Sol Strategies Inc.

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good day and welcome to the Sole Strategies, Inc. Fiscal Year-End September 30, 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, we will conduct a question-and-answer session. In order to ask a question or make a comment, please press the star key followed by the number one on your touch-tone phone. On the call is Leah Wald, Chief Executive Officer, Doug Harris, Chief Financial Officer, and Mo Adham, Chief Investment Officer. I would like to take a moment to direct investors to the investor relations section of the company's website at soulstrategies.io, where we have posted our investor presentation. Before we get started, I want to remind everyone that certain statements discussed on this call are based on information as of today, January 28, 2025, and contain forward-looking statements which are subject to risks and uncertainties, and given our operating history, market volatility, and industry growth. Trends could materially deviate from today's level. Actual results could differ materially from our forward-looking statements. The comments made during this conference call were in the latest reports and CDAR Plus filings, each of which can be found on our website, www.soulstrategies.io, or under our profile at www.cdarplus.ca. The company has made assumptions that no significant events occur outside the company's normal course of a business, and the current trends in respect of digital assets continue. Listeners are cautioned that the metrics of Sol's business fluctuate and may increase and decrease from time to time, and such fluctuations are beyond the company's control. The company does not undertake any duty to update any forward-looking statements except where required by law. The company also wants to caution listeners that the past performance is not indicative of future performance, and current trends in the business and demand for digital assets may not continue, and listeners should not put undue reliance on past performance and current trends. This call will touch on certain audited performance metrics of the business to the month ended September 30th, 2024, provided in the earnings press release issued today. And I would encourage each of you to review the forward-looking statements, risk factor disclosure, and similar disclosures in today's press release. After the speaker's prepared remarks, we will conduct a question and answer session. In order to ask a question or make a comment, please press star 1 on your touch-tone phone. Questions will be taken in the order they are received. With that, let me turn the call over to Leah Wald, Soul Strategies CEO.

Thank you, Operator. I'm excited to host Soul Strategy's first-ever earnings call. We plan to hold these quarterly, fostering consistent engagement with our investor community. Today, I'll review Soul Strategy's positioning within the growing digital asset industry, highlights from the September quarter, and updates to our strategic plan. Unless stated otherwise, all dollar amounts are in Canadian dollars. Following my remarks, Doug will present the financial highlights, Mo will discuss our investment and operational initiatives, and then we'll open the floor to your questions. When I became CEO in July of last year, 2024, I set out to transform soul strategies into a leading vehicle for investors seeking exposure to digital assets through public markets. With the recent regulatory approvals of Bitcoin financial products, our industry has made significant progress in broadening blockchain adoption among traditional investors. Recognizing this momentum, we conducted a comprehensive review of the company's strategy, pivoting from a traditional NAV-based Bitcoin holding company to a technology-driven enterprise focused on Solana's high-performance blockchain. And this evolution led us to rebrand as Sol Strategies, Inc. Our transformation marks a defining chapter in the company's history. Since initiating the strategic pivot, we've achieved exceptional growth across key operational metrics. As of September 30, 2024, Soul Strategies operated one Solana validator with approximately 101,000 souls allocated to it. valued at $20.9 million. By January 25, 2025, that number had surged to approximately 1.7 million sold, valued at $634 million, representing a 1,612% increase in stakes sold. Our validator operations now generate annualized staking revenues of $9.9 million, up 2,887% over the same period. These results underscore the scalability and efficiency of our validator network and highlight our role as a critical infrastructure provider within the Solana ecosystem. To execute this transformation, we have advanced on four key pillars. One, validator expansion and operational growth. We have systematically acquired and optimized high-performance validators, scaling from one to three fully operational validators. These validators, supporting 1.7 million sold, are designated for scalability, high availability, and competitive yields. They provide reliable, high-margin revenue streams and strengthen soul strategies positioned as a leading infrastructure provider within the Solana ecosystem. Two, proprietary technology and innovation. Our proprietary solutions define Soul Strategies as a technology-first company. These include real-time yield calculators, seamless wallet-to-validator integration, and a retail-friendly non-custodial staking app that we launched through the Orange Fin acquisition. This app simplifies staking for self-custodial users and is poised to expand accessibility as it rolls out on Apple and Google platforms this year. Three, strong financial position. With approximately $72 million in liquidity and a recently secured $25 million revolving credit facility and $30 million in capital led by Parify Capital, we are well capitalized to pursue strategic opportunities. These resources allow us to scale validator operations, systematically acquire and stake soul for reoccurring revenue, and invest in technology development. This financial strength ensures sustainable growth as Solana's network continues to expand. Four, commitment to compliance and security. We adhere to rigorous regulatory standards and have implemented ISO 27001 certified security frameworks to protect our infrastructure, validate our operations, and user data. This commitment to transparency and trust positions us as a reliable partner for institutional and retail investors alike. In addition to these core pillars, we have achieved significant capital market milestones. On January 1, 2025, sole strategy is upgraded to an OTCQX listing, enhancing U.S. trading volumes and liquidity. The broader market dynamics are highly favorable. We believe the Solana network continues to lead as a high-performance blockchain with unmatched scalability and transformative potential across industries such as payment, DeFi, and asset tokenization, a market projected to reach $16 trillion by 2030. As the first and largest publicly traded company focused exclusively on Solana, Soul Strategies bridges traditional finance with blockchain innovation. We believe that our scalable and compliant exposure to Solana offers investors a unique opportunity to participate in this ecosystem's transformative growth. With that, I'll now hand it over to Doug for the financial highlights. Thank you.

