Q3 2026 SRX Global Inc Earnings Call

August 13, 2026

Operator: Good day, and welcome to the SRX Global Fiscal Q3 2026 conference call. Please note this event is being recorded. I would now like to turn the conference over to Valter Pinto, Head of Investor Relations. Please go ahead.

Speaker #1: Good day, and welcome to the SRX Global Link fiscal third quarter 2026 conference call. Please note, this event is being recorded. I would now like to turn the conference over to Valto Pinto, Head of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator. Good afternoon, everyone, and welcome to the SRX Global fiscal third quarter 2026 financial results conference call. Joining me today are Kent Cunningham, Chief Executive Officer; Eric Jackson, President of EMJX and Head of Asset Management; and Nina Martinez, Chief Financial Officer.

Valter Pinto: Thank you, operator. Good afternoon, everyone, and welcome to the SRX Global Fiscal Q3 2026 financial results conference call. Joining me today are Kent Cunningham, Chief Executive Officer, Eric Jackson, President of EMJX and Head of Asset Management, and Nina Martinez, Chief Financial Officer. I'd like to remind everyone that the company's financial results press release has been posted to the investor relations section of the website, and our Form 10-Q has been filed with the SEC. The Form 10-Q details the company's financials, capitalization, and other business items. We encourage shareholders to review that information. Before we begin, please note that remarks made today may include forward-looking statements subject to a variety of risks, assumptions, and uncertainties. Company's actual results may differ materially for those contemplated on such statements.

Speaker #2: I'd like to remind everyone that the company's financial results press release has been posted to the Investor Relations section of the website, and our Form 10-Q has been filed with the SEC.

Valter Pinto: I'd like to remind everyone that the company's financial results press release has been posted to the investor relations section of the website, and our Form 10-Q has been filed with the SEC. The Form 10-Q details the company's financials, capitalization, and other business items. We encourage shareholders to review that information.

Speaker #2: The Form 10-Q details the company's financials, capitalization, and other business items. We encourage shareholders to review that information. Before we begin, please note that remarks made today may include forward-looking statements subject to a variety of risks, assumptions, and uncertainties.

Valter Pinto: Before we begin, please note that remarks made today may include forward-looking statements subject to a variety of risks, assumptions, and uncertainties. Company's actual results may differ materially for those contemplated on such statements.

Speaker #2: The company's actual results may differ materially, but those contemplated on such statements. For more detailed discussion, please refer to the forward-looking statements in the company's financial results press release and SEC filings.

Valter Pinto: For more detailed discussion, please refer to the forward-looking statements in the company's financial results press release and SEC filings. Also during the call today, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures will be provided in the company's press release and made available in the investor relations section of the company's website. Following our prepared remarks, management will answer questions that have been submitted by shareholders. Due to high volume of questions and comments, we may not address all of them, but we will do our best to answer as many as possible today. If we do not address your specific questions on this call, please share them with our investor relations team at srx@kcsa.com. I'd now like to turn the call over to Kent Cunningham. Kent, please go ahead.

Speaker #2: Also, during the call today, we'll discuss certain non-GAAP financial measures, reconciliations of these non-GAAP measures, through the most directly comparable GAAP financial measures. We'll be provided in the company's press release and made available on the Investor Relations section of the company's website.

Speaker #2: Following our prepared remarks, management will answer questions that have been submitted by shareholders. Due to high volume of questions and comments, we may not address all of them, but we'll do our best to answer as many as possible today.

Valter Pinto: Following our prepared remarks, management will answer questions that have been submitted by shareholders. Due to high volume of questions and comments, we may not address all of them, but we will do our best to answer as many as possible today. If we do not address your specific questions on this call, please share them with our investor relations team at srx@kcsa.com. I'd now like to turn the call over to Kent Cunningham. Kent, please go ahead.

Speaker #2: If we do not address your specific questions on this call, please share them with our Investor Relations team at SRX at KCSA dot com.

Speaker #2: I'd now like to turn the call over to Kent Cunningham. Kent, please go ahead.

Speaker #3: Thanks, Valto. And good afternoon, everyone. Thanks again for joining us today for our fiscal third quarter 2026 financial results conference call. The third quarter was transformational for the company.

Kent Cunningham: Thanks, Valter, and good afternoon, everyone. Thanks again for joining us today for our fiscal Q3 2026 financial results conference call. The Q3 was transformational for the company. We completed the acquisition of EMJX, strengthened Halo's underlying operations, and ended the quarter with a highly liquid balance sheet and approximately $62.9 million in net asset value, or $3.22 per common share. These accomplishments reflect the core of the SRX strategy, disciplined capital allocation across high conviction opportunities, while improving the performance and value of the operating businesses that we own. Less than 90 days after completing the EMJX acquisition, our focus is squarely on execution, integrating the platform, deploying capital selectively, and maintaining the financial flexibility to act when compelling opportunities emerge.

Speaker #3: We completed the acquisition of EMJX, strengthened Halo's underlying operations, and ended the quarter with a highly liquid balance sheet and approximately $62.9 million in net asset value.

Speaker #3: Over $3.22 per common share. These accomplishments reflect the core of the SRX strategy, disciplined capital allocation across high conviction opportunities, while improving the performance and value of the operating businesses that we own.

