Aixcrypto Holdings (NASDAQ:AIXC) Q1 2026 Earnings Call

0:00 Good afternoon and welcome to the first quarter twenty twenty six earnings conference call of AIXCrypto Holdings, Inc. My name is Andrew Grossman and I will be your moderator today. Before we begin, please note that today's discussion may contain forward looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those discussed today. For a more detailed description of these and other risks and uncertainties, please refer to our quarterly report on Form 10 Q for the period ending 03/31/2026 and our other filings with the Securities and Exchange Commission. Forward looking statements speak only as of today and the company undertakes no obligation to update them except as required by law.

0:53 I will now turn the call over to Jerry Wang, Co Chief Executive Officer. Thank you, Andrew, and good afternoon to everyone joining us today. Welcome to AIXCrypto's first quarter earnings call as a company currently transitioned into operation towards Web3 and AI infrastructure. On our inaugural earnings call earlier this year, we laid out our 2026 execution priorities, user growth and platform expansion, RWA tokenization, operating the infrastructure that enables the programmatic delivery of data assets, and digital asset treasury management.

1:41 The first quarter of twenty twenty six is our first reporting period, executing against those priorities. Koji will walk through the financial picture in detail, but the business signal underneath those numbers is clear. In Q1, our product pipeline progressed from concept to documented designs, internal testing, and preliminary contract conversations with counterparties. Q1 twenty twenty six operational highlights. First, data platform. Project kickoff with Spherity Future. Embodied AI sits within the broader physical AI category. Both rely fundamentally on multi modal data produced by robots performing real work, and real world operational data is among the scarcest training inputs for AI foundation models.

2:40 The data collaboration between AIXCrypto and our majority shareholder, Fare the Future, is centered on turning the scarce asset into a recurring operating work stream. On 03/25/2026, we formally kicked off the EAI data collaboration project with Fare the Future, moving that relationship from strategic alignment into operating execution. Within the quarter, we established the core project team, initiated drafting of the FFAIAiAXC data collaboration contract, and defined the data rights boundaries and commercialization roadmap.

3:25 The collaboration is structured as a dual track platform, a B2B enterprise data platform for institution buyers, and a B2C decentralized, cross sourced data collaboration platform for the broader development and contributor community. Beyond the data business itself, we're also preparing a consumer facing extension, packaging the robotic capability operated within AIXC's digital factory, together with the EAI and physical AI data accumulated through that operation into on chain agents available to end users. This is a consumer graded EII agent product line jointly planned with Fair the Future and operated by AIXCrypto.

4:17 Initiation was completed during this quarter. Specific product form, pricing, and launch cadence will be disclosed separately when finalized. This line carries the Q1 B2B data foundation forward into a seaside agent network that users can participate in. Second, Agentier, AI agent arena platform. Agentier is consumer facing, designed to bring agent infrastructure into a daily use environment. During Q1, we completed initial development of the platform's four core game models, and finalized a commercial model centered on across paths, economic, and arena fees. By early May, the platform reached an internal review milestone, and we're preparing for a phased public launch, with launch time to be announced when finalized.

5:15 Three. RWA equity tokenization: Fare the Future as Proof of Concept asset Q1 was the period in which we converted our RWA equity tokenization strategy into a defined execution path. The proof of concept asset is the fair to future class A common stock that we hold through a designated third party structure. During the quarter, we completed the structural and regulatory review necessary to align our RWA initiative with the Commission's latest interpretations on digital securities. On counterparties, we conducted a structured comparison of the principal tokenization platforms in the market across near term execution and longer term standardization considerations.

6:09 That evaluation remains in progress, and specific partners will be disclosed once definitive agreements are executed. Beyond the launch itself, the broader objective is to build AIXCrypto into compliant on chain infrastructure for tokenized equity, designated to operate within applicable regulatory frameworks, with potential applications including non US distribution and DeFi integration. 2026 outlook. Our 2026 execution priorities remain unchanged. Our objective over the next two quarters is to transition from the Q1 foundation towards initial product delivery and revenue generation.

6:59 That conversion runs along three revenue rails. First, EI data platform. We're targeting the end of Juwen for the first end to end transaction test and the first data delivery, the proof of concept milestone, alongside the closed beta launch of the B2B platform, and product completion plus public participation on the B2C platform. We're working towards a sustained transaction cadence in the second half of the year of one data buyer transaction per month. The consumer grade EAI agent product line that extends from this layer is in initiation.

7:44 Specific product form and launch cadence will be disclosed separately when finalized. Second, AI agent product. AgenTier's first limited public launch is targeted within the near term window, with potential post launch revenue arriving from Genesis and recurring access pass sales, arena fees, and functional platform usage fees. Third, RWA tokenization. Subject to definitive agreements, we're targeting a launch window later this year, subject to the execution of definitive agreements for the company's first tokenized equity instruments, with distribution and exchange listing anticipated to follow.

8:33 With that, I'll turn the call over to Cody to walk through the Q1 financial results in detail. Thank you, Jerry. Good afternoon, everyone. I will walk through the headline financial results for the three months ended 03/31/2026. The full statements are in our 10 Q and the speaker reference tables in the appendix provide complete line item detail. As context for the year over year comparisons, the Q1 twenty twenty five period predates the Faraday investment and the strategic transformation, and we held no digital assets in the prior year period.

