Abaxx Technologies Inc.

Good day and welcome to the ABAX Technologies second quarter 2026 earnings and business update call. All participants will be in listen only mode. For sell side equity analysts on the call with us today, there will be an opportunity to ask live questions following today's management presentation. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star and then two. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that live questions will not be addressed until the Q&A portion of the call begins following prepared remarks. For those on the webcast, you may submit questions throughout the event by typing in the submit a questions box on your screen. Questions will be addressed after the formal presentation has ended. Please note that this event is being recorded. I would now like to turn the conference over to Tara Hayes, Director of Communications. Please go ahead.

Thank you, operator. Good morning, afternoon, or evening, depending on where you're dialing in from today. Thanks for joining us for our Q2 earnings and business update call. With us are Josh Crum, Founder and Chief Executive Officer, Steve Frey, Chief Financial Officer, David Greeley, Chief Strategy Officer, Joe Rea, Chief Commercial Officer of ABEX Exchange, and Leah Wall, Digital Title Lead at ABEX Technologies. The primary disclosure for today's call are our quarterly financial statements, MD&A, and earnings announcement, which were released prior to this call and are available on our investor relations website at investors.abex.tech. This call is being webcast and an archived version along with the presentation will be available there shortly after the conclusion of today's event. Our discussion today includes forward-looking statements which are subject to various assumptions, risks, and uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Please find our full disclaimer and cautions regarding forward-looking statements on the slide on screen. These statements are not guarantees of future performance and therefore undue reliance should be not placed upon them. We refer you to our earnings press release and CDAR filings for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of the company. We do not intend to update any forward-looking statements made on this conference call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events except as required by law. And with that, I'm going to turn the call over to David Greeley.

