DMG Blockchain Solutions Inc. (DMGGF) CEO Sheldon Bennett on Q1 2021 Results - Earnings Call Transcript

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DMG Blockchain Solutions Inc. (OTCQB:DMGGF) Q1 2021 Results Conference Call May 27, 2021 4:30 PM ET

Company Participants

Jules Abraham - CORE, IR

Sheldon Bennett - CEO

Ryan Cheung - CFO


Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the DMG Blockchain Solutions Q2 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Participants on this call are advised that the audio of this conference is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call.

I would now like to turn the call over to Jules Abraham of Core IR, the Company's Investor Relations firm. Please go ahead, sir.

Jules Abraham

Thank you, Sarah. Good afternoon everyone and thank you for joining us for the DMG Blockchain Solutions second quarter 2021 financial results and corporate update conference call. Joining us today from DMG Blockchain Solutions is Sheldon Bennett, the Company's Chief Executive Officer.

During this call, management will be making forward-looking statements including statements that address the DMG Blockchain Solutions expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in DMG Blockchain Solutions most recently filed periodic reports and the Company's recent press releases, particularly the cautionary statements within.

The contents of this call contain time sensitive information that is accurate only as of today May 27, 2021, except as required by law, DMG Blockchain Solutions disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It's now my pleasure to turn the call over to Sheldon Bennett, Chief Executive Officer. Sheldon?

Sheldon Bennett

Thank you so much, Jules. It's great to be here. Thank you for the introduction and we've got a lot to cover. We've looked a bit of time for this. So hopefully we can get through all the questions that we have at the end that people have submitted to the website.

Just in terms of what I'd like to cover and what I'd like to do. I plan on doing a little bit of a general corporate overview then going into our financial results, where I'll just be highlighting parts that I think for the shareholders out there, maybe they have a few questions of why numbers have changed and what they look like. Then I'll go a little bit into what our strategy is and what we're doing. And then Jules has got some Q&A questions. He's going to ask me in a couple of announcements at the end.

So I guess without further ado, as is the first time that DMG has ever done a quarterly review on our financial results, I'm going to take this a little bit slow and try and cover as much as I can and hopefully we'll get some good feedback on things people want to hear from this first trial. So, on an overview of our financial position first, on the performance side and this is before we get into the final results, just in general, our net cash outflows are less the period compared to last.

So I just want everybody to understand that when you take a look at DMGs cash outflow, we're getting closer to a net positive cash flow from operations. Actually, we have strong positive comprehensive income of 2.1 million. So, we don't want to get into financial statements, I'll take you through what's been happening from our cash point of view, and how we are becoming more cash flow or on our way to more cash flow positive operations.

We also have new growth in our software licensing revenue and will speak to this at length around our Bitcoin Pool offering that we have now a second offering coming up. As well, our balance sheet is looking healthy. We decrease our liabilities across the Company from 6.6 million to 1.8 million over the last quarter. And we decrease our debt from 1.7 million to 291,000, last quarter, as well. So, these are all great things from our balance sheet.

And then second in terms of our operations, as many of you have heard I sort of speak about our operations and I something called Core and Core+. Core is our Core Bitcoin mining operations, of our physical assets and Core+ our software operations that we have branded and managed through the trading name Blockseer a company that we purchased out of Silicon Valley back in 2018.

On our Core operations, we have completed multiple purchase orders for new miners, and some of these miners have arrived some were on our ways. So, we're excited to be able to release more information on our mining fleet and new orders that we're planning on completing, we'll press release as they happen. We're continuing our infrastructure below Christina Lake, to accommodate more miners and to access more power with the infrastructure we have there. And we are also in talks with multiple new locations for expanding beyond Christina Lake, where we would look at both mining ourselves with our own fleet of miners, but also hosting for third parties.

We have a lot of companies that have hosted with us for a long period of time, that really like our service, and we look to try and continue that where we can. Obviously for our shareholders, we want to maximize the revenue through Bitcoin mining ourselves with our own equipment, but there's also something to be said about hosting good clients. And good clients are there for you when times can be not, I guess, as positive from profit point of view for the crypto mining.

