DMG Blockchain Solutions Inc. (TSX-V: DMGI) (OTCQB US: DMGGF)
(FRANKFURT: 6AX) (“DMG”), a vertically integrated blockchain and
cryptocurrency technology company, today announces its fourth
quarter and full fiscal-year financial results. All financial
references are in Canadian Dollars unless specified otherwise.
Recent Highlights
- Increased hashrate during fiscal
year 2022 from 15 PH/s to 700 PH/s
- Strong balance sheet at fiscal
year-end with $10.5 million in cash and digital currency with no
debt
- For full year 2022, $43.2 million
revenue, $1.5 million income before other items, $17.0 million net
loss (-$0.10 per share)
Readers are encouraged to review the Company’s
September 30, 2022 year-ended audited 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.sedar.com.
Sheldon Bennett, DMG Blockchain Solutions’ Chief
Executive Officer, commented, “DMG has successfully managed through
a very difficult crypto currency market with bitcoin-Canadian
dollar price declining 56% during our financial year
2022. Despite these challenging market conditions, we
outperformed many of our competitors, which experienced severe
financial hardships as a result of the industry downturn and
subsequent environment resulting from the FTX situation. Our
prudent approach to drive growth while carefully managing our
balance sheet enabled us to execute and continue to generate
positive cash operating income. We ended the financial year with
$10.5 million worth of cash and digital currency and no debt.”
Steven Eliscu, Chief Operating Officer added,
“In 2022, we built a sound base of leading-edge bitcoin mining
capacity that we can continue to grow with the purchase of new
miners, conversion of our existing mining assets to utilize
immersion cooling technology, as well as the potential development
of new sites. In addition, we believe in the future of our Core+
software strategy to monetize bitcoin transactions by building on
our carbon-neutral pool, Terra Pool, monetizing our Petra
technology for filtering in known good transactions, and creating a
carbon-neutral bitcoin marketplace. We believe this suite of
technologies will enable us to further grow our revenue in the
long-term.”
Adrian Glover, Chief Technology Officer,
continued, “2022 was a year for moving forward DMG’s software
development, the results of which we expect to bear fruit in 2023
with an upgraded version of Terra Pool, deployment of Petra on the
Bitcoin mainnet, and upgrades to our Helm mine management software,
which would support our deployment of immersion cooling at
scale.”
Financial Highlights
Revenue for the fiscal year ending September 30,
2022 was $43.2 million versus $10.2 million in the prior year
period, an increase of 323%, mainly on the increase in bitcoin
mining capacity. Additionally, there were increases in software
license and related development income as compared to the prior
year. These increases were offset by a decrease in equipment
hosting revenue as the Company continues to move toward a focus on
self-mining operations.
Revenue for the fourth quarter ending September
30, 2022 was $6.5 million versus $10.5 million in the prior
quarter, a sequential decrease of 38%, and $2.5 million in the
prior year period. The decline in revenues from the prior quarter
was primarily driven by the 35% decline in the average price of
bitcoin.
Income before other items for the fiscal year
ending September 30, 2022 was $1.5 million versus -$6.8 million in
the prior year period.
Operating and maintenance costs for the year
ended September 30, 2022 was $13.0 million as compared to $6.6
million for the year ended September 30, 2021. The majority of this
was due to an increase of $6.6 million in utilities costs, which is
related to the increase in digital currency mining activity from
the additional miners acquired during the year. Operating and
maintenance costs for the three months ended September 30, 2022
were $3.5 million as compared to $1.6 million in the same quarter
in the prior year. The increase is a result of increases in
utilities costs of $1.9 million, which is related to the increase
in digital currency mining activity and the net increase in miners
throughout the period.
