Hyperscale Data, Inc. (GPUS) Q3 2018 Earnings Report, Transcript and Summary

This is Chief Accounting Officer, Ken Cragun. On the call today are Chairman and CEO, Todd Ault III; and CFO, Will Horne. They'll provide a business update and touch on the third quarter results of the company announced earlier today. You'll find that press release in the Investor Relations section on the company's website at ir.dpwholdings.com. Before I turn the call over to Todd and Will, please be advised that this presentation and other written or oral statements made from time to time by representatives of DPW Holdings, sometimes referred to as DPW, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect the current view about future events. Statements that are not historical in nature, such as forecast for the industry in which we operate, and which may be identified by the uses of the words like expects, assumes, projects, anticipates, estimates, we believe, could be, future or the negative of these terms and other words of similar meaning are forward-looking statements. Such statements include, but are not limited to, statements contained in this presentation relating to our business, business strategy, expansion, growth products and services we may offer in the future and the timing of their development, sales and marketing strategy and capital outlook. Forward-looking statements are based on management's current expectations and assumptions regarding our business, the economy and other future conditions that are subject to inherent risks, uncertainties and changes of circumstances that are difficult to predict and may cause actual results to differ materially from those contemplated or expressed. We caution you, therefore, against relying on any of these forward-looking statements. These risks and uncertainties include those risk factors discussed in Part 1, Item 1A Risk Factors of our annual report on Form 10-K for the fiscal year ended December 31, 2017, the annual report of 2017, and other information contained in subsequently filed current and periodic reports, each of which is available on our website and on the Securities and Exchange Commission's website, www.sec.gov. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in the 2017 annual report. Should one or more of these risks or uncertainties materialize, or in certain cases fail to materialize, or should underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned. Important factors that could cause actual results to differ materially from those in the forward-looking statements include a decline in general economic conditions, nationally and internationally; increased demand for our products and services; market acceptance of our products; the ability to protect our intellectual property rights; impact of any litigation or infringement actions brought against us; competition from other providers and products; risks in product development; inability to raise capital to fund continuing operations; changes in government regulation; the ability to complete customer transactions and capital raising transactions. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict them all. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. All forecasts are provided by management in this presentation and are based on the information available to us at this time, and management expects that internal projections and expectations may change over time. In addition, the forecasts are entirely on management's best estimate of our future financial performance given our current contracts, current backlog of opportunities and conversations with new and existing customers about our products. Turning to Slide 3, it's my pleasure to turn the call to Todd.

