Q3 2025 Sato Technologies Corp Earnings Call

Joining us today I'm homeowners that had the cofounder and CEO of <unk> technologies.

For the past eight years, we've been one of the most efficient providers of Ipass almonds computing power in North America.

And as a public company listed on the <unk> venture exchange, we've done it with transparency and discipline.

Today before kind of walk you through the financial results I want to take a few minutes to frame the big picture.

What is happening in our industry, how the market has evolved and why settle is now uniquely positioned to extend on bitcoin mining into the next major growth you are AI compute infrastructure.

As always our presentation include forward looking statements are pleased with our reflect our expectation I mean, these documents reflect our expectation and assumption form our future events and of course, they involve risk and uncertainties.

We encourage everyone to review our full filing them setup, plus and nothing here should be taken as a guarantee of future performance.

So that's all been operating in Quebec, since 2017, and today, we learned a fully built permitted and grid connected 20 megawatt Idaho power data center.

Over the years, we've become one of the most efficient the big miners in the world constantly ranking near the top in industry.

And because <unk> are unique for us.

We've built deep expertise in obtained including and power management.

The same skills are required today for identity GPU computing.

This infrastructure gives us a unique advantage as we expand into AI compute.

Our vision is simple we want to deliver scalable efficient digital infrastructure built on renewable energy.

The world no hands on compute and the most energy intensive workloads from AI to keep the Rafi to HBC require exactly what we have mastered reliable power cooling to operational excellence.

At the same time, our digital asset Treasury strategy aligns us with long term value creation in both bighorn and AI.

This combination hard infrastructure aggressive strategy digital treasury.

Is what positions settle for the next decade.

Before we get into the numbers I want to highlight the work the team has done this year.

First we maintained positive mining profits even in one of the toughest post housing environments evolve we got it.

Net 12 difficulty, it's new time highs and our cost structure and efficiency allowed us to stay profitable.

So Don we continued disciplined cost reduction lower opex, lower repairs and lower depreciation.

Third we continued to execute efficiently.

Non time remain around 1% in Q3 consistent with the strong performance we delivered in Q2.

Now, let's talk about the transition.

Our AI initiative is well underway with completing the early design work for a factory one of the high density GPU facilities at three properties up to 20 megawatts of hydropower.

And subject to the financing we are actually working on our first step will be to deploy eight GPU notes the segments, where demand is expert at four influenced fine tuning and enterprise AI workloads.

It's five to deploy capital efficient and other new generating from day one.

At the same time, we continue building our digital assets.

Treasury the strategy centered on bitcoin and AI narrative networks at defensible, which further strengths our long term positioning.

And finally, we secured a three month grace period on our loan, giving us the runway needed to advance the sundial plan.

To understand why this transition makes sense you have to look at what's happening in Canada, and especially in Quebec.

We have some of the cleanest cheapest electricity on us.

99% of Honeywell, Idaho, and all in energy prices on Fox cents per kilowatt hour.

That is unmatched in North America.

We're also have ICD fiber political stability and one of the strongest AI ecosystem in the wall and called in Montreal.

And now as announced by the Premier Quebec is actively pushing for the development of AI data centers.

This is a clear signal the province wants to attack the next wave of computer infrastructure.

We are already here, we are already built and we are ready.

So it's always one of the very few public companies globally that already controls large scale operational megawatts that are fully energized today.

We have a 20 megawatt of secured Idaho power with a clear path to expand toward more megawatts over the 45 analog up down even more with hydro Quebec.

We have a fully permitted grid connected facility no construction timelines no delays no waiting for approvals.

We run on 100% of renewable energy in a province that is point fast secure and actively supporting AI.

And again.

Our all in power cost on four cents gives us a structural advantage against almost every data center operator in North America.

This is why we can move fast and why we shift into GPU compute is not theoretical it is real and it is happening.

I'm now going to leaves us as a floor to Kyle and he will go through the Q3 number we have released yesterday.

Thanks, Tony.

As mentioned I'm going to go through with you. The Q3 results, which are the three months ended September 30th in the nine months ended September 30 is 425 compared to 24.

These are all in Canadian dollars and in accordance with IRS except for.

The three performance indicators, which we'll talk about compute power.

