Aug 16, 2021 DeFi Technologies Inc.

DeFi Technologies Reports Valour ETN AUM at $107M with Liquid Assets of CA$28.67M with Q2 2021 Financial Results

TORONTO, Aug. 16, 2021 /PRNewswire/ – DeFi Technologies, Inc. (NEO: DEFI)(OTC:DEFTF) (the “Company” or “DeFi Technologies“) announces its strong financial performance for the three and six-month period ending June 30, 2021, since inception (all amounts in Canadian dollars, unless otherwise indicated).

Valour AUM (CNW Group/DeFi Technologies, Inc.)
Valour AUM (CNW Group/DeFi Technologies, Inc.)
Cash and Public Investments (CNW Group/DeFi Technologies, Inc.)
Cash and Public Investments (CNW Group/DeFi Technologies, Inc.)

Valour AUM (CNW Group/DeFi Technologies, Inc.)Cash and Public Investments (CNW Group/DeFi Technologies, Inc.)

In Q2 2021 the Company achieved a record of $107M in assets under management (“AUM“) in fully owned subsidiary Valour Inc. (“Valour“) which is responsible for the Company’s portfolio of products of exchange-traded notes (“ETNs“). In Q2 2021, Valour added two new ETNs to the product mix: Polkadot and Cardano – and plan to launch other innovative ETN’s in the very near future. Both are available on the Nordic Growth Market in Sweden (“NGM“). With Bitcoin experiencing volatility especially around May 19, 2021, the Company has seen the product mix of their ETNs diversify with about 50% held in Bitcoin and 50% in Ethereum (launched late in Q1 2021), while the AUM of Polkadot, and Cardano ETN’s continue to grow.

“Despite the volatility experienced in the broad-based weakness in the crypto and decentralized finance markets around May 2021, we have seen strong demand and inflows into our Valour business, which is really promising. Diana and the team have done an excellent job attracting new investors into these products and the tech and trading team in Zug have shown that even in high volume days our infrastructure and processes are up to the task.”, said Wouter Witvoet, Chief Executive Officer of DeFi Technologies.

ETNs / Valour

The Company is pleased to announce that its ETN business Valour has grown its AUM to $107M in AUM at the end of Q2 2021. The total revenue derived from the Valour business was $2,586,742 for the quarter, implying a potential $10.3M in annualized recurring revenue off of Valour’s relatively small but growing asset base.

Liquidity

The Company maintains a very strong liquidity position. Cash and liquid assets at the end of Q2 2021 stood at CA$28.67M, with an additional $0.9m in crypto investments. With recent increases in share prices of some of its public investments, this value is expected to be significantly higher in the coming months provided that such public investments maintain or increase their value.

DEFI – in CAD millions

6 months ended
 

June 30, 2021

(C$)

Balance Sheet

  
   

Cash

9.2

Public Investments

19.5

Crypto holdings

0.9
 

29.6
   

Private company investments

10.6

Locked in Crypto

0.1
 

10.7
   

Total current and futures available assets (June 30)

40.3

Total current and futures available assets (Current)

45.8

Financial performance

The Company has total revenue of $(1.9)M for the three months ended June 30, 2021. Backing out the mark to market loss on the Company’s equity positions of $(2.3)M, including the unrealized loss of $1.8M on HIVE Blockchain Technologies investment, the Company had total revenues of $0.4M in a weak cryptocurrencies market period.

   

Revenues – in CAD millions

3 months ended
 

June 30, 2021

ETP trading

$

2,504,214

Other trading income

$

16,572

Lending income

$

65,956

Realized (loss) on digital assets

$

(3,950,265)

Unrealized (loss) on digital assets

$

(48,119,403)

Unrealized gain on ETP holders

$

49,823,748

Realized gain (loss) on investments, net

$

10,073

Unrealized (loss) gain on investments, net

$

(2,274,452)

Interest income

$

3,130

Total revenue

$

(1,920,427)
     

less Unrealized (loss) gain on investments, net

$

2,274,452

Adjusted revenue (non-IFRS)

$

354,025

The total corporate loss of the period ending June 30, 2021, was CA$2.7M. There were also intangible losses such as acquisition loss costs (Valour) and change in token prices (Bermuda) loss as well as option issuances to core employees and contractors.

DEFI – in CAD millions

3 months ended

6 months ended
 

June 30, 2021 (C$)

June 30, 2021 (C$)
     

Reported Net Loss

-12.2

-19
     

Less:

    

DeFi Holdings transactions costs

0

6

Amortization of intangibles

1

1.2

Share-based compensation

6.3

8.3
     

Adjusted Net loss:

-4.9

-3.5
     

Notes and Commentary

  • Transaction cost to acquire DeFi Holdings was a one-time item that occurred in Q1 2021 and was a pure share swap transaction.
  • Intangibles were acquired with DeFi Holdings and Valour acquisition. These costs are amortized over 10 years.
  • In relation to share-based compensation, a Black Scholes value of options was performed. This is also a one-time cost to hire the core team.
  • In relation to Adjusted Net Loss:
    • MTM loss of $0.9M during the quarter on non-ETN business. ETN business loss ~$257K for quarter. Weak crypto market during Q2 of 2021 contributed to the digital currency losses. As of yet Valour has limited marketing of the Valour products and are only on NGM. No management fees are earned on BTC Zero, ETH Zero products. Additionally, Valour only just launched ADA and DOT products in late Q2 2021. AUM sits at US$107M. Starting staking/lending of crypto by Valour began in Q2 2021
    • the Company recorded a net gain on all of its token positions since investment in Q1 2021, but in comparison to Q1 2021 experienced a decrease in token prices.
    • includes $1.8M unrealized loss on MTM of the HIVE Position. If taking into account today’s prices, the Company’s Flora Growth Inc. position should increase by an additional $3.5M from June 30, 2021 pricing.

