Operator: Hi, everyone. Welcome to the DeFi Technologies second quarter 26. Financial review and shareholder call.
Curtis Schlaufman: I am Curtis Schlaufman, VP of marketing. And communications. Joining me on the call today are chief executive officer, Johan Wattenstrom chief financial officer, Paul Sandor Bozoki, and president Andrew Forson. We will begin with opening remarks from Johan Wattenstrom followed by a review of our second quarter 26 financial results from Paul. We will then provide an update on growth initiatives and strategic priorities, from Andrew Forson, and we will open up, for Q&A after that. Mix of retail from the chat and, invite analysts to come on and ask questions live. Before we begin, I would like to remind everyone that statements made during today's call may constitute forward looking information. Under applicable securities laws. These statements include, but are not limited to, comments regarding the expected financial performance, business development, strategic initiatives, market expansion, product growth, and future opportunities. Forward looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks and uncertainties. That could cause actual results to differ materially from those expressed or implied. With that, I will turn it over to Johan Wattenstrom.
Johan Wattenstrom: Thank you, Curtis, and thank you everyone for joining us today. The second quarter was shaped by continued volatility across digital asset markets as lower crypto asset prices affected assets under management, which together with a mark to market adjustments weighted our reported financial results. While those market conditions impacted our financial numbers during the quarter, they have not changed our conviction in the long term opportunity or the progress across the business. Our focus remains on executing our strategy, strengthening the platform and creating long term value for shareholders. More importantly, the underlying business continues to move in the right direction. Our core business is becoming more scalable and efficient as we invest across our existing businesses, pursue strategic opportunities and advanced product innovation. Believe these efforts are strengthening the platform, enhancing our competitive position and expanding all our long term growth opportunities across all the business areas. Balor has listed over 100 ETPs and structured product across multiple exchanges globally, Aiming for another 8 more during Q3. During the quarter, Valor generated more than $22.8 million on net inflows reflecting continued customer demand for our product despite the challenging environment for the broader digital asset industry. We view these positive net inflows as an encouraging sign demonstrating continued demand for our product despite the weaker market environment and reinforcing our confidence in the long term opportunities ahead. Beyond Valor, we continue to broaden our institutional platform and product offering. The launch of our first hedge fund remains a key priority, With all obstacles now removed, we are, at days or at least, at worst, 1 or 2, from the actual launch. We also expand expect to expand our arbitrage strategies during the second half of the year with a goal of further strengthening institutional capability and diversifying our revenue streams. The Swedish FSA did not approve our initial user structure, we have appealed the decision and are simultaneously working hard to establish an issuer platform in another domicile within the European Union. Those efforts are moving ahead quite quickly. Development of the Valour platform also remains on track. For a targeted beta launch in the second half of the year. The initial deployment will focus on bringing our custody capabilities in house, reducing third party custody costs and improving margins. Over time, the platform is expected to support a broader range of products and services. AI has also become an increasingly important part of our business, We are leveraging AI to improve operational efficiency while developing AI enabled investment products, which we believe complement our existing product offering and support future growth. From a financial standpoint, the company continues to operate from a position of strength, Our balance sheet and liquidity provide the flexibility to invest through the market cycle, support product innovation, pursue strategic acquisition opportunities, while also maintaining a disciplined approach to capital allocation Steelman maintained a strong momentum in onboarding larger clients and remains on track for a second record year of revenue. As market conditions improve, we believe the business is positioned for asymmetric upside, supported by continued growth in key operating metrics that are not primarily dependent on market volatility. Looking ahead, our priorities remain unchanged. We are focused on expanding our institutional capabilities broadening our product offering, and building a more diversified business aligned with the long term growth of digital assets. While near term market conditions remain challenging, we believe the investment being made today are strengthening the business, expanding our capabilities, and positioning the company to capitalize on the next phase of growth. Our main focus during this market downturn is to aggressively take market share in our core markets. With that, I will turn over to Paul to walk through the financial results.
