Fortress Technologies Inc. Announces First Quarter 2020 and Year End 2019 Financial Results

VANCOUVER, British Columbia, June 01, 2020 (GLOBE NEWSWIRE) -- Fortress Technologies Inc. (“Fortress” or the “Company”) (TSXV: FORT), a well-capitalized company currently evaluating emerging opportunities in technology sectors, reports its results of operations for the first quarter and three month period ended March 31, 2020 (“Q1 2020”) and for the fourth quarter and full year ended December 31, 2019 (“YE 2019”). For the full condensed consolidated interim financial statements and management discussion & analysis for the Q1 2020 and YE 2019, please visit the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at 

Three-Months Ended March 31, 2020

“We are pleased to report a net income of $640,263 for the first quarter of 2020, which results in an earnings per share of $0.01 for this period,” said Aydin Kilic, CEO of Fortress.

“We have continued to streamline our operations by reducing overhead costs where possible, and as a result, Fortress is in strong financial position, with $10,675,000 of fiat and digital currency, with a Cash Value per Share of $0.15 as of June 1, 2020,” said Aydin Kilic, CEO. “By running a lean operation, the Company has been able to maintain its cash position through treasury management and the Grant County Sublease with WeHash.”

Financial Position

The Company decided to increase its inventory of Bitcoin, with the halving event approaching and the potential for increase in value.  Fortress holds an inventory of 60.2 Bitcoin, comprised of 20.6 Bitcoin retained from the Grant County Sublease Amendment with WeHash (the “Sublease”) and 39.6 Bitcoin which were acquired in the first week of May 2020. The 60.2 Bitcoin are worth approximately $845,000 based on the Bitcoin price of US$10,200. In addition to this, as of June 1, the Company held $9,827,000 in cash and GICs, for a total of approximately $10,675,000 held in fiat and digital currencies.

First Quarter 2020 Financial Highlights
(All amounts are in Canadian dollars unless otherwise specified)

  • Fortress had a net income of $640,263 during the Q1 2020.
  • The Company realized earnings per share of $0.01 for Q1 2020.
  • The Company reported total revenue of $316,811 from the Sublease with WeHash during Q1 2020, along with a gain of $758,694 from foreign exchange due to the increase in the US dollars to Canadian dollars from $1.2988 to $1.4187.
  • The Company had gross mining margin of $73,365 during Q1 2020. 
  • As operator of the Grant County flagship facility under the Sublease, WeHash mined 28.47 Bitcoin on behalf of Fortress during Q1 2020.

  • WeHash sold 23.82 Bitcoin and wired US$205,324 to Fortress, and retained 4.65 Bitcoin in their Trezor, not to be sold unless authorized by Fortress.
  • Production cost of US$6,610 per Bitcoin mined (based on quantity of Bitcoin produced divided by incurred “Monthly Cash Operating Expenses”, which include lease, electrical cost, internet, insurance, staff and costs directly relating to operating the facility). Fortress enjoys one of the lowest per Bitcoin costs of production among digital currency mining companies listed on the TSX Venture Exchange (“TSX-V”).
  • The average Bitcoin price for the three months ended Q1 2020 is US$8,274. The average Bitcoin mined per day during Q1 2020 was 0.31.
  • WeHash mined, stored and sold the coins for the Company. The total cost of mining, storing, and selling Bitcoin to the Company was $6,696 per Bitcoin including the Consulting Fee paid to WeHash for custody and sale of the coins.
  • Fortress had gross mining margin of $73,365 during the quarter.  The Company defines gross mining margin (a non-IFRS measure) as the revenue generated from mining activities less operating costs.  Operating costs include Monthly Cash Operating Expenses, as well as incidental or accrued expenses.  Depreciation, being a non-cash cost, is not deducted to arrive at the gross mining margin. Gross mining margin is a non-standard measure of mining efficiency and should not be considered as a substitute for other IFRS operating and profitability measures of performance. The table below reconciles gross mining margin for the respective periods to gross margin in the income statement.
Calculation of gross mining marginQ1 2020 ($)Q4 2019 ($)Q3 2019 ($)Q2 2019 ($)Q1 2019 ($)Q4 2018 ($)Q3 2018 ($)Q2 2018 ($)
Revenue316,811 364,028 616,341 372,743 262,980 439,028 617,034 986,253 
Less: Operating costs243,446 236,384 241,841 130,431 199,441 258,652 232,760 245,381 
Gross mining margin73,365 127,644 374,500 242,312 63,539 180,376 384,274 740,872 
Gross mining margin (%)23% 35% 61% 65% 24% 41% 62% 75% 
Less: Depreciation85,331 92,756 92,784 93,990 57,390 1,743,741 284,893 281,520 
Less: B&O taxes9,162 10,582 19,078 16,278 - - - - 
Less: WeHash Consulting fees3,237 6,539 29,794 21,717 - - - - 
Net mining margin(24,365) 17,767 232,844 110,327 6,149 (1,563,365) 99,381 459,352 
Sublease revenue (April/May flat fee)- - - 67,093 - - - - 
Total Sublease margin (%)- - - 40% - - - - 
Gross margin per Income Statement(34,389) 17,595 266,769 138,618 6,384 (1,563,365) 99,381 459,352 
Gross margin (%)(11%) 5% 43% 31% (0%) (356%) 16% 47% 

Year End 2019 Financial Highlights

As a result of delays associated with the COVID-19 pandemic, the Company has relied on the British Columbia Securities Commission’s blanket order BCI 51-515 (the “Blanket Order”) to postpone the filing of its annual financial statements and management’s discussion and analysis (collectively, the “Annual Filings”) for the year ended December 31, 2019. In accordance with the Blanket Order, the Company hereby presents a summary of financial results for the three and twelve month ended December 31, 2019.