Wow. That was a legal disclaimer. Thank you, Ken. Good afternoon, and thank you for joining us. I am very excited to update today our progress. As a diversified holding company, DPW Holdings acquires, monetizes undervalued assets, disruptive technologies with a global impact. We continually evaluate opportunities to expand our portfolio as well as review our existing portfolio for opportunities to enter adjacent markets and as well as sell for the benefit of shareholders. We are targeting industries in the advanced technologies and finance as well as investing strategically when we discover the right opportunity. I will elaborate as we turn to Slide 4. Earlier this month, our Board of Directors authorized the plan to restructure the company to enhance execution which we believe will increase clarity for our investors. In 2019, we plan to divide our subsidiaries into 2 like-minded groups, thereby improving our leadership structure to facilitate execution and drive strategic growth. DPW Technology Group will focus on advanced technology, manufacturing in industries such as defense, aerospace, power solutions, medical and textiles. DPW Financial Group will focus on lending, investing in areas such as blockchain technology, hospitality, real estate and other opportunities. To that end, we have reallocated internal resources, hired additional executives to increase oversight and to execute on our vision. Our group leaders are implementing procedural and cost reviews to ensure we are focused on the highest priorities in the most cost-efficient manner. One of our key hires is our new Chief Accounting Officer, Ken Cragun. With over 30 years of experience in building financial infrastructure, Ken is an expert in SEC reporting, cash management and sophisticated technical accounting. Already making an impact, Ken will be pivotal in implementing this transformation as we are excited about his long-term contribution. As you've heard, Ken is on the call today and will be -- and can answer questions. Additionally to our natural course of business and exploration, we expect to continue to discover compelling investments like our strategic investment of MTIX International. So what do I mean by natural course of business when we find investments? Our power supply business was assessing the landscape when we identified the opportunity in MTIX. Upon conducting due diligence, we realized a huge opportunity with MTIX has. And in its own outright, we took an investment position. Now I will update you on MTIX's international developments. As a public company, MTIX does business as MTIX International. The public company is Avalanche International. We're continuing to work on gaining SEC compliance as part of the process to uplift into a national exchange. This is important. AVLP is a voluntary filer. We -- this is a high priority for us in late 2018, early 2019. MTIX is commercializing its Multiplex Laser Surface Enhancement machine known as MLSE. The MLSE technology is revolutionary -- has a revolutionary method of digitizing textile finishings that can be used on fabric as well as paper and film. MLSE is very environmentally friendly compared to -- with conventional treatments and methods. It significantly reduces the use of water and chemicals and energy involving with fabric preparation, dyeability, digital printing. The MTIX technology enables extremely cost-efficient treatment, making the material fire retardant, water repellent, digital-print ready and antimicrobial. The technology has many applications across multibillion-dollar textile industry, including home furnishings, commercial upholstery, automotive, apparel, luxury goods, sports and industrial applications such as firefighters and first responders. Turning to Slide 5. I will highlight DPW technologies. By partnering with the subsidiaries that have great promise and providing them with capital and oversight, we have enabled them to innovate and open new markets for their products and unlock value for shareholders. During the quarter, the Technology Group secured $15 million in advanced new technology wins. I will highlight a few of them. First, a $4.3 million second-stage order from an Israeli defense and aerospace contractor to supply computer-based command and control missile defense systems. This is an important win that will result in a multiyear -- resulting from a multiyear development effort, validating our subsidiary's ability to deliver on complex command and control systems and its growing reputation as an innovative provider of state-of-the-art missile defense systems and aerospace systems. Second, a $4.1 million repeat order from our first-tier U.S. government defense contractor to supply sophisticated communications filters to be used in combat warfare systems and components. The multiyear relationship with follow-on orders illustrates our subsidiaries' and customers' confidence in our ability to meet their needs of their clients with the innovative radiofrequency, microwave and millimeter-wave technology solutions, products that enable customers to achieve high-performance reliability at a reduced cost. And third, orders aggregated to over $5 million in development and manufacturing of cutting-edge medical automated test and calibration equipment. At November 13, 2018, we had an aggregated backlog of $71.2 million. Please turn to Slide 6. I'll review the highlights for DPW Financial Group. In lending and investing, one of our subsidiaries launched Monthlyinterest.com. Our team created a win-win situation by enabling main Street investors to use the online portal to select industries, the length of time of the investment, the interest rate that best serves their needs while paying interest monthly. The investments include real estate, specialized high-tech manufacturing, commercial lending and other pecuniary projects. The site is in development but is operational. In the real estate and hospitality, the larger transaction in this quarter related to the luxury hotel investment, Tribeca, in New York City. The anchor of DPW's hospitality portfolio, we expect the hotel to deliver long-term predictable cash flow on track to be completed in the summer of 2020. The asset fundamentals, location advantages position it to capitalize on exploding business and residential growth in Lower Manhattan. Further, the hotel secured a $1 million in new debt financing. We also continue efforts in blockchain. Our subsidiary entered into a $2.5 million revolver to create flexibility and expand growth. We continue to look for low-cost power. For example, we have collated -- co-located cryptocurrency mining in a historic dam. Year to date, we have mined $1.5 million in cryptocurrencies. We've used those proceeds for working capital and to pay down debt. As you know, due to several variables, the number of miners we have changes quite frequently. Therefore, we are going to simplify our reporting by disclosing dollars mined per quarter. We also intend to leverage our experience in technical capabilities to build one of the largest blockchain mining operations in the U.S.. Nonetheless, we expect it to continue to be a relatively small contribution of our total revenue. I feel like I should reiterate that again. Did I cover that properly? We intend to leverage our experience and technical capabilities to build one of the largest blockchain mining operations in the U.S. Nonetheless, we expect it to continue to be relative part of our total revenues. Please turn to Slide 7. Looking to 2019, we have several initiatives in place that we believe will be -- drive strategic growth. In the Technology group, we're implementing plans to improve sales and operations, executing on our $71 million backlog and driving to profitability. In the Finance Group, we continued to expand our lending opportunities, review our existing investments and explore additional investments and acquisitions -- acquisition opportunities while leveraging the relationships with industry experts. I'm now going to turn the call over to our CFO, Will Horne, to provide a quick summary of our preliminary third quarter results. Will? Please turn to Slide 8.

