Hyperscale Data, Inc. (GPUS) Earnings Call Transcript & Summary

Good afternoon, everybody. It's Todd Ault. DPW Holdings investor presentation for 2020. Today, on the phone, you'll have the Vice Chairman and Chief Financial Officer, Will Horne; the CEO of Gresham Worldwide, JR Read. But first, we are going to read the safe harbor statement, which is important that everyone understands these are forward-looking statements. So I'm going to turn it over to [ Steve Cook ] to do that call now.

Hello, everybody. Thank you for being on the call. Our safe harbor statement. This presentation and other written or oral statements made from time to time by representatives of DPW Holdings, Inc., 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 forecasts for the industry in which we operate and which may be identified by the use of 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 and 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 of the fiscal year ended December 31, 2019 -- 2018, the 2018 annual report, 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 2018 annual report. Should one of -- should one or more of these risks or uncertainties materialize or, in certain cases, fail to materialize or should the 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, decreased 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, risk and 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 all of them. 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 information available to us at this time, and management expects that internal projections and expectations may change over time. In addition, the forecasts are based 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. Now that the fun stuff is done, I will now turn the call back over to Mr. Todd Ault.

Now that was painful. Geez, Louise. Thank you, [ Steve Cook ]. [ Steve ] recently joined us. We're very excited to have [ Steve ] helping us with corporate communications. So given the fact that we have really had a significant turnover in our shareholder base over the last couple of years since I became the CEO, obviously, people know and who are historically shareholders know that we had a pretty big run-up in '17 and then in '18 and '19 was really difficult for the company. We've kind of decided we are going to reemphasize what we do here. So here, you see a slide about the overview of what we do as a holding company. And I get a lot of questions online about things that really lead me to believe people don't understand the structure of DPW. So we raise capital. We allocate it. We deploy it. We manage it on a permanent capital basis and generally, when we have the capital, it provides us the wherewithal to make purchases or buy things that are broken. And this is an important factor because JR Read is going to talk about the defense business in the slide presentation. And these were companies we purchased that were having difficulty, and it is sort of our job at DPW Holdings to help the companies turn them around. We truly do operate the company as a holding company. It's headquartered in Newport Beach, California. And we have operations in 3 countries, approximately 250 employees under the umbrella of DPW Holdings. I see a lot of comments from people about really -- obviously, I don't really want to comment on the veracity of people that maybe are unhappy with DPW, but they don't really truly either read the documents or understand the growth and depth of DPW Holdings and the different businesses we have dispersed over what is 3 continents. So part of our policy is we identify undervalued assets. We try to buy them at disruptive prices and then put management -- maybe take control and put management in place to help foresee -- help move the value of the business forward. And that requires a lot of capital. Next slide, please. So it's important that when you look at the structure here, back to the holding company structure, there's about 23 people at the corporate office, maybe a little less, maybe 19, depends because the media team's there also. We have myself, Will Horne, the CFO and Vice Chairman; Henry Nisser, who's Executive VP and General Counsel; Darren Magot, who's Head of Operations for the holding company; Ken Cragun, who's our Chief Accounting Officer; David Katzoff, who I rely on extensively to handle the needs of the subsidiaries basically around the world; and then Joe Spaziano, our Chief Technology Officer. A lot of corporate experience here, very talented people. Ken Cragun came out of a $1 billion NASDAQ company, an extensive background there. David has done over 44 M&A transactions. Henry's a really seasoned lawyer. Will, of course, Pricewaterhouse know Will. Done business with him for a long time. We have a really great team we're pretty proud of. And the way we set the company up, and I know Will -- I know we wanted to comment on this, and that is if you look to the right and you see DPW Holdings, you see Gresham Worldwide, Coolisys, DPW Financial Group, Digital Farms and the newest addition, ItsLikeFashion. What you see there are companies that are -- we like to set them up as if their future is either as a standalone public company themselves or the opportunity for there to be a liquidity event. And we really have set the company up where there are umbilical cords. For example, Gresham Worldwide is run by JR Read and his team. And they truly are, even though they're a wholly owned subsidiary at this time, they truly do run the operation separately. They have their own management team and their own level of employees. Next slide, please. So this is going to be a little bit out of turn here, but we're going to ask JR Read. JR, are you there?

Yes.

This is something -- I can't hear you very well. I'm super proud of the hiring of JR. JR has really turned the defense business around in the -- JR, how long has it been since you've been with the company?

