Crunchfish AB (publ)

Hi, everyone, and welcome to Market Focus at Västra Hamnen Corporate Finance. Today's webcast will be all about CrunchFish and its keyboard report and latest events. I'm standing here with the CEO Joakim Samson. Very much welcome, Joakim.

Thank you, Martin.

Nice to have you here. Thank you. Between all the travels.

Yes, it's in the middle of travels. I mean, between London and Mumbai right now.

Great to have you here in London for once. I just want to remind everyone who's watching to send in your questions and we will address them as we go along. So let me just start with the financials for Q1. Another quiet quarter sales-wise. Any comments?

Well, we are a product company. So what we are supposed to do is to get revenue from our products. Essentially, what our revenues is from what we do is what's called a non-recurrent engineering. It is that you charge fees for... for developing in a way, integrating the product, which is non-recurrent, meaning that it's, yeah, we do it once and then when it's done, then yeah. It delivers. Yeah, it delivers something. But that's like a consultancy company and that's not what we are. So essentially our revenues now, this quarter, Most of the revenue is from MPCI. It's more than half of that revenue is actually from the project we're doing with MPCI. That's what we have recognized in the Q1 numbers.

And looking at cost, they were very close to our expectations. So no surprises. Is this the level we can expect going forward?

Maybe even a little bit. Well, it depends. I think as we move on, this quarter has a lot of marketing costs because we are at a lot of conferences and they are not free to attend. But, yeah, I think it is about this level. We don't have major plans to, you know, do anything crazy or all of a sudden spend too much money. So I would say roughly yes.

Yeah. We noted interest payment of 263,000 Swedish kronor. What is that related to this?

It's actually not an interest. This is something we have already paid. It is when we did our financing round last year. One component of that was that we were getting an opportunity to borrow 10 million krona. And that project had a 5%. sort of upfront cost, whether we use it or not. We've already paid it. We did that last year when we got the 14 million last year. So it's all paid, but we put it as a prepaid expense on the balance sheet. And now what we do in Q1, we took half of it. And we're going to take the other half in Q2. But it's not interest. It's actually an upfront cost for the financing of this loan. We have a choice to use it or not. 10 million. We have to draw on that in Q2. If we don't draw on it, then it's basically we have paid that 500,000 kronor last year and then it's over.

Or the possibility to use it, yeah.

Yeah, we took that. But I don't know, likely we will probably not. We will actually have a board meeting after this today. And that will be one of the topics if we should do that. But we have just done a rights issue and we also are pursuing potentially direct investments from strategics. So chances are that we will not use it.

Yeah, speaking of the rights issue, which was carried out in the beginning of Q2, so not included in the report, but quite close to the end of it.

Yeah, the numbers for our cash situation and everything is before that. So we've added about, I think, 14 and a half million in cash. I think we now have all the invoices from our lawyers. And Nordic issuing here in Malmö, who is emitting all the shares. And it came in very close to expectations. I think we are actually a little bit, it's not above 500,000 that we expected. So it's good.

Yeah. And could you just explain the motive behind the issue?

Well, we needed money. Yeah. Well, yes, look at the cash situation. I think it's 4.7 million. That wouldn't carry us through for the whole year before revenues will start kicking in. So, yeah, we need to do it. And we did it in quite an unusual way, in the way that myself and the chairman, we subscribed for the whole share, all shares. So at the get-go, it was already 100%.

Secured.

Secured. Yeah. Without any cost. We didn't use, sometimes we use Vestra Hamnen, but we actually cut you out as well. So no money to you, but also no money to any guarantees. So we sign up for everything, but obviously we cannot just... assign shares as a directed issue to ourselves in the board. So we have to open up and we did a rights issue and asked shareholders. And we got another 1 million of those 5 million shares was subscribed to by other shareholders. So we got sort of about 4 million shares was between the chairman and this new company that is not a shareholder, but they're now coming in is Granito Growth. Yeah. They are coming in now as the, I think, fourth largest shareholder, where Joran is our chairman. He's the CEO of that company. And then I got some, yeah. So I'm actually also personally now on the top 10 list, not just with my pooling company. So Joran and I, we are eating into the shareholdership of this company. Yeah, we are.

Yes. And speaking of this, you mentioned you're looking for additional funding or at least to attract new investors through this TMS Corporate Finance. Who are they?

