UPXI | Upexi Inc. | earnings call 2026-09-17
Verbatim transcript (source: faster-whisper-small.en)

Good day and welcome to UPEXI Incorporated, fiscal fourth quarter, 2026 financial results conference call. Please note this event is being recorded. I would now like to turn the conference over to Walter Pinto, managing director of KCSA Strategic Communications. Please go ahead. Thank you, operator. Good evening and welcome everyone to UPEXI fiscal fourth quarter and full year 2026 financial results conference call. I'm joined today by Alan Marshall, chief executive officer, Andrew Nordstrom, chief financial officer, and Brian Ruddock, chief strategy officer. Before I begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward looking statements within the meaning of the safe harbor of the private securities litigation reform act of 1995. Acts result may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I'll refer you to the press release issue this evening and filed with the SEC on Form 8K, as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligations to update or revise any forward looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law. In addition, during the course of the call, we may refer to non-GAAP financial measures that are not prepared in accordance with the county principles generally accepted in the United States. And they may be different from non-GAAP financial measures used by other companies. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issue this evening, unless otherwise noted. I'd now like to turn the call over to UPAC's CEO, Alan Marshall. Thank you, Walter, and welcome everyone to our fiscal fourth quarter, 2026 earnings conference call. Our fiscal quarter ending June 30th, 2026, marks not only the end of our fiscal year, but also the one year anniversary of our Solana Treasury Strategy. As such, I wanted to start with a brief review. We first embarked on our Solana Treasury Strategy in April 2025 as it became apparent that the US administration and its agencies were turning from a headwind to a tailwind for digital assets. To bootstrap the strategy, we completed what we believe to be the first large scale equity raise for an altcoin treasury, raising 100 million and kickstarting the digital asset treasury company trend in the US. We followed with a second highly accretive raise in July 2025, taking in an additional 200 million and including, we believe, the first in kind and convertible note, again, demonstrating our innovation within the capital markets. Turning to the quarter, April, May and June were characterized by a subdued market environment for digital assets and no volatile, Solana generally trended lower throughout the quarter. During this bear market, we focused on what we could control. Management works to fortify the balance sheet, the debt reductions and increasing capital on hand using our ATM. Secondly, we dramatically reduced expenses and streamed our business to create a very predictable expense profile. On the balance sheet front, we spent the quarter focused on a number of initiatives to strengthen our financial position. We used some of the ATM proceeds to increase our cash position, which totaled 5.8 million as of June 30th, up 65% from the prior quarter end. Separately, in June, we extinguished roughly 20 million in debt. And subsequent to quarter end, we refinanced our existing credit facility moving the interest rate from 11.5% to 7.5%. And reducing the amount of collateral required for the line all in, we are in a much stronger position and ready for any market environment that may come. On expense management, we successfully completed our efficiency initiative, which included outsourcing our manufacturing, warehousing and logistics operations and reducing full-time employees from 59 a year ago to just 10 today. As previously guided, we expect these efforts to show up in the current quarter ending September 30th. And specifically for our staking revenue to more than cover our ongoing cash expenses on a go forward basis. Before concluding, I wanna express the fact that this was just our first year. And while the crypto market has not been what we hoped for, we believe it's still in the early innings. The market will turn up again. And when the bull marker returns, which it will, the opportunities to create value will be abundant and the premiums will return. The work we have done this year will amplify the capitalization of those as we execute upon them. With that, I'd like to turn the call over to our chief strategy officer, Brian Ruddick. Thanks, Alan. And hello, everyone. Alan covered our strategic priorities and progress at the company. And I will provide an update on Solana. After all, the main determinant of the success of any treasury company will be the performance of its underlying token. Put simply, Solana remains incredibly well positioned. As a brief review, Solana is a high performance blockchain and is uniquely positioned as the first second generation smart contract blockchain. This gives Solana both best in class technology from having come later than early generation blockchains and deep network effects with a plethora of users, developers and applications. While