About 8 months.

Yes. And he's done that under severe capital constraints. And so, JR, I'm going to turn the presentation over to you to this section. And the reason why we're highlighting Gresham Worldwide is because of how well it's gone for JR, and I really want to give you guys a chance to learn about the subsidiary that you own as a DPW shareholder. Go ahead, JR.

Great. Great to be with you today, guys. Gresham Worldwide is a new name to, I think, many of you. It is a culmination of a review of the various companies in the defense field, where we took and isolated 3 companies that had common denominators that made them a worthwhile group to be put together. The common denominators were: the production of bespoke technology. We can use the technology for major contractors in the defense industry. We design in custom processes. We deliver turnkey platforms, and we do elegant designs that are exclusive to the project. We do not produce widgets for common use. We design for projects, and we end up being sole source providers, in most cases, to major defense contractors we'll show you a bit later. They're all blue chip. They're all government-related and military contractors. I need not tell anybody right now that the government -- the defense contractors are at top of mind given the current situation in the world, and we have, again, sole source projects that are long in value, long-term contracts. Next slide, please. We decided to use the name Gresham Worldwide because, a, there's only one Gresham in the world, so to speak. It's not a common name. It implies a strong solid feel, and it's a distinctive logo. So we are marketing everything now under the Gresham banner. We're going to retain the individual sub-brands as necessary. And we're launching, over the next 2 weeks, a -- updating our website, social media collateral and earned media. We believe that the Gresham name is strong. It will be a great banner to run under. Next slide. The key to what we're doing is creating the global footprint. We're going to be headquartered -- we are headquartered in Phoenix, Arizona, but we have operations now in Shelton, Connecticut, Salisbury in the U.K. and Karmiel, Israel. It gives us a global platform to provide not only the direct products but provide services and infrastructure for our customers around the world. In Europe, the Gresham Power electronics provides power solutions to naval and naval projects around the world. We deal with over 6 major countries and a huge number of fleet vessels around the world. In Israel, very timely. We are #1 in specialty manufacturing, defense and aerospace combat. We do missile systems, missile control systems, missile launch systems. And it's a very, very vital project in Israel, providing to Israel and other countries in the region. In North America, we have our company Microphase located in Shelton, Connecticut. It does RF control systems. And basically, we're sole source supplier to the F-15, F-16, F-35, B-1 and B-2 bombers. All of these are legacy projects. All of these have a long life cycle ahead of them. Aside from that, we have with Tim Long in North America, our strategic development office based in Washington, D.C. that poises us to take advantage of government relations and communications directly with Pentagon and other major players in the D.C. area. Next. The beauty of what we have is really in this page and the next page. These are our customers: BAE, Lockheed, Boeing, Raytheon, L3. You name it. Many countries that we haven't even listed on there. Many countries, we can't list on there because we're top secret bound on many of the projects that we're doing. But as you can see, these are major, major suppliers that we've been supplying for over 60 years in some cases. All of our companies are between 25 and 60 years old. All of them have great pedigree within the systems. All of them have great pedigree with these people. It's an amazing background, and the confidence that they display in our small companies is staggering. And the request now flying into us for more work to be done is almost boundless, limited only by our capital abilities right now. You'll notice over in the lower left-hand corner, second up, there's a company called Biosense. It's a Johnson & Johnson company. It's one of our largest forays outside of pure defense, where we do a [ stint ] calibration system for Johnson & Johnson. And just a sort of a sidebar on how we work together as a company now, it's been produced in Israel, these [ stint ] programs, and Johnson & Johnson has come to us and asked us to please work with them to provide support and service around the world. So we're opening up support and service operations in the U.K. for Europe and in Connecticut for North America. This expansion of our ability to unify and provide support is going to be a great boon to our growth and development in all of our markets. Next slide, the second slide, quality. We just talked about the quality of our customer. Here's what we have now. We have a $40 million, essentially, backlog and imminent order spread over the next few years. It is an amazing backlog. We struggle -- we have been struggling as a company to exercise and complete the backlog due to capital constraints. And as we announced the other day, we are looking to raise additional capital for the defense division by way of a strategic [ reminder ] for a public offering, so that we can have the capital necessary to complete all of these projects on a timely basis. We view this as a opportunity to almost double the backlog we have but really boost our sales tremendously. Enertec, we're looking at a major contract with a major company here in the United States for $10 million. Microphase, we've seen a remarkable turnaround in that over the last 6 months under the guidance of Tim Long and his whole team down there.