Kent Cunningham: These accomplishments reflect the core of the SRX strategy, disciplined capital allocation across high conviction opportunities, while improving the performance and value of the operating businesses that we own. Less than 90 days after completing the EMJX acquisition, our focus is squarely on execution, integrating the platform, deploying capital selectively, and maintaining the financial flexibility to act when compelling opportunities emerge.

Speaker #3: So, less than 90 days after completing the EMJX acquisition, our focus is squarely on execution, integrating the platform, deploying capital selectively, and maintaining the financial flexibility to act when compelling opportunities emerge.

Speaker #3: We ended June with $36.7 million in cash, cash equivalents, and restricted cash; $65.2 million in current assets; only $2.4 million in total liabilities; and no debt outstanding.

Kent Cunningham: We ended June with $36.7 million in cash equivalents, and restricted cash, $65.2 million in current assets, only $2.4 million in total liabilities, and no debt outstanding. Since quarter end, we've continued to actively manage our capital allocation priorities, including returning capital to shareholders, evaluating high conviction investment opportunities, and investing behind our operating businesses. Our board declared a one-time cash dividend of $0.05 per common share and authorized a share repurchase program of up to 10 million shares or up to 50% of shares outstanding, with up to $20 million allocated to the program. Nina Martinez will discuss the status of these items in greater detail shortly. We've also continued to build a portfolio of strategic investments across areas where we see attractive opportunities to generate long-term shareholder value. Our investment process combines fundamental diligence, disciplined underwriting, and increasingly, insights generated through EMJX.

Speaker #3: Since quarter end, we've continued to actively manage our capital allocation priorities, including returning capital to shareholders, evaluating high-conviction investment opportunities, and investing behind our operating businesses. Our board declared a one-time cash dividend of $0.05 per common share and authorized a share repurchase program of up to 10 million shares, or up to 50% of shares outstanding, with up to $20 million allocated to the program.

Speaker #3: Nina will discuss the status of these items in greater detail shortly. We've also continued to build a portfolio of strategic investments across areas where we see attractive opportunities to generate long-term shareholder value.

Kent Cunningham: Nina Martinez will discuss the status of these items in greater detail shortly. We've also continued to build a portfolio of strategic investments across areas where we see attractive opportunities to generate long-term shareholder value. Our investment process combines fundamental diligence, disciplined underwriting, and increasingly, insights generated through EMJX.

Speaker #3: Our investment process combines fundamental diligence, disciplined underwriting, and, increasingly, insights generated through EMJX. Specifically, we evaluate opportunities through an internal scorecard across key risk and return dimensions.

Kent Cunningham: Specifically, we evaluate opportunities through an internal scorecard across key risk and return dimensions. We assess where we believe value can be created through operational improvement, market disruption, or structural advantages, and our investment committee then reviews and debates each opportunity and decides whether to move forward, modify the terms, or move on. Our objective is straightforward: deploy capital only when we believe the prospective risk-adjusted return is compelling, size those investments appropriately, and preserve the flexibility to act as new opportunities emerge. Our current capital allocation reflects that discipline. We're investing in Halo to drive revenue growth, expand margins, and continue optimizing the business. We're deploying capital to EMJX in a phased approach, both toward the internal Gen 2 digital asset treasury strategy and commercialization of the platform. We're making selective minority investments across technology and fintech, biotech, consumer, and critical infrastructure and materials.

Speaker #3: We assess where we believe value can be created through operational improvement, market disruption, or structural advantages, and our investment committee then reviews and debates each opportunity and decides whether to move forward, modify the terms, or move on.

Speaker #3: Our objective is straightforward: deploy capital only when we believe the prospective, risk-adjusted return is compelling, size those investments appropriately, and preserve the flexibility to act as new opportunities emerge.

Kent Cunningham: Our objective is straightforward: deploy capital only when we believe the prospective risk-adjusted return is compelling, size those investments appropriately, and preserve the flexibility to act as new opportunities emerge. Our current capital allocation reflects that discipline.

Speaker #3: And our current capital allocation reflects that discipline. We're investing in Halo to drive revenue growth, expand margins, and continue optimizing the business. We're deploying capital to EMJX in a phased approach, both toward the internal Gen 2 digital asset treasury strategy and commercialization of the platform.

Kent Cunningham: We're investing in Halo to drive revenue growth, expand margins, and continue optimizing the business. We're deploying capital to EMJX in a phased approach, both toward the internal Gen two digital asset treasury strategy and commercialization of the platform. We're making selective minority investments across technology and fintech, biotech, consumer, and critical infrastructure and materials.

Speaker #3: We're making selective minority investments across technology and fintech, biotech, consumer, and critical infrastructure and materials. And across the portfolio, we're employing a systematic hedging strategy designed to manage risk and protect against downside.

Kent Cunningham: Across the portfolio, we're employing a systematic hedging strategy designed to manage risk and protect against downside. Our leadership team and the board are significant shareholders alongside you, so our interests are directly aligned. We recognize the frustration with the recent stock performance, particularly given the significant gap between our current market capitalization and the reported NAV. We can't control the market price on a given day, but what we can control is execution, capital allocation, and operating performance. That's where our attention is focused. We're building SRX Global for the long term, for long-term value creation, rounded in disciplined capital allocation, high conviction investments, and sustainable cash generation. With that, I'll walk through the operational performance and the strategy underpinning our consumer business, Halo, before I pass it over to Eric Jackson to discuss the EMJX integration, performance, and commercialization.

