NIP Group Inc.

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to NIP Group earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's prepared remarks. Please note that today's event is being recorded. I will now turn the conference over to your first speaker today, Mr. Benny, CFO of the company. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to NIP Group's first half 2025 earnings call. With us today are our chairman and co-CEO, Mr. Mario Ho, and our co-CEO, Mr. Hisham Shaheen. You can refer to our first half financial results on our IR website. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I'd like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. Please note that all numbers stated in the following management's prepared remarks are in US dollar terms, and we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings release and the filings with the SEC. I will now turn the call over to our chairman and the co-CEO, Mario. Mario, please go ahead.

Good morning and good evening, everyone. Thanks for joining us. The first half of 2025 was a period of recalibration, rebuilding, and disciplined execution for NIP Group. We focused on strengthening our foundational pillars while positioning the company for its next phase of growth under our new dual engine model. Entertainment remains the core of our brand and community. Alongside it, we're building momentum in our newly established mining and digital assets division, which represents our second growth engine and the bridge to our digital future. Let me start with our flagship entertainment business and the progress we've made here. Hisham will then take you through our strategy and progress with our mining and digital asset division, the Abu Dhabi build-out, and our forward outlook. Starting with entertainment, Our esports, talent, and events businesses remain the three pillars of how we engage audiences and monetize our entertainment assets. Total revenues for the first half of the year were $61.2 million, climbing 55.5% year-over-year. Total esports revenue were $3.8 million. In China, esports' first-half softness reflected two industry dynamics, a general market normalization and the timing of revenue recognition. as some league confirmation letters were delayed to the second half. Amid this backdrop, we maintained a disciplined approach, streamlining operations and benefiting from a market-wide reset in player salaries for both China and Western esports. Top-tier talent today cost significantly less than three years ago, which is translating into healthier unit economics. In Western esports, we carried out a deliberate structural rebuild to sharpen competitiveness and commercial efficiency. While this transition temporarily impacted In the first half of 2025, it has paved the way for a return to normalization of revenues as we re-qualified for major events and reinstated digital items and league sharing income following a successful rebuild. This will also set a stronger base for future growth. As we move through the fourth quarter, we have strong visibility and expect Western esports to break even or make a slight profit on an adjusted EBITDA basis in the second half of 2025, with momentum expected to carry into the first half of 2026. Ninjas in Pajamas' performance gains are also feeding commercial opportunities. Our sponsorship pipeline is improving, supported by renewals and new brand partners. Recurring contributions from existing relationships such as Rainbet, Sanex, and Chili's are ongoing, and overall sponsorship discussions are significantly more active and constructive than earlier in the year. At the Esports World Cup, NIP qualified in multiple disciplines, including Rocket League, Apex Legends, Street Fighter, and Rainbow Six. with 14 teams representing its events. This breadth reinforces our position as a multi-title organization. To further strengthen our operations, we recently appointed Grant Rousseau as Chief Operating Officer of NIPG Esports. Grant is among the industry's most accomplished leaders, having led Team Falcon to back-to-back Esports World Cup championships. His experience in scaling global Esports organizations and developing sustainable competitive models will be an important asset for the movement. Turning to tele-management, total revenues for the first half were $46.1 million, surging 110.6% year-over-year. We undertook a purposeful recalibration here to improve both quality and efficiency. We've also integrated online advertising and promotion and diversified monetization from pure live streaming toward brand integrations and product placements. Here is straightforward, make this a lighter, higher quality revenue stream that complements our broader entertainment ecosystem. Our events production business recorded revenues of 11.3 million US dollars, 30.1% year over year. Events production continues to evolve from pure e-sports tournaments to a cultural platform. Early results are encouraging. As an example, we successfully held the Tianfan Music Festival in Beijing, drawing more than 70,000 attendees and setting a high benchmark for crossover entertainment that connects deeply with our core Gen Z and young millennial esport audiences. Music festivals not only deliver strong margins than conventional esport events, they also create valuable sponsor touchpoints. We're scaling from the second half with four to five similar festivals across key cities, one completed in Guangzhou, one in Nanjing, Wuhan, and Foshan. We're also building out a pipeline that includes traditional sports and AR, VR activations in the future. Earlier this month, we signed a framework agreement with the government in Hainan to jointly develop an integrated sports and leisure complex that will combine esports, music, and lifestyle experiences. This partnership underscores our commitment to bringing gaming and youth culture into broader tourism and entertainment formats while contributing to local cultural economies. In conclusion, the competition is audience as we're serving the same digitally native community with more formats more often. Our focus on extending our brand also encompasses physical experiences. We're on track to open our first esports-themed hotel in January. An important proof point that our brand and audience can travel across formats from teams to content and physical experiences. Operationally, all of the steps we've taken in the first half places us on a firm path towards profitability. We're maintaining strict cost discipline across teams and corporate functions, focusing on operational efficiency across every part of the P&L. That operating rigor, together with improving esports performance and the scaling of our Bitcoin mining initiative, support our target of achieving positive adjusted EBITDA in the second half of 2025. Ben will walk through the financial details in just a moment. As we grow, we're also strengthening our corporate governance of sustainability practices. ESG is an integral part of how we build long term value in culture. Earlier this year, we published our inaugural sustainability report. outlining our commitments and achievements in governance, diversity, and community engagement. Women now represent nearly 48% of our workforce, well above the industry average. And our global teams completed over 5,500 hours of professional training. In summary, the first half of 2025 was about discipline, rebuilding, and execution. In esports, China remained focused and efficient, while the West is showing tangible, competitive, and commercial recovery. Talent management was reached for a more sustainable economics. and events are expanding into music-led formats with better margins and wider brand reach. In parallel, we have established our mining and digital asset division, which we view as a natural extension of our capabilities, anchored in compute capacity today and expanding toward digital assets, AI, and AI-enabled applications over time. With that, I'll pass the call over to Hisham to walk through mining and digital assets, our Abu Dhabi headquarters initiatives and incentives, and the outlook for the remainder of the year into 2026. Hisham, over to you.

