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 third
quarter 2024 financial results. All financial references are in
Canadian Dollars unless specified otherwise.
Q3 2024 Financial Results
Highlights
- Q3 2024 revenue up 11% over the
prior year to $8.3M, driven by self-mining revenues increasing
5%
- Net income of negative $3.8
million, a smaller loss versus the year-ago period
- 87 bitcoin mined in the third
quarter, down from 152 bitcoin in the prior quarter, with a
hashrate of 0.95 EH/s and fleet efficiency of 25.6 J/T
- Operating cash flow in the third
quarter of -$1.3 million versus $4.5 million in the prior
quarter
- Strong balance sheet with $39.6
million in cash and digital currency, $111 million in total
assets
Sheldon Bennett, DMG Blockchain Solutions’ Chief
Executive Officer, commented, “The June 2024 quarter was a
transitional quarter, marked by the once-every-four-year halvening
event, which negatively affected our mined bitcoin. While we are
encouraged by the execution of our Systemic Trust subsidiary toward
becoming a qualified custodian, we missed our target to deploy our
new fleet of 4,550 Bitmain T21 miners due to supply chain issues.
Going forward, we are highly focused on regaining profitability by
increasing our hashrate, improving our fleet efficiency and
continuing to execute on our Core+ software initiatives.”
Third Quarter 2024 Financial Results
Review
Revenue for the third fiscal quarter ending June
30, 2024 was $8.3 million versus $7.5 million in the year-ago
period, an increase of 11%, primarily due to an increase in
self-mining revenue. The increase in digital currency mining
revenue was a result of bitcoin price increasing 139% over the
year-ago period to an average of $89,990 in the June quarter. This
increase was partially offset by a 71% increase in Bitcoin network
difficulty from the same period last year.
Operating and maintenance costs for the three
months ended June 30, 2024 was $4.7 million compared to $4.2
million in the same quarter in the prior year. The increase is
attributed to utility expenses, driven by the expansion of digital
currency mining operations and the addition of new miners.
General and administrative costs for the three
months ended June 30, 2024 was $1.5 million compared to $0.9
million in the same quarter in the prior year. General and
administrative costs increased due to the operations related to
Systemic Trust ramping up.
Depreciation for the three months ended June 30,
2024 was $5.0 million compared to $5.3 million in the same quarter
in the prior year. The decrease is based on the depreciation of
existing assets, offset by an increase in mining equipment
installed during the period.
Net loss for the three months ending June 30,
2024 was $3.8 million versus a loss of $4.3 million in the prior
year period. Earnings per share for the third fiscal quarter ending
June 30, 2024 was -$0.02 versus -$0.03 in the prior year
period.
As of June 30, 2024, the Company had cash of
$0.9 million, digital currency of $38.7 million and total assets of
$111.4 million. For more details, please refer to the Company’s
filings.
Readers are encouraged to review the Company’s
June 30, 2024 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. Third Quarter 2024
Financial Results Conference Call
The Company also announces that it will host a
conference call to announce the third quarter 2024 financial
results release date and provide a corporate update on August 27,
2024, at 4:30 pm ET. Participants are asked to pre-register for the
call through this link. Registered participants will receive a