one may think of Solana and smart contract blockchains as a new computing paradigm, Solana is hyper focused on internet capital markets where it aims to provide a single liquidity venue for all the world's assets accessible to anyone, anywhere, anytime with just a simple internet connection. Personally, I like to think of this as re-imagining our antiquated global financial infrastructure which were quite literally built 50 plus years ago with internet and blockchain based rails for massive speed and cost advantages and through items like stable coins, tokenization and AI agents. And with top performance and distribution, Solana is in the cap heard seat to lead this revolution. Metrics agree and show that Solana is winning. Key statistics from last quarter include a 48% increase in stable coin supply over the prior year, tokenized equities growing to over 420 million from virtually zero a year ago and with trading volume of over 5 billion amounting to a 97% market share, the cheapest median transaction fee of any chain at just 0.04 cents, a 53% market share of all blockchain transactions and strong spot ETF inflows compared to large outflows for others. A big reason for Solana success and a pivotal factor for the future is Solana's growth with institutions. After all, institutions are likely the fastest way to onboard the masses given their billions of customers built in trust, billions of dollars of capital and leading developers. Notable corporate announcement during the quarter were numerous and occurred in various areas from key players like in payments and stable coins from SOFI, Western Union, MoneyGram and MasterCard and tokenization and capital markets from State Street, Amundi, Securitize and Ando and an infrastructure from Google Cloud, Amazon Web Services, Moody's and all funds. It's early innings, but institutions are re-imagining our antiquated financial infrastructure with Solana as the rails and we are on our way towards internet capital markets. As that continues Solana and Upexi are well positioned to benefit and with that, I'll turn the call over to our Chief Financial Officer, Andrew Northstrud for a review of our financial performance. Thank you, Brian. As of June 30th, 2026, the company had approximately 5.8 million in cash, 165.3 million in Solana and 180.1 million in total assets and 45.6 million in working capital. Turning to the treasury, as of June 30th, 2026, the company had approximately 2.34 million Solana tokens having a cost basis of approximately 360.3 million equating to an average cost per token of 154 and approximately 95% of these tokens were staked. For the year ended June 30th, 2026, the treasury had approximately 17.4 million in digital asset revenues or approximately earned 135,000 Solana tokens. There was 195.1 million in unrealized losses and 11.7 million in realized losses. For the year ended June 30th, 2026, general administrative expenses were 26.4 million compared to 11.9 million in the prior year. The increase reflects the build out of the treasury strategy includes seven million increase in employee compensation, a four million increase in public company expenses, a 1.5 million increase in digital asset treasury fees, a 1.2 million increase in legal fees, and a 1.1 million increase in travel. Stock based compensation was approximately 21.9 million compared to 2.4 million in the prior year. Interest expense was 13.6 million compared to 1.2 million in the prior year. The increase reflects the increase in short term and convertible debt obtained to increase the company's treasury. The company has recently negotiated a lower interest rate on the short term debt to reduce the interest expense. There's a gain on extinguishment of debt of approximately 10.3 million. This reflects the debt reduction on an acquisition loan and the partial repayment of a convertible debt that the company stopped. Net loss for the fiscal year was 246.1 million or $3.87 per share compared to a net loss of 13.7 million or $1.73 per share in fiscal year 2025. The loss was driven primarily by 195.1 million of unrealized losses on digital assets, 11.7 million of realized losses on digital assets, and 21.9 million stock compensation. During the year we repurchased approximately 2.9 million shares of common stock and an average weighted price of 96 cents per share. For total consideration of approximately 2.8 million under the 50 million repurchase program of our board authorized in November of 2025. Subsequent to year end, we issued approximately 2.5 million shares under the at the market program for gross proceeds of approximately 2.5 million. Total stockholders equity was negative 53.8 million at June 30th, 2026 against positive equity of 90.1 million a year ago. The year over year change in stockholders equities primarily reflects the impact of the unrealized losses on our digital asset treasury and other changes associated with the execution of our treasury strategy. Management continues to focus on growing Solana holdings on a per share basis through discipline capital activities, staking yield and opportunities purchase of discounted lock tokens while maintaining prudent leverage and risk management. And