C1 Fund Inc.

Good morning ladies and gentlemen and welcome to C1 Funds Q3 Earnings Call 2025. Please note that this call is being recorded and will also be available for replay purposes. Following the conversation, we'll answer any questions that have been submitted through the Ask a Question tab at the top right hand of your screen. This call may include forward-looking statements about the expected investment activities of C1 Fund. These statements provide no assurance as to C1 Fund's actual investment activities or results. Listeners must make their own assessment of the information contained herein and consider such other factors as they may deem relevant to their individual circumstances. I would now like to hand the call over to Dr Najeeb Kidway. Please go ahead, sir.

Good morning, everyone. Thank you for joining us and thank you for your partnership as we continue building what we believe will be one of the most unique and compelling investment vehicles in the digital asset ecosystem. When we launched C1 Fund, we made a clear commitment to provide investors with access to high-quality, late-stage private digital asset services and technology companies. The companies that are building the infrastructure of this industry. No speculative tokens, no momentum trades, but companies with real revenue, traction, and institutional relevance. From day one, our investment framework has been fully transparent. We've been focusing on late stage private companies, emphasis on critical infrastructure and mission essential service providers, disciplined entry prices, ideally at discounts to their last primary funding rounds, and companies that have been positioned for IPOs or strategic transactions or strong private market exits. Our progress this quarter and into the fourth quarter reflects strong execution against that strategy. As outlined in yesterday's earning release, we completed one investment during the third quarter, a $2 million investment in Figment, with a fair valuation of $2.035 million at quarter end. More significantly, in the first 45 days of the fourth quarter, we have deployed over $16.5 million into late-stage digital asset companies, including Kraken, Ripple, and Chain Analysis. We expect to deploy an additional 10.5 million during the remainder of the fourth quarter, bringing deployment to approximately 27 million and total invested capital to 29 million by the year end of 2025. This rapid and disciplined deployment for a $60 million IPO. With that overview, I'll turn the call over to our CIO, Elliot Hand, to provide additional detail on our investments, our deployment process, and what investors should understand about timing and disclosures. Elliot, over to you.

