Q2 2026 Sol Strategies Inc Earnings Call

May 18, 2026

Operator 2: Good afternoon, everyone. Welcome to today's Sol Strategies' fiscal Q2 2026 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. On the call with us today is Mr. Michael Hubbard, Chief Executive Officer, Mr. Doug Harris, Chief Financial Officer, and Mr. Steve Ehrlich, Chief Strategy Officer. At this time, I'd like to turn the conference over to Mr. John Ragozzino with ICR. Please go ahead, sir.

Operator: Please standby. Your meeting is about to begin. Good afternoon, everyone. Welcome to today's SOL Strategies' fiscal Q2 2026 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. On the call with us today is Mr. Michael Hubbard, Chief Executive Officer, Mr. Doug Harris, Chief Financial Officer, and Mr. Steve Ehrlich, Chief Strategy Officer. At this time, I'd like to turn the conference over to Mr. John Ragozzino with ICR. Please go ahead, sir.

Speaker #2: At this time, all participants are in a listen-only mode. After the speakers' prepared remarks, we will conduct a question-and-answer session. On the call with us today is Mr. Michael Hubbard, Chief Executive Officer.

Speaker #2: Mr. Doug Harris, Chief Financial Officer, and Mr. Steve Erlich, Chief Strategy Officer. At this time, I'd like to turn the conference over to Mr. John Ragazino with ICR.

Speaker #2: Please go ahead, sir. Thanks, Bob. Good afternoon, everyone, and thank you for joining Sol Strategies' fiscal second quarter 2026 earnings conference call. Before we begin, I want to remind everyone that certain statements on this call contain forward-looking statements subject to risks and uncertainties.

John Ragozzino: Thanks, Bo. Good afternoon, everyone. Thank you for joining Sol Strategies' fiscal Q2 2026 earnings conference call. Before we begin, I want to remind everyone that certain statements on this call contain forward-looking statements subject to risks and uncertainties. Actual results may differ materially from these statements. We refer you to our latest press release, MD&A, and SEDAR+ filings for a detailed risk factor description and all assumptions. All dollar amounts are in CAD unless otherwise noted. The company assumes no significant events occur outside our normal course of business and that our current trends in digital assets continue. However, listeners should note that crypto markets are volatile and that our business metrics can fluctuate significantly. With that, let me turn it over to Michael Hubbard, Sol Strategies' CEO.

Speaker #2: Actual results may differ materially from these statements. We refer you to our latest press release, MD&A, and Cedar Plus filings for a detailed risk factors description, and all assumptions.

Speaker #2: All dollar amounts are in Canadian dollars unless otherwise noted. The company assumes no significant events occur outside our normal course of business and that our current trends in digital assets continue.

Speaker #2: However, listeners should note that crypto markets are volatile, and that our business metrics can fluctuate significantly. With that, let me turn it over to Michael Hubbard, Sol Strategies CEO.

Speaker #3: Thanks, John. Good afternoon, everyone, and thank you for joining us. The first half of our fiscal year 2026 covered October through March, and a lot has happened during this period and in the week since.

Michael Hubbard: Thanks, John. Good afternoon, everyone, thank you for joining us. The H1 of our fiscal year 2026 covered October through March, and a lot has happened during this period and in the weeks since. We cleaned up our capital structure, strengthened the board, and launched our liquid staking token, stake SOL. We acquired the Zyga zero-knowledge technology through the Darklake transaction and signed a definitive agreement to acquire Houdini Swap. We're going to walk through all of it. On the board and leadership side, we added crypto industry veteran Les Borsai and public company veteran Dennis Logan as directors, and most recently named Jon Matonis as Chairman. Jon has been in the blockchain industry since the early 2010s and brings deep experience and relationships to the role. I'm also glad to have the interim title behind me.

Speaker #3: We cleaned up our capital structure, strengthened the board, and launched our liquid staking token, Stakesole. We acquired the Ziga Zero Knowledge technology through the Dark Lake transaction and signed a definitive agreement to acquire HoudiniSwap.

Speaker #3: We're going to walk through all of it. On the board and leadership side, we added crypto industry veteran Les Paulsai and public company veteran Dennis Logan as directors.

Speaker #3: And most recently, named John Matonis as chairman. John has been in the blockchain industry since the early 2010s and brings deep experience and relationships to the role.

