Good morning, everyone, and thank you for joining the HC Wainwright 27th Annual Global Investment Conference. My name is Alejandro Borjas, and I'm an analyst on the Investment Banking team. We're very excited you all could join us for a productive day of one-on-one meetings, corporate presentations, and panels. For this session, we're thrilled to welcome Brian Rudick, Chief Strategy Officer at Upexi Inc.
Hello, everybody. Thank you so much for your interest. I'm Brian Rudick, the Chief Strategy Officer of Upexi Inc. We are a digital asset treasury company underpinned by Solana, so think MicroStrategy, but with a different token. I like to think additional innovations and value accrual mechanisms as well. At the heart of it, we are a consumer brand company. We own three different consumer brands. We put up roughly mid-teens annually recurring revenue, and we are roughly break-even. In February of this year, we actually announced a pivot into cryptocurrency, which included creating a cryptocurrency treasury. In April, we did the first large-scale equity private placement to create an altcoin treasury. As I'm sure you've all seen, there have been hundreds to follow since. We quickly put our treasury to work by buying Solana, and we stake our Solana to turn our crypto treasury into this productive asset.
We also, unlike Bitcoin or Ethereum, are able to buy locked Solana at a discount for built-in gains for shareholders. We'll get into what all this is and where it comes from later on in the presentation. We announced a follow-on raise, $200 million, in July. One thing that was quite differentiated about that, it was also the first in-kind convertible note. This creates a lot of wonderful benefits for both investors and Upexi Inc alike. We most recently announced that we have over 200 million tokens valued at probably $420 million at today's current price. One thing that we think differentiates us is our innovation. As I mentioned, we were at the forefront of this trend, and we did raise what we believe is the first large-scale equity private placement for an altcoin treasury.
We did do what we believe is the first in-kind convertible note, which offers a different risk-reward for investors. It's downside protected and also removes credit risk because it is in-kind. We also believe we have a differentiated management team. Our CEO, Allan Marshall, founded XPO Logistics. It's a $15 billion NYSE-listed logistics company. Our CFO, Andrew Norstrud, has been a CFO of public companies for decades. I spent a decade in traditional finance, mostly at different hedge funds like Citadel, Millennium, and Baliezni running a book of bank stocks. I mention that because I think treasury companies are literally just banks. We understand this stuff quite deeply. At the end of the day, this is a capital markets exercise that we believe we know really well. Just jumping in, a bit of a quick primer. What is a crypto treasury company?
There are what we like to call incidental allocators. You could think of this as someone like Tesla buying Bitcoin just with the cash it has on its balance sheet. We would not qualify them as a treasury company because they're not actually going out and accessing the capital markets to buy even more cryptocurrency. Our view is that MicroStrategy is the first. It's a pioneer. It created the blueprint. Historically, efforts have really been focused on Bitcoin. What you've seen more recently with the new administration being more open to crypto and blockchain technology is you're seeing more and more companies create treasuries around different tokens because both the companies and the investors are confident that they are not unregistered securities. There are a lot of benefits to a crypto treasury company that you can't get with holding the tokens natively or by buying other instruments like an ETF.
One is a treasury company's stock can act as a proxy to the cryptocurrency that it holds in the form of a familiar equity security. Number two, they will often trade with a beta to the underlying cryptocurrency, which is a benefit if you think the cryptocurrency is going to generally move up over the medium term. Lastly, what gets me so excited is the different value accrual mechanisms like issuing equity above book to pull in accretion for shareholders or staking to make your treasury this productive asset or buying locked tokens at a discount for built-in gains for shareholders. Here you can see how successful the model can be. This is MicroStrategy's success. What I'd point out here is that MicroStrategy has literally been the best-performing stock in the U.S. since it turned on its Bitcoin treasury strategy in August 2020.
It's more than tripled the return of Bitcoin. This is with having very minimal leverage. There actually has to be some underlying value creation here. We think we know what it is, and we think we're replicating it and with additional innovations. Instead of being built on Bitcoin, we chose to be underpinned by Solana. What is Solana? It is a high-performance blockchain. The way that I think about this is Bitcoin is just a bunch of computers all around the world that are unrelated that simply keep a local copy of Excel of who paid what to whom when. That's it. If somebody paid me one Bitcoin and I changed my local copy and said they paid me two, everybody else would compare my local copy and say, "Brian's doesn't match," and they'd throw it out.