Hey, JR, I don't -- if you don't mind me saying here, one of -- this is an important point for people to know and that is DPW has provided how much additional capital to Microphase. That turnaround has been amazing. You have brought in Tim Long and you really have turned the business around. How much additional capital have you got approximately this year, I mean 2019?

For parts, we got about $150,000 for parts. The major need for capital, a, was clean up some old bills. That's a different tranche of capital, but we had about $150,000 in parts and another $75,000 in miscellaneous. But we took the company and it went from $170,000 a month to over $700,000 a month in the last 6 months. And it's that kind of really exponential growth that once we have our balance sheets cleaned up and access to capital, we can see steady amazing growth from all of these companies.

But in total, I think that DPW has invested about approximately, not just since you've been here, but in total around -- I think it's close to $3 million, and you guys have been cleaning that up. And that is something that I want to highlight, is that we bought an under-valued asset and brought in a team to turn it around. And I consider this to be a success story what you're doing with Tim. It's really something that I think is increasing the value there. And what's remarkable that JR's team has done is they have -- really went to customers. This business has been around for 63 years. In fact, the 95-year-old founder, I think, recently passed away in December. And we -- JR's team has really been able to get the customers to come back to the table because they do make great products as a single-source supplier. So this is something we're super proud of right now. Back to you, JR. Sorry about that.

Altogether, Todd, you brought in $750,000 to the company and turned this company around in the market with that amount of money. That included paying off some nasty older bills and what -- but on a go-forward plan, any additional capital coming into the company will be recognizable in revenue very rapidly. But it's been a great -- it was a good acquisition. And then just with basic blocking and tackling, as you say, going out meeting with the customers and really pushing forward as a basic core business in the defense industry, we've seen a remarkable turnaround [ then ]. And I appreciate the support that DPW has provided us. In Israel, you can see down in the right-hand corner, our missile systems, very much flavor of the month. We provide both control systems and test systems for missiles that are done in conjunction with the United States for various programs with Israel and with India and other countries in that part of the world where rockets and missiles are a very, very big thing. Enertec is really a shining star for us. We think that, that's going to continue to grow. Microphase is going to continue to grow, and we're looking at pushing our sister company, Gresham in the U.K., into new fields, which will be defense related but also intercontinental transportation, i.e., train system focused. So we see great opportunity. Many of our customers are coming to us and saying, "Gee, we've got this other -- we've got these opportunities, small companies. Could you please look at taking them over for us?" The field is filled with smaller companies that are ripe for consolidation and we see that beyond our just organic growth we have tremendous opportunity for mergers and acquisitions done in a very -- a very, very tight scope of purely accretive activities that do not cause stress on the system that can be absorbed quickly and easily and accretively as I said. Next slide. With that in mind, we're looking at some really explosive growth. This growth that we're seeing -- that we're projecting here, rising up to over $45 million in 2022 is based upon organic growth only. That means doing our job that we're doing now, doing it better than ever and responding to the worldwide needs for our products and for our applications and for our engineering. Can't stress enough, we create solutions to contractors' problems. We don't just provide products. We provide solutions. Next slide. So in summary, we've got a really tight group, 3 companies, 3 continents, 3 different stratagems within the defense industry, solid track record, great customer relations, global footprint, and we're ready and now have tightened up everything to the point where strategic growth is not only attainable, it's proven to be attainable on just a 6- to 8-month basis that we've been in operating. I can't say enough about Tim Long, our Chief Operating Officer, 40 years of experience in building businesses throughout the various sectors of aerospace, strategic communications, business planning, marketing. And I will point out, he's a recovering lawyer from UVA, so he was happy with basketball and happy to be out of the law business. David Katzoff, I'm trying to convince to leave Todd and join us. I don't think I'll be successful. But we have a good back-up bench ready to rock and roll. And I think that Gresham Worldwide, once it has a bit of autonomy, still part of DPW, still very much reporting to DPW, but with a little bit of autonomy, allowing us to create our own financial engineering, is going to be a great boost for DPW.

