REG-Quantum Blockchain Technologies Plc: Interim Results
23/09/2024 07:15
23 September 2024
Quantum Blockchain Technologies plc
("QBT", “the Group” or "the Company")
INTERIM RESULTS
Quantum Blockchain Technologies (AIM: QBT), the AIM-listed investment company
focusing on a R&D and investment programme within blockchain technology, is
pleased to announce its Interim Results for the six months ended 30 June 2024.
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, John Mackay +44 (0)20 3470 0470
Leander (Financial PR)
Christian Taylor-Wilkinson +44 (0) 7795 168 157
About Quantum Blockchain Technologies Plc
QBT (AIM: QBT) is a London Stock Exchange AIM listed Research & Development
and investing company focused on an intensive R&D programme to disrupt the
Blockchain Technologies sector, and which includes, cryptocurrency mining and
other advanced blockchain applications. The primary goal of the R&D programme
is to develop Bitcoin mining tools and techniques, via its technology-driven
approach, which the Company believes will significantly outperform existing
market practices.
Chairman’s Statement
During the first half of 2024, QBT continued to focus its efforts on
developing the first commercial Bitcoin mining products and services that
utilises its intensive R&D programme.
R&D
The R&D programme has achieved several positive milestones so far:
- Asic UltraBoost: Designed to improve Bitcoin mining by
eliminating redundant computations in a key part of the mining algorithm,
resulting in faster and more efficient operations. A patent application has
been filed with patent offices in the UK and the EU (which also covers the
UK), as well as the USA, Canada, Australia and South Korea.
- Asic Enhanced Boost: An optimised approach to SHA-256
computation for Bitcoin mining that enables partial pre-computation of future
blockchain blocks. A patent application has also been submitted to the UK and
EU patent offices.
- Quantum Mining: A quantum version of the Bitcoin mining
algorithm that utilises qubit-based quantum computation and quantum logic
gates. A patent application for this is being drafted and expected to be filed
as soon as practicable in jurisdictions to be determined.
- Method A: A Machine Learning (“ML”) based approach
aimed at reducing the SHA-256 search space compared to the brute-force method
used in Bitcoin mining currently.
- Method B: Another innovation leveraging ML and statistical
optimisation to reduce the SHA-256 search space, but with a fundamentally
different approach than Method A.
- Method C: An AI Oracle developed by the R&D Machine
Learning team to assess in real-time the likelihood that an input to SHA-256
will generate a winning hash. A patent application is under consideration.
Company Objectives:
The Company’s short-term goal is to develop commercial products and services
from the above R&D activities, prioritising Methods A, B and C. The
longer-term goals are to develop an in-house ASIC chip for Bitcoin mining as
well as a quantum computing based miner.
Current Developments:
Currently, the Company is testing Methods A and B through pool-based live
mining. These tests are being conducted in order to assess the improved
performance of commercial ASIC chips when these chips are controlled by the
two Methods. Significantly, the two Methods can be applied to existing
ASIC-based mining machines simply as a client-server software upgrade. QBT’s
recent software switch from CG Miner to ESP-miner is expected to assist and
facilitate the testing programme. If the results of the live testing are
successful, Method A and B could thereafter be made available as SaaS
products.
Method C, which requires its integration at chip-level, is undergoing real
time mining tests using slower FPGA chips on historic blockchain blocks. This
provides the Company with a Bitcoin mining difficulty compatible with the
hashing power of available FPGAs in order to allow the team to understand the
chip mapping process for the purpose of scaling up towards commercial ASIC
integration.
Should any of the tests confirm the R&D team’s findings, the Company may
consider potential partnerships with either miners or chip manufacturers to
quickly deploy Method A and Method B on ASIC Mining Machines and Method C on
an ASIC chip. In preparation for this eventuality, QBT has already initiated
high-level discussions with key industry players.
QBT’s longer-term strategy of using its Quantum Mining Algorithm still
requires more advanced quantum computing power than is currently available, so
the Company will review this project in 2025.