Paul Sandor Bozoki: Thank you, Johan Wattenstrom, and good morning, everyone. I will begin with an overview of assets under management. Average AUM for the quarter was approximately 471.5 million quarter end AUM was approximately 397.2 million. Lower digital asset prices continued to weigh on reported assets under management during the quarter, consistent with conditions across the broader digital asset market. Our effective management fee yield was approximately 1% compared to approximately 1% in the prior period, primarily reflecting the larger weighting of Bitcoin related products within our AUM, which carry lower or no management fees as well as continued weakness across many altcoin markets. Within Valor, our effective staking yield of 2.4% also moderated during the quarter, as lower digital asset prices, compression in lending rates for Bitcoin and Ethereum, and changes in the composition of staking assets reduced overall monetization. Client activity remained encouraging despite these market driven headwinds, Valor generated 22.8 million of net inflows during the quarter, reflecting continued demand for our products despite the broader market environment These inflows provide a solid foundation for future growth in assets under management as digital asset prices recover. Total revenues for the quarter were $7.8 million compared to $11.2 million in the prior period reflecting lower average assets under management and unfavorable mark to market adjustments on our digital asset holdings, which are recognized through revenue under our broker dealer accounting structure. Excuse me. Company also maintained a fortress balance sheet. Ending the quarter with $60.3 million in cash and cash equivalents. 2019 sorry, 19.1 million of stretched preferred shares, and our RWA financial assets 10.4 million of USDTUSDC tokens and $30 million of digital asset treasury holdings for total liquidity of 119.8 million For clarity for our investors about the obvious drop in our cash balance from Q1, we bought $20 million of MicroStrategy stretch preferred shares, for 201 thousand shares to achieve a higher yield on our treasury cash reserves. These preferred share shares yield 12% or $1 per month. We also purchased a smaller position, our RWA, product Our short term US treasury bill holdings yield approximately 3.5%. So these other products yield significantly more. These investments are disclosed on the face of our balance sheet as other investments in fair value through profit and loss. And, again, at management, we view these essentially cash equivalents. But they are not classified as such under IFRS rules. We believe this strong financial position provides the flexibility to continue investing in strategic initiatives while maintaining a disciplined approach to capital allocation. Turning to product activity, we ended the quarter with 102 ETPs and structured products across our platform. We continue to expand our institutional product pipeline and distribution capabilities while advancing several new investment products and fund structures. Stillman Digital maintained an important diversification component of the broader platform, During the first half of 2026, Stillman generated 5.4 million and is on pace for a second year We remain encouraged by the business' trajectory and its contribution to the overall platform as it paces for a record revenue year. We remind our investors that Stillman revenue growth is not dependent on cryptocurrency prices increasing, but rather on trading volumes realized trading spreads. Turning to operating expenses. General and admin expenses and fees and commissions, which are our main cash costs, totaled 8 million in the quarter which represents a 1.6 million reduction from the 9.6 million incurred in Q1 2026 of these costs. We remain focused on disciplined cost management and continue working towards our targeted annualized cash operating cost structure of 36 to 39 million. While continuing to invest in our business. Our bottom line result was negatively affected by 16.3 million negative mark to market adjustments on our venture portfolio as well as our stretch preferred shares. Most of the negative adjustment is from the markdown of our 5% investment in MetaBank to reflect lower AUM and a compression in EV/AUM multiples across a valuation peer group. We are aware of publicly available information that AMINA Bank has engaged Cantor Fitzgerald to explore a potential public listing for it. With that, I will turn it over to Andrew Forson.