Speaker #3: I'm also glad to have the interim title behind me. The board appointed me permanent CEO on March 31, and I'm focused on building from here.

Michael Hubbard: The board appointed me permanent CEO on March 31st, I'm focused on building from here. Alongside that, we formalized Steve Ehrlich as Chief Strategy Officer. Steve has been a meaningful contributor to our capital market strategy for some time, and having him in a full-time leadership role is a real asset. Now, let me talk through what we've actually been building. In January of this year, we launched stake SOL, our liquid staking token on the Solana blockchain. Here's the problem it solves. Native staking on Solana requires users to lock up their SOL, wait up to 2 days to unstake, and they have to choose between earning yield and deploying capital elsewhere. stake SOL changes that. When SOL holders stake through our protocol, they receive stake SOL, a receipt token representing their staked position that continues to earn accruing staking rewards.

Speaker #3: Alongside that, we formalized Steve Erlich as Chief Strategy Officer. Steve has been a meaningful contributor to our capital markets strategy for some time, and having him in a full-time leadership role is a real asset.

Speaker #3: Now, let me talk through what we've actually been building. In January of this year, we launched Stakesole, our liquid staking token on the Solana blockchain.

Speaker #3: Here's the problem it solves: native staking on Solana requires users to lock up their SOL, wait up to two days to unstake, and they have to choose between earning yield and deploying capital elsewhere.

Speaker #3: Stakesole changes that. When SOL holders stake through our protocol, they receive Stakesole, a receipt token representing their staked position that continues to earn accruing staking rewards.

Speaker #3: That token can be held, traded, used as collateral in DeFi applications, or deployed for additional yield—all while the underlying SOL keeps earning. What's unique about Stakesole is that it allocates SOL across validators using our own WizScore methodology from Stakewiz.com, which we own and operate.

Michael Hubbard: That token can be held, traded, used as collateral in DeFi applications, or deployed for additional yield, all while the underlying SOL keeps earning. What's unique about stake SOL is that it allocates SOL across validators using our own Wiz Score methodology from stakewiz.com, which we own and operate. The Wiz Score intelligently ranks validators based on performance, security, and decentralization metrics. There are up to 75 validators in our current set. At launch, we had integrations with Kamino, Orca, Loopscale, Squads, and Sanctum. By the end of March, stake SOL had approximately 768,000 SOL deposited into the protocol, equivalent to roughly $61 million or CAD 83 million at the time. The company receives 5% of all staking rewards accrued to the pool. This is a new revenue line sitting alongside our treasury stake and delegated stake. Our broader validator network continues to perform well.

Speaker #3: The WizScore intelligently ranks validators based on performance, security, and decentralization metrics. There are up to 75 validators in our current set. At launch, we had integrations with Camino, Orca, Loopscale, Squads, and Sanctum.

Speaker #3: By the end of March, Stakesole had approximately 768,000 SOL deposited into the protocol, equivalent to roughly $61 million USD, or $83 million Canadian dollars at the time.

Speaker #3: The company receives 5% of all staking rewards accrued to the pool. This is a new revenue line sitting alongside our treasury stake and delegated stake.

Speaker #3: Our broader validator network continues to perform well. We estimate that just over 5% of all the staking wallets on Solana are delegating to a Sol Strategies-managed validator.

Michael Hubbard: We estimate that just over 5% of all the staking wallets on Solana are delegating to a Sol Strategies' managed validator. On the technology side, we acquired the assets of Darklake Labs in April 2026, including the intellectual property behind Zyga, a zero-knowledge proof engine built natively for Solana. The team has joined us as well. Vitor Py Braga, who brings experience from Meta and IBM, joins us as Director of Engineering and takes over technical leadership. Amber Hales joins with strong compliance and operations background. Together, they add real depth. Zyga is designed for privacy preserving execution with dynamic inputs. On top of the engine, the team has built an application specifically for dynamic slippage protection that executes trades privately. We see significant potential here, and we'll share more as the work develops. That technology connects directly to our next transaction.

Speaker #3: On the technology side, we acquired the assets of Dark Lake Labs in April 2026, including the intellectual property behind Ziga, a zero-knowledge proof engine built natively for Solana.

Speaker #3: The team has joined us as well. Vitor Paibraga, who brings experience from Meta and IBM, joins us as Director of Engineering and takes over technical leadership.