Thank you, Mario. Let me now turn to our mining and digital assets division, which has become the second growth engine of NIP Group. This business embodies the next chapter of our transformation, combining near-term monetization through Bitcoin mining with long-term strategic positioning in digital infrastructure and AI computing. We began building this division with the September closing of the acquisition of our first tranche of mining assets, marking NIPG's entry into digital computing. The first tranche brought online an installed hash rate of approximately 3.11 exahash per second. In the past two months, we mined 102 Bitcoins in line with our expectations. As of November 30th, 2025, we held over 150 Bitcoins in Bitcoin treasury, supported by our strong production and disciplined liquidity management. Building on that success, we announced a second Trans Asset Purchase Agreement, or Tranche 2, to significantly expand our total mining capacity. Tranche 2 is expected to close in December. Once completed, it will add an additional 11.19 exahash of on-rack mining capacity to our operations, bringing our total installed mining capacity to 11.3 exahash per second. This will position NIPG as one of the top-listed Bitcoin miners globally and the largest miner in the Middle East. Based on our current Bitcoin network conditions, an installed hash rate of 11.3 exahashes, and a relatively stable utilization rate defined as a ratio of average operating hash rate to total installed hash rate, these two trenches combined are expected to generate roughly 150 Bitcoins per month. providing a meaningful cash flow visibility and establishing mining as a strong contemporary revenue stream within our broader portfolio. Operationally, we are following a balanced approach to liquidity and asset management. Our plan is to sell a portion of our mined Bitcoin to cover liquidity needs, operational costs and capital expenditures, while retaining the remainder on our balance sheet as digital assets. Crucially, Unlike many traditional miners, our financing structures provide the flexibility to cover operating costs without forced monthly coin sales. This strategic advantage allows us to act as long-term Bitcoin holders and sell Bitcoin opportunistically when market conditions are most attractive, enabling the strategic growth of our Bitcoin treasury. We intend to remain long-term holders of Bitcoin, reflecting our confidence in its long-term value creation potential. To lead this next phase of growth, we appointed Carl Egren as chief operating officer of mining and digital assets at NIP. Carl brings exceptional experience spanning both blockchain infrastructure and AI data centers. Most recently, he served as the CEO of Phoenix Technology, one of the leading blockchain infrastructure operators globally, managing over 700 megawatts of power capacity across the US, Canada, Europe, and the Middle East. He led Phoenix's Group's IPO in December 2023, raising approximately $370 million and oversaw roughly 400 megawatts of crypto mining operations. Before joining Phoenix, Carl co-founded and served as chief operating officer of G42 Cloud, now Core42, which is the largest AI, big data, and cloud computing company in the Middle East, where he led development of hundreds megawatts of data center capacity dedicated to AI and high-end performance computing workloads. Carl will be based in Abu Dhabi, operating from a new established headquarters under the Audio Partnership. As we scale, our immediate focus remains on efficiency, uptimes, and site upgrades specifically. Refining the power mix and site infrastructure is also a priority. To date, operational metrics have been in line with plan, and we expect to announce monthly Bitcoin production figures following the close of Tranche 2 and our digital assets acquisition. Let me now touch on our Abu Dhabi headquarters and the audio incentive framework. We currently benefit from two separate partnership programs in Abu Dhabi. The first with Abu Dhabi Gaming and the Department of Culture and Tourism. This one has been running for about one year and a half. Under this framework, we receive 30% subsidies for payroll for UAE-based employee, along with office subsidy, dispersed, quarterly, and uncapped. These benefits continue to support our operating base and will remain in addition to other incentive programs. Separately, we entered into a new agreement with the Abu Dhabi Investment Office earlier this year, which provides up to $40 million in financial incentives over four years. We're tracking well to trigger the first subsidy payment and are trending ahead of schedule on all KPIs. These two programs together create a highly supportive environment for NIP Group's long-term expansion in Abu Dhabi, reinforcing the Emirates' commitment to building a global hub for computing, AI, digital infrastructure, which is a vision that aligns closely with ours. As we continue to expand, this structure not only enhances our financial efficiency, but also anchors NIP Group at the center of Abu Dhabi's rapidly growing digital economy under a world-class government and regulatory framework. Turning to our outlook for the remainder of the year and into 2026. The second half of 2025 will represent the first reporting period where we begin to see operational and financial contributions from the mining business. Together with continued efficiency gains from the entertainment division, this positions us firmly on track to achieve adjusted EBITDA in the second half of 2025, which is positive. With TransTruth scheduled to close in December, we're entering 2026 with a new fully operational revenue stream coupled with enhanced revenue visibility. At current Bitcoin price levels, our installed mining capacity has the potential to generate approximately $200 million in annualized revenue. When combined with over $100 million in anticipated annual revenues from our entertainment businesses, NIP Group's total annualized revenue run rate is expected to exceed $300 million US dollars based on current Bitcoin mining network conditions, prevailing Bitcoin prices, and assuming NIP Group's share of network cash rate and its utilization remain relatively stable. Looking further ahead, 2026 will be about optimization and stability. NIP Group is now the only gaming and entertainment company globally that has successfully scaled into Bitcoin mining and compute infrastructure from a native audience base. This gives us a differentiated position, combining cultural relevance and computing ability, which we believe is a durable competitive advantage as the digital and physical worlds continue to converge. Our approach is infrastructure-first and execution-led. We are building real capacity, achieving tangible outputs, and laying the technological groundwork for broader digital assets and AI opportunities ahead. With that, I will hand it over to Ben to take you through the first half financials in detail. Thank you.