Conference 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 27, 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, increasing
hashrate, improving fleet efficiency and continuing to execute on
Core+ software initiatives, hosting a conference call, 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 |
For the Nine Months Ended |
|
Notes |
June 30, 2024 |
|
June 30, 2023 |
|
June 30, 2024 |
|
June 30, 2023 |
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Revenue |
15 |
8,294,866 |
|
7,495,257 |
|
28,001,289 |
|
22,293,172 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Operating and maintenance
costs |
16(a) |
4,675,279 |
|
4,156,305 |
|
15,093,781 |
|
13,159,995 |
|
General and
administrative |
16(b) |
1,476,973 |
|
875,197 |
|
4,209,432 |
|
2,600,075 |
|
Stock-based compensation |
|
480,945 |
|
544,966 |
|
1,247,447 |
|
1,483,175 |
|
Research and development |
|
603,919 |
|
480,815 |
|
1,528,314 |
|
1,411,919 |
|
Provision for doubtful
accounts |
|
2,628 |
|
(34,853 |
) |
6,434 |
|
79,524 |
|
Depreciation |
10 |
5,037,240 |
|
5,334,219 |
|
13,185,010 |
|
17,279,768 |
|
Total expenses |
|
12,276,984 |
|
11,356,649 |
|
35,270,418 |
|
36,014,456 |
|
|
|
|
|
|
|
Loss before other items |
|
(3,982,118 |
) |
(3,861,392 |
) |
(7,269,129 |
) |
(13,721,284 |
) |
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
Interest and other income |
7 |
174,417 |
|
124,303 |
|
510,242 |
|
359,535 |
|
Provision of sales tax
receivable |
|
(10,584 |
) |
- |
|
(646,174 |
) |
- |
|
Gain on disposition of
assets |
|
- |
|
- |
|
4,809 |
|
70,429 |
|
Foreign exchange loss |
|
(103,008 |
) |
(3,792 |
) |
(225,934 |
) |
(110,782 |
) |
Unrealized gain (loss) on
revaluation of digital currency |
5 |
(4,200 |
) |
- |
|
9,178,116 |
|
- |
|
Realized gain (loss) on sale
of digital currency |
|
177,005 |
|
(156,791 |
) |
2,172,364 |
|
172,101 |
|
Loss on modification of amount
recoverable |
|
- |
|
(555,075 |
) |
- |
|
(555,075 |
) |
Gain (loss) on change in fair
value of marketable securities |
|
(89,449 |
) |
179,215 |
|
21,594 |
|
84,391 |
|
Loss on
fair value of investments |
10 |
- |
|
- |
|
(609,120 |
) |
- |
|
Net income (loss) |
|
(3,837,937 |
) |
(4,273,532 |
) |
3,136,768 |
|
(13,700,685 |
) |
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
Items that may be reclassified
subsequently to income or loss: |
|
|
|
|
|
Unrealized revaluation (loss) gain on digital currency |
5 |
(4,819,676 |
) |
2,690,110 |
|
10,652,539 |
|
6,094,477 |
|
Cumulative translation adjustment |
|
6,686 |
|
(39,736 |
) |
5,490 |
|
8,355 |
|
Comprehensive income (loss) |
|
(8,650,927 |
) |
(1,623,158 |
) |
13,794,797 |
|
(7,597,853 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share |
13(d) |
(0.02 |
) |
(0.03 |
) |
0.02 |
|
(0.08 |
) |
Weighted average number of
shares outstanding |
13(d) |
|
|
|
|
- basic |
|
168,975,567 |
|
167,681,377 |
|
168,937,426 |
|
167,626,853 |
|
-
diluted |
|
168,975,567 |
|
167,681,377 |
|
172,496,489 |
|
167,626,853 |
|
DMG Blockchain Solutions Inc. Consolidated
Statements of Financial Position (Expressed in Canadian
Dollars)(Unaudited) |
|
|
Notes |
As atJune 30, 2024(unaudited) |
|
As atSeptember 30, 2023(audited) |
|
ASSETS |
|
$ |
|
$ |
|
Current |
|
|
|
Cash and cash equivalents |
|
877,122 |
|
1,789,913 |
|
Amounts receivable |
6 |
3,224,443 |
|
2,476,679 |
|
Digital currency |
5 |
38,683,776 |
|
17,142,683 |
|
Prepaid expense and other
current assets |
|
373,260 |
|
193,512 |
|
Marketable securities |
8 |
408,578 |
|
386,984 |
|
Assets held for sale |
11 |
- |
|
3,451,024 |
|
Total current assets |
|
43,567,179 |
|
25,440,795 |
|
|
|
|
|
Long-term deposits |
9 |
2,105,408 |
|
3,256,324 |
|
Property and equipment |
12 |