On our Core+ software, as we'll get into this a little bit later, our pool called MARA Pool, which we've licensed to Marathon is up and running. We received our first payment for this as our licensed setup fee. We took $500,000 in Marathon stock as a onetime setup fee. And in our agreement, which we've disclosed information on this already, we have a minimum $100,000 month license fee, which increases and moves up and down with the amount of hash rate that MARA Pool is running.

And so, we're looking forward to MARA Pool growing over time, as many people know, Marathon Digital has a very large mining fleet that they are planning on deploying and putting on this pool. So, we're quite excited for Marathon and they've been a great partner with us since launching our first licensed pool.

The next one that we're close to concluding is Terra Pool with our partnership with Argo. We haven't quite finalized terms on the financial side of the pool. But it's -- the technology is very similar to MARA Pool; however, this one is focusing on renewable energy and we believe that with the current interest in renewable energy in Bitcoin Blockchain mining, we believe that this pool will grow significantly in a short period of time, and we will actually get into some more comments around that later in this, a few comments and questions on that in the Q&A section.

And the last piece on our Core+ is, around some of the other software that we're developing and I alluded to this in some of our press releases, but we are very interested and moving forward with some interesting ideas and concepts with exchanges or crypto exchanges working with our software products. Right now, we're deploying some capital into different projects and investments around crypto exchanges and other things around crypto custody that will help us build on to the Blockseer platform. So, as we complete some more of these projects, we'll be publicly announcing the details about it as well.

So, those are my general comments on the business. Moving onto the financial results. So I'm just going to go through the financial statements. And as I said at the beginning, I'm only going to pick a few parts here, just to highlight, sort of for all larger changes or areas where people may have a few questions or evidence have changed for months. So when you take a look at March 31, 2021 versus September 30, so the six months in term of consolidated financial statement of position, you'll see our assets are up significantly with a raise of $70 million that we did with U.S. institutions.

Earlier in the year, we ended the quarter with $42.3 million in cash on hand, which is up from just $1 million cash on hand six months prior. So, it's a significant increase in cash that the Company now has available. And we have a proceeds list of things that we're doing with that cash raise in order to enhance the Company and to increase our revenue and decrease our costs overtime.

So on digital currency, as you'll see, we have our approximately 1 million six months ago on hand, now we're up to $18 million, just to explain that number a little bit, part of that about $15 million out of that was cash used to purchase BTC, which we announced in the prior. Another, almost 700,000 is just BTC inventory from mining, and then we gained about $2.9 million over the last six months in BTC appreciation.

On prepaid expenses on the current assets, you'll see that there is a large number that is related to a technology company that DMG's made an investment into that integrates in the Blockseer platform. This investment is not quite finished. So, it's not a stage where we can publicly disclose what we've done to invest the money. But for those of you that are taking a look at that and wondering why this number has changed so much, that's why we brought this larger number there.

On long-term deposits, this is increased approximately $12 million related to the purchase of the miners that are being delivered. So just if people are wanting to borrow there such a large deposit, it was so small before, it's mainly to outlays of cash and risk and we're waiting for minus to be delivered for that cash. And again this number, looking forward, as there are more purchases past March 31, we'll grow in future statements due to larger purchases that we've done, and we have some information about that in MD&A as well under subsequent tabs.

Moving onto equity, share capital increased from $44 million to $92 million. The majority of this obviously is from our financings and including increases 1 million import exercises, 3 million auction exercise and 1.5 million in the conversion of DMG USA into DMG Canadian shares and just so people that don't quite understand what DMG USA is. It is the Company that we used to purchase Datient, which Datient runs on the trading Blockseer.

So when we purchase that company, the shareholders have Datient were able to convert shares over a period of time. That conversion is now completed. And now DMG USA is 100% converted to previous shareholders based in the DMG Canada shares. As well, the accumulated other comprehensive income rose to 3.3 million. And again, this is a lot reflected in the gain of the market price of BTC over the last six months. Overall, DMG's financial position in terms of assets has increased up to 90.9 million up from 21.6 million six months ago.

Moving onto the consolidated statement of loss and comprehensive loss, I don't really like the title, but our accountants mix some cases. Until we switch around the games, which were close to doing. So I only have four points here, maybe five points, the one, revenue increase over 1 million for the last quarter. And this is due mainly to the software license agreement with Marathon in the MARA Pool payment that we received, as I just mentioned earlier. As well, we've increased our hosting fees to third parties and we are currently still hosting in the split of this. This is about a 60/40 split between the license fees that we received from Marathon as well as the hosting fees that we've been receiving.