Speaker #3: Amber Hales joins with a strong compliance and operations background. Together, they add real depth. Ziga is designed for privacy-preserving execution with dynamic inputs. On top of the engine, the team has built an application specifically for dynamic slippage protection that executes trades privately.

Speaker #3: We see significant potential here and will share more as the work develops. That technology connects directly to our next transaction. Earlier this month, we announced a definitive agreement to acquire HoudiniSwap for $18 million.

Michael Hubbard: Earlier this month, we announced a definitive agreement to acquire Houdini Swap for $18 million. Houdini Swap is a non-custodial, privacy-enabled cross-chain swap aggregator operating across more than 100 blockchains and more than 30 exchanges, both centralized and decentralized. More than half of its trailing 12-month transaction volume touched Solana. We expect to close by the end of May. What we've really been doing over the past year is building up the stack. Validators are the foundation, the infrastructure layer that the Solana network runs on. We established a significant foothold there early. With stake SOL, we moved up into user-facing products, inserting ourselves between end users and validators and creating deeper touch points across DeFi.

Speaker #3: HoudiniSwap is a non-custodial, privacy-enabled cross-chain swap aggregator operating across more than 100 blockchains and more than 30 exchanges, both centralized and decentralized. More than half of it is sorry, more than half of its trailing 12-month transaction volume touched Solana.

Speaker #3: We expect to close by the end of May. What we've really been doing over the past year is building up the stack. Validators are the foundation.

Speaker #3: The infrastructure layer that the Solana network runs on—we established a significant foothold there early. With Stakesole, we moved up into user-facing products, inserting ourselves between end users and validators.

Speaker #3: And creating deeper touchpoints across DeFi. With the Ziga technology, we stepped further up into product and technology development, adding privacy-preserving execution capability that we believe has broad applications.

Michael Hubbard: With the Zyga technology, we stepped further up into product and technology development, adding privacy-preserving execution capability that we believe has broad applications. With Houdini Swap, we will move up again, adding a cross-chain routing business with proven revenue, real distribution, and significant Solana exposure. Each layer connects to the ones below it. That's deliberate. What I'd say at a high level is this: the Solana blockchain is growing. Transaction volume is growing. The financial applications being built on Solana, trading, stablecoins, prediction markets, and perpetuals are growing. We've spent the last year building infrastructure that sits across multiple layers of that stack. We believe we're well-positioned for what comes next. With the Clarity Act advancing through US legislation, we anticipate greater certainty around key regulatory questions. That's something we greatly look forward to.

Speaker #3: And with HoudiniSwap, we will move up again, adding a cross-chain routing business with proven revenue, real distribution, and significant Solana exposure. Each layer connects to the ones below it.

Speaker #3: That's deliberate. What I'd say at a high level is this: the Solana blockchain is growing. Transaction volume is growing. The financial applications being built on Solana—trading stablecoins, prediction markets, perpetuals—are growing.

Speaker #3: We've spent the last year building infrastructure that sits across multiple layers of that stack. We believe we're well positioned for what comes next. With the Clarity Act advancing through US legislation, we anticipate greater certainty around key regulatory questions.

Speaker #3: And that's something we greatly look forward to. Healthy regulation that provides clarity, end-user protection, and protects innovation is essential for this industry to reach its full potential.

Michael Hubbard: Healthy regulation that provides clarity, end-user protection, and protects innovation is essential for this industry to reach its full potential. With that, I'll pass it to Steve.

Speaker #3: With that, I'll pass it to Steve.

Speaker #1: Thanks, Michael. Good afternoon, everyone. Over 30 years in financial services, I've watched infrastructure reshape markets completely. On the trading side, we went from calling your broker, to orders being electronically routed to the exchange floor, to a 24/7 market running on the most efficient, scalable blockchain in existence.

Steve Ehrlich: Thanks, Michael. Good afternoon, everyone. Over 30 years in financial services, I've watched infrastructure reshape markets completely. On the trading side, we went from calling your broker to orders being electronically routed to the exchange floor to a 24/7 market running on the most efficient, scalable blockchain in existence, Solana. The product categories keep expanding from equities, options, and futures to prediction markets and perpetual futures. Volume keeps growing, and so does the reliance on Solana. The same pattern is playing out in money movement and banking, from bank tellers to ATMs to stablecoin transfers. Where is that volume going? The Solana blockchain. That conviction in Solana is the dominant financial infrastructure layer and what's driving our acquisition strategy. The Darklake transaction and the pending Houdini Swap acquisition are the start of a deliberate build-out of assets that improve and enhance what we've already built.

