VANCOUVER, British Columbia, May 30, 2019 (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, 2019 (“Q1 2019”). For the full condensed consolidated interim financial statements and management discussion & analysis for the three month period ended March 31, 2019, please visit the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.
First Quarter Financial Highlights
(All amounts are in Canadian dollars unless otherwise specified)
- Revenues of $262,980 for the three months ended March 31, 2019. During Q1 2019, Fortress mined 53.7 Bitcoin over 64 days from January 1, 2019 to March 5, 2019 (on March 5, 2019, the Company temporarily deactivated its Flagship Facility and then entered into a sub-lease at the Flagship Facility on March 27, 2019). The average Bitcoin mined per day (“Average Mining Yield”) during Q1 2019 was 0.84 Bitcoin equivalent, representing a 17% increase over the Q4 2018 Average Mining Yield of 0.72 Bitcoin equivalent (with 64.8 Bitcoin and 16.4 Bitcoin Cash produced in Q4 2018 over a total of 92 days)1.
- The 17% yield increase is a result of the technical proficiency of the Fortress management deriving greater hashing power of up to 20.0 PH/s in the 2MW facility from implementing ASIC Boost technology, allowing the Company to operate over 1500 S9 miners in the 2MW facility, along with the benefit of a decrease in Bitcoin mining Difficulty;
- During Q1 2019, the Company maintained its competitive cost of mining at US$2,796 per Bitcoin mined (based on quantity of Bitcoin produced divided by Cash Operating Costs), which is one of the lowest per Bitcoin costs of production among digital currency mining companies listed on the TSX Venture Exchange (“TSX-V”). Cash operating costs for the Flagship Facility are comprised of electricity costs, mine staff, and general Flagship Facility operating costs (lease, insurance, internet and other maintenance costs) but excludes depreciation (“Cash Operating Cost”). .
- The Company notes that it lead all TSX-V listed digital currency mining companies for lowest cost of Bitcoin production (based on quantity of Bitcoin produced divided by Cash Operating Costs) during the financial year ending December 31, 2018 (“FY2018”). During FY2018, the Company’s per Bitcoin cost for mining was US$2,271 per Bitcoin. From March 7, 2018 to December 31, 2018, the Company mined a total of 257.4 Bitcoin equivalent (assuming a 10 Bitcoin Cash to 1 Bitcoin estimated conversion).
- The Company was renamed to Fortress Technologies Inc to better reflect its diversified outlook for strategies that provide accretive growth to shareholders.
- On March 5, 2019, the Company's operating partner and digital currency custodian and exchange, Goldmoney Inc. (TSX: XAU), exited the digital currency space. With Goldmoney Inc. no longer offering services as a trusted digital currency exchange, and due to the uncertainty of the regulatory landscape with the Canadian Public Accountability Board (“CPAB”) in early March 2019, the Company decided to pursue a business model that would not involve custody or trading of Bitcoin or other digital currencies.
- On March 27, 2019, the Company and WeHash Technology LLP (“WeHash”) signed an agreement to sublease the Flagship Facility for US$25,000 per thirty-day period (the “Sublease Agreement”). On May 17, 2019, the Company was pleased to have renegotiated the sub-lease of its Flagship Facility, allowing the Company to participate in the upside of rising Bitcoin prices (the “Sublease Amendment”). Under the Sublease Amendment, the Company will now be paid the revenue from all digital currency mined at the Flagship Facility (currently only Bitcoin is being mined). The Company also replaced the receipt of a flat-fee of US$25,000 monthly rent (the “Rent”) with a 10% fee of monthly net profit, up to a maximum of US$10,000, payable monthly to sub-lessee, WeHash (the “Consulting Fee”). As part of the Consulting Fee, WeHash will be responsible for the custody and sale of mined digital currency and for transferring the proceeds of the sale of digital currency to the Company. For more information regarding the Sublease Amendment, please refer to the Company’s May 28, 2019 press release.
- Since May 17, 2019, the effective date of the Sublease Amendment, WeHash has mined over 10 Bitcoin. More importantly, WeHash has sold 10 Bitcoin to date at an average of US$ 8,687 through their Coinsquare account, for total gross proceeds of US$86,870 which has been remitted to Fortress.
- The Sublease Amendment will allow the Company to capitalize on the increase in Bitcoin prices as Management continues to focus on developing projects where access to growth capital is highly valued.
- As at March 31, 2019, the Company had $10,427,038 in cash and $nil in digital currencies (December 31, 2018: $10,564,795 in cash and $10,408 in digital currencies).
- The share value of the Company's cash and digital currency holdings, after deducting liabilities, as at March 31, 2019 was $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 Flagship Facility or S9 ASIC Miners owned by the Company.
- Corporate overhead (recurring costs relating to the staffing, operation and maintenance of the Company as a TSX-V listed company in good standing) were approximately $30,000 per month in Q1 2019 on average, while free cash flow from the mining operation was $30,000 per month on average.
Cash Position
The Company maintains a strong cash position as of May 30, 2019 with $10,460,000 in cash and GICs. Additionally, the Company now enjoys at least 90% of the profit from the Bitcoin mining activity which provides an estimated monthly net income of US$115,000 per month (US$195,000 revenue less US$70,000 Monthly Cash Operating Costs and the US$10,000 Consulting Fee) on a run-rate basis using current Bitcoin prices and 0.75 BTC mined per day at current difficulty.
Fortress believes that its digital currency mining operation, having successfully completed an audit, has unique value amongst other publicly traded digital currency mining companies which were not able to successfully complete an audit under the new CPAB regulations.
Grant of Stock Options
The Company also announces that it has granted (the “Option Grant”) to certain officers of the Company an aggregate of 100,000 incentive stock options to purchase common shares (a “Stock Option”) under the Company’s stock option plan (the “Plan”). Under the Option Grant, all Stock Options are exercisable at a price of C$0.18. The Stock Options will expire three years from the date of grant, will vest immediately and be subject to the terms and conditions of the Plan.
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.
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, the status and impact of new electrical power rates and the status of deliberations by the Grant County Public Utility District, 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.
1 The Company calculates Average Mining Yield by using a 10 Bitcoin Cash to one Bitcoin estimated conversion.