Upexi, Inc.

Good day and welcome to the UPAC-C Fiscal First Quarter 2026 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Walter Pinto, Managing Director at KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Good evening and welcome everyone to the UPAC-C Fiscal First Quarter 2026 Financial Results Conference Call. I'm joined today by Alan Marshall, Chief Executive Officer, Andrew Nordstrud, Chief Financial Officer, and Brian Ruddick, Chief Strategy Officer. Before we begin, I'm going to remind everyone the statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to the press release issued this evening and filed with the SEC on Form 8K, as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law. In addition, during the course of the call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States, and they may be different from non-GAAP financial measures used by other companies. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued this evening, unless otherwise noted. I'd now like to turn the call over to UFAXC's CEO, Alan Marshall.

Thank you, Valter, and welcome, everyone, to our first quarter 2026 earnings conference call. I couldn't be more excited to hold our first earnings call since adopting the Solana Treasury strategy. It has been truly transformational for the company, and as such, I wanted to comment on our path since inception. As you know, we primarily were a consumer Amazon brand owner. As the Amazon business became increasingly more difficult, we started to think about the best ways to create shareholder value going forward. After a thorough analysis of many options, we made a strategic decision to invest our time and resources into digital assets. This was due to two reasons. The first was a newfound openness towards crypto in the U.S., mainly due to the change in administration and its various regulatory bodies. Put simply, the U.S. administration went from a headwind to a tailwind for digital assets, and which we believe to accelerate innovation, adoption, and ultimately affect prices moving upwards. Second, with a greater appreciation for the value MicroStrategy has created for shareholders. Indeed, it has been the best performing stock in the U.S. since adopting a Bitcoin treasury strategy in 2020. And more importantly, it has more than doubled the return of Bitcoin with only minimal leverage, meaning its capital markets activities are creating tremendous value for shareholders. We first publicly announced a pivot towards digital assets in February. And as we honed our strategy, we settled in on one built around Solana. We'll cover the rationale in more detail later in the call, but the decision to focus on Solana was simple. From an asset perspective, we believe strongly that Solana has the best chance to be the end game winning high performance blockchain, and particularly so as the new rails for global finance. Second, from a treasury perspective, Solana offers additional ways to create value for shareholders. via activities like staking and purchasing of discounted lock sole. Our plan was simple. Close on a large scale capital raise, employ and improve the proven capital markets playbook from MicroStrategy where issuing equity above book value is by definition accretive. Then innovate on MicroStrategy's model by staking our Solana to generate yield, to turn the treasury into a cash flowing asset, and also buying locked discounted sole for built-in shareholder gains. We did just that in April, successfully completing a $100 million equity private placement in what we believe was the first large-scale equity pipe for an altcoin strategy. We followed it up with a $200 million raise in July, which included an innovative in-kind convertible note issuance, offering with significant benefits for both investors and the company. And again, we believe that to be an industry first. Each time we deployed the funds into spot and locked solar attractive entry prices, sticking nearly all of it to generate cash flow. The company currently owns 2.1 million soul, valued in excess of 327 million. While raising capital and deploying the capital in a systematic way, we remained hyper-focused on both external visibility and intelligent capital issuance, Success in raising capital and deploying it are only part of a successful public strategy. We have put forth an enormous effort to build our online and traditional finance following and to educate the market on our vision and the investment opportunity. We are proud to have been quoted in over 50 news articles since launching the strategy, participating in multiple leading podcasts each month, establishing an advisory committee with Arthur Hayes, John Najarian, and Sol Bigbrain, and attended or are scheduled to attend over 20 mostly traditional finance oriented conferences and have conducted hundreds of individual investor meetings. As previously stated, we've remained steadfast on utilizing the capital markets to create value for shareholders. Notably, our July raise not only material increased our sauna per share, but also led to multiple expansion as we demonstrated our ability to raise funds in a creative fashion. On the financial side, our consumer brand business continues to perform as expected. Most importantly, our staking revenue is uniquely providing a huge boost to company revenue. Our fiscal Q1, we generated over $6 million in digital asset revenue, and we are currently adding over $75,000 a day. As we look ahead, Q2 will benefit from having all our $2.1 million sole staked for the future quarter. I'll now turn the call over to Brian Ruddick, Chief Strategy Officer.

