Earnings call transcript: Apix Technologies Q1 2025 outlines growth and innovation

Apix Technologies, a digitally native exchange, provided an update on its Q1 2025 performance, highlighting strategic initiatives and product innovations. Trading near its 52-week low of $6.48, the stock has seen a 25% decline over the past year. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation. With earnings expected in 4 days, investors seeking deeper insights can access comprehensive valuation metrics and 10+ additional ProTips through InvestingPro's detailed research reports.

Key Takeaways

• Launched futures markets in LNG, carbon, and battery metals.
• Secured $33 million in financing to extend growth runway into 2026.
• Focused on expanding multicurrency settlement capabilities by May 2025.
• Submitted application for foreign board of trade recognition with the CFTC.

Company Performance

Apix Technologies is in the early stages of ramping up commercial operations and revenue generation. The company has successfully onboarded 29 trading firms and 14 interdealer brokers, signaling progress in its operational transition. The focus remains on expanding its global reach, particularly in emerging markets like battery metals and LNG.

Financial Highlights

• Concluded a $33 million financing round.
• Passed peak operating expenditure headcount and total compensation spend.
• Planning to streamline to normalized operating costs.

Outlook & Guidance

Apix Technologies is prioritizing revenue growth and network expansion, with analysts forecasting sales growth of 6.83% for the current year. While the company achieved impressive revenue growth of 276.83% in the last twelve months, profitability remains a challenge with negative gross margins. The company is developing faster-to-market products, such as indexes and spreads, and exploring third-party clearing services. Advancements in AI and digital identity technologies are also on the horizon, with a focus on expanding global market liquidity.

Executive Commentary

• "We believe that the time is now for upgrading the global post-trade and commodity derivative collateral ecosystem," said Josh, CEO.
• Joe Reyes, CCO, emphasized the importance of volume growth, stating, "Volume, just like onboarding, is equally important, and it's a direct result of the firms that are coming on board."
• Josh, CEO, highlighted the company's proactive approach: "We're not waiting for third-party integrators to explain how this is gonna work. We're living it, building it, testing it."

Risks and Challenges

• Potential delays in product launches could impact revenue growth.
• Regulatory challenges in securing foreign board of trade recognition.
• Competition in the global exchange market may pressure pricing and margins.
• Dependence on technology development and integration for multicurrency capabilities.
• Market volatility in emerging sectors like battery metals and LNG.

Apix Technologies continues to position itself as a leader in the digital exchange space, with a focus on innovation and strategic growth. The company's proactive approach to expanding its product offerings and market presence is central to its future success.

Full transcript - Abaxx Technologies Inc (ABXX) Q1 2025:

Josh, CEO/Founder, Apix Technologies: Great. Thanks. Well, good morning, everyone, and good evening for those of you joining us from Singapore. Welcome to the Apix Technologies and Apix Exchange q one twenty twenty five corporate update call.

During today's call, I'll reference disclosures from Tuesday's q one twenty twenty five quarterly business and corporate update and last week's filing of our 2024 audited annual financial statements and related filings on SEDAR plus. By reference to these press releases and disclosures, I also want to draw your attention to some of the specific cautionary statements and notices that accompany each of those releases, respectively, and to start off this call today by referring to our caution on forward looking statements and the regular risk disclosures of our quarterly and annual filings. Please see our disclaimer on forward looking statements in the slide attached. In addition, given the highly regulated nature of our products and operations and the early growth stage of our ramp up and listing of new products as the year progress, it's it's also important to reiterate reiterate the cautionary nature of our forward looking statements with respect to products that are still subject to ongoing regulatory work and review. I will endeavor to point out these cautions as we go.

But as of today, our Abbott Singapore entity's regulatory status is that of a recognized market operator ex exchange and approved clearinghouse in Singapore with futures products currently trading in physical LNG and VCM carbon. And as of q one, the launch of our metals businesses in lithium carbonate and nickel sulfate. Any other potential products discussed today, including potential new markets planned for gold and precious metals, base metals, weather derivatives, and smart commodities, or even some of our innovative technology enabled products, these new products would be subject to meeting all regulatory requirements. We all we will also speak about our upcoming gold products today. And upfront, I wanna specifically point out that AveX Spot is a newly incorporated business in Singapore in q one, but operating under a different branch of the AveX corporate family tree and not part of our monetary of authority Singapore Monetary Authority of Singapore regulated entities of ABX Singapore, ABX Exchange and ABX Clearing, as MAAS does not regulate spot commodity markets.

For those of you who are new to the company on on the call today, we've hosted project update calls semi regularly around key milestone quarterly ends, not and did not specifically speak to financial statements or financial guidance directly. The company is still in an early operating transition stage, ramping up commercial operations and revenues, So we'll increasingly transition this quarterly call to that of a typical financial k p key performance indicator presentation in quarters ahead. But in today's call, the majority of the material updates will be focused again on onboarding KPIs and trading updates, product pipeline updates, and other technology and product milestone related developments. So as in recent calls, the call today is intended to serve as a review of recent disclosures in a forum for investor and analyst q and a. It looks like the q and a portion of the call today will again be heavily focused on the commercial ramp up of the Abixx exchange and clearinghouse, updates on our contract adoption and onboarding of participants across LNG, environmental markets, and battery metals.

But in today's prepared statements, I want to specifically lay out the corporate update and milestones presentations as they relate to our two primary value creation objectives for shareholders. First, our near term business and financial objectives that make us a sustainable business, I e, you know, the revenue growth and transitioning of our operating businesses from a company that builds things to a company that sells things, both in commodity derivatives and markets and software. And second, our continued development of new nodes in a global trading and clearing network, or in other words, continuing to onboard and build out all of the so called market plumbing and market distribution infrastructure that will enable AbEx markets to achieve our medium term goal of eventually joining the ranks of the million plus average daily volume club as a true global market, and therefore, really realizing our current addressable markets for global gas, news new new metals products, as well as commercial distribution network for our software and the AbEx full digital title collateral service network as envisioned by the founding by our founding mission. As you can see from all the immense amount of of activity and successes we've had over the last four or five months in developing products and adding new nodes to our network, as laid out in our press release on Tuesday, there is no doubt as to the quarter or quarter, year over year progress in the strategic development of the operating assets and commercial network of the Abix Group, a company that continues to execute in an extremely impressive global level relative to our overall capitalization.

