PWCM

Good day, and thank you for standing by. Welcome to the PowerCompute second quarter 2026 earnings conference call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now turn the conference over to speaker today, Phil Carlson. Please go ahead.

Thank you, operator, and thank you all for joining us on PowerCompute's second quarter 2026 earnings conference call. Joining us today are Chairman and Chief Executive Officer, Bruce Rodgers, Chief Financial Officer, Richard Russell, and President of U.S. Digital Mining, Ryan Durand. An accompanying supplemental investor presentation has been posted under the Events section of our investor relations website. Before we begin, please note that today's remarks include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future results and are subject to risks and uncertainties that could cause actual results to differ materially.

Important factors include, among others, our ability to retain the listing of our securities on the Nasdaq Capital Market, our liquidity and our ability to obtain additional financing on acceptable terms, the short-dated nature of our credit facility and our ability to renew it, the early stage of our AI infrastructure business and our lack of operating history in it, the volatility of Bitcoin prices and risks related to the use of Bitcoin as collateral, and our ability to secure customers and capital for any conversion of our power capacity. Any statements regarding the potential revenue opportunity from a full build-out of our power capacity are illustrative estimates only. They are not guidance, not a forecast for any period, and are subject to substantial execution, capital, and market risks. We will also reference certain non-GAAP financial measures.

Please refer to our Form 10-Q for a full reconciliation to the most comparable GAAP measures and to our SEC filings in the Investor section of our website at power-compute.com/investors for a more comprehensive discussion of these and other risks. I will now turn the call over to Chairman and Chief Executive Officer, Bruce Rodgers. Bruce, please go ahead.

Thank you and good morning, everyone. This is a transformational time for our company. in July, we expanded our business to include hosting AI infrastructure and high-performance computing to take advantage of the 26 megawatts of power under our control. As of July 22nd, we trade on Nasdaq under our new name, PowerCompute, and our new ticker, PWCM. The business you know as LM Funding America still exists, but the name we carried no longer captured where we were headed. Our owned power is the foundation of this strategy. We control 26 megawatts across two sites, a 15-megawatt site in Calumet, Oklahoma, and an 11-megawatt site in Columbus, Mississippi, both energized, industrial zoned, and operating today. Power is priced at approximately $0.037 per kilowatt hour in Oklahoma and $0.035 per kilowatt hour in Mississippi, a blended average of $0.036.

Our power is priced at variable market rates and will fluctuate. Our roughly 22 megawatts currently power Bitcoin mining, and all or part of that capacity is addressable for AI and HPC. We are also in discussions with our Oklahoma power provider regarding a potential expansion, and we continue to evaluate additional low-cost power sites. Those discussions are preliminary, and we cannot predict whether they will result in an agreement. We believe the defining constraint in AI infrastructure has shifted from space and fiber to power. Greenfield grid connection and permitting can take years. Our sites are energized now. The same attributes that make a strong mining site, owned power, low cost, operational infrastructure, and room to scale, are what AI compute customers are looking for. We think that convergence creates a timely opportunity for us.

Our first steps are deliberately small. In July, we acquired our first GPU and listed that capacity on the Vast.ai Compute marketplace. This is a proof of concept deployment. It generated no revenue in the second quarter, and revenue in the third quarter will be immaterial. Its purpose is to build operational experience and give us direct visibility into demand. In parallel, we are marketing approximately four megawatts of currently available energized capacity at our Columbus, Mississippi site for co-location and hosting. The full 11-megawatt site is convertible to HPC, and we would redeploy mining capacity there for the right customer commitment. We are also evaluating modular containerized data center solutions for converting power infrastructure to GPU compute and engaging vendors so that we can move quickly when we are ready.