Thanks, Alan. And hello, everyone. The biggest determinant of any treasury company's performance will be that of its underlying token. Here, we are supremely confident in and feel very fortunate to be underpinned by Solana. We chose Solana for three reasons. First, it's the first, second generation smart contract blockchain. This means that it benefits from having best-in-class technology like parallel transaction processing like modern computers do, but also from strong network effects having launched in 2020. Second, Solana has a vibrant and growing ecosystem of users, developers, and decentralized applications. You can really build anything on Solana from decentralized finance to deep into stable coins, tokenization, gaming, art, social agents, meme coins and more. And third, Solana is already putting up the best metrics of any blockchain, often beating out all of them combined. These metrics include daily active users, decentralized application revenues and decentralized exchange volumes. But what gets me so excited is the potential for Solana to revolutionize the world's antiquated financial infrastructure. Indeed, current financial rails, for example, ACH and the credit card issuer networks, were created 50-plus years ago. And even FinTech is a front-end wrapper that uses these antiquated rails on the back end. However, blockchain technology allows us to entirely reimagine these antiquated rails and to utilize things like stablecoins and tokenization to remove rent-extracting intermediaries and democratize value exchange. Tangibly, this means huge cost savings and speed benefits, not to mention improvements in settlement times, transparency, composability, investor access, and much more. And Solana is purpose-built for exactly this in what it calls internet capital markets. Its goal is to have all of the world's assets trading on the same liquidity venue, accessible 24-7 to anyone with the internet connection. And institutions are taking note From PayPal to Societe Generale, Fiserv, Western Union, and others, leading financial companies are building stablecoins on Solana due to its industry-leading speed, cost, and reliability. Tokenization infrastructure firms like Securitize, Superstate, and R3 are bringing real-world assets on-chain from leading asset managers like BlackRock, VanEck, Apollo, Franklin Templeton, Hamilton Lane, and others. And Visa is using Solana for its USDC stablecoin merchant settlement program for cross-border payments. Finance is moving onto the blockchain and it's happening on Solana. We are in the very early innings, but this transformation is absolutely happening and with Solana front and center. Lastly, I point out that we have what I consider to be the mother of all catalysts that can drastically accelerate this transformation in the US passing comprehensive digital asset legislation. Indeed, a lack of clear rules in the U.S. has, in my opinion, always been the biggest item holding crypto back. Institutions have thus far only dabbled in digital assets and blockchain technology and have been loath to materially adopt the technology when it comes with heightened legal and regulatory risks. However, if and when the U.S. passes this market structure bill called the Clarity Act, which is currently being worked on in the Senate with high bipartisan support, institutions will be forced to jump in in a big way. Otherwise, they will be disintermediated by those who do. And it's big tech and big finance that have billions of customers, built-in trust, billions of dollars for investment, and the top developers. Imagine Google adding a built-in crypto wallet to its Chrome browser or Amazon integrating stablecoin payments. We just may be on the precipice of onboarding the masses, leading to a step change in digital asset innovation, adoption, and usage. Solana and UPEXI are well-positioned to benefit. And with that, I'll turn it over to our Chief Financial Officer, Andrew Nordstrom.

Thank you, Brian. Total revenue increased by $4.9 million to $9.2 million for the quarter. Net income was $66.7 million for the quarter, and earnings per share was $1.21 for the quarter. All of these increases were related to the Solana Treasury performance. Solana tokens increased during the quarter by approximately 1,322,000 tokens. This increase was from both liquid and locked Solana purchases and swaps, with approximately 181 million in non-cash Solana purchases. The company has purchased approximately 2,029,100 tokens through direct purchases and swap transactions. The average price of Solana tokens purchased is $155.57. 31,347 of the quarter's increased tokens were from the $6.1 million in staking revenue generated from the Treasury. In total, the Treasury has generated approximately $7.1 million and 37,742 Solana tokens since inception. Unrealized gains of approximately $78 million was recognized during the quarter and had significant impact to the reported financials. Management understands the volatility of the digital assets and will continue to focus on growing the number of Solana tokens held in the Treasury in a way that will maximize the return for our shareholders. And now I'll turn the call back over to Alan for concluding remarks.

Thanks, Andrew. UPEXI is a truly differentiated treasury company with many advantages. We have a differentiated management team that is more traditional finance rather than crypto-oriented. I founded what is now New York Stock Exchange listed XPO Logistics, and Andrew was our CFO at XPO and has been a public CFO for decades. Brian spent years at the most prestigious hedge funds managing hundreds of millions of dollars. This is relevant because at the end of the day, this is a capital markets exercise, and we believe our experience will be paramount to our future success. We led the innovation to create what is now the DAT industry and look to innovate in the future to stay ahead of peers. With the first large-scale equity raise for an all-kind treasury and the first in-kind convertible note, we have set UPEX on a trajectory for a very bright future. We do several things to be more in line with traditional finance, to differentiate our strategy. First, we only take on prudent amount of credit risk leverage and limit it to 20%. We do not partake in aggressive on-chain trading that increase smart contract liquidation and legal regulatory risk. Lastly, we only use qualified custodians and top validators and diversify amongst them for operational risk management and best practices. We believe the strategy will not only position us well for any market environment, but also will appeal to crypto and traditional investors alike. Finally, and again, quite uniquely, we have a proven ability to create value. We have increased adjusted sold per share in sold terms by 47%, and in U.S. dollar terms by 82%. As a reminder, the former measures our ability to capture our three value accrual mechanisms in accretive issuances, staking income, and purchases of discounted locked sold tokens. while the latter also incorporates the price of Solana. We are in an advantage position to win. We are underpinned by an end-game winning asset with nearly unlimited upside and offering additional value accrual mechanisms in staking and discounted locked purchases. We have a differentiated management team with best-in-class capital markets expertise. We have a risk-prudent strategy positioning us for any market environment and resonating with investors of all kinds. Lastly, we have a proven track record of innovation and shareholder value creation. With that, I'll turn it over to the operator for Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions.