Speaker #3: Our leadership team and the board are significant shareholders alongside you, so our interests are directly aligned. We recognize the frustration with the recent stock performance, particularly given the significant gap between our current market capitalization and the reported NAV.

Speaker #3: We can't control the market price on a given day, but what we can control is execution. Capital allocation, and operating performance. That's where our attention is focused.

Kent Cunningham: We can't control the market price on a given day, but what we can control is execution, capital allocation, and operating performance. That's where our attention is focused. We're building SRX Global for the long term, for long-term value creation, rounded in disciplined capital allocation, high conviction investments, and sustainable cash generation. With that, I'll walk through the operational performance and the strategy underpinning our consumer business, Halo, before I pass it over to Eric Jackson to discuss the EMJX integration, performance, and commercialization.

Speaker #3: We're building SRX for the long term, for long-term value creation, rounded in disciplined capital allocation, high conviction investments, and sustainable cash generation. So with that, I'll walk through the operational performance and the strategy underpinning our consumer business, Halo, before I pass it over to Eric to discuss the EMJX integration performance and commercialization.

Speaker #3: So Halo is a 30-year-old premium pet food brand that competes in the roughly $130 billion pet food market. It's got a very loyal consumer base and an asset-light model.

Kent Cunningham: Halo is a 30-year-old premium pet food brand that competes in the roughly $130 billion pet food market. It's got a very loyal consumer base and an asset-light model. Our focus here has been on strengthening the underlying operations of the business and positioning the brand for sustainable growth. I would tell you that our team has deep expertise in scaling consumer brands, and increasingly, we expect insights from EMJX's technology platform to inform how we allocate marketing dollars, identify opportunities, and improve decision-making across the business. Over the past few quarters, our top operational priorities for Halo have been restoring supply continuity, sharpening our digital-first channel focus, and establishing sustainable marketing leverage. I'm pleased to report that our supply chain fill rate recovery is on track, with fill rates reaching 98% in June as we've restored reliable product availability across our key channels.

Speaker #3: Our focus here has been on strengthening the underlying operations of the business and positioning the brand for sustainable growth. And I would tell you that our team has deep expertise in scaling consumer brands, and increasingly, we expect insights from EMJX's technology platform to inform how we allocate marketing dollars, identify opportunities, and improve decision-making across the business.

Speaker #3: Over the past few quarters, our top operational priorities for Halo have been restoring supply continuity, sharpening our digital-first channel focus, and establishing sustainable marketing leverage.

Kent Cunningham: Over the past few quarters, our top operational priorities for Halo have been restoring supply continuity, sharpening our digital-first channel focus, and establishing sustainable marketing leverage. I'm pleased to report that our supply chain fill rate recovery is on track, with fill rates reaching 98% in June as we've restored reliable product availability across our key channels.

Speaker #3: I'm pleased to report that our supply chain fill rate recovery is on track, with fill rates reaching 98% in June, as we've restored reliable product availability across our key channels.

Speaker #3: Going forward, we're focused on driving revenue growth and improving margins through digital optimization, partnerships, and innovation. And we're already seeing progress on this front.

Kent Cunningham: Going forward, we're focused on driving revenue growth and improving margins through digital optimization, partnerships, and innovation. We're already seeing progress on this front. The recent operational improvements helped position Halo for a record Prime Day performance. New-to-brand consumers increased 13% year over year, while search cost per click was $2.51. That's important because it's approximately 8% below the pet category benchmark. Taken together, these metrics indicate both the expanding consumer reach and improving efficiency in how we're generating that demand. Additionally, our recurring subscription base across both Chewy and Amazon remains one of Halo's most valuable assets because it offers predictable cash flow as well as high consumer retention. Also during the quarter, we onboarded new agency partners across media, creative, and e-commerce to improve consumer messaging and increase our share of voice in the marketplace, drive greater discoverability online, and enhance overall digital execution.

Speaker #3: The recent operational improvements helped position Halo for a record prime day performance. New to brand consumers increased 13% year over year, while search cost per click was $2.51.

Speaker #3: That's important because it's approximately 8% below the pet category benchmark. So, taken together, these metrics indicate both the expanding consumer reach and the improving efficiency in how we're generating that demand.

Speaker #3: Additionally, our recurring subscription base across both Chewy and Amazon remains one of Halo's most valuable assets, because it offers predictable cash flow as well as high consumer retention.

Kent Cunningham: Additionally, our recurring subscription base across both Chewy and Amazon remains one of Halo's most valuable assets because it offers predictable cash flow as well as high consumer retention. Also during the quarter, we onboarded new agency partners across media, creative, and e-commerce to improve consumer messaging and increase our share of voice in the marketplace, drive greater discoverability online, and enhance overall digital execution.

Speaker #3: Also, during the quarter, we onboarded new agency partners across media, creative, and e-commerce to improve consumer messaging and increase our share of voice in the marketplace.

Speaker #3: Drive greater discoverability online and enhance overall digital execution. As I mentioned, we're already seeing the positive impact of those moves on the brand's growth trajectory.

