Canada NewsWire
NEW YORK, Nov. 13, 2020
NEW YORK, Nov. 13, 2020 /CNW/ - Galaxy Digital Holdings Ltd. (TSX: GLXY) today released financial results for the three and nine months ended September 30, 2020 for both itself and Galaxy Digital Holdings LP, as well as corporate updates through the date of this press release.
"Galaxy Digital made progress across our business lines in the third quarter, including record volumes in our Trading business," said Michael Novogratz, Founder and CEO of Galaxy Digital. "We've taken several key steps forward in the second half of 2020, including making critical senior hires, expanding our capital base, and completing strategic actions to position Galaxy Digital for the clear, incoming wave of institutional adoption ahead of digital assets and blockchain solutions by investors, corporates and governments."
Corporate Updates
Operating Highlights
Select GDH LP's Financial Highlights (Q3 2020)
_________________________ |
1 Net book value includes non-controlling interests. |
Corporate Structure
GDH LP's Financial Results
September 30, | December 31, | ||||||
2020 | 2019 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 54,666,020 | $ | 106,262,780 | |||
Digital assets | 224,847,948 | 85,980,731 | |||||
Investments | 200,672,653 | 158,163,420 | |||||
Receivable for digital asset trades | 590,657 | 330,609 | |||||
Digital asset loans receivable | 23,657,167 | 16,061,945 | |||||
Assets posted as collateral | 16,768,600 | 10,585,819 | |||||
Receivables | 2,216,386 | 1,853,169 | |||||
Derivatives | 2,072,522 | — | |||||
Prepaid expenses and other assets | 2,328,841 | 2,580,255 | |||||
Loans receivable | — | 11,719,738 | |||||
527,820,794 | 393,538,466 | ||||||
Right of use asset | 4,725,670 | 5,182,993 | |||||
Property and equipment | 3,703,037 | 4,057,662 | |||||
8,428,707 | 9,240,655 | ||||||
Total assets | $ | 536,249,501 | $ | 402,779,121 | |||
Liabilities | |||||||
Current liabilities | |||||||
Digital assets sold short | $ | 12,077,789 | $ | 18,616,860 | |||
Accounts payable and accrued liabilities | 15,055,582 | 11,719,494 | |||||
Payable for digital asset trades | 3,808,919 | 250,158 | |||||
Digital asset loans payable | 53,975,808 | 11,134,329 | |||||
Collateral payable | 420,385 | 434,498 | |||||
Lease liability | 759,260 | 772,003 | |||||
86,097,743 | 42,927,342 | ||||||
Lease liability | 4,581,259 | 4,747,214 | |||||
Total liabilities | 90,679,002 | 47,674,556 | |||||
Equity | |||||||
Partners' capital | 401,315,533 | 347,785,081 | |||||
Non-controlling interests | 44,254,966 | 7,319,484 | |||||
Total equity | 445,570,499 | 355,104,565 | |||||
Total liabilities and equity | $ | 536,249,501 | $ | 402,779,121 |
Three months | Three months | Nine months | Nine months | ||||||||||
Income (loss) | |||||||||||||
Advisory and management fees | $ | 1,544,200 | $ | 1,260,725 | $ | 4,602,042 | $ | 4,110,936 | |||||
Net realized gain (loss) on digital assets | 10,473,168 | (8,532,363) | 20,838,311 | 107,038,137 | |||||||||
Net realized gain (loss) on investments | 15,818,968 | (18,159) | 11,401,110 | 38,082,476 | |||||||||
Interest income | 1,702,678 | 1,272,231 | 4,411,610 | 2,898,153 | |||||||||
Net derivative gain (loss) | (792,130) | 5,187,275 | 6,081,183 | 10,886,584 | |||||||||
28,746,884 | (830,291) | 47,334,256 | 163,016,286 | ||||||||||
Operating expenses | |||||||||||||
Equity based compensation | 3,339,278 | 6,297,963 | 8,251,249 | 23,441,735 | |||||||||
