TAAL Announces 2020 First Half Financial Results
TAAL Distributed Information Technologies Inc. (CSE: TAAL, OTCQX: TAALF) reported its Q2-2020 financial results, highlighting a 62.7% decline in gross revenue to $1,604,452 compared to $4,304,627 in 2019. This decline is attributed to the termination of hashing operations. However, total gross revenue for the six months reached $7,608,956, a 76.8% increase. Operating expenses rose to $2,287,655, resulting in a net loss of $2,425,520. TAAL maintains a working capital of $14,363,983, indicating significant liquidity.
- Total gross revenue for H1-2020 increased to $7,608,956, a 76.8% rise.
- Working capital stood at $14,363,983, indicating strong liquidity.
- Q2-2020 gross revenue decreased by 62.7% to $1,604,452 from $4,304,627 in Q2-2019.
- Operating expenses increased significantly to $2,287,655 from $883,197 in 2019.
- Net loss was $2,425,520 compared to a net loss of $139,743 in the previous year.
VANCOUVER, BC, Aug. 26, 2020 /PRNewswire/ - TAAL Distributed Information Technologies Inc. (CSE: TAAL) (FWB: 9SQ) (OTCQX: TAALF) ("TAAL" or the "Company" ), a vertically integrated, blockchain infrastructure and service provider, enabling customized solutions to enterprise clients, today announces its financial results for the second quarter ended June 30, 2020 ("Q2-2020"). TAAL reports all amounts in Canadian dollars unless otherwise stated.
Q2-2020 Financial Highlights
- The Company reported gross revenue of
$1,604,452 for the three-months ended June 30, 2020, as compared to$4,304,627 for the same period in 2019, a62.7% decline that reflects the termination of hashing operation in May 2020, which resulted in gross revenue of$7,608,956 for the six months ended June 30, 2020, as compared to$4,304,627 for same period in 2019, a76.8% increase that reflects the difference in revenue sources in the first half of 2020 that were not operational in 2019. Gross revenue for the three months ended June 30, 2020 included: - Block subsidies generated by hashing operations represented
$1,071,075 , compared to$4,304,627 for the equivalent period last year; - fleet management services represented
$558,074 in fee revenue from a management services agreement pursuant to which TAAL maintains and manages third-party hashing equipment, compared to no revenue for the equivalent period last year; and - software development and licensing represented
$11,303 in fee revenue from licensing the Company's TAAL Orchestrator software, compared to no revenue for the equivalent period last year. - The Company had working capital of
$14,363,983 as of June 30, 2020, providing ample liquidity. - The Company had operating expenses totaling
$2,287,655 as compared to$883,197 for the comparable period in 2019. The increase in expenses is largely attributed to management fees, salaries and wages of$875,238 compared to$225,054 in 2019, and office and administration of$257,974 compared to$59,338 for the comparable period in 2019 reflecting investments to expand our talent pool with senior hires, including key strategic and technical appointments, necessary to deliver the corporate Strategic Vision and manage the transition to transaction processing. - Net loss of
$2,425,520 as compared to a net loss of$139,743 for the comparable period in 2019.
Selected Quarterly Financial Information (Figure 1)
Three months ended June 30, | Six months ended June 30, | |||||||
(In CAD dollars, except percentages and per share | 2020 | 2019 | 2020 | 2019 | ||||
Revenue | $ | 1,640,452 | $ | 4,304,627.00 | $ | 7,608,956 | $ | 4,304,627.00 |
Adjusted EBITDA | $ | (1,321,853) | $ | 253,111 | $ | (1,337,991) | $ | (670,479) |
Net loss | $ | (2,425,520) | $ | (139,743) | $ | (3,265,930) | $ | (1,171,519) |
Basic and diluted loss per share | $ | (0.11) | $ | (0.01) | $ | (0.18) | $ | (0.09) |
June 30, 2020 | December 31, 2019 | |||||||
Assets | ||||||||
Current assets | $ | 35,565,613 | $ | 44,188,111 | ||||
Total assets | $ | 48,684,268 | $ | 46,776,428 | ||||
Liabilities | ||||||||
Current liabilities | $ | 21,201,630 | $ | 22,140,102 | ||||
Shareholders' equity | ||||||||
Total shareholders' equity | $ | 27,482,638 | $ | 24,636,326 | ||||
Total liabilities & shareholders' equity | $ | 48,684,268 | $ | 46,776,428 | ||||
H1-2020 Overview
TAAL ended the first half of 2020 with a new senior management team and a plan for our transition to a transaction processing-based business model, which offers customized solutions for businesses building applications and that contribute data to the blockchain. TAAL Management is committed to this transition in recognition of the anticipated paradigm shift in the blockchain industry, which will be marked by a shift from a block rewards subsidy model to a transaction fee-based model as the prevailing profit model.
In May, Management announced its strategic vision (the "Strategic Vision") that provides details of how we plan to position the Company as a world-class industry leader and innovator. We intend to do this by taking a long-term view on the potential of blockchain technology, and by capitalizing on the innovations emerging on the secure, scalable global ledger, that is the Bitcoin SV (BSV) blockchain. TAAL has been improving its block processing infrastructure and streamlining systems in preparation for scaling of operations and advancing its Strategic Vision that include five pillars of profitability:
- Transaction Processing: the core business of the Strategic Vision is our Transaction Processing business model, which will facilitate businesses building applications and contributing data onto a public, permission-less and scalable blockchain. At first, we intend to offer volume discounts to help grow this business through our Hashing application programming interface (MAPI) service and build a massive and stable flow of transactions for processing. Revenue will be generated from fiat-based transaction fees.
