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:
-
continuing to
focus on its R&D programme, which is providing promising and
consistent results;
-
investing in
the technology sector (both in a direct and an indirect
manner);
-
managing the
Legacy Assets portfolio, where positive outcomes are expected from
the Company’s claims; and
-
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
-
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.