Speaker #1: Solana. And the product categories keep expanding. From equities, options, and futures, to prediction markets and perpetual futures. Volume keeps growing, and so does the reliance on Solana.

Speaker #1: The same pattern is playing out in money movement and banking. From bank tellers to ATMs to stablecoin transfers. Where is that volume going? The Solana blockchain.

Speaker #1: That conviction in Solana as the dominant financial infrastructure layer is what's driving our acquisition strategy. The Dark Lake transaction and the pending HoudiniSwap acquisition are the start of a deliberate build-out of assets that improve and enhance what we've already built.

Speaker #1: On HoudiniSwap specifically, as Michael mentioned, more than 50% of the transactions touch Solana. What we see is the opportunity to own a cross-chain, API-based, compliant transaction network with significant existing distribution across core wallets.

Steve Ehrlich: On Houdini Swap specifically, as Michael mentioned, more than 50% of the transactions touch Solana. What we see is the opportunity to own a cross-chain, API-based compliant transaction network with significant existing distribution across core wallets. The team has done a strong work building that distribution layer. We see real opportunity to expand the product suite into new traded markets and to connect it with our existing validator network and liquid staking products. Looking further out, vaults, real-world asset tokenization, stable coin infrastructure, and RPC technology all remain interesting to us. The goal is a suite of easily accessible APIs across the Solana economy, infrastructure that lets any wallet or institution participate while benefiting from a relationship with a trusted, compliant partner. I've been part of several businesses that grew significantly and genuinely excited about where we're headed.

Speaker #1: The team has done strong work building that distribution layer. We see real opportunity to expand the product suite into new traded markets and to connect it with our existing validator network and liquid staking products.

Speaker #1: Looking further out, Vault's real-world asset tokenization, stablecoin infrastructure, and RPC technology all remain interesting to us. The goal is a suite of easily accessible APIs across the Solana economy infrastructure that lets any wallet or institution participate while benefiting from a relationship with a trusted, compliant partner.

Speaker #1: I've been part of several businesses that grew significantly and am genuinely excited about where we're headed. Closing HoudiniSwap by the end of the month is the next milestone.

Steve Ehrlich: Closing Houdini Swap by the end of the month is the next milestone. With that, I'll turn it over to Doug.

Speaker #1: With that, I'll turn it over to Doug.

Speaker #3: Thanks, Steve. And good afternoon, everyone. I'm going to start with a quick picture of our balance sheet. As of March 31, 2026, we had approximately $60.6 million of cryptocurrencies, $22 million of intangible assets, and about $350,000 of cash on our balance sheet.

Doug Harris: Thanks, Steve, good afternoon, everyone. I'm going to start with a quick picture of our balance sheet. As of 31 March 2026, we had approximately CAD 60.6 million of cryptocurrencies, CAD 22 million of intangible assets, and about CAD 350,000 of cash on our balance sheet. During the period, we also reduced our liabilities by approximately CAD 9 million as we paid off significant debt to our former chairman, which is part of our corporate initiative to make the company more capital efficient. On the income statement, the H1 numbers included a loss on the disposition of cryptocurrencies, which is, for the most part, an exchange of Solana for other cryptocurrency tokens, mainly Solana liquid staking tokens to enhance yield rather than a pure sale of Solana for cash.

Speaker #3: During the period, we also reduced our liabilities by approximately $9 million as we paid off significant debt to our former chairman, which is part of our corporate initiative to make the company more capital efficient.

Speaker #3: On the income statement, the six-month numbers included a loss on the disposition of cryptocurrencies, which is for the most part an exchange of Solana for other cryptocurrency tokens, mainly Solana liquid staking tokens, to enhance yield rather than a pure sale of Solana for cash.

Speaker #3: Under IFRS accounting rules, the exchange must be accounted for as a gain or loss based on the carrying costs at the time of the conversion.

