Mr. Chadwick Wasilenkoff reports

FORTRESS GLOBAL ENTERPRISES REPORTS SECOND QUARTER 2018 RESULTS

Fortress Global Enterprises Inc. had second quarter 2018 operating EBITDA (net income before interest, income taxes, depreciation, amortization, non-operating income and expenses, and stock-based compensation) from continuing operations of $2.7-million compared with operating EBITDA loss from continuing operations of $1.4-million in the previous quarter and operating EBITDA from continuing operations of $1.5-million in the prior-year comparative period. The dissolving pulp segment generated operating EBITDA of $4.2-million, and the bioproduct segment generated operating EBITDA loss of $500,000. Corporate costs were $1.6-million in the second quarter of 2018.

Chadwick Wasilenkoff, chief executive officer of Fortress Global Enterprises, commented: "This quarter saw significant operational progress, which was offset by issues that caused more downtime than planned. We have seen steady progress on the number of digester cooks per day, the tonnes per each of these cooks and the daily megawatts of power produced. We are confident this progress will continue into the coming quarters, which should provide additional economic benefits. We remain confident that we will receive the operating permit for the fifth digester in the third quarter, which will help with a step-change improvement. The unplanned downtime enabled the mill to move up some planned third quarter shutdown activity to debottleneck a long-term issue in the evaporator/concentrator area of the mill. Results derived from the work performed have proven to show meaningful benefits to date. We also experienced several power outages that affected the region, including our mill. The latest unplanned shuts in July were caused by issues within our recovery boiler, which resulted in approximately seven days of unplanned downtime at the FSC mill. Despite this challenge, the Thurso mill was EBITDA positive for the month. Along with the recovery boiler repair, we were able to accelerate numerous projects that were originally planned for our annual maintenance shut in the fourth quarter. Therefore, we now believe that we can reduce our annual planned shutdown by approximately 50 per cent."

Second quarter 2018 segment results

The dissolving pulp segment generated operating EBITDA of $4.2-million for the quarter ended June 30, 2018, compared with operating EBITDA of $200,000 for the quarter ended March 31, 2018, and operating EBITDA of $3.5-million for the prior-year comparative period. The ramp-up and optimization of the fifth digester continued in the second quarter of 2018. The receipt of the requisite permit required for commercial operation was previously expected by the end of the second quarter and is now expected in the third quarter of 2018 as the company works through the permitting process. The fifth digester is expected to result in approximately 17,000 tonnes increased annualized production once operating as projected. Production volumes in the second quarter of 2018 increased approximately 12 per cent from the first quarter of 2018.

A total of 38,266 air dried metric tonnes (ADMT) of dissolving pulp were produced in the second quarter of 2018, and the FSC mill sold 39,882 ADMT of dissolving pulp in the same period, compared with sales of 33,144 ADMT and 34,672 ADMT of dissolving pulp in the previous quarter and prior-year comparative period, respectively.

Dissolving pulp prices in 2018 have been increasing through the second quarter of 2018, and currently, the price is $1,214 (US$935) per tonne, which is 11 per cent higher year over year based on U.S.-dollar quoted pricing. Typical market cycle peak occurs in the fall coinciding with downstream textile and viscose staple fibre (VSF) market cycles. Dissolving pulp prices are likely also being supported by increases in Chinese VSF output, and favourable paper pulp market pricing, which influences swing mill production toward paper pulp. VSF pricing has been impacted by increased capacity and is currently $2,668 ($2,055 (U.S.)) per tonne, which is approximately 11 per cent lower year over year based on U.S.-dollar quoted pricing. Current low VSF inventory levels should help to stabilize pricing. VSF historically trades at a premium to cotton and has been supported by stronger cotton pricing over the past two years. Sales of reserve cotton for 2018 began in April and are expected to further reduce the Chinese stockpile, which is expected to improve stability in the cotton market. Cotton ending stocks in China for 2018 to 2019 are projected to decline to 28.5 million bales, which are less than half the peak volume of 66.4 million bales reached in 2014 to 2015. Cotton ending stocks globally for 2018 to 2019 are projected to decline by 7.1 million bales to their lowest level since the 2011 to 2012 season. Population growth, particularly the middle class, continues to drive the worldwide demand for fibre (103 million tonnes) as reported in The Fiber Year 2018. Increased demand for fibre has resulted in increased prices and demand for textile feedstocks, including man-made materials, which continue to capture market share. VSF demand is expected to continue to grow by over 6 per cent per year.