Thank you, Hisham, and hello, everyone. I'm pleased to share our financial results for the first half of 2025. Total revenue for the first half was $61.2 million, up 55.5% year-over-year. Growth was led by talent management revenue, which increased by 110.6% year-over-year, and event production, which increased by 30.1% year-over-year. Esports team operations contributed revenue of 3.9 million US dollars. In addition to fewer sponsorships, the decline in esports team operation revenue was also due to timing effects. Unlike the first half of 2024, first half 2025 results did not include league revenue share. This year's full year share is expected to be recognized in the second half of 2025. Overall, the first half revenue performance reflects the effectiveness of our diversification strategy and the continued evolution of our entertainment portfolio toward higher quality, more scalable revenue streams. turning to gross profit and gross margin. We recorded a gross loss of 1.2 million US dollars with gross margin of minus 2% versus 6% in the prior year period. The year-over-year change was driven by the absence of the league revenue share in the first half of 2025 and softer high margin sponsorships in esports. partially offset by a more favorable mix in talent management and events. At a segment level, esports posted a growth loss given the previously mentioned timing effect. Talent management growth margins improved to minus 1.1% from minus 5.9% last year, and events production delivered a 9.2% growth margin. Now let's talk about impairment, a standout expense that had a meaningful impact on our bottom line. During the period, we recorded non-cash goodwill impairment of $106.3 million and intangible asset impairment of $19.5 million, primarily associated with the Ninjas in Pyjamas brand. These impairments reflect a prudent reassessment of fair value based on updating market multiples and performance assumptions in line with industry-wide normalization. These are one-time non-cash adjustments that have no impact on our operation cash flow and are not expected to recur in the second half of 2025. Net loss for the first half of 2025 was $136.3 million compared with $4.7 million a year ago, almost entirely driven by the impairment adjustments. Excluding these one-time items, adjusted EBITDA was negative $7.1 million compared with negative $2.6 million last year. primarily reflecting our ongoing investment in business transformation and the digital infrastructure build-out, as well as the lack of league revenue share in the first half of 2025. Looking ahead to the second half of 2025 into 2026, with the successful scaling of our Bitcoin mining machine acquisitions and the entertainment divisions achieving greater stability, we expect a meaningful sequential improvement in profitability in the second half of 2025. The combination of growing recurring revenues from entertainment and incremental revenues from mining, alongside the 30% payroll subsidy under the AD gaming and the DCT framework, the audio financial incentives and the zero tax environment should collectively enhance operations leverage, and improve cash flow in the coming quarters. Therefore, we also target a positive for the second half of 2025. Finally, I want to reaffirm that our financial discipline remains unchanged. We are executing against our dual-engine strategy with a clear focus on profitability and on the sustainability of scalable long-term growth. Our balance sheet remains solid, and will be supported by growing transactions in Bitcoin mining. Our cost structure is leaner, and our capital allocation priorities remain centered on efficient growth and long-term shareholder value creation. Okay, this concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you.