Thank you, Todd. Turning to Slide 8. The company reported gross revenues of $8.3 million during the quarter ended September 30 as compared to $3.2 million in the quarter ended 2017. This represents a 159% increase, and it really demonstrates the power of solid performance from our defense, manufacturing and hospitality acquisitions. However, our quarterly revenue was expected to be higher. And the decrease, the slight -- really is a result of the slight delay in receiving parts, which, of course, hampered our ability to stand our production schedule to fill the -- fulfill the MTIX backlog. Gross margins during the quarter were 24.3%, and that compares with 34% for the third quarter of 2017. Because of a lot of reasons, our gross margins continued to fluctuate. And it reflects the volatility in bitcoin market prices and cryptocurrency mining costs. Those were the biggest drag in the quarter to our gross margins. We do hope to mitigate these swings by sourcing power less expensively. And to that end, we expect to be operational in December of this year, the new cryptocurrency mining farm that we are co-locating with a hydroelectric dam in Upstate New York. Net loss was $7.5 million, which included non-cash charges of $4.7 million during the current quarter. That compares with a net loss of $2.1 million and the corresponding non-cash charges of $1.2 million for the third quarter of 2017. As far as our balance sheet, at September 30, we had reported total assets of $53.1 million, which is relatively flat from the quarter ended June 30 of $53.4 million. During the quarter, we did complete several financing transactions. We conducted a public offering of $25 million of our Series A cumulative redeemable perpetual preferred stocks, and we also initiated a new at-the-market offering, which replaced the prior ATM. At September 30, our investment portfolio included convertible promissory notes, warrants and shares of common stock of $7.9 million in MTIX, which does -- it does business as MTIX, I should say. The investment was in Avalanche International Corp. Under GAAP, the value of the warrants and shares of common stock are marked to market on a quarterly basis. And because of that, we end up with significant fluctuations which reflects the volatility of the underlying markets. Finally, stockholders' equity at September 30 was $28.1 million, which compares to $31.5 million at June 30. Todd, I'll turn the call back over to you.

Thanks, Will. Slide number 9, please. As you may well know, we've been aggressively deploying capital for the better part of 2 years, and our efforts are coming to fruition. Due to production delays and a decline in bitcoin mining revenue, we are trimming our full year guidance from $34 million to $39 million, and we now expect 2018 revenue guidance to be $29 million to $33 million. This is 3x greater than our revenues in 2017 of $10 million. Slide 10, please. I'd like us to look at the long term now. Reviewing our current portfolio and run rate, we expect 2019 revenues to double 2018 revenues. We estimate full year 2019 revenues to be approximately $60 million, which does not include any impact from acquisitions. We expect the Technology Group to contribute over $40 million in total revenue, which is about two-thirds; and we expect the Financial Group to contribute about $20 million in total revenue, which is about one-third. We continue to evaluate the composition of our portfolio and look for new opportunities to add growth, monetize value for the benefit of shareholders. And finally, I'd like to open it up for questions now. On a side note, I'd like to note that DPW with MTIX International for the first time will be presenting together at the conference at LD Micro's Main Event in December. We also will be conducting our annual shareholder meeting on December 28. We look forward to seeing you there. And with that, I'll open the session up to questions.

This is Mary Magnani from LHA, and I will be reading questions that have come in via the Zoom. The first question is can you provide more info on your plan to triple revenue in 2019?

Our current backlog in the Technology Group alone is over $70 million. We will continue to execute our strategies to improve sales and operations and drive to profitability. Mary, it's a relatively simple answer. And that is that we've been investing heavily in structure and sales and opportunities to execute on the backlog, and I expect that actual backlog to grow. So it's really a simple numbers game of executing our backlog to be able to do that $60 million. The backlog on the technology side, I expect to grow. It could grow from MTIX. It could grow from the Israeli defense side and the acquisition of Enertec, which is starting to pay off in terms of orders, and we're seeing an uptick in orders from Microphase, too. So the total defense and aerospace side will grow, and we'll execute that in 2019. Next question?

