Cryptologic Releases 2019 Year End Financial Results
CRYPTOLOGIC RELEASES 2019 YEAR END FINANCIAL RESULTS
TORONTO, Ontario, May 13, 2020 -- Cryptologic Inc. (“Cryptologic” or the “Company”) (CSE:CRY) today
announces its financial results for the year ended December 31, 2019. Selected financial information of
the Company for the three months and years ended December 31, 2019 and 2018 is set forth below:
For the Three Months Ended December 31, 2019 and 2018
During the three months ended December 31, 2019, the Company mined 300.74 Bitcoins compared to
918.35 Bitcoins in the prior year period. The decrease in Bitcoins results from (i) the sale of 8,475 mining
machines representing approximat ely 38% of the Company’s total miners, and (ii) increased network
difficulty due to increased network hashrate and a corresponding decrease in coin production per miner.
Average network difficulty for the three months ended December 31, 2019 was 13.03 tril lion as compared
to 6.57 trillion for the three months ended December 31, 2018, an increase of 98%. The average price for
Bitcoin during the three months ended December 31, 2019 was $10,559, an increase of $3,733 or 54.7%
from $6,826 for the three months ended December 31, 2018. Cost of revenue is comprised of site operating
costs and depreciation. The cost of mining a Bitcoin, calculated by dividing site operating costs by the
number of Bitcoin mined, was $10,243 for the three months ended December 31, 201 9, an increase of
$5,557 or 119% from $4,686 for the three months ended December 31, 2018.
For the Years Ended December 31, 2019 and 2018
During the year ended December 31, 2019, the Company earned $26.4 million in revenue from the mining
of Bitcoin and $2.3 million from colocation hosting services as compared to $15.8 million and $2.3 million
respectively in the prior year periods, representing a total increase of 50.8%. During the year ended
December 31, 2019, the Company mined 2,952 Bitcoins compared to 1,978 Bitcoins in the prior year period.
The increase in Bitcoins mined is related to a full twelve months of mining operations at both the 205 and
828 facilities in 2019 as compared to the prior year, offset by increased network difficulty corresponding to
increased network hashrate and a decrease in miner count as 8,475 miners were sold in late Q3 of 2019.
The average price for Bitcoin during the year ended December 31, 2019 was $9,881 compared to $8,587
for the period April 2, 2018 through to December 31, 2018. The cost of mining a Bitcoin for the year ended
December 31, 2019 was $5,466, an increase of $923 or 20% from $4,543 for the year ended December
31, 2018. Average network difficulty for the year ended December 31, 2019 was 9.00 trillion as compar ed
to 5.70 trillion for the year ended December 31, 2018, an increase of 58%.
Three Months Ended December 31, Year Ended December 31,
2019 2018 2019 2018
Net loss and comprehensive
loss from continuing operations $ (9,718,162 ) $ (4,419,635 ) $ (16,962,291 ) $ (8,340,441 )
Net loss and comprehensive loss (13,590,497 ) (18,924,184 ) (11,722,599 ) (74,252,959 )
Total assets 15,581,954 17,973,697 15,581,954 17,973,697
Total liabilities 38,847,679 29,710,012 38,847,679 29,710,012
Basic and diluted net loss and
comprehensive loss per common
share from continuing operations $ (0.73 ) $ (0.84 ) $ (1.33 ) $ (1.59 )
Basic and diluted net loss and
comprehensive loss per common share $ (0.85 ) $ (3.60 ) $ (0.92 ) $ (14.13 )
Cryptologic incurred a net loss and comprehensive loss from continuing operations in 2019 of $16.96 million
compared to a net loss of $8.34 million in the prior year. Net loss and comprehensive loss, including
discontinued operations and tax recovery, was $11.72 million in 2019 compared to $74.25 million in the
prior year.
Assets Held for Sale
During 2019, Cryptologic’s management and board of directors evaluated the cryptocurrency mining
business and decided to divest of its crypto assets and look for a strategic pivot of the business. On August
3, 2019, the Company entered into a non-binding letter of intent with Wayland Group Corp. (“Wayland”), a
vertically integrated cultivator and processor of cannabis, with production facilities in Langton, Ontario
where it operates a cannabis cultivation, extraction, formulation and distribution business. The decision led
to the classification of the crypto- mining related assets and liabili ties as held for sale. See note 8 to the
Company’s consolidated financial statements for the year ended December 31, 2019 for more information.