Thank you, Naj. Welcome all. So today I'm pleased to confirm that our portfolio now includes several of the most valuable and hard to access private companies in the digital asset ecosystem. Let me walk through some of the names we have announced this quarter. So we talk about Figment. Figment was our first investment post IPO and is a foundational name in digital asset infrastructure. They provide institutional grade staking, data and network services to major proof of stake networks and enterprise clients. Their growth mirrors the increasing institutional adoption of these technologies, exactly the type of infrastructure we aim to own. The next is Ripple. Ripple is one of the most established global payment infrastructure providers out there. They support enterprise remittances, compliance rails, and cross-border payments. Their recent raise attracted firms such as Citadel Securities, Pantera, Galaxy, and Marshall Ways. Being able to invest alongside these institutions is a meaningful validation of our sourcing capabilities. We've also added Kraken, one of the longest standing and consistently profitable US exchanges. Its financial profile makes it, in our view, one of the most mature and operationally disciplined companies in the sector. We secured our position at a very compelling valuation. Shortly after completing its recent $800 million raise, Kraken announced that it is confidentially filed to go public, a major step that underscores the quality of the companies we're bringing into the portfolio. Chain analysis. We've also added Chainalysis, which is widely regarded as the global standard for blockchain compliance and analytics. Their software supports governments, federal agencies, financial institutions, and global corporates. It enables investigations and compliance work across trillions of dollars in blockchain activity. This is mission critical infrastructure, not speculation, and exactly the type of essential company we seek to bring into the portfolio. So this portfolio of category defining companies reflects the strategy we laid out from the start. And importantly, it's not only the quality of the names, it's also the terms at which we were able to own them. We are acquiring these companies at meaningful discounts to their prior funding rounds, including the recent ones. We believe these entries are highly attractive relative to where traditional institutional investors have historically participated. This pace of activity reinforces two major points here. One, our access is real and highly differentiated. And two, our pipeline is deep and actionable. We believe our portfolio consists of companies with scale, revenue, and long-term growth potential. Names that many private investors cannot access and certainly not at the pricing and structures we've secured. So before I turn it back to Naj, I want to address the few questions we hear often. Why does it sometimes take time to move from identifying an investment to actually closing it? It's a fair question, essentially given how quickly we can source opportunities. So late stage private transactions evolve structural, legal, and operational steps that naturally take weeks or months. This is standard. and often reflects the strong governance frameworks these companies maintain. Here, what is typically driving timing is a variety of things. Number one, it's the company capacity. Late stage companies are preparing for IPOs, financings, or regulatory reviews, and they have busy legal, finance, and compliance teams. This affects scheduling and document turnaround. The second is legal, regulatory, and operational reviews. Before a transaction closes, both sides must work through a wide range of requirements. We're talking transfer restrictions, corporate documentation, prior investor rights, securities law compliance, governance positions, custody arrangements, full KYC, AML, and beneficial owner screening. I purposely read all of these tasks to you so you know the extent of the list. These steps aren't optional. They exist to protect the fund and ultimately our shareholders. Third, company level approvals. Many transactions require formal board approval or right of first refusal reviews, transfer agent sign offs, and in some cases, notices to existing shareholders or option holders. A simple example, we have one investment right now that's fully agreed and ready to fund, but unannounced because the company requires formal board approval at its next quarterly meeting. That is entirely standard, but not always visible externally. And fourth, closing conditions. Even once approvals are complete, the transaction may still depend on funding mechanics, regulatory or tax certifications, There's counterparty deliverables, as well as settlement through custodians. These are, again, routine steps in the private markets, and they all contribute to the overall timeline. So the big question here is, what does this mean for all our shareholders? It means that while we can often source these opportunities very quickly, often earlier than other market participants, the closing process naturally takes longer. That is standard for late stage private deals. And in our view, it reflects the quality and maturity of the companies we invest in. These steps validate the opportunity and enhance our risk controls and reinforce the institutional discipline behind how the portfolio is built. And more importantly, we manage all of this operational, legal and regulatory complexity on your behalf. So you are not burdened with it. Another question we receive is why some investments are disclosed immediately while others cannot yet be named. The explanation is straightforward. Many late stage private companies request confidentiality and prohibit early disclosure. They may be preparing for a public listing, conducting a financing, navigating regulatory reviews, or working through other sensitive corporate events. In those situations, they often prefer that new investor participation remained undisclosed until the appropriate milestone. We respect those requests because maintaining strong relationships with these companies is essential to sustaining our access to high quality opportunities. Many of these companies can simply say no and not sell us any stock. We obviously do not want to be put in that type of position. So what should investors expect going forward? At the same time, as all of the work we're doing, we are strongly committed to transparency and given these dynamics, here's what investors should expect. One is ongoing announcements as transactions close. We will disclose names as soon as they close and we are contractually allowed. As an example, we currently have a company which has filed confidentially for an IPO and has asked us not to disclose our holding just yet. Two, full transparency at quarter end. Our SEC filings will continue to include purchase prices and fair value marks. And that's what you saw at the end of Q3 with the investment figment, which closed in that quarter. You should expect to see the details at the end of the close of Q4 for the other names of companies that I've read today, as well as any that we will announce here in Q4. Deployment on track. So we remain well within the six to 12 month window deployment outlined at the IPO. As Naj mentioned, and also in our press release, we've already deployed over 16.5 million in the first half of the fourth quarter. And we expect approximately 27 million of total Q4 deployment that would bring ERN capital, invested capital to 29 million. Ongoing discipline is our last bucket here. We will only invest when the right company comes along at the right price under the right structure Now, by putting it all this together, while individual transactions vary in timing, as I mentioned, the overall pace of portfolio construction is ahead of schedule. Our process remains deliberate, disciplined, and aligned with long-term shareholder interests. We will continue providing timely and transparent updates as transactions close. Now, with that, I'll turn it back to Naj.

Thank you, Elliot. So a little bit about market overview and outlook. Stepping back, the digital asset market has continued to experience volatility, but this does not impact the core of our strategy. We are not a directional bet on Bitcoin or Ethereum or any other token. Instead, our portfolio companies serve institutional customers, build our retail investor base, generate real revenue, provide mission-critical infrastructure, and remain essential regardless of token cycles. Whether Bitcoin is at 30K or 300K, these businesses continue operating and growing. This is why we believe our approach offers more stable, long-term exposure to digital asset adoption without relying on short-term price moves. Guidance and execution against our plan. To close, we remain aligned with the roadmap we shared at the IPO, a six to 12 month period to construct the core portfolio, which we are ahead of schedule, a focus on quality, a disciplined approach to valuation and structure, Today, we are deploying capital into the types of companies that we said we would target, doing so at attractive entry points and building a diversified, high-quality portfolio consistent with our original vision. On behalf of the entire C1 Fund team, thank you for your trust, your patience, and your continued support. With that, I'd be happy to take your questions. Thank you.

