Upexi(US:UPXI)2025-11-12 11:10Treasury Strategy - The company has shifted its treasury strategy to hold digital currency assets, primarily focusing on Solana (SOL), aiming for higher yields on excess cash [158]. - Approximately 95% of the company's Solana treasury is currently staked, with plans to maintain or increase this percentage in the future [161]. - The treasury strategy includes intelligent capital markets issuance to purchase and hold more Solana, potentially benefiting shareholders as Solana's price rises [160]. - The company maintains a certain amount of liquid SOL and cash to meet current obligations, ensuring liquidity management [166]. - The treasury strategy aims to turn the treasury into a productive asset through staking, enhancing shareholder value [160]. - The company evaluates its treasury operations bi-weekly to adjust the allocation of SOL in the staking program [163]. - The Company has approximately $253,000,000 in treasury value at BitGo, based on the SOL price of $202.51 per token [192]. - The Company maintains more than 98% of its SOL treasury in cold wallets [195]. - The Company has not reduced its treasury or sold any of its SOL staking rewards to date [186]. - The Company is in the process of onboarding a third qualified custodian as part of its risk management process [198]. Staking and Yield - The staking program utilizes multiple validators to maximize yield and reduce risk, with regular evaluations of validator performance [167]. - Staking rewards are distributed based on the proportion of stake relative to the total active stake in the network, funded by inflationary issuance and transaction fees [183]. - The Solana staking yield is currently at 4.3%, down from an initial 8.0%, and will decrease by 15% every epoch-year until reaching a long-term floor of 1.5% [200]. - There are currently 27.2 million locked SOL, representing 6.7% of the total SOL supply [200]. Financial Performance - Revenue declined by approximately $1.2 million, or 28%, compared to the same period last year [211]. - Digital asset revenue increased by approximately $6.1 million as the Company began investments in digital assets [212]. - Cost of revenue decreased by approximately $0.5 million, or 33%, resulting in a gross margin of approximately 69.7% [213]. - General and administrative expenses increased approximately $7.9 million, or 577%, primarily due to the shift to holding digital assets [215]. - Unrealized gain on digital assets increased by approximately $78.0 million due to price changes on SOL [216]. Cash Flows and Assets - Net cash flows used in operating activities was $9,780,221 for the three months ended September 30, 2025, compared to $1,974,592 for the same period in 2024 [220]. - Net cash flows used in investing activities was approximately $30.3 million for the three months ended September 30, 2025, compared to $5.8 million provided in the same period in 2024 [221]. - Net cash flows provided by financing activities was approximately $39.4 million for the three months ended September 30, 2025, compared to $2.7 million used in the same period in 2024 [222]. - Current assets increased to $220,341,167 as of September 30, 2025, compared to $56,778,043 as of June 30, 2025 [218]. - The Company estimates sufficient working capital to fund operations and meet debt obligations over the next twelve months [223]. Solana Network Insights - The Solana network's transaction fees are fixed at 0.000005 SOL per transaction, plus a variable fee based on computation resources used [179]. - The company does not hedge its SOL and has no plans to do so in the future, focusing solely on Solana as a digital asset [158]. - Solana is the 1 ecosystem for new developers, growing 83% in 2024, indicating strong future growth potential [203]. Fees and Charges - The Company pays BitGo a monthly digital asset storage fee based on the market value of the assets in storage, plus $500 [189]. - The Asset Manager will charge an asset-based fee of 1.75% per annum on the assets under management [205]. - The Company issued warrants to the Asset Manager to purchase 2,192,982 shares of Common Stock at various exercise prices ranging from $2.28 to $5.70 per share [206].