Abaxx Technologies Inc.

Thanks. Well, good morning, everyone, and good evening for those of you joining us from Singapore. Welcome to the APEX Technologies and APEX Exchange Q1 2025 Corporate Update Call. During today's call, I'll reference disclosures from Tuesday's Q1 2025 Quarterly Business and Corporate Update and last week's filing of our 2024 Audited Annual Financial Statements and related filings on CDAR+. 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 progresses, it's also important to 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 exchange, an approved clearinghouse in Singapore, with futures products currently trading in physical LNG and VCM carbon, and as of Q1, 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 will also speak about our upcoming gold products today. And up front, I want to specifically point out that AVEX Spot is a newly incorporated business in Singapore in Q1, but operating under a different branch of the AVEX corporate family tree and not part of our Monetary Authority of Singapore regulated entities of AVEX Singapore, AVEX Exchange, and AVEX Clearing, as MAS does not regulate spot commodity markets. For those of you who are new to the company on the call today, we've hosted project update calls semi-regularly around key milestone quarterly ends 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 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&A. It looks like the Q&A portion of the call today will again be heavily focused on the commercial ramp-up of the ABIX 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., 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 realizing our current addressable markets for global gas, new metals products, as well as commercial distribution network, for our software and the ABEX full digital title collateral service network as envisioned by our founding mission. As you can see from all the immense amount 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-over-quarter, year-over-year progress in the strategic development of the operating assets and commercial network of the ABEX group. a company that continues to execute at 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 and 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 AVEX 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 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 trades 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 end of March of a physical LNG trade using AVEX benchmark prices. On today's call, I also want to discuss some of the new futures products additions that we have in the 2025 Roadmap and Pipeline, 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 than 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 roadmap. 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 functions very similarly 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 to date, 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 roadmap perspective and that of some of our major strategic investors, growing the asset value of ABIX is not just predicated on the next 12 months of volume revenue growth. While our company is absolutely in the transition phase of becoming a streamlined and process-oriented sales and client service company, and we're already in the midst of a number of management and process optimizations to better service onboarding and grow trading activity, the strategic value of the company continues to be 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 ID++ 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 business, 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, and in our case, lower the intermediary risk for commerce. We believe that the time is now for upgrading the global post-trade and commodity-derivative collateral ecosystem, and in Q1, ABEX has reached the second-stage milestone of a three-phase development for engineering and testing our proprietary software technology to achieve these objectives. Over the coming quarters, we'll be publishing more about the planning and execution of our pilot work for a better way to move commodity collateral with ID++ in the ABEX 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 is one of a handful of commodity futures businesses globally with our own independent clearinghouse and a major financial center, 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&A. And finally, speaking on behalf of the Avex Global team, sometimes it's hard to contain our excitement on how things are all coming 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&A section with the rest of the team. Joining me on the call today are Chief Commercial Officer Joe Rea, Chief Strategy Officer Dave Greeley, and CFO Steve Frey. Today's agenda will present it 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'll push more of the technology and corporate financing discussion to the Q&A section. That said, we did have some big milestones and updates this quarter on ID++, the ABEX console suite, and full digital title technology, which sets us up for an exciting back half of 2025 as we move to pilot trades and 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 million financing that extends our growth and 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&A. For institutions and analysts who are new to ABEX on the 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 the product presentations from David Greeley on LNG and futures addressable markets, which is our approach to addressable markets and ramp-up in general, the ID++ and ABEX console suite demonstration from Ian Forrester, my description of the full-stack technology layer cake in November's call, and my discussion of our strategic approach to operating off of two balance sheets and two distinct but complementary business units, AVEX Exchange and Clearing, which I'll also refer simply as AVEX Singapore, and AVEX Technologies. It's through this 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 in price and distribute the positive and negative externalities 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 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, focused on both objectives, let's get into how these updates can also help opening new revenue lines as the year progresses. As you all know, on G28, 2024, we launched the ABICS 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 Q1, we added four new futures markets and battery metals with three physically deliverable lithium carbonate contracts and nickel sulfate futures. Our current suite of U.S. dollar-priced futures contracts across LNG, battery metals, and carbon are open for trading 14 hours a day, Monday through Friday. But stay tuned for some innovations we'll work on to expand our hours, currencies, and settlement infrastructure in the quarters ahead, especially once our AVEX digital title product is fully integrated later this year, subject to meeting all regulatory requirements. The most important commercial highlights to point out are the first trades in nickel sulfate and lithium carbonate futures during Q1, including the world's first trade of a non-Chinese U.S. 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 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 inter-dealer brokers the market ranges to work our products through their 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 ABEX markets to over 100 million viewers. In total, we added our first six market data partners in Q1 2025, 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 one-time 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 it 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 engaged that's looking to utilize our clearinghouse for third-party clearing services. Now, it's important to note that I don't want to 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 a non-competitive product exchange that would integrate their markets with our clearinghouse. And in this specific group's case, they could potentially help with onboarding additional bank and non-bank clearing members to our clearinghouse for their products and ours. And AVEX would earn a per trade fee on all of their daily cleared trading volume. In this model, particularly if it's a highly liquid, high volume market, this can significantly add to both our business objectives, adding immediate daily volume and revenue line items, as well as a new onboarding pole that builds out the nodes in our long term network. Again, it's important to speak generally here 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 and Q1, ABEX expanded marketing efforts in China, including the launch of a dedicated Chinese language website and the announcement of a co-hosted Mandarin language battery metals seminar with Shanghai Metals Market. The team also engaged in exploratory discussions with external exchange groups based in China to collaborate on a cross-jurisdictional, i.e. onshore-offshore, product listing opportunities with ABEX 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 AVEX Exchange that have 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 clearers that include global bank clearers are currently in progress to establish new clearing connectivity. We plan to cover the FCM topic in more detail in Q&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 ABEX products are only available to a limited number of the initial execution brokers and their clients in some 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 were taken 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 the onboarding process. Clients connected to ABEX continue to be able to access ABEX markets through central limit order book, And 14 inter-dealer brokers, or IDPs, are onboarded with 12 more in progress. So we've had another strong Q1 for trading firm and inter-dealer broker onboarding. We continue to have a substantial commercial interest for our products, despite some of the connectivity and onboarding frustrations. And in mid-Q1, we initiated an end-to-end onboarding process review to help smooth out some of the ABEX side trading forum process, as well as FCM network communications. Again, we can talk through this more in the Q&A. Turning to new futures product 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 lookalikes 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 the 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 U.S. dollars. As part of 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 many other regional markets, 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 kilobar Singapore gold futures contract to support Asia's kilobar market, an offering not currently matched in London or New York. In parallel, we incorporated ABEX Spot, a separate entity designed to support convergence between futures and physical gold markets. While the gold futures contract will be listed by ABEX Exchange, ABEX 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 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 to highlight a few here. ABEX Exchange submitted its application to the U.S. CFTC for recognition as a foreign board of trade. Once granted, this recognition would enable U.S. trading participants to directly access products listed on the ABEX Exchange. In February, the company completed a public consultation on rule amendments to support the introduction of additional currencies as acceptable 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 multi-currency settlement and collateralization. With the project projected to be complete by May 2025, And we also completed the upgrade of Verifier Plus into the ABEX trade registration platform after successfully developing the more robust mobile application and ID++ infrastructure in earlier use with Smarter Markets 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++ and digital title discussions to the Q&A portion of the call, as we've spent a lot of time talking through the AVEX 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 updates we've released, ABEX Tech released upgrades to the ID++ protocol and Verifier Plus in Q1 2025, including integrations with ABEX Exchange and Smarter Markets Coffeehouse. The ABEX Messenger is in its final stage of pre-release testing ahead of deployment and initially as a user support tool for ABEX Exchange in Q2 here. Future 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 inference tools that help support teams manage multiple ongoing conversations. Development of AVEX 1 was initiated as a middleware solution connecting enterprise identity systems such as Auth0, Okta, and Microsoft ID systems into AVEX ecosystems, and importantly, as another seamless onboarding experience into ID++ and the AVEX private network ecosystem, which will be required for our digital title product in upcoming pilots. And finally, Abbott 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 these software products, while ABEX Messenger's first deployment as an exchange support tool would not be a paid per-user 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 ABEX trades. The completion of Avex 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 software partners like Mindhub. And remember, Messenger will also be used as a cockpit for our future AI tools and the rest of the Avex console and digital title products. In that state, The revenue model for AVEX software tools would be that of a typical monthly per-user license fee and in-platform upgrade service. And finally, it would also function as the initial sales and access funnel for another per-transaction revenue model 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 of the tech, commercial onboarding, and corporate finance discussions to the Q&A portion of the call. So I'll now invite David, Joe, and Steve on the line and turn it over to questions.

