DMG Blockchain Solutions Inc. (TSX-V: DMGI) (OTCQB US: DMGGF)
(FRANKFURT: 6AX) (“DMG”), a vertically integrated blockchain and
data center technology company, today announces its fiscal first
quarter 2024 financial results. All financial references are in
Canadian Dollars unless specified otherwise.
Q1 2024 Financial Results
Highlights
- Q1 2024 results of $9.7 million
revenue, $1.5 million operating loss before other items, $7.0
million net income and $0.04 per share
- 196 bitcoin mined, up 35% from the
prior quarter on 0.96 EH/s, up 45% from the prior quarter
- $3.7 million cash flow from
operations, up 163% from the prior quarter
- Signed agreement with Bitmain
Technologies in December to purchase 4,550 T21 190 TH/s bitcoin
miners, which is expected to approximately double hashrate to about
2 EH/s
- Strong balance sheet as of December
31, 2023 with $27.7 million in cash and digital currency, $91.0
million in total assets
Sheldon Bennett, DMG Blockchain Solutions’ Chief
Executive Officer, commented, “DMG Q1 2024 results benefitted from
the confluence of our 45% higher hashrate and a 30% increase in the
quarterly average price of bitcoin versus the prior quarter. With
the purchase of 4,550 new 190 TH/s T21 miners and the
infrastructure needed to energize those miners, we are positioned
to approximately double our electrical infrastructure and hashrate.
Regarding our Core+ Blockseer software strategy, we continue to
invest in both Bitcoin network software infrastructure and
applications, and we remain encouraged regarding the opportunity to
monetize bitcoin transactions.”
Q1 2024 Financial Results
Review
Revenue for the first fiscal quarter ending
December 31, 2023 was $9.7 million versus $7.2 million in the prior
year period, an increase of 35%, primarily due to the increase in
digital currency mining revenues as a result of bitcoin price
increasing 100% over the year-ago period to an average of $49,129
in the December quarter. This increase was partially offset by an
81% increase in Bitcoin network difficulty that lowered DMG’s
bitcoin generation per EH/s by 37% from the same period last year.
In addition, revenue was also partially offset by a loss in net
pool revenue of $1.0 million.
Income before other items for the three months
ended December 31, 2023 was -$1.5 million versus -$5.3 million in
the prior year period.
Operating and maintenance costs for the three
months ended December 31, 2023 were $5.1 million as compared to
$4.4 million in the same quarter in the prior year. The increase is
a result of a rise in utilities expense, driven by expanded digital
currency mining operations related to additional miners.
Net income for the three months ending December
31, 2023 was $7.0 million versus a loss of $7.0 million in the
prior year period. The improvement in net income was driven
primarily by an increase in unrealized revaluation gain on digital
currency, which was a gain of $8.2 million versus a loss of $1.4
million in the prior year period. In addition, it was also driven
by an increase in revenue of $2.5 million and a decrease in
depreciation of $1.7 million, partially offset by an increase in
operating and maintenance costs of $0.7 million all related to the
increase in installation of new miners for self-mining. Research
costs increased slightly to $0.4 million.
Earnings per share for the first fiscal quarter
ending December 31, 2023 was $0.04 versus -$0.04 in the prior year
period.
As of December 31, 2023, the Company had cash of
$2.2 million, digital currency of $25.5 million and total assets of
$91.0 million. For more details, please refer to the Company’s
filings.
Readers are encouraged to review the Company’s
December 31, 2023 quarterly unaudited 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.
DMG Blockchain Solutions Inc. First Quarter 2024
Financial Results and Corporate Update Call
The Company also announces that it will host a
conference call to review first quarter 2024 financial results and
provide a corporate update on February 22, 2024, 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 February 22, 2024.
About DMG Blockchain Solutions
Inc.