But it's also clear that we need to spend more time contextualizing each of these development updates into both buckets, not just the long term infrastructure network development, but also getting more granular on the near term successes and challenges of transitioning the core part of the business to sales and trading volume growth. So today, we'll spend more time outlining what's required to grow near term volumes and revenue through the remainder of 2025 even as the longer term technology vision starts to become a reality this year and as we continue to onboard new nodes to the network. From recent stakeholder discussions, both internally and externally, I've come to realize that framing our updates in this way, both unlocking a near term revenue and trading volume trajectory as well as the development of the network, and strategic asset, this dual mandate is critical for understanding the path of AbEx through the remainder of 2025 and understanding the road markers ahead for our existing markets, our new product additions, and our new software updates along the way. As I as I believe I mentioned on the last call, borrowing and paraphrasing from Howard Lutnick's description of building a new exchange as a year to onboard, a year to build liquidity, and then we really start competing.

I want to break down that process in a little bit further detail to discuss the major milestones we hit over the last quarter with our first trade in lithium carbonate and nickel sulfate, incredibly important work that's been ongoing in the distributing of our prices and market data over the past quarter and the very significant milestones announced at the March of a physical LNG trade using AVEX benchmark prices. On today's call, I also want to discuss some of the new fee new futures products additions that we have in the 2025 road map and pipeline and present them and present them with a new category framework to help stakeholders understand how each new product can potentially add to near term volumes and revenue, as well as how new products expand the access nodes to our network and help achieve both of our objectives. We're currently focusing on products that can potentially achieve quicker ramp up volumes in the brand new markets built from scratch, like our physical LNG and battery metals, and therefore, products that can also add new liquidity nodes for both new and existing contracts listed. I'll touch on this new categorization in more detail as we outline the product pipeline.

But, basically, there are three types of markets in our road map. Again, the brand new greenfield physical products like the ones we've just launched and are currently building from scratch. Second, there are what I'd describe as step out markets, the first of which will be our new gold market, where it's still a new market, but it's but it functions very similar to other existing markets and will need less product education and less global connectivity nodes to build the liquidity. And finally, various spreads, indexes, and look alike markets that we plan to roll out over the course of the year and can likely tie into existing pools of market liquidity much more seamlessly than the new physical markets or regional step out markets developed from scratch. So we'll discuss how these different product categories can each help to achieve both of our objectives, products that can potentially achieve quicker ramp up volumes even on a smaller network of onboarded nodes today, but also products that can grow and attract new nodes or tip some of the firms in our onboarding funnel over the line for joining because of the multiple offerings.

Thus far, the new greenfield markets like LNG, for example, our flagship, have been facing the dual challenges of market development penetration at the same time as our onboarding connectivity still has to be built out further for the global liquidity to take hold. That all said, I think it's important to point out from our road map perspective and that of of some of our major strategic investors, growing the asset value of Abix is not just predicated on the next twelve months of volume revenue growth. While our company is absolutely in the transition phase of becoming streamlined and process oriented sales and client service company, and we're all and we've already in the midst of a number of management and process optimizations to better service onboarding and grow grow trading activity, the strategic value of the company continues with the long term development of the network connectivity infrastructure, the plumbing that will allow us to launch new products demanded by the market at any time once the access and distribution is global and on par with other exchange companies. A clearing network as an asset is a strategic business in core global commodities and trade collateral management, which continues to be the focus of our long term shareholders and strategic partners.

And finally, thinking about this dual mandate of network building as well as our near term revenue growth objectives, over the next few quarters, I believe it will become increasingly clear to stakeholders how our I d plus plus and Apex digital, title development work is not just a tangential software service, but core to the strategy of unlocking inefficiencies for our clients, adding network value to our ecosystem, and generating new potential revenue streams for our exchange and clearing business. I've often talked about the concept of a fully integrated greenfield fintech the so called full stack venture, that rare type of business that can first develop a commercial footing within an entrenched incumbent network, be it an entrenched distribution network or a highly regulated and protected industry, and then push software innovation from the inside out to lower customer friction, increase commercial speed and efficiency, in our case, lower the inner intermediary risk for commerce. We believe that the time is now for upgrading the global post trade and commodity derivative collateral ecosystem. And in q one, AbEx has reached the second stage milestone of a three phase development for engineering and testing our proprietary software technology to to achieve these objectives.

Over the coming quarters, we'll be publishing more about the plan the planning and execution of our pilot work for a better way to move commodity collateral with I v plus plus in the Abix technology ecosystem. So, again, having reached this operating growth stage in both parts of our full stack technology and operating businesses, and now that Abix has won a handful of commodity futures businesses globally with our own independent clearing and a major financial center. We we should have a number of updates to share on both aspects of the business over the next few quarters. But for now, we're also very focused on the objective of growing volumes so we can cover that a lot more in the q and a. And finally, speaking on behalf of the AVEX global team, sometimes it's hard to contain our excitement on how things are all come together here in 2025, but I should always caution that all of this forward looking innovation would be subject to meeting regulatory requirements and navigating the complex technological adoption cycles of our institutional clearing and exchange members, which we've only started to navigate with live software products.

So turning to the agenda, and sorry for the longer introduction than usual, but on today's call, I will go through recent disclosures more quickly than usual and jump right to the q and a section with the rest of the team. Joining me on the call today are chief commercial officer, Joe Reyes, chief strategy officer, Gabe Greeley, and CFO, Steve Fray. Today's agenda will present a little bit different than previous calls as I'll really just focus on our commercial and operating updates in my prepared agenda, and then we will push more of the technology and corporate financing discussion to the q and a section. That said, we did have, some big milestones and updates this quarter on I d plus plus, the AbEx console suite, and full digital title technology, which sets us up for an exciting back half of '20 '20 '5 as we move to pilot trades in the operating phase. But I think it's better to address that update through the incoming questions.