Kent Cunningham: As I mentioned, we're already seeing the positive impact of those moves on the brand's growth trajectory with more to come. Going forward, our focus is on converting improved product availability and more efficient consumer acquisition into sustainable revenue growth and improved profitability. I'm encouraged by the progress we saw during the quarter while recognizing there remains significant work ahead. I'll hand the call over to Eric Jackson now to walk through our EMJX platform strategy, commercialization milestones, and strategy model performance. Eric, over to you.

Speaker #3: With more to come. So, going forward, our focus is on converting improved product availability and more efficient consumer acquisition into sustainable revenue growth and improved profitability.

Speaker #3: I'm encouraged by the progress we saw during the quarter, while recognizing the remaining significant work ahead. I'll hand the call over to Eric Jackson now to walk through our EMJX platform strategy, commercialization milestones, and strategy model performance.

Speaker #3: Eric, over to you.

Speaker #2: Thank you, Kent. And good afternoon, everyone. It's great to be here. Since the June 16th close, EMJX by SRXH, my focus has been on three things.

Eric Jackson: Thank you, Kent, and good afternoon, everyone. It's great to be here. Since the 16 June close of EMJX by SRXH, my focus has been on three things: standing up live trading, commercializing the platform, and integrating EMJX into how we manage balance sheet. First, I want to frame the performance metrics that we disclosed today appropriately. The figures we are discussing are hypothetical, system-generated model results, exactly the way that I described them at the recent fireside chat. They don't represent actual trading results or returns earned on SRX capital. From the 16 June close through 30 June, Bitcoin declined approximately 10.8% over those two weeks. Over that same period, the EMJX strategy model generated hypothetical performance of 4.3%, representing approximately 15.1 percentage points of outperformance relative to Bitcoin, and finished ahead of all four of its primary benchmark comparators.

Speaker #2: Standing up live trading, commercializing the platform, and integrating EMJX into how we manage balance sheet. So first, I want to frame the performance metrics that appropriately: the figures we are discussing are hypothetical.

Speaker #2: System-generated model results—exactly the way that I described them at the recent fireside chat—do not represent actual trading results or returns earned on SRX capital.

Eric Jackson: They don't represent actual trading results or returns earned on SRX capital. From the 16 June close through 30 June, Bitcoin declined approximately 10.8% over those two weeks. Over that same period, the EMJX strategy model generated hypothetical performance of 4.3%, representing approximately 15.1 percentage points of outperformance relative to Bitcoin, and finished ahead of all four of its primary benchmark comparators.

Speaker #2: From the June 16th close through June 30th, Bitcoin declined approximately 10.8% over those two weeks. Over that same period, the EMJX strategy model generated hypothetical performance of 4.3%, representing approximately 15.1 percentage points of outperformance relative to Bitcoin and finishing ahead of all four of its primary benchmark comparators.

Speaker #2: But I would not ask investors to put significant weight on just a two-week return in isolation. That period was a drawdown environment, which is precisely where the strategy's risk management characteristics become important.

Eric Jackson: I would not ask investors to put significant weight on just a two-week return in isolation. That period was a drawdown environment, which is precisely where the strategy's risk management characteristics become important. The metric that I would ask investors to focus on over time is the risk profile, in particular. From the strategy model's 11 February 2026 inception through 30 June, its maximum drawdown was approximately 10.6%. Over that same period, the maximum drawdowns across our four primary benchmark comparators ranged from approximately -28% to as much as 58% down. Maximum drawdown, just to remind you, measures the largest peak-to-trough decline over the applicable measurement period. For us, why we're proud of that, limiting that downside while maintaining exposure to the underlying opportunity is an important measure of how the strategy is designed to perform across market cycles.

Speaker #2: The metric that I would ask investors to focus on over time is the risk profile, in particular. From the strategy model's February 11th, 2026 inception, through June 30th, its maximum drawdown was approximately 10.6%.

Speaker #2: And over that same period, the maximum drawdowns across our four primary benchmark comparators ranged from approximately negative 28% to as much as down 58%.

Eric Jackson: Over that same period, the maximum drawdowns across our four primary benchmark comparators ranged from approximately -28% to as much as 58% down. Maximum drawdown, just to remind you, measures the largest peak-to-trough decline over the applicable measurement period. For us, why we're proud of that, limiting that downside while maintaining exposure to the underlying opportunity is an important measure of how the strategy is designed to perform across market cycles.

Speaker #2: So maximum drawdown, just to remind you, measures the largest peak to trough decline over the applicable measurement period. So for us, why we're proud of that, limiting that downside while maintaining exposure to the underlying opportunity is an important measure of how the strategy is designed to perform across market cycles.

Speaker #2: And it's something that potential clients are particularly interested in. We are now preparing to deploy our own real capital into live execution. It's too early to report on a meaningful actual return.

Eric Jackson: And it is something that potential clients are particularly interested in. We are now preparing to deploy our own real capital into live execution. It is too early to report on a meaningful actual return, and we will update the market once we have the appropriate performance history to report to you guys. On construction, the strategy maintains a core allocation to Bitcoin and Ethereum, just as I talked about before, like on the fireside chat. There is also a smaller sleeve of higher-conviction equities and digital assets. There is also a systematic hedging program sized according to predefined risk parameters, and obviously, those have worked extremely well since our inception as the macro environment, especially for Bitcoin, has been particularly difficult. Beyond managing internal capital, though, we intend for EMJX to function as a standalone revenue generator for SRX.