QBT’s previously announced project to build in-house its own Bitcoin mining
chip. This is anticipated to commence once the relevant patents have been
granted. As previously stated, the chip will be based on a large format ASIC
and, while it will not be competitive in the market, it will serve as a
demonstrator model for the major Bitcoin miners serving to prove the
disruptive nature of QBT’s enhancements. A second option under consideration
whereby the Company may exploit its patents (once granted) would be to partner
with a chip designer and, through a licensing arrangement share QBT’s
patented Method C intellectual property. This second option is less
capital intensive than QBT manufacturing its own chips but the Company also
anticipates that such an approach would be expected to reduce future revenue.
Conclusion
Despite the slower than anticipated progress with the results from the R&D
programme, which should not be considered unexpected given QBT’s stated
objectives, the Company firmly believes in the results it has obtained so far
and it is working diligently to complete all the necessary testing in order to
launch one or more Bitcoin products.
Legacy Assets
The board believes that its legal matters are moving closer to a positive
resolution.
The Company continues its court action against the former management and
statutory committee of Sipiem Srl In Liquidazione (“Sipiem”). The claim is
being conducted by QBT’s wholly owned subsidiary, Clear Leisure 2017 Ltd
(“CL17”).
In April 2024, CL17 reached an agreement with certain of the Sipiem jointly
liable defendants with an agreement to settle these defendants’ liabilities
for €700,000 (this amount, net of costs, was received by CL17). CL17 also
secured the right to 30% of any future sums recovered through the litigation
by acquiring the Sipiem Receiver’s rights for €170,000. The intention was
to provide CL17 with damages already received (€700,000) as well as maximise
eventual receipt of those damages QBT hopes to recover pursuant to the 2022
judgment of the trial court in CL17’s favour (the remaining €5.575 million
plus interest and inflation adjustments – together with the damages already
received, the "Settlement"). The Settlement, however, was itself subject to
the approval of trial court in Venice being granted prior to the Venice Court
of Appeal making a ruling on the appeal of the 2022 judgment filed by the
defendants.
This sequence of events did not occur as foreseen in the Settlement, however,
for in June 2024, the Venice Court of Appeal issued its appeal judgement
upholding the 2022 ruling in favour of CL17, with a minor exception of certain
items of damages that were judged as awarded on inadequate grounds amounting
to €105,412,19 while confirming the award of €6,083,562 (plus interest and
inflation adjustments) in damages, along with overall €134,176 in legal fees
accrued since the start of legal proceedings. Since, however, the Appeals
court’s decision was issued before the trial court’s approval of the
Settlement, the terms of the Settlement were not confirmed.
The Company is currently reviewing the situation with its legal team but
retains the funds received to date, less the €170,000 payment to the Sipiem
Receiver. Discussions are ongoing with all relevant parties to assess the
legal and contractual implications of the voided Settlement.
In other litigation activity, the Company continues to also pursue its claim
against the former management of Sosushi Srl, amounting to approximately €1
million. The matter is subject to arbitration and although the arbitration
process has stalled, QBT intends to relaunch it soon.
Regarding QBT’s investee companies, the Company is happy to report that in
late June 2024 Forcrowd Srl obtained authorisation to extend its crowdfunding
licence across all EU jurisdictions. With respect to PBV Monitor Srl (now More
Legal Srl), the Company's stake has decreased to approximately 0.45% following
a recent fundraising round.
Finally, as announced on 9 January, QBT reached an agreement with MC Strategy
S.A., the sole bondholder of its €3.5 million Zero-Coupon Bond issued in
2020, to extend the bond’s maturity from 15 December 2024 to 15 December
2026, and to increase the yield on maturity from 1% to 3%. Similarly,
bondholders of QBT's Zero-Coupon Bond issued in 2013 agreed to extend the
maturity date from 15 December 2024 to 15 December 2026, and to amend the
conversion price from £0.05 to £0.03.