Over the long term and assuming a full build-out of our existing 26 megawatts, we have said we believe this could represent a $20 million-$50 million annual revenue opportunity. I want to be clear about what that is. An example estimate of the opportunity at full build-out, not guidance and not a forecast for any period. Realizing it would require substantial additional capital, customer contracts we have not yet signed, and execution over multiple years. We have no assurance any of that will occur. But we value the opportunity to pursue $20 million-$50 million in annual revenue potential by building on the assets we already own and operate. Second quarter marks the beginning of this work rather than the result of it. I will now turn the call over to Rick to review the financial results.

Thank you, Bruce. Total revenue for the second quarter of 2026 was $2.1 million, essentially flat compared with $2.1 million in the first quarter of 2026, and an increase from $1.9 million in the second quarter of 2025. This represents a year-over-year increase of 9.8% for the quarter. This revenue growth reflects an increase in the number of miners actively mining and a decreased difficulty rate, partially offset by a lower average Bitcoin price. We mined 27.9 Bitcoins in the second quarter of 2026, up from 26.1 Bitcoins in the first quarter of 2026, and up from 18.4 Bitcoins in the second quarter of 2025. On June 3rd, 2026, our 318 Bitcoins were valued at approximately $18.6 million, when Bitcoin was valued at $58,400.

Our mining margin, after including curtailment and energy sales, was 29% in the second quarter of 2026, compared with 24.1% in the first quarter of 2026. The mining margin for the second quarter of 2025 was 41% when Bitcoin was much higher. Mining margin in the current quarter was supported by $145,000 in curtailment and energy sales, which was recognized as a reduction of cost of revenues set against an average Bitcoin price that declined to $72,000 in the second quarter of 2026, from around $75,700 in the first quarter of 2026. The average Bitcoin price in the second quarter of 2025 was $98,000. Net loss for the second quarter of 2026 was around $4.6 million, while our core EBITDA loss was $2.8 million.

Compared with second quarter of 2025 net income of $100,000, while core EBITDA income was $2.6 million. The change from the prior year quarter primarily reflects a loss on fair value of digital assets and digital asset receivables totaling $3 million versus a gain of around $3.8 million in the prior year quarter. Together with $460,000 of increased interest costs, primarily attributed to the imputed interest cost of the Galaxy loan and $280,000 of increased digital mining costs of revenues from higher Bitcoin mined. On June 3rd, 2026, total assets were around $37.1 million, including 318 Bitcoins, of which 174 were being held by Galaxy Digital as collateral. The total value of all Bitcoin was around $18.6 million, and cash was $900,000.

Total liabilities were around $21.6 million, consisting primarily of $10.8 million under the Galaxy Digital matched currency loan and $8.5 million of other notes payable, of which $1.9 million is long-term. As a subsequent event update, we refinanced and consolidated our three existing debt facilities totaling $18 million with Arch Lending secured by 307 Bitcoins from our treasury. The Arch facility replaced an $11 million loan from Galaxy Digital and $7 million of loans from another lender used to purchase our Oklahoma and Mississippi facilities. We initially entered into a bridge loan with Arch to consolidate the three loans. Then on August 3rd, 2026, we entered into a Bitcoin-backed facility with a revolving 30-day term carrying an interest rate of 2% APR.

The debt we retired carried a blended annual rate of around 13%, consisting of $7 million of notes at 12% and $11 million non-interest-bearing facility with Galaxy, but with imputed interest from the collar feature. The Arch facility is shorter in duration than the debt it replaced, and its rate and availability are subject to renewal. The Arch structure lets us hold our Bitcoin at a low cash carrying cost rather than sell it. We retain participation at Bitcoin appreciation between the contractual floor and ceiling of the collar with the ability to reset those levels as the facility renews. I will now turn the call back to Bruce.

Thank you, Rick. Let me close with where we are focused. Our near-term priority is proving out the model, running our proof of concept at Calumet, Oklahoma, learning what demand for this capacity actually looks like, and using what we learn to decide how quickly to convert additional owned megawatts in Oklahoma and Mississippi from mining to AI and HPC. This is a single GPU today. It is deliberately small because we would rather learn cheaply before we commit capital at scale. We are not starting from zero, though. We already own the power, the sites, and the operating experience this transition requires. We have real work ahead, and we intend to do it deliberately. At the same time, managing liquidity remains a near-term priority. The refinancing we completed after quarter end reduced our interest expense.