We're also just concluding a second tranche of an important $33,000,000 financing that extends our growth in working capital with additional development runway into 2026. And we've also passed our peak OpEx headcount and total compensation spend over the last two quarters, and we will look to streamline our transition to normalized operating costs for operations over the quarters ahead, which we'll also cover in the questions coming into the q and a. For institutions and analysts who are new to AbEx on the call to call with us today, as I go through our prepared operating updates, for further context, I would also encourage you to listen to our previous project update calls, which are on the AbEx IR website and our AbEx YouTube channel, drawing specific reference to product presentations from David Greeley on LNG and futures addressable markets, which is our approach to addressable markets and ramp up in general. The I d plus plus and Abix console suite demonstration for me and Forrester, my description of the full stack technology layer cake in November's call, and my dis discussion of our strategic approach to operating off of two balance sheets and two distinct complementary business units, AbEx Exchange and Clearing, which I'll also refer simply as AbEx Singapore, and AbEx Technologies.

It's through the sum of the parts we can realize our long term smarter markets vision and strategy for changing the way commodities are priced and traded to allow the invisible hand of the free market to better discover and price and distribute the positive and negative externalities of the of the natural resource sector, particularly in this time of unprecedented trade volatility and a potential reordering of global energy and metal supply chains, which is ongoing in real time this quarter, all of which require smarter risk management tools and new market builders that we've assembled at AbEx. So first up, getting them into the commercial update, we've had an extremely busy four or five months since our last investor call with a number of key milestones achieved and a number of important new nodes added to our network. And, again, focus on both objectives. Let's get into how these updates can also help opening new revenue lines of the year progresses. As you all know, on g twenty eighth twenty twenty four, we launched the Abix Commodity Futures Exchange and Clearinghouse in Singapore with trading commencing in physically deliverable, liquefied natural gas and carbon futures contracts, a total of five new markets.

And in q one, we added four new new futures markets in battery metals with three physically deliverable l lithium carbonate contracts and a nickel sulfate futures. Our current suite of US dollar priced futures contracts across LNG, battery metals, and carbon are open for four open for trading fourteen hours a day, Monday through Friday. But stay tuned for some innovations we're working on to expand our hours, currencies, and settlement infrastructure in the quarters ahead, especially once our Abix digital title product is fully integrated later this year, subject to meeting all re regulatory requirements. The most important commercial highlights to point out are the first trades in nickel sulfate and lithium carbonate futures during q one, including the world's first trade of a non Chinese US dollar denominated and physically deliverable lithium carbonate futures. The company also saw its first OTC LNG cargo indexed to AbEx LNG futures, which was a major milestone for AbEx, reflecting growing confidence in AbEx's prices as a benchmark contract.

This announcement, in particular, initiated some of the most active engagement for accelerating the onboarding activity and inbounds from the LNG community since we launched the markets. We also established active bids and offers in all all three LNG contracts and both carbon contracts across our trading hours, which combined with all of the new developments in market data and distribution, now allows potential clients to build their own tracking and market assessment tools as they onboard to trade our products and allows the interdealer brokers, the market ranges to work our products through their check sales channels when brokering physical and block trades as well. And on the market data front, we finalized onboarding with our first major global distribution network expected to expand the visibility of Avax markets to over a hundred million viewers. In total, we added our first six market data partners in q one twenty twenty five, which, again, was not really available before establishing active markets across all of our markers. Beyond this initial six, we're now progressing with basically all of the major financial data platforms so that any financial professional can pull our prices just as seamlessly as they do with other major global commodity instruments.

This is an important development milestone in the hard plumbing and distribution of our markets and all future products that will no longer require this onetime build out. Looking ahead with additional deals in the pipeline, we're getting close to the market equivalency needed for broad price visibility by the summer or right around that one year milestone of core onboarding. With so much complexity and chicken and the egg dependency loops in building markets, we probably didn't spend enough time previously in talking about this aspect of the infrastructure. But it's obviously important for both building the asset value from a network node perspective, but also opens up a future revenue channel as market data is an important part of the exchange business model. As we've discussed on previous calls, in the early days, the data is used in more of a strategic way than just selling a monthly data subscription fee before our markets are liquid.

But this is a future revenue lever that starts with the partnerships executed over the past quarter and more onboarding in the funnel. Another important commercial development to highlight is an inbound discussion we've gauge engaged that's looking to utilize our clearinghouse for third party clearing services. Now it's important to just note that I don't wanna get too far out ahead of this one before putting in more regulatory work, but the basic third party clearing model is that this is noncompetitive this is a noncompetitive product exchange that would integrate their markets with our clearinghouse. And in this group this specific group's case, they could potentially help to with onboarding additional bank and nonbank clearing members to our net to our clearinghouse for their products and ours, and Abix would earn a per trade fee on all of their daily cleared trading volume. In this model, particularly if it's a highly liquid, you know, high high volume market, this can significantly add to both our business objectives, adding immediate daily volume and revenue line items, as well as new on onboard a new onboarding poll that builds out the nodes in our long term network.

Again, it's important to to speak generally here as as there's still a lot of system, regulatory, and commercial work to be done, but it's important to introduce this potential real option value of the infrastructure and technology being developed by AbEx. To support commercial growth in Asia in q one, AbEx expanded marketing efforts in China, including the launch of a dedicated Chinese language website and the announcement of a cohosted Mandarin language battery metals seminar with Shanghai Metals Market. The team also engaged in exploratory discussions with the external exchange groups based in China to collaborate on a cross jurisdictional, I. E, onshore, offshore product listing opportunities with Abix Exchange and Clearing. Again, on the potential for cross listing business, this would be subject to additional regulatory work in line with other new product developments, but could open a potential revenue share opportunity for licensing our products to be traded onshore China on a per trade fee basis as well as new product listings on AbEx exchange of that of established Chinese market as an index price that could potentially increase trading and network build out of our own exchange and clearinghouse.

Turning to onboarding progress. Full clearing and execution are currently accessible through three clearing members, Stonex, KGI Securities, and ADM Investor Services, with three additional futures commission merchants or FCMs in Mizuho, Merix, and Straits Financial providing indirect access to our market for brokers, market makers, and commodity trading clients. Four additional clears that include global bank clears are currently in the progress in progress to establish new clearing connectivity. We plan to cover the FCM topic in more detail in q and a, but it's important to note the initial volume seen in the first few quarters of connectivity and ramp up are still working through some full client access and connectivity blockers with a few of our FCMs and clearing members. And some of the AveX products are only available to a limited number of the initial execution brokers and their clients in some of the of our core launches and were not available in all global regions in some of the early sessions.