Speaker #2: And we will update the market once we have the appropriate performance history to report to you guys. On construction, the strategy maintains a core allocation to Bitcoin and Ethereum.

Speaker #2: Just as I talked about before, like on the fireside chat, there's also a smaller sleeve of higher-conviction equities and digital assets. There's also a systematic hedging program, sized according to predefined risk parameters, and obviously, those have worked extremely well since our inception.

Eric Jackson: There is also a smaller sleeve of higher-conviction equities and digital assets. There is also a systematic hedging program sized according to predefined risk parameters, and obviously, those have worked extremely well since our inception as the macro environment, especially for Bitcoin, has been particularly difficult. Beyond managing internal capital, though, we intend for EMJX to function as a standalone revenue generator for SRX.

Speaker #2: As the macro environment, especially for Bitcoin, has been particularly difficult, beyond managing internal capital though, we intend for EMJX to function as a standalone revenue generator for SRX.

Speaker #2: We are in discussions right now with institutional counterparties regarding potential applications of the strategy to corporate treasuries, and also exchange-traded products. Those discussions remain ongoing.

Eric Jackson: We are in discussions right now with institutional counterparties regarding potential applications of the strategy to corporate treasuries, also exchange-traded products. Those discussions remain ongoing. We are not going to characterize their stage or the counterparties today, obviously, because we are still in discussions. But we will disclose material developments if and when appropriate. EMJX is also beginning to develop additional models that can inform SRX's broader investment process, as Kent alluded to earlier. Our objective is to incorporate those insights into the due diligence and investment decision-making framework that we use when evaluating both new opportunities as well as our existing portfolio. With that, I am now going to pass it over to Nina to cover the financials.

Speaker #2: We're not going to characterize their stage or the counterparties today. Obviously, because we're still in discussions. But we will disclose material developments if and when appropriate.

Speaker #2: EMJX is also beginning to develop additional models that can inform SRX's broader investment process, as Kent alluded to earlier. Our objective is to incorporate those insights into the due diligence and investment decision-making framework that we use when evaluating both new opportunities as well as our existing portfolio.

Eric Jackson: EMJX is also beginning to develop additional models that can inform SRX's broader investment process, as Kent alluded to earlier. Our objective is to incorporate those insights into the due diligence and investment decision-making framework that we use when evaluating both new opportunities as well as our existing portfolio. With that, I am now going to pass it over to Nina to cover the financials.

Speaker #2: So with that, I'm now going to pass it over to Nina to cover the financials.

Speaker #1: Thanks, Eric. And good afternoon, everyone. Net sales for the fiscal third quarter totaled $3.4 million, an increase of 27% year over year. Gross profit for the quarter was approximately $904,000, representing gross margin of 27%.

Nina Martinez: Thanks, Eric, and good afternoon, everyone. Net sales for the fiscal Q3 totaled $3.4 million, an increase of 27% year-over-year. Gross profit for the quarter was approximately $904,000, representing gross margin of 27%. Margin optimization remains a key priority, and we are executing several strategic initiatives designed to structurally improve gross margin and profitability. Several of these initiatives are now moving into the next phase of implementation, and we do expect continued gross margin expansion over the next 12 months. Operating expenses were $4.1 million, a reduction of 52% year-over-year. As a result, our loss from operations improved 63% year-over-year to $3.2 million. Turning to our investment activity, performance varied across asset classes during the quarter, with our strongest gains coming from our actively managed trading portfolio.

Speaker #1: Margin optimization remains a key priority and we are executing several strategic initiatives designed to structurally improve gross margin and profitability. Several of these initiatives are now moving into the next phase of implementation and we do expect continued gross margin expansion over the next 12 months.

Nina Martinez: Several of these initiatives are now moving into the next phase of implementation, and we do expect continued gross margin expansion over the next 12 months. Operating expenses were $4.1 million, a reduction of 52% year-over-year. As a result, our loss from operations improved 63% year-over-year to $3.2 million. Turning to our investment activity, performance varied across asset classes during the quarter, with our strongest gains coming from our actively managed trading portfolio.

Speaker #1: Offering expenses were $4.1 million, a reduction of 52% year over year. As a result, our loss from operations improved 63% year over year to $3.2 million.

Speaker #1: Turning to our investment activity, performance varied across asset classes during the quarter, with our strongest gains coming from our actively managed trading portfolio. Our exchange-traded option activity generated approximately $600,000 in net gains during the third quarter and $1.2 million in gains year to date.

Nina Martinez: Our exchange traded option activity generated approximately $600,000 in net gains during the Q3 and $1.2 million in gains year to date. These GAAP P&L gains are reflected within the change in fair value of derivative liabilities line on our consolidated statement of operations and include both realized and unrealized activity. Importantly, these results reflect actual trading activity by the company and are separate and distinct from the hypothetical system-generated EMJX strategy model performance that Eric just discussed. Overall, GAAP net loss from continuing operations was $4.1 million, an improvement of 40% year-over-year and 35% quarter-over-quarter. Adjusted EBITDA loss improved 35% year-over-year to $1.6 million. As a reminder, adjusted EBITDA is a non-GAAP financial measure, and the reconciliation to net loss is included in our earnings release and will also be included in our Form 10-Q.