EBITA adjusted EBITA. So those are non <unk> measures.

And also as <unk> mentioned, we did courage you to read our full financial statements and MD&A on SEDAR plus.

For full details in Europe.

We're going to just go through some of the highlights here.

Start with for revenues for the three months ended September 30, we had $3 3 million.

Compared to $2 6 million and 24 and for the nine months ended September 30, we had $9 3 million compared to $12 8 million in the same period in 2004.

So for the three months, we earned 21 bitcoin.

<unk> to 31 in 'twenty four and for the nine months, we earned 65 point compared to 161.

In the same period of 24.

The major impacts on the bitcoin mining operations for the periods.

One as Rami mentioned in April 24.

They are having event occurred.

Basically cutting the rewards in half two.

Throughout 'twenty five.

Network cash rate continued to reach all time highs. So that also reduced the number of bitcoin earned per unit of computing power.

Both those obviously impacted the entire industry.

Negatively not just us just including us and our peers.

In June 24, we had a fire at our facility.

Which resulted in approximately <unk> <unk>.

Imaging.

Are some of our equipment and there was a loss of $5 four present to.

Operating capacity, which has not been replaced yet.

So those all negatively impacted the bitcoin and revenue now.

Now the price of Bitcoin did increase although it's been very volatile and subsequent to September 30.

Kris but throughout.

25, it was a lot higher than in 2004, so the reduction in bitcoin earned.

<unk> was offset by the increase in the price of Bitcoin. So you can see are for the third quarter our revenues increased.

Cost of revenue.

Revenue the main items in there the biggest item is electricity, which we have a good low cost there. So the reduction you can see in both the three months and the nine months are mainly due to <unk>.

Decrease in depreciation and noncash item.

And resulted in a.

You want to go back to the previous slide here, our gross profit.

For Q3, a positive growth gross profit of 381000 compared to a <unk>.

Negative gross profit or gross loss of $5.

In the third quarter of 2004.

Looking at our operating income.

Okay.

We're always continuing to monitor our cost and reduce costs, where we can without impacting operations. So you can see for the third quarter, we had a small loss of 60000.

Significantly reducing our loss from the Q3 and 24 one.

$1 million.

Yeah.

Finally, the net.

The loss for the period.

We had 284000 loss.

Production from operating income is basically our interest on R.

Our loans as well as some unrealized foreign exchange.

And realized foreign exchange losses on conversion from U S D to Canadian dollar.

So you can see again in Q3, we significantly reduced our loss from 24 in Q3 of $4 seven to.

A marginal loss of 284000 in Q3 25.

And we ended up with a positive EBITDA, which will look at years.

Can see this slide represents our key performance indicators.

Compute power profit, which mainly takes our gross profit.

And then removes depreciation.

EBITDA and adjusted and adjusted.

Adjusted EBITA.

Adjusted EBITA for any noncash items like share based payments and unrealized gains or losses.

So if we look at 25 quarter to quarter.

From Q1 to Q3 in each of our.

Key performance indicators, we have a positive.

Trend.

So we're very encouraged by that up until Q3, but again the crypto environment in <unk> environment has been extremely volatile with at prices between.

Increasing and decreasing as well as the increase in the highest rate.

This slide shows our cash and digital asset position at the end of Q3.

Totaling $2 1 million split between our digital assets is about 70% in cash 30% split.

And met our slide here is just showing our capital structure at September 30th.

Our share price was about $15.05.

Basic shares outstanding we continue to have a low share count of $73 3 million.

Fully diluted $80 4 million and then you could see our tickers on the TSMC.

Sito and on the OTC QB CCP data.

Thank you Kayla as we close I want to take a moment to look at the journey, we've taken over the past eight years, we built a 20 megawatt renewable power compute center from scratch, we operated efficiently for multiple.

With current cycles, we listed the company critically and proved our ability to deliver reliable computing power at scale.

Now we're entering the next phase of phase, where bitcoin AI and identity compute converge.

And were subtle is positioned to play a meaningful role.

Yeah.

Our strategy is simple keep operating efficiently keep transforming <unk> into value and expand into AI in a disciplined focused way.

Thank you for being here today and thank you for your continued support as we build the next chapter of set of technologies.