DMG Blockchain Solutions Inc (DMGGF)

[PotterBanker]

DMG Provides Year in Review Update

https://globenewswire.com/news-release/2019/01/10/1686196/0/en/DMG-Provides-Year-in-Review-Update.html

VANCOUVER, British Columbia, Jan. 10, 2019 (GLOBE NEWSWIRE) -- DMG Blockchain Solutions Inc. (TSX-V: DMGI) (DMGGF:OTC US) (FRANKFURT:6AX) (“DMG” or the “Company”)

Dear Shareholders:

Thank you for your continued support of DMG. We know this market has been challenging for our industry and our shareholders alike. In an effort to keep our shareholders well-informed, going forward, DMG is publishing a quarterly newsletter highlighting operational activities and key corporate developments, of which this is the first.

DMG was founded as a diversified blockchain technology company, with a goal to build the best hosting operations, software analytics tools, and enterprise blockchain platforms in the industry. I believe we are now well on our way to fulfilling these goals, and hopefully this update will provide you with the same confidence in DMG that I have.

Hosting Operations

DMG’s strategy of hosting predominately crypto equipment on behalf of third parties has proven to be a wise one, as most of our competitors spent a great deal of capital on equipment that is quickly nearing the end of its useful life. The crypto market is now readying itself for a new generation of technology that will be shipping soon and DMG is poised to become a preferred hosting location.

DMG recently energized its 85-megawatt substation at our eastern British Columbia mining facility.

DMG is capable of adding approximately 15 megawatts of hosting capacity every 6 - 8 weeks, to a near-term capacity of 60 megawatts under its current power configuration, expandable to 85 megawatts. What does this mean? It means that DMG now has the capacity to host between 40,000 and 50,000 individual ASIC miners, making DMG’s facility one of the largest such facilities in North America.

DMG’s existing clients account for about 15 megawatts with approximately half of this having been recently added for a new Mining-as-a-Service (“MaaS”) client. https://globenewswire.com/news-release/2018/12/05/1662453/0/en/DMG-Blockchain-Signs-7-Megawatt-Bitcoin-Mining-Contract.html.

A further 15 megawatts is planned for late February, with the remaining 30 megawatts to be energized shortly thereafter. The Company is in discussions with multiple parties to host their mining servers as part of our MaaS offering, and we will update the market if and when we enter into these agreements.

Unlike most large operations, DMG wholly owns its new substation, which not only provides our hosting clients with a reliable source of energy, but also enables DMG to purchase power at favourable rates. Furthermore, DMG’s power consumption does not affect the local community’s power quality and availability.

How we generate revenue from Mining

DMG charges clients a monthly hosting fee to operate the client’s servers. In some cases we source miners for clients from various manufacturers and resell to our clients at a profit.

Mine Management Software

Operating successful industrial hosting facilities is all about driving efficiencies to minimize power consumption and maximize uptime for client servers. To enable this, DMG recently launched the first version of our proprietary Mine Management software. This real-time platform monitors many key metrics, including temperature, humidity, individual and pooled hash rates, as well as real-time switching and routing, allowing our mining facility staff to make real-time adjustments and repairs. DMG intends to license this software to other industrial miners as well.

Blockseer and Walletscore

In early 2018, DMG acquired Datient Inc., a Silicon Valley-based technology company founded and led by Danny Yang, a Stanford PhD in Computer Science and Artificial Intelligence. Tim Eller, our Head of Data Science is a graduate of Harvard and has a PhD in Data Science and Mathematics from UCLA. Tim is also the inventor of Lyft’s advanced surge price algorithm, which was a major innovation for the rideshare industry. The team is comprised of six engineers and is situated in Sunnyvale, CA under the leadership of Danny Yang, DMG’s Chief Technology Officer.

Blockseer.com is an analytics tool that enables tracking of cryptocurrencies and transactions on both the Bitcoin and Ethereum blockchains. This technology is currently used by the FBI, IRS, various crypto exchanges, and other law enforcement agencies and industry participants. Until recently this was a tool we offered at no charge, as we were building the deep data analytics engine that now powers both Blockseer and its companion tool, Walletscore. User interaction and labelling, together with our proprietary artificial intelligence algorithms, are how Blockseer has become an essential blockchain investigative tool. With more than 8,000 users/contributors over the past 5 years its core data was built for users by users!

Walletscore provides a risk score for Bitcoin wallets based on historical transactions and transactional relationships - in essence, it is like a credit score for crypto wallets. This product has now been completed, and target clients include crypto exchanges, payment platforms, and others wishing to comply with AML regulations. For a short time you can try it at DMGBlockchain.com/walletscore

How we generate revenue from Blockseer and Walletscore

DMG’s Blockseer is sold primarily to law enforcement, while our Walletscore product is sold primarily to exchanges and payment platforms. Blockseer is a subscription based product whereas Walletscore is transactionally based.