Operation and maintenance fees increased as well as part of our base power usage associated with hosting not significant in line with the amount of power that we've had to allocate to hosting. Stock-based compensation has increased, this is actually due to us hiring more people and expanding the team. And then I think what is really important is net loss for the quarter is $914. This is an important milestone for us towards profitability increased cash stimulation.

If you take a look at the MD&A, when you have some time to look at the financial statements posted, you'll see if you go back to June 30, 2019, we had a net loss of about $2.5 million for that year we moved up to will definitely reduce that loss to $816,000. And June 30, 2020, we reduce it further down to $900,000 versus $691,000. And each quarter it has been being reduced until this quarter, we're at 914.

And if you take a look at that number and you take a look at the comprehensive income, which is 2.1 million, we are actually moving the Company out of crypto winter out of a really hard time for crypto miners into much better times. We reduce our costs from increased our revenue in a healthy way, we've actually been able to keep our revenue fairly constant over the last eight quarters for a bit of increase right now, which is nice.

And I just wanted to sort of highlight that, every quarter for the last two years, our net loss has been decreasing and now we're really at a good focus positions and bring forward. As well, our other comprehensive income, again I just wanted to reiterate that, we reported a positive income of 2.4 million, when you look at other comprehensive income over the past six months. Again, this has a lot to do with the gains on the value of Bitcoin over the last two quarters.

Moving on, I wanted to talk a little bit in just a couple of points on consolidated statement of cash flow and the main point is digital currencies. Again, this has gained significantly as a Pitch purchased BTC. And so if people are wondering why that number has changed a lot. It has to do with the amount of BTC that we purchased and put on to our inventory.

And although BTC price is quite volatile, we are big believers in BTC, this quarter the price ended quarter quite high, we're seeing double the price right now. But we still believe that theseinvestments are great investments, as we are, our Core Bitcoin miners, and moving into not being just Bitcoin miners, but really, experts on the software side of regulatory compliance. And we'll talk more about that a little bit.

So just to reiterate, that, gain this quarter we ended with cash on hand of $42 million. And I wanted to know a couple of things about cash on hand and raise, a lot of people ask a lot of questions about why we raised so much money, what do we do with for? Do we need to do that much. And for those of you that are newer to Bitcoin mining stocks aren't sure why we would do this.

I just wanted to highlight that, Bitcoin mining equipment is very expensive. The manufacturers price their equipment based on the price of Bitcoin. And so, they don't do it at a fixed price stays constant no matter what happens to the price of Bitcoin. And so we work on our purchases and our goals to purchase equipment on trying to achieve a one year ROI on all of our purchases. And this is quite important because if I was just to go out and buy Bitcoin mining equipment, I'd be end up paying $110 a terahash.

And I would be looking at two years or more ROI on that equipment, and that's just not a really good way to use your capital. So, we're trying to focus in on finding deals and working with the manufacturers and our friends in the industry to try and get any new deals that are 12 months or one year ROI or better. And sometimes a little bit hard to find, but we have been finding that we have been making purchases of equipment based on a 12-month ROI at the time we make that purchase.

The other comment I wanted to make about Bitcoin mining equipment and mining is, some people don't quite understand that. If you want to have 1 exahash or Bitcoin mining, operating, right now, to buy that equipment, you're looking at spending somewhere in the $75 million to $80 million U.S. And so 1 exahash of mining, the full operations today and you're under about $39,000 a Bitcoin U.S., you would average around $3.5 million a month or more $42 million a year.

So when you're looking at that sort of number of $75 million to $80 million to buy the equipment, you're looking at two-year ROI on that equipment. So, the way DMG has been looking at this is, we're focused on a one-year ROI. And so, we're trying to find some of the better deals and take advantage of some of the deals that the manufacturers are able to provide us through our long-term relationship with them.

So, the point here is that, Bitcoin mining equipment is expensive to generate a lot of money. It works for many years, but we have to be careful in how we purchase and we have to really think through any purchases we do. And the other point that a lot of people don't understand is a lot of the Bitcoin mining manufacturers will give out great deals for spot purchases.