Financial Review
The Group reported a total comprehensive loss for the period of €1.3 million
(30 June 2023: loss €1.4m). The operating loss for the period was €1.1
million (30 June 2023: operating loss €1.2m). There were no charges relating
to the recognition of share options within administrative expenses (2023:
€370,000) however, within finance costs there are charges for the
revaluation of derivatives totaling €231,000 (2023: €142,000). The
difference of these items is strictly dependent on the volatility of the
Company’s share price during the first half of 2024, used for the
calculation according to the relevant accounting standards.
At 30 June 2024, the Group is in a net assets position of €4.3 million,
compared to a net liabilities position of €2.6 million at 31 December 2023.
The Group is also at a net current assets position of €3.9m compared to net
current liabilities of €3.1m at 31 December 2023.
The Company’s cash position at the period end was €1.6m, compared to €2m
at 31 December 2023.
Post 30 June 2024 Events
In August 2024 the Company announced that, with regards to the porting of the
Methods to existing commercial ASIC-based, it decided to migrate away from
CGMiner to AxeOS (ESP-miner), a more recently developed and, in the
Company’s opinion, a better designed public domain operating system software
for Bitcoin mining devices.
In September 2024, the QBT announced the appointment of Mr. Jose Rios as
Strategic Adviser Mr. Rios is the former General Manager of Blockchain and
Business Solutions in the Accelerated Computing Systems and Graphics Group at
Intel Corp, where he spent 25 years. He was instrumental in the Blockscale
ASIC project - Intel’s dedicated chip for Bitcoin mining – and he brings
extensive expertise in ASIC chip design, production and proprietary
architecture development to QBT.
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 various legal 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 who are expected to remain solvent, thereby enhancing the
prospect of collection of the judgment debts.
Francesco Gardin
Quantum Blockchain Technologies PLC
CEO and Chairman
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2024
Note Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
(Unaudited) (Unaudited) (Audited)
Continuing operations €’000 €’000 €’000
Revenue - - -
- - -
Administrative expenses (1,111) (1,190) (4,025)
Other operating income - 1 -
Operating loss (1,111) (1,189) (4,025)
Other gains and losses - - 32
Share of loss from equity-accounted associates - - (59)
Finance charges (231) (292) (296)
Loss before tax (1,342) (1,481) (4,348)
Taxation - 42 142
Loss for the period attributable to owners of the parent (1,342) (1,439) (4,206)
Other comprehensive income/(loss) - - -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT (1,342) (1,439) (4,206)
Earnings per share:
Basic loss per share (cents) 3 (€0.104) (€0.143) (€0.382)
Diluted loss per share (cents) 3 (€0.056) (€0.090) (€0.256)
GROUP STATEMENTS OF FINANCIAL POSITION
AT 30 JUNE 2024
Note As at 30 June 2024 €’000 (Unaudited) As at 30 June 2023 €’000 (Unaudited) As at 31 December 2023 €’000 (Audited)
Non-current assets
Intangible assets 2 - 2
Property, plant and equipment 141 198 169
Financial assets at fair value through profit and loss 322 689 396
Investments in equity-accounted associates 7 66 7
Total non-current assets 472 953 574
Current assets
Trade and other receivables 3,067 4,643 3,243
Cash and cash equivalents 1,584 752 2,057
Total current assets 4,651 5,395 5,300
Total assets 5,123 6,348 5,874
Current liabilities
Trade and other payables (744) (369) (413)
Borrowings - - (7,451)
Derivative financial instruments - - (459)
Provisions (98) (210) (98)
Total current liabilities (842) (579) (8,421)
Net current assets/(liabilities) 3,809 4,816 (3,121)
Total assets less current liabilities 4,281 5,769 (2,547)
Non-current liabilities
Borrowings (7,079) (8,286) -
Derivative financial instruments (690) (610) -
Total non-current liabilities (7,769) (8,896) -
Total liabilities (8,611) (9,475) (8,421)
Net liabilities (3,488) (3,127) (2,547)
Equity
Share capital 9,219 8,586 9,219
Share premium account 54,165 51,497 54,165
Other reserves 14,629 14,182 14,228
Retained losses (81,501) (77,392) (80,159)
Total equity (3,488) (3,127) (2,547)