Compensation and compensation related | 6,376,099 | 7,551,497 | 19,370,264 | 22,230,967 | |||||||||
General and administrative | 3,513,028 | 5,466,079 | 9,833,382 | 9,875,149 | |||||||||
Professional fees | 1,709,746 | 2,269,488 | 4,212,947 | 5,886,115 | |||||||||
Interest | 1,867,101 | 637,525 | 4,138,742 | 2,264,779 | |||||||||
Insurance | 190,954 | 282,876 | 855,215 | 1,039,980 | |||||||||
Director fees | 29,915 | 50,000 | 129,915 | 150,000 | |||||||||
(17,026,121) | (22,555,428) | (46,791,714) | (64,888,725) | ||||||||||
Net unrealized gain (loss) on digital assets | 16,156,476 | (39,957,814) | 26,877,763 | (29,009,140) | |||||||||
Net unrealized gain (loss) on investments | 17,044,180 | (4,761,276) | 28,676,078 | (10,583,501) | |||||||||
Unrealized foreign currency gain (loss) | (29,476) | (136,911) | (595,158) | 143,687 | |||||||||
Realized foreign currency gain (loss) | (334,790) | 16,704 | (193,250) | (183,034) | |||||||||
32,836,390 | (44,839,297) | 54,765,433 | (39,631,988) | ||||||||||
Income (loss) for the period | $ | 44,557,153 | $ | (68,225,016) | $ | 55,307,975 | $ | 58,495,573 | |||||
Income (loss) attributed to: | |||||||||||||
Unit holders of the Partnership | 41,423,998 | (63,531,407) | 49,779,599 | 57,004,219 | |||||||||
Non-controlling interests | 3,133,155 | (4,693,609) | 5,528,376 | 1,491,354 | |||||||||
$ | 44,557,153 | $ | (68,225,016) | $ | 55,307,975 | $ | 58,495,573 | ||||||
Other comprehensive income (loss) | |||||||||||||
Foreign currency translation adjustment | 78,455 | (13,128) | 95,248 | (101,396) | |||||||||
Net income (loss) and comprehensive income (loss) for the period | $ | 44,635,608 | $ | (68,238,144) | $ | 55,403,223 | $ | 58,394,177 | |||||
Net income (loss) and comprehensive income (loss) attributed to: | |||||||||||||
Unit holders of the Partnership | $ | 41,502,453 | $ | (63,544,535) | $ | 49,874,847 | $ | 56,902,823 | |||||
Non-controlling interests | 3,133,155 | 5,797,856 | 5,528,376 | 1,491,354 | |||||||||
$ | 44,635,608 | $ | (68,238,144) | $ | 55,403,223 | $ | 58,394,177 |
Income and expenses by each reportable segment of GDH LP for the three months ended September 30, 2020 are as follows:
Trading | Principal Investments | Asset | Investment Banking | Corporate | Totals | |||||||||||||
Income (loss) | ||||||||||||||||||
Advisory and management fees | $ | — | $ | — | $ | 1,277,050 | $ | 267,150 | $ | — | $ | 1,544,200 | ||||||
Net realized gain (loss) on digital assets | 10,912,286 | (439,118) | — | — | — | 10,473,168 | ||||||||||||
Net realized gain on investments | — | 15,818,968 | — | — | — | 15,818,968 | ||||||||||||
Interest Income | 1,241,123 | 461,511 | — | — | 44 | 1,702,678 | ||||||||||||
Net derivative loss | (792,130) | — | — | — | — | (792,130) | ||||||||||||
11,361,279 | 15,841,361 | 1,277,050 | 267,150 | 44 | 28,746,884 | |||||||||||||
Operating expenses | 5,925,256 | 1,132,163 | 3,436,517 | 1,323,317 | 5,208,868 | 17,026,121 | ||||||||||||
Net unrealized gain on digital assets | 5,379,862 | 10,776,614 | — | — | — | 16,156,476 | ||||||||||||
Net unrealized gain on investments | — | 17,044,180 | — | — | — | 17,044,180 | ||||||||||||
Unrealized foreign currency loss | (29,476) | — | — | — | — | (29,476) | ||||||||||||
Realized foreign currency loss | (334,790) | — | — | — | — | (334,790) | ||||||||||||
5,015,596 | 27,820,794 | — | — | — | 32,836,390 | |||||||||||||