You can come to this consensus or this source of truth in this decentralized manner. What happened is smart contract blockchains came along and they said, instead of having all these computers simply keep track of who paid what to whom when, let's have them process code. You can have all these computers compare the output of that code and similarly come to this source of truth in this decentralized manner. Put very simply, we think that Solana is the best high-performance blockchain. Anybody can upload arbitrary computation in the form of a smart contract, which can create this decentralized application, and anybody can permissionlessly interact with it. We believe that Solana has superior technology, and this is resulting in Solana putting up leading statistics and best-in-class metrics, often of all other blockchains combined.
Our thesis is that we offer investors exposure to crypto in the form of a familiar equity security. We are unlocking significant value through proven capital market strategies that MicroStrategy pioneered. We are actually improving on MicroStrategy's model with key innovations. We are capitalizing on crypto and Solana's secular expansion. We are supporting Solana with improved visibility, particularly amongst folks like yourselves. For any treasury company, there are really two components in our view. One is you want to maximize external visibility so you can increase demand for the stock that helps you continue to have this premium multiple. I won't go through all of this, but you can see we are doing as much as possible, both in the realm of traditional finance and in the crypto sphere. Like being here is one example.
We have 13 or 14 different conferences that we'll be at throughout the rest of the year, mostly in the traditional finance side. Really out there trying to raise our visibility as much as possible. On the intelligent capital issuance side, when you issue equity above book, it is by definition accretive. It's the business model of these companies. We're out there considering all options. We can do that via an equity line. If you're trading at a nice premium to NAV, you want to issue as much capital as possible to pull in as much accretion for shareholders as you can. We've demonstrated our ability to do this multiple times in the past, and we think we have a proven ability here as well. Our strategy is to go big and fast. We started, as we mentioned, in April by raising $100 million.
Candidly, this was eye-popping at the time. Once the model has been proven, there are many others who are coming. I would almost argue it's easier to raise $1 billion now than it was $100 million at the time. We did it, and we deployed that quickly, which is what you want to do if you think that the token is going to move up over time, which it has. As you can see, we have a lot of built gains that we've created for shareholders. Another thing about us, we are backed by 15 or 16 of the most prestigious crypto VCs. They are adding a lot of value by staking for us. We delegate our Sol to them, taking 0% commissions. They are reinvesting in future rounds, which some of them have done in a big way in some of our subsequent raises.
They are helping to amplify our visibility by putting us on podcasts and talking about us on crypto Twitter and the like. Lastly, one thing that we think differentiates us is we are running this company in a manner that is befitting of a public company. What I mean by that is, unlike some other treasury companies, we will not get over-levered. We want to make sure that we're well-positioned for all market environments, and we're dealing with a very volatile underlying asset here. Another thing, too, is we're not going to do a bunch of on-chain crazy degen crypto trading that some others are doing. If you do that, you actually heighten your legal risk, your regulatory risk, your smart contract risk, your liquidation risk.
We just think the model is so powerful in and of itself that we don't want to try to squeeze out an extra 2% on our treasury yield and inciting and adding all this other risk. We're only using qualified custodians and top validators, and we're diversifying amongst them. We think that this is a strategy that will resonate not only with crypto investors, but also traditional investors and will position us well to weather any market environment. Here's a slide that gets me so excited. These are the different value accrual mechanisms that, by the way, all compound. I will start with staking. For any proof-of-stake network, you can actually participate in the security mechanism of the blockchain by staking your tokens, and you actually get compensated in kind for that. We make 8% on our $420 million treasury.
Assuming that this 8% staking yield holds and it's been quite steady, in a year from now, we'll have 8% more SOL just by staking our SOL. It doesn't take much effort. You have to click a couple of buttons. Another thing that we do is we buy locked Solana at a discount. This really comes from where Solana was created. It was created via what's called a pre-mine launch. They initially created Solana by basically making 500 million SOL, and then they sell them to different investors that don't all vest on day one. We can actually go out and buy locked SOL at a 15% discount. It has roughly a 1.4-year weighted duration. If you put that discount into any sort of yield equivalent, we're roughly doubling the staking yield in this very risk-prudent manner.