Speaker #1: These GAAP P&L gains are reflected within the change in fair value of derivative liabilities line on our consolidated statement of operations, and include both realized and unrealized activity.

Speaker #1: Importantly, these results reflect actual trading activity by the company, and are separate and distinct from the hypothetical system generated EMJX strategy model performance that Eric just discussed.

Speaker #1: Overall, gap net loss from continuing operations was $4.1 million, and improvement of 40% year over year and 35% quarter over quarter. Adjusted EBITDA loss improved 35% year over year to $1.6 million.

Nina Martinez: Overall, GAAP net loss from continuing operations was $4.1 million, an improvement of 40% year-over-year and 35% quarter-over-quarter. Adjusted EBITDA loss improved 35% year-over-year to $1.6 million. As a reminder, adjusted EBITDA is a non-GAAP financial measure, and the reconciliation to net loss is included in our earnings release and will also be included in our Form 10-Q.

Speaker #1: As a reminder, adjusted EBITDA is a non-GAAP financial measure, and the reconciliation to net loss is included in our earnings release and will also be included in our Form 10-Q.

Speaker #1: We believe these improvements demonstrate the progress we have made in scaling the company more efficiently, optimizing operations and corporate functions, and leveraging technology across the organization.

Nina Martinez: We believe these improvements demonstrate the progress we have made in scaling the company more efficiently, optimizing operations and corporate functions, and leveraging technology across the organization. As we continue to refine our capital allocation mix, our objective is really to build an investment portfolio capable of generating returns that meaningfully offset our corporate cost base while creating additional upside through the growth and profitability of our operating businesses. Turning to the balance sheet, as Kent Cunningham previewed earlier, we ended June with $36.7 million in cash equivalents, and restricted cash, $65.2 million in total current assets, and just $2.4 million in total liabilities, no debt outstanding at quarter end. Based directly on those balance sheet amounts, our net asset value at the end of the quarter was $62.9 million.

Speaker #1: As we continue to refine our capital allocation mix, our objective is really to build an investment portfolio capable of generating returns that meaningfully offset our corporate cost base, while creating additional upside through the gross and profitability of our operating businesses.

Speaker #1: Turning to the balance sheet, as Kent previewed earlier, we ended June with $36.7 million in cash, cash equivalents, and restricted cash, $65.2 million in total current assets, and just $2.4 million in total liabilities. No debt was outstanding at quarter end.

Nina Martinez: Turning to the balance sheet, as Kent Cunningham previewed earlier, we ended June with $36.7 million in cash equivalents, and restricted cash, $65.2 million in total current assets, and just $2.4 million in total liabilities, no debt outstanding at quarter end. Based directly on those balance sheet amounts, our net asset value at the end of the quarter was $62.9 million.

Speaker #1: Based directly on those balance sheet amounts, our net asset value at the end of the quarter was $62.9 million. Based on the approximately 19.5 million common shares outstanding after giving effect to our 1-for-60 reverse stock split, NAV was $3.22 per common share, exceeding our preliminary estimate of $3.07 per share that we announced back on July 8.

Nina Martinez: Based on the approximately 19.5 million common shares outstanding, after giving effect to our one for 60 reverse stock split, NAV was $3.22 per common share, exceeding our preliminary estimate of $3.07 per share that we announced back on 8 July. Beyond our cash position, we held a diversified mix of short-term investments, equity securities. We have notes receivables and digital assets, with approximately 70% of our total current assets considered liquid. Together with our debt-free balance sheet, this provides substantial financial flexibility to execute the capital allocation strategy Kent Cunningham discussed. Our priority is to preserve that flexibility while deploying the capital where we believe the expected risk-adjusted return justifies the investment. Regarding our recently declared cash dividend, I am pleased to share that we have fully funded the dividend distribution with our transfer agent acting as the company's paying agent.

Speaker #1: Beyond our cash position, we held a diversified mix of short-term investments, equity securities, we have notes receivables and digital assets, with approximately 70% of our total current assets considered liquid.

Speaker #1: Together with our debt-free balance sheet, this provides substantial financial flexibility to execute the capital allocation strategy Kent discussed. Our priority is to preserve that flexibility while deploying capital where we believe the expected risk-adjusted return justifies the investment.

Nina Martinez: Together with our debt-free balance sheet, this provides substantial financial flexibility to execute the capital allocation strategy Kent Cunningham discussed. Our priority is to preserve that flexibility while deploying the capital where we believe the expected risk-adjusted return justifies the investment. Regarding our recently declared cash dividend, I am pleased to share that we have fully funded the dividend distribution with our transfer agent acting as the company's paying agent.

Speaker #1: Regarding our recently declared cash dividend, I am pleased to share that we have fully funded the dividend distribution with our transfer agent, acting as the company's paying agent.

Speaker #1: The transfer agent is now completing distributions to eligible shareholders of record, either directly or through BTC as applicable. We expect those distributions to be completed in the very near term, and we thank our shareholders for their patience while these final steps are completed.

