure associated with manufacturing activities.
We plan to integrate our switchgear solutions with our software solutions. We expect that when our switchgear is coupled to our proprietary adaptive controls’ platform, it will allow for a simplified business development model, ease of deployment and opportunity for rapid growth. Traditional ‘hardware only’ solutions will now have the capability of being locally controlled, AI honed and driven by cloud-based insights to improve energy-security, cyber-security and economic optimization.
Executed our first contracts for expansion outside of the United States, We were awarded a contract to serve as a technical consultant and vendor for our proprietary control platform with an Engineering, Procurement and Construction partner in Costa Rica. We also executed a Memorandum of Understanding to integrate our software solution with an Iron-flow-battery manufacturer in Brazil. Lastly, we were tasked by ViaSyn, a California-based energy services company to perform paid analysis and modeling on a large, industrial energy customer in Mexico. The results of this work provided the basis of utilizing our services to more than 60,000 energy-intensive customers in the country.
Deployed improvements to CleanSpark’s mPulse 2.0 operating system and mVSO 2.0 (Microgrid Value Stream Optimizer). We are deploying mPulse 2.0’s latest resiliency features on our project at the U.S. Marine Corps Base Camp Pendleton. We are extremely excited to see all of our efforts result in improvements being deployed on a department of defense site. We are also pleased to announce that we expect our improved economic optimization engine for mPulse 2.0 to be ready for customer release in July of 2019. The improved economic engine will actively predict customer usage patterns to create additional savings from prior versions amongst other benefits. We are also pleased to announce the planned release of our improved user interface for mVSO 2.0 in May 2019. The new and improved user interface will make the system easier to use and will include features for modeling complex single meter microgrid systems. We plan to follow the May 2019 release with multi-meter functionality in mid-to-late 2019. We firmly believe that our software is the cornerstone of our business and that these features will not only further increase only our capabilities but also our access to new market segments.