Next question from [Sandeep] is what is the total number of MS -- MLSE machines in the $71 million?

In the $71 million backlog, about $46 million or so, give or take, is the number of dollars we expect to execute on -- out of the $71 million backlog. It may be a little bit lower because we reported $3.9 million in revenue so far for the year from that. The total number of machines that we're building is approximately 25 right now. We expect that number to grow, worldwide demand for the machines. There's over 100,000 textile plants around the world, so it's not hard for people to figure out that, over time, these textile plants will need the machine and that order backlog will grow.

Great. Will, what's the main driver for lowering guidance for the year? Can you give some more color on the revenue that was pushed out in the third quarter?

Will, are you there? Can you talk about us pushing out some of the manufacturing contracts into the fourth quarter and possibly, in part, into the first quarter?

Of course. So right now, as everybody knows, the MTIX machines are a large lead time product. And certainly, the first 2 or 3 machines, there's a pretty big learning curve. And because of the cost that is required to -- on multiple vendors, you're talking several million dollars right now. When one of them gets delayed, it doesn't make sense to continue to invest resources at the time into a MLSE machine that's going to be sitting uncompleted. So we had one of our critical vendors on these parts postpone delivery on some components, and that resulted in us delaying production or manufacturing of the existing machines. We hope that we've worked through that, but it could -- I think the delays will impact, to a certain extent, this quarter as well as the next quarter a little bit.

Thanks, Will.

You're welcome.

What's the next question?

The next question is what are the complications that are keeping AVLP from being current on its financial reporting? And will they be uplifted soon?

Will, that AVLP call is another -- that is another question for you.

So right now, we are in the process of finalizing one of the quarterly reviews with AVLP. We did end up experiencing a lot more difficulty with some of the debt instruments in that entity, their old legacy debt instruments. But because of the variability, we determined that we should move to a different valuation approach, which resulted in bringing on a specialist. We've worked through that process now. And going forward, we shouldn't see any more delays in being able to get those financials filed on a timely basis. In part, because of bringing on Ken, that's going to help offload some of the workload but also leveraging some of our third-party consultants that will help as well.

Thanks, Will.

All right. The next question is do you plan to do anything to increase the stock price in the short term?

That's a good question. Unfortunately, I don't feel like we have -- as you know, we don't have any really control of that. You look at holding companies in the way that they are valued, the categories, and you overlay the fact that we got bit up by bitcoin and people who focused on bitcoin only with us. We've suffered the consequences of that decline in bitcoin. I would just say regarding -- we don't really comment on stock price. I just think it's not appropriate. I myself have never sold. I don't know an executive of the company that ever sold. We really are focused on execution. That $60 million next year is a number that Will and I got very comfortable with. There's a lot of room for upside there, and there's a lot of embedded opportunities in the investments we've made. A lot of that noncash losses are -- were hires and things that we did regarding debt and structuring to provide a lot of leverage to the balance sheet in terms of earnings power. So I would simply think that, over time, people will look at what we're building, and the market will react appropriately. It's clearly, obviously, in my opinion, overdone, but there's -- the market is the market. There's also an enormous amount of negativity over the decline in bitcoin, and I see a sentiment of sort of a bitcoin overhang. People don't realize that although we're focused on becoming very large blockchain miners and we're focused on the growth of our data center business, we think that is going to pay off anyways. We think that we're going to have a footprint of being one of the largest cryptominers around. So cryptomining does recover. We'll probably be the biggest player out there. I mean, if you look at our competitors, you navigate what's happened to them, I think you're going to see some pretty dramatic issues with competitors out there. There may be even some bankruptcies of our competitors. Well, we've navigated this pretty well and pulled back really quickly and navigated a situation that got really, really ugly, very, very bad. I was talking to Crypto Joe just yesterday and he was telling me that in some cases the difficulty rate changed 3 times in a week, and it is very difficult to navigate that. And so I kind of understand everyone's pain there. I'm the largest shareholder, and I want what they want, which is a better price. But I think that's just going to take place over time. As we get closer to profitability next year and our footprint increases and we exceed the $60 million and hopefully get larger in 2020, in 2021, I think that we'll recover and that price will take care of itself over time. What's your next question?

Next question is you said you would have 10,000 miners by the end of 2018. Can you provide an update on that?