We will now begin the question and answer section of this call. Please submit your questions by clicking the ask the questions tab. Our first question, what is NAV and why is stock trading at a discount to NAV?

David, hi there, who's our CFO, will take this question.

As all of you know who invest in funds, you know that each one has to be revalued at the end of the reporting period to tell you what its actual market value is, regardless of what we paid for it, whether we paid more for it or less for it. And so that is our net asset valuation, which you see in the report. And again, for the third quarter, you'll see that for just one investment. But you will see this when we do our fourth quarter reporting in the new year that you will see the entire portfolio listed. As my colleague Elliot mentioned, each investment listed what we paid for it, how many shares we own and what the estimated market value is at that time. Who estimates that value? We are required and do use an independent accounting firm that is Eisner Amper to, as announced in our perspective, to, before we invest in any company, we get their assessment of what the market value is. And I'll tell you, I'll talk a little bit about their method in a minute so that we have a benchmark against which to judge our own negotiations. Are we, if, if, if the then if we wanna make sure that we are able to invest at prices that track what valuation is, and if the two are widely separated against investor interest, we will not invest. And so in that case, they provide us before we invest, And every quarter after that, at the end of each quarter, they go through each company in our portfolio and then reassess the value. So, for example, right now we have invested in Kraken shares. Since we have invested, Kraken has made several announcements. Will that impact that? We will get their independent assessment of that. Then the investment committee receives that and in almost all cases uses that information to revalue the asset, how the assessor has, that is the valuation agent, Eisner Amper, has judged that to be. Their methodology is to base it on known financings, And there is, as you can imagine, very few and uneven record of transactions. So unlike public equities, we can't actually know each and every trade that's been out there. So therefore, we have a classic market price the way you would in public equities. But that information of what trades are known and what fundings have happened, enables them to determine a NAV. We add all the portfolio up with those, and that's what gives us our NAV. Finally, why is a DAV down? Initially, from the monies that were invested, there are sales load, that is the cost for the underwriters and the public offerings. And there was a significant amount of legal and accounting costs to make that happen. So that leaves an initial NAV for the fund the day we start investing, which was August 7th, 2025, that NAV of the company was $7.98 per share. At the end of the third quarter, that's on September 30th, 2025, that NAV is at 7.86. This is on a cost basis is what the first one is on 7.98. And then after that, it becomes on NAV. What is the difference in NAV between that and cost? There was a slight increase for Figment in its valuation from reports come through from our independent valuation agent, Eisner Amper. and said that the figment asset that we have went up in value $35,000, or approximately 3.84% of the portfolio is what figment is, and that affects our portfolio. valuation. In addition, the monies that are uninvested are in treasuries because treasuries enable us to continue to have a RIC status, a registered investment corporation status with the US IRS, which enables us to have the As we plan to distribute all the profits for each transit exit that we have, as we do that, we are able to have zero corporate taxes on a federal and state level. That's a short summary of NAV and how that works.

Thank you, David.

Thank you. Would you please be able to kindly confirm what is the NAV and what is the number?

Yes, the NAV, let's go through two sets of numbers. The NAV, the day we started investing, which had been the day after the IPO and all the offering costs and those we're taking out. that NAV is $7.98 per share or a total NAV for the entire fund of 53,209,000 and change. As of the end of the third quarter, that NAV is $7.86 per share or a total NAV of 52,428,000 and change. Those are the numbers.

Thank you. The next question is why is there such a significant a significant discount to the NAV and any interest in buyback of shares to help narrow this considerable discount?

I think I would answer that very simply is if you look at the actual volume of shares trading, it's actually very small. So if one investor sells, when you have such a modest number of transactions going on, literally, we saw one drop in price last week where it was 4,000 shares of an outstanding number of shares of over 6.6 million there. So at this point, as the stock is just beginning to get attention among a broader set of investors, one trade in a very small number, could set a price. So I will caution everyone to look at transaction volume also. Beyond that, I'll let our investors judge. When you see the value of the portfolio and you look at several of the companies have announced initial public offerings in the next year, and in any one of these companies, acquisition is always a possibility. And if you look at those, we would see that we would have exits in this in a foreseeable future, which would mean direct returns to investors and investors have to be aware of that and take that into account when they look at the market prices. Again, the issue is a small amount of volume trading. So as the volume increases, we'll see the gap, I believe, between price and actual value will close.