Andrew Forson: Thank you, Paul. As we discussed last quarter, our focus remains on expanding the institutional capabilities distribution relationships, and operating infrastructure needed to support the next phase of growth for DeFi technologies. Throughout the quarter, we made progress across several strategic initiatives designed to broaden our product offering improve monetization, and expand access to the platform. A key priority remains the development of regulated fund structures and institutional investment products. We are working to bring these initiatives to market in a disciplined manner. With an emphasis on products that are fully operational commercially ready, and available to investors. An organization like DeFi operates in a complex regulated space. Which requires the building of trust through relationships. Initiatives often require work months and years before the results are seen by the general public. In our case, Q2 saw increased adoption by partner organizations globally of our DVO Index platform which provides a strong broad narrative to discuss the unique strengths of each product within the Valor platform. Q2 also saw us systematize and execute on approaches for interacting with institutions and onboarding institutional capital into our Valour products. Over 40% of this quarter's inflows are directly attributed to our institutional events and outreach. To give a clear example, deals that began as discussions at our Abu Dhabi event in December 2025, closed during Q2. We have built an institution focused marketing and outreach strategy that uniquely and interestingly enables us to communicate the power of our products, the services offered by our portfolio companies, and our pipeline of future products on our terms. Efficiently, and economically to a global audience of bona fide investors. We built this capacity, which has enabled us to be competitive and generate positive net inflows. Despite compressed digital asset prices and poor market conditions. In less than 12 months. What we have created plays an important role We finally have an all important institutional sales platform, The beauty of what we do and how we do it is it is global. And flexible enough to accommodate all the innovative products in our pipeline that have been discussed by Johan Wattenstrom in a CEO letter and his earlier statement. In science, as in finance, to be effective, we must categorize the factors we deal with as independent or dependent variables. I remain heartened by our team's focus and our company's resilience in unfavorable market conditions. I am bullish on DeFi technologies, Valor, and Stillman Digital, because we are demonstrating increased efficiency and effectiveness with the dependent variables. These elements we have control over like net inflows, visibility, product development, clarity of the financial story, optimization of our corporate venture holdings, Those areas we do not have full autonomy or control over like asset prices and regulatory approvals, which can be impacted by anything from war interest rates, holiday seasons, and broader asset prices we monitor closely and have a dedicated team that responds quickly and professionally to all requests in an attempt to ensure we give ourselves the best shot at success. I asked listeners and viewers to know When Johan speaks of creating a platform, these are not empty words. he is done it before. And the evidence of this is in our world leading portfolio of over 100 digital asset underlying ETPs, Now we are entering into a new era of product with the objective of expanding our platform into structured instruments that have the potential for performance based upside increases. It is not a question of if these products will be delivered. They will be. And when they come online, the nature of many of these products are higher returning with great potential for upside to the firm. These initiatives are important not only because they broaden our product offering, but also because they expand the ways we can monetize the platform. Historically, our revenue model has been driven primarily by assets under management, management fees, and staking income. Over time, we believe these new institutional products and investment strategies can add performance-based returns, institutional mandates, and other revenue streams that are less directly tied to the direction of digital asset markets. Since November 2025, we have worked hard to develop our innovative business intelligence system that provides granular views of key competitive and operational metrics. This has grown into a system of proprietary data driven tools that give unique insights as to how specific Valour's single or index products interact with the financial world around us. Such research and development efforts leverage our infrastructure to provide unique insights. This serves as a proving ground for potential new products that can be created for third party asset managers for deployment by their internal risk desk, or wealth management platforms. This new capability enables us to expand distribution through the provision of valuable insights enables us to create new institutional partnerships, and improve monetization across products and assets already supported by the business whilst using data to define the products of the future. The positive net inflows generated in Q2 are proof that our model is working. Demonstrating the strength of our product offering and our ability to attract institutional and other customer assets through challenging market conditions. We also continue to invest in the long term capabilities of the platform. As tokenization becomes more widely adopted across financial markets, we believe our technology and operating infrastructure can eventually support a broader range of financial products and asset classes including tokenized real world assets. As the new products come online, I am excited that the firm will be in a position to speak with institutional capital allocators worldwide. This is the platform and product diversification that will insulate the company from the exogenous shocks inherent in digital asset markets whilst providing new and larger opportunities for institution focused revenue generation. That said, our focus is on execution. We will only communicate new products when they are operational and available to investors rather than before the necessary legal, regulatory, and commercial requirements are in place. We believe this approach will strengthen credibility support durable client relationships, and create more sustainable value for shareholders. With that, I will turn the call back over to Curtis for Q&A.