Net income (loss) for the period, including non-controlling interests | $ | 10,451,619 | $ | 42,529,992 | $ | (2,159,467) | $ | (1,056,167) | $ | (5,208,824) | $ | 44,557,153 |
Income and expenses by each reportable segment of GDH LP for the three months ended September 30, 2019 are as follows:
Trading | Principal Investments | Asset | Investment Banking | Corporate | Totals | |||||||||||||
Income (loss) | ||||||||||||||||||
Advisory and management fees | $ | — | $ | — | $ | 1,260,725 | $ | — | $ | — | $ | 1,260,725 | ||||||
Net realized loss on digital assets | (8,073,212) | (459,151) | — | — | — | (8,532,363) | ||||||||||||
Net realized loss on investments | — | (18,159) | — | — | — | (18,159) | ||||||||||||
Interest Income | 327,933 | 927,524 | — | 16,556 | 218 | 1,272,231 | ||||||||||||
Net derivative gain (loss) | 5,008,525 | 190,000 | (11,250) | — | — | 5,187,275 | ||||||||||||
(2,736,754) | 640,214 | 1,249,475 | 16,556 | 218 | (830,291) | |||||||||||||
Operating expenses | 7,268,827 | 1,576,050 | 4,181,199 | 1,578,080 | 7,951,272 | 22,555,428 | ||||||||||||
Net unrealized loss on digital assets | (33,151,646) | (6,806,168) | — | — | — | (39,957,814) | ||||||||||||
Net unrealized loss on investments | — | (4,761,276) | — | — | — | (4,761,276) | ||||||||||||
Unrealized foreign currency loss | (136,911) | — | — | — | — | (136,911) | ||||||||||||
Realized foreign currency gain | 16,704 | — | — | — | — | 16,704 | ||||||||||||
(33,271,853) | (11,567,444) | — | — | — | (44,839,297) | |||||||||||||
Net loss for the period, including non-controlling interests | $ | (43,277,434) | $ | (12,503,280) | $ | (2,931,724) | $ | (1,561,524) | $ | (7,951,054) | $ | (68,225,016) |
Assets and liabilities by reportable segment of GDH LP as of September 30, 2020 are as follows:
Trading | Principal | Asset | Investment | Corporate and | Totals | |||||||||||||
Total assets | $ | 218,388,530 | $ | 291,835,575 | $ | 5,012,174 | $ | 1,801,917 | $ | 19,211,305 | $ | 536,249,501 | ||||||
Total liabilities | $ | 71,822,898 | $ | 246,793 | $ | 6,589,594 | $ | 43,281 | $ | 11,976,436 | $ | 90,679,002 |
Assets and liabilities by reportable segment of GDH LP as of December 31, 2019 are as follows:
Trading | Principal | Asset | Investment | Corporate and | Totals | |||||||||||||
Total assets | $ | 177,226,904 | $ | 199,678,202 | $ | 1,415,135 | $ | 1,102,055 | $ | 23,356,825 | $ | 402,779,121 | ||||||
Total liabilities | $ | 30,329,154 | $ | 403,187 | $ | 1,377,492 | $ | 96,273 | $ | 15,468,450 | $ | 47,674,556 |
Select statement of financial position information
The fair value of each asset class by reporting segment of GDH LP as of September 30, 2020 is as follows:
Trading | Principal Investments | Asset Management | Investment Banking | Corporate and Other | Totals | |||||||||||||
Digital assets: | ||||||||||||||||||
Cryptocurrency | $ | 137,764,820 | $ | 87,083,128 | $ | — | $ | — | $ | — | $ | 224,847,948 | ||||||
Digital assets posted as collateral | 16,768,600 | — | — | — | — | 16,768,600 | ||||||||||||
Investments: | ||||||||||||||||||
Pre-ICO | — | 5,757,327 | — | — | — | 5,757,327 | ||||||||||||
Convertible Notes | — | 7,570,019 | — | — | — | 7,570,019 | ||||||||||||
Preferred Stock | — | 90,061,363 | — | — | — | 90,061,363 | ||||||||||||
Common Stock | — | 20,927,242 | — | — | — | 20,927,242 | ||||||||||||
LP/LLC Interests | — | 64,346,281 | — | — | — | 64,346,281 | ||||||||||||