You can see that over half of our SOL purchases have actually been for locked SOL. This intelligent capital issuance, this to me is the big one. When MicroStrategy is out there and it sells equity at two times, it's literally selling $1 for $2, or it is tantamount to buying Bitcoin half off. This is how MicroStrategy has created $26 billion worth of free Bitcoin. They call it their Bitcoin yield for shareholders over the last six quarters. We're doing this exact same thing. Lastly, we obviously have less control on this, but we think that the change in the SOL price probably will be the number one determinant of our equity performance. Here we think that there are a lot more positive catalysts than negative catalysts in the future, including regulatory clarity in the U.S.
Just because it's so important, here is a slide on the capital markets flywheel. I'll talk about this in bank terms because I'm a former banks investor. Basically, banks earn spread income. The market will present value all the spread, will add it to book value, and then they will generally trade at a premium to book. We're the same way. We earn spread income, which is just the difference between the return on SOL and our cost to capital. The market will then present value all of that and add it to the NAV. We will generally trade at a premium to NAV or MNAV, as folks in the crypto sphere call it. We can then actually monetize that premium by issuing equity above book, which again is by definition accretive.
We can sell convertible notes to the market, which actually enable us to sell equity at a higher multiple because typically that conversion price is above your current spot price. Most of these notes, if you look at any sort of options pricing model, will tell you that they're highly likely to convert because the maturity is so far out and the volatility of the underlying is so high. When we do that, we increase our SOL per share. If the multiple holds, the stock should move up commensurately or is likely to move up commensurately. What you saw in our last big raise is the multiple actually increased because it gave the market confidence in our ability to raise equity in this accretive fashion. When the stock price moves up, it helps support the multiple, and this flywheel can continue. Here is a slide on valuation.
My view, and there's a couple of arguments very candidly that argue the other way, but they're much smaller. My view is that wherever MicroStrategy is trading in the current market, it should be the floor valuation. The reason is MicroStrategy is so big that for a similarly sized, similarly priced raise, there will be more accretion for a smaller company. If Upexi issues $100 million at two times, it could be nicely accretive for us. Whereas if MicroStrategy issues $100 million of equity at any multiple, probably not going to move the needle because they're so big.
Similarly, as you move off of Bitcoin to a smaller token, as long as you can be pretty sure that that token will perform well and will still be around in five years, and this is a huge, huge caveat and why we're so fortunate to be underpinned by Solana, where we very strongly believe that, there should be another size premium for being underpinned by a much smaller token. Bitcoin is literally the fifth largest asset in the world, $2.5 trillion, unlikely to 5x from here versus something like Solana that's 5% the market cap of Bitcoin, could legitimately 5x in the next year or two. All else equal, there should be another built-in growth premium there.
We don't have it in the slide, but we also have additional value accrual mechanisms that you don't get with something like MicroStrategy, where we're staking our treasury and we're buying locked Solana at a discount. You can see we've traded at a pretty healthy premium to book value over time. Here is a snapshot of our Solana treasury. I've mentioned most of this already, but 2 million Solana, probably worth $420 million at today's prices. Most of the purchases were done via locked form. We are staking almost all of our Solana and earning 8%. We have pretty nice gains because we've generally been buying a lot lower than where the current market price is. This is a new metric that we're adding, this adjusted Solana per share in the top left. This is actually what I'm most proud of.
In my view, this manages or measures the efficacy of management treasury operations. What we've done is we've taken out the impact of the price of Solana, and we've adjusted for different things like leverage. This basically says that we have increased on this adjusted basis Solana per share by 54% since we initially raised that equity private placement. If the multiple holds, the stock should move up by that amount. Our main focus is continuing to increase adjusted Solana per share. This doesn't even take into account the price of Solana. Solana was much, much lower, sub $150 when we first started. This number would be much higher if you actually multiplied that by the price of Solana and put it in dollar terms. What you can see is our credit risk leverage. We have $40 million in a line outstanding. That's relative to over $400 million in Solana.
