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

Rhea-AI Summary

DMG Blockchain Solutions announced its fiscal Q2 2024 results. Key highlights include a 31% revenue increase to $10M, driven by a 39% rise in self-mining revenues. Net income was slightly positive, maintaining profitability for the second consecutive quarter despite a 22% drop in bitcoin mined. The company recorded $4.5M in cash flow from operations, a 19% rise from the previous quarter, and holds $43.6M in cash and digital currency. Plans include deploying Bitmain T21 miners to achieve a hashrate of 1.7 EH/s by June, with a long-term target of 2 EH/s. Operating and maintenance costs rose to $5.3M, impacting net pool revenue negatively by $1.3M.

Positive

• Revenue increased 31% YoY to $10M.
• Self-mining revenue rose 39%.
• Maintained profitability for the second consecutive quarter.
• Cash flow from operations rose 19% to $4.5M.
• Strong balance sheet with $43.6M in cash and digital currency.
• Total assets amount to $118M.
• Unrealized revaluation gain on digital currency of $1M.
• Realized gain on sale of digital currency of $1.1M.
• Lower depreciation costs, down to $3.8M from $5.9M in the prior year.

Negative

• Bitcoin mined decreased by 22% from the prior quarter.
• Net pool revenue loss of $1.3M.
• Operating and maintenance costs increased by $0.7M to $5.3M.
• General and administrative expenses rose by $1.1M.
• Earnings per share were flat at $0.00.

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

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

FAQ

What were DMG Blockchain Solutions' Q2 2024 revenues?

Q2 2024 revenues for DMG Blockchain Solutions were $10 million, a 31% increase from the previous year.

How did DMG Blockchain Solutions' self-mining revenues change in Q2 2024?

Self-mining revenues increased by 39% in Q2 2024.

What was DMG Blockchain Solutions' net income for Q2 2024?

Net income was slightly positive in Q2 2024, maintaining profitability for the second consecutive quarter.

How much bitcoin did DMG Blockchain Solutions mine in Q2 2024?

DMG Blockchain Solutions mined 153 bitcoins in Q2 2024, a decrease of 22% from the previous quarter.

What is the hashrate target for DMG Blockchain Solutions by June 2024?

DMG Blockchain Solutions aims to achieve a hashrate of 1.7 EH/s by the end of June 2024.

What are DMG Blockchain Solutions' total assets as of March 31, 2024?

DMG Blockchain Solutions' total assets amounted to $118 million as of March 31, 2024.

How much cash and digital currency does DMG Blockchain Solutions hold?

DMG Blockchain Solutions holds $43.6 million in cash and digital currency.

What was DMG Blockchain Solutions' cash flow from operations in Q2 2024?

Cash flow from operations was $4.5 million in Q2 2024, up 19% from the prior quarter.

What were the operating and maintenance costs for DMG Blockchain Solutions in Q2 2024?

Operating and maintenance costs for Q2 2024 were $5.3 million, an increase from $4.6 million in the same quarter last year.

How did DMG Blockchain Solutions' general and administrative expenses change?

General and administrative expenses increased by $1.1 million in Q2 2024.