26 June 2024

 

Quantum Blockchain Technologies Plc

(”QBT” or ”the Company”)

 

FINAL RESULTS

 

QBT (AIM: QBT), is pleased to announce its final results for the year ended 31 December 2023.

 

The Company’s Annual General Meeting (“AGM”) will be held at Company’s registered address, 1st Floor, 1 Chancery Lane, London, WC2A 1LF at 12.00 pm on Wednesday, 31 July 2024.

 

The Annual Report and Accounts together with the AGM Notice and Form of Proxy (together the “Documents”) are available on the Company’s website under the “Investor Relations – Annual Reports and Circulars” section. The Documents will be posted shortly to those shareholders who have requested to receive printed documents.

 

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

 

I am pleased to present the Group’s Final Results for the year ended 31 December 2023. The Group consists of Quantum Blockchain Technologies PLC (the “Company” or “QBT”), which undertakes the Group’s Research and Development (“R&D”) Programme and holds the Legacy Assets, and its wholly owned subsidiary, Clear Leisure 2017 Ltd (“CL17”), which deals with the legal claims and related litigation.

 

During 2023, the main focus of the Company has been the R&D Programme, launched in 2021, which aims to develop a proprietary disruptive technology for mining Bitcoin through the development of Artificial Intelligence (AI), Quantum Computing and a special architecture for ASIC chips design for mining rigs. The capitalisation of the Bitcoin market as at the date of this report exceeds USD1.3 trillion, therefore, a technology which could bring a competitive advantage to existing Bitcoin miners is considered by the Company as potentially valuable.

 

The Company has several independent R&D teams working on each of the above technologies, based in London (UK), Munich (Germany) and Milan (Italy).

 

The first goal of QBT’s R&D Programme is to create AI software to improve the mining power of existing Bitcoin mining rigs. By applying AI and Machine Learning (ML) technologies, three different R&D teams have independently achieved very promising results from internal laboratory tests for the Company’s three proprietary methods, called “A”, “B” and “C”. While they are materially different, each method has substantiated the Company’s initial assumption, i.e., that SHA-256, the core algorithm for mining of Bitcoin, is to some extent predictable. Hence calculations can be limited only to those cases where the chance of successfully mining Bitcoin is higher, resulting in better overall performance of the mining process.

 

The Company is now working on adapting its three Bitcoin mining methods to existing mining rigs in order to launch the first commercial QBT products, as Software as a Service (“SaaS”) for Bitcoin miners.

 

A second goal, which has a mid to long term timeframe, is the development of a proprietary mining chip which includes all the internal R&D results, as per the two patent applications filed in 2021 and 2023.

 

Finally, the third objective will be the implementation of “Quantum Mining”, which is a proprietary quantum version of SHA-256 algorithm for Bitcoin mining. A patent application for this implementation is in the process of being drafted at the time of publication of this report.

 

In order to use QBT’s proprietary quantum algorithm for Bitcoin mining, a quantum computer with more qubits than is currently commercially available is required. Therefore, the Company is planning ahead to be in a position to use this opportunity when such quantum computer is available.

 

During 2023, the Company continued to deal with its Legacy Assets, with special focus on the litigation against the former management and internal audit committee of Sipiem in Liquidazione Spa (“Sipiem”), which is held via CL17. In late 2022, the Venice Court ruled in favour of CL17 and ordered Sipiem defendants to pay CL17 €6,274,000 in damages (exclusive of interest and adjustments for inflation), and legal fees (together the “Award Payment”).

 

The Company also continued to deal with its other Legacy Assets, such as the Sosushi Srl (“Sosushi”) €1m litigation, and Company’s investments in PBV, Forcrowd and Geosim, although there are no specific updates available at this time.

 

During the period under review, as announced on 1 June 2023, QBT raised a total of £1 million (before expenses) pursuant to the issue of 71,428,571 new ordinary shares of 0.25 pence each in the Company (“Ordinary Shares”) at a price of 1.4 pence per Ordinary Share. Further to that, as announced on 30 October, the Company raised a total of £2 million (before expenses) pursuant to the issue of 133,333,333 new Ordinary Shares at a price of 1.5 pence per Ordinary Share.

 

On 7 July 2023, the Company announced that it had received a conversion notice from MC Strategies AG to convert €1 million of the Zero-Coupon Bond into new Ordinary Shares at a conversion price of 1 pence per Ordinary Share (EUR: GBP exchange rate of 0.89 – fixed per terms and conditions of the Zero-Coupon Bond) (as originally disclosed by the Company on 9 November 2020). As a result, the Company issued 89,000,000 new Ordinary Shares to MC Strategies AG on 14 July 2023.

 

As disclosed on 31 May 2023, QBT granted seven million new options over new Ordinary Shares to certain consultants, members of the R&D team and in-house staff. As a result, at the time of this report, the Company has outstanding options over 133,500,000 new Ordinary Shares exercisable at 5 pence and outstanding options over 133,500,000 new Ordinary Shares exercisable at 10 pence, set to expire between December 2024 and December 2026.

 

In conclusion, the Company believes that exciting times are ahead, as it expects that its products, once available, could truly energise the cryptocurrency mining industry, while eventually being able to monetise its Legacy Assets through legal settlements.