It's a one-man shop. It's a boutique sort of corporate finance company. Olof Rydsäter. Göran has worked with them a lot. Göran is sharing and involving as a CEO in many companies. And they have very positive experience working with Olof. So Göran suggested we should use him. And our motivation why we're doing this is that... It's not primarily for the money. It is actually to try to find, as we have announced, we want to find strategics. That means that companies in our space that have a strategic reason for maybe advancing their own business, complementing with what we do. And that will help us to get more distribution strength into the market. We have something quite unique. And if we can have some... potential partnering company that have not just become a partner, but they've also invested into us, we believe that they will have a more vested interest to actually see us succeed. So we said we're looking for... Yeah, two to five million dollars. It could come from one, but it could also come to sort of maybe even up to five, five companies putting in one million each. And we have started this project with Tjermase, with Olof, and we've sent out teasers and we are now getting some responses back and following up with management presentations. That's what we are.

Nice. And you're not bounded to any specific geography?

The bigger the better. Because this could be global companies that where we could, we have global ambitions. And if we can have global companies getting our government offline approach into global payment rails that helps us to put governance offline everywhere.

Let's leave the financials for now and turn to the projects and ongoing discussions. Let's start with the pilot project with MPCI in India. Where are you now?

Well, it's an interesting project, to say the least. We've started already sort of the work specifying what to do and everything sort of last year. I think it's To a little bit our, yeah, we are a little bit annoyed because they're changing the goalposts a little bit. And we have to sort of chew that in. We just have to adjust. I'm actually traveling now to Mumbai and I'm going to meet with RBI, their CBDC team, as well as their executive director. Because RBI is also annoyed because they want this to be out. This is their product. This is the digital rupee. MPCI is implementing it, but it's their product. They put the requirements and they are above MPCI in terms of hierarchy. So we have delivered, but last week they came with a new change. which was very unexpected to us, we can accommodate. And the motivation was that they wanted to be aligned with UPI as well, which is a good thing because the digital rupee project is quite small in some sense. It's 15 banks and the total volume is in the tens of millions of users. UPI is 500 million users. So that's the big fish. So in a way, we're happy. But I know our tech team is not another. They're just adding a little bit of... technical steps, because to be more aligned with what they have done previously with what's called UPI LiteX. Not necessarily a bad thing, but it means that, okay, we will have to adjust a little bit now again to deliver. But the spirits are good. It's friendly conversations, and I think we are... Yeah, we are moving forward, even if it's sometimes one step in another direction that we didn't plan for or we had agreement on what it should be. And all of a sudden, there's some other higher up boss that comes in. That's a little bit what's actually taking some time, but we are...

So what about the banks that participate in IDFC?

Well, they are also very annoyed because RBI is pushing them. But they can't do anything because before the MPCI delivers the specs, what can the banks do? And RBI has called in the CEO of the banks. You know, think of that. This is the top of the bank. And this is a project somewhere four levels below and telling you better have this ready, you. And so it creates ripple effects. So it's a bit... Yeah, but I... It's going forward a little bit slower, but again, I think as long as it's moving in the right direction, and right now with this last change, they're just indicating that it's not just for the Diddle to Rupert. This is potentially also now aligned with the Big Fish, which is the UPI rail. Yeah, I'm not unhappy about it.

Could you tell us anything about the timelines of the project?

According to RBI, it was April. Yeah, it was last month. Yeah. That's what the demand to the CEO is what this has to be out in April. But then this sort of came sort of just a couple of weeks back. And now this has to be adjusted for because someone said. I think it is a little bit uncoordinated by what RBI wants and what MPCI sort of all of a sudden changes their product rules sort of. But yeah. As soon as possible. And I'm going to talk to RBI, as I said. I have a big meeting, actually. I think there's about 10 people coming. It's the whole team. And I have a chance to align with them. Okay, what can we do? And what pressure could you put on? Because I think they need to step in, not just to the banks, but also to MPCI. Because MPCI, that's the middleman who has to deliver. That's the system.

And NPCI need to finish this first before you can onboard the other banks?

Well, the system has to set up in a way the system rules that the service provider applies to. Yes, so that's why. But I'm going to meet with IDFC First Bank, I'm going to meet with Axis Bank, I'll meet with them as well. But I think they The key is not them. The key is MPCI. It needs to move. And the key to that is that the RBI tells them to do that.

So, I mean, the market and we are speaking about potential deals, deal structures. And I just wanted to ask you about this. You've previously mentioned a structure based on number of users. And recently you have talked a lot about the bankable opportunity for this. Will it be a combination or how do you see it?

