DMG Blockchain Solutions Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the DMG Blockchain Solutions Q1 2026 update conference call. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available on the company's website. Joining us today from DMG Blockchain Solutions is Sheldon Bennett, the company's Chief Executive Officer, and Stephen Alistew, Chief Operating Officer. During this call, management will be making forward-looking statements, including statements that address DMG Blockchain Solutions' expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in DMG Blockchain Solutions' most recently filed periodic reports and the company's recent press releases, particularly the cautionary statements within. The content of this call contains time-sensitive information that is accurate only as of today, February 26, 2026. Except as required by law, DMG Blockchain Solutions disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Sheldon and Steve. Sheldon? Thank you, Adrian.

Good afternoon, and thanks to everyone who has joined the call today. My name is Sheldon Bennett and I am the CEO and founder of DMG Blockchain Solutions. With a similar format as recent quarters, first I will provide an overview of the company's strategy and accomplishments. I will then pass the call to Stephen who will review the company's performance. We will structure the call to focus on the two strategic pillars we presented last quarter. the acceleration of our core business, namely data center operations to AI infrastructure, and the progress in our core plus operations, namely our digital asset financial services. This structure results in no changes to our specific business lines and how we report our financial statements. But we are reorientating our messaging in a way we believe will be easier for investors to understand. We will end the call with our Q&A session based on questions submitted to us prior to the call, as well as those from using Zoom chat. So now to provide an overview of our strategy. First, core, our data center infrastructure strategy. DMG is now focused primarily on AI infrastructure. To preface the discussion for AI, we are focused on a business model of providing AI data center co-location services. As typical, contracts provide multi-year revenue streams. While we would consider providing cloud services in the future, we are focused on infrastructure services in the near term. Now to discuss the opportunities. First, Christina Lake. As we announced in a press release earlier in December, we are focused on converting our Christina Lake facility into an AI data center that can provide at least 50 megawatts of critical IT load. As industry data points and in discussions support, there is dwindling available capacity not only for 2026, but also for 2027. We are encouraged that we can fill an industry gap in the near term with available AI capacity. In Canada, the amount of power we can offer in this timeframe puts us in what we believe to be a good position to support large-scale sovereign AI. Since our last earnings call, we have had numerous discussions with off-takers as well as potential partners that have direct relationships with large off-takers. We believe that our 65 megawatts of available power can meet the demand of what some of the new clouds are seeking. We'll provide updates as we make progress. Second, on other sites. Even as we withdrew guidance for a timeframe for the purchase of an 18-acre site in Boardman, Oregon, we are actively working with potential partners to create a pipeline of future data center capacity. It is our goal to enable a pipeline of contracted power with land that is significantly larger than our Christina Lake facility that would become available over the next several years in both Canada and the U.S. Third, on government. Also, for those who have been following the Innovation, Science, and Economic Development, or ISED, 100-megawatt data center request for information program, Yes, DMG did submit an application in conjunction with the Malahat Nation based on developing data centres on our Christine Lake facility and the Malahat Nation's properties. As it is an RFI, we don't expect it to directly result in a government contract or sponsorship, but we are encouraged that the Canadian government is more aggressively seeking partnerships with the industry to build a network of advanced AI data centres across Canada and that we have an opportunity to participate. Lastly, PDCs are prefabricated data centers. Finally, as previously reported, the two megawatts of prefabricated data centers are being shipped to Christina Lake in March. And we plan to set them up as soon as they arrive. We're considering purchasing the remainder eight megawatts that we have an option to purchase as well. Next, Core Plus, our digital asset financial services. Even with the current economics of Bitcoin mining, we're not planning to exit. That being said, we are being cautious about any fleet expansion and will continue to work to refine operations of our current fleet. We also see the opportunity to provide custody services via our systemic trust subsidiary, along with EMG's crypto asset mining hosting services. for others, and in particular for treasuries. We have taken on our first client, Luxfolio, which has a small fleet of script miners that mine Litecoin for its Litecoin DAT. For systemic trust, we have continued to upgrade the platform, whereby we can offer value-added services by integrations. In the coming months, we anticipate we will be able to provide more guidance on revenue growth. For Bitcoin mining, we reiterate our guidance to operate at approximately 1.8 exahash with an efficiency of approximately 21 jewels. TerraPool, we have continued to test TerraPool and remain encouraged that we can expand the use of the pool this year. Helm, we continue to make improvements in our Helm software and anticipate it will be among the first of our software platforms that uses AI agents where a technician could query the platform that would help the techs ensure their fleet operates most optimally. Reactor, we continue to test and upgrade versions of our Reactor software with plans to begin offering hash rate contracts in the coming months. Now for a summary of our strategy. For our core data center strategy, we encourage that the conversation of Christina Lake to an AIDA sender fills a timely industry need. We are focused on making this happen. For our core plus digital asset financial services, systemic trust remains the cornerstone of this strategy. Our long-term goal remains for revenue from custody and other financial services to be a driver of our business. Now I'll hand it over to Stephen to review the company's performance.

