TIDMQBT
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].
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:
i. continuing to focus on its R&D programme, which is providing promising and
consistent results;
ii. investing in the technology sector (both in a direct and an indirect
manner);
iii. managing the Legacy Assets portfolio, where positive outcomes are expected
from the Company's claims; and
iv. 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 PERIODED 30 JUNE 2023
Note Six months to Six months to Year ended
30 June 2023 30 June 2022 31 December
2022
(Unaudited) (Unaudited) (Audited)
Continuing ?'000 ?'000 ?'000
operations
Revenue - - -
- - -
Administrative (1,190) (2,067) (4,547)
expenses
Other operating 1 - -
income
Operating loss (1,189) (2,067) (4,547)
Share of loss from - - (69)
equity-accounted
associates
Finance charges (292) (797) (636)
Loss before tax (1,481) (2,864) (5,252)
Taxation 42 74 226
Loss for the (1,439) (2,790) (5,026)
period
attributable to
owners of the
parent
Other - - -
comprehensive
income/(loss)
TOTAL (1,439) (2,790) (5,026)
COMPREHENSIVE LOSS
FOR THE
PERIOD
ATTRIBUTABLE TO
OWNERS OF THE
PARENT
Earnings per
share:
Basic loss per 3 (?0.143) (?0.281) (?0.508)
share (cents)
Diluted loss per 3 (?0.090) (?0.213) (?0.312)
share (cents)
GROUP STATEMENTS OF FINANCIAL POSITION
AT 30 JUNE 2023
Note As at As at
As at
30 June 30 June
31
De
cember
2023 2022
2022
?'000 ?'000
?'000
(Unaudited) (Unaudited)
(Audited)
Non-current
assets
Property, 198 234
226
plant and
equipment
Investments 689 714
677
Investments 66 211
60
in equity
-accounted
associates
Total non 953 1,159
963
-current
assets
Current
assets
Trade and 4,643 5,029
4,626
other
receivables
Cash and 752 1,307
463
cash
equivalents
Total 5,395 6,336
5,089
current
assets
Current
liabilities
Trade and (369) (311)
(465)
other
payables
Provisions (210) -
(210)
Total (579) (311)
(675)
current
liabilities
Net current 4,816 6,025
4,414
assets/(liabi
l
ities)
Total assets 5,769 7,184
5,377
less
current
liabilities
Non-current
liabilities
Borrowings (8,286) (8,439)
(8,131)
Derivative (610) (870)
(468)
financial
instruments
Total non (8,896) (9,309)
(8,599)
-current
liabilities
Total (9,475) (9,620)
(9,274)
liabilities
Net (3,127) (2,125)
(3,222)
liabilities
Equity
Share 8,586 8,378
8,378
capital
Share 51,497 50,541
50,541
premium
account
Other 14,182 12,673
13,812
reserves
Retained (77,392) (73,717)
(75,953)
losses
Equity (3,127) (2,125)
(3,222)
attributable
to
owners of
the
Company
Total equity (3,127) (2,125)
(3,222)
GROUP AUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Group Share Share Other Retained losses Total equity
capital premium reserves ?'000 ?'000
?'000 account ?'000
?'000
At 1 January 2022 8,221 49,442 11,409 (71,896) (2,824)
Total - - - (5,026) (5,026)
comprehensive loss
for the year
Grant of warrants
Exercise of 157 1,099 - 969 2,225
warrants
Grant of share - - 1,854 - 1,854
options
Modification of - - 549 - 549
bond
At 31 December 8,378 50,541 13,812 (75,953) (3,222)
2022
GROUP UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2022
Group Share Share Other Retained losses Total equity
capital premium reserves ?'000 ?'000
?'000 account ?'000
?'000
At 1 January 2022 8,221 49,442 11,409 (71,896) (2,824)
Total comprehensive - - - (2,790) (2,790)
loss for the period
Exercise of 157 1,099 - 969 2,225
warrants
Grant of share - - 1,264 - 1,264
options
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 Share Other Retained losses Total equity
capital premium reserves ?'000 ?'000
?'000 account ?'000
?'000
At 1 January 2023 8,378 50,541 13,812 (75,953) (3,222)
Total comprehensive - - - (1,439) (1,439)
loss for the period
Issue of shares 208 956 - - 1,164
Share based payment - - 370 - 370
expense
At 30 June 2023 8,586 51,497 14,182 (77,392) (3,127)
GROUP UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2022
Six months to Six months to Year ended 31
30 June 2023 30 June 2022 December 2022
(Unaudited) (Unaudited) (Audited)
?'000 ?'000 ?'000
Cash used in operations
Loss before tax (1,189) (2,864) (5,252)
Impairment of investments - - 154
Share of post-tax losses of - - 69
equity accounted associates
Non cash foreign exchange 10 (50) (35)
movements
Finance charges (142) 800 637
Decrease/(increase) in (25) (49) 474
receivables
(Decrease)/increase in 95 (18) 346
payables
Impairment of intercompany - - 33
receivables
Share based payments 370 1,264 1,854
Depreciation 28 20 49
Net cash (outflow)/inflow (853) (897) (1,671)
from operating activities
Cash flows from investing
activities
Purchase of investments (28) - (50)
Purchase of property, plant - (90) (111)
and equipment
Interest received 6 - -
Net cash inflow from (22) (90) (161)
investing activities
Cash flows from financing
activities
Proceeds from capital issue 1,164 1,255 1,256
Net cash inflow/(outflow) 1,164 1,255 1,256
from financing activities
Net increase in cash for 289 268 (576)
the period
Cash and cash equivalents 463 1,039 1,039
at beginning of year
Cash and cash equivalents 752 1,307 463
at end of period
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 Six months to Year to
30 June 2023 30 June 2022
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 1,009,060 994,291 989,497
of ordinary shares (000's)
Diluted weighted average 1,664,647 1,295,619 1,632,694
number of ordinary shares
(000's)
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.
This information was brought to you by Cision http://news.cision.com
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