Appreciate it, JR. Operator, could you go back to the slide where it talks about the revenue projections for Gresham Worldwide? It's one slide back, I believe. And I'd like to discuss this really quickly. And this would be, if successful, the revenues of just Gresham Worldwide. Now as long as DPW, going back to sort of a little bit of a lesson about what the holding company does, as long as DPW remains a shareholder of Gresham Worldwide, these revenues would consolidate into the total of DPW. So these projections are only for what Gresham Worldwide and their 3 companies could achieve. We have said publicly that the company would like to have access to the capital markets on their own. JR is very kind but has -- internally really wants to grow the company, would prefer that he would be a standalone company, having access to public markets themselves. Obviously, DPW would remain a shareholder. But this is a value-creation project, which JR's done a great job of. And we think if you look at other defense companies, DPW is a proud owner of Gresham Worldwide. We're very pleased with the progress being made under difficult financial situations because DPW has been so capital constrained as many of us know. Could we go to the next slide, please? Thank you. One more. All right. JR, thank you so much. We wanted to sort of break down an overview of the current holdings and some of the strategic goals. We're going to go through these real quickly. We just covered the defense business. They want to raise their own capital and move towards their own public market. That would be not dilutive from the parent company perspective. And it's a scenario where we'd rather own 80%, 90%, 70% of a bigger company than 100% of a smaller company, and we want JR and them to have their own balance sheet. The Power Solutions business is one run by the former Chairman and CEO -- former CEO, I mean, Amos Kohn. That business itself is a pure Power Solutions business, which we're very happy to have. That is the old legacy DPW or Digital Power Corp., which has been around for over 50 years. I said earlier that we don't own any business that we don't think could possibly someday or hope the goal would have liquidity to be its own public company. In the middle, you see the Financial Group. It's a California licensed lender. We completed 4 different loans to 4 different public companies not related to DPW or any of our subsidiaries, other publicly traded companies. And we've been paid back on all 4 of them, and the portfolio generated more than a 40% return with warrants. So we're very pleased with the way that our beta tests ran there. Monthlyinterest.com, which was launched a few months ago, relaunched, has over 700 members. Those are people that have signed up to the site and have joined, and so we see that number growing. We're very happy about that. We did announce a transaction where we were attempting to buy a broker-dealer and a clearing firm. That transaction is extremely difficult and one where poses great risk of not -- being accomplished and in its current form, would have to be redone. We announced that this morning. However, we are working diligently to figure out the path there. And it may result in there being no path. But it's something we talked about last year in a sense that we wanted to make an acquisition in financial services. That road seems difficult but stay tuned. We stand by what we've announced this morning, where we stand right now. The hospitality business is one that is not growing right now. A little disappointing there. They want to expand. That's something that they are expanding their internal cloud kitchen concepts. There are other concepts developed at those 4 locations. That, we really can't comment on right now because there's -- it's in various transition. So we don't know ultimately what their plans are, but we will be updating the market after the first quarter as to what the plans are for that particular part of the hospitality business. A blockchain and the data mining business is one where we really want to spin that off to shareholders, but there are rules regarding it being a going concern on what you're spinning off and their financial condition. And so it's been very difficult with the volatility of cryptocurrency with bitcoin specifically and the acquisition of the data center for that spin-off to take place. We're still efforting that. As we told you earlier, all the companies we own, we always want them to have the ability to be a separate standalone business. I'm frankly disappointed that, that hasn't happened yet. We were pretty close, but we weren't able to get across the finish line, and that part has been somewhat disappointing. But I -- we're still optimistic and still, at this time, plan to be there. We are still efforting the closing of the data center in Michigan. That Michigan data center is very large and has historical issue with -- was pollution. It was a location from the '70s, and banks have to get themselves comfortable that the cleanup is done. And so we've had ongoing issues with closing that transaction. But hopefully, if -- when -- with the upcoming split in blockchain, with bitcoin coming up, hopefully, we can see a stabilization there in that business and still be in the data center business. This is something we are still efforting and disappointed that we weren't able to spin it off so far. Our foray into e-commerce is really one of an opportunity. As you know, we always look for opportunities here. This is one where it is a start-up internally in our holdings but one that comes with us from a partner in New York that has a very long history of sample sales in New York City and very successful. And this is an opportunity for us to expand it to the West Coast. And it's really hard to predict this because it is new. But because it's a consignment model, a mainly consignment model, we expect it to contribute significant margin from its total sales in terms of total margin, but there's no way to predict what it'll look like. We're hopeful that this will be additive. There are 2 sample sales planned in [ 2000 ] in the first quarter, and they'll ramp up all the way through the fourth quarter. But we're not providing any guidance, and none of our numbers right now include the ItsLikeFashion concept. But in the second quarter, they will be expanding to an online presence, and so we're pretty excited about that business. That's one that has been incubated for a while. Next slide, please. So we have a portfolio of investments we own. We own some Alzamend. We've been able to buy that for very inexpensive prices. We've owned that inside the -- inside Digital Power Lending. And that is -- it's a small position, but we were able to buy that position for very inexpensive from people who needed to sell. And I think that the company recently filed a Reg A for about $7.50 a share. So for us, it would represent a significant gain. But of course, we'll see what happens and develops with that position. We're still own a position in Sandstone that we invested in a few years ago. Will, if you could join the call here and talk about what are -- where we stand with the textile business. This is -- as most of us know, we have been very capital constrained. And as we raise capital -- but the capital markets have been very disruptive as the stock has performed very poorly in 2019. And although we have a very big backlog, it requires a lot of capital. Will, can you comment on where you think -- what kind of guidance we want to provide for the textile business at this time?