Warrants/Trust Units/Trust Shares | 11,455,702 | 554,719 | — | — | — | 12,010,421 | ||||||||||||
$ | 165,989,122 | $ | 276,300,079 | $ | — | $ | — | $ | — | $ | 442,289,201 |
The fair value of each asset class by reporting segment of GDH LP as of December 31, 2019 is as follows:
Trading | Principal | Asset | Investment | Corporate and | Totals | |||||||||||||
Digital assets: | ||||||||||||||||||
Cryptocurrency | $ | 53,882,704 | $ | 32,098,027 | $ | — | $ | — | $ | — | $ | 85,980,731 | ||||||
Digital assets posted as collateral | 8,208,653 | — | — | — | — | 8,208,653 | ||||||||||||
Investments: | ||||||||||||||||||
Pre-ICO | — | 6,005,114 | — | — | — | 6,005,114 | ||||||||||||
Convertible Notes | — | 5,255,579 | — | — | — | 5,255,579 | ||||||||||||
Preferred Stock | — | 75,703,153 | — | — | — | 75,703,153 | ||||||||||||
Common Stock | — | 32,476,631 | — | — | — | 32,476,631 | ||||||||||||
LP/LLC Interests | — | 38,120,805 | — | — | — | 38,120,805 | ||||||||||||
Warrants/Trust Units | — | 602,138 | — | — | — | 602,138 | ||||||||||||
$ | 62,091,357 | $ | 190,261,447 | $ | — | $ | — | $ | — | $ | 252,352,804 |
This press release should be read in conjunction with (i) GDH LP's Management Discussion and Analysis and Consolidated Financial Statements for the three and nine months ended September 30, 2020 and (ii) GDH Ltd.'s Management Discussion and Analysis and Consolidated Financial Statements for the three and nine months ended September 30, 2020 (together, the "Consolidated Financial Statements" and "MD&As"), which have been filed on SEDAR at www.sedar.com.
Grant of Stock Options
In the fourth quarter 2020, the Company intends to grant an aggregate of 9,600,000 stock options to acquire ordinary shares of the Company (the "Options") pursuant to the Company's amended and restated stock option plan. 8,900,000 of the Options will be granted to new officers joining the Company and 700,000 of the Options will be granted to new employees and will be priced at the greater of C$3.50 or fair market value at the time of grant. 150,000 options will be granted to the new manager on the Board of managers and will be priced at fair market value at the time of grant. The Options are exercisable for a period of five years from the date of grant.
About GDH Ltd. and GDH LP (Galaxy Digital)
Galaxy Digital Holdings Ltd.'s only significant asset is a minority investment in GDH LP. GDH LP is a diversified, financial services and investment management company in the digital asset, cryptocurrency and blockchain technology sector. GDH LP's multi-disciplinary team has extensive experience spanning investing, portfolio management, capital markets, operations, and blockchain technology. GDH LP currently operates four distinct business lines, which include: Trading, Asset Management, Principal Investments and Investment Banking. The CEO of GDH Ltd. and the general partner of GDH LP is Michael Novogratz. GDH LP is headquartered in New York City, with offices in Tokyo, Japan, London, England, Hong Kong, Jersey City, U.S., San Francisco, U. S., and the Cayman Islands (registered office). Additional information about GDH LP's businesses and products is available on www.galaxydigital.io.
Disclaimers and Additional Information
The TSX has not approved or disapproved of the information contained herein. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy Digital.
