REG-Quantum Blockchain Technologies Plc: Interim Results
26/09/2023 07:15
26 September 2023
Quantum Blockchain Technologies plc
("Quantum Blockchain Technologies", “the Group” or "the Company")
INTERIM RESULTS
For the Six Months Ended 30 June 2023
Quantum Blockchain Technologies plc (AIM: QBT) announces its unaudited Interim
Results for the six months ended 30 June 2023.
For further information please contact:
Quantum Blockchain Technologies Plc
Francesco Gardin, CEO and Executive Chairman +39 335 296573
SP Angel Corporate Finance (Nominated Adviser & Broker)
Jeff Keating +44 (0)20 3470 0470
Kasia Brzozowska
Leander (Financial PR)
Christian Taylor-Wilkinson +44 (0) 7795 168 157
About Quantum Blockchain Technologies Plc
QBT (AIM: QBT) is an AIM listed investment company which has recently
realigned its strategic focus to technology related investments, with special
regard to Quantum computing, Blockchain, Cryptocurrencies and AI sectors. The
Company has commenced an aggressive R&D and investment programme in the
dynamic world of Blockchain Technology, which includes cryptocurrency mining
and other advanced blockchain applications.
Chairman’s Statement
During the first half of 2023 (“Period”), Quantum Blockchain Technologies
Plc maintained focus on its research and development (“R&D”) strategy, but
also started to set the basis for the commercialisation of the products under
development.
In addition, the Company continues its endeavours to recover damages and legal
expenses from its legacy legal actions taken in the Italian courts.
Bitcoin Mining R&D
The bitcoin mining industry has, in the past, sought mainly to achieve
improvements by regularly optimising hardware and its integrated firmware,
which is a capital-intensive endeavour. The Company, with its R&D team of
senior researchers from leading European universities, has instead taken a
different approach. QBT is focusing its intensive R&D efforts on identifying
and utilising certain key predictive properties in the operation of
bitcoin’s SHA-256 cryptographic hash functions an area that the Company
believes is not currently being addressed on the same scale by any other
market participant.
To enhance its research and development capabilities and eventually its
commercial prospects, the Company announced in January 2023 that it had
appointed Dr Lov Kumar Grover as a special consultant. He is now working with
QBT’s Quantum Computing Team. Specifically, Dr Grover and the team are
focused on improving the already developed proprietary quantum version of
SHA-256, also known as the “Quantum Mining Algorithm”, being the
translation of the bitcoin (“BTC”) mining algorithm for quantum computers.
As previously discussed in the Company's recent announcements, currently there
are no quantum computers with sufficient qubits to run QBT’s Quantum Mining
Algorithm, but once these become available, the Company expects to be in a
highly advantageous position to offer a BTC mining method that could offer
significant improvements and efficiency to the industry.
During the first half of 2023, the Company also announced its Machine Learning
teams had developed two unique methods (Method A and Method B) that could
potentially lead to immediate performance improvements for existing BTC
miners. A third improvement (“Method C”) is currently being assessed by a
different QBT R&D group.
With regard to Method B, during the Period, the Company completed a key
testing phase that demonstrated Method B theoretically increases the rate of
successful bitcoin mining by approximately 2.6 times compared to standard
bitcoin mining industry practices widely used over the same time period. The
Company’s algorithm also theoretically reduced electricity consumption by
4.3%.
The Company’s current main focus is to complete the development of software
that will permit the use of Method A and Method B (and possibly Method C) for
use by existing BTC miners. It is anticipated that this will enable the
relevant QBT R&D groups to run real time tests (both, simulated experiments
and pool based real time mining for testing and experimental purposes) at
current mining degrees of difficulty and thereby allow QBT to commence the
commercialisation phase of its discoveries. As announced in September 2023,
QBT successfully redesigned part of Method B specifically for application on
the Chinese market-leading mining rig, significantly expanding its addressable
market.