Sure. I don't know if I would want to provide specific financial guidance as far as revenue numbers. As Todd noted, 2019 was incredibly difficult for the company. We got a little overextended, and we spent the bulk of the year focusing on restructuring or repaying down our existing debt obligations. That didn't allow us to focus on producing the MLSE machines related to our contract that we signed back in 2017. That contract requires or provides for the delivery and production of 25 of these machines. And each machine is about $2 million to a related party, Avalanche and MTIX, which is a wholly owned subsidiary of Avalanche. So we still have 2 machines in production. One of them is about 95%, give or take, complete, and we -- our goal this year is to finish those 2 machines and potentially begin production on 2 to 3 more. But it really depends on capital and whether or not we have sufficient capital to where we feel comfortable. We don't want to be in a position where we're making decisions based upon short-term debt obligations as we had to in 2019.

One of the things that Will talks about is we want to get away from short-term debt. And so we have -- we made a strategic decision, as Will said earlier to me privately, we really have taken our foot off the gas because the capital markets have not been cooperative and maybe seeing out our vision. And what's interesting is, despite the fact that the capital markets have not been cooperative, we really have developed a nice portfolio of businesses that have significant backlog. I'm going to come back to MTIX in a second. The real estate business, the hotel is something that we're very happy that has come out of bankruptcy, has secured a $135 million loan from Hana Bank for construction is under construction, is going well. We are a partner in that. We do not have, and I want to make sure this is clear, we do not have, at this time, any obligation to contribute capital. And so we're focused on all our future capital contributions to our portfolio of companies to our subsidiaries. And the hotel is just something we own passively. But it is under construction. It is going well. I checked in with the general partner yesterday before this call, and they are very pleased with it. And you obviously can go by and see it if you are in Tribeca in New York. Next slide, please. Will, could you comment on the backlog a little bit and maybe how the -- I'm going to make a quick comment here, too, and that is we really hoped with acquisitions and fulfilling our backlog that our 2019 numbers would be much higher. Obviously, everybody knows that we were not able to achieve the goals through. If you -- it's really important, when you see our forecast, we talk about -- the forecasts include acquisitions that we either had or thought we would make and some of our backlog. And that is very difficult. And that's why I talked about JR's role. He's managed to fulfill and continue to grow the company despite the fact that the capital has been constrained. But Will, can you talk about this slide, please, for a second?