Wouter Witvoet, DeFi Technologies Chief Executive Officer stated: “For a company that is experiencing our type of double-digit growth and with the investments and expenditures we have made, it is a great result to see such a small loss in the period and shows that we remain exceptionally well-capitalized. Such a strong liquidity position will allow us to keep growing our business for many periods to come. With our proposed acquisitions of DeFi Yield and Protos, we now have a ‘triangle’ in place that caters to all relevant investor groups we have identified: public market investors, institutional private investors, and crypto-native investors.”

About DeFi Technologies:

DeFi Technologies, Inc. (NEO: DEFI)(OTC:DEFTF) is a Canadian company that carries on business with the objective of enhancing shareholder value through building and managing assets in the decentralized finance sector. For more information visit https://defi.tech/ 

Cautionary note regarding forward-looking information: 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the financial performance of the Company; the financial statements of the Company and valuation of investments; anticipated revenues, acquisition and investment plans of the Company; the decentralized finance industry and the merits or potential returns of any such opportunities. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Non-IFRS Measures

The Company believes that Adjusted Revenue is an important measure when analyzing its financial performance without being influenced by quarterly adjustments of public investments and ordinary course hedging operations of its subsidiaries. The Company also believes that Adjusted Net Loss is an important measure as it as it shows the losses of the Company without incorporating certain one time acquisition costs, share-based compensation and amortization of intangible assets. These non-IFRS financial measures are not earnings or cash flow measure recognized by International Financial Reporting Standards (“IFRS”) and do not have a standardized meaning prescribed by IFRS. The Company’s method of calculating Adjusted Revenue and Adjusted Net Lost may differ from the methods used by other issuers and, accordingly, the definition of these non-IFRS financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS financial measures should not be construed as an alternative to revenue or net income/loss determined in accordance with IFRS as indicators of the Company’s performance or to cash flows from operating activities as measures of liquidity and cash flows.

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE DeFi Technologies, Inc.

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6) This document contains forward-looking information and forward-looking statements, within the meaning of applicable Canadian securities legislation, (collectively, “forward-looking statements”), which reflect management's expectations regarding DeFi Technologies Inc.'s future growth, future business plans and opportunities, expected activities, and other statements about future events, results or performance. Wherever possible, words such as “predicts”, “projects”, “targets”, “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative or grammatical variation thereof or other variations thereof, or comparable terminology have been used to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to: (a) revenue generating potential with respect to DeFi Technologies Inc.'s industry; (b) market opportunity; (c) DeFi Technologies Inc.'s business plans and strategies; (d) services that DeFi Technologies Inc. intends to offer; (e) DeFi Technologies Inc.'s milestone projections and targets; (f) DeFi Technologies Inc.'s expectations regarding receipt of approval for regulatory applications; (g) DeFi Technologies Inc.'s intentions to expand into other jurisdictions including the timeline expectations relating to those expansion plans; and (h) DeFi Technologies Inc.'s expectations with regarding its ability to deliver shareholder value. Forward-looking statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this document including, without limitation, assumptions about: (a) the ability to raise any necessary additional capital on reasonable terms to execute DeFi Technologies Inc.'s business plan; (b) that general business and economic conditions will not change in a material adverse manner; (c) DeFi Technologies Inc.'s ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; (d) DeFi Technologies Inc.'s ability to enter into contractual arrangements with additional Pharmacies; (e) the accuracy of budgeted costs and expenditures; (f) DeFi Technologies Inc.'s ability to attract and retain skilled personnel; (g) political and regulatory stability; (h) the receipt of governmental, regulatory and third-party approvals, licenses and permits on favorable terms; (i) changes in applicable legislation; (j) stability in financial and capital markets; and (k) expectations regarding the level of disruption to as a result of COVID-19. Such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of DeFi Technologies Inc. to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Such risks include, without limitation: (a) DeFi Technologies Inc.'s operations could be adversely affected by possible future government legislation, policies and controls or by changes in applicable laws and regulations; (b) public health crises may adversely impact DeFi Technologies Inc.'s business; (c) the volatility of global capital markets; (d) political instability and changes to the regulations governing DeFi Technologies Inc.'s business operations (e) DeFi Technologies Inc. may be unable to implement its growth strategy; and (f) increased competition.

Except as required by law, DeFi Technologies Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Neither does DeFi Technologies Inc. nor any of its representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this document. Neither DeFi Technologies Inc. nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this document by you or any of your representatives or for omissions from the information in this document.

7) Any graphs, tables or other information demonstrating the historical performance or current or historical attributes of DeFi Technologies Inc. or any other entity contained in this document are intended only to illustrate historical performance or current or historical attributes of DeFi Technologies Inc. or such entities and are not necessarily indicative of future performance of DeFi Technologies Inc. or such entities.