Digihost Announces Restatement of Previously Issued Financial Statements
Digihost Technology (Nasdaq/TSXV: DGHI) has announced a restatement of its financial statements for fiscal years 2022 and 2023. The restatement follows an SEC review that identified a material error in how the company classified proceeds from digital asset sales.
The key correction involves reclassifying proceeds from digital asset sales from 'cash flow from operating activities' to 'cash flow from investing activities'. The company emphasizes that this restatement does not affect its:
- Overall cash position
- Net cash flows
- Operational performance
- Business operations
Management has acknowledged a material weakness in internal control over financial reporting during the restatement periods and is implementing remediation measures to address these issues.
Digihost Technology (Nasdaq/TSXV: DGHI) ha annunciato una rettifica dei suoi bilanci finanziari per gli anni fiscali 2022 e 2023. La rettifica segue una revisione della SEC che ha identificato un errore materiale nel modo in cui l'azienda ha classificato i proventi dalla vendita di asset digitali.
La correzione principale consiste nel riclassificare i proventi dalla vendita di asset digitali da 'flussi di cassa da attività operative' a 'flussi di cassa da attività di investimento'. L'azienda sottolinea che questa rettifica non influisce sul suo:
- Posizione di cassa complessiva
- Flussi di cassa netti
- Performance operativa
- Operazioni commerciali
La direzione ha riconosciuto una debolezza materiale nel controllo interno sulla rendicontazione finanziaria durante i periodi di rettifica e sta implementando misure di rimediazione per affrontare queste problematiche.
Digihost Technology (Nasdaq/TSXV: DGHI) ha anunciado una rectificación de sus estados financieros para los años fiscales 2022 y 2023. La rectificación sigue una revisión de la SEC que identificó un error material en la forma en que la empresa clasificó los ingresos de las ventas de activos digitales.
La corrección clave implica reclasificar los ingresos de las ventas de activos digitales de 'flujos de efectivo de actividades operativas' a 'flujos de efectivo de actividades de inversión'. La empresa enfatiza que esta rectificación no afecta su:
- Posición de efectivo total
- Flujos de efectivo netos
- Rendimiento operativo
- Operaciones comerciales
La dirección ha reconocido una debilidad material en el control interno sobre la información financiera durante los períodos de rectificación y está implementando medidas de remediación para abordar estos problemas.
Digihost Technology (Nasdaq/TSXV: DGHI)는 2022년 및 2023년 회계연도에 대한 재무제표 수정 발표를 했습니다. 이 수정은 SEC 검토에 따른 것으로, 회사가 디지털 자산 판매로부터의 수익을 분류하는 데 중대한 오류가 발견되었습니다.
주요 수정 사항은 디지털 자산 판매로부터의 수익을 '영업 활동으로 인한 현금 흐름'에서 '투자 활동으로 인한 현금 흐름'으로 재분류하는 것입니다. 회사는 이 수정이 다음에 영향을 미치지 않는다고 강조합니다:
- 전체 현금 위치
- 순 현금 흐름
- 운영 성과
- 사업 운영
경영진은 수정 기간 동안 재무 보고에 대한 내부 통제의 중대한 약점을 인정했으며, 이러한 문제를 해결하기 위한 시정 조치를 시행하고 있습니다.
Digihost Technology (Nasdaq/TSXV: DGHI) a annoncé une révision de ses états financiers pour les exercices fiscaux 2022 et 2023. Cette révision fait suite à un examen de la SEC qui a identifié une erreur matérielle dans la manière dont l'entreprise a classé les produits des ventes d'actifs numériques.
La correction principale consiste à reclasser les produits des ventes d'actifs numériques de 'flux de trésorerie provenant des activités opérationnelles' à 'flux de trésorerie provenant des activités d'investissement'. L'entreprise souligne que cette révision n'affecte pas :
- Sa position de trésorerie globale
- Ses flux de trésorerie nets
- Sa performance opérationnelle
- Ses opérations commerciales
La direction a reconnu une faiblesse matérielle dans le contrôle interne sur le reporting financier durant les périodes de révision et met en œuvre des mesures de remédiation pour traiter ces problèmes.
