DMG Blockchain Solutions Inc. (TSX-V: DMGI) (OTCQB US: DMGGF)
(FRANKFURT: 6AX) (“DMG”), a vertically integrated blockchain and
cryptocurrency technology company, today announces its third
quarter 2023 auditor reviewed financial results. All financial
references are in Canadian Dollars unless specified otherwise.
Recent Highlights
- Revenue of $7.5 million, 195.7 mined bitcoin on 0.8 EH/s of
realized hashrate, net loss of $4.3 million, $0.03 net loss per
share
- Cash and digital currency of $22.4
million in Q3, up 3% Q/Q and 88% Y/Y, $1.0 million debt
- Completed installation of 1 EH/s of nameplate capacity;
targeting 1.2 EH/s with additional miners to be installed by the
December quarter
- Targeting initial deployment of immersion cooling technology in
the December quarter
- Invested in additional developers
for our Core+ business to accelerate development of new
products
Readers are encouraged to review the Company’s
June 30, 2023 quarterly auditor reviewed financial statements and
management’s discussion and analysis thereof for a fulsome
assessment of the Company’s performance and applicable risk
factors, available at www.sedarplus.ca.
Sheldon Bennett, DMG Blockchain Solutions’ Chief
Executive Officer, commented, “In the June quarter, we focused our
software effort for enabling scalability of Terra Pool, as growing
our pool is foundational to our ability to generate revenue from
our other software initiatives. We are also encouraged that the
market for cryptocurrency has improved slightly during the last
quarter, suggesting the market is in a holding pattern, as it waits
for the regulators to potentially approve spot bitcoin ETFs.”
Steven Eliscu, Chief Operating Officer, added,
“Our balance sheet has remained strong with $22.4 million of cash
and digital currency, up from $21.7 million the prior quarter, and
we are encouraged that our income before other items less
depreciation and stock-based compensation, a proxy for operating
cash flow, rose to $2.0 million or 27% of revenue from 22% the
prior quarter. This improved liquidity position is enabling us to
continue to invest in infrastructure, including power distribution
equipment for our purchased mining containers as well as equipment
and materials for our first 12-megawatt tranche of immersion
cooling infrastructure. This spending will enable us to have the
infrastructure in place to rapidly grow to 2 EH/s or more with new
miner purchases.”
Financial Highlights
Revenue for the third fiscal quarter ending June
30, 2023 was $7.5 million versus $10.5 million in the year-ago
quarter, a decrease of 29%. This decline was primarily driven by a
9% year-over-year decrease in the quarterly average bitcoin price
and a decrease in the amount of mined bitcoin to 195.71, down from
212.46 in the prior-year period.
Operating and maintenance costs for the quarter
ended June 30, 2023 were $4.2 million as compared to $3.6 million
in the year-ago period. This increase was due to higher utility
costs of $0.5 million associated with an increase in digital
currency mining activity. The Company had 9,581 miners installed as
of June 30, 2023, up from 7,272 installed at June 30, 2022.
General and administrative expenses declined to
$875 thousand in the quarter ending June 30, 2023 versus $930
thousand in the prior-year period. This decrease was primarily due
to lower professional fees and lower regulatory and filing fees
during the period.
Net loss for the quarter was $4.3 million,
versus a net loss of $12.2 million in the prior-year period. The
decline in the loss for the period ending June 30, 2023 compared to
the prior-year period, was primarily the result of lower revenues
combined with increasing operating and maintenance costs, lower
unrealized revaluation losses on digital currency and lower
realized losses on the sale of digital currency.
Earnings per share for the third fiscal quarter
ending June 30, 2023 was negative $0.03 versus negative $0.07 in
the prior year period.
As of June 30, 2023, the Company had cash of
$1.8 million, digital currency of $20.6 million and total assets of
$91.2 million.
For more details, please refer to the Company’s
filings.
DMG Blockchain Solutions Inc. Third Quarter 2023
Financial Results and Corporate Update Call
Company management will host a conference call to review third
quarter 2023 financial results and provide a corporate update on
August 30, 2023 at 4:30 pm ET. Participants are asked to
pre-register for the call through this link. Registered
participants will receive a Financial Results and Corporate Update
Call weblink and dial-in information in their confirmation
email.
As there will be no live Q&A session, management will
address pre-submitted questions during the call. Those wishing to
submit a question may do so via investors@dmgblockchain.com using
the subject line ‘Conference Call Question Submission’ through 2:00
pm ET on August 30, 2023.
About DMG Blockchain Solutions Inc.