Yes. We decided to update based on coins mined because, as I was just talking about earlier, in the beginning of the year, the 10,000 number was based on a goal we had to get out there. But what we realized very quickly is that was mining capability and cost of power that mattered -- the number of miners, while it sounds dramatic, you could -- I'm sure that everyone saw this in the second and third quarter, which is that you could install more miners and still be mining less bitcoin because of difficulty at the end of the quarter. So we just decided as a group, and I think that Joe and Darren were instrumental in saying that we need to focus on total amount we could mine and less on how many miners there were. With that said, we're spending our time investing in miners that have greater capability and less cost, right. So right now, Joe and Darren have done an amazing job of finding us really low-cost power. There's an opportunity for us to have penny power in Alaska, which is geothermal. We have penny power in New York with our dam, and there are opportunities in other parts of the country that Joe and Darren have identified that we think will bring our cost down by 70% or greater. So the problem with talking about the scale of the mining operation is that our defense and commercial business, along with medical -- along with our manufacturing business with Russ, our new CEO at our Power Solutions Group, we're growing our revenue faster than we can keep up with bitcoin, right. So as a total percentage of our revenue, let's say, next year we do $60 million plus, bitcoin, unless something changes, will be a much smaller part of that $60 million total. So it's just not something we can sit there and focus on every day because you can mine all you want, but if the bitcoin price keeps coming down, there's not a lot we can do about that. That being said, we have a nice footprint. And we have the capability, and you'll be hearing this in the future. We have the capability to having a very large data center with our ability to expand, if crypto prices change.

All right. Next question. Do you believe that Ault & Company and Philou Ventures are going to make additional investments in DPW?

So I'm sorry. Is the question will Ault & Company and Philou Ventures make additional investments? Is that what the question was?

Correct, yes.

Okay. So Ault & Company is the manager of Philou, and Philou is the venture capital fund that I control with my family, and we have certain embedded rights. We saved the company from being delisted in 2016 and '17, and so we have the right to invest an additional $3.75 million in the preferred, which I think is $0.70. We do intend to make that investment in 2019 later this year and early next year. So we will execute -- exercise our right to buy more of the preferred. And Ault & Company absolutely is committed to making additional open-market purchases, and long term, exercising its right to invest more in DPW. It is our plans right now, going forward, for Ault & Company to be the largest shareholder of DPW. As we raise more capital, we have to invest more to keep the same percentage. And we intend to exercise our rights to be shareholders and be the largest shareholders in the company going forward. So you can absolutely expect me, my fund to continue to invest in the company.

All right. The next question is what changes will there be with the new structure beyond dividing the companies into 2 groups?

Well, the biggest change is from the holding company level is adding Ken. We think Ken and the team he's brought is going to support Will and the ability for the individual subsidiaries, DPW Technology Group and DPW Financial Group, to effectively execute on their own plans. When you look at the Technology Group, Amos was running 5 companies, multiple contracts and multiple different countries. Now you have Russ running the Power Solutions Group in the United States, along with [Tim], an important new hire for sales. And then when you look at Amos, who's running defense, he's running the Enertec, Russian power, Microphase business and exercising -- and executing on that plan with his team. And the reporting that they don't have their own controllers and the reporting is much more streamlined. And so -- and Ken is hoping there, along with reporting opportunities, to build efficiencies. We wanted separate sales forces, so the Power Solutions Group will have a separate sales force, and the defense group has a separate sales force. And this will allow them to have their own motivation and their own sort of goals -- they're part of a group of companies, but they have their own plans and their own budgets. So on the financial side, I think Darren and Billy Corbett, along with the Billy Corbett's team, make a big difference here. And that is -- it's funny. I see people comment on the low revenue on the financial side, but they're not focused on the amount of loans that are made and the derivatives upside you get from those loans. An example of that is when we make a loan at DPW lending, we make a loan to a company we also get warrants and opportunities that, that company performs. So Billy has built -- did a good job in the first part of the year in building a portfolio that he's developing over time, and we're seeing loan flows, et cetera from there. And I expect, over time, Billy will develop his own balance sheet at the financial side. And there are potential acquisitions on the financial side that we think will make DPW financially even better and hopefully higher than the $20 million that they'd be expecting to do in 2019.