 

Financial Review

The Group reported a total comprehensive loss of €4,206,000 for the year ended 31 December 2023 (2022: €5,026,000) and a loss before tax of €4,348,000 (2022: €5,252,000). Operating losses for the period were €4,025,000 (2022: €4,547,000). Included within administrative expenses are charges relating to the recognition of share options totalling €416,000 (2022: €1,854,000) and within finance costs are charges for the revaluation of derivatives representing a profit of €9,000 (2022: loss of €324,000). The movement in these items is dependent on the volatility of the Company’s share price used for the calculation according to the relevant accounting standards. The undiluted Net Asset Value (“NAV”) of the Group decreased by €675,000 in 2023, compared to a decrease of €398,000 in 2022. The Group had Net Current Liabilities of €3.1m as at 31 December 2023 (2022: Net Current Assets €4.4m).

 

Post-Balance Sheet Events

In January 2024, the Company announced it has agreed with MC Strategy S.A., the sole Bondholder of the Company’s €3.5m Zero-Coupon Bond issued in 2020, to extend the maturity of the Bond from 15 December 2024 to 15 December 2026. QBT and MC Strategy S.A. have agreed to change the yield on maturity from 1% to 3%.

 

With regards to the Company’s Zero-Coupon Bond originally issued in 2013, at the Bondholders meeting held on 22 February 2024 (previously duly called on 18 January 2024) the bondholders agreed to extend the maturity of the Zero-Coupon Bond from 15 December 2024 to 15 December 2026, and to amend the conversion price from £0.05 to £0.03.

 

In March 2024, the Company announced a new development, called Method C, based on Machine Learning and using predictive AI technology that is producing consistent results during testing. In testing environments Method C had favourably demonstrated predictive ability in c. 30% of instances where it was input to SHA-256 producing a winning hash, resulting in a potential saving of energy.

 

At the same time, QBT announced that it had commenced development of a proprietary ASIC chip. A working prototype is about to undergo development to confirm performance levels, and the Company entered into early-stage exploratory discussions with Bitcoin rig manufacturers and US Bitcoin mining companies. Also in March, the Company noted that the porting of Method A and Method B into commercial rigs had proven to be very challenging.

 

The R&D team engaged in testing different solutions for the final stage in order to deliver a fully reliable product. Finally, per the same announcement, QBT disclosed that its first two patent applications (ASIC UltraBoost and ASIC EnhancedBoost) were making positive headway and that a third patent application was being drafted concerning the proprietary quantum version of SHA-256.

 

In May 2024, the Company announced that at the end of April 2024, it reached an agreement with certain of the Sipiem litigation co-liable defendants who have settled their position for €700,000 (which, net of certain costs, has been received by CL17) .

 

At the same time, CL17 also reached an agreement with the Sipiem’s receiver, acquiring its right to receive 30% of any sums collected (net of legal and other costs) from the Sipiem litigation, as envisaged in the 2019 claim purchase agreement (through which CL17 acquired the Sipiem litigation) for an amount of €170,000, giving CL17 rights to all funds recovered, namely the €700,000 of the above agreement and the balance amounting to €5.575 million plus interest and augmentation for inflation, together (the “Settlement”)

 

As announced on 16 May 2024 the above agreements were subject to the Venice Court scheduling of a hearing to approve the Settlement, before the issue of the appeal ruling.

 

In June, QBT confirmed that the payment of €700,000 had been completed, and that €170,000 has been paid by CL17 to Sipiem’s Receiver with respect to the acquisition by CL17 of the Receiver’s right to receive 30% of any further sums collected in connection with the claim (net of legal fees).

 

Subsequently, in June 2024, the Company announced that the Venice Court of Appeal confirmed the ruling of the 2022 lower court Judgment in favour of CL17 (save for €105,412), amounting to €6,083,562 (plus interest and adjustments for inflation) in damages, plus €134,166 for legal expenses. As the appeal ruling has been issued prior to the scheduling of the hearing regarding the Settlement, such settlement is now deemed void.  While the above matter is currently being assessed by the Company’s legal team, the Company still hold the above Settlement funds, minus the €170,000 paid to the Receiver for the 30% rights. In the meantime, all the parties involved, namely the Receiver, the Sipiem’s statutory auditor’s lawyers and the insurer’s lawyers are being contacted to discuss the contractual implications of the voided Settlement.

 

 

Outlook

The Board remains committed to return value to its stakeholders by:

continuing to focus on its R&D Programme, which is providing promising and consistent results for the disruption of the Bitcoin market; investing in the technology sector (both in a direct and an indirect manner); managing the legacy portfolio assets, where positive outcomes are expected from the Company’s 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, while the legal claims have strong merit and against defendants that are expected to remain solvent, thereby enhancing the prospect of collection of the judgment debts.

 

 

 

Francesco Gardin

Chairman

25 June 2024

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

Note

2023

2022

 

 

€’000

€’000

 

 

 

 

Revenue

 

-

-

 

 

-

-

 

 

 

 

Administrative expenses

7

(4,025)

(4,547)

Other income

 

-

-

Operating loss

 

(4,025)

(4,547)

 

 

 

 

Other gains and losses

 

32

-

Share of loss from equity-accounted associates

8

(59)

(69)

Finance costs

9

(296)

(636)

Loss before tax

 

(4,348)

(5,252)

Tax

12

142

226

Loss for the year

 

 (4,206)

(5,026)

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

 

(4,206)

(5,026)

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

Basic loss per share (cents)

13

€0.382

€0.508

Diluted loss per share (cents)

13

€0.256

€0.312

 

There was no other comprehensive income during the year.

 

The accounting policies and notes form an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

 

 

Notes

Group

2023

Group

2022

 

Company

2023

Company

2022