Towards this commercialisation, in May 2023, QBT engaged Mr Vladimir
Kusznirczuk, as Marketing and Business Development Manager. Mr Kusznirczuk was
appointed to seek commercial opportunities with large US and Canadian bitcoin
miners and manufacturers of mining rigs.. The Company is currently in
discussions with a number of the largest North American cryptocurrency miners
which provided the Company with a number of the most commonly used mining rigs
to analyse and implement the porting of Method A and Method B.
It is worth noting that, as announced in January 2023, although the main focus
of the R&D programme is to develop the fastest and most energy efficient BTC
mining products, the Company is confident it is possible to extend its
improvements to miners of the two BTC ‘hard forks’, namely, Bitcoin Cash
(“BCH”) and Bitcoin SV (“BSV”) without significant additional R&D
effort. This would further enlarge the Company’s target market.
Legacy Investment Assets
During the first half of 2023, the Company continued to deal with its legacy
assets. These assets consist of pending court actions in Italy in relation to
Sipiem in Liquidazione S.p.A (“Sipiem”) and Sosushi Srl (“Sosushi”)
and QBT’s investments in PBV Monitor Srl (“PBV”), Forcrowd Srl
(“Forcrowd”) and Geosim Systems Ltd (“Geosim”). With regard to the
court actions, despite ongoing efforts by the Company’s lawyers, there has
not been significant updates during the Period.
In relation to the Company’s claim against the previous management and
internal audit committee of Sipiem, held by its wholly owned subsidiary Clear
Leisure 2017 (“CL17”), as previously reported the Venice Court ruled in
favour of CL17 in November 2022 and ordered the defendants to pay CL17 an
award payment amounting to €6,188,974 in damages (exclusive of interest and
adjustments for inflation), and €85,499 in legal fees. CL17 has commenced
the process to collect the award payment from the main defendant.
CL17 also maintains a circa €1 million claim against Sosushi’s previous
management in Italy, which is currently continuing via an arbitration process.
As previously reported, the process has, unfortunately, been subject to severe
procedural delays outside of CL17’s control. The Company is not expecting
the claim to be settled in the short term.
The Company’s legacy investment portfolio comprises the following three
companies: PBV, an Italian start-up which has developed an online
international legal directory, Forcrowd, an Italian crowdfunding company, and
Geosim, an Israeli company which has developed a proprietary high resolution
3D mapping technology used to develop realistic 3D models of cities and
airports.
During the period under review, as announced on 1 June 2023, QBT completed a
placing which raised a total of £1m (before expenses) pursuant to the issue
of 71,428,571 new ordinary shares of 0.25 pence each in the Company
(“Ordinary Shares”).
Additionally, as disclosed on 31 May 2023, QBT granted seven million new
options over new Ordinary Shares. As a result, the Company has outstanding
options over 138,500,000 Ordinary Shares exercisable at 5 pence and options
over 133,500,000 Ordinary Shares exercisable at 10 pence, set to expire
between 2024 and 2026.
The Company believes it is in an excellent position to capture potential
market opportunities in the bitcoin market in the near term, mostly due to the
development of Methods A and B. In the longer term QBT aims to be able to
build its own more efficient mining chip (embedding all the improvements
developed so far) whilst waiting to exploit its potentially revolutionary
Quantum Mining Algorithm. The Company will continue to pursue its legal claims
in respect of legacy assets and the monetisation of its existing investments.
Financial Review
The Group reported a total comprehensive loss for the period of €1.4 million
(30 June 2022: loss €2.8m). The operating loss for the period was €1.2
million (30 June 2022: operating loss €2.1m).
Included within administrative expenses are charges relating to the
recognition of share options totalling €370,000 (2022: €1.3m) and within
finance costs are charges for the revaluation of derivatives totalling
€142,000 (2022: €700K). The difference of these items is strictly
dependent on the volatility of the Company’s share price during the first
half of 2023, used for the calculation according to the relevant accounting
standards.
At 30 June 2023, the Group’s net liabilities had improved to €3.1 million,
compared to net liabilities of €3.2 million at 31 December 2022. Net current
assets of the Group also improved during the period under review, to €4.8
million compared to net current assets of €4.4 million at 31 December 2022.