Doug Harris: Under IFRS accounting rules, the exchange must be accounted for as a gain or loss based on the carrying costs at the time of the conversion. For the six months ended 31 March 2026, it was approximately a CAD 22 million loss, and for the three months ended 31 March 2026, it was a CAD 15 million loss. The majority of this amount is related to the launch of our liquid staking token in January 2026. If you exclude these amounts from our results, revenue from our own stake and third-party validators for the six-month period was approximately CAD 3.3 million, and for the three-month period, approximately CAD 1.2 million.

Speaker #3: For the six months ended March 31, 2026, it was approximately a $22 million loss, and for the three months ended March 31, 2026, it was a $15 million loss.

Speaker #3: The majority of this amount is related to the launch of our liquid staking token in January 2026. If you exclude these amounts from our results, revenue from our own stake and third-party validators for the six-month period was approximately $3.3 million.

Speaker #3: And for the three-month period, approximately $1.2 million. Also on the income statement, our six-month numbers include some significant non-cash expenses totaling approximately $77 million.

Doug Harris: Also on the income statement, our 6-month numbers include some significant non-cash expenses totaling approximately CAD 77 million, which consist of a CAD 12.1 million write-down of our validators, CAD 4.7 million of amortization expense on the validators, CAD 2.2 million of share-based compensation expenses, CAD 1.7 million of interest expense, mostly paid in stock, and a CAD 56.5 million revaluation loss on digital assets. The latter reflecting the decline in price of Solana from approximately $208 at the beginning of October 2025 to approximately $83 at 31 March 2026. Analyzing our existing operating business shows that at lower Solana prices, our 6-month operating loss on the business is approximately CAD 2.6 million.

Speaker #3: Which consist of a $12.1 million write-down of our validators, $4.7 million of amortization expense on the validators, $2.2 million of share-based compensation expenses, $1.7 million of interest expense—mostly paid in stock—and a $56.5 million revaluation loss on digital assets.

Speaker #3: The latter reflecting the decline in price of Solana from approximately $208 USD at the beginning of October 2025 to approximately $83 USD on March 31, 2026.

Speaker #3: Analyzing our existing operating business shows that at lower Solana prices, our six-month operating loss on the business is approximately $2.6 million. We continue to take steps to reduce our operating expenses, including some one-time legal costs incurred during the six-month period, to ensure we can get closer to breakeven on our validator business in the current environment.

Doug Harris: We continue to take steps to reduce our operating expenses, including some one-time legal costs incurred during the six-month period, to ensure we can get closer to breakeven on our validator business in the current environment. We are excited about the Houdini Swap transaction and believe that upon closing, it will add significant revenue and profits to our business and materially change our future financial statements. With that, I will hand it back to Michael.

Speaker #3: We are excited by the we are excited about the HoudiniSwap transaction and believe that upon closing, it will add significant revenue and profits to our business and materially change our future financial statements.

Speaker #3: With that, I will hand it back to Michael.

Speaker #1: Thank you, Doug and Steve. And thank you all for joining us today. We're excited about the pending Houdini closing at the end of the month and the long-term value it brings to our business.

Michael Hubbard: Thank you, Doug and Steve. Thank you all for joining us today. We're excited about the pending Houdini closing at the end of the month and the long-term value it brings to our business. The future of Sol Strategies is very exciting. We look forward to sharing the results next quarter. We are thrilled to be positioned to capture the growth of the Solana and digital asset economies, to be ready to service institutions and traders who need access, priority, privacy, and execution quality. With that, we open it up to any questions listeners may have.

Speaker #1: The future of Sol Strategies is very exciting, and we look forward to sharing the results next quarter. We are thrilled to be positioned to capture the growth of the Solana and digital asset economies, to be ready to service institutions and traders who need access, priority, privacy, and execution quality.

Speaker #1: With that, we open it up to any questions listeners may have.

Speaker #4: Thank you, Mr. Hubbard. Ladies and gentlemen, at this time, if you do have any questions or comments, please press star one. And if your question has been addressed, you may remove yourself from the queue.

Operator 2: Thank you, Mr. Hubbard. Ladies and gentlemen, at this time, if you do have any questions or comments, please press star one. If your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, that's star one for questions, and we'll pause 1 moment to allow everyone a chance to respond. We'll go first this afternoon to Gareth Gacetta at Cantor Fitzgerald. Gareth, please go ahead.