So if you have cash on hand, you're will do much better on some deals than if you have to try and agree a deal haven't held and then trying to raise that cash or financing. It just takes too long, the markets moving too fast and somebody else will buy that equipment. It has cash on hand.

Sojust to restate and look at a couple of the big things that we see happening for DMG in the industry; first, the DMG, we're big believers in energy efficiency and renewable based mining. We believe that's the future. We've been focused on it for a long time. As everyone knows, being a BC company, we sit on renewable hydropower. So, we're lucky that way, a lot of other companies don't do that.

But we're taking -- our belief in renewable energy and us being 100% renewable and teaming up and Argo and becoming members of the Crypto Climate Accord, and not only becoming members we actually signed, the court has, as one of the feds is the first two signatories are going DMG as well we were looking at pushing forward this discussion about energy, energy efficiency, renewable energy in the crypto mining space.

We are also in talks with large financial institutions that are very interested in ESG in renewable energy or BTC mine and try and find supply of BTC that meets the ESG goals. So, there's a lot of financial institutions out there that would like to enter BTC or have entered BTC, but they also have a sustainability guideline or ESG goal to try and have as little carbon in their corporate footprint as possible.

And so, we're working with a few of these trying to find ways that perhaps the Terra Pool as one way, but also through our efforts with the Crypto Climate Accord. And perhaps we'll see what happens with the Bitcoin Mining Council to ensure that we can move as much Bitcoin mining into renewable energy as possible. We also believe that our future core strategy around the mine is found. We aim to continue to invest in our mining operations. We are focusing on efficiency.

Many of you already know about our mine management software, which we've been using for a long time. It's given us great efficiency in the way that we can run our operations, both controlling the amount of power we use, and what money, we're running, how we're running it, our retrofitting immersion cooling as part of our strategy. As I've said, in the past, the results we've had some of our testing has been very positive. And we plan on moving forward with our retrofitting of Christina Lake immersion cooling.

As well, I've noticed a few press releases, we have done some engineering and looking at adding solar infrastructure to our property. We do have a large 33 acre property. And it's a shame to have it all sitting there without investing in solar infrastructure. We've been looking at the payback time for our capital going into it. The numbers don't look too bad. And it's not, it's not like we're doing so in California but for British Columbia. The numbers look promising.

And we're going to continue working with our engineering company and costing us and making a decision on whether or not we end up adding solar generation onto our Christina Lake property. And then for the future of our Core+ strategies, so this is our strategy around software. As I've mentioned Terra Pool, it's something that we believe is key to DMGs future. We see ourselves as sort of leaders in renewable energy and really thinking about this before renewable energy really took off in the media.

Months-and-months ago DMG and Argo we're talking about a pool based on renewable energy. And we were talking about even before we met with the Crypto Climate Accord and with this sustainable different standards group. So, for us, we just think that, renewable energy makes sense Bitcoin mining I think is the future for any energy intensive business. And so, we plan to continue resourcing and building out our Blockseer platforms this year.

Our goal is to bring as many to market as possible. We've given lots of information about some of the products that are under development, and we're hoping to complete as many as we can in the shortest time. And so, that's my update on DMG, where we're at now, what our financial, some information on our financial numbers.

I'm just giving you a little bit of a highlighting of our key care areas where people may not understand some that we can figure jumps and sort of how we see the business in terms of us continuing to develop our Core assets at Christina Lake, and our focus on Core+ strategy of software development, again, focused on sort of regulatory and compliance issues in Bitcoin. And of course, the pools that we're doing are focused in on that as well as on renewable energy.

With that said, I think, we're at the Q&A session. We did take some questions in by email. I believe we got some via Twitter as well. Jules collected them all and sent them off fast in some type of order. I think Jules kind of explain what he did and trying to take some of the questions and clean them off so that we had sort of a very direct, clear question-and-answer.

Question-And-Answer Session

A - Jules Abraham

Thank you, Sheldon. The Company received many questions from investors for today's call and we thank you for your interest, your feedback, and continued support as shareholders. Many of these questions were repetitive. And so on today's call, we'll be addressing the most frequently-asked questions.