Net loss for the fiscal year ending September
30, 2022 was $17.0 million, versus $9.6 million in the prior year
period. Increases in revenue of $33.0 million were offset by
increases in depreciation of $17.9 million and operating and
maintenance costs of $6.5 million all related to the increase in
installation of new miners for self-mining. Research costs
increased by $1.5 million, mostly related to work on software
development projects. Additionally, the Company recognized a
decline in fair value on its investment in Brane of $3.0 million
and its investment in Bosonic of $2.8 million as well as an
impairment of the amount recoverable of $1.3 million. The increase
in net loss was offset by a decrease in share-based compensation of
$1.1 million.
Earnings per share for the fiscal year ending
September 30, 2022 was -$0.10 versus -$0.07 in the prior year
period.
As at September 30, 2022, the Company had cash
of $1.2 million, digital currency of $9.3 million and total assets
of $96.9 million. For more details, please refer to the Company’s
filings.
Management Call
Today the Company also announces that it will host a conference
call to review fourth quarter 2022 financial results and provide a
corporate update on January 31, 2023, at 4:30 PM ET. Participants
are asked to pre-register for the call through the following
link:https://dpregister.com/sreg/10175490/f5d31c6aa0.
Please note that registered participants will
receive their dial in number upon registration and will dial
directly into the call without delay. Those without Internet access
or unable to pre-register may dial in by calling: 1-844-282-4703
(U.S. toll free), 1-412-317-5624 (international) or 1-647-484-8814
(Canadian toll free). All callers should dial in approximately 10
minutes prior to the scheduled start time and ask to be joined into
the DMG Blockchain call.
The conference call will also be available through a live
webcast found here, and will be available for webcast replay
approximately one hour after the end of the call and until April
30, 2023.
A telephonic replay of the call will be
available through February 14, 2023, and may be accessed by calling
1-877-344-7529 (U.S. toll free), 1-412-317-0088 (international) or
855-669-9658 (Canadian toll free) and using the access code
5467434.
Although 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 January 31, 2023 at 2:00 PM ET.
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.
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.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:
DMG Blockchain Solutions Inc.Email:
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 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.
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.SEDAR.com. 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)
|
For the years ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
$ |
|
|
$ |
|
Revenue |
|
43,236,152 |
|
|
10,218,499 |
|
|
|
|
Expenses |
|
|
Operating and maintenance
costs |
|
13,033,028 |
|
|
6,557,868 |
|
General and
administrative |
|
3,447,690 |
|
|
3,447,841 |
|
Stock-based compensation |
|
3,077,100 |
|
|
4,149,382 |
|
Research |
|
2,364,513 |
|
|
826,146 |
|
Bad debt expense
(recovery) |
|
(32,039 |
) |
|
19,292 |
|
Depreciation |
|
19,782,363 |
|
|
1,847,685 |
|
Amortization of intangible assets |
|