Joe Ray and I can walk through some of the updates and steps we're taking to remove some of the continued blockers to build initial access and liquidity in our markets. 29 trading firms comprised of merchant traders and financial trading firms are now fully onboarded to execute block trades with 12 additional firms currently in on the onboarding process. Clients connected to the AbEx continue to to AbEx continue to be able to access AbEx markets through central limit order book, and 14 interdealer brokers or IDPs are onboarded with 12 more in progress. So we've had another strong q one for trading firm and inter interdealer broker onboarding. We continue to have sustain a substantial commercial interest for our products despite some of the connectivity and onboarding frustrations.

And in mid q one, we initiated an end to end onboarding process review to help smooth out some of AveX's the AveX side trading firm process as well as the FCM network communications. Again, we can talk through this more in the q and a. Turning to new futures products developments. We've had another strong quarter for new product development, and I would reiterate that new internal classification we're using to describe these products. Unlike our nine existing contracts where each one is a brand new physically deliverable market being built in sectors not always familiar with physical delivery futures, outside of our gold product, much of our next slate of products are specifically being developed with industry clients as new cash settled index futures, spreads, and look alikes that can be a lower barrier to entry for trading and adoption and can more easily draw on existing pools of market liquidity and risk management.

Specifically, we advanced a regional copper spread futures contract to listing pipeline, a suite of weather derivatives, and carbon market contracts aligned with regional compliance programs, each currently in our final stage three of new listings and regulatory work. Certain weather and compliance carbon futures are expected to become the first AbEx contracts priced in currencies other than US dollars. As per our innovative new gold market structure, which is not quite a greenfield market, more of a step out market, which will be very familiar to gold market participants in in many other regional markets, we do not believe we we do believe that we can build trading and network effects in our Singapore Broker and FCM community with less of a global onboarding node requirement as our other greenfield global markets. On the product specifically, we've submitted our regulatory work for a one kilo bar Singapore gold futures contract to support Asia's kilo bar market, an offering not currently matched in London or New York. In parallel, we incorporated ABX Spot, a separate entity designed to support convergence between futures and physical gold markets.

While the few while the gold futures contract will be listed by ABX Exchange, ABX Spot, not regulated by MS, enables electronic settlement and physical delivery of a 99.99% purity kilo bar in Singapore through a secure transparent gold pool. Onboarding momentum for our gold markets continued through targeted on the ground engagement and and at commercial events globally. We've also progressed a number of important developments in our exchange and clearing systems development, risk and regulatory work, which I'd refer you back to Tuesday's disclosure for more detail. But I'd just like like to highlight a few here. Abnex Exchange submitted its application to the US CFTC for recognition as a foreign board of trade or.

Once granted, this recognition would enable US trading participants to directly access products listed on the AbEx exchange. In February, the company computed completed a public consultation on rule amendments to support the introduction of additional currencies as acceptable marginal margin collateral. These amendments are now under regulatory review with the final list of approved currencies to be announced in due course. We also expanded system capabilities to support multicurrency settlement and collateralization with with the project projected to be complete by May 2025, and we also completed the upgrade of of of Verifier Plus into the AVX TradeRidge registration platform after successfully developing the the more robust mobile application and I d plus plus infrastructure in earlier use with SmarterMarkets Coffeehouse testing. This was another important milestone in the integration and implementation of our proprietary ID and digital signature technology, which will be required for the AbEx digital title infrastructure.

As I mentioned earlier, on today's call, I'd like to push a lot of the iD plus plus and digital title discussions to the q and a portion of the call as we spent a lot of time talking through the AbEx software innovation strategy on the previous two investor calls. So I encourage you all to listen through those recorded sessions if you'd like more details a detailed run through of the strategy. Touching just briefly, though, on the milestones up updates we've released, Abix Tech released upgrades to the I d plus plus protocol and Verifier Plus in q one twenty twenty five, including integrations with Abix Exchange and SmarterMarkets Copy apps. The Abix Messenger is in its final stage of prelease prelease testing ahead of deployment and initially as a user support tool for AbEx Exchange in q two here. Future develop feature development for this initial release is complete with improvements to maintaining performance at scale now in testing.

These include faster load times for messages, improved performance under load, and infer and inference tools that that help support teams manage multiple ongoing conversations. Development of AveX One was in was initiated as a middleware soft solution connect connecting enterprise identity systems such as Auth0, Okta, and Microsoft ID systems into AveX ecosystems, and importantly, as another seamless onboarding experience into I d plus plus and the AveX private network ecosystem, which will be required for our digital title product in upcoming pilots. And finally, AveX Sign reached its initial functional milestone and is now progressing through an internal testing and design partner feedback cycles for deployment ahead of our pilot tests as well. Speaking to the initial revenue opportunities on the software products, while Abix Messenger's first deployment as an exchange support tool would not be a paid per user seat seat license model, it does allow exchange users their first onboarding and product experience with the platform, opening a first enterprise sales channel for future SaaS revenue as we roll out additional features, particularly in use for digital title workflows and brokering ABX trades. Completion of ABX Messenger as a hub and spoke platform support tool also opens up the potential for our first third party license opportunity of the suite as an add on feature to the feature to software partners like Minehub.

And remember, Messenger will also be used as a cockpit for our future AI tools and and the rest of the Abix console and digital title products. In that state, the revenue model for Abix software tools would be that of a typical monthly per user license fee and in plat in platform upgrade service. And finally, it would also function as the initial sales and access funnel for another per transaction revenue model in in use as the pre trade and post trade platform for our vision of a collateral settlement technology. So with that, I want to wrap up with a more formal presentation. And for today's call, we can move the rest rest of the tech, commercial op onboarding, and and and corporate finance discussions to the q and a portion of the call.

So I'll now invite David, Joe, and and Steve on the line and turn it over to questions. Thank you.

Moderator/Investor Relations, Apix Technologies: Thanks so much, Josh. And I'll walk through some of the questions. Just a reminder, we received quite a few questions over the past few days through the investor relations inbox. We'll be giving those priority. There are also quite a few questions coming in through the call, so I may need to group some of these together just so we can try to hit the the topics in the heart of the questions in the time we have with you today.

The first question we have really is about regarding the investment strategy, and that's asking if you could elaborate on how AbEx prioritizes its investments between the technology development and the market expansion. And what are the specific criteria used to guide these internal resource allocation decisions?