All right. Last question. When and where do you think your next acquisition might be? Can you give us any indication it will be on the financial side or the technology side?

I think we're looking really hard at the data center business. One of the things that came out of this whole bitcoin experience is we started selling power supplies. We've been doing that for 48 years before we got into bitcoin, then we're sort of mining bitcoin. And through that, the relationships that Joe and Darren had developed on the data side have led to opportunities for us to invest in data centers. And so this is really an important part of our future. And that is if you look at the data center, and let's say, you look at 100000-square-foot data center, you might only use 10,000 square feet of that or even less to cryptomine, leaving you a lot of room to have other types of data center activities. And I would say that the serendipity out of the whole thing with Joe and Darren has been our ability to expand our data center footprint. And so none of our numbers for 2019 -- what happened was Will took a very conservative approach. He said, "Listen. We really thought bitcoin was going to kill it for us in 2018. It didn't. So let's cut our numbers way back." And so we don't have data center operations in the 2016 -- or 2019 budget in terms of total sales. We don't have any acquisitions in there. So I would think that the acquisition side of the data center side is important. There is consumer lending opportunity businesses that we could put in there. The financial side, we may make an acquisition there. I don't see the Technology Group making any new acquisitions. However, there is 1 or 2 that we're talking to. There's about 4 total acquisitions where -- people we're having conversations with but nothing relative we're ready to report. If we were anywhere in terms of closer to getting somewhere, it would probably be -- one of our goals is to be a very large data center in the United States and to control a large data center. And so we're very active in M&A in the data center side of it. And so I think that people probably say, well, why are you putting the data center side as part of the financial side?" And that is because in any data center operations, we would own the real estate, and then we would operate and we'd partner with people in the data center business. So we'd have a real estate play and then a data center operations play. So we put it on the financial side because Darren and Joe really have developed those relationships, and they're cultivating them. And so we think that the data center side could be an important driver for us.

All right. That was all the questions we have for today, so I'll turn the call back over to you.

Mary, I thought that there were additional questions? Were there --they're not -- I thought there were a few others that I saw come across. Is there any others you sure that we missed?

There's a few asking about number of miners. I'll let you cover that.

Yes. I already dealt with that question.

Right. What about an update around AntEater progress?

I'll tell you we are very excited about the idea of selling miners. I think it's an important part of Coolisys' business. The problem is that the development cycle is very fast. And as we talked about earlier, the efficiency of the miner is probably the most important thing. Energy use total Terahash. So we are not reporting numbers yet on total sales for miners as it's not relative to the total sales number, probably $30 million plus this year, $60 million plus next year. It's not a big enough segment to break up report, but I still think it's gonna add value to us eventually. We have partners obviously in China and our relationship with Samsung. Clearly, the decline in bitcoin prices has -- is tepid demand. We're probably going to use more of them at our data centers for ourselves than we sell, but that doesn't mean that can't change. But it's a product that I know Joe is committed to. And Joe and Darren lead that effort, along with the technologies in the Coolisys. The power supply business is still bigger relative to the size of our mining business in terms of selling the miners, but I think that's -- that will be an important update next year as we seek progress with some of our newer machines and the ones we announced in the coming weeks and months ahead. Mary, did we decide not to deal with the question about me because I thought there was a question I saw that came across about with me?

Well, there's a few questions about share buyback and -- yes, a question about your sustainability at the company.

Right. So what was the question about me? I didn't read the whole thing.

Your future at the company and what you're doing to bring the share price up. And do you really...