Yeah, well, it's a clear combination. I think the... Last year, we understood. This was the big announcement when we stood here actually a year ago. We said the system is one thing. The system, they receive payments. They don't make them. They receive them and they process them. Right now, when we're working with MPCI, they are the system operator. So they're going to receive offline payments and they're going to process them. At that point last year, we didn't really have figured out what is the business model for this split, that there is the system on one side and the other side is the service level. The service level is where we go to a bank who enable their users and they can pay per user. But what do we do for the system? You have followed us and we work with a long time with the system. Aren't we getting anything from the system? Yes, we are. And the way we have figured out to do that, and that's something we it's new for this, that we really, I think, thought it through, is that in order to use our system, We don't move money from, if you're gonna pay offline, I don't move it to your device. Instead, the money is reserved in the banking sector. And that is good for the banks. Banks do not like to take out retail deposits. They need that. That's their baseline in order to lend out money. They have to have things on their balance sheet. What we do, we keep the money in the bank with our offline model. And also, and the banks are happy with this, they don't pay interest for what you have reserved because you, Martin, you have now accessed it offline. So you don't have the money offline. The money is with the bank, safe and secure, but you have access to it. So you don't really... asking for interest. It's very similar in a way that you go to an ATM, except that there you actually take out money. But the money is reserved. But it creates what in banking term is called a free float. They don't pay interest and they're getting funding from their user base without paying interest. That is an economic incentive or economic sort of value for the bank. And what our business model is now, we want the system to set up rules that every single reservation done with our technology should, that economic value of that should be shared with us. That has nothing to do with number of users for our, that's on the service side. And this is regardless of who's going to deliver the offline wallet. Offline wallets, I think most people will actually charge per user, something like that. That's what we had with IDFC two years ago. But the reservation is our system. We want to share the economic upside that the bank are getting from having interest-free wallets. deposits and this is something that the system will set up and also to sort of take out money from the banks and give to us because that's what we require. That's the model. So we are having two components, system level, which is reservation-based, sort of a portion of that. And then there is per user. The good thing here, if you think back to MPCI again, I don't mind if they take UPI Lite X because they're not going to charge for it. They typically just work for free for the banks. But they will just push it out everywhere. That will go quickly. The system puts it out. I'm very happy with that. It's going to be maybe harder for me to sell in offline wallets and charge per user. But all these wallets will make reservations. And I get a tick from that. And that's the biggest part of our model.

So have you presented this to the infrastructure or the bank?

Well, the banks don't really care. They are getting resilience and they're going to make money out of this. They just have to share a little bit of that upside. I have to sell the model to the system operator that needs to put this part of the rules together. I did present it in London yesterday, and the executive director of RBI was there, and he said, come and see me on Monday. We sorted it out. But we have talked to, when I was in Philippines, I met the central bank there. What they like about our model is that we don't add any transaction fees. There's no additional transaction fee, even if you pay offline. But they asked us, when I met with the Philippines here in February, so... Where do you make money? And I told them, this is how we make it. And they said, that's brilliant. They liked it. So we're getting positive reactions for that model. And this reservation is uniquely tied to our way of doing it. If you move money out, you haven't reserved anything. And if you think the card rail, the way they do it, there's no reservations. You can pay offline, but there's a credit risk. Yeah.

just before we move on talk a little bit about the Philippines I remind everyone who's watching to send in your questions if you have them and we will address them as we go along so the Philippines you last we stood and talked about the Q4 report you talked a little bit you've just been in Manila yeah we put it in this was Q1 stuff yeah

Because I was there in... That was sort of early February. And we stood here. That was sort of mid-February.

Yes.

So we decided... Because we thought it was exciting. Because we... In the Philippines, I met with the central bank. I met with the major wallet, GCash. I met with the... The people who are doing the banknet, connecting all the banks with payments infrastructure. And I also met with the equivalent of Swish called Instapay. And I met with the most leading bank as well in terms of innovation, RCBC. And all are interested, every single one. And they're still interested. And we are now, we have given... No, it's up for a decision. I think where we're closest is that GCash. This is now up for a management decision. For them, it is to build or buy. They are thinking, should we build it ourselves? I don't think they should. But that's what they're thinking. Can they build it themselves? Technically, yeah. Well, we have built it, so I guess they can. We don't have a patent protecting here in the Philippines. But I think given that we won't, this would, I don't think it makes commercial sense for them to do that. I think it's better to use our system. But we also have had meetings with RCBC. This innovative bank, they could be an on us banking solution. They can start just them as well. And then we are continuing talking to Instapay, which is their sort of equivalent to the switch. That's the open switch system.