Digihost Technology (Nasdaq/TSXV: DGHI) hat eine Neufassung seiner Finanzberichte für die Geschäftsjahre 2022 und 2023 angekündigt. Die Neufassung folgt einer Überprüfung durch die SEC, die einen wesentlichen Fehler bei der Klassifizierung der Erlöse aus dem Verkauf digitaler Vermögenswerte festgestellt hat.
Die wesentliche Korrektur besteht darin, die Erlöse aus dem Verkauf digitaler Vermögenswerte von 'Cashflow aus operativen Aktivitäten' auf 'Cashflow aus Investitionstätigkeiten' umzuklassifizieren. Das Unternehmen betont, dass diese Neufassung keinen Einfluss auf:
- Die gesamte Liquiditätslage
- Netto-Cashflows
- Die operative Leistung
- Die Geschäftstätigkeit
Die Geschäftsführung hat eine wesentliche Schwäche in der internen Kontrolle über die Finanzberichterstattung während der Neufassungszeiträume anerkannt und setzt Maßnahmen zur Behebung dieser Probleme um.
- No impact on company's cash position or net cash flows
- No effect on actual business operations or financial performance
- Material weakness identified in internal control over financial reporting
- Required restatement of two years of financial statements
- SEC review revealed material classification errors
Insights
Digihost's restatement of financial statements for 2022-2023 represents a significant negative development that should concern investors. While the company attempts to downplay the issue by noting there's no impact on overall cash position or net cash flows, the reclassification from operating to investing activities is materially important.
This accounting error artificially inflated Digihost's operating cash flows - a critical metric investors use to evaluate core business performance. Operating cash flow is particularly vital for cryptocurrency mining companies as it reflects their ability to generate cash from day-to-day operations. By incorrectly classifying digital asset sales as operating rather than investing activities, Digihost presented an overly optimistic view of its operational efficiency.
Most concerning is the acknowledgment of a material weakness in internal controls. This admission raises serious questions about the reliability of Digihost's financial reporting processes and the effectiveness of its governance structure. The fact that this error was identified during SEC review rather than through internal processes suggests potential deficiencies in the company's compliance mechanisms.
For a small-cap company (
This restatement reflects poorly on Digihost's governance framework and financial controls. The identification of a material weakness in internal control over financial reporting is a red flag that indicates fundamental deficiencies in the company's financial oversight mechanisms.
The fact that this error persisted through multiple reporting periods (2022-2023) before being caught during an SEC review suggests inadequate internal audit procedures and potentially insufficient board oversight. Properly functioning controls should have identified this misclassification before external intervention became necessary.
The technical nature of the error - misclassifying cash flows from digital asset sales - highlights unique challenges faced by cryptocurrency companies in applying traditional accounting frameworks. However, this doesn't excuse the failure, especially since proper cash flow classification is a fundamental accounting principle.
Investors should pay close attention to the promised "remediation measures" and whether they adequately address the root causes of this control deficiency. The company needs to demonstrate meaningful improvements in its financial reporting processes to restore credibility. Board committee structure, internal audit resources, and the expertise of financial leadership will be critical areas to evaluate.
While Digihost emphasizes no impact on cash position or operations, the restatement undermines confidence in management's financial stewardship capabilities and raises questions about what other reporting issues might exist. For a company operating in an industry already facing regulatory uncertainty, governance shortcomings of this nature represent a significant vulnerability.
MIAMI, March 05, 2025 (GLOBE NEWSWIRE) -- Digihost Technology Inc. (“Digihost” or the “Company”) (Nasdaq / TSXV: DGHI), an innovative energy infrastructure company that develops cutting-edge data centers, today announced that it has filed an amended annual report on Form 20-F for the fiscal year ended December 31, 2023 (the “2023 Annual Report” and, as so amended, the “Amended 2023 Annual Report”) with the U.S. Securities and Exchange Commission (the “SEC”), which contains restated financial statements for the fiscal years ended December 31, 2023 and 2022 (the “Restatement Periods”) and related updates to management’s discussion and analysis for the Restatement Period. In connection with the SEC’s review of the 2023 Annual Report (the “SEC Review”), and in consultation with members of management and the Audit Committee of the Board of Directors, the Company determined that its previously issued consolidated financial statements for the Restatement Periods that were included in the 2023 Annual Report and the related management’s discussion and analysis for the year ended December 31, 2023 were required to be restated to correct a material error in the classification of proceeds derived from the sale of digital assets. Digihost previously categorized proceeds derived from the sale of digital assets as a cash flow from operating activities. In conjunction with the SEC review, it was determined that proceeds from the sale of digital assets should instead be classified as cash flow from investing activities.