Our leverage is quite low, which we think is appropriate for a company that's underpinned by a quite volatile asset. You can see on the bottom right here, we're trading roughly $50 million a day on a 20-day lookback. We're one of the more liquid treasury companies out there. Why crypto? I'll go quickly through this, but very simply, there are a lot of wonderful use cases and benefits that you can't get with traditional other incumbent technologies, like the removal of intermediaries, the democratization of value exchange, and new constructs around ownership, governance, and business models. Prices will fluctuate based on speculation. If you actually look underneath the hood, the underlying fundamentals are strong and up into the right. You can see the number of crypto users, daily transactions, experienced devs. It's all up and to the right.
Prices will fluctuate, but eventually will follow these underlying fundamental trends, which are all very strong and positive. I actually think that we are on the precipice of the mother of all catalysts for crypto to become mainstream and for us to see mass adoption. The reason I say that is, in my mind, the big reason always holding crypto back is a lack of clear rules and regulations in the U.S. Big companies just didn't really want to disintermediate themselves, particularly if it's going to come with heightened legal and regulatory risks. Once we pass market structure legislation, which we believe will happen next year, they're going to be forced to, because if they don't, they'll be disintermediated by those who do. If you think about it, it's big tech and it's big finance that have billions of customers. They've got built-in trust.
They've got billions of dollars of capital. They have the top devs. This would be something like Google adding a built-in crypto wallet to its Chrome browser, or something like Amazon adding stablecoin payments to its online marketplace. We really think that we are on the precipice of potentially onboarding the masses over the next couple of years. Solana and Upexi are in this really great position to benefit if that occurs. We chose Solana. I previewed this a little bit. Our view is that Bitcoin is the best monetary asset. Solana is the best high-performance blockchain. It's kind of that simple. We could have done this on Bitcoin, but there are 50 Bitcoin treasury companies. We didn't want to be the 51st. Number two, Bitcoin is this big asset already, and it's unlikely to 5x from here without immense sovereign buying. We know the U.S.
is not going to be buying new Bitcoin, at least for now. We believe that Solana has more potential upside, all else equal. There are a bunch of Solana-specific reasons. I won't get into all of them, but the big three in my mind, there really are. The first one is that Solana is the first second-generation blockchain. What I mean by this is it is able to benefit from increasing utilizing the best technology, like it can process transactions in parallel, like our phones and our computers do right now. Also, because it launched in 2020, it benefits from having these really great network effects. That's led into my second point, which is Solana has this really wonderful, growing, and vibrant ecosystem of users, developers, and decentralized applications. You can really build anything on Solana, from DeFi to DePIN to AI agents to gaming to social to meme coins.
You think of it, Solana is literally just a computer in the sky. It's focused first on finance because there's so many intermediaries in the world of finance. Solana is just a big computer with all these wonderful, great properties. We believe that it will be the endgame winner. Lastly, all of this is emanating in Solana putting up best-in-class metrics, whether it's daily active users, decentralized application revenues, decentralized exchange volumes. Solana is leading the pack on all of them.
Just a heads up, you have about two minutes left if you want to open it up to questions.
OK, yeah, this is the last slide. Yeah, and then why Upexi? We are a first mover. We believe that we have a top and differentiated management team. We've led with innovation. We're one of the first Solana treasury companies. We think that we know how to execute, and we've proven that we can execute on both increasing our visibility and issuing capital in this accretive fashion. We intend to continue to do that for the benefit of shareholders. Happy for any questions. Yes.
Yeah, I was just reading about the first great event at Southern Europe. I was curious to get your inside view on how things are going with the SEC. I know it's been a slow process to get these crypto games through. I think you guys have been working with Bitcoin. What's your take on that? How's it going?
Yeah, I think that the SEC is taking a close look. I mean, this is public information. There was an information article out the other day. I think they want to make sure that they're protecting investors as much as possible because you've seen a lot of these. At the same time, the SEC is now very open and supportive of blockchain. I think they're trying to weigh consumer protections with fostering innovation. My sense is, and I'm not involved in these discussions, they're kind of inundated with these registration statements from hundreds of these companies. My sense, just looking at, you know, when folks file S-1s, when they file amended S-1s, and then when they go effective, it's taking some time.
I think that a lot of that is because they do want to dot their I's, cross their T's, but also just because there have been so many registration statements. I would expect that to continue. I'm not personally, I'm not too worried that they'll shut down this model or anything like that.
We're going to have to wrap up there, Brian. Thank you so much.
Thank you, everybody.
Yes.