Thank you. 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 topics in the heart of the questions in the time we have with you today. Okay. 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?

Yeah, look, it's a great question. And again, we've Probably gone to that in more detail on previous calls, talking about kind of the two balance sheets and the approach. Again, I always want to reiterate that, you know, the priority and the highest, because this is really a multi-phase development, you know, the highest priority and the bulk of the spending over the last, you know, five, six years is obviously to AVEX Singapore. And again, because we've got a small minority interest there, you can actually see the inner company investments into AVEX Singapore. So given that that's the first phase. I would say that over previous years, we look at some of the ID++ technology, although we're obviously very focused on the long-term development there. I would have called it a little bit more R&D, and some of it's been classified that way. But I would say, again, really as of this quarter, where we're deploying that technology live into operations and now into regulated operations, this really is becoming a commercial infrastructure and not just R&D. So we will see that more as one integrated business strategy going forward here. It really isn't necessarily built to be AVEX Tech is for multi-party where AVEX Singapore 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 first customer has always, you know, always 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 operated as one integrated company, even though the strategy allows for other flexibility. But this year in particular, you know, we are just one company, you know, solely focused on the, you know, the two mission goals that I mentioned, you know, in the prepared statements, right? One is, you know, turning all of these operations into revenue. And then two is using all of these technologies, tools, and new products to build the global nodes of the network. I very specifically call it network nodes, as in probably the next presentation that we do. you know, as an investor presentation. And I will, you know, put Taft Nanga, 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 do that in future calls. But, you know, really 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 another long answer to the integrated approach to building ABEX. But, again, increasingly this is one company with one mission, and I think that will be more clear over the next couple quarters.