9:19 AIXCrypto generated no revenue in the first quarter of twenty twenty six, consistent with our status as pre revenue company in the early stage of building our web three and AI infrastructure platform. As Jerry described, our near term revenue streams are tied to the launch of our RWA tokenization product, the agent tier launch program, the data platform commercialization roadmap, and functional service fee. As disclosed in note two, our recurring losses and accumulated deficit raise substantial doubt about our ability to continue as a going concern.

10:04 We are addressing that condition through the execution sequence Jerry described and the framework I will walk through. Total operating expenses were $4,300,000 in Q1 twenty twenty six compared to 2,700,000 in Q1 twenty twenty five. The increase is concentrated in general and administrative expense, which rose to 3,500,000 from 2,500,000 in the comparative period. The GNA increase reflects the cost of operating as a transformed business, including incremental payroll for new hires, executive signing bonuses, the Faraday transition services agreement, and other support functional costs, which were partially offset by a 1,300,000 year over year decline in investor relations expense.

11:02 The full G and A bridge is presented in table A in the appendix. R and D expense was de minimis for the quarter, reflecting the suspension of legacy clinical stage activity. Credit loss expense on short term notes receivable was $142,574 which represented a small adjustment on accrued interest on the Merizyme notes. The larger collectability assessment was made in 2025. Other expense net was $1,700,000 in Q1 twenty twenty six, driven almost entirely by a 1,900,000 net loss on digital assets.

11:55 This is the largest single item in the quarter and reflects mark to market movements on our C10 treasury under the fair value model effective with our adoption of ASU twenty twenty three-eight. At quarter end, the C10 portfolio carried a cost basis of $10,400,000 against fair value of $6,200,000 Investors should expect digital asset fair value movements to continue affecting our quarterly reported results as long as we hold the C10 treasury. Partially offsetting that loss was $303,010 of interest income, primarily accrued interest on the Mary Zeyn notes as just mentioned and small fair value gains on warrant liabilities and convertible debt.

12:58 There was no interest expense in the quarter compared to $73,615 in Q1 twenty twenty five reflecting the repayment of the prior period promissory notes operating cash burn for Q1 twenty twenty six was $4,500,000 driven primarily by the operating loss. Investing activities used $8,500,000 primarily reflecting $10,000,000 prepaid investment in Faraday managed by a designated third party structure, as Jerry touched on earlier, purchases of digital assets and intangible assets, partially offset by $2,100,000 in proceeds from digital asset sales.

13:50 Financing activities used $132,000 to repay convertible debt. Net change in cash for the quarter was a decrease of $13,100,000 driven principally by the $10,000,000 strategic deployment into Faraday equity position, which was contractually committed during the quarter and subsequently consummated in April 2026 upon issuance of the investment instruments. As fully disclosed in note 17 of our 10 Q, the company entered into first and second amendments to its previously disclosed entrusted investment agreement on 04/10/2026, expanding the scope of entrusted assets to include preferred equity affair today and modifying certain governance and option provisions.

14:53 The framework rests on three things, revenue ramp, operating expense normalization, and disciplined treasury management. Initial revenue is targeted to begin in the third quarter from Edge and Tier platform fee and initial data buyer transactions. Each is supported by Q1 foundation work the company completed during the quarter. Our RWA tokenization product is targeted for launch later this year. We will provide further detail on its commercial model once definitive agreements are executed. On expense normalization, the $1,300,000 year over year decline in investor relations expense disclosed in our MD and A is the initial indication that transformation related expenses are beginning to align with our revised operating model.

15:57 We expect that to continue with offsets reflecting investment in payroll, software, and legal expenses. On treasury, the C10 portfolio is being managed for market transparency and is exposed to prevailing digital asset market conditions. No digital asset appreciation is built into our operating model. We will continue to provide quarterly updates against this framework. With that, I will turn the call back to Jerry. Thank you, Cody. To put Q1 in one sentence, the products, the contracts, and the partnerships that drive our twenty twenty six revenue streams advanced meaningfully during the quarter.

16:47 Looking back across Q1 and the period since, we delivered against four operational anchors. We brought AGENTER into active development, reaching an internal review milestone in early May. We initiated our data collaboration with FEREDITHFUTURE, supporting the broader physical AI category that the industry is converging around. We progressed our RWA equity organization initiative through structural and regulatory review, and continue to work toward a launch later this year. And in April, we expanded our fair to future investment position to an aggregate $12,000,000 bidding on the $10,000,000 prepaid in Q1, and deepen the proof of concept asset that anchors our RWA infrastructure.

17:41 We will continue to make ourselves available to investors. Looking ahead, we expect to participate in industry forums on tokenization, AI infrastructure, and digital asset market structure. Details will be posted on our IR website as they are confirmed. Our SEC filings, investor materials, and corporate updates are available at ir.aixcrypto.ai and on EDGAR via the link posted on our Investor Relations page. Investor inquiries may be directed to iraixcrypto.ai. This wraps up the twenty twenty six AIXC Q1 earnings call for today.

18:29 Thank you for listening. Thank you. This does conclude today's conference. You may disconnect at this time, and thank you for your participation.