now I'll turn it back over to Alan for concluding remarks. Thanks Andrew. I wanted to close the call by reiterating the progress we have made despite the difficult market environment for crypto. The improvements to our balance sheet and the material reduction to our expenses will be within a position to capitalize on the inevitable upturn. The company results will improve material when this happens and all the groundwork we did will be amplified with material improvement in the Solana price. With that I'll turn it over to the operator for questions. Thank you. If you would like to ask a question please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue and for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys. Our first question is from Brian Kinslinger with Alliance Global Partners. Please proceed. Great, thanks so much. Two questions. My first one is I'm curious if you can discuss the progress and or ways you can maximize yield and some of the avenues you're exploring to achieve your goals and then what are your top priorities for you practicing in the current fiscal year? And then I'll ask my second question. Brian, do you want to take that one? Do you want me to take it down Marshall? We're happy to. Great. Yeah Brian, thanks for the call. I'd say that we slow played this a bit. We've looked at several different opportunities. At first one was quite attractive from both risk and return perspective. Recall we have a quite high bar. We want to make sure it's very low risk and we want to make sure that it can be recurring and also something that investors understand. What I'd say is some of the opportunities that we were looking at got less attractive during the quarter and we think that as the crypto market comes back a lot of those opportunities will improve as well and we can become much more active there. So not a ton to report there, but we're still actively looking and that is something that we do want to do. Great. My second question is, could you explain with the stock price well below the strike price for the converts, why is management choosing to calculate MNAV as though these will convert, as it seems like you're trading at 1.4 times and so capital raising would be accretive to sole per share. I'd love to hear your thought process on those converts. Sure, Brian's Alan Marshall. I think we spoke about this in the past. I mean, you're speculating on sole price and asking us to do that and I just don't think we're in a position to do that. I mean, in July of 2025, within 150 days, sole went from 234 to 82. So, I mean, we have 281 days assuming we don't either extend them or find a way to convert them like we did with the high buying deal. So anything we do would have speculation in it. So we reported these, we know what the dates are and assume that they're not gonna convert in 281 days when sole, like I said, went from 234 to 82 in 150 days. Just some time not willing to make, I mean, we did this transaction assuming they would convert and if sole were back at 200, they would convert. I guess we could do like a percentage-wise on what we think it is, but it'll all be speculation. So this is, we're just being consistent with how we reported it. Like Andy said, we have, we report on our website. We think we'll be able to either grade value with these converts, find a way to convert them and so on I could go above a level that would make them convert. So you're making one assumption that it's not gonna convert and I just don't know how we could make that, responsibly make that same, I guess speculation. If I was that good of speculating, I would have sold on my song at 234 and bought it back at 82. Okay, fair enough, thank you. Brian, one thing I would add is if you take the embedded option in our in-kind notes and you run it through any sort of options pricing model like Black Scholes, that Delta is actually still quite high. It's because like the vol on our stock is extremely high, like we would trade with the Beta to Sol and Sol is quite volatile as you know. So that suggests that there's actually still a really, really dark and high chance that they do end up converting and I think like that volatility is often overlooked. So one dimension that as well. And just not to go further, but you saw we did the high mind deal, we converted early. So even if somehow we had to possibly reprice them or if it was close or something, so maybe there would be some additional dilution. We just can't do it, we just can't do a zero. We can't do an all or nothing kind of transaction. So like speculating, it's just hard for us right now. Thanks for the question. Our next question is from Gareth Garchetta with Cancer Fitzgerald. Please proceed. Hey guys, I wanted to touch on the June private place. It looks like you were able to retire just under 20 million of principal for around 10 million at the time. So a pretty meaningful discount to face value. I'm wondering how we should think about the capital allocation framework going forward and maybe if you think that something like you just did would be repeatable or then how you would weigh that versus the buyback program. I got a more generalist Alan Marshall, thanks for the question. On