Josh, CEO/Founder, Apix Technologies: Yeah. Look. It's it's a great question. And, again, we've we've we've probably gone to that more in more detail on previous calls talking about kind of the two balance sheets and the approach. Again, I always wanna reiterate that, you know, the the priority and not the highest you know, because this is really a multiphase development, you know, the highest priority and and the bulk of the spending over the last, you know, five, six years is obviously to to add back Singapore.

And, again, because we've got a small minority interest there, you can actually see the, you know, the intercompany, you know, investments into into AbEx Singapore. So be given that that's the that's the first phase, I would say that, you know, over previous years, we look at some of the ID plus plus technology, you know, although we're obviously very, you know, you know, very focused on the long term development there. I would have called a little bit more r and d, and it's been you know, some of it's been classified that way. But, you know, I would say as of, you know again, really, as of this quarter, where we're deploying that technology live into into, you know, operations and and, you know, now into, you know, regulated operations, this really is becoming a a commercial, you know, commercial infrastructure and and not just r and d. So, you know, we will, you know, we will see that more as one integrated business strategy, you know, you know, going forward here.

You know, it really isn't necessarily built to be you know, Avix Tech is for, you know, multiparty where Avix Singapore is is just the exchange. You know, the core commercial strategy is always for that one common, you know, vision of building out a global network that's both for trading and, you know, pre trade, post trade, and collateralization digitization. So our, you know, our our our our first customer is always, you know, always been the been Apex Singapore. And, again, this I would say over the you know, really over the remainder of the year, this is all one we've always offered it as one integrated company even though the strategy allows for for other flexibility. But this year, in particular, you know, we are just one one company, you know, solely focused on on on the, you know, the two two mission goal that I goals that I mentioned, you know, in the in the prepared statements.

Right? One is, you know, turning all of these operations into revenue, and then two is using all of these, you know, all all of these technologies, tools, and new products to build the global nodes in the network. You know, I I very specifically call it call it network nodes as in, you know, probably the next the next presentation that we do in you know, as an investor presentation. And and I will I will, you know, put Taf Benga, our our head of corporate development on the spot here because he's been vibe coding an amazing network model that I think will help show, you know, show what this nodes more visually and what the value creation of that network is. We'll we'll do that in future calls.

But, you know, really, we've we've identified something like 800 firms globally, and we built out a network model to understand how those connect and create value so we can create those pools of liquidity in all of our products. So, anyways, it was it was another long answer to to the integrated approach to building AbEx. But, again, increasingly, this is this is one company with one mission, and I think that'll be more clear over the next couple quarters.

Moderator/Investor Relations, Apix Technologies: Alright. I think there are quite a few questions from our investors and stakeholders looking to understand that pathway to revenue. And I'll start. I'll I'll group them together. There's a number on onboarding and connectivity.

So the first question would be for Abixxchange. What are the key strategies for addressing the challenges typically associated with entering new markets and expanding your global presence?

Josh, CEO/Founder, Apix Technologies: Maybe Joe to hand it hand out hand that one to you.

Joe Reyes, Chief Commercial Officer, Apix Technologies: Gosh. Yeah. The, you know, the strategy hasn't really changed since the beginning and that clearing members are certainly one of the most, if not the most important part of our onboarding strategy and and and work to do. You know, new clearinghouse, new products, new exchange are all difficult hurdles to get over. I think given that we have six firms that are clearing firms that customers can connect with is one of the most important, successes that we've had.

And we continue, as you've mentioned, to engage with bank bank clearing firms that are equally important for our customers to that are reaching out to us to ask that have asked us to list new products to connect with. So that is really the the most important thing. We engage with them constantly. We our customers engage with clearing firms constantly. And the products that we'll be launching will only increase the surface area of the clearing firms that need to connect with us.

And I think you touched on this, Josh, also in your remarks in that by adding new products, we will bring on various trading entities within trading companies that will will look to trade our products that will only spread across the other trading entities within companies to increase increase their onboarding. So you mentioned 800 firms. It's probably even double that with the firms that we're talking to. There's brand awareness out there that we peep we get great eye marks from the marketplace on building brand awareness of Avax in general. And I think that that's only gonna increase the opportunities for us for not only new products, but also new clearing members and new customers to come onboard with us.

Moderator/Investor Relations, Apix Technologies: Thanks, Joe. And we have another question geared to trying to understand the specific strategic benefits and expected impact on market liquidity and contract adoption associated with onboarding different types of participants. For example, a bank FCM versus a nonbank FCM, merchant traders versus financial traders.

Josh, CEO/Founder, Apix Technologies: Maybe maybe I'll take this and then hand it over to Joe to just add a little bit more context. You know, I didn't wanna specifically get into the the prepared remarks, but, you know, I'd I'd take something like, you know, like our lithium carbonate futures. You know, it was abundantly clear, you know, from global media, you know, all of our client conversations, that this is an incredibly needed and useful product, you know, particularly given everything that's going on in the world where where lithium carbonate is is is generally dominated and priced in China when when you look at the survey assessments and and indexes, you know, that are being traded in other exchanges. Yet our contract is, you know, deliverable for Baltimore. Now we've you know, obviously, Traxxas is is is a major player in the battery metals, is is both an investor in AbEx and and, you know, a partner in some of the first trades.

But we've also been, you know, working to onboard, you know, you know, other of the the the largest, you know, metals traders in the world. And, you know, unfortunately, they weren't ready for the first trade. It's obviously has no relevance to the to to the fact that they they want and need this product and and help develop it. Again, it's it's still in the plumbing and and onboarding process that that we're working through. So yeah.

Joe, you know, maybe maybe going back to the original question, you wanna kind of explain how different parts of this I mean, obviously, the the FCM and the core connectivity for, you know, for settlement and clearing is is critically important. But, you know, again, there's there's, you know, many many players that that make up this ecosystem.

Joe Reyes, Chief Commercial Officer, Apix Technologies: Yeah. And these are these are nascent markets. These are so new in in in their infancy. You look at lithium carbonate, and you look at the the the universe of trading firms and and nickel sulfate, I would argue, is even smaller. So you're you're you're talking to firms that some of them have never traded futures before.