Thank you, Leah. Yeah. I am pleased to present Soul Strategy's financial results for the year ended September 30, 2024. While these results are excellent, I want to emphasize that they do not fully reflect the transformative changes initiated under Leah's leadership as CEO. These changes, which continue to unfold, are expected to have a profound impact on the company's financial performance in fiscal 2025 and beyond. Please note that we may refer to the year ended September 30, 2024 as fiscal 2024 and the year ended September 30, 2023 as fiscal 2023 or the prior year. Total comprehensive income for the year ended September 30, 2024 was approximately $9.4 million, an increase of about $15.8 million from the total comprehensive loss of approximately $6.5 million for the year ended September 30, 2023. The main reasons for the increase in total comprehensive income are as follows. Total investment income increased approximately $15.2 million to $10.7 million in fiscal 2024 compared to a loss of approximately $4.5 million in the prior year. The increase in investment income is mainly due to A realized gain on dispositions of cryptocurrencies of approximately $7.7 million in fiscal 2024 compared to nil in the prior year. A realized gain on investments of $1.2 million in fiscal 2024 compared to a realized loss of approximately $1.2 million in the prior year. That's due to a realized gain on animal brands of approximately $1.8 million. This is offset by a realized loss of $170,000. due to a write-off of ZK Snacks to nil. In fiscal 2023, the company realized investment losses of approximately $500,000 and $700,000 on its Iowa Capital and Lucy Lab investments, respectively. The strategy had an unrealized gain on investments of approximately $1.1 million in fiscal 2024, an increase of about $5.1 million from a $4.1 million unrealized loss in fiscal 2023. The fiscal 2024 unrealized gain was mainly due to a recovery of approximately $830,000 on Lucy Labs. In fiscal 2023, the unrealized loss of $4.1 million was mainly due to an unrealized loss on Animoca of $4.3 million. Making and validating income was approximately $207,000 in fiscal 2024 compared to nil in fiscal 2023. Making and validating income reflects Less than two months of operations of one startup validating node and rewards earned on the company Solana staked to that node. These results are not indicative of staking and validating revenue the company is expecting in fiscal 2025. Operating expenses in 2024 were $2.5 million compared to $1.8 million in the prior year. The increase of approximately $670,000 in operating expenses were mainly due to Stock-based compensation in fiscal 2024 of $1.32 million, an increase of $890,000 from fiscal 2023's expense of $431,000. General and administrative expenses in fiscal 2024 of $344,000 compared to $198,000 in the prior year, an increase of about $146,000. And foreign exchange gain in fiscal 2024 of $51,000. while 2023 had a loss of $350,000, a decrease of about $401,000. Income tax expenses in fiscal 2024 were $1.6 million. On fiscal 2023, there was an income tax recovery of $27,000. The increase was mainly due to realized gains on the disposition of cryptocurrencies. In fiscal 2024, the other comprehensive income was $2.7 million, while in 2023, there was a loss of $197,000, an increase of almost $2.9 million, mainly due to the unrealized gain on cryptocurrencies. At the end of fiscal 2024, the company had $1.8 million of cash, 100,763 SOL, 56.25 BTC, that had a combined value of $25.6 million and $1.5 million of investments with total assets of $28.9 million and a net book value of $26.7 million. This is a significant increase from fiscal 2023 when the company had cash of $1.9 million, 215.37 Bitcoin with a value of $7.9 million investments with a fair value of $6.5 million, and total assets of $17.1 million that led to a net book value of $16.8 million. A significant increase in net book value from the prior year is mainly due to the increase in value of cryptocurrency investments of $17.7 million, offset by a decrease in investments of approximately $5 million. Our Chief Information Officer, Mo Adam, will be discussing the staking and validating strategy but I want to reiterate that the company believes that its staking and validating revenue will significantly increase for the year ended September 30, 2025, as it will reflect the cogent and orange-fin acquisitions that closed on November 24, 2024, and December 31, 2024, respectively. Management believes that staking and validating revenue will continue to grow as more third-party Solana holders delegate their soul to our validator nodes, generating income paid in Solana to the company, which we intend to reinvest in staking. As a result, we believe that the staking and validating income will surpass operating expenses that the company may incur to operate the business, demonstrating the scalability of our model. And with that, I will turn the call over to Mo to discuss our staking and validation strategies.