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DMG Blockchain Solutions Reports Second Quarter 2024 Results Ending March 31, 2024

DMG Blockchain Solutions Inc.
DMG Blockchain Solutions Inc.

VANCOUVER, British Columbia, May 22, 2024 (GLOBE NEWSWIRE) -- 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 second quarter 2024 financial results. All financial references are in Canadian Dollars unless specified otherwise.

Q2 2024 Financial Results Highlights

  • Q2 2024 revenue increased 31% over the prior year to $10M, driven by self mining revenues increasing 39%

  • Net Income was slightly positive, maintaining profitability for the second consecutive quarter

  • 153 bitcoin mined, down 22% from the prior quarter, with a hashrate of 0.96 EH/s and fleet efficiency of 28.4 J/TH

  • $4.5 million cash flow from operations, up 19% from the prior quarter

  • Deploying Bitmain T21 miners with goal to reach 1.7 EH/s by the end of June, targeting 2 EH/s and beyond longer term

  • Strong balance sheet with $43.6M in cash and digital currency, $118M in total assets

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Sheldon Bennett, DMG Blockchain Solutions’ Chief Executive Officer, commented, “We are pleased with our robust performance this quarter, achieving a 3% sequential revenue increase to $10.0M and maintaining profitability for the second consecutive quarter. Our strategic investments in both our Core and Core+ strategies are delivering promising results. Systemic Trust is paving the way for financial institutions to transact bitcoin in a carbon-neutral manner, while the deployment of our Bitmain T21 miners positions us to achieve 1.7 EH/s by the end of June with further expansion planned. Additionally, our strong cash flow from operations of $4.5M and a solid balance sheet with $43.6M in cash and digital currency underscore our execution.”

Second Quarter 2024 Financial Results Review

Revenue for the second fiscal quarter ending March 31, 2024 was $10.0 million versus $7.6 million in the prior year period, an increase of 31%, primarily due to the increase in digital currency mining revenues as a result of bitcoin price increasing 133% over the year-ago period to an average of $71,851 in the March quarter. This increase was partially offset by a 93% increase in Bitcoin network difficulty that lowered DMG’s bitcoin generation per EH/s by 47% from the same period last year. In addition, revenue was also partially offset by a loss in net pool revenue of $1.3 million.

Income before other items for the three months ended March 31, 2024 was -$1.8 million versus -$4.6 million in the prior year period.

Operating and maintenance costs for the three months ended March 31, 2024 were $5.3 million as compared to $4.6 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.

Net income for the three months ending March 31, 2024 was $2 thousand versus a loss of $3.8 million in the prior year period. The improvement in net income was driven primarily by an increase in revenue of $10.0 million versus $7.6 million in the prior year period, unrealized revaluation gain on digital currency, which was a gain of $1.0 million versus zero in the prior year period as well as realized gain on sale of digital currency of $1.1 million versus $0.5 million in the year-ago period. It was also driven by lower depreciation, which was $3.8 million versus $5.9 million in the prior year period. These were partially offset by operating and maintenance costs, which increased by $0.7 million and general and administrative expenses which increased by $1.1 million over the prior year.

Earnings per share for the second fiscal quarter ending March 31, 2024 was $0.00 versus -$0.02 in the prior year period.

As of March 31, 2024, the Company had cash of $1.6 million, digital currency of $42.0 million and total assets of $118.4 million. For more details, please refer to the Company’s filings.

Readers are encouraged to review the Company’s March 31, 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. Second Quarter 2024 Financial Results Conference Call

The Company will host a conference call to review second quarter 2024 financial results and provide a corporate update on May  23, 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 May 23, 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.com
Follow @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 & Director
Tel: 516-222-2560
Email: investors@dmgblockchain.com
Web: www.dmgblockchain.com

Investor Relations Contact:
Core IR 516-222-2560

For Media Inquiries:
Jules Abraham
Core IR
917-885-7378
julesa@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, deploying Bitmain T21 miners to reach 1.7 EH/s by June 2024, targeting 2 EH/s and beyond, hosting the conference call, 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 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 Six Months Ended

 

Notes

March 31,
2024

March 31,
2023

March 31,
2024

March 31,
2023

 

 

 

 

 

 

 

Revenue

15

10,015,659

7,623,323

19,706,423

14,797,915

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

Operating and maintenance costs

16(a)

5,270,851

4,594,898

10,418,502

9,003,690

 

General and administrative

16(b)

1,846,398

776,942

2,732,459

1,724,878

 

Stock-based compensation

 

398,010

423,079

766,502

938,209

 

Research and development

 

486,216

499,165

924,395

931,104

 

Provision for doubtful accounts

 

42

50,773

3,806

114,377

 

Depreciation

10

3,805,988

5,854,704

8,147,770

11,945,549

 

Total expenses

 

11,807,503

12,199,561

22,993,434

24,657,807

 

 

 

 

 

 

 

Loss before other items

 

(1,791,844)

(4,576,238)

(3,287,011)

(9,859,892)

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

Interest and other income

7

170,044

122,091

335,825

235,232

 

Provision of sales tax receivable

 

(381,690)

-

(635,590)

-

 

Gain on disposition of assets

 

4,809

-

4,809

70,429

 

Foreign exchange loss

 

(28,341)

(26,014)

(122,926)

(106,991)

 

Unrealized gain on revaluation of digital currency

5

1,019,456

-

9,182,316

-

 