Shareholders and users of the Company’s financial statements should note that the restatement is not a result of any change to the Company’s operations, business or financial operating performance for the Restatement Periods. For any and all of the Restatement Periods, there was no impact on the Company’s overall cash position or net cash flows.
A summary of the restated financial statements is available in the tables set forth below (expressed in thousands of U.S. dollars). More details may be found in the revised financial statements and related revised management’s discussion and analysis included in the Amended 2023 Annual Report, which are available on the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar.
Adjustments to consolidated statements of cash flows for the year ended December 31, 2022 – Restatement
| Year ended December 31 | |||
| 2022 (as reported) | Cash flow reclassification | 2022 (as restated) | |
| Cash flows provided by (used in) in operating activities | |||
| Net loss | 4,329,342 | – | 4,329,342 |
| Adjustments for: | |||
| Proceeds from sale of digital assets | 15,528,972 | (12,084,280) | 3,444,692 |
| Net change in cash related to operating activities | (3,410,899) | (12,084,280) | (15,495,179) |
| Cash flows provided by (used in) in investing activities | |||
| Acquisition of digital currencies | – | (3,932,000) | (3,932,000) |
| Proceeds form sale of digital assets | – | 16,016,280 | 16,016,280 |
| Net change in cash related to investing activities | (14,513,038) | 12,084,280 | (2,428,758) |
Adjustments to consolidated statements of cash flows for the year ended December 31, 2023 – Restatement
| Year ended December 31 | |||
| 2023 (as reported) | Cash flow reclassification | 2023 (as restated) | |
| Cash flows provided by (used in) in operating activities | |||
| Net loss | (21,885,410) | – | (21,885,410) |
| Adjustments for: | |||
| Proceeds from sale of digital assets | 1,388,123 | (19,264,980) | (17,876,857) |
| Net change in cash related to operating activities | 5,692,022 | (19,264,980) | (13,572,958) |
| Cash flows provided by (used in) in investing activities | |||
| Proceeds from sale of digital assets | – | 19,264,980 | 19,264,980 |
| Net change in cash related to investing activities | (7,257,482) | 19,264,980 | 12,007,498 |
The Company’s management has previously concluded that the Company had a material weakness in its internal control over financial reporting during the Restatement Periods. Management is in the process of implementing remediation measures to address the material weakness in respect of the errors described above.
About Digihost
Digihost is an innovative energy infrastructure company that develops cutting-edge data centers to drive the expansion of sustainable energy assets.
For further information, please contact:
Michel Amar, Chief Executive Officer
Digihost Technology Inc.
www.digihostpower.com
Digihost Investor Relations
T: 888-474-9222
Email: IR@digihostpower.com
Cautionary Statement
Trading in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections as at the date of this news release and are covered by safe harbors under Canadian and United States securities laws. Forward-looking information in this news release includes information about potential further improvements to profitability and efficiency across mining operations, including, as a result of the Company’s expansion efforts, potential for the Company’s long-term growth and clean energy strategy, and the business goals and objectives of the Company. Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to: the pending SEC Review; the potential that additional restatements of the Company’s financial statements will be required; the potential that the Company identifies additional material weaknesses in its control over financial reporting; the ability of the Company to remediate known material weaknesses; future capital needs and uncertainty of additional financing; share dilution resulting from equity issuances; risks relating to the strategy of maintaining and increasing Bitcoin holdings and the impact of depreciating Bitcoin prices on working capital; effects on Bitcoin prices as a result of the most recent Bitcoin halving; development of additional facilities and installation of infrastructure to expand operations may not be completed on the timelines anticipated by the Company, or at all; ability to access additional power from the local power grid and realize the potential of the clean energy strategy on terms which are economic or at all; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized; development of additional facilities to expand operations may not be completed on the timelines anticipated by the Company; ability to access additional power from the local power grid; an increase in natural gas prices may negatively affect the profitability of the Company’s power plant; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedarplus.ca and www.SEC.gov/EDGAR. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; the ability to maintain reliable and economical sources of power to run its cryptocurrency mining assets; the negative impact of regulatory changes in the energy regimes in the jurisdictions in which the Company operates; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainties therein. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.
FAQ
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