Sure. So yes -- so I've seen that question before about me. I've recently signed a 10-year contract. I don't think I'm going anywhere. In fact, I would be highly surprised that the company wouldn't want to pay what it would cost to get rid of me. I'm also the largest shareholder of DPW and intend to increase my position, and I'm also the controlling shareholder of AVLP, which has been disclosed for probably the better part of the couple of years. And really, Will and I and now Ken are architecting the plan of building the holding company. Whether we decide to spin out any companies or sell them or dividend out to shareholders, these are all possibilities. But we're really not even in our stride yet. I mean, if you take away the sort of bitcoin mania, running the stock up and running it down, I never sold a share. In fact, I bought more. And we've been very clear with our plans from the beginning. I'm super excited about the future of the company. I see a lot of speculation on things that are just total nonsense. With $54 million in assets and a commitment from our lenders to grow the company in the coming weeks and months ahead, you'll see investments from myself. You'll see investments, hopefully, from strategic partners and new relationships. And I don't plan on going anywhere. And if anyone wants to come by the company, get out their checkbook, but I'm not going anywhere. I've got the support of my board, which is independent. Will has the full support of the board. We love [Chen] and the acquisition there. We love Joe and Darren and Amos and the team and Russ, the new CEO of the Power Solutions Group. We think people at I.AM and the hospitality side are doing a great job. They're growing the company. Billy is developing a lending platform. He's got a good team with [Jim] and the people there. We have other investments we think we're going to announce in the future. We're gonna burn out our new Chief Operating Officer for DPW Technology group. We'd hope to announce a CEO soon for that division, too. So people react to the stock price, and they personally attack me. I expect that with the job. We're just not focused on anything other than growing the company. If you look at my contract and you take the 35% annualized revenue growth, I've got to grow this to $1 billion over 10 years. That's a big number. But if you just do the math on my contract, I'm incentivized to grow the top line. With the natural progression of growing the top line and putting checks in place for profitability, having people I can involve to help guide the company financially, you look for profitability later in 2019 and then the leverage of the balance sheet, the leverage of the lender starts to kick in, and the leverage of the opportunities, the investments we made in defense, I just don't see that we're not going to perform going forward. And I'm optimistic, and I'm thrilled to be here. This is something I've committed to. The only thing to get possibly changes is if we decided to break the company up into multiple divisions, spin them out. We've talked about that flexibility, but that flexibility has to make sense. And we just didn't -- we made a decision to grow the top line so that $1 million wasn't material. And we want to get bigger, and we want to get a lot bigger. Growth is really important to us. Now Will has kind of pushed back a little bit, so as the board, on sort of a growth at all costs. So one of the things that Ken is focused on -- we got to look at Ken's background. One of the things that Ken is focused on helping us with his cost of capital, but we intend to continue to grow and find markers to grow in and get that footprint in terms of total sales and grow its margin dollars larger. So I don't intend on going anywhere. And with Ken here and the team he's bringing on, we think we're going to grow in 2019 and beyond. So we're pretty excited. What's next, Mary?

What about a share buyback?

You couldn't buy back the stock right now for various reasons. We have loan covenants that requires to pay down our debt first. I would say this, the board authorized the buyback, but we couldn't do it until we had all the divisions doing better and the free cash flow was improving. We had total free cash flow. I think Will would just like -- Will, you're there. Do you want to comment on the share buyback at all? I just think it's -- I mean, that's something we'd look at after we have generated a lot more free cash.

Well, clearly, anytime the stock is depressed, that's when you look to buy back shares. But as Todd pointed out, the company is leveraged right now. We have a significant amount of debt, and we're focusing over the short term on creating profitable operations at the various subsidiaries to eliminate the ongoing need for cash. So I really don't want expect this over the -- at least the next 6 months to have any real discussions on buying back shares. And at the point, when we do get to the point where we could consider it, ultimately the share price would be a consideration as to whether or not we would even start doing a buyback.

Thanks, Will.

You're welcome.

Mary, what's next?

I think that's about it. We can...

All right, everybody. I appreciate those shareholders that have stuck with us, I appreciate it. I know that the -- lucky you, I'm not happy with the price, but I am happy with the footprint the company has. I'm happy with the new hires. I really hope people focus on the fact that not only we -- do we mine blockchain, cryptocurrency, but we have a defense business. We have a hospitality business. We have a growing and burgeoning power solutions business, and we think we look forward to 2019. We think we'll have a good last quarter of the year. I attended a conference in Amsterdam with the MTIX. I saw a lot of promising results there, and I would encourage people to realize that as MTIX gets reporting and possibly uplift, we're a very large shareholder. And as a large shareholder of the company, that would -- we think it will have a material effect on our profitability in 2019 and beyond. And with 100,000 textile plants around the world and us having an order for 25 of them, as they sell through their 25 and start delivering and they get more comfortable with their own deliveries and they establish their own credit lines and their ability to finance their growth, we benefit from what potentially could be hundreds of machines over the next 5 years and beyond. And so we're very excited about the future. And we appreciate everyone's time, and have a good Thanksgiving, everybody, and take care. Bye-bye.