Operator: Thank you, Mr. Hubbard. Ladies and gentlemen, at this time, if you do have any questions or comments, please press star one. If your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, that's star one for questions, and we'll pause 1 moment to allow everyone a chance to respond. We'll go first this afternoon to Gareth Gacetta at Cantor Fitzgerald. Gareth, please go ahead.

Speaker #4: By pressing star two. Once again, that's star one for questions, and we'll pause one moment to allow everyone a chance to respond. We'll go first this afternoon to Gareth Gacetta.

Speaker #4: At Cantor Fitzgerald, Gareth, please go ahead.

Speaker #5: Hi, guys. Thanks for taking the question. I wanted to touch on the kind of products and timelines for Dark Lake and Houdini. Could you maybe dive a little deeper on where you see the greatest opportunity from a product perspective in the near term, and also which of those products you might see the greatest monetization opportunity from?

Gareth Gacetta: Hi, guys. Thanks for taking the question. I wanted to touch on the kind of products and timelines for Darklake and Houdini. Could you maybe dive a little deeper on where you see kind of the greatest opportunity from a product perspective in the near term and also which of those products you might see the greatest monetization opportunity from?

Speaker #1: Yeah, absolutely. Thanks, Gareth, for your question. So, Dark Lake is really exciting for their Ziga privacy engine, and that unlocks multiple different use cases.

Michael Hubbard: Yeah, absolutely. Thanks, Gareth, for your question. Darklake is really exciting for their Zyga privacy engine, and that unlocks multiple different use cases. When we look at Houdini, there are essentially 2 or 3 core products under the hood. They have the routing infrastructure across 100 plus blockchain networks and over 1 million supported tokens, which is available both for public and private swaps. They have the private swap optionality, and then they have the API product, which allows third-party integrations into this infrastructure. The real opportunity that we see is when we start combining these things where we can use some of the Zyga zero-knowledge technology to potentially offer enhanced private swap opportunities on the Houdini APIs and provide value-added services to those swap users.

Speaker #1: And when we look at Houdini, there are essentially two or three core products under the hood. So they have the routing infrastructure across 100-plus blockchain networks and over a million supported tokens.

Speaker #1: Which is available both for public and private swaps. Then they have the private swap optionality. And then they have the API product, which allows third-party integrations into this infrastructure.

Speaker #1: The real opportunity that we see is when we start combining these things, where we can use some of the Ziga zero-knowledge technology to potentially offer enhanced private swap opportunities on the Houdini APIs.

Speaker #1: And provide value-added services to those swap users, and essentially build out those B2B APIs for third-party partners that are using the Houdini APIs currently, and who might be using them in the future.

Michael Hubbard: Essentially building out those B2B APIs for third-party partners that are using the Houdini APIs currently and who might be using them in the future and giving them a more controlled environment for that private swap experience. The specifics there aren't something we can speak to in too much detail just yet, but there's definitely a lot of opportunity for integration between those technologies, and we think there's a lot of potential, particularly on the Solana blockchain.

Speaker #1: And giving them a more controlled environment for that private swap experience. So the specifics there aren't something we can speak to in too much detail just yet.

Speaker #1: But there's definitely a lot of opportunity for integration between those technologies, and we think there's a lot of potential, particularly on the Solana blockchain.

Speaker #5: Great, that's super helpful. And then, maybe, could you just touch on the potential synergies that might exist between your existing validator business and these two new acquisitions?

Gareth Gacetta: Great. That's super helpful. Then maybe could you just touch on the potential synergies that might exist between your existing validator business and these two new acquisitions? How might you think of a potential uplift to maybe block-level fee capture or staking yields after the integration?

Speaker #5: How might you think of a potential uplift to, maybe, block-level fee capture or staking yields after the integration?

Speaker #1: Yeah, absolutely. That's a great question as well. I don't want to get too technical here, but essentially, at the moment, we're sitting at, effectively, two layers here.

Michael Hubbard: Absolutely. That's a great question as well. I don't wanna get too technical here, but essentially at the moment, we're sitting at effectively two layers here. With the validators, we're sitting at the core of the Solana network, which means that we are processing transactions, not just our own, but of the entire network whenever we have leader slots. About 1% of the network, we're processing blocks. That gives us first look at those transactions, right, and those blocks and the ability to include transactions there. With that comes the ability to provide priority to transaction inclusion and transaction landing. The second is that through our staking services, both native and liquid, we're providing users access to yield through the Solana blockchain staking layer.