Additionally, the Company also received a number of questions that are seeking information about things not disclosed by the Company or that are forward-looking as well as the number that are regarding share price fluctuations and the trading activities of its share. As a matter of policy and regulatory compliance, the Company does not offer interim, operational or financial updates forward-looking guidance or capital market strategies, nor does it comment on the performance of its shares in the market.

With that, here's the first question, which is a question as to, why you weren't part of the conference call with the other North American miners that included Michael Saylor and Elon Musk? Argo Blockchain seems to have been there and joined the Bitcoin Mining Council. And as if they were part of the Crypto Climate Accord, did they get a better offer, a better partner? And could you explain, what's the difference and confirm the implication for DMG in the Crypto Climate Accord and the Bitcoin Mining Council?

Sheldon Bennett

Yes, that's a great question. There's a lot to unpack here. We've got a few different names here, Bitcoin Mining Council, Crypto Climate Accord. I would probably add in the Sustainable Bitcoin Standard as well. So, let me try to unpack it. First, Argo and DMG, we came together on the concept of renewable energy pool many months ago, probably four months ago, maybe longer.

And out of all those discussions as company we issued a statement that we are working on a MoU basis to try and come to a definitive agreement on something called Terra Pool. And so, once we said that the statement publicly, it was actually Crypto Climate Accord that contacted us to learn a little bit more about what we were trying to do with our renewable energy pool. And from that initial contact over what six weeks, we discussed with the Crypto Climate Accord, how we understood energy as Bitcoin mining operators, how they think about our business, how we do our investments.

And really learn, I think the Crypto Climate Accord learned a lot about the inner workings of crypto miners, and especially crypto miners, build large assets in crypto mining versus the smaller miners that are more hobbyist. So, we also learned a lot about the goals of the Crypto Climate Accord and sort of their policies of the striving for in their overall framework, what they wanted to do.

From our discussions over this six weeks period, we actually made some changes to the Crypto Climate Accord and added in a grouping or like a new part to the Crypto Climate Accord called a signatory. And the reason we did that is, we didn't want to just as two Bitcoin mining companies with a cool focus on renewable energy. You're finding the Crypto Climate Accord a charter or its association to be associated with them, just saying, oh, great, we're associated with Crypto Climate Accord, let's put their logo on our website and we're done.

Instead, we push to great this idea of concept of signatory where we would publicly state our goals commit to them. And those goals that we're committed to for ROI, as the first two companies are 100% renewable energy and all of our operations, and to develop and implement status for energy and Blockchains. So these are the two main things that we're working on, as being the founding signatories of the Crypto Climate Accord.

And through all of our discussing the Crypto Climate Accord, the Sustainable Bitcoin Standard organization and out of Switzerland contacted myself, and we worked out with Argo a few calls with them, and started to understand what they were doing this well. And the idea here was with Max Song, who has been talking with Sustainable Bitcoin Standard was to not try and fragment a lot of different movements in this concept of trying to find renewable energy and what is sustainable in Bitcoin mining, but is trying to bring it all together.

And so, Argo and DMG, our goal is to have Crypto Climate Accord and Sustainable Bitcoin Standard working together in some fashion working with us the Terra Pool for the betterment of everyone that is interested in this topic of sustainable Bitcoin sustainable energy in the Bitcoin ecosystem.

And so, we broke before we call between Argo DMG Max as Sustainable Bitcoin Standards and our friends over Crypto Climate Accord. And everybody's sort of working out how we can work together and try to make progress on sort of standards and energy and bringing more and more companies to the Crypto Climate Accord and pushing forward this movement into renewable energy.

And then, I guess, last weekend, there was a tweet from Elon, last week, and then Michael Saylor, so between back. And on the weekends, a few of the companies got together and had a call of which Argo was there and DMG was not there Argo is a great partner of ours. They had a call with me on the weekend deep briefly on what's going on and they have told me about the Bitcoin Mining Council.

And it's early days of Bitcoin Mining Council. And so you've got, a couple of very big names, with some really great ideas around what should be done in terms of Bitcoin mining and what would be great for the industry. And you also have, what we've done with Argo to-date, like putting the other Terra Pool, and you've got some single and max doing a Sustainable Bitcoin Standard and Crypto Climate Accord, and you just got this recipe of a lot of people with the right intentions.

