Fortress Technologies Inc. Announces Second Quarter 2020 Financial Results

VANCOUVER, British Columbia, Aug. 31, 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 second quarter and six months period ended June 30, 2020 (“Q2 2020”). For the full condensed consolidated interim financial statements and management discussion & analysis for the Q2 2020, please visit the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at 

Six-Months Ended June 30, 2020

“We are pleased to report revenue of $572,046 and net income of $95,188 for the first six months of 2020,” said Aydin Kilic, CEO of Fortress.

“Fortress is in a strong financial position, with $10,487,777 of fiat, digital currency, and accrued interest with a cash value per Share of $0.15 as of June 30, 2020,” said Aydin Kilic, CEO. “By running a lean operation, the Company has been able to maintain its cash position through treasury management and revenue from the Grant County Sublease with WeHash.”

Financial Position

Fortress holds an inventory of 74.05 Bitcoin, comprised of 30.4 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 74.05 Bitcoin are worth approximately $1,098,186 based on the Bitcoin price of US$11,320 and USD CAD exchange rate of 1.31. In addition to this, as of August 27, the Company held $9,389,591 in cash and GICs, for a total of approximately $10,488,000 held in fiat and digital currencies, with pending payments to purchase the Company’s shares under the NCIB.

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

  • Fortress had a net loss of $545,078 during the Q2 2020, mainly attributed to foreign exchange.
  • The Company reported total revenue of $255,235 from the Sublease with WeHash during Q2 2020, along with a loss of $313,860 from foreign exchange due to the decrease in the US dollars to Canadian dollars value from $1.4187 to $1.3628, in addition to accrued payments being (including audit fees) of approximately $160,000.
  • The Company had gross mining margin of $7,298 during Q2 2020, which the Company notes is still positive despite challenging economics in the Bitcoin halving event, which significantly reduced revenues from the Grant County facility Sublease. 
  • As operator of the Grant County flagship facility under the Sublease, WeHash mined 22.06 Bitcoin on behalf of Fortress during Q2 2020.

  • Production cost of US$8,251 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 Q2 2020 is US$8,630. The average Bitcoin mined per day during Q2 2020 was 0.24.
  • Fortress had gross mining margin of $7,298 during the quarter.  The Company defines gross mining margin (a non-IFRS measure) as the revenue generated from mining activities less operating costs.  Operating costs include Monthly Cash Operating Expenses, as well as incidental or accrued expenses.  Depreciation, being a non-cash cost, is not deducted to arrive at the gross mining margin. Gross mining margin is a non-standard measure of mining efficiency and should not be considered as a substitute for other IFRS operating and profitability measures of performance. The table below reconciles gross mining margin for the respective periods to gross margin in the income statement.
Calculation of gross mining marginQ2 2020 ($)Q1 2020 ($)Q4 2019 ($)Q3 2019 ($)Q2 2019 ($)Q1 2019 ($)Q4 2018 ($)Q3 2018 ($)
Revenue255,235 316,811 364,028 616,341 372,743 262,980 439,028 617,034 
Less: Operating costs247,937 243,446 236,384 241,841 130,431 199,441 258,652 232,760 
Gross mining margin7,298 73,365 127,644 374,500 242,312 63,539 180,376 384,274 
Gross mining margin (%)3% 23% 35% 61% 65% 24% 41% 62% 
Less: Depreciation87,994 85,331 92,756 92,784 93,990 57,390 1,743,741 284,893 
Less: B&O taxes4,192 9,162 10,582 19,078 16,278 - - - 
Less: WeHash Consulting fees- 3,237 6,539 29,794 21,717 - - - 
Net mining margin(84,888) (24,365) 17,767 232,844 110,327 6,149 (1,563,365) 99,381 
Sublease revenue (April/May flat fee)- - - - 67,093 - - - 
Total Sublease margin (%)- - - - 40% - - - 
Gross margin per Income Statement(84,888) (34,390) 17,595 266,769 138,618 6,384 (1,563,365) 99,381 
Gross margin (%)(33%) (11%) 5% 43% 31% (0%) (356%) 16% 


“The Company continues to review numerous technology projects (unrelated to crypto-currency mining) that would provide an accretive path forward for shareholders,” said Aydin Kilic, CEO. The Company commenced a NCIB on July 27, 2020, as it believes the current market price does not reflect the underlying value of the Company. Thus far the company has purchased 1,006,000 shares. Further details are available on SEDI.

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; an inability to predict and counteract the effects of COVID-19 on the business of the Company, including but not limited to the effects of COVID-19 on the price of digital currencies, capital market conditions, restriction on labour and international travel and supply chains; 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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