Sure. So I think it's important also before we get too far into this, is just to kind of reconcile these 2 slides. Earlier in the presentation, JR discussed the backlog and imminent orders at Gresham Worldwide. And that was just over $40 million. So that does include imminent orders, which are orders we expect to receive in 2020 but have not received yet, and that represented a little over $20 million of that backlog and imminent order number. So when you look at the first -- the numbered paragraph when we discussed our backlog, our existing one at December 31 of $68.9 million and then you factor in that we've got $46 million related to the related party, which is MTIX and the MLSE machines, the 25-machine purchase order, obviously, that's significantly less than $40 million that was on a previous slide. So that is the discrepancy. So we anticipate this backlog number is going to be increasing significantly because of orders we expect to the tune of about $20 million if you go through and jump back to that slide. So the company's prospects going forward are strong. They're stable. We have good relationships with the customers. We have a decent asset base. And again, as I pointed out, 2019 was really a period that we were trying to focus on reduction or restructuring our existing debt. Current liabilities did decrease by $5.6 million. If you were to exclude the lease liabilities, which were new for 2019, they didn't exist in 2019 because the new accounting standards went into effect on January 1. We have seen reductions in interest expense, both on a quarter-over-quarter comparison as well as the -- an annual comparison, 2018 versus 2019. And to the extent that we're able to eliminate a lot of the short-term debt, we will continue to see reductions there, significant reductions, I would expect. As Todd and JR pointed out, Microphase is seeing a significant improvement. I think I heard JR cite $170,000 revenue in one number. I do think it's important to note that, that $170,000, that month, where revenues were at $170,000, that was a reflection of deteriorating revenues because of capital constraints. Once we went back in there and injected some additional capital, we saw significant improvements to the point that, I believe, Microphase is going to post its best 6 months that we've ever seen since we've acquired the company. Revenue numbers have -- obviously, 2019 estimate is consistent with 2018's, and a big part of that is because of the absence of related party revenue in 2019. There was none, whereas in 2018, we had about $4 million. And again, that's related to our MLSE machines with MTIX. Todd, unless there's anything else you wanted to focus on?

I do want to focus on the fact that Will and I have been very diligent on trying to figure out a way to change the short-term borrowing. And as many of you might have seen and maybe if you read the disclosures, Will and I own a company called Ault & Company. I'm the Chairman and CEO. Will is the Vice Chairman, one of the largest shareholders, and the CFO, and him and I have made a decision because of the capital markets to put very -- what we consider to be competitive money in there. And recently, we bought 19% of the company, in Ault & Company. We signed a transaction. We actually -- so there's clarity here. We -- Will, can you make a comment to them that we've advanced the money of the company, the company did receive the capital? Will, can you confirm that?

Of course, they did.

Yes. Because I know that people comment to -- well, unfortunately, people make up stories that, that's not true, and the money has been received and DPW has had access to that capital. Will and I have put in additional money in there. And we'll be -- we will be opportunistic in terms of when we look at putting additional capital into DPW from Ault & Company. Unfortunately, the company trades at a significant discount to its book value. I think as of September 30, the book value was $6.80, and the company continues to trade at what we consider to be a very poor number. And there are people that shout from the rooftops of how much they don't like us. Unfortunately, we hope to gain enough shareholders that do like us and get the market value to a reasonable number. If you look at the defense business alone and you look at what those things sell for independently, you can see that we believe there's great opportunity here. Operator, next slide, please. So this kind of lays out our strategy for each one of the businesses. When you see here where it says the strategies of investment intend to provide additional capital to the portfolio of companies, I would tend to say that, that's probably incorrect. Will and I have made a decision, along with the Board of Directors, to not really invest in any more -- in new investments. I think, Will, is that a fair assessment? Can you maybe give a comment on the future investments into where we stand there? I don't think that, that's really something that represents fairly what we're going to do there.

Well, I think our -- for 2020, anyway, I think our investment focus is going to be on our existing opportunities because they're all significant. Every one of these could make a significantly material impact to our results. And it doesn't make sense to expand into areas, new areas and add an additional layer of risk.