And so, our goal is to try and bring everyone together. We don't know what's going to stick in the future, but for us, we end up working in the Bitcoin Mining Council, that'd be great. I am looking forward to it, but I think it's early days to kind of understand how all this is going to work and operate. My goal for DMG is to be inclusive and work with as many parties towards the same goal. I don't care if it's 1 party or 10 different parties, but I think, everybody's thinking and talking about the right things.

So, from DMG's point of view, whether we're on that initial call of the Bitcoin mining town for not a little bit irrelevant to us. It's what does the council want to do and how's it going to ask them and operate. And I'm sure they'll be opening for any companies that are Bitcoin miners to join the Bitcoin Mining Council, if that makes sense for each company that it was looking at that organization.

So just to recap, we're given a very long answer to a very big question. I think this Bitcoin Mining Council is a great thing to have big names in the industry taking all these challenges. I think they invited a lot of great companies to do sort of create this council. We're looking forward to seeing what the council wants to do what we're going to focus on. But for DMG, it is our partner Argo, we've done some real concrete moves already we have a pool. We will be soon announcing the launch to that pool. Lots of many other people may think right now.

We have already committed courageous signatory group within the Crypto Climate Accord. We have brokered some Using Crypto Climate Accord and Sustainable Bitcoin Standard. And we're working with all these groups in a positive way and pushing forward this idea that different people with different interests can work together towards a greener future. And so I guess that's a very long answer, but that's sort of where we're at with this and we're looking forward to being a big part of this discussion in the future.

I'll let Jules asked another question.

Jules Abraham

Thank you. The next question is regarding an update regarding Petra.

Sheldon Bennett

Yes, Petra is, I've disclosed more and more about it. We're really excited about Petra. And so DMG, we are actively pursuing Petra. And just to give people a little bit of idea of what Petra is what we're up to, one, DMG's patent lawyers have filed and received patent pending status for Petra. It's a technology process. So we're quite excited that, this first initial patent protecting of our IP has been completed. And Petra is a technology that we came up with, just out of our understanding of the blocks through a wall store and then our pooling software.

And it became a list of ideas of how we can actually work with exchanges. And that's why I speak about exchanges more frequently. In crypto exchanges that is and we can actually work with them and give them new options and how they want to transact and do trades. And so I'm going to leave it at that.

It's a little cryptic, but right now, we are doing some trial transactions and working with a couple of different exchanges, ways that we can integrate Petra into their exchanges, in a way that was obviously revenue positive for DMG and in a way that we can pull this technology, ensure that it will work properly. Once we get there and we're sure that this technology will do what it's supposed to do and very similar to this, when we get the pool to a state where we're sure, they can do what we want to do, then we were able to go out and market it.

And we were lucky to find, Marathon interest in our full technology. It's the same with Petra, we're testing it, we're pretty close to getting I guess beta testing positive results, where we would be more comfortable saying exactly what work does and how it works out integrates in with exchanges. So for us, like I say, Petra is a big part of our regulatory compliance drive within the group of locks your products.

Jules Abraham

The next question is regarding DMG's plans to uplift from the OTC?

Sheldon Bennett

So, yes, I was asked this was the last time. Do we have plans? We do have plans to uplift. We're exploring the TSX and the NASDAQ. Naturally, they both have advantages and disadvantages. We've talked to both exchanges. We've talked to our legal teams. We've talked to our auditors. We haven't made decision on which one or if both we would go to, but we're working on that and as soon as they make a decision, we will publicly announce what our decision is and some timelines around that decision.

Jules Abraham

Thank you, Sheldon. The next question is a follow-up to that which is, what additional requirements does the Company need to complete in order to meet the more stringent requirements of uplift? These more stringent requirements are usually for highly respected and reputable companies, and also seemingly assure investors full disclosure and transparency. So, can you make any comments on that?

Sheldon Bennett

Yes, I mean, this is true, these sort of full board exchanges do have expanded expectations and requirements on transparency and disclosure. So, speaking with DMG, we would probably have to spend a bit of time on our internal controls. And I don't need that in a bad way, like they're weak, I think they're great. But internal controls, on the NASDAQ, the U.S. rules and stocks compliance are different under Canadian rules and Canadian market compliance. And so we'd have to spend a bit of time taking a look at that and how we would have to make any changes or adjustments for that.