So the Philippine system is not dependent on the system operator in the same way as in India?

Well, the system operator, the name of the company is called PPMI, and the system they have is PPMI. Instapay.

Yes. Instapay is like the... That's the switch system.

Instapay is switch. But what we could start with, and we talked about that, I think, last quarterly report, we can start in a closed-loop system. GCash is a closed-loop system. They are closed in the sense that they have the whole ecosystem themselves, but they're also connected to the open system of Instapay. So they have both. But it's a good place to start with a company like GCash. There's also actually others. It's called Horn Shop, not P-O-R-N. I think it's P-A-W-N. This is actually a punt handle. It's huge in the Philippines, and there are two major chains. We met them both. They could potentially also set up a wallet that actually could facilitate. They have 30 million customers each. We met with them as well. So there's a lot of points of entry into the Filipino market.

Interesting. Other reasons. When we talked in April... In February?

No, I mean before... Oh, when we released the annual report. Yeah, you're right. I see you too often.

I tried to catch you when you were home in Sweden. You mentioned interest from the Middle East.

Yes.

As a consequence from the things that are going on with Iran and the US and its allies. And now you're partners with Mercury.

We have written about that quite a lot in the CEO world and as sort of in the chapter for system operators, because they are a system operator. They are like MPCI, equivalent of MPCI in India. Mercury is that. And it's a joint venture between sort of a private company, actually, and the central bank. Just like the central bank, the MPCI is started by RBI, but with all the major banks. That's the MPCI setup. But this is similarly. They are on top of everything, and they will do all sort of rails. They have a card rail. They have an instant payment rail. They are experimenting with CBDC, and they have a stablecoin implementation as well. All in UAE, the United Arab Emirates. This is Abu Dhabi. It's the capital in Dubai. And what happened here early in the Iranian sort of war here is that the Iranians, they put a missile into the AWS. This is the Amazon Cloud Center. A lot of the banks had all their banking operations in that cloud center. So these banks, yeah, that was a wake-up call for them. We can't just be online. So the central banks said to Mercury, which they are a joint venture with, This needs to be solved now. And so it was a very quick deal. We did very quickly. And it's interesting with Mercury is that they do all rails. So this is a first opportunity actually to do resilience in our governed way on the card rails. I think that will echo into MasterCard and Visa because I think if we show for their customers, for the banks, you can actually do resilience, but you have no credit risk all of a sudden. That's interesting for them. And we're going to do it now with, Mercury is a white labor solution from Discover. Discover is one of, you know, on EMVico, this is technical, but EMVico is the organization that is a collaboration of the card networks, Visa, MasterCard, JCB from Japan, UnionPay from China, Discover is one, Amex, yeah. But Discover, what they do is to allow other sort of brands to make their own brand out of the Discover platform. So Discover is already approved to work on, you know, with car terminals and everything. But you can put your own brand on it. That's what they've done in India. RuPay in India, which MPCI runs, is underneath its Discover. Mercury, which is sort of their rail in the Gulf states, That is also Discover. And they have plans to do a pan-African card network, Mercury. It's going to be under, again, it's Discover, but they just put a brand name on it. And that's a good thing to get into.

So this partnership, has it resulted in any actual project discussions?

Yeah, but it's still early days and it's a war going on. So this puts pressure on, I think, some of the conversation. But there is also, the war is pushing that they need it sooner rather than later. But a war also means that there are sometimes delays in communications.

I see. So you told me you've just been in London.

In London? In London, yeah. At the Digital Money Summit.

Yeah. And you're participating in this called the Digital Palm Lab. Yes. What do you expect from this?