DMG is an environmentally friendly vertically integrated
blockchain and cryptocurrency company that manages, operates, and
develops end-to-end digital solutions to monetize the blockchain
ecosystem. DMG’s sustainable businesses are segmented into two
business lines under the Core and Core+ strategies and unified
through DMG’s vertical integration.
For more information on DMG Blockchain Solutions visit:
www.dmgblockchain.com Follow @dmgblockchain on Twitter and
subscribe to DMG's YouTube channel.
For further information, please contact:
On behalf of the Board of Directors,
Sheldon Bennett, CEO & DirectorTel:
516-222-2560Email: investors@dmgblockchain.comWeb:
www.dmgblockchain.com
Investor Relations ContactCORE IR
516-222-2560
For Media InquiriesJules AbrahamCORE
IR917-885-7378julesa@coreir.com
Neither the TSX Venture Exchange nor its Regulation Service
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Cautionary Note Regarding
Forward-Looking Information
This news release contains forward-looking
information or statements based on current expectations.
Forward-looking statements contained in this news release include
statements regarding the potential of Core+ strategies and plans,
Terra Pool, delivering products that enable the monetization of
bitcoin transactions, developing and executing on the Company’s
products and services, increasing self-mining, the launch of
products and services, events, courses of action, and the potential
of the Company’s technology and operations, among others, are all
forward-looking information.
Future changes in the Bitcoin network-wide
mining difficulty rate or Bitcoin hash rate may materially affect
the future performance of DMG’s production of bitcoin, and future
operating results could also be materially affected by the price of
bitcoin and an increase in hash rate mining difficulty.
Forward-looking statements consist of statements
that are not purely historical, including any statements regarding
beliefs, plans, expectations, or intentions regarding the future.
Such information can generally be identified by the use of
forwarding-looking wording such as "may", "expect", "estimate",
"anticipate", "intend", "believe" and "continue" or the negative
thereof or similar variations. The reader is cautioned that
assumptions used in the preparation of any forward-looking
information may prove to be incorrect. Events or circumstances may
cause actual results to differ materially from those predicted, as
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the Company,
including but not limited to, market and other conditions,
volatility in the trading price of the common shares of the
Company, business, economic and capital market conditions; the
ability to manage operating expenses, which may adversely affect
the Company's financial condition; the ability to remain
competitive as other better financed competitors develop and
release competitive products; regulatory uncertainties; access to
equipment; market conditions and the demand and pricing for
products; the demand and pricing of bitcoins; security threats,
including a loss/theft of DMG's bitcoins; DMG's relationships with
its customers, distributors and business partners; the inability to
add more power to DMG's facilities; DMG's ability to successfully
define, design and release new products in a timely manner that
meet customers' needs; the ability to attract, retain and motivate
qualified personnel; competition in the industry; the impact of
technology changes on the products and industry; failure to develop
new and innovative products; the ability to successfully maintain
and enforce our intellectual property rights and defend third-party
claims of infringement of their intellectual property rights; the
impact of intellectual property litigation that could materially
and adversely affect the business; the ability to manage working
capital; and the dependence on key personnel. DMG may not actually
achieve its plans, projections, or expectations. Such statements
and information are based on numerous assumptions regarding present
and future business strategies and the environment in which the
Company will operate in the future, including the demand for its
products, the ability to successfully develop software, that there
will be no regulation or law that will prevent the Company from
operating its business, anticipated costs, the ability to secure
sufficient capital to complete its business plans, the ability to
achieve goals and the price of bitcoin. Given these risks,
uncertainties, and assumptions, you should not place undue reliance
on these forward-looking statements. The securities of DMG are
considered highly speculative due to the nature of DMG's business.
For further information concerning these and other risks and
uncertainties, refer to the Company’s filings on www.SEDARplus.ca.
In addition, DMG’s past financial performance may not be a reliable
indicator of future performance.
Factors that could cause actual results to
differ materially from those in forward-looking statements include,
failure to obtain regulatory approval, the continued availability
of capital and financing, equipment failures, lack of supply of
equipment, power and infrastructure, failure to obtain any permits
required to operate the business, the impact of technology changes
on the industry, the impact of Covid-19 or other viruses and
diseases on the Company's ability to operate, secure equipment, and
hire personnel, competition, security threats including stolen
bitcoins from DMG or its customers, consumer sentiment towards
DMG's products, services and blockchain technology generally,
failure to develop new and innovative products, litigation, adverse
weather or climate events, increase in operating costs, increase in
equipment and labor costs, decrease in the price of Bitcoin,
failure of counterparties to perform their contractual obligations,
government regulations, loss of key employees and consultants, and
general economic, market or business conditions. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement. The reader is cautioned not to place
undue reliance on any forward-looking information. The
forward-looking statements contained in this news release are made
as of the date of this news release. Except as required by law, the
Company disclaims any intention and assumes no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise. Additionally, the
Company undertakes no obligation to comment on the expectations of
or statements made by third parties in respect of the matters
discussed above.