So that would be one area that the Company would have to take a look at, for more stringent requirements. Another is we would be looking at increasing the board size with a focus on Independent Directors. This is something that I already have in process. We are we're looking at expanding our Board currently and have some discussions with some candidates on potentially joining our Board as Independent Directors. We'll also be looking at expanding the amount of committees we have. We already have a large amount of policies that the board have approved in the operation of the Company, but we added a few new committees and new committee heads that are independent.

But I think also an important part of the Company for people to really understand especially when it comes to reporting and disclosure is that, if you take a look at our last financial year and look into our auditor, DMG was able to smear financials a month early. And you don't really see this happening much with public companies, especially with crypto companies, but we've done immense amount of work and a lot of progress in our financial accounting and reporting. And so, last year our deadline was January 31st and we ended up reporting December 31st, the full month at a time. So I think that shows a lot of our commitment in DMG to ensuring that we have procedures great in place, and we're really under control of our finances and our disclosures.

Jules Abraham

Thank you, Sheldon. The next question is regarding any future plans to conduct any financing activities?

Sheldon Bennett

So, as of right now, we have not filed any new rate shelf perspectives, and right now I don't see us filing anything. Obviously, things can change as mining is capital intensive. And as I stated before, at today's prices of sort of $75 million to $80 million to buy next to hash and needing to have cash on hand with the manufacturers that we buy equipment from, this can change if something comes along, that makes sense.

Again, we'll work within our one one-year ROI metrics. But, like I say, right now, we have no plans or focusing on the two raises we've done, and use the proceeds from those raises, executing with them and we'll see how our execution goes and we'll see what happens in the market. And then, if we make any changes there, I mean, the decisions we will let our shareholders know.

Jules Abraham

Thank you, Sheldon. The next question is a request or perhaps for further narrow-down the protected phasing of the immersion cooling completion. The question being, if it's still on-track for late June for Phase 1 and late December for Phase 2?

Sheldon Bennett

That's a great question. Our immersion cooling, we've talked about it quite a bit. We've spent money and time and effort onto immersion cooling for Christine Lake. We do have some challenges around the supply chain. People may not realize this, but the metal that we need, can take two or three months to actually get the volumes of the types we need to make tanks. There has been a slow down and just overall equipment and get our hands on it, but we are moving forward. We are overcoming from these challenges.

We do have our fluid figured out and we'll be announcing a partnership on our fluid. For those of you that aren't that familiar with the immersion cooling, the verge of fluid is probably the most expensive and critical part of immersion cooling. Tanks themselves are not super expensive, it's a bit hard to debate the metal and get it the engineering of that metal proper to ensure you have any hotspots in your fluids, as it's moved through the tanks. But, the fluid itself is the largest callbacks.

And so, we've got a great relationship that we've been announcing soon for the fluid, and we do and I have said this in the past, we do have this Vancouver based manufacturing company that we're looking at showing up a partnership. So that we would be essentially using this partnership to self manufacture this equipment. And we are exploring some ideas of actually retailing this equipment to other crypto miners that would be interested in the lines and the pool that we've been able to partner up on and perhaps sell them immersion containers or immersion equipment for their operations.

So the answer to the question, we'll do, first of all, we have the first phase completed. No, we don't have all the miners we need from our suppliers to actually put into immersion. But Phase 1 and Phase 2 and then the year, this is something that it looks like a more realistic date, especially since we'll have the first few deliveries of our miners that we ordered arriving before the end of the year.

Jules Abraham

Thanks Sheldon. Here's the next question. When DMG announced the closing of the 70 million Canadian Private Placement on March 5th, the proceeds were supposedly going to be used among other things to achieve 2 exahash per second by year-end and 1 exahash per second by mid-year. Could you provide an update on what DMG has done today to achieve the target hash rate for 1 exahash rate mid-year and two by year-end and are you still on track to achieve these hash rates?

Sheldon Bennett

So that's a great question. And that seems to be a little bit of confusion here in what DMG is obtained or maybe we haven't been saying that clear. So just to be clear, DMG, we haven't stated that we've purchased 2 exahash for minors with the proceeds of the private placement 70 million. As I said earlier, it's not possible to buy 2 exahash minus $70 million. We did allocate the lion's share of those proceeds to purchase minors, and this is money that we've spent in our spending.