Though the facility is shorter in duration than the debt it replaced and substantially all of our Bitcoin is pledged as collateral, the structure lets us hold our Bitcoin rather than sell it. We retain participation in Bitcoin appreciation between the contractual floor and the ceiling, with the ability to reset those levels as the facility renews. Between owned low-cost power infrastructure and a large and growing market for AI compute, we believe PowerCompute has an opportunity to convert this quarter's announcements into tangible results. We look forward to updating you on our progress. Thank you for your continued support. Operator, please open the line for questions.

Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star one one again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Matthew Galinko with Maxim Group. Your line is open.

Hey, thanks for taking my questions. Maybe if we could start with, I think it's been a few weeks now since you announced the potential for hosting AI HPC at your infrastructure. Have you had any initial discussions with potential counterparties to provide a colo style arrangement or can you just give us any color of how the beginnings of that process is going?

We haven't announced anything definitive, and it'd be premature to do that, but the answer to your question is yes, we are talking to counterparties and sorting through it.

Got it. Thank you. In the prepared remarks, I think you mentioned exploring containerized type AI or GPU infrastructure to maybe scale up the single GPU pilot that you're doing now. Again, I understand it's maybe a little bit early to be going into which direction you might go, but can you maybe add some color to what the economics of that might look like or what operations might look like, and would you be able to fund the acquisition of a container? Would you replace your mining wholesale with containerized GPU infrastructure? Just how do you envision that path playing out if that's the direction you go?

Yeah, Matt, I'd love to answer every one of those questions, but I can't. I can answer a bunch of the questions. So there are folks out there that are manufacturing containers for HPC. They are sophisticated enough to require NDAs and wrap this up pretty tightly. It's also sophisticated enough to come with willing financial partners on both sides of it to advance that because of the potential of all of the other cheap places you could possibly run these things, and while the AI curve and the price for compute is so high. So that's the color and context. I wish I could tell you some material developments, but we're not to that point yet.

Got it. And maybe if I could get a last question in. With regards to any capacity expansion potential at your existing sites, what are the steps you would need to do? And maybe just on a local level, how would you say your counterparties are? What is the willingness to deploy an AI data center there? Do you expect pushback on a local level? Thanks.

I think you are probably going to more of a community by community on the pushback question. So the pushback question in Oklahoma is you are in a middle of an oil patch. There is no community. So any expansion there does not have any social or headline risk. Our facility in Columbus is in a community that I used to live in, believe it or not. And like all places, there is some anti-data center sentiment there that you can find on Facebook. But we had a very nice interview with the local newspaper there, The Columbus Dispatch, where Todd Liebel, our Vice President of Operations there, fielded every question, any question, and was pretty forthright with them. And I think it came off quite well that we complement the community because they would be facing brownouts otherwise.

That our ability to shut off our power and deliver power to them at peak is being seen as a community benefit or at least being positioned there. So I hope that is responsive to what you are asking. I will give you another shot at it if it is not.

No, that is great. I appreciate it. I will jump back in the queue.

All right. Thanks.

Again, ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. There being no further questions, this concludes PowerCompute's second quarter 2026 earnings conference call. Thank you for participating. You may now disconnect.

Good day. Thank you for standing by. Welcome to the LM Funding America's first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cody Fletcher, Investor Relations. Please go ahead, sir.

Thank you, operator, and thank you all for joining LM Funding America's first quarter 2026 earnings conference call. Joining us today are Chairman and Chief Executive Officer, Bruce Rodgers, Chief Financial Officer, Richard Russell, and President of U.S. Digital Mining, Ryan Duran. An accompanying supplemental investor presentation has been posted under the Events section of our investor relations website. Before we begin, please note that today's remarks may include forward-looking statements.