Post 30 June 2023 Events
On 7 July 2023, the Company announced that, with regards to its Zero-Coupon
Bond (“Bond”) originally announced on 9 November 2020, the Company had
received a conversion notice from MC Strategies AG to convert €1 million of
the Bond into new Ordinary Shares at a conversion price of 1 pence per share
(EUR: GBP exchange rate of 0.89 – fixed per terms and conditions of the
Bond). As a result, the Company issued 89,000,000 new Ordinary Shares on 14
July 2023.
On 24 July 2023, QBT announced it had filed a patent application in relation
to ASIC EnhancedBoost developed by the Company’s cryptography expert and
Cryptographic Optimisation team. This novel approach, called Message
Scheduling For Cryptographic Hashing addresses one of the most challenging
problems in BTC mining: partial pre-computing of future blockchains’ blocks.
The Company believes the process has the potential to achieve a potential area
savings of approximately 8%.
On 20 September 2023, QBT announced it was focusing its current R&D efforts on
the most commonly used mining rigs available in the market for the Company to
study and implement the porting of its Method A and Method B chip enhancements
to these machines. The Company is targeting not only Intel’s Blockscale
based miners, but also the most popular mining rigs produced in China, which
are used by more than 75% of the global Bitcoin market 1 (#_ftn1).
The Company also announced it is currently in discussions with a number of the
largest North American cryptocurrency miners which provided the Company with a
number of the most commonly used mining rigs to analyse and implement the
porting of Method A and Method B.
Outlook
The Board remains committed to return value to its shareholders by:
1. continuing to focus on its R&D programme, which is providing promising and
consistent results;
2. investing in the technology sector (both in a direct and an indirect
manner);
3. managing the Legacy Assets portfolio, where positive outcomes are expected
from the Company’s claims; and
4. further reduction of the debt position (if and when the conditions are
deemed appropriate)
The Board remains positive as the technology investments are deemed sound and
promising in fast growth markets, while the legal claims have strong merit
against defendants that are expected to remain solvent, thereby enhancing the
prospect of collection of the judgment debts.
1
https://www.coindesk.com/tech/2023/06/13/bitmains-s19-bitcoin-miners-account-for-bulk-of-network-hashrate-says-new-research/
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2023
Note Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
(Unaudited) (Unaudited) (Audited)
Continuing operations €’000 €’000 €’000
Revenue - - -
- - -
Administrative expenses (1,190) (2,067) (4,547)
Other operating income 1 - -
Operating loss (1,189) (2,067) (4,547)
Share of loss from equity-accounted associates - - (69)
Finance charges (292) (797) (636)
Loss before tax (1,481) (2,864) (5,252)
Taxation 42 74 226
Loss for the period attributable to owners of the parent (1,439) (2,790) (5,026)
Other comprehensive income/(loss) - - -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT (1,439) (2,790) (5,026)
Earnings per share:
Basic loss per share (cents) 3 (€0.143) (€0.281) (€0.508)
Diluted loss per share (cents) 3 (€0.090) (€0.213) (€0.312)
GROUP STATEMENTS OF FINANCIAL POSITION
AT 30 JUNE 2023
Note As at 30 June 2023 €’000 (Unaudited) As at 30 June 2022 €’000 (Unaudited) As at 31 December 2022 €’000 (Audited)
Non-current assets
Property, plant and equipment 198 234 226
Investments 689 714 677
Investments in equity-accounted associates 66 211 60
Total non-current assets 953 1,159 963
Current assets
Trade and other receivables 4,643 5,029 4,626
Cash and cash equivalents 752 1,307 463
Total current assets 5,395 6,336 5,089
Current liabilities
Trade and other payables (369) (311) (465)
Provisions (210) - (210)
Total current liabilities (579) (311) (675)
Net current assets/(liabilities) 4,816 6,025 4,414
Total assets less current liabilities 5,769 7,184 5,377
Non-current liabilities
Borrowings (8,286) (8,439) (8,131)
Derivative financial instruments (610) (870) (468)
Total non-current liabilities (8,896) (9,309) (8,599)