58,681,134 |
|
47,398,585 |
|
Long-term investments |
13 |
45,000 |
|
45,000 |
|
Amount recoverable |
7 |
6,956,493 |
|
6,446,251 |
|
Total assets |
|
111,355,214 |
|
82,586,955 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
Current |
|
|
|
Trade and other payables |
14 |
4,808,126 |
|
4,178,104 |
|
Deferred revenue |
19 |
24,181 |
|
64,361 |
|
Current portion of lease
liability |
15 |
45,126 |
|
50,555 |
|
Current portion of loans
payable |
16 |
13,838,075 |
|
1,272,397 |
|
Total current liabilities |
|
18,715,508 |
|
5,565,417 |
|
|
|
|
|
Long-term lease liability |
15 |
61,953 |
|
41,202 |
|
Total liabilities |
|
18,777,461 |
|
5,606,619 |
|
|
|
|
|
Shareholders'
Equity |
|
|
|
Share capital |
17(a) |
112,425,364 |
|
110,820,540 |
|
Reserves |
17(b)(c) |
45,705,068 |
|
45,507,272 |
|
Accumulated other
comprehensive income |
|
10,807,073 |
|
149,044 |
|
Accumulated deficit |
|
(76,359,752 |
) |
(79,496,520 |
) |
Total shareholders' equity |
|
92,577,753 |
|
76,980,336 |
|
Total liabilities and shareholders' equity |
|
111,355,214 |
|
82,586,955 |
|
|
|
|
|
Contingencies |
23 |
|
|
Subsequent
events |
25 |
|
|
DMG Blockchain Solutions Inc. Consolidated
Statements of Cash Flows(Expressed in Canadian
Dollars)(Unaudited) |
|
For the Nine Months Ended |
|
|
June 30, 2024 |
|
June 30, 2023 |
|
|
$ |
|
$ |
|
OPERATING
ACTIVITIES |
|
|
Net income (loss) for
the period |
3,136,768 |
|
(13,700,685 |
) |
Non-cash
items: |
|
|
Accretion |
28,876 |
|
38,425 |
|
Depreciation |
13,185,010 |
|
17,279,768 |
|
Share-based payments |
1,247,447 |
|
1,483,175 |
|
Unrealized foreign exchange loss |
144,288 |
|
56,086 |
|
Gain on disposition of assets |
(4,809 |
) |
(70,429 |
) |
Gain (loss) on change in fair value of marketable securities |
(21,594 |
) |
(84,391 |
) |
Loss on fair value of investment |
609,120 |
|
- |
|
Provision for sales tax receivable |
646,174 |
|
- |
|
Bad debt expense |
6,434 |
|
79,524 |
|
Digital currency related revenue |
(26,137,726 |
) |
(20,915,310 |
) |
Unrealized gain on digital currency |
(9,178,117 |
) |
- |
|
Digital currency sold |
26,598,464 |
|
15,957,866 |
|
Realized gain on sale of digital currency |
(2,172,364 |
) |
(172,101 |
) |
Non-cash interest income |
(504,311 |
) |
(450,636 |
) |
Accrued interest |
229,208 |
|
(129 |
) |
Loss on amount recoverable modification |
- |
|
555,075 |
|
|
|
|
Changes in non-cash
operating working capital: |
|
|
Prepaid expenses and other current assets |
(184,748 |
) |
110,586 |
|
Amounts receivable |
(1,345,463 |
) |
2,076,703 |
|
Amounts recoverable |
- |
|
(9,458 |
) |
Deferred revenue |
(28,254 |
) |
(91,752 |
) |
Trade and other payables |
611,762 |
|
1,302,640 |
|
Net cash provided by operating activities |
6,866,165 |
|
3,444,957 |
|
|
|
|
INVESTING
ACTIVITIES |
|
|
Purchase of property and
equipment |
(1,710,629 |
) |
(1,415,329 |
) |
Deposits on mining
equipment |
(18,088,936 |
) |
(2,423,564 |
) |
Proceeds on sale of
equipment |
- |
|
4,829 |
|
Purchase of short-term
investment |
(609,120 |
) |
- |
|
Proceeds from sublease |
- |
|
37,012 |
|
Net cash used by investing activities |
(20,408,685 |
) |
(3,797,052 |
) |
|
|
|
FINANCING
ACTIVITIES |
|
|
Proceeds from option
exercises |
555,173 |
|
63,750 |
|
Principal lease payments |
(85,793 |
) |
(129,345 |
) |
Proceeds from secured
loan |
12,161,909 |
|
950,665 |
|
Repayment of loans payable |
(1,668 |
) |
- |
|
Net cash provided by financing activities |
12,629,621 |
|
885,070 |
|
|
|
|
Impact of currency
translation on cash |
108 |
|
(1,078 |
) |
Change in
cash |
(912,791 |
) |
531,897 |
|
Cash, beginning |
1,789,913 |
|
1,247,513 |
|
Cash, end |
877,122 |
|
1,779,410 |
|