(All amounts are in Canadian dollars unless otherwise specified)

  • Fortress had a net loss (not including one-time payments, and non-cash costs) of $7,877 during the three months ended December 31, 2019. 
  • Fortress had a net loss of $446,754 during the three months ended December 31, 2019. The largest expenses were non-cash costs for share based compensation ($8,770) and depreciation ($93,286) and foreign exchange loss ($159,541).
  • The Company was well capitalized at the end of the year with cash balances of $10,382,500, after a payment of $120,009 was made towards prepaid expenses during the quarter. Total assets were $11,230,173, primarily comprised of cash balances.
  • Fortress had annual revenue of $1,683,185 in 2019 and generated a total of 164.2 Bitcoin through the Sublease.
  • Fortress had a gross mining margin of $807,995 in 2019.
  • Revenue from the mining of digital currencies for the three months ended December 31, 2019 was $364,028 from 34.5 Bitcoin (Q3 2019: $616,341 from 36.0 Bitcoin) (Q2 2019: $439,836 from 40.0 Bitcoin) (Q1 2019: $262,980 from 53.7 Bitcoin) (Q4 2018: $439,028 from 64.8 Bitcoin and 16.4 Bitcoin Cash) (Q3 2018: $617,034 from 64.5 Bitcoin and 52.0 Bitcoin Cash) (Q2 2018: $986,253 from 93.8 Bitcoin and 31.1 Bitcoin Cash).             


On March 6, 2019 the Company announced 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. Please refer to the Company’s April 30, 2019 press release for further disclosure surrounding the de-activation and subsequent lease of the Grant County flagship facility.

The Sublease of the Grant County flagship facility continues to constitute the going concern of the Company as a TSX-V Tier 1 Technology issuer. While the Company stands behind its position to not further expand in the crypto-currency mining business, the Company is continuing to seek technology projects outside of crypto-currency mining that we believe could provide an accretive path forward for shareholders.  Fortress is proud to have completed the audit of its 2019 financial statements, and notes that management’s 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 with its strong cash position, the Company is well positioned to find an accretive path forward for the business.

“The Company has signed NDA’s to review numerous technology projects (unrelated to crypto-currency mining) throughout 2019; however upon detailed review of these opportunities, and consideration of sector-specific and financing risks, the Company has not signed any LOIs. We continue to seek a path that would provide an accretive path forward for shareholders. We have continued to be a low-cost operator, and we are glad to see this is reflected in the growth of our treasury” said Aydin Kilic, CEO.

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.

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.

Non-IFRS Measures:

This news release contains non-IFRS financial measures; the Company believes that these measures provide investors with useful supplemental information about the financial performance of its business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating the Company's performance, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. These non-IFRS financial
measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed as alternatives to measures of financial performance determined in accordance with IFRS. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on the Company's operating results.

Forward Looking Statements:

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. The information in this release about future plans and objectives of the Company, are forward-looking information. Other forward-looking information includes but is not limited to information concerning: the intentions, plans and future actions of the Company, as well as the Company’s ability to successfully mine digital currency, revenue increasing as currently anticipated, volatility in digital currency prices and the resulting significant negative impact on the Company’s operations, the construction and operation of expanded blockchain infrastructure, and the regulatory environment of cryptocurrency in the United States and other jurisdictions where the Company may operate.

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.

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:  the status and impact of new electrical power rates and the status of deliberations by the Grant County Public Utility District; risks relating to the global economic climate; dilution; the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the industry; currency exchange risks; the need for the Company to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; the effect of government regulation and compliance on the Company and the industry; network security risks; the ability of the Company to maintain properly working systems; reliance on key personnel; global economic and financial market deterioration impeding access to capital or increasing the cost of capital; and, volatile securities markets impacting security pricing unrelated to operating performance.  In addition, particular factors which could impact future results of the business of the Company include but are not limited to: the impact of new electrical power rates which could impair profitability and operating performance; deliberations by the Grant County Public Utility District which could limit the ability of the Company to carry on business on a profitable basis or at all; the construction and operation of blockchain infrastructure may not occur as currently planned, or at all; expansion may not materialize as currently anticipated, or at all; the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; the volatility of digital currency prices; the anticipated growth and sustainability of hydroelectricity for the purposes of cryptocurrency mining in the Grant Count of the State of Washington, the ability to complete current and future financings, any regulations or laws that will prevent the Company from operating its business; historical prices of digital currencies and the ability to mine digital currencies that will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company’s normal course of business.  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. 


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