DMG is an environmentally friendly vertically
integrated blockchain and data center 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.comFollow @dmgblockchain on X 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
Contact:Core IR 516-222-2560
For Media Inquiries:Jules
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 DMG’s strategies and plans, the expected
increase in realized hashrate, the deployment of new capacity, the
expected arrival of new miners, the expected timelines, the
opportunity and plans to monetize bitcoin transactions, the
continued investment in Bitcoin network software infrastructure and
applications, developing and executing on the Company’s products
and services, increasing self-mining, efforts to improve the
operation of its mining fleet, 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, equipment failures, 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 December 31, |
|
|
2023 |
|
2022 |
|
|
$ |
|
$ |
|
Revenue |
9,690,764 |
|
7,174,592 |
|
|
|
|
Expenses |
|
|
Operating and maintenance
costs |
5,147,651 |
|
4,408,792 |
|
General and
administrative |
886,061 |
|
947,936 |
|
Stock-based compensation |
368,494 |
|
515,130 |
|
Research |
438,179 |
|
431,939 |
|
Bad debt expense
(recovery) |
3,764 |
|
63,604 |
|
Depreciation |
4,341,782 |
|
6,090,845 |
|
Total expenses |
11,185,931 |
|
12,458,246 |
|
|
|
|
Operating loss before other items |
(1,495,167) |
|
(5,283,654) |
|
|
|
|
Other income
(expense) |
|
|
Interest and other income |
165,781 |
|
113,141 |
|
Gain on disposition of
assets |
- |
|
70,429 |
|
Foreign exchange loss |
(94,585) |
|
(80,976) |
|
Loss on fair value of
investments |
(609,120) |
|
- |
|
Provision of sales tax
receivable |
(253,900) |
|
- |
|
Unrealized revaluation gain
(loss) on digital currency |
8,162,860 |
|
(1,415,660) |
|
Realized gain (loss) on sale
of digital currency |
851,870 |
|
(177,162) |
|
Gain
(loss) on change in fair value of marketable securities |
244,751 |
|
(229,522) |
|
Net income (loss) |
6,972,490 |
|
(7,003,404) |
|
|
|
|
Other comprehensive
income |
|
|
Items that may be reclassified
subsequently to income or loss: |
|
|
Revaluation loss on digital assets |
- |
|
(9,644) |
|
Cumulative translation adjustment |
10,082 |
|
(256) |
|
Net income (loss) and comprehensive income
(loss) |
6,982,572 |
|
(7,013,304) |
|
|
|
|
Basic earnings (loss) per share |
$0.04 |
|
($0.04) |
|
Diluted earnings (loss) per
share |
$0.04 |
|
($0.04) |
|
Weighted average number of
shares outstanding |
|
|
- basic |
168,147,570 |
|
167,519,584 |
|
-
diluted |
170,175,939 |
|
167,519,584 |
|
DMG Blockchain Solutions Inc.Consolidated
Statements of Financial Position(Expressed in Canadian
Dollars)(Unaudited)
|
|
As atDecember 31,
2023(unaudited) |
|
As atSeptember
30,2023(audited) |
|
ASSETS |
|
$ |
|
$ |
|
Current |
|
|
|
Cash and cash equivalents |
|
2,202,219 |
|
1,789,913 |
|
Amounts receivable |
|
3,021,455 |
|
2,476,679 |
|
Digital currency |
|
25,465,280 |
|
17,142,683 |
|
Prepaid expense and other
current assets |
|
162,883 |
|
193,512 |
|
Marketable securities |
|
631,735 |
|
386,984 |
|
Assets held for sale |
|
3,738,632 |
|
3,451,024 |
|
Total current assets |
|
35,222,204 |
|
25,440,795 |
|
|
|
|
|
Long-term deposits |
|
5,382,519 |
|
3,256,324 |
|
Property and equipment |
|
43,714,797 |
|
47,398,585 |
|
Long-term investments |
|
45,000 |
|
45,000 |
|
Amount recoverable |
|