Total liabilities (9,475) (9,620) (9,274)
Net liabilities (3,127) (2,125) (3,222)
Equity
Share capital 8,586 8,378 8,378
Share premium account 51,497 50,541 50,541
Other reserves 14,182 12,673 13,812
Retained losses (77,392) (73,717) (75,953)
Equity attributable to owners of the Company (3,127) (2,125) (3,222)
Total equity (3,127) (2,125) (3,222)
GROUP AUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total equity €’000
At 1 January 2022 8,221 49,442 11,409 (71,896) (2,824)
Total comprehensive loss for the year - - - (5,026) (5,026)
Grant of warrants
Exercise of warrants 157 1,099 - 969 2,225
Grant of share options - - 1,854 - 1,854
Modification of bond - - 549 - 549
At 31 December 2022 8,378 50,541 13,812 (75,953) (3,222)
GROUP UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2022
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total equity €’000
At 1 January 2022 8,221 49,442 11,409 (71,896) (2,824)
Total comprehensive loss for the period - - - (2,790) (2,790)
Exercise of warrants 157 1,099 - 969 2,225
Grant of share options - - 1,264 - 1,264
At 30 June 2022 8,378 50,541 12,673 (73,717) (2,125)
GROUP UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2023
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total equity €’000
At 1 January 2023 8,378 50,541 13,812 (75,953) (3,222)
Total comprehensive loss for the period - - - (1,439) (1,439)
Issue of shares 208 956 - - 1,164
Share based payment expense - - 370 - 370
At 30 June 2023 8,586 51,497 14,182 (77,392) (3,127)
GROUP UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six months to 30 June 2023 (Unaudited) €’000 Six months to 30 June 2022 (Unaudited) €’000 Year ended 31 December 2022 (Audited) €’000
Cash used in operations
Loss before tax (1,189) (2,864) (5,252)
Impairment of investments - - 154
Share of post-tax losses of equity accounted associates - - 69
Non cash foreign exchange movements 10 (50) (35)
Finance charges (142) 800 637
Decrease/(increase) in receivables (25) (49) 474
(Decrease)/increase in payables 95 (18) 346
Impairment of intercompany receivables - - 33
Share based payments 370 1,264 1,854
Depreciation 28 20 49
Net cash (outflow)/inflow from operating activities (853) (897) (1,671)
Cash flows from investing activities
Purchase of investments (28) - (50)
Purchase of property, plant and equipment - (90) (111)
Interest received 6 - -
Net cash inflow from investing activities (22) (90) (161)
Cash flows from financing activities
Proceeds from capital issue 1,164 1,255 1,256
Net cash inflow/(outflow) from financing activities 1,164 1,255 1,256
Net increase in cash for the period 289 268 (576)
Cash and cash equivalents at beginning of year 463 1,039 1,039
Cash and cash equivalents at end of period 752 1,307 463
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Quantum Blockchain Technologies plc is a company incorporated and domiciled in
England and Wales. The Company’s ordinary shares are traded on the AIM
market of the London Stock Exchange. The address of the registered office is
22 Great James Street, London, WC1N 3ES.
2. Accounting policies
The principal accounting policies are summarised below. They have all been
applied consistently throughout the period covered by these consolidated
financial statements.
Basis of preparation
The interim financial statements of Quantum Blockchain Technologies Plc are
unaudited consolidated financial statements for the six months ended 30 June
2023 which have been prepared in accordance with UK adopted international
accounting standards. They include unaudited comparatives for the six months
ended 30 June 2022 together with audited comparatives for the year ended 31
December 2022.
The interim financial statements do not constitute statutory accounts within
the meaning of section 434 of the Companies Act 2006. The statutory accounts
for the year ended 31 December 2022 have been reported on by the company’s
auditors and have been filed with the Registrar of Companies. The report of
the auditors was qualified in respect of the valuation of the investment in
Geosim Systems Ltd. The report of the auditor also contained an emphasis of
matter paragraph in respect of a material uncertainty regarding going concern.
