April 26, 2019
Toronto, Canada – Fountain Asset Corp. (TSXV:FA) (“Fountain” or the “Company”) is pleased to announce its financial results for the three months ended December 31, 2018 (“Q4/18”) and for the year ended December 31, 2018 (“Fiscal 2018”).
Highlights from Q4/18:
- Adjusted net asset value (“ANAV”) of $36.77 million ($0.63 per share) at December 31, 2018 compared to $35.54 million ($0.60 per share) at September 30, 2018, representing a 5.0% increase quarter over quarter on a per share basis. ANAV reflects the net asset value plus the amount of available tax loss pools available;
- Net comprehensive income of $1.02 million compared to $4.63 million for three months ended December 31, 2017 (“Q4/17”);
- Total revenue from investment activity was $2.29 million compared to $3.60 million for Q4/17;
- Net realized gains on the sale of portfolio investments of $2.17 million compared to net realized gains of $1.58 million for Q4/17;
- Net unrealized gains on portfolio investments of $0.05 million compared to net unrealized gains of $1.84 million for Q4/17;
- Total expenses of $1.26 million, which include annual incentive plan expense and stock-based compensation, compared to $0.73 million for Q4/17; and
- Operating expenses of $0.42 million compared to $0.61 million for Q4/17.
Highlights from Fiscal 2018:
- ANAV of $36.77 million ($0.63/share) at December 31, 2018 compared to $25.54 million ($0.47/share) at December 31, 2017, representing a 34% increase year over year on a per share basis;
- Net comprehensive income of $8.58 million compared to $8.13 million for the year ended December 31, 2017 (“Fiscal 2017”);
- Total revenue from investment activity increased to $13.24 million compared to $5.04 million for Fiscal 2017;
- Net realized gains on the sale of portfolio investments of $14.42 million compared to net realized gains of $2.54 million for Fiscal 2017;
- Net unrealized losses on portfolio investments of $1.66 million compared to net unrealized gains of $1.40 million for Fiscal 2017;
- Total expenses of $4.37 million, which include annual incentive plan expense and stock-based compensation, compared to $1.85 million for Fiscal 2017; and
- Operating expenses of $1.24 million compared to $1.64 million for Fiscal 2017.
During 2018, the Company saw robust positive performance from its portfolio of publicly traded companies. This included an outstanding year for HEXO Corp. which announced a joint venture with Molson Coors Brewing Company. This was offset by our investment in Spectra7 Microsystems Inc. Furthermore, several of Fountain’s private investments went public during the year, including Canopy Rivers Inc. and Green Growth Brands Inc. For Fiscal 2018, the Company reported total revenue of $13.24 million compared to $5.04 million in the prior year.
The Company reported total expenses of $4.37 million for Fiscal 2018 compared to $1.85 million in the prior year. Included in total expenses for the current year was an annual incentive plan expense of $2.59 million (2017 – $nil) and stock-based compensation of $0.55 million (2017 – $0.21 million). The annual incentive plan was initiated during the three months ended September 30, 2018 by the board of directors of Fountain. Operating expenses decreased by 24% year over year to $1.24 million for Fiscal 2018 compared to $1.64 million for Fiscal 2017. The decreased was driven by lower salaries, consulting fees, and general and administrative costs.
The Company generated net comprehensive income of $8.58 million for Fiscal 2018 compared to net comprehensive income of $8.13 million for Fiscal 2017. As at December 31, 2018, the Company’s adjusted net assets were valued at $36.77 million or $0.63 per share compared to $25.54 million or $0.47 per share at December 31, 2017.
“The Company posted solid revenue and profit during Fiscal 2018. In addition, Fountain was able to grow its Net Asset Value by 5% quarter over quarter in Q4/18 while the broader indexes declined substantially during that period. During 2018, we continued to prove our ability to support early stage companies and realize significant returns from these investments for our shareholders. This is the second year in a row that the Company has increased its adjusted book value by well over 30%. We continued to make investments that we believe will help grow Fountain’s capital base into 2019 and beyond. We are extremely excited about our portfolio of investments and our pipeline going forward.” said Andrew Parks, CEO of Fountain.
A full set of the 2018 audited financial statements and the management discussion & analysis are available on SEDAR.
About Fountain Asset Corp.
Fountain Asset Corp. is a merchant bank which provides equity financing, bridge loan services (asset back/collateralized financing) and strategic financial consulting services to companies across many industries such as marijuana, oil & gas, mining, real estate, manufacturing, retail, financial services, blockchain technology and biotechnology.
Certain information contained in this press release constitutes forward-looking information, which is information relating to possible events, conditions or results of operations of the Company, which are based on assumptions and courses of action and which are inherently uncertain. All information other than statements of historical fact may be forward-looking information. Forward-looking information in this press release includes, but is not limited to, growing Fountain’s capital base and a strong pipeline going forward. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: the level of bridge loans and equity investments completed, the nature and credit quality of the collateral security and the nature and quality of equity investments, and the other risks disclosed under the heading “Risk Factors” and elsewhere in the Company’s annual information form dated December 22, 2017 filed on SEDAR at www.sedar.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information: please contact Andrew Parks at (647) 344-4429 or visit Fountain Asset Corp.’s website at www.fountainassetcorp.com.