Thank you.

Our first question comes from the line of Brian Kingslinger. with Alliance Global Partners. Please proceed.

Great, thanks so much. The company has added a few high-profile crypto investors to the advisory committee, like you mentioned. So, excuse me, can you talk about the impact they're having on the company and any recommendations the committee is making as we think about differentiation of that, for example, outside of sole accumulation and yield? Is the committee recommending... or is management thinking about ancillary revenue generating businesses? And if so, can you share any details?

Thanks, Brian.

So two parts. One is so far it's been, you know, a short amount of time we've been working with them, but we've gotten A lot of good feedback, both on, you know, how we're presenting ourselves to the market, their opinions on, you know, Sol, the overall opinion on, you know, how we're positioning the company to communicate to both traditional finance and also the crypto community. Nobody right now is talking about anything outside of Solana and revenue generating outside of that. Like we still believe, you know, as we get some clarity here going forward on regulatory changes that Solana is in line for and all of crypto or all of the top cryptos in line for a pretty big move. So we're going to continue with the strategy we have, like we've said to our investors and stay focused. We will try to maximize yield. And we have had internal discussions, but none of that's public yet. We're going to do the right thing to increase our yield for our investors as quickly as possible, and we're always open to input from the people we bring on board and also the outside community we talk to.

Great. I have two more questions. The first one is, given you didn't have a full quarter of sole holdings, can you tell us what your effective yield has been And is there any way to enhance that? Or are you maximizing that already? Maybe any information on yield would help.

I can let Andrew answer that question. I will say, you know, as we've been, because we've been building it step by step, you know, not everything is staked as quickly. Well, it's staked quickly, but as quickly as possible. And, you know, just moving things around and getting things set in like the risk prudent factor, the way we manage it. Also, we're always working with different we've been working with validators we've been increasing the yield as it goes, so I think this is probably the baseline for us and it's going to go higher from here. Especially since it's you know, mostly all states, now that we have on on board, so I can turn over and if he has a rate but i'm not sure we've been able to blend it exactly just because of all the steps along the way, but Andrew.

Yeah, you're not going to be able to blend it yet. Next quarter will be a lot better. But just to add to Alan's note, we've got a program that we put in place to look at the various different validators to have them compete against each other on any fees or anything else that's being done. We've got some great partners with us in that side and continue to look at how to increase that yield. Plus, we've had some other opportunities to try and increase the yield higher than just the standard rate. staking yields. So more and more of that will come out this next quarter as we kind of have everything under control and have some of these programs in place. So unfortunately, I can't give you an exact yield, but going forward, you'll be able to calculate a lot better next quarter.

But to close that off, Brian, we definitely think this is kind of like the baseline for us. Like this is the low end and it will continue to rise from here.

Okay. The last one is Several of the DATs are trading below one times. Steep discounts, in fact. Thankfully, UPEXI is not. But I think investors are interested in management in general of DAT companies' plans with capital markets should UPEXI face a deep discount. How would you address that?

You know, we have, we have plenty, you know, I think, you know, Brian and I, and Andrew have always said when, if, if for some reason we do trade at a discount, it's the model is just on toss. Like the, we, we still, we still believe that inevitably crypto, the yield, um, the crypto increases and the yield and the us maximizing that, and also keeping, you know, company expenses as low as possible and continuing to get better at that will, will, will warrant a premium. So at those moments in time, I mean, the company does have plenty of options, right? It can turn its staking revenue into a buyback. It could actually buy back shares. There's plenty of ways to offset that. But what I want to stress, this is a longer game, right? We don't want to think about it as one quarter at a time. We really do believe even if there is some sort of crypto pullback, it's just a pause. I'll let Brian, you know, chime in here a little bit. Cause him and I have talked about this over the, over, you know, with, with multiple investors and I'm sure he'd like to add in something on this one.

Yeah. Thank you, Alan. And thank you, Brian. Um, yeah, I had plus one on the capital market side of the equation, just being a bit on pause. I think that there's no better example than micro strategy. So 2024, it increased Bitcoin per share. By 74% 2021, it was something like 47%. And then when it got into a bear market and it did trade at a discount to NAV, it still was able to increase Bitcoin per share, but it was something like mid single digits. So it was just a bit on pause. Like Alan mentioned, there are things that we can do to compress any discount should one come to fruition. And importantly, we actually don't have to sell our soul to do that. You could actually borrow some funds. to repurchase your shares to compress any sort of discount. And then the last thing I'd say is like we make an 8% staking yield on almost our full treasury. And then on top of that, a lot of the soil that we've bought is in mock form, which when you put that discount into any sort of yield equivalent, it's nearly doubling that 8% staking yield. So all in, we're making this really nice return on our treasury. And so, while we are waiting to issue capital in this accretive fashion, we're able to increase our sole per share at a very nice pace.

Great. Thanks, guys.

Thank you. As a reminder, if you would like to ask a question, please press star 1 at this time.

There are no further questions at this time. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.