And I can add to David's commentary here. So right now, we are not considering a buyback because the capital would be more valuable if it's deployed into our late stage digital asset companies here. I mean, you have to keep in mind that every dollar that's used for the buyback is a dollar not deployed into these high conviction deals. And as you've already seen, there have been several companies that have already filed confidentially some that you guys are aware that are in our portfolio others that we are in those companies but these companies have asked us not to disclose our holding just yet and we hope to be able to do that as soon as possible um so the you know the irr of any of these new investments is going to be very likely to be materially um higher than any sort of return that we would get by repurchasing shares at a discount. The other thing I want to point out is that We're early in our fund's life here. We are ahead of pace and we want to get out this deployment as soon as possible. And that is our priority right now. And there's some technical dynamics, as David mentioned, where because of the low share count, a seller here or a seller there will have more of a dramatic effect on our price. So we don't want to send any sort of a signal to the market here that there is a lack of investment opportunities because there hasn't been, that there has been difficulty in sourcing deals. We don't want that to be misinterpreted because we have been sourcing the highest quality deals out there. And as we've already mentioned, and there's more to come back. So I think taking that all into the picture at the moment, a buyback does not make sense for the fund.

Thank you. Our next question is what is the expected timeline for the fund to be fully deployed?

Yeah, I can pick up on that one. So right now, as I mentioned earlier on the call, is that we are very well ahead of schedule and we expect to be fully deployed sometime, but definitely by the end of Q1 of 2026. We may hold back some capital for opportunistic investments that we are aware of that are coming up. So that is the expected timeline that we're aiming for right now.

Thank you. Do you have a plan or timeline to be listed and tradable on popular exchanges such as Robinhood? If so, if yes, when, if not, why?

I'll take this one. We are actually listed on Robinhood and we're listed on Schwab and Fidelity and a bunch of other exchanges. We've also had inbounds from platforms like Securitize and an exchange in Korea called KuCoin. to potentially tokenize the C1 Fund as well. So there are many avenues and opportunities for us to get CFND listed on other investment platforms going forward. And the team has been working very hard on promoting the platform on platforms like X, on LinkedIn. We're also doing quite a few podcasts and media. We've done a bunch of interviews with the likes of the Wall Street Journal, CNBC and Bloomberg, StockTwits and Reddit. There is a whole plan on getting the word out on C1 Fund and what we're doing. And today, it's actually the only place that retail can get exposure to companies like Ripple and Kraken. And I think as Elliot had mentioned, Kraken has just raised at a $20 billion valuation. We got in at a meaningful discount to that. Ripple has just raised at a $40 billion valuation, and we got in at a meaningful discount to that as well. So I think when we'll be in a position to announce the actual amounts on the next call, our investors will be able to hopefully see, we've invested in these companies at very attractive prices, which should show appreciation on the NAV and the fund on the next call.

And to just add on that, as I mentioned earlier, the timing from identifying and sourcing that opportunity to actually closing it and making an announcement, there's an extended lead time. So as Naj mentioned, these new raises and valuation marks that Kraken and Ripple have announced recently are well after when we invested.

And I also think, to be specific on that question, I would say that we should be in a position to have deployed this fund by the end of the first quarter of 2026, with maybe some capital left for some opportunistic opportunities. But the fund will be definitely deployed by the second quarter latest. But we are pretty confident that it will be deployed by the end of first quarter 2026.

Thank you. Our final question is, what is your outlook on the IPO market for digital assets in the near future?

It's great. I think this year with having Circle gone public, eToro, Bullish, Gemini, there's been some great IPOs. We've seen some M&A action as well with Coinbase buying Deribit and a number of other transactions in the space. You've already seen companies file confidentially to go public. like BitGo, like Blockchain.com, like Kraken, they've all announced their intentions to go public. And obviously, we're investors in some of those companies. So we feel that the ecosystem is maturing. Wall Street is getting into this space. And I think when you look at the C1 Fund and the type of companies that we're in, these are all very relevant infrastructure players that are going to be building the next generation of digital finance. And we believe that M&A and IPOs in the next 12 to 18 months is going to be, a lot of these companies are planning on going out in the next year or two. Elliot, anything to add?

Not much more. I think you captured the gist of it. If anything, I would just want to say that with the excitement that's going around the space and the maturity, Forget about the macro news and noise going on. These companies are maturing quietly behind the scenes. They are still increasing their revenues. Growth is at phenomenal levels. And so I think what we are doing is, you know, we're working behind the scenes in order to ensure that we are able to take part of that in return. Then in turn, then the shareholders take part in that. So we look forward to an exciting 2026 and hopefully capital markets.

Thank you. This concludes C1 Fund's Q3 Earnings Call 2025. If you have any further questions, please send an email to investors at c1fund.com. Thank you for your participation. You may now disconnect.