Thank you, Sheldon. I'm Steve Eliskew, DMG COO. Now to review our financial results. In the December quarter, revenue decreased 2% sequentially to $11.2 million. As self-mining revenue decreased 16% on 13%, lower network Bitcoin per hash generation and 12% lower average Bitcoin price. partly offset by a 10% higher hash rate. The decline in self-mining revenue is mostly offset by a one-time $1.5 million energy incentive. For our mining operations in the December quarter, we received 68.5 Bitcoin from mining. a decrease of 5% from the September quarter, with an average hash rate of 1.76 exahash, up 10% sequentially and 9% year-over-year, with a fleet efficiency of 22 joules per terahash. We expect our hash rate to remain about steady and our fleet efficiency to slightly improve in the March quarter. Hosting revenue decreased 2% sequentially to $0.1 million in the December quarter. We expect our existing hosting revenue to decline to near zero in fiscal 26, but hosting has the potential to support new clients, as we recently brought on Luxfolio, Small Fleet of Script Miners, In conjunction with expectations, it could be onboarded as a systemic trust client, holding in custody at least part of its Litecoin digital asset treasury. Operating and maintenance costs decreased 2% sequentially to $6.7 million in December quarter, as our 8% sequential increase in energy consumption was more than offset by an 11% reduction in the cost of energy. Well, typically we would expect the winter months to result in an increase in energy rates. This year has been mild in western North America, and hence our energy costs have been low even through February. Our margin percentage on our revenue, less operating and maintenance costs, was 40% in December quarter, flat from 40% in the September quarter, as we benefited from the energy incentive. Our energy cost to mine a Bitcoin was about 64K US, flat from the September quarter, as decreased Bitcoin per hash was offset by lower energy rates. As a proxy for cash flow from our business, which assumes we're selling 100% of our generated Bitcoin, our earnings before other items, excluding depreciation, amortization and stock-based comp was $1.9 million, or 17% of revenue on a percentage basis in the December quarter, a decrease from $3.5 million and 30% in the September quarter, but more in line with prior quarters as we benefited from a one-time R&D expense adjustment in the September quarter. Our cash flow from operations was minus $5.6 million in the December quarter as we sold only 12% of the Bitcoin we mined so that we could build up our Bitcoin balance. We remain bullish on Bitcoin in the long run, notwithstanding the current downturn. Non-mine expenses, excluding depreciation, amortization, and stock-based comp, were $2.5 million in the December quarter, in line with recent quarters prior to the September quarter, as we recognized the one-time R&D expense adjustment previously cited. We will continue to manage expenses by rationalizing our staff and hiring only where it can directly help us drive revenues. Our earnings before other items was minus 2.1 million in the December quarter versus minus 1.5 million in the September quarter, which included the one-time R&D adjustment. Net income in the December quarter was minus 2.2 million, or minus one cent per share. Regarding our balance sheet, our cash short-term investments plus Bitcoin holdings on December 31st was $58.6 million, down 10% from the September quarter, mainly on the decreased value of Bitcoin. With the decrease in value of our digital asset holdings, And the increase in debt, working capital increased 25%, decreased 25% to $39.5 million from the September quarter. The value of our property and equipment and long-term deposits decreased 6% to $50.5 million from from the end of the September quarter as depreciation exceeded our capital additions. Accordingly, our total asset base decreased to $122 million from the end of the September quarter. Book value was $98.5 million, or $0.48 per share. Our Signum loan balance was $16.2 million at the end of December quarter. As we pause liquidations and utilize this debt facility to support rebuilding our Bitcoin balance. However, we do not intend to utilize our debt facility in the near term, but rather we'll look to pay it down. Our Bitcoin balance rose from an unaudited low of 307 at the end of July to 414 at the end of January. For at least the near term, we will not be providing guidance as to how we manage our Bitcoin holdings, as we want maximum flexibility as to how we utilize our Bitcoin, given the increased market uncertainty. In the December quarter, we sold eight Bitcoin or 12% of our mined output, generating 1.2 million of cash. Regarding raising new capital for a future where AI could be a major component of our business, The bulk of our capital raising would most likely be debt instruments tied to client contracts. I will now hand the call back to Sheldon to summarize our prepared comments, and we will answer questions. Sheldon?