Curtis Schlaufman: Thanks, Andrew Forson. First of all, if you are an analyst, please do raise your hand. I can invite you on live to chat. And then I will go through the Q&A chat here for our retail investors. We will start with a couple of questions. There. I guess first question from when can we expect the smart crypto fund and hedge fund products? How is usage listing coming along? I think, Johan Wattenstrom, if you could sort of give, as much color as you can on Yeah. Our upcoming fund structures as a as a whole.
Johan Wattenstrom: Yeah for sure. We have, actually, right now, much more visibility than had only a few weeks ago. Unfortunately, it took it also think 3 months to onboard with some key trading partners because of different, yeah, different jurisdictional problems and other things. But now we finally onboarded with everyone. there is no more obstacles for the for the smart crypto fund. So we are in the final, yes, practicalities. So should be maybe 1 or 2, hopefully, in 3 weeks the most. But I would say within it is it is possible within a week. We have no more actual formal obstacles Everything is done. We are into practicalities and yet some final integrations. So we should see that within Q3, for sure. And on usage, we unfortunately, we got a note from this Swedish FSA. They dried it out longer time than they actually had a legal ground to do, and they actually in the end, did not even give a reason. They quite anti act anti crypto activists in the Swedish FSA. Since a long time. But we have actually both appealed that decision. We have also re redone the application in Sweden just to have to pressure on there. But we also have come quite far in the Luxembourg structure where they are quite neutral in terms of the different test classes. So yeah, if we do not get through in Sweden, we will get through in Luxembourg So but it will if it is Luxembourg, it might unfortunately take another few more months. We cannot give an exact date or clarity. I do not want I do not want to promise anything there. But within this year is my hope. If we get through in Sweden, I have no idea what the probability would be. That could go much quicker. But so, unfortunately, the uncertainty on the usage, but on the hedge fund, we have clarity. We are through all with all the obstacles.
Curtis Schlaufman: Next question.
Analyst: Our shares are 1/5 the price that they were when we initiated the capital raise. Should we not utilize some capital at this 80% discount to close out our current buyback? So, again, another question and thoughts around on our view on buybacks.
Johan Wattenstrom: Yeah. I can say what we have said before on that matter that the, our objective is to use the cash to grow our operation. We have done some investments this quarter. You have to get a high yield on the cash. But, obviously, we want to maintain it ready for some of the deals we, yeah, continuously are looking at. Which we think would have a much higher impact on the stock price if and when we can get those or any of those done than to just buy shares back. I also have the opinion that we should primarily buy back shares if we do, if we have a strong positive cash flow when you partial actual earnings to buy back shares. Obviously, you can do it in other by other reasons as well. But it is in a falling market, in a market where we see any change in the crypto market so far. I do not think it would have a lasting impact on its own. I think what would have a lasting impact is for us to grow the AUM, get out with more products, and do structural deals. So that remains the focus. that is not a note to buy backs. it is just saying that we think we have better opportunities, better use of cash at this point.
Paul Sandor Bozoki: And to reemphasize again, when we do buy back shares, those shares are retired. it is not like buying shares on the open market. And you hold them and they increase in value if the share price appreciates. So there is once we utilize that capital, the shares are burned. That capital is then dead. it is gone. We cannot make it liquid again, go buy it go out and buy anything else or reinvest it anywhere else. So it for from an operating leverage standpoint, especially during a bear market, when we are not producing a whole lot of free cash flow, it does not make a whole lot of sense for the long term revenue capabilities of the of the of the company.
Johan Wattenstrom: Yeah. I think what we what is best for the stock price long term, what will drive the stock price in long term the most is obviously for us grow the AM, grow the revenues, and that remains our full focus with all the resources we have at hand.
Curtis Schlaufman: And then a couple of questions on the Nasdaq compliance and applying for 180-day extension. I will address this quickly. We will be applying for the 1 hundred additional 180-day extension on September 1. We have had discussions with the team at Nasdaq They have indicated that we do qualify for the additional 180-day extension. But they cannot give us an, an affirmative answer, yes or no, until the application is submitted. We are very optimistic that the extension will be granted. And then know, of course, during that time, hopefully, crypto winter ends and, the company rerates during that time. So we will keep all, investors apprised as we proceed along this process. And the goal here is to get back over $1 organically. Through, our own internal growth initiatives, and, and quite bluntly, the market coming out of a crypto winter and back in a stable run in Bitcoin and some of the other. I will answer 1 more question, then we will go to analysts, then I will keep answering. We will pop back and forth. Now that geographic expansion has slowed and institutional products have stalled in Europe, what does the company see as the biggest driver of AUM outside of increased crypto prices? Again, Andrew or Johan Wattenstrom?