- Pool Management: we will use TAAL Orchestrator to manage public hashing pools so that Hash producers can contribute to building the Bitcoin SV (BSV) blockchain.
- Data Storage Solutions: we will offer secure, easy and reliable storage, retrieval and management of blockchain data, featuring timestamping and data fingerprinting for audit and legal purposes.
- Blockchain Computing: is poised to become the most interesting space in the next decade. This capability will allow contracts to occur without a third-party executor via smart contracts and will allow for computation to be truly distributed.
- Blockchain Devices: in the future specialized hardware will maximize the efficiency of certain blockchain specific operations.
The Company proposes to drive revenue by delivering the corporate Strategic Vision by granting access to and utilization of a variety of proprietary products, platforms, licenses and services, and intends to continue to add to these product offerings. In order to deliver on these initiatives requires a blockchain network that supports theoretically limitless scalability, unbounded transactional volume, and profits earned by those that process the most transactions, not operations with the highest hashrate. Management believes that blockchain is the one supported by the Bitcoin SV (BSV) blockchain network, and TAAL will focus its attention and resources on this protocol.
Accordingly, we will continue to explore acquisitions of key businesses that we believe will enhance our commercial offerings to institutional and enterprise level clients, and that contribute to or enhance our ability to manage and maintain a stable and secure blockchain infrastructure foundation upon which these services and products depend. Further, we expect to see an increase in expenditures as we expand our talent pool with key new hires, including strategic and technical appointments.
The Company has already begun delivering on this Strategic Vision with a number of recent announcements, which included its confirmation of two successive record blocks in May. The 309-megabyte (MB) block followed only days later by the confirmation of an even larger 369MB block are demonstrable proof of the scale and capacity of the Bitcoin SV (BSV) blockchain network, and of the potential of the Transaction Processing business model. In these two blocks, we processed approximately 2.4 million transactions.
Furthermore, the Company announced the release of our beta implementation of MAPI (a miner API), through which customers can connect directly to TAAL's API endpoints, enabling them to send direct transactions for processing through TAAL at network rates. TAAL has engagements with a dozen new clients spread across several blockchain industries during this beta phase, and we believe that with the public launch we can expect to take market share from other transaction processing blockchain networks, such as Ethereum. Moreover, the heightened security and lower cost offered by the Bitcoin SV (BSV) blockchain may prove competitive against many private blockchain offerings, which have become popular alternative against the scaling and coding issues of other public blockchains.
Finally, the Company has filed a number of unique patents on blockchain applications, including our newly acquired Layer 1 token blockchain technology for the Bitcoin SV (BSV) blockchain network. The significance of this patent is that Layer 1 tokens have been primarily the domain of Ethereum, whose network of Layer 1 tokens is currently recognized as the largest in the blockchain industry, and this technology opens the door for the migration of tokens that require enterprise level scaling to also consider the Bitcoin SV (BSV) blockchain network. In consideration of acquiring the intellectual property underlying the Layer 1 patent application, TAAL's operating subsidiary has entered into a royalty agreement with the inventor.
This release has been reviewed and approved by the audit committee of the Company and should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements and corresponding management discussion and analysis for the three and six months ended June 30, 2020 filed on SEDAR and posted on the Company's website.
About TAAL Distributed Information Technologies Inc.
TAAL delivers value-added blockchain services, providing professional-grade, highly scalable blockchain infrastructure and transactional platforms to support businesses building solutions and applications upon the Bitcoin SV platform, and developing, operating, and managing distributed computing systems for enterprise users.
For a more complete business and financial profile of the Company, please view the Company's website at www.taal.com and public documents posted under the Company's profile on www.sedar.com.
The CSE, nor its Regulation Services Provider, accepts no responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements included in this news release constitute "forward-looking information" as defined under applicable Canadian securities legislation. The words "will", "intends", "expects" and similar expressions are intended to identify forward-looking information, although not all forward-looking information will contain these identifying words. Specific forward-looking information contained in this news release includes, but is not limited to statements regarding: the effects of the COVID-19 pandemic, development of advanced blockchain transactional systems and the Bitcoin SV platform, TAAL's expectations with respect to the future of transaction processing and TAAL's strategic vision and related objectives. These statements are based on factors assumptions related to historical trends, current conditions and expected future developments. Since forward-looking information relates to future events and conditions, by its very nature it requires making assumptions and involves inherent risks and uncertainties. TAAL cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from expectations. Material risk factors include the future acceptance of Bitcoin SV and other digital assets and risks related to information processing using those platforms, the ability for TAAL to leverage intellectual property into viable income streams and other risks set out in Item 20 Risk Factors of TAAL's Form 2A – Listing Statement dated July 31, 2018 and elsewhere in TAAL's continuous disclosure filings available on SEDAR at www.sedar.com. Given these risks, undue reliance should not be placed on the forward-looking information contain herein. Other than as required by law, TAAL undertakes no obligation to update any forward-looking information to reflect new information, subsequent or otherwise.
NON-IFRS FINANCIAL MEASURES
The terms "EBITDA" (earnings before interest, taxes, depreciation, and amortization) and "Adjusted EBITDA" (which is calculated by the Company by adjusting EBITDA to exclude share-based payments, fair value losses or gains on re-measurement of the value of digital assets, write-offs, and costs associated with one-time transactions) are not recognized measures under International Financial Reporting Standards ("IFRS"). There is no standardized measure of "Adjusted EBITDA" and consequently, TAAL's method of calculating this measure may differ from methods used by other companies and therefore may not be comparable to similar measures presented by other companies. A reconciliation of "Adjusted EBITDA" to Net Loss is set out above in Figure 1.
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SOURCE Taal Distributed Information Technologies Inc.
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