Thank you. We will now begin the question and answer session. To ask a question, you need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, it's star 1 1 to register for question. And to withdraw your question, please press star 1 and 1 again. Thank you. We are now going to proceed with our first question. And the first questions come from the line of Bo Pei from U.S. Tiger Securities. Please ask a question.

Hi, management. Thanks for taking my question. Can you hear me well?

Yep. Yes, we can.

Okay, great. Yeah, thanks for taking the questions. I have two. So the first is event production revenues grew strongly in the first half this year as you scale into music and broader life entertainment industry. The Wonderland Festival was a major milestone. So my question is how replicable is this model geographically and financially? And what does your pipeline look like for the second half of this year and 2026? And how should we think about the margins over time? Thank you.

Thank you so much. This is Mario. Yes, indeed. It was a fantastic milestone for us with over 70,000 attendees. That is in itself qualifies us into the top tier music festival operators in China. So I think the case study in Beijing already validated our ability to execute these large-scale multi-format live entertainment events, including music beyond esports. And to answer your question, the model I think is highly replicable in both China and also some selected international markets where we have strong esports and youth audience overlap. As mentioned earlier in the call, we've already established another one in guangzhou another one in nanjing and we look to have around 10 more of these across next year on a big scale level but at the same time we're also looking to sign more music concerts aside from music festivals and as you think about um pipeline and also margins over time we definitely expect with more of these large scale music festivals our margins in the events production business overall will continue to improve healthily. Thank you.

Awesome. That's very helpful. And then my second question is about the eSports team. So the revenue have been under pressure due to software sponsorships and timing of league revenue recognition. So what do you stand today in terms of a competitive performance sponsorship pipeline and profitability for eSports? esports segment, and should we expect a recovery in the second half and into 2026? Also, what's the amount of league revenue share recorded in the first half of 2024?

Indeed, the league revenue timing issue is mostly the reason as to why, as you coined, we have been under pressure. But I do expect the league revenue confirmation letters to normalize as we head into the second half of 2025. This is a very normal process and a continued discussion relationship with leagues. As soon as we have the letters, the revenue can be recognized, then we will see normalized and improved performance. And in terms of our competitive performance, it's definitely been increasing and improving across several different rosters, most notably in Counter-Strike very much recently. Thank you.

Thank you so much. That's all my questions.

Thank you. We are now going to proceed with our next question. And the next question comes from the line of Xiyi Wu from Huaiyuan Securities. Please ask your question.

Thanks for inviting me to our performance meeting. Congratulations on our company's positive achievements. I have two questions. The first question is, The first half of 2025 results showed strong top line growth but wider losses driven by non-cash impairments. How we should think about the trajectory into the second half of 2025 and your path to positive adjusted EBITDA?