Johan Wattenstrom: Yeah. Yeah. I can start to so I think, obviously, the new products we are launching now, the new crypto fund, the issuer funds and so forth, where we address a different market. We have distribution not just locally in our core markets. We have this distribution globally for those products. I think there that is not as that market. We have a lot of demand. there is not a lot of products to choose from. I think our products will be unique and address that market very, you an extremely attractive way. We also will be listing a few innovative new products in the next few months. Think 2 of them, hopefully, within 2 weeks that are unique. there is no competition for those. So I think within the product portfolio, I do not wanna get too explicit about what we are gonna list here in the next few months. that is something we will we will announce when we list. But both the institutional fund type of products and also the other ETP products we have in our pipeline, I think, will be unique and will address a new market than where we what we are working with right now. So I think there is a lot of untapped potential there, and I think that will really drive our AUM once launched.
Curtis Schlaufman: Thanks. And then Paul, before we go to Edward and Alan and Hal, I guess, could you clarify the use of capital to purchase the stretch preferreds and the RWA product.
Paul Sandor Bozoki: Yeah. Okay. So for everybody to know, we keep our cash in US dollars. We keep our cash in US treasury bills short term, 3 months or less on the yields on those are about 3.5%. So it is not great as we all know in this environment. The board approved 20 million of our cash pile, going to MicroStrategy prefs. the stretch preferred, STRCs that I think most people are aware of. We did buy them at $99.50, They went as low as $85 at June 30. Think they were actually in the seventies, but they were 85 on June 30. So they we marked it down in the financials that you are seeing today. Those shares have since recovered to approximately $95. And Michael's Sailor and Fong Li have come out publicly repeatedly saying that their goal is to get them back to a 100. We will not sell. We do not have any intention to sell our shares in the near term. They are just a higher yielding component of our treasury. So, we do pick up a dollar a share. there is no withholding tax. They are paid as return of capital. They are we do still consider them attractive.
Curtis Schlaufman: that is cool.
Operator: Okay. I will add from Compass Point. Analyst. Edward. Go ahead and unmute yourself from the give the floor.
Edward Engel: Hey, guys. Thanks for taking my question here. Do you mind I mean, I know you kind of touched on some of the strength and the net flows being driven by institutional, but just kind of curious. Was there any specific product or was it just kind of across the spectrum? For those net inflows? I know I think you guys called out 1 big sale like, to Hedera, I think, early in the quarter, but and it seems like even since then, things have had a pretty good pace.
Paul Sandor Bozoki: Yeah. I could I could touch that briefly. There certainly was the 11 million of HBAR, the Hedera, which was a big part of it. And just overall for people to be aware of our AUM that we are 46% Bitcoin and Ethereum and 69.8% Bitcoin, Ethereum, Solana. So 70% in 3 tokens. So the grow the growth does generally reflect that. The disproportionate HBAR In flow that we press released and you are aware of.
Edward Engel: Yeah. But guess even I mean, for the 13 million of inflows, it is still your best quarter in a while. I am just kind of curious, like, what is driving that? Is it any geography? Is it anything specific, or was that, like, a was it lumpy, or is it generally broad based?
Andrew Forson: I mean, I can comment to that. It was actually, quite broad, I think the distribution that Paul mentioned is correct. But we have just really been you know, over the past year, we have just been really hammering contacts with broker dealer platforms with institutional investors, and making sure that people are aware of our presence. They see that we are visible. There have been some strong, marketing and publicity campaigns in The Nordics as well. And we have a very granular system for being able to track which products money is flowing into and out of not only us, but our competitors too. So we are just maximizing efficiency, and we were aware that it was a tough market, so we wanted to make sure to squeeze out every, last drop of, capital into our products, to attract capital into our products.