The Company listed on the TSX via TSX Sandbox, an initiative intended to facilitate listing applications that may not satisfy the original listing requirements of TSX, but due to facts or situations unique to a particular issuer otherwise warrant a listing on TSX. The TSX has exercised its discretion to waive the requirements of subsection 309(c)(i) of its manual (C$10 million in treasury resulting from public raise) which the Company did not meet and has approved the listing of the Company pursuant to TSX Sandbox. Galaxy Digital's approval pursuant to TSX Sandbox was conditioned upon public filing of an Annual Information Form and prominent quarterly disclosure of digital assets and investments, which the Company has completed and agreed to continue to provide. The Company will remain listed pursuant to TSX Sandbox until such time as it has completed a twelve-month period without significant compliance issues after graduation. In addition, Galaxy Digital is required to disclose the following two risk factors that were also included in the most recent Annual Information Form for the year-ended 2019: (1) The Company has limited operating history and its business lines are nascent and subject to material legal, regulatory, operational and other risks in every jurisdiction; and (2) the market price and trading volume of the Company's ordinary shares has been volatile and will likely continue to be so in response to, among other factors, market fluctuations in digital assets generally or the digital assets that Galaxy Digital holds or trades.
The performance of the Bitcoin Funds and the Index Fund will vary from the performance of their respective indices. BLOOMBERG is a trademark or service mark of Bloomberg Finance L.P. GALAXY is a trademark of GDCM. Bloomberg Finance L.P. and its affiliates (collectively, Bloomberg) are not affiliated with GDCM, the GBCIF, the Bitcoin Funds and their respective affiliates (collectively, Galaxy). Bloomberg's association with Galaxy is to act as the administrator and calculation agent of the CFIX and the BGCI (collectively, the "Index"), which is the property of Bloomberg. Neither Bloomberg nor Galaxy guarantee the timeliness, accurateness, or completeness of any data or information relating to the Index or results to be obtained. Neither Bloomberg nor Galaxy make any warranty, express or implied, as to the Index, any data or values relating thereto or any financial product or instrument linked to, using as a component thereof or based on the Index (Products) or results to be obtained therefrom, and expressly disclaims all warranties of merchantability and fitness for a particular purpose with respect thereto. To the maximum extent allowed by law, Bloomberg, its licensees, Galaxy, and their respective employees, contractors, agents, suppliers, and vendors shall have no liability or responsibility whatsoever for any injury or damages—whether direct, indirect, consequential, incidental, punitive, or otherwise—arising in connection with the Index, any data or values relating thereto or any Products—whether arising from their negligence or otherwise.
Forward-Looking Statements
Certain information in this press release, including, but not limited to, statements regarding the digital asset opportunity set and momentum in the businesses, the Company or Partnership's anticipated results and the use of proceeds for the PIPE, may constitute forward looking information (collectively, forward-looking statements), which can be identified by the use of terms such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" (or the negatives) or other similar variations. Because of various risks and uncertainties, including those referenced below, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Forward looking statements are subject to the risk that the global economy, industry or the Company's businesses and investments do not perform as anticipated, that revenue or expenses estimates may not be met or may be materially less or more than those anticipated, that trading momentum does not continue or the demand for trading solutions declines, that expected fundraising for asset management products is delayed, that advisory transactions may be modified or not completed at all, that the mining business is not able to gain traction with clients and partners and management's discretion to reallocate the use of proceeds and those other risks contained in the MD&A's and Annual Information Form (AIF) for the year ended December 31, 2019. Factors that could cause actual results of the Company and its businesses to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market or general economic conditions; the failure or delay in the adoption of digital assets and the blockchain ecosystem by institutions; a delay or failure in developing infrastructure for the trading and mining businesses or achieving mandates and gaining traction; failure to grow assets under management and for advisory transactions, a decline in the securities markets, an adverse development with respect to an issuer or party to the transaction or failure to obtain a required regulatory approval. In connection with the forward-looking statements contained in this press release, the Company has made assumptions that no significant events occur outside of the Company's and Partnership's normal course of business. Forward-looking statements are not guarantees of future performance, accordingly, you should not put undue reliance on forward-looking statements. Information identifying assumptions, risks and uncertainties relating to the Company and the Partnership are contained in Galaxy Digital's filings with the Canadian securities regulators available at www.sedar.com. The forward-looking statements in this press release are applicable only as of the date of this release or as of the date specified in the relevant forward-looking statement and Galaxy Digital undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
All figures are in U.S. Dollars unless otherwise noted.
SOURCE Galaxy Digital Holdings Ltd.
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