DMGI DMG Blockchain Solutions Inc

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 2023 and full year ending September 30, 2023 audited financial results. All financial references are in Canadian Dollars unless specified otherwise.

Recent Highlights

• For full year 2023, DMG financial results were $27.9 million revenue, $16.5 million net loss (-$0.10 per share), $4.9 million positive operating cash flow
• DMG mined 878 bitcoin in 2023, up 12% from the prior year
• Strong balance sheet at financial year-end with $18.9 million in cash and digital currency, $82.6M of total assets
• Signed agreement with Bitmain Technologies to purchase its T21 bitcoin miners for up to 1 EH/s of new hashrate with expected shipment in the March 2024 quarter

DMG’s CEO, Sheldon Bennett commented, “While our financial year 2023 was filled with challenges for DMG and the cryptocurrency industry at large, we are encouraged by recent developments with the price of bitcoin up more than 2.5x from a year ago today, new Bitcoin blockchain use cases rapidly developing with the advent of Ordinals, BRC-20 and Runes as well as the potential approvals of spot Bitcoin ETFs in the US. We believe this emerging landscape creates an extraordinary opportunity for DMG in the future.”

Readers are encouraged to review the Company’s September 30, 2023 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.sedarplus.ca.

Financial Highlights

Revenue for the financial year ending September 30, 2023 was $27.9 million versus $43.2 million in the prior year period, a decrease of 35%, primarily due to a 32% decrease in the average price of bitcoin over the same period.

Revenue for the fourth quarter ending September 30, 2023 was $5.6 million versus $7.5 million in the prior quarter, a sequential decrease of 25%, and $6.5 million in the prior year period. The decline in revenues from the prior quarter was largely due to the Company’s 26% decrease in bitcoin production.

Income before other items for the year ending September 30, 2023 was negative $18.6 million versus positive $1.5 million in the prior year period.

Operating and maintenance costs for the year ended September 30, 2023 were $16.8 million as compared to $13.0 million for the year ended September 30, 2022. This increase was the result of a $3.4 million increase in utilities cost, driven by expanded digital currency mining operations. Operating and maintenance costs for the three months ended September 30, 2023 were $3.6 million as compared to $3.5 million in the same quarter in the prior year. The increase is a result of increases in utilities costs of $143 thousand, which is due to the increase in digital currency mining activity and the net increase in miners throughout the period.

Net loss for the year ending September 30, 2023 was $16.5 million, versus $17.0 million in the prior year period. Declines in revenue of $15.3 million as well as an increase in depreciation of $2.1 million and an increase in operating and maintenance costs of $3.8 million, partially offset by stock-based compensation, which declined by $1.3 million and research expense, which declined by $0.4 million. The decline in stock-based compensation was due to a lower weighted average grant date fair value of options issued. Lower research expenses were the result of a reduction in subscription costs, partially offset by higher wage expenses.

Earnings per share for the financial year ending September 30, 2023 was -$0.10 versus -$0.10 in the prior year period.

As at September 30, 2023, the Company had cash of $1.8 million, digital currency of $17.1 million and total assets of $82.6 million. For more details, please refer to the Company’s filings.

DMG Blockchain Solutions Inc. Fourth Quarter and Full Year 2023 Financial Results and Corporate Update Call

The Company also announces that it will host a conference call to review fourth quarter 2023 financial results and provide a corporate update on December 21, 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 December 21, 2023.

Grant of Stock Options

DMG also announces it has granted 1,167,770 stock options (“Options”) to employees and directors of the Company. The Options are exercisable for a period of five years at a price of $0.53 per share and will vest as to 25% on each of the six-, 12-, 18- and 24-month anniversaries of the grant date.

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 the filing of year end results and hosting a conference call, the Company’s strategy for growth, the expected delivery of the new miners and the expected increase in hashrate, the planned monetization of certain product and service offerings, developing and executing on the Company’s products, services and business plans, 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 bitcoin; security threats, including a loss/theft of DMG's bitcoin; 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, delays in the shipment of equipment, 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 bitcoin 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, except for number of shares)
	For the years ended September 30,
		2023			2022
		$			$
Revenue		27,940,995			43,236,152
Expenses
Operating and maintenance costs		16,797,262			13,033,028
General and administrative		3,729,643			3,447,690
Stock-based compensation		1,804,551			3,077,100
Research		1,951,868			2,364,513
Bad debt expense (recovery)		343,082			(32,039	)
Depreciation		21,902,282			19,782,363
Amortization of intangible assets		-			42,388
Total expenses		46,528,688			41,715,043
Operating (loss) income before other items		(18,587,693	)		1,521,109
Other income (expense)
Interest and other income		506,610			111,243
Gain on disposition of assets		70,429			1,179,949
Foreign exchange (loss) gain		(118,566	)		149,798
Gain on write-down of accounts payable		-			2,050,827
Loss on settlement of legal claims		-			(30,000	)
Impairment of non-current assets		(102,735	)		(39,134	)
Loss on modification of amounts recoverable		(692,859	)		-
Impairment of amounts recoverable		-			(1,302,049	)
Decline in fair value of investments		(202,725	)		(5,782,825	)
Provision of sales tax receivable		(1,805,343	)		-
Unrealized revaluation gain(loss) on digital currency		4,301,472			(11,528,632	)
Realized gain (loss) on sale of digital currency		183,954			(2,220,167	)
Loss on change in fair value of marketable securities		(14,558	)		(1,085,073	)
Net loss		(16,461,728	)		(16,975,396	)
Other comprehensive income
Items that may be reclassified subsequently to income or loss:
Revaluation gain (loss) on digital assets		19,465			(89,352	)
Cumulative translation adjustment		7,955			1,474
Net loss and comprehensive loss		(16,434,307	)		(17,063,274	)
Basic and diluted loss per share		($0.10	)		($0.10	)
Weighted average number of shares outstanding
- basic and diluted		167,709,852			167,180,278