Speaker #1: With the validators, we're sitting at the core of the Solana network, which means that we are processing transactions not just our own, but of the entire network.

Speaker #1: Whenever we have leader slots—so, about 1% of the network—we're processing blocks. And that gives us a first look at those transactions and those blocks, and the ability to include transactions there.

Speaker #1: And with that comes the ability to provide priority to transaction inclusion and transaction landing. The second is that through our staking services, both native and liquid, we're providing users access to yield.

Speaker #1: Through the Solana blockchain staking layer. So the opportunities there with Houdini are really in how we can bring in more users into that staking ecosystem and offer them access to our staking products.

Michael Hubbard: The opportunities there with Houdini are really in how we can bring in more users into that staking ecosystem and offer them access to our staking products, as well as potentially combining some of those products to give them better opportunities for swapping on Houdini and cross-selling or loyalty systems. Those are things we haven't fully developed just yet, but there's a few different opportunities that we're thinking about.

Speaker #1: As well as potentially combining some of those products to give them better opportunities for swapping on Houdini and cross-selling or loyalty systems. Those are things we haven't fully developed just yet.

Speaker #1: But there are a few different opportunities that we're thinking about.

Speaker #5: Great. That's super helpful. Thanks for taking my questions.

Gareth Gacetta: Great. That's super helpful. Thanks for taking my questions.

Speaker #4: Thank you. And just a quick reminder: star one, please, for questions today. We'll go next now to John Roy with Water Tower Research.

Operator 2: Thank you. Just a quick reminder, star one, please, for questions today. We'll go next now to John Roy with Water Tower Research.

Operator: Thank you. Just a quick reminder, star one, please, for questions today. We'll go next now to John Roy with Water Tower Research.

Speaker #6: Yeah, these two acquisitions are pretty significant. You're really changing the company to more of an infrastructure middleware company, am I reading that right? Is that where you guys are headed?

John Roy: Yeah. These two acquisitions are pretty significant. You're really changing the company to more of an infrastructure middleware company. Am I reading that right? Is that where you guys are headed?

Speaker #1: Yeah, thanks, John. That's exactly right. Essentially, the way we're looking at it is we're working our way up the stack. So, we started with the validated infrastructure, which is really the scaffold or the foundation that the entire blockchain network operates on.

Michael Hubbard: Yeah. Thanks, John. That's exactly right. Essentially, the way we're looking at it is we're working our way up the stack. We started with the validator infrastructure, which is really the scaffold or the foundation that the entire blockchain network operates on. That gets us into the transaction execution layer of the blockchain. With the liquid staking token, we're stepping up more into the user-facing side, where we're offering a more enhanced staking product to users where they have the ability to use it as collateral, to use it in DeFi, to maintain liquidity. With Houdini, we're taking that step further where we're now looking at cross-chain, and the importance there is the ability for liquidity to move between blockchain ecosystems. That's a very, very important aspect of the blockchain economies.

Speaker #1: That gets us into the transaction execution layer of the blockchain. With the liquid staking token, we're stepping up more into the user-facing side, where we're offering a more enhanced staking product to users—where they have the ability to use it as collateral, to use it in DeFi, to maintain liquidity.

Speaker #1: And with Houdini, we're taking that step further, where we're now looking at cross-chain, and the importance there is the ability for liquidity to move between blockchain ecosystems.

Speaker #1: That's a very, very important aspect of the blockchain economies. And also, offering those additional services, or swapping between over a million supported tokens. Swapping within the same blockchain, swapping between different blockchains, and then adding on to that the privacy products, which are important both to end users but also to institutions.

Michael Hubbard: Also offering those additional services of swapping between over a million supported tokens, swapping within the same blockchain, swapping between different blockchains, and then adding on to that the privacy products, which are important both to end users but also to institutions. For us, really, we're seeing this as a vertical expansion and integration of all these layers.

Speaker #1: So for us, really, we're seeing this as a vertical expansion and integration of all these layers.

Speaker #6: Okay. Excellent. And you're looking to do this without too much of a significant investment? I mean, is this going to be positive to the P&L and then not too long a time?

John Roy: Okay, excellent. You're looking to do this without, you know, too much of a significant investment? I mean, is this gonna be positive to the P&L in not too long a time?