They know they wanna manage their risk. They wanna have transparency in the markets. You have the ecosystem of the trading firms, the clearing firms, and brokers. This market is mostly a brokered market. And so the brokers that that are new to lithium carbonate may have been brokering LNG or carbon or other products, and they're only just stepping into the the the battery metal space in general.

And so that collective onboarding is is happening as we speak, and it's it's an important part of the process that people need to understand how difficult that is. You have firms that have never traded lithium before that are getting involved in it just based on their investments in this marketplace. And some of them are some of the biggest names in in in energy markets like ExxonMobil and Equinor and Coke Supply and Trading. All those firms that are trading firms in energy markets or other commodity markets are now getting involved in lithium. And so that only just brings, again, as I said earlier, new trading firms on board, new broker firms on board, new clearing firms on board, and that collective kind of rub Rubik's cube of of onboarding is happening as we speak.

And it's just a it that doesn't happen certainly as fast as maybe a lot of people want and including us, but it does happen, and it is happening. And that's that's an important thing to to not lose focus on.

Moderator/Investor Relations, Apix Technologies: And I think a good follow-up to that question would be this next one, which was how does the current pace of clearing member and trading from onboarding compare to your expectations and targets for this initial phase?

Josh, CEO/Founder, Apix Technologies: I'll I'll probably start with mine. Joe obviously has a lot more industry experience, but yeah. I mean, look. I I think, you know, just based on some of my previous comments, it's it's not it's it's not as as rapid as we like. But, again, this is this is an environment, you know, where we are kind of a one of one company doing this on a global basis from scratch.

Right? You know, as one of the first new, you know, clearing firms, you know, licensed and and built kind of in the screen field way in in decades. You know, there's a lot of process, particularly given the global risk environment and, you know, these sort of ongoing rolling crisises in financial supply chains is is, you know, it it's a new environment with with a lot of things that we you know, a lot of a lot of hurdles, the the unknown unknowns that that that come at you. But, again, like, the the end clients and and doing things that no one else is doing is is is is what continues to drive us. And, again, it's you know, over the five, six years we've been doing this, there is no doubt that our products are demanded by by the traders.

It's it's all the infrastructure between the trade and actually executing the volume that that that, you know, just continues to be knocked out. And and that's, you know, that's why we got into things like that we haven't even described in the past, like the distribution of market data. Right? You know, other than going to our x account or emailing us directly, how do they find our prices? Right?

How do you compare it to prices? How does that become part of your market, you know, checks and your arbitrage opportunities? Right? They're you know? But and you you can't even do that until you have market making and you've got bids and offers all the time.

How do you have bids and offers before you have a market? Right? So so, like, these are things that every quarter, we're adding value and allowing this this ecosystem to to evolve. And and and so, yeah, it it's probably not the timeline we would have liked, but, you you know, I I just keep going back. You know, the value of what we're building both in solving commercial needs globally and the value to, you know, to stakeholders of a business of the scale that we're, you know, that we're you know, of our vision has is is is a very, very high ROI investment, you know, no matter how long you wanna stretch out this this this this time frame, you know, within the next, you know, the next few years.

So so, you know, that's that's what the investors are focused on as we, you know, continue to raise capital on new milestones. And it's not fast enough, but it's but but it's a high ROI in our view. Joe, you know, maybe given your experience, you know, how how would you describe the time line here?

Joe Reyes, Chief Commercial Officer, Apix Technologies: It's it's never fast enough for me. Certainly, I think everybody knows that on the team, and we we wanna step on the gas as fast as we can. But we really can't move any faster than clearing firms, which are really the most important part of the of the, you know, of the of the ecosystem for us for them onboarding. The the fact that we have six is quite remarkable, I think, and and a testament to the the risk systems that we built, the products that we've launched, and the team that we have. But, you know, the couple of us that have had long long time exchange experience, including Dan and myself, we know how hard this is, and we know how how how how important it is for the marketplace to get these products out there.

They're not being addressed by other exchanges, and the and the marketplace clearly has come to us and asked for them. So they're put they're bothering as much as possible their clearing firms to get connected with us, and we're always looking for alternatives and way to do that. And so, you know, we we're we're committed to the FCM model, and we we want them to be partners with us in this. And we just the market has to be, you know, just patient that we and we're as much as we're impatient to to to know that this takes time, unfortunately. But we know that we have the right model.

We have the right products. We have the the best team in the marketplace, and we know that once we succeed, this will be we'll look we'll look back at this and kind of laugh and say that, you know, why were we worried about that, you know, back back in the day. So this is the this is an important part of the process is to continue to be engaged with the marketplace. And, again, I think they're looking at all the interactions that we have with all of the customers across all of our ecosystem. We know we're we're moving in the right direction.

Moderator/Investor Relations, Apix Technologies: Thanks, Jeff. We also just have a question on some of the improvements to the exchange systems. One question is about the ability to settle trades and other currencies besides the US dollar. And the question is, you know, once this is in place, will LabX be the only exchange that has capabilities like this? How important is it?

And what does what types of traders does it allow us to attract and products for the exchange?

Josh, CEO/Founder, Apix Technologies: Yeah. Look. It's it's a good question. And and, again, the the major global exchange groups, particularly in commodities, you know, have this have this ability. You know, oftentimes, they've got multiple clearing houses spread around the world and and different, you know, natural currency regions and and so forth.

So, obviously, it's quite a complex network. And but what I would add is is probably you know, we've as a global first, you know, digitally native, remote first, you know, type of company, you know, I think we're probably the only ones that have built this greenfield on a global basis, which which again is make makes it extra extra difficult. But, you know, we do also have the benefit of of of of being able to build that in a new global technology environment. Right? You know, obviously, a global exchange, you know, business, you know, settling collateral, you know, built, you know, on prem, you know, with local, you know, local servers, local jurisdictions, older infrastructure is very different than building a global, you know, ultimately, exchange is a technology business.

Obviously, there's gonna be a lot of legal and other market infrastructure jurisdictional issues. But but from a pure, you know, sort of interconnectivity of our of our software network, you know, we've we've been built global and multicurrency have this global multicurrency thinking from day one. Now, of course, that all said, you know, as I mentioned in the prepared statements, there is a regulatory local process to this. Right? There's, you know, there's there's there's obviously the regulatory submittals.

