DMG Blockchain Solutions Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the DMG Blockchain Solutions Q2 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 Liskew, 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 EMG Blockchain Solutions' most recently filed periodic reports and the company's recent press releases, particularly the cautionary statements within them. The content of this call contains time-sensitive information that is accurate only as of today, May 27, 2026. Except as required by law, EMG 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 Stephen. Sheldon?

Thank you, Adrian. Good afternoon, and thanks to everyone who's joined the call today. My name is Sheldon Bennett, and I'm 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 accomplishment. 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 in recent quarters. 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. We will end the call with our Q&A session based on questions submitted to us prior to the call, as well as from those using Zoom chat. So now to provide an overview of our strategy. First core, our data center 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. Now to discuss the opportunities. First, for Christina Lake's Bitcoin mining, we expect to operate at about 1.6 exahash and 21 joules per terahash during the warmer summer months. For Christina Lake's AI transformation strategy, we continue to focus on providing at least 50 megawatts of critical IT load, and we are pleased with our progress to date. Also note that we announced that we received verbal approval from our utility for an additional 10 megawatts of non-firm power. This approval raised Christina Lake's total available power capacity to 75 megawatts. We also note that we have filed an application with utility for an additional 150 megawatts of firm power. However, we expect this to be a long process in today's energy-strained environment. Additional sites. We have been exploring development of other sites in both BC and other parts of Canada for additional AI data centers. We know that we need to grow beyond Christina Lake in the longer term, but our immediate focus is securing an off-taker for Christina Lake. Our goal is to line up a pipeline of power that will demonstrate our growth potential. Outside of the announced site in Borden, Oregon, which is still on hold, We are focused mainly on developing other sites within Canada where we believe we can be a differentiated leader. On government, regarding the Innovation Science and Economic Development, or ISED, 100 megawatt data center request for information, we don't have an update on the government's progress at this time. Malahat. Regarding our definitive agreement with the Malahat Nation, specifically for 30 megawatts of AI data center capacity between the two parties, we are encouraged and anticipate completing this agreement in the coming months. We believe our relationship with the Malahat will help facilitate penetration into the public sector and will be instrumental to any longer-term effort with both federal and provincial agencies. We see this working as a hybrid of traditional data center services mixed with customer-focused AI needs. Regarding our PDCs, our prefabricated data centers. The initial purchase of two megawatts of prefabricated data centers have been shipped to the Crystal Lake site in March, and we are working to set them up by later this year. As well, we are working to secure off-take clients. We are still considering purchasing the remainder 8 megawatts that we have an option to purchase. Next, comments on CorePlus, our digital asset financial services. For systemic trust, we have been focused on integration of third-party value-added services. In the coming months, we anticipate that we will be able to provide information on its operations. For TerraPool, we have continued to test TerraPool and believe we can expect the use of the pool this year. We are encouraged as we believe we may have a market opportunity to sell Bitcoin generated from TerraPool at a premium, which should enable an economically viable method to mine with pool members being more than compensated for pool fees for the carbon neutral hash rate. We'll provide updates as we make progress. We have engaged a third party to help us with this effort, which could be a catalyst for enabling revenue from our carbon neutral Bitcoin ecosystem. Next, Helm. Helm has become an integral part of our operations with new features that we believe will be appealing to others who use TerraPool. We're bundling Helm with TerraPool. Reactor. We have been testing Reactor for several weeks, and we anticipate to be able to offer hash rate contract services in the coming months and included as part of our carbon-neutral Bitcoin ecosystem. We are focused on improving reactors' usability to easily manage multiple simultaneous hash rate contracts. Now for a summary of our strategy. For our core data center strategy, we are encouraged by our progress to transform Christina Lake into an AI data center. For Core Plus Digital Asset Financial Services, we continue to build a foundation of products and services that will allow us to have a comprehensive offering that can drive new revenue. Now I'll hand it over to Stephen to review the company's performance.

Thank you, Sheldon. I'm Steve Oliskew, DMG COO. Now to review our financial results. In the second quarter of fiscal 2026, revenue decreased 35% sequentially to 7.3 million. Self-mining revenue decreased 24%, mainly on a 25% lower average Bitcoin price, along with the prior quarter's 1.5 million energy incentive being a one-time event. For our mining operations in the March quarter, we received 68.8 Bitcoin for mining, about flat versus the prior quarter, with an average hash rate of 1.7 exahash, down 4% sequentially with fleet efficiency of 21.4 joules per terahash, a 3% sequential improvement. We expect our hash rate to decrease modestly in the June quarter as we lower the operating power and hence the hash rate of most of our non-hydro fleet, to best deal with the seasonally warmer temperatures. As we are already tuned for optimal efficiency, we expect fleet efficiency to remain steady. Hosting revenue is about flat at 0.1 million in the March quarter. We expect hosting revenue to remain steady in the current quarter. Operating and maintenance costs decreased 23% sequentially to 5.2 million in the March quarter, as our energy consumption was down 9% sequentially, and our cost of energy declined 17% sequentially. We cited in a recent press release that our cost of non-firm energy has been in the range of 3.5 to 5 cents Canadian per kilowatt hour delivered to DMG's substation over the past few months. While this has been a boon to supporting our margins during a difficult period for the industry, our costs will not necessarily stay down at these levels through the summer. Our margin percentage on our revenue, less operating and maintenance costs, was 29% in the March quarter, down from 40% from the prior quarter, which benefited from the one-time $1.5 million energy incentives. our energy cost to mine a Bitcoin was about 50K US, down from the prior quarter at about 65K, as we benefited from 17% lower energy rates, 6% lower network difficulty, and 3% higher fleet efficiency. 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 1.4 million, or 19% of revenue on a percentage basis in the March quarter, a decrease of 1.9 million in the prior quarter. Our cash flow from operations was about zero in the March quarter when we sold slightly more Bitcoin than we earned. Non-mine expenses, excluding depreciation, amortization, and stock-based comp, were $0.8 million in the March quarter as we benefited from the capitalization of R&D. Management determined that the recognition criteria for an internally generated intangible asset had been met for the systemic trust custody platform. As of March 31st, capitalized development costs totaled $1.4 million, which includes costs from the most recent as well as prior quarters. The cost was moved to the balance sheet under intangible assets and will be amortized over time. Our earnings before other items was minus 2 million in the March quarter versus minus 2.1 million the prior quarter. Net income in the March quarter was minus 3.5 million or minus 2 cents per share. Regarding our balance sheet, our cash short-term investments plus Bitcoin holdings on March 31st was $47.4 million, down 19% from the prior quarter, mainly on the decreased value of Bitcoin. With this and the increase in debt, working capital decreased 30% from the prior quarter to $27.6 million. The value of our property and equipment and long-term deposits decreased 6% to $47.6 million from the end of the prior quarter as depreciation exceeded our capital additions. Accordingly, our total asset base decreased to $109.9 million. Book value is $85.3 million, or $0.41 per share. Our single loan balance was $18.9 million at the end of the March quarter. We do not expect to draw from the facility in the near term, and we'll look for opportunities to pay it down. In the March quarter, our Bitcoin balance decreased by 5.2 Bitcoin from the prior quarter to 397.7 Bitcoin. In the March quarter, we sold 74 Bitcoin, or 108% of our mined output, generating 7.5 million in 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 dead instruments tied to client contracts. We have actively engaged investment banks to keep them up to date on our strategy and potential fundraising needs. We continue to see a positive market for raising capital, for the construction of AI data centers, assuming investment-grade off-takers or backstops. I will now hand the call back to Sheldon to summarize our prepared comments, and we will answer questions. Sheldon?