We've already delivered and shown how Govern Offline can work with a digital pound. Very similar to how we've shown that Govern Offline can work with a digital euro. Very similar. We've shown that. And we are they have this is they call it phase two in the digital pound project. And we we have delivered and we actually going to have a closing meeting with them. I think it's early June and we have discussions with them of how they will actually now. officially put this on their website and write something about it from the bank's perspective, not our perspective. So this will probably come out. They will have one meeting in September because this phase two, we were very early in that phase. So we're already done. But there are companies entering now and they will close it up in September. But they also likely they will have, I don't think we will wait from hearing from the bank until September about what we've done. And commercially, I think... they are experimenting with having CBDC in UK. I think they've taken a decision that they are favorable of doing it, but timelines are not set. And it's a little bit just a position ourselves. And it's good because Bank of England is Bank of England. It's not any small institution. And we're aligned. They put out a white paper or a design note in October last year saying that the immediate model where you move money out to you, they think that's a premature model and they don't like that model. They've said, we're not going to start with that. And that's very much in line with our thinking, that it should be something which needs settlement as well. And that's what we have. And I think they're quite happy with what we've done.

Sounds promising. I myself am running out of questions. I have a final one, and you will hopefully be back in August. Here? From my travels? Here, from my travels. From vacation? Yes, and vacation perhaps, to talk about the Q2 report. Yes. What should investors be on the lookout for until then?

I hope we have product revenue. What I mean is that we have set up not just NRE, non-recurrent engineering, but that we have announced project that this is now going live. There is quite a few conversations going on. Before London, last week, I I had three presentations, which was a lot, at the CBDC conference in Kuala Lumpur. And the story we have, that we have in a way, really put together in Q1. I don't know, I brought this note. This is a good white paper. It came out in March 2026. It's on our website under resources. Go to, if you haven't seen it, This resonates because we don't talk technology. We've just understood five years we've talked technology. No one have really understood what we're saying. So let's stop talking technology. But what we talk instead is about what is the impact of our technology? Not technology itself, but what does it do for you? And what we're having here, this is the traffic light model that it needs to be banking friendly. It needs to be implementable. This is for all the applications who are going to have it. And it needs to be what's called governed. This is why we're calling it even the governed offline model. Governance of money is done by the central banks and the system operator. Any system would need to report back to the central bank. So unless you have all three green, I don't think offline would work in a really good, serious way. And we score on all. This is sort of the other model where you take out money from the banking system. They don't like that. You have to have hardware. It's very complicated and there's no ecosystem to support it. And you create a parallel universe of digital money where you don't really have too much control. It's not very... And I, in London, in KL, and I did this at the Digital Euro Conference, this narrative that we have resonates. People are coming up to me. We want to drive on green. We have a driver license. We understand. You don't drive on red. So we are getting a lot of... people now that understands the implications. And this is why we are, I said, I think last time we talked, I think maybe we have up to sort of 10 opportunities. Now I would probably say that it's probably 20. So it's increasing, which we have. And we have the big fish, MPCI, that we are still plodding along, even if they're a big organization and they do changes. So I'm actually happy where we are, even if no one would have been happy with me if we had revenues. Which one? What did you say? Quiet quarter sales-wise. Yes, it is quiet because there's no product revenues. It's only sort of fees for integration. And then it won't be happy numbers until we really start to kick that in.

So we're looking forward to looking at those I believe me. So are we. You need to keep traveling to create more opportunities.

Well, I don't know. I'm actually heading tomorrow to... It's a great big conference. It's the Indian Tech and Innovation Festival in Mumbai at the Jio Center. This is where MPCI has their global fintech fest. 100,000 people are coming. So it's a huge place. And they're going to have now... This is not just payments. It's anything to do with tech and innovation. And I present on Saturday there. But most importantly, I meet with RBI, which is sort of one of the most important central banks worldwide to talk to them. It's actually something which I hope will happen because the executive director who came to the event in London as well, and I had a good time too. I sat next to him during dinner. he offered that RBI should do a roundtable. And he said, I want to bring our Swedish partner to the roundtable. That's going to happen probably June 10th to 11th. And The OMFIF, this is the organization that organized the digital money. So they were all they were very happy because RBI, as he said, we don't talk much. We do. So they move fast, but they are very seldom you hear them presenting at conferences. Now, the executive director himself, which is the top dog of the whole organization, he said. Yeah, we want to do something. We want to talk about it. Because he said, I think we have a message to tell the world. And I'm very happy when he said, and I want my Swedish partner to be part of it. So I may have to go to London again, June 10th, 11th. Yeah, for that. I think it will be a closed door session, but still, it's good.

Looking forward to talk to you about that. Yeah, we can do that. Yeah. And thank you for this session. Thank you. Thank you for watching. Don't forget to subscribe to our YouTube channel to not to miss any of our coverage of Crunchfish. Until next time. See you later.

Thank you.