Realized gain on sale of digital currency

 

1,143,489

506,054

1,995,359

328,892

 

Gain (loss) on change in fair value of marketable securities

 

(133,708)

134,698

111,043

(94,823)

 

Loss on fair value of investments

10

 

-

(609,120

-

 

Net income (loss)

 

2,215

(3,839,409)

6,974,705

(9,427,153)

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Items that may be reclassified subsequently to income or loss:

 

 

 

 

 

Unrealized revaluation gain on digital currency

5

15,472,215

6,245,331

15,472,215

4,820,027

 

Cumulative translation adjustment

 

(11,278)

48,347

(1,196)

48,091

 

Comprehensive income (loss)

 

   15,463,152

   2,454,269

 

22,445,724

 

(4,559,035)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per share

13(d)

0.00

(0.02)

0.04

(0.06)

 

Weighted average number of shares outstanding

13(d)

 

 

 

 

- basic

 

169,029,065

167,681,377

168,585,910

167,599,591

 

- diluted

 

172,516,428

167,681,377



173,248,160

167,599,591

 

 

 

 

 

 

 

 



DMG Blockchain Solutions Inc.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited)

 

 

Notes

As at
March 31, 2024
(unaudited)

As at
September 30,
2023
(audited)

 

ASSETS

 

$

$

 

Current

 

 

 

Cash and cash equivalents

 

1,609,479

1,789,913

 

Amounts receivable

6

2,102,769

2,476,679

 

Digital currency

5

41,966,494

17,142,683

 

Prepaid expense and other current assets

 

332,900

193,512

 

Marketable securities

8

498,027

386,984

 

Assets held for sale

11

3,702,466

3,451,024

 

Total current assets

 

50,212,135

25,440,795

 

 

 

 

 

Long-term deposits

9

18,687,623

3,256,324

 

Property and equipment

12

42,632,378

47,398,585

 

Long-term investments

13

45,000

45,000

 

Amount recoverable

7

6,782,076

6,446,251

 

Total assets

 

118,359,212

82,586,955

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current

 

 

 

Trade and other payables

14

5,408,373

4,178,104

 

Deferred revenue

19

63,712

64,361

 

Current portion of lease liability

15

57,014

50,555

 

Current portion of loans payable

16

12,127,654

1,272,397

 

Total current liabilities

 

17,656,753

5,565,417

 

 

 

 

 

Long-term lease liability

15

71,873

41,202

 

Total liabilities

 

17,728,626

5,606,619

 

 

 

 

 

Shareholders' Equity

 

 

 

Share capital

17(a)

111,820,687

110,820,540

 

Reserves

17(b)(c)

45,711,651

45,507,272

 

Accumulated other comprehensive income

 

15,620,063

149,044

 

Accumulated deficit

 

(72,521,815)

(79,496,520)

 

Total shareholders' equity

 

100,630,586

76,980,336

 

Total liabilities and shareholders' equity

 

118,359,212

82,586,955

 

 

 

 

 

Contingencies

23

 

 

Subsequent events

25

 

 

 

 

 

 


DMG Blockchain Solutions Inc.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited)

 

 

For the Six Months Ended

 

 

March 31, 2024

March 31, 2023

 

 

 $

 $

 

OPERATING ACTIVITIES

 

 

Net income (loss) for the period

6,974,705

(9,427,153)

 

Non-cash items:

 

 

Accretion

23,272

25,466

 

Depreciation

8,147,770

11,945,549

 

Share-based payments

766,502

938,209

 

Unrealized foreign exchange loss

40,351

43,613

 

Gain on disposition of assets

(4,809)

(70,429)

 

Gain (loss) on change in fair value of marketable securities

(111,043)

94,824

 

Loss on fair value of investment

609,120

-

 

Provision for sales tax receivable

635,590

-

 

Bad debt expense

3,806

114,377

 

Digital currency related revenue

(18,355,313)

(13,773,874)

 

Unrealized gain on digital currency

(9,182,315)

-

 

Digital currency sold

20,173,781

11,161,893

 

Realized gain on sale of digital currency

(1,995,359)

(328,892)

 

Non-cash interest income

(329,914)

(229,349)

 

Accrued interest

-

(129)

 

 

 

 

Changes in non-cash operating working capital:

 

 

Prepaid expenses and other current assets

(144,388)

52,650

 

Amounts receivable

(212,015)

3,000,466

 

Amounts recoverable

-

(237,039)

 

Deferred revenue

11,277

(91,752)

 

Trade and other payables

1,144,920

1,895,676

 

Net cash provided by operating activities

8,195,938

5,114,106

 

 

 

 

INVESTING ACTIVITIES

 

 

Purchase of property and equipment

(830,859)

(572,044)

 

Deposits on mining equipment

(18,102,867)

(1,991,167)

 

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

(19,542,846)

(2,521,370)

 

 

 

 

FINANCING ACTIVITIES

 

 

Proceeds from option exercises

438,024

63,750

 

Principal lease payments

(61,187)

(102,973)

 

Proceeds from secured loan

10,791,288

950,665

 

Repayment of loans payable

(1,668)

-

 

Net cash provided by financing activities

11,166,457

911,442

 

 

 

 

Impact of currency translation on cash

17

 (481)

 

Change in cash

 (180,434)

 3,503,697

 

Cash, beginning

1,789,913

 1,247,513

 

Cash, end

 1,609,479

 4,751,210