Nina Martinez: The transfer agent is now completing distributions to eligible shareholders of record, either directly or through BTC as applicable. We expect those distributions to be completed in the very near term, and we thank our shareholders for their patience while these final steps are completed. The board also authorized a share repurchase program under which the company may repurchase up to 10 million shares of common stock or up to 50% of the shares outstanding, with up to $20 million allocated to the program through 27 July. No repurchases have been made under the program to date while the company has been subject to a blackout period in connection with our quarterly reporting process. Stepping back, we believe the financial picture today is increasingly aligned with the model we are building.

Speaker #1: The board also authorized a share repurchase program under which the company may repurchase up to $10 million shares of common stock or up to 50% of the shares outstanding, with up to $20 million allocated to the program through July of 27.

Nina Martinez: The board also authorized a share repurchase program under which the company may repurchase up to 10 million shares of common stock or up to 50% of the shares outstanding, with up to $20 million allocated to the program through 27 July. No repurchases have been made under the program to date while the company has been subject to a blackout period in connection with our quarterly reporting process. Stepping back, we believe the financial picture today is increasingly aligned with the model we are building.

Speaker #1: No repurchases have been made under the program to date, while the company has been subject to a blackout period in connection with our quarterly reporting process.

Speaker #1: Stepping back, we believe the financial picture today is increasingly aligned with the model we're building: a more efficient corporate cost structure, a highly liquid and debt-free balance sheet, disciplined capital deployment designed to generate investment returns, and operating businesses with additional gross and profitability potential.

Nina Martinez: A more efficient corporate cost structure, a highly liquid and debt-free balance sheet, disciplined capital deployment designed to generate investment returns, and operating businesses with additional growth and profitability potential. Together, these provide us with multiple avenues to create shareholder value from here. I will now pass it to Valter Pinto to moderate our Q&A session.

Speaker #1: Together, these provide us with multiple avenues to create shareholder value from here. I'll now pass it to Walter to moderate our Q&A session.

Speaker #3: Thank you, Nina. And thank you to all of our shareholders who submitted their questions ahead of today's call. We've received several recurring questions that we'll go through today.

Valter Pinto: Thank you, Nina. Thank you to all of our shareholders who submitted their questions ahead of today's call. We received several recurring questions that we'll go through today. Our first question is what is the current capitalization structure of the company, including fully diluted share count?

Speaker #3: Our first question is, what is the current capitalization structure of the company, including fully diluted share count?

Speaker #1: Sure, Walter, I can take that one. So, as discussed and as disclosed in our 10-Q, our common shares outstanding count at June 30th is about 19.5 million.

Nina Martinez: Sure, Valter, I can take that one. As discussed and as disclosed in our 10-Q, our common share outstanding count at 30 June is about 19.5 million. That's on a post-split basis. Fully diluted, assuming all conversion of our outstanding preferred stock, our exchangeable shares, exercise of all of our warrants outstanding, as well as all of our shares that are reserved for issuance under our stock incentive plan, that fully diluted share count number is approximately 22.8 million.

Speaker #1: That's on a post-split basis. So, fully diluted, assuming conversion of all of our outstanding preferred stock, our exchangeable shares, exercise of all of our outstanding warrants, as well as all of our shares reserved for issuance under our stock incentive plans, that fully diluted share count number is approximately 22.8 million.

Speaker #3: Thank you, Nina. And are there plans for future capital raises?

Valter Pinto: Thank you, Nina. Are there plans for future capital raises?

Speaker #2: Yeah, you know, I'll take that one. What I'd say is we've got sufficient capital to execute on our current strategy. As Nina just mentioned, we ended the quarter with $36.7 million in cash.

Kent Cunningham: Yeah, I'll take that one. What I'd say is we've got sufficient capital to execute on our current strategy. As Nina just mentioned, we ended the quarter with $36.7 million in cash. We've got $65.2 million of current assets and no debt. We don't currently anticipate raising capital simply to fund the existing operating plan. As you'd expect, we'll continually evaluate our capital structure and opportunities, but any future financing needs would need to make strategic and economic sense.

Speaker #2: We've got $65.2 million of current assets and no debt. So we don't currently anticipate raising capital simply to fund the existing operating plan. Now, as you'd expect, we'll continually evaluate our capital structure and opportunities.

Speaker #2: But any future financing needs, you know, would need to make strategic and economic sense.

Speaker #3: Thank you, Kent. Our third question is: What is the structure of EMJX within SRX, and is the event Horizon IQ part of that?

Valter Pinto: Thank you, Kent. Our third question is, what is the structure of EMJX within SRX, and is EventHorizonIQ part of that?

Speaker #4: Yeah, Walter, I'll take that. This is Eric. We touched on this a little bit at the fireside chat, but the question does come up often, so I want to go over it again.

Eric Jackson: Yeah, Valter, I'll take that. This is Eric. We touched on this a little bit at the fireside chat, but the question does come up often, so I want to go over it again. The announcement that we made back in December, and then what closed in June, was the acquisition of EMJX within now SRX. EMJX is separate from EventHorizonIQ. EMJX obviously is focused on the AI models that help us predict different cryptocurrencies such as Bitcoin and Ethereum, and manage the overall Gen 2 treasury. EventHorizonIQ is something separate. It's completely not connected to EMJX. However, it's developed its own AI models. There are potential for EventHorizonIQ to work with SRX, and we have been talking about that. So if and when that does happen, there will be commercial terms between SRX and EventHorizonIQ.

