Expects to File Annual Financials by June 30, 2019;
Testing New Generation Servers at Flagship 20MW US Datacenter;
Provides Update on Corporate Matters Including Audit Status
TORONTO, May 2, 2019 /CNW/ - HyperBlock Inc. ("HyperBlock" or the "Company") (CSE: HYPR) has been granted a Management Cease Trading Order by the Ontario Securities Commission and intends to file its audited annual financial statements, management's discussion and analysis and related officer certifications for the financial year ended December 31, 2018 (collectively, the "Annual Filings") no later than June 30, 2019.
As previously disclosed, HyperBlock submitted an application to the Ontario Securities Commission, as principal regulator for the Company, under National Policy 12-203 - Management Cease Trade Orders ("NP 12-203") requesting that a management cease trade order be imposed in respect of its inability to file its Annual Filings prior to the April 30, 2019 filing deadline under National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and National Instrument 52-109 – Certification of Disclosure in Issuers Annual and Interim Filings. The issuance of a management cease trade order generally does not affect the ability of persons who have not been directors, officers or insiders of the Company to trade in their securities. The management cease trade order will be in effect until the Annual Filings are filed, provided that HyperBlock complies with the terms of the order in the interim.
Composition of the Audit Committee
The Company confirms that Sean Walsh and Roozbeh Ebbadi have been appointed to the Company's audit committee to sit alongside the Honourable Ronald Spoehel. Mr. Spoehel is an independent director, and while both Mr. Walsh and Mr. Ebbadi are Company executives, their appointments to the audit committee were to fill the vacancies caused by earlier reported director resignations, in compliance with National Instrument 51-110 – Audit Committees.
HyperBlock Continues to Operate at its US Datacenter; Testing New Bitmain S17 Servers
Normal operations continue at the Company's 20MW US datacenter, where it currently runs more than 10,000 servers at an average electricity price below US 4 cents per kWh. Current power contracts are expected to be active into Q3 2022. Operations in the existing 20MW datacenter are unaffected by recently imposed Missoula County interim zoning regulations, which are only applicable to new operations.
HyperBlock is currently testing Bitmain Antminer S17 servers. If the tests are successful, the Company expects to begin replacing its older generation servers using a combination of working capital and funds raised in new debt financing, which the company recently began seeking. The datacenter operations team believes the new Bitmain S17 servers will deliver over 20 TH/s of computational power per kilowatt of electrical consumption compared to just under 10 TH/s of computational power per kilowatt for Bitmain Antminer S9 servers. With the existing available evidence, the Company believes that refreshing an existing datacenter with new servers has the potential to double that datacenter's revenue at little to no increased operating expense.
The Company is also moving forward with the previously announced US $1 million sale of non-core datacenter assets at one of its Canadian facilities, which is expected to close on or before June 30, 2019. The Company has already received US $800,000 in payments, and expects to receive an additional US $199,000 payment within the next 10 days.
HyperBlock Provides Bi-Weekly Market Update
HyperBlock recently appointed Manning Elliott LLP as its new auditor and the audit of the Company's Annual Filings is underway.
The Company confirms that since its press release on April 18, 2019 announcing a delay of the filing of its Annuals Filings (the "Filings Notice"): (i) there is no material change to the information set out in the Filings Notice that has not been generally disclosed; (ii) there has been no failure by the Company in fulfilling its stated intentions with respect to satisfying the provisions of the alternative information guidelines set out in NP 12-203; (iii) there has not been any other specified default by the Company under NP 12-203; and (iv) there is no other material information concerning the affairs of the Company that has not been generally disclosed.
The Company will continue to comply with the provisions of the alternative information guidelines under NP 12-203 by issuing bi-weekly default status reports in the form of news releases until it has met the filing requirements set out above.
Legal Matters Involving HyperBlock
The Company also wishes to provide information on two legal matters.
The first relates to the offering of subscription receipts of the Company on March 14, 2018 (the "Offering"), the proceeds of which were held in escrow pending the satisfaction of certain release conditions, which proceeds were released from escrow shortly after the Company's common shares were listed on the Canadian Securities Exchange on July 10, 2018. In connection therewith, a subscriber (the "Subscriber") under the Offering has alleged that the escrow release conditions were not satisfied and has brought an action against the Company claiming, among other things, that the release of the proceeds of the Offering constituted a breach of the terms of its subscription agreement with the Company. The Company has thoroughly reviewed the details of this claim with its legal counsel and has concluded that the claim is without merit. A case conference was held on May 1, 2019. As a result of the case conference, the parties are to discuss whether the Subscriber's claim should proceed by way of application on a paper record or by way of an action. No timeline has been established for such discussions.
The second relates to the formation of the Company, which was result of an amalgamation involving Cryptoglobal Corp. ("Cryptoglobal") on July 10, 2018. In connection therewith, the founders of Cryptoglobal, Rob Segal and James Millership, are seeking an inspection to review certain financial terms of the Amalgamation which were approved as part of a plan of arrangement dated July 10, 2018 (the "Review"). Mr. Segal and Mr. Millership have sought to recover from the Company any expenses arising in connection with the Review. This matter was argued before the Ontario Superior Court of Justice on April 23, 2019, with the decision being reserved and unknown as of the date of this press release.
The Company confirms, as of the date of this news release, that there is no insolvency proceeding against it and that it believes there is no other material information relating to its affairs that has not been generally disclosed.
About HyperBlock Inc.
HyperBlock is a leading publicly traded crypto-asset enterprise. The Company operates one of North America's most efficient cryptocurrency datacenters and provides complementary product offerings, which include cryptocurrency mining, Mining-as-a-Service (MAAS), server hosting and server hardware sales, depending on market conditions. HyperBlock is committed to operating as sustainably as possible, purchasing electricity from a hydro-electric dam for its current 20MW US datacenter — and employing advanced recycling technology to minimize environmental impact. Learn more at www.hyperblock.co
Cautionary Note Regarding Forward Looking Information and Future-Orientated Financial Information
Certain information in this news release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "intend", "forecast" and similar expressions. The forward-looking information contained in this press release includes, but is not limited to, statements related to: the anticipated filing of the Annual Filings; the future status Company's current power contracts; the replacement of the Company's older generation servers; the increase of an existing datacenter's revenue after refreshing it with new servers; the impact of litigation; the effect of market or other changes on the business; and the sale of the Company's non-core data center assets at one of its Canadian facilities.
These forward-looking statements contained herein are made as of the date of this press release and are based on assumptions and estimates of management, which management considers reasonable, based on information available on the date hereof. Such assumptions may be incorrect. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward looking statements.
Such factors, among other things, include: general economic, market and business conditions will be consistent with expectations, fluctuations in general macroeconomic conditions; fluctuations in securities markets; risks relating to the Company's ability to execute its business strategy and the benefits realizable therefrom, the ability to retain personnel to execute the Company's business plans and strategies; the ability to retain auditors to perform an audit of the Company's financial statements; the presence of laws and regulations that may impose restrictions on the ability of the Company to operate its business, including securities laws applicable to the Company; the speculative nature of cryptocurrency mining and blockchain operations; and those factors described under the heading "Risks Factors" in the Company's listing statement dated July 10, 2018 and the risks described in the Company's Management's Discussion & Analysis for the nine months ended September 30, 2018 dated November 29, 2018, each of which is available on the Company's issuer profile on SEDAR. There may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
For further information: For media inquiries: 1-800-613-4721; For investor inquiries: Sean Walsh, [email protected], 1-800-613-4721