42,388 |
|
|
204,850 |
|
Total expenses |
|
41,715,043 |
|
|
17,053,064 |
|
|
|
|
Income (loss) before other items |
|
1,521,109 |
|
|
(6,834,565 |
) |
|
|
|
Other income
(expense) |
|
|
Interest and other income |
|
111,243 |
|
|
105,085 |
|
Gain (loss) on disposition of
assets |
|
1,179,949 |
|
|
(202,111 |
) |
Gain on assets held for
sale |
|
- |
|
|
1,543,138 |
|
Foreign exchange gain
(loss) |
|
149,798 |
|
|
(294,134 |
) |
Gain on write-down of accounts
payable |
|
2,050,827 |
|
|
- |
|
Loss on settlement of legal
claims |
|
(30,000 |
) |
|
(198,874 |
) |
Impairment of non-current
assets |
|
(39,134 |
) |
|
- |
|
Impairment of amounts
recoverable |
|
(1,302,049 |
) |
|
- |
|
Decline in fair value of
investments |
|
(5,782,825 |
) |
|
- |
|
Provision of sales tax
receivable |
|
- |
|
|
(1,722,044 |
) |
Unrealized revaluation loss on
digital currency |
|
(11,528,632 |
) |
|
(1,973,328 |
) |
Realized gain (loss) on sale
of digital currency |
|
(2,220,167 |
) |
|
167,362 |
|
Loss on
change in fair value of marketable securities |
|
(1,085,073 |
) |
|
(142,935 |
) |
Net loss |
|
(16,975,396 |
) |
|
(9,552,406 |
) |
|
|
|
Other comprehensive
income |
|
|
Items that may be reclassified
subsequently to income or loss: |
|
|
Unrealized revaluation loss on digital currency |
|
(89,352 |
) |
|
(217,304 |
) |
Cumulative translation adjustment |
|
1,474 |
|
|
125,986 |
|
Net loss and comprehensive loss |
|
(17,063,274 |
) |
|
(9,643,724 |
) |
|
|
|
Net loss attributable to: |
|
|
Shareholders |
|
(16,975,396 |
) |
|
(9,549,680 |
) |
Non-controlling interest |
|
- |
|
|
(2,726 |
) |
|
|
(16,975,396 |
) |
|
(9,552,406 |
) |
|
|
|
Basic and diluted loss per share |
|
($0.10 |
) |
|
($0.07 |
) |
Weighted average number of
shares outstanding |
|
|
- basic
and diluted |
|
167,180,278 |
|
|
136,160,785 |
|
DMG
Blockchain Solutions Inc. |
Consolidated
Statements of Loss and Comprehensive Loss |
(Expressed in
Canadian Dollars, 000s) |
|
Quarter Ended |
FY22 |
QUARTERLY
INCOME STATEMENT |
|
December
31,2021 |
|
March
31,2022 |
|
June
30,2022 |
|
September
30,2022 |
|
TOTAL |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
Revenue |
|
14,259 |
|
11,900 |
|
10,529 |
|
6,548 |
|
43,236 |
Expenses |
|
|
|
|
|
Operating and
maintenance costs |
|
2,752 |
|
3,244 |
|
3,568 |
|
3,469 |
|
13,033 |
General and
administrative |
|
1,009 |
|
1,414 |
|
930 |
|
94 |
|
3,448 |
Stock-based
compensation |
|
1,339 |
|
614 |
|
574 |
|
550 |
|
3,077 |
Research |
|
299 |
|
290 |
|
554 |
|
1,222 |
|
2,365 |
Bad debt expense
(recovery) |
|
12 |
|
15 |
|
6 |
|
(66) |
|
(32) |
Depreciation |
|
3,483 |
|
4,822 |
|
5,532 |
|
5,945 |
|
19,782 |
Amortization of
intangible assets |
|
42 |
|
0 |
|
0 |
|
0 |
|
42 |
Total expenses |
|
8,936 |
|
10,399 |
|
11,165 |
|
11,216 |
|
41,715 |
Income (loss) before other items |
|
5,324 |
|
1,501 |
|
(635) |
|
(4,668) |
|
1,521 |
Other
income (expense) |
|
|
|
|
|
Interest and other
income |
|
39 |
|
68 |
|
- |
|
4 |
|
111 |
Gain (loss) on
disposition of assets |
|
2 |
|
- |
|
1,155 |
|
23 |
|
1,180 |
Gain on assets
held for sale |
|
- |
|
- |
|
- |
|
- |
|
- |
Foreign exchange
gain (loss) |
|
(251) |
|
(96) |
|
221 |
|
276 |
|
150 |
Gain on write-down
of accounts payable |
|
- |
|
2,051 |
|
- |
|
- |
|
2,051 |
Loss on settlement
of legal claims |
|
- |
|
- |
|
(30) |
|
- |
|
(30) |