These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures. Please refer to our Form 10-Q for a full reconciliation of these measures to the most comparable GAAP measures and to our SEC filings in the investor section of our website at lmfunding.com/investors for a more comprehensive discussion of these and other risks. I will now turn the call over to our Chairman and CEO, Bruce Rodgers. Bruce?

Thank you, Cody, and good morning, everyone. The first quarter of 2026 saw us continue to grow and improve our operations in a softer Bitcoin environment. Since completing our site integrations in 2025, our focus has shifted to running our vertically integrated platform at scale. We mined 26.1 Bitcoin during the quarter, an increase from 22 Bitcoin in the fourth quarter of 2025. We did this with higher energized hash rate and continued improvements in fleet efficiency.

In March, energized hash rate reached approximately 790 petahash, the highest level in the company's history, and the month delivered 9.6 Bitcoin of production, our strongest of the quarter. On March 31, 2026, our 338.2 Bitcoin treasury was valued at approximately $23.1 million. With the recovery in Bitcoin price since quarter end, our 334 Bitcoin treasury on April 30th was valued at approximately $25.3 million and approximately $27.3 million as of earlier this week.

Despite this trend, our market capitalization continues to trade at a material discount to the value of our Bitcoin holdings alone. While Bitcoin price weakness is driving the reported financial results, the underlying operating profile improved across every relevant measure. Bitcoin produced, energized hash rate, fleet efficiency, and uptime. The first quarter of 2026 represents the first full period in which the platform we assembled in 2025 has operated at scale, and we are very happy with the numbers being produced. I'll now turn the call over to the President of U.S. Digital Mining, Ryan Duran. Ryan.

Thank you, Bruce. The first quarter of 2026 was the first full period during which our expanded fleet operated at scale across both sites. We produced 26.1 Bitcoin, an increase of 19% over the fourth quarter, while energized hash rate grew from approximately 750 petahash at year-end to approximately 790 petahash at quarter end, the highest in company's history. In January, we energized our second BC40 Elite immersion-cooled unit at Oklahoma, adding approximately 35 petahash via 160 Bitmain S21 Immersion miners.

The same month, Winter Storm Fern gave us an opportunity to demonstrate the value of our grid relationships. We proactively curtailed mining operations and redirected power to the grid, generating approximately $305,000 in energy and curtailment revenue in January, with the majority earned in just three days during the storm, equivalent to roughly 4 Bitcoin. In late February, we deployed approximately 300 Bitmain S19 XP miners at Oklahoma, replacing older hardware and reallocating higher terahash units to Mississippi. The upgrade lifted February production to 8.7 Bitcoin.

March closed the quarter at 9.6 Bitcoin, our highest monthly output and highest hash rate on record. As we move into the second quarter, we are mindful of the seasonal headwinds that warmer temperatures bring to mining efficiency and output. We look to continue incremental fleet upgrades where opportunities present themselves, with the goal of partially offsetting those effects and maintaining the competitive position we have built through the first quarter.

Looking at the fleet more broadly, the competitive economics of our hardware are better than the market typically appreciates. ASIC efficiency gains have compressed materially across recent generations. Early generational leaps, S9 -S17, S17-S19, delivered efficiency improvements of 30%-55%. The last two air-cooled generations have produced gains in the 18%-23% range, modest by historical standards. The driver is structural.

Leading semiconductor foundries are allocating an increased share of advanced manufacturing capacity to AI chip production, extending ASIC lead times and compressing efficiency improvements across the Bitcoin supply chain. The practical result is that our deployed S19 XP, S21, and S21 immersion fleet retains its competitive position on the network meaningfully longer than the same generational hardware that would have in prior cycles, a dynamic we expect to persist. I will turn the call over to Rick.