So if you look at the financial services side here, I want to reiterate, on the strategic investment side, I don't see a lot of new investment there. I think that we would deploy that capital to our existing subsidiaries. On the financial services side, we did file a Reg A. We are pending comments there, and there's regulatory review there that's still ongoing. But we hope to get that Reg A done sometime and allow the lender to borrow money and re-lend the money and really develop a lending portfolio. The restaurants, as I said earlier, that's sort of in development there in terms of their strategic focus. The defense business and power business really wants to move to some independent public markets. We talked about that with JR already. Blockchain, we're really disappointed we weren't able to spin that off, but we're still efforting that opportunity. And then we see -- we really hope for -- and this is really forward looking. We can't forecast at all yet, but this is going to be a growth story, the apparel business. And I'll provide a link on DPW's website as to really kind of what that is. But there is a remarkable amount of excess inventory in the apparel business, of which we have an opportunity through relationships to really benefit from some of the sites and locations we have and really be accretive here from a -- if you look at things, some of the companies out there that work on consignment that are app-based only, we are going to be app-based but we're also pop-up store-based. And those are all growing very significantly. We have a great relationship in that company, and the brand partners we hope to bring to the table there we think will be meaningful someday. It's not meaningful today, small, but we're super optimistic about the future of that business. Next slide, please. So we've given a forecast here, some plans for 2020. We won't belabor this but obviously, to expand -- to work on the backlog, to have Gresham work on its own capital base, Gresham Worldwide, to improve the cash flow of the business. There is improvements all across many -- many of the companies are improving, and we hope to be profitable or towards profitability at the end of '19. Obviously, that's pushed out a little bit, but we do see a lot of improvement. The expanding offers at Monthlyinterest.com. We probably get requests every month for people to list on that platform. That's a regulatory issue for us right now. So we're -- that platform is pending. We only offer deals that are internal. But there are other companies that want to list on that, and that's a great fintech portal, we think, for the future. The -- we think that the retail business, especially the pop-up consignment business, will help to our bottom line. We've completed and will -- excuse me, we expect to complete the rebrand in Gresham Worldwide and seek access to the public markets in the first quarter and the second quarter. And Will, can you comment on the projections here because, clearly, someone can add up that we internally look like we're going to do more than that? But we've really taken our gas -- our foot off the pedal. We have not accessed capital markets. We want DPW to stabilize. We're really -- we're concerned about dilution there. We had to do 2 reverses last year. It was a very choppy market for us, terrible market. Can you talk about the projections there and your comments on that 30 million, 35 million?

Yes. Again, I think the biggest takeaway from this [ while we're ] looking at projections is the fact that we're looking this year to be conservative in January until we have a better sense of what's going to happen with the capital markets and with our ongoing debt reduction program. It could certainly -- be higher but I wouldn't feel comfortable saying they're going to be higher today.

Yes. We're very -- a couple of things I want to point out before we -- if you could do me a favor, operator, and go to the next slide. Amos Kohn has been running the Power business, which is now called Coolisys, which represents Digital Power Corp. He is doing a great job of holding the line there with that business. I know he has aspirations, too, of how successful that business will be. He's been there for like 12 or 13 years. And so we're super optimistic about what Amos is trying to get done there. The -- if you look at the subsidiaries now, we're very comfortable where we stand. And I think this is the first time that we can say honestly we're not really looking to do any acquisitions at this time. We're more looking to -- we planted a lot of seeds, and we're more looking to help the trees grow, so to speak, and then figure out how we can harvest them for the shareholders. Obviously, Will and I are confident that we have a plan. We bought an additional 20% of the company. We plan on buying more of it when the -- and if the Board, the independent Board approves it. Now there is a process to get the independent Board to approve us doing that. And so that's not a simple task, but we have been working with them to make additional investments. At this time, we're going to open it up for questions. There was one question already. If you could simply go on to your slide and ask the question, we'll be happy to answer it.

Let me see here. Will, the first question that we received was -- well, I'm going to read it to you. The question is we have lawsuits in New York. What do we plan on doing about them? Do you want to take that? Or do you want me to comment?

You can go ahead on the lawsuits. Obviously, we're going to -- the company is going to defend itself and protect its shareholders and its creditors.

Yes. I would say to you, we have a very good relationship with our primary lien holder. We couldn't get to terms we were both comfortable with, but we are working with them. It is not a material transaction, but we did sell the dam in upstate New York. It is in escrow. And that represents only a few hundred thousand dollars, but they're working with us on some of the assets that we will be selling that are not material or will not -- are not part of our future plans. Other creditors or other people that are suing us, we have taken an approach of aggressive defense and aggressive counter litigation because we really have felt like that we have been under somewhat of attack and the -- and Will, chime in here if you think it's incorrect. But we do not believe that we need to pay these kind of excessive fees that some creditors are asking for. Like I said, I'll go back. This does not apply to our first lien creditor. Our first lien creditor is very cooperative, and even though there's a pending lawsuit, we're working with them diligently. We have a strategy we think we can employ to solve these issues, but we're not going to just take it. We're going to be aggressive in defending the capital base. We're very disappointed with the performance of the company's stock last year, and we've made a decision to take a stand there. Will, is that a fair comment in your estimation?

Yes, that's fair. And I just don't [indiscernible] any more details than that. It's difficult to discuss litigation, ongoing litigation.