DMG Blockchain Solutions Inc. Consolidated
Statements of Loss and Comprehensive Loss(Expressed in Canadian
Dollars)(Unaudited)
|
|
For the Three Months Ended |
|
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
$ |
|
$ |
|
Revenue |
|
7,495,257 |
|
10,529,315 |
|
|
|
|
|
Expenses |
|
|
|
Operating and maintenance
costs |
|
4,156,305 |
|
3,568,483 |
|
General and
administrative |
|
875,197 |
|
930,172 |
|
Stock-based compensation |
|
544,966 |
|
574,419 |
|
Research and development |
|
480,815 |
|
553,509 |
|
Provision for doubtful
accounts |
|
(34,853 |
) |
6,009 |
|
Depreciation |
|
5,334,219 |
|
5,531,655 |
|
Amortization of intangible assets |
|
- |
|
262 |
|
Total expenses |
|
11,356,649 |
|
11,164,509 |
|
|
|
|
|
Income (loss) before other items |
|
(3,861,392 |
) |
(635,194 |
) |
|
|
|
|
Other income
(expense) |
|
|
|
Interest and other income |
|
124,303 |
|
- |
|
Gain on disposition of
assets |
|
- |
|
1,154,776 |
|
Foreign exchange gain
(loss) |
|
(3,792 |
) |
221,198 |
|
Loss on settlement of legal
claims |
|
- |
|
(30,000 |
) |
Loss on modification of amount
recoverable |
|
(555,075 |
) |
- |
|
Impairment of amounts
recoverable |
|
- |
|
(1,261,330 |
) |
Gain on write-down of accounts
payable |
|
- |
|
- |
|
Unrealized revaluation loss on
digital currency |
|
- |
|
(8,089,448 |
) |
Realized gain (loss) on sale
of digital currency |
|
(156,791 |
) |
(2,909,548 |
) |
Gain (loss) on change in fair
value of marketable securities |
|
179,215 |
|
(683,179 |
) |
Net income (loss) |
|
(4,273,532 |
) |
(12,232,725 |
) |
|
|
|
|
Other comprehensive
income |
|
|
|
Items that may be reclassified
subsequently to income or loss: |
|
|
|
Unrealized revaluation gain
(loss) on digital currency |
|
2,690,110 |
|
(2,611,125 |
) |
Cumulative translation adjustment |
|
(39,736 |
) |
(114,004 |
) |
Net loss and comprehensive loss |
|
(1,623,158 |
) |
(14,957,854 |
) |
|
|
|
|
Basic and diluted income (loss) per share |
|
(0.03 |
) |
(0.07 |
) |
Weighted average number of
shares outstanding |
|
|
|
- basic
& diluted |
|
167,681,377 |
|
167,254,729 |
|
DMG Blockchain Solutions Inc. Consolidated
Statements of Financial Position (Expressed in Canadian
Dollars)
|
As atJune 30, 2023
(unaudited) |
|
As atSeptember 30,
2022(audited) |
|
ASSETS |
$ |
|
$ |
|
Current |
|
|
Cash and cash equivalents |
1,779,410 |
|
1,247,513 |
|
Amounts receivable |
4,245,919 |
|
6,320,533 |
|
Digital currency |
20,644,465 |
|
9,319,790 |
|
Prepaid expense and other
current assets |
177,703 |
|
258,289 |
|
Current portion of lease
receivable |
- |
|
36,883 |
|
Marketable securities |
485,933 |
|
401,542 |
|
Total current assets |
27,333,430 |
|
17,584,550 |
|
|
|
|
Long-term deposits |
7,037,598 |
|
14,526,569 |
|
Property and equipment |
50,353,305 |
|
58,083,429 |
|
Long-term investments |
45,000 |
|
75,000 |
|
Amount recoverable |
6,436,960 |
|
6,632,501 |
|
Total assets |
91,206,293 |
|
96,902,049 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
Current |
|
|
Trade and other payables |
4,441,697 |
|
4,854,517 |
|
Deferred revenue |
11,926 |
|
103,678 |
|
Current portion of lease
liability |
65,309 |
|
131,612 |
|
Current portion of loans
payable |
319,596 |
|
291,881 |
|
Total current liabilities |
4,838,528 |
|
5,381,688 |
|
|
|
|
Long-term lease liability |
46,573 |
|
92,809 |
|
Secured loan payable |
944,568 |
|
- |
|
Total liabilities |
5,829,669 |
|
5,474,497 |
|
|
|
|
Shareholders'
Equity |
|
|
Share capital |
110,478,267 |
|
110,381,441 |
|
Reserves |
45,409,379 |
|
43,959,280 |
|
Accumulated other
comprehensive income |
6,224,455 |
|
121,623 |
|
Accumulated deficit |
(76,735,477 |
) |
(63,034,792 |
) |
Total shareholders' equity |
85,376,624 |
|
91,427,552 |
|
Total liabilities and shareholders' equity |
91,206,293 |
|
96,902,049 |
|
DMG Blockchain Solutions Inc.