Thank you so much for the question. I'll take this one. We need to keep in mind that the reported loss that we did was primarily driven by non-cash impairments, which does not affect our operating cash flow or business fundamentals at all. In general, we took these impairments because historically we did our merger creating an IP group. And since then, the valuations of esports team assets have in general come down. in line with a cooling market. So we felt that it was timely and appropriately that we adjusted these values to reflect realistic market conditions, I would say. If you look at the business in general and how you should think about it, think about it as what it is, a one-time non-cash impairment, In general, the underlying operational metrics of the business are positive and improving with stronger contribution margins to our bottom line. And we do expect continued revenue momentum and cost efficiency improvements in the second half of 2025 and beyond, as Mario has touched on. And particularly driven by uptick in performance and improved market and interest surrounding the esports assets themselves. I think that what makes us very excited is now when we look at 2026 and have added mining and digital computing. We are extremely excited of the potential and revenue generation, but also the P&L impact that will have on us from the second half of 2025. And with the additional added compute capacity, 2026 looks extremely promising and exciting. I hope that answered your question.

That's really helpful. My second question is, you have moved very quickly in building out your mining and digital asset division. How should investors think about economics and your differentiation versus pure player miners? Thank you.

Yeah, so we have indeed moved extremely fast on the digital computing side and scaling digital assets. Now, NIP as a group and a brand has been doing things in the digital asset space for a while, right? But the scaling of compute infrastructure of 11.3 EH is quite an achievement and a remarkable milestone for us, right? We're now generating a lot of monthly Bitcoin output, which improves the economics of the group substantially. The reason primarily that we were able to scale it so quickly is that we acquired, already built an existing mining infrastructure, which resulted in a quick ramp up speed of that compute capacity. Right. We saw that in trench one. We will see that in trench two. And it also results in lower upfront capex investments and needed cash flow for that. And I think One of the big reasons that we were able to scale computing capacity this fast is our strong government partnerships, in particular in Abu Dhabi, which provides us long-term cost stability and operational support. And in particular, since they are extremely interested in the mining space, they've been present in it for a long period of time, and they have it as a national vision to establish the Emirate as a computing hub when it comes to both these types of workloads but also ai in the future and how do we regard nip which is the second part of your question uh we are obviously not a pure play bitcoin miner and we are very happy that we are given that down the line a lot of bitcoin miners will have to look to pivot their business models we already came from a a space where we have one of the most legendary iconic brands in esports and broader gaming entertainment, which includes esports teams, live events, content networks, which in general reaches 100 million fans. And now back to what I said initially, given that we reach 100 million fans, we have very valuable and solid IPs, which has been experimental in the place of digital assets, right? Look at our fan loyalty platform, look at the fan token, which has been issued in the plus we've been playing around with digital fashion. We have been doing NFTs very successfully. We do see that the audience base that we do have now is your target adapters and primary adapters on what we are doing in the digital compute space. Just coming from acquiring large-scale computing power, it is naturally to think that that growth journey can use AI compute. We look at broader digital assets, and we also look at the AI application space, which naturally connects to these millions and hundreds of millions of gaming fans that we do have. I hope that answered your question. I know it was a little bit long.

And the questions come from the line of Marco Zhang from Galong Reef Research.

Please ask your question.

Hi, this is Marco from Galong Reef Research. Congrats again on your strong results and your successful transformation. So I have three questions here. The first, can you provide more details on the execution timeline for your Abu Dhabi headquarters build out and how the AD gaming and ADO programs will impact your P&L over the next few years?

Yeah, absolutely. And hi, Marco. In general, we're tracking and trending very well with the various Abu Dhabi collaborations that we do have. Our headquarter build is progressing on schedule. We have senior leadership like myself, Carl Agran, and other C-level staff already relocated and in Abu Dhabi. If you look at the DCT collaboration that has been running for a year and a half, we're already utilizing and realizing the benefits of the 30% payroll subsidy, the office subsidies and so on. So that is already affecting us in a positive way. Now that we are building out digital computing as well in Abu Dhabi, we are looking to be able to utilize even more out of that 30% subsidy scheme. So you can look at it as we scale, are able to offset quite a substantial amount of our payroll costs into that, which improves our advantages. And in particular, in the esports space, it gives us a significant competitive advantage. So that is sort of, on the DCT side, rolling out quite well, operational. We're receiving all the subsidies and benefits. And we're looking, as we scale, of that continuing to grow and affect us extremely positive. When you look at the Abu Dhabi investment office partnership that is now activated, that is the deal, which is $40 million contributed over a time period of four years. We are trending ahead of schedule to trigger the KPIs. As I said, the HQ is already established. It's operational. And we look at it now as we're scaling esports, we're scaling other gaming entertainment properties and verticals that we have. And also by adding mining, that will have significant positive effects on us for the long term. So in generally, very good positive news coming out of that avenue, I would say.