There's the questions and and review periods. So so, you know, we obviously in global commodities, you you know, you abstract to this being one global market. But, of course, you know, the the legal reality of any market is its jurisdiction by jurisdiction and how the legal and and regulatory matches, you know, hit as you, you know, move a ship across water, for example. Right? And that's the same thing with current currency settlement.

You know, we we we tend to think in this abstract, everything's one system, but it's a lot of interconnected local systems. And that's what we're building in both the technology, legal, and regulatory front so that our system can be seamless.

Moderator/Investor Relations, Apix Technologies: Okay. And we've had a few questions on contract adoption and volumes. I'm gonna group them into to one question. And I know we've hit a number of these aspects already, but maybe this is a good opportunity to to summarize in one place for everyone. And I think a representative question is that there's you know, the the management has emphasized strong interest in trading AbEx products.

People are waiting to see that strong interest translate into volumes and just trying to understand and connect the dots between that interest and the path to volumes on the exchange, when that would potentially be realized, and how we get from there one point to the other. So I don't know, Josh or Joe, if you would wanna just kinda walk people through that process one more time, maybe some clarity on the the trading interest and how that you know, how you see that translating into volumes over time.

Josh, CEO/Founder, Apix Technologies: Sure. Maybe maybe I'll take it first and then and then hand over to Joe. But, again, I I think that's why I laid out in the in the earlier earlier statements, you know, even though we think the long term ROI on something like LNG, as I mentioned on our hedge eye interview yesterday, you know, we we actually believe, like like, last week, an important thing happened where where, you know, I think the OPEC decision and and a number of the things are happening in global trade, you know, really did show that global gas is becoming the global energy commodity in a way that oil has dominated as the as the global you know, the key global energy commodity for the last, you know, hundred years plus. So global gas, you know, I I think we were literally at that tipping point, you know, you know, this quarter. And so that's why and and we predicted that many years ago, and that's why we built that as our flagship, you know, our flagship product.

And so so yeah. So, you know, that that's still our long term objective. But as I said, and what and I think we'll be more clear as we show some of this network node model maybe on the next call, you know, that that that to to bring that liquidity, you're really starting, you know, at a global basis from day one, which needs all of this legal regulatory and technology infrastructure and onboarding and so forth. So what we've done now as we continue to build that long term that long term ROI in things like go global gas, what we've done now is we're actually, you know, really focused now that we have this core infrastructure in place on faster developed products. You know, again, things like indexes, spreads, and what I call step out markets, which which can actually develop liquidity on probably a smaller network of nodes.

Like, you know, just, you know, obviously, even from a regulatory perspective, our clearing members are, you know, Singapore entities. We've got a a, you know, very developed Singapore ecosystem there already. And so launching something like a Singapore specific gold futures product, you know, potentially can can grow volumes quicker on a smaller number of nodes than trying to tackle the whole global LNG industry from from start. Right? So I think that's the sort of the two pronged approach.

We're not forgetting about the ROI and the core mission here, but of the global network. But, you know, we are now focusing on products that can that can add more nodes and develop smaller smaller network liquidity. So that that that's that's probably what I would say, and and that's what we're you know, I I think we'll have, obviously, many good updates on that front over the next quarter. Joey, anything you wanna add to, again, the

Joe Reyes, Chief Commercial Officer, Apix Technologies: Just a couple of things. Yeah. I think I think, you know, again, volume, just like onboarding, volume is is equally important, and it's a it's a direct result of the firms that are coming on board. But when you look at what we have to date in in in markets that are being made on the screen, pretty much all day long in LNG and all three LNG contracts. It's the first time that that's ever been done ever in the history of LNG where you have three global benchmarks that have bids and offers all day long that that market participants can execute on.

And we've seen now the the announcement that we made two weeks ago where we had an OTC trade that was based on our our our one of our price references. That's really the start of something. When you see how Brent started back in the day, Brent started with a very small handful of cargoes a month coming out of the North Sea and started the price reference. Now you're looking at our LNG contracts now starting to be price reference, the huge important step in the marketplace. Again, will we wish it would happen faster?

Absolutely. But the the the important thing is that that the the green shoots are there for us and and the distribution of our pricing. As you mentioned, Josh, we have a a partnership with a incredibly large distribution network that will get our prices out to the marketplace in in areas that nobody's seeing them now. And that's that's that's gonna happen within a very, very short period of time, and that will only open up more eyeballs to our products, more interest to trade it, more onboarding. So, again, it it's it the flywheel starts with with the distribution of our products, the use of our indexes, and and, again, bringing products to market that the that the more that the companies are asking us to launch.

So that's an important part of the whole kind of ecosystem that that we built.

Josh, CEO/Founder, Apix Technologies: Yeah. I would also probably point out that there, you know, we've talked about things like the onshore, offshore, you know, look alike partnerships in in China. Yeah. That's obviously gonna be that's gonna be, obviously, gonna be increasingly relevant in today's world of, unfortunately, more, you know, more regional, you know, sort of trade walls and and capital walls. And so and and and being in a place like Singapore, that's exactly why we're there, is is you know, we we believe that that, you this is still a place to to manage that liquidity and global supply chain.

So, you know, that's that's one one area. Again, the focus that we've had on on data and distribution, that's one area. The potential for third party clearing, that's another area. So none of these are new strategies. I I it's important to point out.

Maybe we didn't emphasize others before, and and now we're now we're in a, you know, more of a dynamics, you know, situation where you look at the network as a whole, you look at the long term objectives, and you start tackling the, you know, the priorities to add the most nodes to the network. You know, again, whether it's a product that can trade faster and and ramp up faster and and doesn't need so much of the the network. And so we're always, you know, we're always, you know, reading and reacting to to how to to how to bootstrap a market that, like I said, there's probably like, even where we've been to date, there's probably six or seven chicken and egg sort of, like, you know, what do you focus on first problems that we've already gotten through. We've got more ahead. But, again, as Joe said, well, you know, we we know the the ways through it, and and and we know, you know, we know the timelines we need to be focused on, you know, this year, you know, to to to get through the next wave.

Moderator/Investor Relations, Apix Technologies: Thanks, Josh and Joe. Yeah. I know we're coming up on the hour. I'd like to try to get in a few questions on the technology side, so I'd like to pivot there. You know, we've had a number of questions that get to the the the point of, you know, can you provide an update on ID plus plus and the broader ABX technology suite, really with giving investors an understanding of how you see that being applied, and given your earlier comments today, how you see that, you know, coordinating and adding value to what's happening at the exchange and clearinghouse.