The bioproducts segment generated operating EBITDA loss of $500,000. During the second quarter of 2018, the company integrated the operations of S2G Biochemicals Inc. and made significant progress on the company's xylitol demonstration plant project planned for the Fortress specialty cellulose mill site. On May 1, 2018, the board of Sustainable Development Technologies Canada approved $10.4-million of grant funding for the project, subject to finalization of definitive agreements. In parallel, the company secured support from the government of Quebec through Investissement Quebec for an approximately $5-million equity investment for a 49-per-cent ownership position in Fortress Xylitol Inc., a new subsidiary established in Quebec to install and operate the xylitol demonstration plant, and a further conditional loan of $2-million. Furthermore, on July 27, 2018, Natural Resources Canada announced that the company's xylitol demonstration plant proposal was one of the shortlisted semi-finalists for its flagship clean growth program. The company is targeting to execute definitive agreements in the third quarter of 2018. Further announcements for the balance of funding are expected in the second half of 2018.

The xylitol demonstration plant project is estimated to require 18 months to engineer and build. The budget for the project is estimated at up to $33-million. This includes equipment procurement and installation, operating utilities and raw materials during the demonstration, engineering of a commercial plant, overhead, and cash flow.

Corporate and cash

Corporate expenses for the three months ended June 30, 2018, decreased by $1.0-million to $1.0-million compared with the prior-year comparative period primarily due to a decrease in personnel costs and corporate activity. Cash and restricted cash at June 30, 2018, were $32.1-million compared with $37.8-million at March 31, 2018. As at June 30, 2018, the company had $7.9-million in restricted cash.

For a summary of significant developments, please refer to management's discussion and analysis for the three-month period ended June 30, 2018 (available on SEDAR).

Selected financial information

The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the company's unaudited condensed consolidated financial statements as at and for the three-month period ended June 30, 2018, the related notes thereto, and management's discussion and analysis, which are available on SEDAR.

Reference is made in this news release to operating EBITDA (defined as net income before interest, income taxes, depreciation, amortization, non-operating income and expenses, and stock-based compensation), which the company considers to be an indicative measure of operating performance and a metric to evaluate profitability. Operating EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to net loss or cash flows as determined in accordance with international financial reporting standards. As there is no standardized method of calculating this measure, the company's operating EBITDA may not be directly comparable with similarly titled measures used by other companies. Reconciliation of operating EBITDA to net loss reported in accordance with IFRS is included in the attached table.

                    SELECTED FINANCIAL INFORMATION AND STATISTICS
                      (thousands of dollars, except shipments)                 
                                   
                                                           Q2 2018    Q1 2018    Q2 2017

Sales from continuing operations                           $50,077    $39,735    $42,808
Operating EBITDA (1) (loss) from continuing operations       2,652     (1,421)     1,468
Net (loss) from continuing operations                       (8,150)    (8,762)    (5,075)
Pulp shipments (ADMT)                                       39,882     33,144     34,672
                                                           =======    =======    =======

(1) Note the net loss to operating EBITDA (loss) reconciliation from continuing 
operations.

A conference call to discuss the financial results for the second quarter of 2018 will be held on Aug. 8, 2018, at 6 a.m. PDT. To participate in the conference call, please dial one of the following numbers.

Vancouver:  604-681-8564

Calgary or international:  403-532-5601

Edmonton:  780-429-5820

Toronto:  416-623-0333

Ottawa:  613-212-0171

Montreal:  514-687-4017

Toll-free dial-in number:  1-855-353-9183 from Canada and the United States

Participant passcode:  15086 followed by the number sign

Conference reference No.:  1235322 followed by the number sign

A replay of the conference call will be available for 30 days. To access the replay, listeners may dial 1-855-201-2300 from North America or 403-255-0697 international. The conference reference number is 1235322 followed by the number sign, and the participant passcode to access the replay is 15086 followed by the number sign.

A presentation to complement the company's second quarter earnings conference call is available under the financials section or by sending a request to info@fortressge.com.

About Fortress Global Enterprises Inc.

Fortress Global Enterprises operates its dissolving pulp business at the Fortress specialty cellulose mill located in Canada, which also operates in the renewable energy generation sector through its cogeneration facility.

We seek Safe Harbor.