Impairment of
non-current assets |
|
- |
|
- |
|
- |
|
(39) |
|
(39) |
Impairment of
amounts recoverable |
|
- |
|
- |
|
(1,261) |
|
(41) |
|
(1,302) |
Decline in fair
value of investments |
|
- |
|
- |
|
- |
|
(5,783) |
|
(5,783) |
Provision of sales
tax receivable |
|
- |
|
- |
|
- |
|
- |
|
- |
Unrealized
revaluation loss on digital currency |
|
- |
|
- |
|
(8,089) |
|
(4,186) |
|
(12,276) |
Realized gain
(loss) on sale of digital currency |
|
(94) |
|
(3,058) |
|
(2,910) |
|
4,588 |
|
(1,474) |
Gain (loss) on
change in fair value of marketable securities |
|
17 |
|
(409) |
|
(683) |
|
(10) |
|
(1,085) |
Net income (loss) |
|
5,037 |
|
56 |
|
(12,233) |
|
(9,836) |
|
(16,975) |
Other
comprehensive income |
|
|
|
|
|
Items that may be
reclassified subsequently to income or loss: |
|
|
|
|
|
Unrealized
revaluation gain (loss) on digital currency |
|
884 |
|
1,620 |
|
(2,611) |
|
18 |
|
(89) |
Cumulative
translation adjustment |
|
9 |
|
53 |
|
(114) |
|
53 |
|
1 |
Net income (loss) and comprehensive income
(loss) |
|
5,930 |
|
1,729 |
|
(14,958) |
|
(9,765) |
|
(17,063) |
Basic income
(loss) per share |
|
$0.03 |
|
$0.00 |
|
$(0.07) |
|
$(0.06) |
|
$(0.10) |
Diluted income
(loss) per share |
|
$0.03 |
|
$0.00 |
|
$(0.07) |
|
$(0.06) |
|
$(0.10) |
Weighted average
number of shares outstanding (000s) |
|
|
|
|
|
- Basic |
|
167,017 |
|
167,200 |
|
167,255 |
|
167,256 |
|
167,182 |
- Diluted |
|
170,109 |
|
168,332 |
|
167,255 |
|
167,256 |
|
167,182 |
DMG Blockchain Solutions Inc. Consolidated
Statements of Financial Position (Expressed in Canadian
Dollars)
|
As atSeptember
30,2022 |
|
As atSeptember
30,2021 |
|
ASSETS |
$ |
|
$ |
|
Current |
|
|
Cash and cash equivalents |
1,247,513 |
|
19,686,777 |
|
Amounts receivable |
6,320,533 |
|
3,300,563 |
|
Digital currency |
9,319,790 |
|
17,925,942 |
|
Prepaid expense and other
current assets |
258,289 |
|
426,600 |
|
Current portion of lease
receivable |
36,883 |
|
140,624 |
|
|
|
|
Amount recoverable |
- |
|
7,823,307 |
|
Marketable securities |
401,542 |
|
486,615 |
|
Total current assets |
17,584,550 |
|
49,790,428 |
|
|
|
|
Long-term deposits |
14,526,569 |
|
24,368,883 |
|
Property and equipment |
58,083,429 |
|
31,195,930 |
|
Long-term portion of lease
receivable |
- |
|
36,312 |
|
Intangible assets |
- |
|
58,487 |
|
Long-term investments |
75,000 |
|
5,677,650 |
|
Amount recoverable |
6,632,501 |
|
- |
|
Total assets |
96,902,049 |
|
111,127,690 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
Current |
|
|
Trade and other payables |
4,854,517 |
|
5,050,612 |
|
Deferred revenue |
103,678 |
|
224,125 |
|
Current portion of lease
liability |
131,612 |
|
173,372 |
|
Current portion of loans
payable |
291,881 |
|
291,881 |
|
Total current liabilities |
5,381,688 |
|
5,739,990 |
|
|
|
|
Long-term lease liability |
92,809 |
|
72,974 |
|
Total liabilities |
5,474,497 |
|
5,812,964 |
|
|
|
|
Shareholders'
Equity |
|
|
Share capital |
110,381,441 |
|
110,099,851 |
|
Reserves |
43,959,280 |
|
41,057,232 |
|
Obligation to issue
shares |
- |
|
7,538 |
|
Accumulated other
comprehensive income |
121,623 |
|
209,501 |
|
Accumulated deficit |
(63,034,792 |
) |
(46,059,396 |
) |
Total shareholders' equity |
91,427,552 |
|
105,314,726 |
|
Total liabilities and shareholders' equity |
96,902,049 |
|
111,127,690 |
|
DMG Blockchain Solutions Inc.