Thank you, Ryan. Total revenue for the first quarter of 2026 was approximately $2.1 million, compared with $2.4 million in the fourth quarter of 2025 and $2.4 million in the first quarter of 2025, a year-over-year decline of approximately 11%. The decrease reflects a significantly lower Bitcoin price, partially offset by a 19% sequential increase in Bitcoin produced. Mining margin was approximately 24.1% in the first quarter of 2026, compared to 25% reported in the fourth quarter of 2025.

Mining margin in the quarter was supported by approximately $368,000 in curtailment and energy sales, recognized as a reduction of cost of revenues set against an average Bitcoin price that declined from an average of $99,700 in the fourth quarter of 2025, as compared to an average of $75,700 in the first quarter of 2026. The net loss for the first quarter of 2026 was approximately $10.1 million, and the core EBITDA loss was approximately $8.4 million, compared with a Q1 2025 net loss of $5.4 million and core EBITDA loss of $2.8 million.

Net loss in the first quarter of 2026 reflects a $7 million negative fair market value adjustment on both mined digital assets and Bitcoin collateral receivable, since the Bitcoin price declined from approximately $87,500 at year-end to approximately $68,300 on March 31st, 2026. The company's net adjusted cash flow used in operations was approximately $200,000 after adding back the $3.1 million of proceeds from the sale of digital assets to the $3.3 million of net cash used in operating activities. On March 31st, 2026, total assets were approximately $41.8 million, including Bitcoin holdings of 338.2 Bitcoin, of which 174 Bitcoin are held by Galaxy Digital as collateral.

The total value of all Bitcoin was approximately $23.1 million in cash of approximately $800,000. Total liabilities were approximately $22.7 million, essentially flat with year-end 2025, consisting primarily of the $10.9 million of the Galaxy Digital master digital currency loan and approximately $8.7 million of other notes payable, of which $1.9 million is long term. During the first quarter, we extended the maturity date of the Galaxy facility to June 26, 2026, providing flexibility to evaluate settlement options as Bitcoin market conditions evolve.

As a subsequent event update, the underlying value of our Bitcoin treasury has recovered significantly since the close of the quarter. As I noted previously, our March 31st Bitcoin treasury was valued at approximately $23.1 million or $1.06 per diluted share. On April 30th, 2026, we held 334 Bitcoin, including the 174 Bitcoins held by Galaxy Digital as collateral, totally valued at approximately $25.3 million or $1.18 per diluted share at a Bitcoin price of approximately $75,800.

As of May 11th, that treasury was valued at approximately $27.3 million or $1.27 per diluted share at a Bitcoin price of approximately $81,700. The approximately 21% Bitcoin price recovery since March 31st represents roughly $5 million of incremental Bitcoin fair value across our holdings. The substantial majority of our reported Q1 net loss reflect a non-cash Bitcoin fair value adjustment, applying the May 11th Bitcoin price to our March 31st balance sheet on a pro forma basis would reduce our reported Q1 net loss by a comparable amount.

The implied per share value of our Bitcoin treasury held on April 30, 2026, valued at the May 11 price, now stands at approximately $1.27, well above our recent share price in a direct measure of the valuation disconnect we continue to work to close. Looking through the non-cash fair value adjustments, the underlying operating profile remains consistent with the fourth quarter. Stable mining margin, higher Bitcoin produced, and a manageable balance sheet. The operating leverage embedded in our two wholly owned low-cost power sites translate directly to margin and cash flow expansion in any Bitcoin price recovery. I will now turn the call back to Bruce.

Thank you, Rick. Let me close with four points. First, the company is operationally in the strongest position in its history. Record energized hash rate, record monthly production in March, and two wholly owned sites running at scale. Second, during the quarter, we again extended the Galaxy Digital facility maturity, this time to June 26, 2026. This helps further preserve our capital structure flexibility of our Bitcoin asset base.

Third, our common equity continues to trade at a material discount to the underlying value of our Bitcoin treasury and the value of our operating platform. Closing that valuation gap remains a primary focus. Managing the things we can control, like disciplined operating execution, consistent communication with shareholders, and selective accretive growth. Fourth, the point of which I'd like to close, we remain a focused Bitcoin mining and treasury company.