Speaker #4: The announcement that we made back in December and then what closed in June was the acquisition of EMJX within now SRX. And so EMJX is separate from Event Horizon IQ.

Speaker #4: EMJX obviously, is focused on the AI models that help us predict different crypto currencies such as Bitcoin and Ethereum. And manage the overall Gen 2 treasury.

Speaker #4: Event Horizon IQ is something separate. It's completely not connected to EMJX. However, it's developed its own AI models, there are potential for us to work, you know, for Event Horizon IQ to work with SRX, and we have been talking about that.

Speaker #4: So, if and when that does happen, there will be commercial terms between SRX and Event Horizon IQ. Those will be disclosed in any future filings that get made.

Eric Jackson: Those will be disclosed in any future filings that get made. There might be additional models that we develop within EMJX as well. But right now, those are two separate entities.

Speaker #4: And there might be additional models that we develop within EMJX as well. But right now, those are two separate entities.

Speaker #3: Thanks, Eric. That's very helpful. Our next question is relating to the rationale and details regarding the company's recent investments and, for example, Vistagen, Jersey Mike's IPO, SpaceX.

Valter Pinto: Thanks, Eric. That's very helpful. Our next question is relating to the rationale and details regarding the company's recent investments in, for example, Vistagen, Jersey Mike's IPO, SpaceX. Can you provide a little bit more detail into that thought process?

Speaker #3: Can you provide a little bit more detail about that thought process?

Speaker #2: Yeah, guys, I'll take that one. This is Kent. You know, each of those investments was evaluated independently. And we look at them based on, you know, risk-return profile, valuation, downside protection, liquidity, and, you know, the ultimately the potential to create shareholder value.

Kent Cunningham: Yeah, guys, I'll take that one. This is Kent. Each of those investments was evaluated independently, and we look at them based on risk-return profile, valuation, downside protection, liquidity, and ultimately the potential to create shareholder value. I would also say the size of those positions reflect partly our conviction in the opportunity. Also, we're balancing that against overall portfolio risk and the importance that we place on maintaining diversification and liquidity. While we won't discuss the specific underwriting assumptions or return expectations for individual positions, all of those, Vistagen, Jersey Mike's, SpaceX, each met our investment criteria within that broader framework.

Speaker #2: I would also say the size of those positions reflect, you know, partly our conviction in the opportunity, also we're balancing that against overall portfolio risk and the importance that we place on maintaining diversification and liquidity.

Speaker #2: And so, you know, while we won't discuss the specific underwriting assumptions or return expectations for individual positions, all of those—Vistagen, Jersey Mike's, SpaceX—each met our investment criteria within that broader framework.

Speaker #3: Thank you, Kent. And that is our last question for today. I do want to thank Kent, Eric, and Nina for today's call. Again, if we did not get to your question, please, as always, reach out to our investor relations team at SRX@kcsa.com.

Valter Pinto: Thank you, Kent. That is our last question for today. I do want to thank Kent, Eric, and Nina for today's call. Again, if we did not get to your question, please, as always, reach out to our investor relations team at srx@kcsa.com. Kent, over to you for final comments today.

Speaker #3: Kent, over to you for final comments today.

Speaker #2: Thanks, Walter.

Kent Cunningham: Thanks, Valter. Yeah, I guess I'd say I'll leave everyone with this. SRX today is a very different company than it was even a few months ago. We have a strong debt-free balance sheet, an improving operating business in Halo, new capabilities in EMJX, and the capital and the flexibility to go after opportunities where we believe we have a meaningful advantage. Ultimately, none of that matters without execution. So our job now is to convert those assets and those opportunities into results. We've got to grow Halo successfully. We need to deploy and commercialize EMJX, allocate our capital with discipline, and create durable value for shareholders. I'd also say that our management team and the board are significant shareholders alongside you. So we're aligned, we're focused, and we believe the opportunity in front of SRX is substantial. Again, we appreciate your continued support.

Speaker #3: Yeah, I guess I'd say I'll leave everyone with this. SRX today is a very different company than it was even a few months ago.

Speaker #3: We have a strong, debt-free balance sheet. And improving operating business and halo, new capabilities in EMJX, and the capital and the flexibility to go after opportunities where we believe we have a meaningful advantage.

Speaker #3: But ultimately, you know, none of that matters without execution. So our job now is to convert those assets and those opportunities into results. We've got to grow Halo, successfully.

Speaker #3: We need to deploy and commercialize EMJX, allocate our capital with discipline, and create durable value for shareholders.

Speaker #2: I'd also tell you that our management team, and the board, are significant shareholders alongside you. So we're aligned we're focused, and we believe the opportunity in front of SRX is substantial.

Speaker #2: So again, we appreciate your continued support. We're looking forward to updating everyone on our progress in the months ahead. And I would say that concludes our call.

Kent Cunningham: We're looking forward to updating everyone on our progress in the months ahead. I would say that concludes our call, and thanks again to everyone for joining us today.

Speaker #2: And thanks again to everyone for joining us today.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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Q3 2026 SRX Global Inc Earnings Call

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