Right. So I've answered that question. We don't have, it seems like, any additional questions. I would say to you that the one question I get over and over again is am I going somewhere, is Will going somewhere. Will and I have long-term contracts. Ault & Company is committed to the future of DPW, and we're not going anywhere. We see a lot of speculation out there about where we stand. We're very comfortable with the subsidiaries we have. We're very comfortable that the material science technology of MTIX and MLSE is very viable. The people that run that company are very dedicated. They are capital constrained. We expect that to improve. When their capital situation improves, ours will. We're very comfortable with JR and Amos. The financial services business, the lender has performed well to our satisfaction so far. Digital Farms, we're disappointed that it didn't get spun out, but we're still working there. And ItsLikeFashion, if you look at the Poshmarks of the world and The RealReals of the world and you see what we're doing there, we're very excited about the future that we think that will be a subsidiary that we hope will contribute for a long time to come. That's a big business, the fashion business and the opportunity for us to take advantage of what is a -- what I call the consignment part of that business is -- [ could ] potentially add a lot of margin. So with that said, with no additional questions, operator, do you have any additional questions? Hold on one second. Okay. We do have one question that says what are you most excited about or do you see new contracts or opportunities that we hope for to come in 2020. I would answer that by saying I'm most excited about what JR is doing on the defense side. JR and Tim Long and the team there, I'm very pleased with what they're doing. I'm excited to see Amos turn around Digital Power Corp. He is working under very difficult conditions, and so I'm very pleased with that. I think that's probably the thing that I see the most opportunistic. If you look at the defense businesses, they're valued much higher than the overall DPW. And so we're going to do everything we can to help JR with his backlog and getting value there and figuring out how to deliver that value to shareholders, of which Will and I, through Ault & Company, are shareholders with you and expect to be larger shareholders over time. So I think what we'll try to promote here in 2020 is calm execution on the existing businesses we have. We don't really want to add anything to that. We want to be calm and deliberate in future financings and get the balance sheet under control and allow the company a chance to grow. I think that's really what we're excited about the most. The question is do you see any future offerings coming. We can't comment on future offerings, but I would say to you that we know that Gresham Worldwide wants to have their own capital structure. We know that DPW Holdings has to fix its debt issues, but it needs to be done very deliberately. And so I would say to you that -- Will, can you comment on future offerings in terms of what you think there?

I think it's still to be determined. But I would, I guess, go back to your comment about what I see the biggest progress was in 2019. I mean let's be very candid. We made 2 big acquisitions, this company did, and that was Microphase and Enertec in the prior years. So bringing on a management team and restructuring those and putting some capital in and getting them to the point where they're really starting to be integrated amongst the 3 different entities, to me, that's the biggest thing that we achieved in 2019. And in 2020, who knows? We'll see what happens. There could be another acquisition. There may not be. It's just -- I don't know if any one has been identified that would be accretive to those 3 different entities and would make sense at this point. And it's subject to the right financing in place and not reaching and putting the company itself in a big debt position. As far as offerings, it's possible, but I don't know at this point.

It's possible, but Will, I think that you and I have demonstrated that we would be willing to participate there. I mean Ault & Company has already put additional money in, and we plan on putting more in. So we are not fans of the price level. We're not fans of the way it's trading under book. We're not fans of some of our current debt structure. So I think we're going to work really hard to clean that part of it up and deal with what we have now. We've -- when we took over the company, it had a -- $3 million of equity, and it was being delisted from the New York Stock Exchange in 2016. We raised additional equity. The company has $47 million in assets despite the fact that we wrote down our miners and we did take an impairment charge, Will, on the miners. Will, how large was the impairment charge for the miners?

It was approximately $5 million.

Right. So people don't realize that even with $47 million in assets, that was after we took a $5 million write-down for the value of those miners that we still own, but obviously, the bitcoin performance has been really poor. And our shareholder base in 2017, '18 really turned hardcore towards -- really hardcore towards bitcoin in a way that we just -- bit really kind of got biblical on us. And so it really became difficult to deal with, and we're struggling from that, so. Anyways, we appreciate the questions now, and everyone, have a good day. There's obviously a lot to talk about in the future with MTIX and hopefully, it, if getting current with its financials and the future of Digital Farms and et cetera. So we're pretty excited about the defense business, which is growing. We appreciate everyone hanging with us. And with that, we're going to close the call out, and everyone, have a good day. Bye-bye.