a more general level, I think what we've been able to do over the process of building this treasure or starting the treasury and then being the first to create these in-kind notes then finding a way to get a deal done with hive mind to make it beneficial for both sides. I think what I would take from that is just our creativity and our awareness that these are things we have to accomplish this year. So our process there is like, how do we find creative ways to create value? Whether it's another deal like hive mind, whether it's, we go back to the investors and sweeten the deal to extend the duration, whether we, there are plenty of negotiation, negotiating points which couldn't benefit both the investor, ourselves and the shareholder. And we're very aware that we need to at least start considering those and possibly execute on them. We'll go back to like the volatility. It's not unreasonable that we could wake up in June of next year and so be 250. So we just don't wanna do something too early to create a situation where we give too much back or I don't think that's the way to really look at it but that's our thought on that. And so we continue to, when we decide to raise money on the ATM, the closer it is to now, above now, we still think, actually so we look at it a little differently this year than we did last year. Like everybody was raised as much money if you're an app, put it to work. And it turns out that all of that is kind of incorrect in a certain way, I mean, correct at the moment in time but when soul goes from 234 to 65, everything you bought is upside down. When you think you'd wanna raise as much money as you can if you still believe in the story of 65, unfortunately that's, we all know that's not how the markets work. So we're trying to blend that, the ATM, we're trying to be creative. We are going to look to continue to raise capital in a way that we think is a creative in the scenario where soul goes back to both where it's been and maybe to a new high. Great, that's super helpful. And then maybe just touching on the blueprint delegation. So it appears that blueprint is under the umbrella of hive mind. So I'm just wondering it, was that maybe a portion of the deal or what it took to get the deal through and could you maybe clarify how much of the treasury you're going to shift over to blueprint? Not sure I understand the question. You're talking about the validator with blueprint and we're not shifting any more or less. We are, you know, partnering with them. They've partnered with us in the past. We also have a few other validators that are primary ones that give us very good rates. We get back most of the state forever black rewards, everything else. So that's kind of how we look at it. We don't just favor one, but without looking at the economics of all of them. Yeah. Oh, I believe just, but yeah. So the blueprint deal was a deal that hive mind, Matt and their team and I had been working on for, you know, they had for a year. So it wasn't really connected. It was just like, if we're going to deepen our partnership, we wanted to, you know, after that, you're like, Hey, you know, we can, we can maybe increase the reward side. So that's the way we did that as well. That makes sense. And I was actually looking into it. It looks like they have a pretty unique platform in general, just from like a asset management perspective. So maybe could you just touch on like how you see that platform and the uniqueness of it? Yes. Some of the things, you know, are you talking about, so the relationship with hive mind, we're looking to expand into other, you know, we think the US market, you know, is a gray market, but they have more access on their platform, you know, to enter the Asian market. So for us, for a taxi, you know, that partnership was how do we expand our footprint outside of that? And they're a great, you know, making a deal with them hopefully would lead to making deal with other investors in that area of the world. And I'm not, I'll let Andy jump in in case the question was more about the validator. Well, yeah, just with the dashboard and everything else, one of the things that we did with this partnership, you know, before they even had a Solana validator, that was kind of the why we were putting this partnership together prior to the conversion, prior to even actually the deal being done on the convertible. So it's been a process, we work together very well, and we'll continue to try to expand that as we go forward in many different ways. All right, Alty, thanks for all the questions and nice results. There are no further questions at this time. I would like to turn the conference back over to Alan for closing remarks. Thank you everybody for joining the call today. Thanks for the questions. Like I said, I'll just reiterate again, we're looking forward into 2027. We think there's a significant bull market coming. We think we'll be able to execute on those strategies. And we'll close that with a thank you again for everyone and look forward to talking to you on listening to you on the next call. Thank you. This will conclude today's conference. You may disconnect at this time and thank you for your participation.