DMG Blockchain Solutions Inc.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
		As atSeptember 30, 2023		As atSeptember 30,2022
ASSETS		$		$
Current
Cash and cash equivalents		1,789,913		1,247,513
Amounts receivable		2,476,679		6,320,533
Digital currency		17,142,683		9,319,790
Prepaid expense and other current assets		193,512		258,289
Current portion of lease receivable		-		36,883
Marketable securities		386,984		401,542
Assets held for sale		3,451,024		-
Total current assets		25,440,795		17,584,550
Long-term deposits		3,256,324		14,526,569
Property and equipment		47,398,585		58,083,429
Long-term investments		45,000		75,000
Amount recoverable		6,446,251		6,632,501
Total assets		82,586,955		96,902,049
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Trade and other payables		4,178,104		4,854,517
Deferred revenue		64,361		103,678
Current portion of lease liability		50,555		131,612
Current portion of loans payable		1,272,397		291,881
Total current liabilities		5,565,417		5,381,688
Long-term lease liability		41,202		92,809
Total liabilities		5,606,619		5,474,497
Shareholders' Equity
Share capital		110,820,540		110,381,441
Reserves		45,507,272		43,959,280
Accumulated other comprehensive income		149,044		121,623
Accumulated deficit		(79,496,520	)	(63,034,792	)
Total shareholders' equity		76,980,336		91,427,552
Total liabilities and shareholders' equity		82,586,955		96,902,049

DMG Blockchain Solutions Inc.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
For the years ended September 30,	2023		2022
	$		$
OPERATING ACTIVITIES
Net loss for the period	(16,461,728	)	(16,975,396	)
Non-cash items:
Accretion	52,570		15,843
Amortization of intangible assets	-		42,388
Depreciation	21,902,282		19,782,363
Share-based payments	1,804,551		3,077,100
Unrealized loss(gain) on revaluation of digital currency	(4,350,308	)	11,528,632
Unrealized foreign exchange loss (gain)	121,576		(149,212	)
Gain on sale of assets	(70,429	)	(1,179,949	)
Gain on write-down of accounts payable	-		(2,050,827	)
Unrealized loss on marketable securities	14,558		1,085,073
Impairment of non-current assets	102,735		39,134
Impairment of amounts recoverable	-		1,302,050
Impairment of investment	202,725		5,782,825
Provision for sales tax receivable	1,805,343		-
Bad debt expense (recovery)	343,082		(32,039	)
Digital currency related revenue	(26,356,393	)	(37,820,728	)
Digital currency sold	23,087,300		32,686,625
Realized (gain) loss on sale of digital currency	(183,954	)	2,220,167
Digital currency purchased	-		(93,664	)
Non-cash interest income	(600,471	)	(115,475	)
Accrued interest	(129	)	(4,292	)
Loss on amount recoverable modification	692,859		-
Changes in non-cash operating working capital:
Prepaid expenses and other current assets	45,973		143,644
Amounts receivable	1,732,308		(4,158,741	)
Amounts recoverable	(9,442	)	-
Deferred revenue	(39,317	)	(1,047,818	)
Trade and other payables	1,031,284		1,107,980
Net cash provided by operating activities	4,866,975		15,185,683
INVESTING ACTIVITIES
Purchase of property and equipment	(1,788,257	)	(2,646,248	)
Deposits on mining equipment	(3,354,595	)	(34,857,051	)
Purchase of short-term investment	(202,725	)	-
Proceeds on sale of equipment	4,829		3,855,776
Refund of security deposit	-		1,000
Proceeds from sublease	37,012		146,595
Net cash used in investing activities	(5,303,736	)	(33,499,928	)

DMG Blockchain Solutions Inc.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
For the years ended September 30,	2023		2022
	$		$
FINANCING ACTIVITIES
Proceeds from option exercises	182,540		44,000
Proceeds from warrant exercise	-		55,000
Principal lease payments	(152,996	)	(224,717	)
Proceeds from secure loan	950,665		-
Net cash provided by (used in) financing activities	980,209		(125,717	)
Impact of currency translation on cash and cash equivalents	(1,049	)	698
Cash and cash equivalents, change	542,400		(18,439,264	)
Cash and cash equivalents, beginning	1,247,513		19,686,777
Cash and cash equivalents, end	1,789,913		1,247,513