Okay, thanks. Yeah, my second question is related to your impairments. So you recorded sizable goodwill and intangible asset impairments in the first half related to ninjas in pajamas. Could you elaborate on the rationale behind this impairment and should investors expect further similar charges going forward?

Yeah, absolutely. So the impairment primarily relates through what has been happening in the esports industry over the last three years. When we did the merger between Ninjas and Pajamas, the esports team and ESV5, I would say that esports valuations were at their pinnacle. There was an extreme market hype. And I think that we, over the course of the years, have seen a cool down surrounding that and felt it was necessary and timely to adjust that value to reflect the true value as it is today of an esports team, right? Back in 2022, 2023, when we were conducting this merger, you saw esports team valuation going as far up as half a billion US dollars amongst our peers, right? And we can all safely say that when you have a broad esports market cool down, that historical merger valuation, which was done in a market boom, it is natural to adjust that down. And also our jobs is to have our numbers reflect what is reality, right? So in that sense, that was timely to do so. Just we need to keep in mind the charge is non-cash. It does not impact our liquidity, cash flow, or any of our operational plans. And in general, We have taken a large impairment this time and reset that base quite conservatively, so there's no further impairment pressure. And I do not foresee us having to take any further impairment given that we took a very sizily one now. And we will continue to do our jobs, scale the esports assets and properties. They're seeing recovery. And hopefully that will be a growth part rather than a catch-up part when it comes to goodwill valuations.

Yes, that's good to hear. And my last question is regarding your mining business. So you previously announced the additional asset purchase agreements to further expand your Bitcoin mining capacity. So could you provide an update on the progress and expect a timeline for closing?

Yeah, absolutely. So we announced it not long ago. The acquisition remains active and all parties in it are closing together towards closing. When you do M&A of this size and the scale, there's customary closing conditions. We're all working to fulfill those, similarly to what we had to do in tranche one. and we will go ahead with the closing as soon as that is completed. And at this stage, I would say that we are still targeting December to close it, and we will inform the market as soon as that is closed as well. So I hope that answered that question.

Okay, got it. Thanks. I'm good here.

And the next questions come from the line of Jack Vanderaad from Maxim Group. Please ask your question.

Okay, great. Hello, gentlemen. Congrats on all the progress in the new HPC frontier. It's exciting. I guess I have a couple questions kind of on the balance sheet, as well as the crypto kind of just bigger picture plans here and kind of what has happened so far. But if I could just maybe get into that. Maybe circling back to the hotel, esports hotel strategy. Mario, can you just give me an update quick on kind of where that stands in terms of your priorities? And then just bigger picture, how does that fit into the overall strategy or has that taken a backseat?

Oh, hi. Hello. Yeah, this is Mario. We're very excited about our opening potentially in January. And we're still continuing to see a massive growth in the esports hotel business in China, lots of new hotels opening. But of course, looking at the operators right now, are there that many that composes an incredible esports brand, an existing massive audience, and also the ability to host our own IP events as well as working closely with our partners like Tencent? The answer to that, I think, is there aren't that many operators and we will land into the top tier of those. Once our hotel is open in January, our business model is proven, we're going to aggressively expand in the management model and the licensing model. We've already received a lot of interest from local governments and a lot of traditional hotel operators and also real estate operators wanting for us to expand into their assets. So overall, we're very hopeful and optimistic and excited about the strategy. In terms of priority, I think on a monetization level in the world of esports, this remains a big priority for us because we see this as a constant stream of revenue and opportunity for our esport lovers across the country to be able to spend on the things that they like. I hope that answers your question. Thank you.

Yes, no, that's very helpful. And maybe just speaking of not to get too ahead of ourselves, you just made a major expansion effort here as well with the HPC initiatives, but just other ideas that maybe would fit in well with your business strategy. You guys have been acquisitive. Do you see any other, I guess, new frontiers as well to add to your list while you guys are at it? Maybe the predictions market is something that's been getting a lot of attention here and out in the West. Just anything, any other new verticals as well, Mike, as are all these other growth initiatives?