Curtis Schlaufman: Yeah. A bit a bit more color on that. Too. it is like behind the scenes, Andrew Forson, Jacob, Johan Wattenstrom, and our marketing and sales team at Velour are doing an extensive amount of work to grow the brand not only in The Nordics, but across The EU. And I know a lot of folks have their own opinions on our symposiums or capital market series. But, again, these are where you will see the seeds planted that will turn into, net inflows and AUM gains. So there are a lot of tiny little things and face to face connections that our marketing and sales are doing. And these are things that we were not able to do because frankly, we did not we were not in the position to do it from a financial perspective a couple of years ago. But even in a crypto winter, with, an extensive or a robust balance sheet, we are able to be aggressive but also efficient in our marketing and sales tactics this time around. Then we have ran a couple of our larger campaigns in The Nordics, attract additional inflows into our ETPs over the past few months as well. So even though things, are a bit slower in the in the ecosystem itself, this is an opportunity for us to be aggressive and grow our brand, plant continue to plant seeds. And see those fruits of our labor when, when conditions, turn.
Edward Engel: Great. And I think in the press release, you kinda mentioned how, in the bear market, you guys are pretty well capitalized in there could be potential M&A. Obviously, nothing specific, but I am just kinda curious of what you are seeing. Are you seeing of potential deals and sellers here, or is that just kind of a general comment that you might be able to execute on at some point?
Johan Wattenstrom: Yeah. I can do a brief comment. We, yeah, we see a continuous stream and pipeline of potential deals of different kinds in M&A. Base. In the last 6 months, I would say, have been much more intense in that regard. We are obviously extremely picky so even though we have done some really deep due diligence of some deals, which were very, very close and could have been extremely good with the if it is not a perfect fit, we do not go ahead. So we have done a lot of work on that. We see more and more in the pipe So it is it is very active Yeah. The M&A space is very active right now and a lot of interesting deals coming up. And we are selectively approaching and looking at new deals. But we obviously want to make sure it is a perfect fit for our long term strategy for sure. So but, yeah, it is super exciting and a lot of interesting discussions are being held.
Edward Engel: Yeah. Great. Thanks for the color.
Operator: Any other questions, Edward?
Edward Engel: No. that is it for me.
Operator: Cool. Alan?
Alan Klee: from Maxim, Alan here.
Operator: Do you have the floor? Alright. I will invite Hal from, B Riley. Allen, go ahead.
Analyst: Yeah. I my question is on the operating expense that you mentioned in the in the presentation, you know, that operating expenses fell to about $10 million from 2014. Is that a kind of a reasonable level going forward? And, you know, with the AUM at quarter end, you know, at just below $400 million, Can you maybe give us some commentary on kind of breakeven levels now with maybe the lower expense structure? Thanks.
Paul Sandor Bozoki: Yeah. Thanks for the question, Hal. It is our goal to keep operate cash operating costs, which is the general admin and the fees and commissions. Right? So excluding the noncash share based stuff, in the 36 to 39 million range. Okay. We need we need about 550 million of AUM at 4.25% monetization to be breakeven at that level, which we think is a reasonable monetization rate and slightly stronger crypto markets. So that is something we, of course, continue to monitor and, you know, depending on how long the crypto bear market goes down, we will continue to reevaluate. But at the current time, we think that is where we would like to operate.
Operator: Right.
Paul Sandor Bozoki: Thanks, Paul.
Operator: Cool.
Analyst: If I could ask a follow-up to Andrew Forson.