Aside from the limitation of scope relating to Geosim Systems Ltd, the
auditor’s report did not contain any statement under section 498 of the
Companies Act 2006.
The interim consolidated financial statements for the six months ended 30 June
2023 have been prepared on the basis of accounting policies expected to be
adopted for the year ended 31 December 2023, which are consistent with the
year ended 31 December 2022.
Going concern
The Group’s activities generated a loss of €1,439,000 (June 2022:
€2,790,000) and had net current assets of €4,816,000 as at 30 June 2023
(June 2022: €6,025,000). The Group’s operational existence is still
dependent on the ability to raise further funding either through an equity
placing on AIM, or through other external sources, to support the on-going
working capital requirements.
After making due enquiries, the Directors have formed a judgement that there
is a reasonable expectation that the Group can secure further adequate
resources to continue in operational existence for the foreseeable future and
that adequate arrangements will be in place to enable the settlement of their
financial commitments, as and when they fall due.
For this reason, the Directors continue to adopt the going concern basis in
preparing the interim accounts. Whilst there are inherent uncertainties in
relation to future events, and therefore no certainty over the outcome of the
matters described, the Directors consider that, based upon financial
projections and dependant on the success of their efforts to complete these
activities, the Group will be a going concern for the next twelve months. If
it is not possible for the Directors to realise their plans, over which there
is significant uncertainty, the carrying value of the assets of the Group is
likely to be impaired.
Notwithstanding the above, the Directors note the material uncertainty in
relation to the Group being unable to realise its assets and discharge its
liabilities in the normal course of business.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Company’s medium-term performance and
the factors that mitigate those risks have not substantially changed from
those set out in the Company’s 2022 Annual Report and Financial Statements,
a copy of which is available on the Company’s website:
www.quantumblockchaintechnologies.com. The key financial risks are liquidity
and credit risk.
Critical accounting estimates
The preparation of interim financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the end of the reporting period. Significant items subject to
such estimates are set out in note 3 of the Company’s 2022 Annual Report and
Financial Statements. The nature and amounts of such estimates have not
changed significantly during the interim period.
3. Loss per share
The basic earnings per share is calculated by dividing the loss attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share is computed using
the same weighted average number of shares during the period adjusted for the
dilutive effect of share options and convertible loans outstanding during the
period.
The loss and weighted average number of shares used in the calculation are set
out below:
Six months to 30 June 2023 Six months to 30 June 2022 Year to 31 December 2022
(Unaudited) (Unaudited) (Audited)
€’000 €’000 €’000
(Loss)/profit attributable to owners of the parent company:
Basic earnings (1,439) (2,790) (5,026)
Diluted earnings (1,492) (2,762) (5,091)
Basic weighted average number of ordinary shares (000’s) 1,009,060 994,291 989,497
Diluted weighted average number of ordinary shares (000’s) 1,664,647 1,295,619 1,632,694
Basic and fully diluted earnings per share:
Basic earnings per share (€0.143) (€0.281) (€0.508)
Diluted earnings per share (€0.090) (€0.213) (€0.312)
IAS 33 requires presentation of diluted earnings per share when a company
could be called upon to issue shares that would decrease earnings per share or
increase net loss per share. No adjustment has been made to diluted earnings
per share for out-of-the money options and warrants.
4. Principal Activity
The principal activities of the Company are focused on the R&D programme
relating to bitcoin and as an investing company with a portfolio in technology
sectors. The main focus of management is to successfully run the R&D programme
and release new products to the market. The management is also pursuing the
monetisation of all of the Company’s Legacy Assets, through selected
realisations, court-led recoveries of misappropriated assets and substantial
debt recovery processes.
5. Copies of Interim Accounts
Copies of the interim results are available at the Group’s website at
www.quantumblockchaintechnologies.co.uk.
Copies may also be obtained from the Group´s registered office: Quantum
Blockchain Technologies PLC, 22 Great James Street, London, WC1N 3ES.
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