Yeah, I'll quickly touch on it on the China side, and then Hisham, you want to take this? So, yeah, so I guess another exciting part would be our collaboration with the Hainan government. We're looking to build a sports entertainment complex in the city of Sanya. And at the same time, we are moving our real estate management company, which we created this year, to be headquartered also in Hainan. We've signed and announced a few different deals, achieving the operational rights of certain prime assets across different cities in China. So I think this is also an interesting growth frontier from the China side, whilst we, of course, take a big focus in creating more music festivals and events that you've seen already in our data earlier, where we're experiencing fantastic growth. And also, with our recent festival in Beijing, I can confidently say that as a music festival operator, we've already now become one of the most favored brands. We are getting a lot of inbound requests from different local governments and companies to be hosting more in 2026. I think these two frontiers will be very exciting together with the hotel business here in China.

I think I will take a little bit more of a visionary approach to answer your question, Jack, if that is okay. And hopefully that can provide a little bit of clarity on how we think about So obviously, when I joined NIP 10 years ago, it was an esports team, right? We quickly scaled that in to one of the largest, if not the largest, esports team in the world. And then we set our sights on diversifying business into wider gaming entertainment, right? So talent management, events production, the publishing aspect. hotels, and now we're moving into the infrastructure side through acquisition of large-scale computing capacity. So number one, we're looking to make that more efficient, and number two, we're looking to continue scaling that capacity. Sort of the approach in this is If you look at going from e-sports to wider gaming entertainment, looking to now jumping into high-performance computing, what we are doing is building a full circle ecosystem. So it might sound that we go into Bitcoin mining. Yes, it's great as a business vertical. It's great for our financials and scaling and growth, but it would be realistic to think about that Once you are in the computing space, it is natural to look at things such as AI computing and converting existing mining sites or new sites to AI compute. That is something. Another element to that is we're in the gaming space. There's a mega trend of AI. In particular, what would be interesting for us to look into and which... is on the horizon is AI application, which is relevant to esports and games, right? And utilizing a potential compute capacity that we're sitting on to run such AI applications. So you will start seeing it forming into an ecosystem which spans esports into gaming entertainment, high-performance computing infrastructure, which then spans into AI and AI compute. but you will see it sort of always being anchored in the brand DNA, which is esports and it is video games. We are not pivoting away from that brand DNA just because we went into mining at this scale, becoming one of the largest in the world. I hope that answered it on more of a visionary note on which type of direction we're taking.

No, that was excellent. Covered a lot of ground there too. I appreciate that. And maybe just two quick ones here just to get a sense of the Bitcoin progress since we are kind of interim here. So I think I saw 10 million of USD roughly of fiat cash on the balance sheet as of June, at the end of June. And you did acquire those assets, those Bitcoin in the first tranche in September. So I think we're targeting maybe 60 Bitcoin from that group of assets. We're in October, then November. Have you guys mined any Bitcoin yet? And are you also, what is the strategy of kind of, what are you doing with that Bitcoin in the near term? Are you selling a portion of it for working capital or is the plan to hold it?

Yeah. So I touched on that in my prepared remarks. So We closed the first tranche in September. We have been mining since September and generally accumulating coin, right? The business is outputting exactly on expectations. So through the last months, we have been mining between 50 and 60 Bitcoins per month. We have been accumulating all that coin. So as of the end of November, we were sitting on above 150 in Bitcoin in our treasury. Now, as I said in my written remarks, we are long-term believers in digital assets and Bitcoin and are looking to hold. So you might see and will see that what we sell is to cover operating expenses when needed. But in general, we will follow the thread that we have been doing this year, right? 50 to 60 coins a month. Three months in, there's about 160 coins sitting in our treasury. So expect that to be sort of the approach we're taking as long-term holders.

Excellent. I appreciate that. And I apologize for missing that. I thought you were just doing 150 per month once you had the other tranche closed as well. But good to know you have quite a healthy number of Bitcoin already. That's it for me. Congrats, guys.

Thank you. It's fun checking our wallet. I will tell you that.

Great.

Thank you. As there are no further questions, I'd like to hand back the call over to the management for closing remarks.

All right. No further questions?

There are no further questions. I'd like to hand the conference back to the management for closing remarks. Thank you.

Okay. Thank you again for joining our call today. If you have any further questions, please feel free to contact us or make a request through our website. We look forward to speaking with everyone on our next call. Have a good day.

Concludes the conference call. You may now disconnect your lines. Thank you.