Josh, CEO/Founder, Apix Technologies: Yeah. Look. I I think, you know, I think one of the, you know, one of the major global energy companies, you know, I I I saw a quote on our internal go to market, you know, Slack channel, you know, how they were saying, you know, you, you know, you you allow the collateralization of a physical commodity, you know, digitally. It changes the entire nature of of of, you know, futures market collateral and efficiency. So, again, that that's why Abix was built.

I mean, that was the that was a number of patents I've been writing for over ten years is is how we use these new distributed and decentralized computing systems to do that. I think I've spent a lot of time on previous calls saying that I do not believe that blockchain tokenization is is the right path for that. You know, if you can super, like, you know, simplify and commodify, you know, a product like a, you know, an equity security, a a, you know, money market fund, you know, maybe a US dollar stablecoin, these types of things, sure. You know, that that can move as a token on a blockchain. But a very complex, you know, financial instrument, you know, you're really you're really about talking about how do you really secure a digital title and the, you know, and the, you know, rights and and responsibilities of of those people executing a a digital title.

That's why we have put so much work in into the identity side of our development and also the digital contract and digital signature, you know, the credential verification aspects of the technology. And, you know, as recently as last week, you know, we we talked about how, you know, people like, you know, the, you know, the the CEO of of BlackRock are are talking about, you know, solving identity and essentially credential management is is the key path to unlocking this this whole blockchain collateral ecosystem. So I think we've been focused exactly in the right place, and I think we've done it in a way nobody else is at this stage. And so so, yeah, we're we're incredibly excited about that. And as as far as, you know, specifically for doing things on the exchange, the collateral and currency movements globally that that others can't do, That's that's that's exactly where we're focused on this technology.

And, you know, although, you know, like I said, it's a long call, and and we've obviously been, you know, very much focused on the network building and onboarding updates, the revenue and product updates. But, you know, I would say in the next next couple quarters and the next, you know, next calls, like, look, we're gonna be releasing our our pilot road maps. We're gonna get into more details and white papers. That's all in process. And and and, yeah, I I think I think, you know, probably as the last few calls, this is all coming together for people.

It's increasingly, I believe, gonna come together over the next quarter.

Moderator/Investor Relations, Apix Technologies: Thanks, Josh. And I'd love to squeeze in one more question. I know we're coming up at the hour, but just to get one more on the technology side. And that question is, you know, you mentioned how the road maps are gonna be, coming on future calls. Just a question of how do you see artificial intelligence AI, playing into the technology strategy?

Josh, CEO/Founder, Apix Technologies: Yeah. Look. It's as, you know, the understatement, it's it's an absolutely, you know, change in the way everybody globally is gonna be doing work. And so we need to be thinking about that on a one year horizon, two year horizon, five year horizon. And what I've emphasized in previous calls is by being a full stack company that puts technology in the front office, you know, from, you know, really from the CEO down, you know, we're thinking about technology and innovation in every step.

We're not waiting for third party integrators, you know, to to come explain how this is gonna work. We're we're living it. We're building it. We're testing it. We've, you know, we've got a labs approach to to using it every day.

You know, we already have our own internal AI infrastructure, which is probably not, you know, not normal for a startup exchange of this side of of the of of our of our capitalization. And I think the I think the places it's gonna it's gonna be incredibly important for, you know, for our our ecosystem is, again, you know, collapsing the pre trade and post trade. The pre trade is all about your network of, you know, all these people we've talked about before, the commercial firms, the market makers, the brokers, you know, all of the all of the network that that that that creates liquidity, creates price discovery on the pre trade, on all the processes of, you know, submitting orders, you know, analyzing data to submit orders. AI is gonna be part of every every piece of that. And then, of course, on the post trade, how do you speed up settlement and clearing from, you know, multi days to basically real time?

That's all gonna need reconciliation automate automation, you know, verification of digital signatures. All of that's gonna you know, verification of custody, verification of legals, all of that is gonna be accelerated with artificial intelligence. But the question is, how do you maintain the privacy throughout the network to allow that speed and efficiency to come through, collapse the pretrade and post trade, but but do it privately that, you know, only, you know, only the AI agents can see on a need to know basis. You know, the same thing that that's already happening in the the human blockchain, the human network of intelligence of of of the financial system. We we're gonna have to replicate all of that privately and securely in a digital ecosystem, but speed it up with artificial intelligence.

So, you know, I I think if you even go back to our initial listing statement, you know, filed on SEDAR, we we mentioned how self sovereign identity, you know, distributed and decentralized computing technology, content addressable storage, and very specifically, we, you know, we we would we've been following for for many years the development in natural language processing machine learning. Obviously, that's all been taken to another, you know, another scale with with with, you know, what's now known as AI and, you know, and and the inference technologies. But this has always been built built into our road map. And, you know, and and it's you know, we we keep technology in the front office, and we think the AI piece of this is is a game changer for our industry as it is for everybody else's. And and we, you know, we we have a very high expectation for ourselves that we will be at the forefront of of of implementing this as as, you know, the the global exchange group with the latest technology stack, and, you know, I I would hope, you know, some of the most advanced thinking in this field.

Moderator/Investor Relations, Apix Technologies: Thanks, Josh. So that's really all the time we have for questions today. We really tried to get to the heart of all the questions being asked, if not the specific questions themselves. Thank you for sending those in. If you feel that your question was not addressed, please reach out to us at ir@abex.tech, to our relations our investor relations email address, and we'll address those questions with you specifically.

And with that, I'll turn it back to Josh for any closing comments you might have.

Josh, CEO/Founder, Apix Technologies: No. Thanks, everybody, and thanks for staying a little longer today. Again, you know, the the transition this year to the operating and and revenue side of of all of these developments have been you know, it's just incredibly exciting. And I know, you know, there's, you know, certain milestones that that that that, you know, people always wanna see faster, but but it is happening this year. The team is is absolutely focused.

We've got some fantastic new shareholders, and and investors, you know, on board, for our mission. And, yeah, it's I just I couldn't be more excited about about the next couple quarters ahead. So so thanks, everybody.

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