Consolidated Statements of Cash Flows(Expressed in Canadian
Dollars)(Unaudited)
For the nine months ended June 30, |
2023 |
|
2022 |
|
|
$ |
|
$ |
|
OPERATING
ACTIVITIES |
|
|
Net income (loss) for
the period |
(13,700,685 |
) |
(7,139,380 |
) |
Non-cash
items: |
|
|
Accretion |
38,425 |
|
6,777 |
|
Amortization of intangible assets |
- |
|
42,125 |
|
Depreciation |
17,279,768 |
|
13,836,891 |
|
Share-based payments |
1,483,175 |
|
2,527,097 |
|
Unrealized loss on revaluation of digital currency |
- |
|
8,089,448 |
|
Unrealized foreign exchange loss |
56,086 |
|
22,127 |
|
Gain on sale of assets |
(70,429 |
) |
(1,156,564 |
) |
Gain on write-down of accounts payable |
- |
|
(2,050,827 |
) |
Unrealized loss (gain) on marketable securities |
(84,391 |
) |
1,075,395 |
|
Impairment of amounts recoverable |
- |
|
1,261,330 |
|
Bad debt expense |
79,524 |
|
33,730 |
|
Digital currency related revenue |
(20,915,310 |
) |
(31,935,210 |
) |
Digital currency sold |
15,957,866 |
|
31,397,207 |
|
Realized loss on sale of digital currency |
(172,101 |
) |
(6,061,114 |
) |
Non-cash interest income |
(450,636 |
) |
(3,878 |
) |
Accrued interest |
(129 |
) |
(98,672 |
) |
Loss on amount recoverable modification |
555,075 |
|
- |
|
|
|
|
Changes in non-cash
operating working capital: |
|
|
Prepaid expenses and other current assets |
110,586 |
|
250,598 |
|
Amounts receivable |
2,076,703 |
|
(3,240,121 |
) |
Amounts recoverable |
(9,458 |
) |
- |
|
Deferred revenue |
(91,752 |
) |
25,533 |
|
Trade and other payables |
1,302,640 |
|
3,731,015 |
|
Digital currencies |
- |
|
5,661,116 |
|
Net cash provided by operating activities |
3,444,957 |
|
16,274,623 |
|
|
|
|
INVESTING
ACTIVITIES |
|
|
Purchase of property and
equipment |
(1,415,329 |
) |
(4,193,256 |
) |
Deposits on mining
equipment |
(2,423,564 |
) |
(34,363,490 |
) |
Proceeds on sale of
equipment |
4,829 |
|
3,678,311 |
|
Refund of security
deposit |
- |
|
100,498 |
|
Proceeds from sublease |
37,012 |
|
109,582 |
|
Net cash used by investing activities |
(3,797,052 |
) |
(34,668,355 |
) |
FINANCING
ACTIVITIES |
|
|
Proceeds from option exercises |
63,750 |
|
44,000 |
|
Proceeds from warrant
exercise |
- |
|
55,000 |
|
Principal lease payments |
(129,345 |
) |
(155,850 |
) |
Proceeds from secured
loan |
950,665 |
|
- |
|
Net cash provided by (used in) financing
activities |
885,070 |
|
(56,850 |
) |
Impact of currency translation on cash |
(1,078 |
) |
410 |
|
Change in
cash |
531,897 |
|
(18,450,172 |
) |
Cash,
beginning |
1,247,513 |
|
19,686,777 |
|
Cash, end |
1,779,410 |
|
1,236,605 |
|
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