6,612,032 |
|
6,446,251 |
|
Total assets |
|
90,976,552 |
|
82,586,955 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
Current |
|
|
|
Trade and other payables |
|
4,881,577 |
|
4,178,104 |
|
Deferred revenue |
|
66,737 |
|
64,361 |
|
Current portion of lease
liability |
|
64,754 |
|
50,555 |
|
Current portion of loans
payable |
|
1,280,700 |
|
1,272,397 |
|
Total current liabilities |
|
6,293,768 |
|
5,565,417 |
|
|
|
|
|
Long-term lease liability |
|
81,606 |
|
41,202 |
|
Total liabilities |
|
6,375,374 |
|
5,606,619 |
|
|
|
|
|
Shareholders'
Equity |
|
|
|
Share capital |
|
111,381,071 |
|
110,820,540 |
|
Reserves |
|
45,459,049 |
|
45,507,272 |
|
Obligation to issue
shares |
|
125,962 |
|
- |
|
Accumulated other
comprehensive income |
|
159,126 |
|
149,044 |
|
Accumulated deficit |
|
(72,524,030) |
|
(79,496,520) |
|
Total shareholders' equity |
|
84,601,178 |
|
76,980,336 |
|
Total liabilities and shareholders' equity |
|
90,976,552 |
|
82,586,955 |
|
|
|
|
|
DMG Blockchain Solutions
Inc.Consolidated Statements of Cash Flows(Expressed in
Canadian Dollars)(Unaudited)
For the three months ended December 31, |
2023 |
|
2022 |
|
|
$ |
|
$ |
|
OPERATING
ACTIVITIES |
|
|
Net income (loss) for
the period |
6,972,490 |
|
(7,003,404) |
|
Non-cash
items: |
|
|
Accretion |
11,460 |
|
11,845 |
|
Depreciation |
4,338,369 |
|
6,090,845 |
|
Share-based payments |
368,494 |
|
515,130 |
|
Unrealized (gain) loss on revaluation of digital currency |
(8,162,861) |
|
1,415,660 |
|
Unrealized foreign exchange (gain) loss |
(16,272) |
|
10,353 |
|
Gain on sale of assets |
- |
|
(70,429) |
|
Unrealized (gain) loss on marketable securities |
(244,751) |
|
229,522 |
|
Impairment of investment |
609,120 |
|
- |
|
Provision for sales tax receivable |
253,900 |
|
- |
|
Bad debt expense |
3,764 |
|
63,604 |
|
Digital currency related revenue |
(8,744,492) |
|
(6,671,394) |
|
Digital currency sold |
9,445,176 |
|
4,128,129 |
|
Realized (gain) loss on sale of digital currency |
(851,870) |
|
177,162 |
|
Non-cash interest income |
(164,632) |
|
(113,141) |
|
Accrued interest |
- |
|
(129) |
|
|
|
|
Changes in non-cash
operating working capital: |
|
|
Prepaid expenses and other current assets |
35,269 |
|
(6,848) |
|
Amounts receivable |
(781,682) |
|
(748,923) |
|
Deferred revenue |
14,302 |
|
64,650 |
|
Trade and other payables |
668,276 |
|
636,444 |
|
Net cash provided by (used in) operating
activities |
3,744,420 |
|
(1,270,924) |
|
|
|
|
INVESTING
ACTIVITIES |
|
|
Purchase of property and
equipment |
(381,773) |
|
(350,486) |
|
Deposits on mining
equipment |
(2,570,515) |
|
- |
|
Purchase of short-term
investment |
(609,120) |
|
- |
|
Proceeds on sale of
equipment |
- |
|
70,429 |
|
Proceeds from sublease |
- |
|
37,012 |
|
Net cash used in investing activities |
(3,561,408) |
|
(243,045) |
|
|
|
|
FINANCING
ACTIVITIES |
|
|
Proceeds from option
exercises |
269,776 |
|
63,750 |
|
Principal lease payments |
(40,276) |
|
(64,044) |
|
Proceeds from secure loan |
- |
|
950,665 |
|
Net cash provided by financing
activities |
229,500 |
|
950,371 |
|
|
|
|
Impact of currency
translation on cash and cash equivalents |
(206) |
|
(144) |
|
Cash and cash
equivalents, change |
412,306 |
|
(563,712) |
|
Cash and cash equivalents, beginning |
1,789,913 |
|
1,247,513 |
|
Cash and cash equivalents, end |
2,202,219 |
|
683,801 |
|
|
|
|
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