VANCOUVER, British Columbia, April 30, 2019 (GLOBE NEWSWIRE) -- Fortress Technologies Inc. (“Fortress” or the “Company”) (TSXV: FORT), reports its results of operations for the fourth quarter and full year ended December 31, 2018. On March 6, 2019, the Company announced an exit from the crypto-currency business and, accordingly, the financial results for the fourth quarter and full year ended December 31, 2018, represent the last full period in which the Company has been engaged in crypto-currency mining operations. For the full consolidated financial statements and management discussion & analysis for the year ended December 31, 2018, please visit the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.
FY 2018 Highlights
(All amounts are in Canadian dollars unless otherwise specified)
- Revenue from the mining of digital currencies for the three months ended December 31, 2018 was $439,028 from 64.8 Bitcoin and 16.4 Bitcoin Cash (Q3: $617,034 from 64.5 Bitcoin and 52.0 Bitcoin Cash) (Q2: $986,253 from 93.8 Bitcoin and 31.1 Bitcoin Cash);
- Gross mining margin of $180,376 during the quarter ($384,274 in the quarter ended September 20, 2018);
- As at December 31, 2018, the Company had $10,564,795 in cash and $10,408 in digital currencies (September 30, 2018: $10,610,967 in cash and $25,487 in digital currencies);
- The share value of the Company's cash and digital currency holdings, after deducting liabilities, as at December 31, 2018 is $0.15 per share based on 71,177,984 outstanding Fortress common shares (the “Net Liquid Asset Value”). This Net Liquid Asset Value does not include the asset value of the Grant County flagship facility or S9 ASIC Miners owned by the Company;
- Net loss of $9,430,571 during the quarter. The largest expenses were non-cash costs for depreciation $1,743,741 and the impairment of property, plant & equipment $7,286,940. The Company was well capitalized at the end of the quarter with cash balances of $10,564,795.; and
- As at December 31, 2018, total assets were $11,729,115, primarily comprised of assets deployed at the Grant County flagship facility and cash balances.
Cash Position
The Company maintains a strong cash position as of April 29, 2019 with over $10,300,000 in cash and GICs. Additionally, the Company has sub-leased the Grant County flagship facility for a monthly payment of US$25,000. The sub-lease commenced March 27th, 2019 and will continue in to Q3 2019, when it will be subject to renewal. This sub-lease allows the Company to receive recurring income to support corporate overhead while the Company owns the Grant County flagship facility.
This cash position does not include additional value from the potential sale of the mining operation at the Grant County flagship facility. A sale of the Grant County flagship facility is being reviewed pursuant to the Company’s previous announcement to exit the crypto-currency mining business. While the financial statements use an impairment value for the Grant County flagship facility, the Company believes the value of the Grant County flagship facility as a going concern operation has a significantly greater value. The Grant County flagship facility generates approximately 20 PH/s of Bitcoin mining capacity, with a power cost of $0.034/kWh, and thus generates gross mining margin.
Fortress believes that this crypto-currency mining operation, having successfully completed an audit, would have unique value to other publicly traded crypto-currency mining companies.
Outlook
After a careful strategic review and consultation between management and the Board in early March 2019, the Company determined that the profitability of the business measured against the depreciation of assets and risk of further downside, along with increased regulatory costs and oversight, would not justify expanding the crypto-currency mining business. While the Fortress Flagship Facility operation still generated a profit for the Company at the time, the time horizon for return on initial capital invested in the crypto-currency mining business is indeterminate due to economic factors of the industry. These factors include the volatility in the price of Bitcoin, increased mining difficulty representative of a massive global deployment of Bitcoin mining hardware, in tandem with a large depreciation of mining hardware value as manufacturers have reduced their selling prices to levels almost 80-90% below January 2018 prices.
Accordingly, on March 6th, 2019, the Company announced it’s exit from the crypto-currency mining, and the Grant County flagship facility was deactivated. On March 27th, 2019, the facility was reactivated and has been leased for operation by a third party.
Due to changes to policies in Canadian public company audit practice governed by the Canadian Public Accountability Board, the Company believes that crypto-currency mining may be best suited as an operation for companies that are not publicly traded on Canadian stock exchanges. Fortress is proud to have completed the audit of its 2018 financial statements, and notes that the Company’s internal controls and engineering processes contributed to this process.
The Company's Board of Directors and management have an accomplished track record in business development and building shareholder value, and thus the Company is well positioned to find an accretive path forward for the business.
About Fortress Technologies
Fortress Technologies Inc. (TSX-V: FORT) is a well-capitalized company currently evaluating emerging opportunities in technology sectors. Fortress is focused on developing projects where access to growth capital is highly valued.
For further information, please contact:
Aydin Kilic
Chief Executive Officer
604 477 9997
a@fortressblockchain.io
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in
the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this press release.
Forward Looking Statements:
Certain information set out in this news release contains certain “forward-looking information” within the meaning of applicable Canadian securities laws that are based on expectations, estimates and projections as at the date of this news release. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information. In particular, this news release contains forward-looking statements in respect of among other things, information concerning the intentions, plans, and future action of the Company described herein. Forward-looking statements are based upon the opinion and expectations of management of the Company as at the effective date of such statements and, in certain cases, information provided or disseminated by third parties. This forward-looking information is based on reasonable assumptions and estimates of management of the Company at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others: risks relating to the ability to realize value from the crypto-mining operations by divestiture as a going concern or asset sale; the Company has stopped commercial operations and investment in the common shares of the Company is highly speculative given the unknown status of the Company’s business; there is no assurance that the Company will find a profitable undertaking or that it can successfully conclude a purchase of such an undertaking at all or on terms which are commercially acceptable; the directors and officers of the Company will only devote a portion of their time to the business and affairs of the Company and some of them are or will be engaged in other projects or businesses such that conflicts of interest may arise from time to time; and there can be no assurance that an active and liquid market for the Company’s common shares will continue or develop and an investor may find it difficult to resell its common shares. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.