Write Off of Loan Receivable
In connection with the proposed Wayland transaction, on August 9,2019 the Company provided Wayland
with a $5,000,000 subordinated bridge loan. In connection with this loan, Wayland granted the second-lien
security over the assets to be purchased by Cryptologic, which is subordinate to Wayland’s existing secured
convertible debentures in accordance with their terms. On September 17, 2019, the Company and Wayland
entered into an amended and restated loan agreement under which the Company advanced an additional
$1,000,000 to Wayland. In November 2019, the Company advanced an additional $250, 000 to Wayland.
On December 2, 2019, Wayland was granted an order from the Ontario Superior Court of Justice under
the Companies’ Creditors Arrangement Act. The initial order provides for, among other things, a stay of
proceedings in favour of Wayland and certain of its affiliates (the “Wayland Group”), and the appointment
of PricewaterhouseCoopers Inc. as monitor of the Wayland Group. As at December 31, 2019, after review
of the market conditions in the cannabis industry and the developments with Wayland, management
concluded that it was unlikely that the Company would recover the balance of the loan and decided to
provide for an allowance of $6.55 million, representing the entire balance of the loan including accrued
interest.
Asset Impairment
The Company recognized impairment losses related to the mining equipment of $3.29 million for the three
months ended December 31, 2019, as compared to $14.50 million for the comparative period in the prior
year. As at December 31, 2019, the Company determined that the recoverable amount of mining equipment
and mining infrastructure was less than the previously impaired value. The Company impaired the mining
equipment and mining infrastructure to its recoverable amount (see notes 10 and 21 to the Company’s
consolidated financial statements for the year ended December 31, 2019 for more information).
Subsequent Event
On April 8, 2020, the Company announced that it had closed a transaction to sell all the shares of its wholly-
owned subsidiary 9376- 9974 Quebec Inc. ( “9376”), which holds the rights to a 30 megawatt dedicated
cryptocurrency mining operation located in Lachute, Quebec, to HIVE Blockchain Technologies Ltd.
(“Hive”). As consideration for the shares of 9376, Hive issued 15,000,000 common shares to the Company
at a deemed price of $0.20 per share, which are subject to a four -month lock-up agreement, and paid the
Company $1,956,231 in cash, being the cash portion of the purchase price as adjusted by estimated closing
working capital and a holdback amount.
The financial statements for the year ended December 31, 2019 and the related management’s discussion
and analysis (“MD&A”) are available on Cryptologic’s SEDAR profile at www.sedar.com.
For information or interview please contact:
Jordan Greenberg
Chief Financial Officer
(647) 715-3707
About Cryptologic Inc.
Cryptologic Corp. is currently a cryptocurrency mining company that is focused on divesting its crypto
mining assets and exploring acquisition opportunities in sectors outside of cryptocurrency mining.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this press release, including statements with respect to the Company’s position to
enter other aspects of cryptocurrency min ing, contain forward-looking information which can be identified
by the use of forward looking terminology such as "believes", "expects", "may", "desires", "will", "should",
"projects", "estimates", "contemplates", "anticipates", "intends", or any negative such as "does not believe"
or other variations thereof or comparable terminology. No assurance can be given that potential future
results or circumstances described in the forward-looking statements will be achieved or will occur. By their
nature, these forward-looking statements necessarily involve risks and uncertainties, including the risk that
costs will be higher than anticipated reducing margins, that expense reductions will not be realized, the risk
that the price of power to the Company increases and other risks and uncertainties discussed herein, that
could cause actual results to significantly differ from those contemplated by these forward- looking
statements. Such statements reflect the view of the Company with respect to future events and are based
on information currently available to the Company and on assumptions, which it considers reasonable.
Management cautions readers that the assumptions relative to the future events, several of which are
beyond management's control, could prove to be incorrect, given that they are subject to certain risk and
uncertainties, and that actual results may differ materially from those projected. Other factors which could
cause results or events to differ from current expectations include, among other things, t he impact of
general economic, industry and market conditions. Management disclaims any intention or obligation to
update or revise any forward- looking statements whether as a result of new information, future events or
otherwise, except as required by app licable securities laws. The reader is cautioned not to place undue
reliance on forward-looking information. The Canadian Securities Exchange has not reviewed, approved
or disapproved the content of this news release.