Consolidated Statements of Cash Flows(Expressed in Canadian
Dollars)
For the years ended September 30, |
2022 |
|
2021 |
|
|
$ |
|
$ |
|
OPERATING
ACTIVITIES |
|
|
Net loss for the
period |
(16,975,396 |
) |
(9,552,406 |
) |
Non-cash
items: |
|
|
Accretion |
15,843 |
|
- |
|
Amortization of intangible assets |
42,388 |
|
204,850 |
|
Depreciation |
19,782,363 |
|
1,847,685 |
|
Share-based payments |
3,077,100 |
|
4,149,382 |
|
Unrealized loss (gain) on revaluation of digital currency |
11,528,632 |
|
2,190,632 |
|
Unrealized foreign exchange gain |
(149,212 |
) |
- |
|
Gain on sale of assets |
(1,179,949 |
) |
(1,341,027 |
) |
Gain on write-down of accounts payable |
(2,050,827 |
) |
- |
|
Unrealized loss on marketable securities |
1,085,073 |
|
142,935 |
|
Impairment of non-current assets |
39,134 |
|
- |
|
Impairment of amounts recoverable |
1,302,050 |
|
- |
|
Impairment of investment |
5,782,825 |
|
- |
|
Provision for sales tax receivable |
- |
|
1,772,044 |
|
Bad debt expense (recovery) |
(32,039 |
) |
19,292 |
|
Digital currency related revenue |
(37,820,728 |
) |
(3,823,293 |
) |
Digital currency sold |
32,686,625 |
|
955,003 |
|
Realized loss on sale of digital currency |
2,220,167 |
|
- |
|
Digital currency purchased |
(93,664 |
) |
(14,967,000 |
) |
Digital currency received for payment of receivables or loans |
- |
|
(1,315,279 |
) |
Non-cash interest income |
(115,475 |
) |
(8,801 |
) |
Accrued interest |
(4,292 |
) |
11,037 |
|
|
|
|
Changes in non-cash
operating working capital: |
|
|
Prepaid expenses and other current assets |
143,644 |
|
976,684 |
|
Amounts receivable |
(4,158,741 |
) |
(4,375,528 |
) |
Amounts recoverable |
- |
|
(7,823,307 |
) |
Deferred revenue |
(1,047,818 |
) |
1,125,706 |
|
Trade and other payables |
1,107,980 |
|
(22,608 |
) |
Net cash provided by (used in) operating
activities |
15,185,683 |
|
(29,833,999 |
) |
|
|
|
INVESTING
ACTIVITIES |
|
|
Purchase of property and
equipment |
(2,646,248 |
) |
(20,284,494 |
) |
Deposits on mining
equipment |
(34,857,051 |
) |
(24,172,236 |
) |
Purchase of long-term
investment |
- |
|
(5,677,650 |
) |
Proceeds on sale of
equipment |
3,855,776 |
|
4,559,637 |
|
Refund of security
deposit |
1,000 |
|
- |
|
Proceeds from sublease |
146,595 |
|
127,490 |
|
Net cash used in investing activities |
(33,499,928 |
) |
(45,447,253 |
) |
DMG Blockchain Solutions (TSXV:DMGI)
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From Sep 2024 to Oct 2024
DMG Blockchain Solutions (TSXV:DMGI)
Historical Stock Chart
From Oct 2023 to Oct 2024