Partnerships: JCIS Japan

DMG recently partnered with JCIS Japan to begin selling Blockseer and Walletscore to clients throughout Japan. These clients include crypto exchanges, police and law enforcement agencies, as well as other government entities.

Why Japan?

DMG has always had a focus on the Japanese market, and our first two MaaS clients were Japanese companies. Japan is the first country to regulate bitcoin, Japan frequently leads the world in bitcoin trading volume, and the Japanese population has embraced bitcoin. Tools such as Blockseer and Walletscore are REQUIRED by the Japanese government, and we see huge growth for this class of AML and investigative technology as other governments around the world begin actively regulating their own markets. Japan is just the beginning.

Partnership: Blockchain based Supply Chain Management Platform

In a recent press release DMG announced that it had partnered with IBM to collaborate on building blockchain platforms for supply chain management. IBM is the GLOBAL leader in this technology having built Food Trust with Walmart (Food Safety and Traceability), and TradeLens with Maersk (Global Shipping and Logistics Management), two leaders in their respective industries. Simply put, partnering with IBM strengthens DMG’s efforts and provides real-world enterprise-level experience in blockchain technology and systems integration.

Project Wazabi

Wazabi, the result of more than two years of market research and industry discussion, is a blockchain-based platform to manage the cannabis supply chain and regulatory compliance on a global scale. Bitcoin was the “FIRST” use of blockchain technology, but the “PERFECT” use case is supply chain management of controlled products. Blockchain technology will transform many industries, but due to the need to integrate with existing legacy systems, these changes will take years. As the cannabis industry is very new and therefore not tied to legacy systems, implementation of supply chain management systems utilizing blockchain technology can happen much faster. The cannabis industry needs immediate traceability, which is exactly what blockchain provides.

DMG is currently assembling a consortium of industry stakeholders, including licensed producers, retailers, testing facilities, and government, who will collaborate to ensure that Wazabi meets the needs of each specific participant in the entire supply chain. The intention is to build Wazabi so that the platform seamlessly integrates with existing ERP and other software systems already deployed and in use.

By Spring 2019 the beta version will be released with additional functionality added to the platform over time. We are tremendously excited about being a founding partner in the Wazabi consortium, and the future revenue potential that should result from the deployment of this technology solution.

Benefits and Features

It is anticipated that Wazabi will bring the following benefits to the Cannabis industry:

Enabling irrefutable product traceability for immediate recalls
Ensuring all product in the supply chain is sourced from legal producers
Improving product safety for consumers
Allowing different parties to access blockchain data based on their specific permission-level
Automating regulatory, legal and tax compliance in each jurisdiction
Enabling consumers to see exactly which licensed producer grew or processed their products, when it was grown, etc.
Enhanced international credibility through product verification
Market intelligence and industry wide data analytics

Change of Auditor
In late 2018 the Company also changed its auditor. Effective November 1, 2018, Charlton & Company LLP ("Charlton" or the "Former Auditor") was terminated and MNP LLP (“MNP” or the "Successor Auditor") was appointed. The resignation of Charlton and the appointment of MNP have been approved by the Company’s Board of Directors. None of the reports of Charlton on any of the Company’s financial statements relating to the “relevant period” (as such term is defined in section 4.11(1) of NI 51-102) expressed a modified opinion. There has not been a “reportable event” (as such term is defined in section 4.11(1) of NI 51-102), which occurred in connection with the audit of the predecessor company for the financial year ended March 31, 2017 and of the Company for the financial year ended September 30, 2017 , or for any period subsequent thereto.

I once again thank you for your continued support. I hope that this provides you with increased clarity on the Company’s efforts and confidence that DMG is achieving the goals we initially set.

Regards,

Dan Reitzik, CEO

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About DMG Blockchain Solutions Inc.
DMG Blockchain Solutions Inc. is a diversified blockchain and cryptocurrency company that manages, operates and develops end-to-end solutions to monetize the blockchain ecosystem. DMG, with its Blockseer division located in Silicon Valley, intends to be the global leader in industrial scale crypto mine hosting – Mining as a Service (MaaS), crypto mining, blockchain forensics/analytics, and blockchain platform development.

For more information on DMG Blockchain Solutions visit: www.dmgblockchain.com

For further information, please contact:

DMG Blockchain Solutions Inc.
Investor Relations: John Martin
Toll Free: 1-888-702-0258
Email: [e-mail]
Web: www.dmgblockchain.com
Direct: 778-868-6470