Thanks, Tara, and good morning, everyone. Thank you for joining us today. ABEX Exchange celebrated its two-year trading anniversary this quarter, and not coincidentally, it was the strongest quarter that ABEX Technologies has reported to date. At its core, ABEX is building one of the rarest assets in global finance, a fully licensed, regulated exchange and clearinghouse designed to bridge physical commodity trading between East and West. Our operational execution remains at a high pace, and multiple transformational milestones were completed during the second quarter that solidified the global foundations of our business, setting up years of scalable growth ahead. In Q2, we chose to accelerate our plans for scaling that growth towards our goal of 1 million average daily volume in the next three to five years. We raised capital and put it to work. expanding our sales team and building the initial liquidity in our markets that will attract commercial participants. And as liquidity begets liquidity, will allow us over time to win these markets as the venue providing commercial participants with best execution on a number of global commodity benchmarks. We can see the results of these efforts in our trading activity and financial results, which I will walk you through first, and again, in the network building and commercial milestones, which I will review in our 2Q highlights. First, the results. Total volume reached 888,902 contracts, and year-to-date trading volume surpassed 1.1 million contracts in the second quarter, a seven-fold increase over the full year of 2025. Average daily volume reached 14,572 in Q2 and continued to grow into July, where it reached 34,136 contracts per day, with single-day volume on ABEX Exchange surpassing 100,000 contracts for the first time on July 1st. Average daily open interest reached 641 in Q2 and continued to grow into July, reaching 1,119. And as we continue to advise investors to evaluate our trajectory on six month horizons, we're pleased to report our first half over half comparisons and daily trading commenced in mid 2025 with a 613% increase in H1 2026 volume over H2 2025. We expect this positive, though nonlinear growth to continue in H2 2026. Looking ahead to 2027 and beyond, based on the continued expansion of our client network, new products, new markets, more trading hours, and more trading regions, we remain confident in our trajectory to reaching our goal of $1 million average daily volume over three to five years, which would imply maintaining 50% to 100% half over half growth. Returning to our Q2 results, the increased trading activity generated $4.5 million in transaction and clearing fees for ABX Exchange. These transaction and clearing fees covered the liquidity related credits to liquidity providers, resulting in a small positive revenue. However, this quarter's transaction revenue was not the goal. The goal remains to build the liquidity required for widespread commercial participation in our markets. As our transaction and clearing fees and liquidity related credits have grown into significant light items in our financial results, Our CFO, Steve Frey, will be discussing how we are presenting these in our financial statements. Importantly, our deployment of these liquidity building programs, which are used at all exchanges, have worked as designed, deepening order books, establishing institutional scale liquidity for the first time in our markets, driving broader onboarding across clearing members, ISVs, and brokers that will grow transaction and clearing fees from commercial participants. In order to capitalize on this commercial interest and engagement and accelerate growth of commercial participation in our markets, we recruited to build out our sales team and scale our market development efforts. This increased our nat cash spend to $16.3 million in 2Q compared to $12.3 million in 1Q 2026 and $13.2 million in 4Q 2025 and remained consistent with our steady long-term trend of disciplined budget and headcount expansion, even as the company's trading and commercial activity scales more rapidly than our largely fixed cost base. Just as we continue, just as we chose to increase spending this quarter, we retain the levers and flexibility to reduce cash spending in the future if required, including adjusting our spending plans for commercializing our MarketOS and ID++ technology and our exchange commercialization runways. Including a non-cash component of expenses of $12.4 million, the company reported a net loss of $28.8 million for Q2 2026 compared to a net loss of $21.6 million in Q1 2026. We'd note that this non-cash component includes an unrealized loss on derivatives of $6.1 million caused by the effect of the decline in our share price on our outstanding convertible debentures. We raised capital, put it to work, and are seeing results. ABEX raised $69 million during 2Q at a price of $54.25 per share. And as of June 30, 2026, ABEX had $95.1 million in cash and cash equivalents on its balance sheet, remaining in a secure financial position to continue scaling our markets and completing a number of major milestones planned over the next four to six quarters of funded runway. On our agenda, In the call today, we'll dig into our operational accomplishments and plans going forward. I'll review the key operational highlights from the quarter. Josh Crum and Steve Frey will then discuss our approach to capital allocation and how we're prioritizing investment to support commercial growth. Joe Rea and I will follow up with an update on ABEX Exchange, including the progress we're making in market development and participation. Finally, Leah Wald will discuss the commercialization of ID++ through MarketOS and milestones ahead. Before discussing our second quarter highlights, I'll provide a brief update on the unfounded and meritless allegations advanced by Viceroy Research in a series of so-called short reports issued between June 11th and 30th, 2026. Viceroy published these communications while disclosing a short position in ABEX such that it stands to benefit from a decline in ABEX's share price. The company has taken regulatory and legal action. We asked the Canadian Investment Regulatory Organization, or CERO, to investigate potentially manipulative or deceptive trading activity in AbEx shares. And we retained Paul, Weiss, Rifkin, Wharton, and Garrison to investigate potential wrongdoing related to Viceroy's campaign and trading in the company shares and to assess all available legal remedies. The board directed the audit committee, which is comprised of independent directors, to conduct an independent investigation into the allegations. The Audit Committee retained independent legal counsel and a major international public accounting firm to assist in the course of the investigation. As outlined in detail in our MD&A, that review has found no evidence supporting the allegations. The process requires a substantial amount of time and is ongoing, and we will provide an update when it is complete. Finally, the board believes the current market price does not reflect the underlying value of the company and on July 22nd authorized a normal course issuer bid and automatic securities purchase plan, both of which became effective July 24th and remain in place. Purchases under the plan are intended to protect shareholders and the company's cost of capital from the effects of potentially manipulative trading activity associated with the campaign. With that update, I'll turn to our second quarter operational highlights. I'll move quickly to leave space for the rest of the team to discuss these in more detail and provide the context for what each means for our business. At Abex Exchange, broader connectivity and growing liquidity are increasing the relevance of our markets to commercial participants. MarketOS advanced toward commercial implementation at Abex Clearing and toward third-party commercialization outside the Exchange. Our shares began trading on the Toronto Stock Exchange on May 21st after ABEX had grown to become the largest company by market capitalization on SIBO Canada. We welcomed Yung An International Singapore as our first mainland China-backed clearing and trading member, providing institutional clients across Hong Kong and Asia with direct clearing access to ABEX Exchange.