Speaker #1: That doesn't make sense, John. Do you want to speak to that, yeah?

Michael Hubbard: That.

Steve Ehrlich: I'll take that one, John.

Michael Hubbard: Michael, do you wanna speak to that, Steve Ehrlich?

Speaker #6: Yeah, I'll take that one. And, John, yeah, the idea when we executed this transaction—and again, set to close by the end of the month—is to add significant revenue to our business and the profits to go with that.

Steve Ehrlich: Yeah, I'll take that one. John, these, you know, the idea when we executed this transaction, again, you know, set to close by the end of the month, is to add significant revenue to our business and the profits to go with that. The transaction details as set out were CAD 18 million, with CAD 4 million of stock and set up in multiple payments over time, with revenue that we expect on this business to be CAD 12 million to CAD 13 million a year. We set up an earn-out on this business too, where the earn-out, the floor of the earn-out is CAD 2.5 million a year. We definitely believe that this business is going to be profitable and revenue generating for the business.

Speaker #6: And so the transaction details, as set out, were $18 million with $4 million of stock, and set up in multiple payments over time. With revenue that we expect on this business to be $12–13 million a year.

Speaker #6: And we set up an earnout on this business too. Where the earnout, the floor of the earnout is 2 and a half million dollars a year.

Speaker #6: So we definitely believe that this business is going to be profitable. And revenue generating for the business. And another piece that I want to touch on in addition to what 2 and a half million of EBITDA, let me clarify that.

Steve Ehrlich: Another piece that, you know, I wanna touch on, in addition to what, CAD two and a half million of EBITDA. Let me clarify that. Another piece I wanna, you know, just add on to some of these synergies Michael said, is the existing Houdini Pay business and the Zyga technology to combine with the privacy aspect of sending money, between wallets, is an important aspect of this too. We see a tremendous opportunity to expand the Houdini Pay business as well.

Speaker #6: Another piece I want to just add on to some of these synergies, Michael said, is the existing Houdini Pay business. And the Zyga technology to combine with the privacy aspect of sending money between wallets is an important aspect of this, too.

Speaker #6: We see a tremendous opportunity to expand the Houdini Pay business as well.

Speaker #5: Great. Thanks so much for the answers, gentlemen.

John Roy: Great. Thanks so much for the answers, gentlemen.

Speaker #4: Thank you. And, ladies and gentlemen, just a final reminder: star one, please, for any further questions this afternoon. And we'll pause for just one moment.

Operator 2: Thank you. Ladies and gentlemen, just a final reminder, star one, please for any further questions this afternoon. We'll pause for just one moment. Gentlemen, it appears we have no further questions today. Mr. Hubbard, I'd like to turn things back to you, sir, for any closing comments.

Operator: Thank you. Ladies and gentlemen, just a final reminder, star one, please for any further questions this afternoon. We'll pause for just one moment. Gentlemen, it appears we have no further questions today. Mr. Hubbard, I'd like to turn things back to you, sir, for any closing comments.

Speaker #4: And gentlemen, it appears we have no further questions today. Mr. Hubbard, I'd like to turn things back to you, sir, for any closing comments.

Speaker #1: Thank you, Bob. Thank you, everyone, for dialing in. We're very excited about what's to come for this company and the upcoming closing of the Houdini transaction.

Michael Hubbard: Thank you, Bo. Thank you everyone for dialing in. We're very excited about what's to come for this company and the upcoming closing of the Houdini transaction. We're incredibly excited about the potential for this company going forward, and look forward to providing a further update for our next quarterly earnings. Thank you.

Speaker #1: We're incredibly excited about the potential for this company going forward, and look forward to providing a further update in our next quarterly earnings. Thank you.

Speaker #4: Thank you, Mr. Hubbard. Again, ladies and gentlemen, thank you for joining the Sol Strategies fiscal second quarter earnings call. Again, thanks so much for joining us.

Operator 2: Thank you, Mr. Hubbard. Again, ladies and gentlemen, thank you for joining the Sol Strategies' fiscal Q2 earnings call. Again, thanks so much for joining us. We wish you all a great afternoon. Goodbye.

Operator: Thank you, Mr. Hubbard. Again, ladies and gentlemen, thank you for joining the Sol Strategies' fiscal Q2 earnings call. Again, thanks so much for joining us. We wish you all a great afternoon. Goodbye.