Andrew Forson: Andrew, you mentioned on the inflows,, it was it that 40% of new inflows were from institutions? I have to make sure I heard that number right. Yeah. It was approximately 40% But well, actually, no. It would probably be higher than that. But it was 40% from institutional deals. So actual what happens is we have face to face meetings at our events If they like it, we enter into discussion about how we can use the platform and people can institutions can invest in our products. And those particular deals I am actually looking at some of the questions from some people, but those particular deals that were reached at these meetings and events that we have represented approximately 40%. Of, the Q2 inflows. So, I mean, what 1 could say that with without these new vectors of communicating and institutional outreach and events, we may not have been able to close those deals or others like it in the future. And that is using our existing product mix. Whenever you factor in the fact that we are creating new products that are going to be less geographic restricted and have more of an appetite globally and it will also be very interesting to institutional investors, then that is where what we are doing, hopefully, will grow and drive more AUM to our platform as Paul and Johan have alluded to. 1 follow-up to that is, like, what is, you know, a idea for a geographically less restricted product that you know, that might replace what you have been doing? What is what does that really mean, or how does that, how is that constructed? Well, for instance, some of the fun products that Johan Wattenstrom has discussed we have had interest and we have discussed with wealth management platforms institutional allocators outside of Europe. And they can participate in those quite easily because they have an interesting theory behind them They have an interesting investment philosophy, great Sharpe ratio, interesting certain ratios. So these are products that larger capital allocators outside of Europe would have an interest in and would be able to avail themselves of these.
Analyst: Thank you, guys.
Operator: Yeah. I think, unless Alan comes back, I think that is all the questions we have from analysts. I think we Alan, are you still there? You are at So I have invited you back.
Alan Klee: Allen, if you can unmute yourself. Okay. Tell her. Hi. Can you hear me? Sorry about that. I cannot hear you. I just wanted to check So you said getting back to cash operating expenses, you said you are shooting for your target is $36 million to $39 million. If I took your-- you were very disciplined this quarter. You are g and a plus the fees and commission was just under 8 million. Which if you annualize that, that would get you to 32 million, which is lower than what you said, $36 million to $39 million. Is it reasonable that you could be running at a lower rate than $36 million to $39 million?
Paul Sandor Bozoki: Yeah. I mean, I you gotta look at what we were a little higher in Q1, Alan. So, hopefully, we do come in at the lower end of the bar. We are trying to underpromise and overdeliver here. But, yeah, we are we are we are running leaner now.
Alan Klee: Okay. Good.
Paul Sandor Bozoki: And then you there were some issues on yield this quarter. But the normal assumption for coming up with, like, the breakeven AUM is using a 4.5% yield on AUM. Is there any reason that we should be using a lower yield going forward? So we did 5% actual in 2025. We were 3.6 in Q1, in Q1 2003. I mean, Bitcoin was also $58.3 thousand on June 30. Right? Mike, it is it is do personally think it is dark days right now in crypto, and we are hopeful that the fall with the 4-year cycle and, you know, if Bitcoin can get closer to its 200-day, let alone go through it, it will be better. And then the yields will come up. So the yields right now are extremely distressed. We are still internally budgeting at 4.25, if you feel you want to use lower, it pushes the breakeven up, but you can see we are aggressive on the costs and trending on the low end as well.
Alan Klee: Okay. Did you say you are budgeting 4.25? Or 4.5?
Paul Sandor Bozoki: 4.25 for, hopefully, for the fall. Yeah.
Johan Wattenstrom: Yeah. The dynamic here is obviously that the when markets go down, the Bitcoin dominance normally goes up. And so our higher yielding assets are a lower part of the AUM, and that is what drives down the average monetization rate. So even though we have been more efficient in getting higher monetization rates on single in assets, across the board. The product mix changes when the market goes down, Bitcoin dominance goes up. When we mostly have Bitcoin and Ethereum, that is the dynamic that actually lowers the average monetization rate. So even though we even though we do a great job in actually earning more from most assets than before. Because a larger percentage of the AUM now is Bitcoin and Ethereum, where returns are lower that is what is driving the monetization rate average monetization rate down in the bear market But that obviously reverses when the market goes up, and then what we have seen in all cycles before is that then the ALTs and other coins come back with a high beta, and they yeah. And then the larger part of the portfolio they are, the more the monetization rate goes up.
Alan Klee: This is very helpful. Thank you very much.
Operator: Cool. Thanks, Alan. With that, we will go ahead and wrap it up. If we were not able to get to your questions, please do email IR@DeFi.tech. Thank you all for your time. Your patience, and your commitment as shareholders. We do value that greatly. And we will see you next time, everyone. Thank you.
