Mr. Sheldon Bennett reports

DMG BLOCKCHAIN SOLUTIONS REPORTS FOURTH QUARTER AND YEAR-END RESULTS ENDING SEPTEMBER 30, 2022

DMG Blockchain Solutions Inc. has released its fourth quarter and full fiscal year financial results.

Recent highlights:

• Increased hash rate during fiscal year 2022 from 15 petahashes per second to 700 petahashes per second;
• Strong balance sheet at fiscal year-end with $10.5-million in cash and digital currency with no debt;
• For full-year 2022, $43.2-million revenue, $1.5-million income before other items and $17.0-million net loss (10 cents per share).

Readers are encouraged to review the company's Sept. 30, 2022, year-end audited financial statements and management's discussion and analysis thereof for a fulsome assessment of the company's performance and applicable risk factors, available at SEDAR.

Sheldon Bennett, DMG Blockchain's chief executive officer, commented: "DMG has successfully managed through a very difficult crypto currency market with the bitcoin-Canadian-dollar price declining 56 per cent during our financial year 2022. Despite these challenging market conditions, we outperformed many of our competitors, which experienced severe financial hardships as a result of the industry downturn and subsequent environment resulting from the FTX situation. Our prudent approach to drive growth while carefully managing our balance sheet enabled us to execute and continue to generate positive cash operating income. We ended the financial year with $10.5-million worth of cash and digital currency and no debt."

Steven Eliscu, chief operating officer, added: "In 2022, we built a sound base of leading-edge bitcoin mining capacity that we can continue to grow with the purchase of new miners, conversion of our existing mining assets to utilize immersion cooling technology, as well as the potential development of new sites. In addition, we believe in the future of our Core+ software strategy to monetize bitcoin transactions by building on our carbon-neutral pool, Terra Pool, monetizing our Petra technology for filtering in known good transactions and creating a carbon-neutral bitcoin marketplace. We believe this suite of technologies will enable us to further grow our revenue in the long term."

Adrian Glover, chief technology officer, continued: "Two thousand twenty-two was a year for moving forward DMG's software development, the results of which we expect to bear fruit in 2023 with an upgraded version of Terra Pool, deployment of Petra on the Bitcoin mainnet and upgrades to our Helm mine management software, which would support our deployment of immersion cooling at scale."

Financial highlights

Revenue for the fiscal year ended Sept. 30, 2022, was $43.2-million versus $10.2-million in the prior-year period, an increase of 323 per cent, mainly on the increase in bitcoin mining capacity. Additionally, there were increases in software licence and related development income as compared with the prior year. These increases were offset by a decrease in equipment hosting revenue as the company continues to move toward a focus on self-mining operations.

Revenue for the fourth quarter ended Sept. 30, 2022, was $6.5-million versus $10.5-million in the prior quarter, a sequential decrease of 38 per cent, and $2.5-million in the prior-year period. The decline in revenues from the prior quarter was primarily driven by the 35-per-cent decline in the average price of bitcoin.

Income before other items for the fiscal year ended Sept. 30, 2022, was $1.5-million versus negative $6.8-million in the prior-year period.

Operating and maintenance costs for the year ended Sept. 30, 2022, were $13.0-million as compared with $6.6-million for the year ended Sept. 30, 2021. The majority of this was due to an increase of $6.6-million in utility costs, which is related to the increase in digital currency mining activity from the additional miners acquired during the year. Operating and maintenance costs for the three months ended Sept. 30, 2022, were $3.5-million as compared with $1.6-million in the same quarter in the prior year. The increase is a result of increases in utility costs of $1.9-million, which is related to the increase in digital currency mining activity and the net increase in miners throughout the period.

Net loss for the fiscal year ended Sept. 30, 2022, was $17.0-million, versus $9.6-million in the prior-year period. Increases in revenue of $33.0-million were offset by increases in depreciation of $17.9-million and operating and maintenance costs of $6.5-million all related to the increase in installation of new miners for self-mining. Research costs increased by $1.5-million, mostly related to work on software development projects. Additionally, the company recognized a decline in fair value on its investment in Brane of $3.0-million and its investment in Bosonic of $2.8-million, as well as an impairment of the amount recoverable of $1.3-million. The increase in net loss was offset by a decrease in share-based compensation of $1.1-million.

Earnings per share for the fiscal year ended Sept. 30, 2022, were negative 10 cents versus negative seven cents in the prior-year period.

As at Sept. 30, 2022, the company had cash of $1.2-million, digital currency of $9.3-million and total assets of $96.9-million. For more details, please refer to the company's filings.

Management call

Today, the company also announces that it will host a conference call to review fourth quarter 2022 financial results and provide a corporate update on Jan. 31, 2023, at 4:30 p.m. ET. Participants are asked to preregister for the call.

Please note that registered participants will receive their dial-in number upon registration and will dial directly into the call without delay. Those without Internet access or unable to preregister may dial in by calling: 1-844-282-4703 (United States toll-free), 1-412-317-5624 (international) or 1-647-484-8814 (Canadian toll-free). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the DMG Blockchain call.

The conference call will also be available through a live webcast and will be available for webcast replay approximately one hour after the end of the call until April 30, 2023.

A telephonic replay of the call will be available through Feb. 14, 2023, and may be available by calling 1-877-344-7529 (U.S. toll-free), 1-412-317-0088 (international) or 855-669-9658 (Canadian toll-free) and using the access code 5467434.

Although there will be no live question-and-answer session, management will address presubmitted questions during the call. Those wishing to submit a question may do so by investors@dmgblockchain.com using the subject line "conference call question submission" through Jan. 31, 2023, at 2 p.m. ET.

About DMG Blockchain Solutions Inc.

DMG Blockchain is an environmentally friendly vertically integrated blockchain and cryptocurrency company that manages, operates and develops end-to-end digital solutions to monetize the blockchain ecosystem. DMG Blockchain's sustainable businesses are segmented into two business lines under the Core and Core+ strategies and unified through DMG Blockchain's vertical integration.

Future changes in the bitcoin network-wide mining difficulty rate or bitcoin hash rate may materially affect the future performance of DMG Blockchain'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.

We seek Safe Harbor.