But it's not enough money to buy 2 exahash of miners at current prices and even going back in time a bit, it wouldn't be enough money. We are working to grow up to 2 exahash as quickly as possible. And so as I said before, we're looking at opportunities where we can get great pricing on spot yields and/or contracts we can purchase at great prices to people within our firm one year ROI goal.

But saying all this, DMG, we are physically building up Christina Lake to be able to 2 exahash and miners. And that's 2 exahash or miners in immersion cooling, so, when we talk about 2 exahash, Christine Lake will have the capacity and then until we purchase 2 exahash, we will either be running in less than 2 exahash for ourselves, but we'll have the capacity of 2 exahash.

So in the meantime, what we've been doing and what we have been doing since the inception of the Company is hosting for parties, and so there's no shortage of people interested in moving to Christina Lake or continuing Christina Lake, hosting our facility especially with the future American cooling equipment could hosted and which would give them greater energy efficiency savings and higher hash rate.

So just to clear it off, we're building Christina Lake out to 2 exahash mining. We don't want our private place in our placement efficiency, private placement but with our placements 70 million in follow-on 20.1 million later on. We're using that money or lion's share that money to purchase equipment to fill up to 2 exahash in Christina Lake. I hope that sort of clarifies the question.

Jules Abraham

Thank you, Sheldon. And this is our last question. How many companies are expected to run on thematic schematic mining pool software like MARA agreed to?

Sheldon Bennett

That's a great question. And I wasn't expecting this one. So, we've had a lot of interest from minors or mining groups about pools. There are quite a few pools out there. None of them I think are like what we've designed and put together with the Blockseer Pool that MARA has licensed and because they're pulling MARA Pool. So outside of our MoU Argo for Tara Pool, there are two other parties, I would consider to be large enough serious enough about having specific pool for their usage.

And so, like I say, outside of MARA Pool, which is operating Argo. And when you with DMG to create Terra Pool, right now, there's two other parties and there could be more in the future and the two we're talking to may or may not happen, and we don't know what will happen. But we are quite happy to discuss with other organizations or groups. The advantages of using Blockseer technology to spin up and create pool specific to their needs, so yes, hopefully, we'll have a few more thematic pools out there, licensed by Blockseer.

Jules Abraham

This concludes our Q&A, and I now send a call back to you for some announcements and conclusion.

Sheldon Bennett

Yes, just a couple of announcements. As many people may have noticed, I sort of made the decision to try and be a bit more transparent and give more information out about DMG. I think that during crypto winter, there probably wasn't a lot to say, and there wasn't a lot happening in the world of crypto companies. And I don't know if what DMG did in the past was right or wrong, but we didn't share a lot of information and a lot of exciting things that we're doing during the crypto winter time.

But recently, we, as a company starting to start share more information. And it's not just sort of material information that we do in a press release, but we've really put a lot more effort into our Twitter and LinkedIn and other social media, as well as answering more questions on forums like this. I myself have done many presentations recently and some people we put them on Twitter. I've done a few different investing conferences as well.

And so, we're trying to open up and be more transparent and talk more about our business in our company. And let people know that we're more than just a pure Bitcoin mining company. We are a Bitcoin mining company and a software company, all integrated together as a vertical company, and we think this is the right recipe to really accelerate over the next few years for DMG shareholders.

And so with that, just to let everybody know, I just completed an interview with Equity Guru. We had a great talk. I think it will release soon. So please take a look for that when it is released it for allowed to all put it on our Twitter feed or at least our marketing people will or Facebook, so people can take a look at. What looks to be a 10-minute conversation, it turned into about a half an hour, so it was a great conversation we had with Equity Guru.

And as well DMG is a sponsor of Miner Summit on June 15th and 16th. So anybody that wants to see me or see DMG a Miner Summit, we will be there with some more information about Miner Summit up onto our Twitter fees as well. We were able to get a discount code to Miner Summit for those who want to buy some tickets and go attend events. So, take a look at our Twitter feed for that discount code.

DMG will represent both itself as DMG Blockseer are two main brands as well as Terra Pool. So, we will have a booth for Terra Pool and a booth for DMG Blockseer at Miner Summit. So, we're looking forward to that event in the future. And those are my two announcements.

Jules Abraham

This concludes the second quarter update call. You may now disconnect.

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