GROUP AUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 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 year - - - (4,206) (4,206)
Issue of shares 841 3,624 - - 4,465
Grant of share options - - 416 - 416
At 31 December 2023 9,219 54,165 14,228 (80,159) (2,547)
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 CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2024
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total equity €’000
At 1 January 2024 9,219 54,165 14,228 (80,159) (2,547)
Total comprehensive loss for the period - - - (1,342) (1,342)
Modification of bond - - 401 - 401
At 30 June 2024 9,219 54,165 14,629 (81,501) (3,488)
GROUP UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Six months to 30 June 2024 (Unaudited) €’000 Six months to 30 June 2023 (Unaudited) €’000 Year ended 31 December 2023 (Audited) €’000
Cash used in operations
Loss before tax (1,342) (1,189) (4,348)
Impairment of investments 74 - 303
Share of post-tax losses of equity accounted associates - - 59
Non cash foreign exchange movements - 10 -
Finance charges 231 (142) 296
Depreciation expense 28 28 55
Decrease/(increase) in receivables 176 (25) 1,383
(Decrease)/increase in payables 331 95 (164)
Share based payments - 370 416
R&D tax credit received - - 154
Net cash (outflow)/inflow from operating activities (502) (853) (1,846)
Cash flows from investing activities
Purchase of investments - (28) (27)
Purchase of intangible assets - - (2)
Interest received 29 6 -
Net cash inflow from investing activities 29 (22) (29)
Cash flows from financing activities
Proceeds from capital issue - 1,164 3,465
Net interest paid - - (9)
Net cash inflow/(outflow) from financing activities - 1,164 3,456
Net increase/(decrease) in cash for the period (473) 289 1,581
Cash and cash equivalents at beginning of year 2,057 463 463
Exchange differences - - 13
Cash and cash equivalents at end of period 1,584 752 2,057
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
First Floor, 1 Chancery Lane, London, England, WC2A 1LF.
The principal activity of the Group is that of an investment company with a
portfolio of companies primarily encompassing the leisure and real estate
sectors mainly in Italy and, more recently, technology sectors. The focus of
management is to pursue the monetisation of all of the Company’s existing
assets, through selected realisations, court-led recoveries of misappropriated
assets and substantial debt-recovery processes. The Company has also realigned
its strategic focus to technology related investments, with special regard to
interactive media, blockchain and AI sectors.
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
2024 which have been prepared in accordance with UK adopted international
accounting standards. They include unaudited comparatives for the six months
ended 30 June 2023 together with audited comparatives for the year ended 31
December 2023.
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 2023 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
2024 have been prepared on the basis of accounting policies expected to be
adopted for the year ended 31 December 2024, which are consistent with the
year ended 31 December 2023.
Going concern
The Group’s activities generated a loss of €1,342,000 (June 2023:
€1,439,000) and had net current assets of €3,809,000 as at 30 June 2024
(June 2023: net current assets €4,816,000). 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 2023 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 2023 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 2024 Six months to 30 June 2023 Year to 31 December 2023
(Unaudited) (Unaudited) (Audited)
€’000 €’000 €’000
(Loss)/profit attributable to owners of the parent company:
Basic earnings (1,342) (1,439) (4,206)
Diluted earnings (1,136) (1,492) (4,424)
Basic weighted average number of ordinary shares (000’s) 1,291,314 1,009,060 1,102,309
Diluted weighted average number of ordinary shares (000’s) 2,043,195 1,664,647 1,727,130
Basic and fully diluted earnings per share:
Basic earnings per share (€0.104) (€0.143) (€0.382)
Diluted earnings per share (€0.056) (€0.090) (€0.256)
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. Investment Policy
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, First Floor, 1 Chancery Lane, London, England,
WC2A 1LF.
-ends-
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