We plan to acquire and mine Bitcoin with low cost power that presently does not suit HPC or AI compute demands, but may in the future as the profile of those demands evolve. We continue to evaluate selective expansion in the 5 MW-20 MW range, including additional capacity in Mississippi. These are assets that fall below the scale threshold required for hyperscaler hosting and appear to be increasingly available at relatively attractive prices in both power and acquisition cost.

That positioning is reinforced by the broader market backdrop. Bitcoin network hash rate has declined approximately 27% from its October 25 peak as public miners reallocate capacity to AI hosting. Five downward difficulty adjustments have been recorded year to date. Public miners sold a record 32,000 Bitcoin in the first quarter alone to fund the GPU capital expenditure required for those AI build-outs.

More than $70 billion of HPC contracts have been announced across the sector. Each megawatt of mining capacity that exits the network for an AI workload is a megawatt of reduced difficulty for those of us mining Bitcoin. We view these dynamics as structural rather than cyclical, driven by foundry capacity allocation, accelerating hyperscaler power demand, and the persistent spread between the available power cost and the Bitcoin mining revenue per megawatt.

We believe the economic logic favors operators of our profile. Our priorities for the remainder of 2026 are unchanged. Grow Bitcoin production, improve fleet efficiency, increase Bitcoin per share, and evaluate accretive acquisitions in the 5 MW-20 MW range with the same value discipline that produced the Mississippi acquisition. Thank you for your continued support. Operator, please open the line for questions.

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for our first question. Our first question is going to come from the line of Matthew Galinko with Maxim Group. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking my questions. Maybe firstly, given your comments about the impression of efficiency gains across ASIC generations more recently, how does that shape your thinking about adding hash rate to, you know, if you do acquire an additional site or as you look for fleet optimization, are you know, still looking for new ASICs, or would, you know, would you purchase used, you know, older generations? Thanks.

It is all driven by electricity tariffs and price and what can you buy the electricity for. With the right electricity price, you size what sort of machines work best there and whether it's gonna be air-cooled or immersion, etc. Our driving force is always payback time. That meaning the sooner that that machine mining at a constant price of constant electricity can pay for itself and be in the black, that's what we want. That's taking us into the used market or the second from the fastest generation area machine because it's just where the terahash pay off and the revenues pay off for us.

Got it. I guess, you know, you touched on continuing to evaluate sites, in the 5 MW to, you know, 20-ish MW range. Can you maybe talk a little bit more about what you've seen over the last quarter as far as, you know, counterparty expectations for, you know, what those costs, have they come down at all? Have you seen more entering the pipeline? Is there more evaluation going on today than, you know, a couple quarters ago? Just a little bit more color on that side. Thanks.

The pipeline gets to be pretty robust because people that have a wire going over their land all assume that they are sitting on HPC or Bitcoin gold. You know, you do the due diligence and find out what that wire can carry and where the nearest transformers and substations are, and things fall apart quickly. Even when you find the electricity there, then you've got the Bitcoin mining, the environmental issues, you know, the noise issue, the heat, where is it gonna go?

Are you really gonna be able to scale an operation on that site with a residential neighborhood or a church or school nearby, that kind of thing. It's, it's all of those things that drive you to where you can go. You asked about pricing. I think our Mississippi transaction sort of sizes it up. People that are exiting Bitcoin to go do HPC and greater things kind of start off with what their cost basis is plus something in terms of what they're hoping to realize.

It's kind of a buyer's market out there for these 5MW-20 MW sites. There's only a few of us left in this microcap land where you can do that kind of thing. That's probably the explanation why there's less velocity so far this year on those type of acquisitions than we would have thought. It's all about price reconciliation.

Thanks. I'll jump back in the queue.

Thank you. Showing there's no further questions, this concludes LM Funding America's first quarter 2026 earnings conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.