The latest report, Joachim. A lot was going on when last we spoke, and so it will be very interesting to hear where things stand now.

This time I'd like to focus on the market update section of your report, but let's start with the financials. The figures in Q2 were largely as expected.

Net revenue was low, but we forecast that you will enter into an agreement this year that will start generating some revenue. Are we too optimistic, or how would you comment on the sales development?

When you say are we too optimistic, is that in terms of generating sales?

Generating sales.

I think it's reasonable. I think what has certainly have happened this quarter is that a lot of the opportunities have moved from looking at does the product work, technically verifying it, into commercial discussions.

We've certainly started discussing commercials with RBI and NPCI for India. We are moved significantly for GCash.

There we are discussing the commercials in parallel with the technical trial agreement that we've signed. Then there is also good movements in the Caribbean for a CBDC project as well.

To expect revenue this year, yes, we certainly do that.

Okay.

Yeah.

We'll come back to all those projects in just a bit. Let me ask you about the cash situation.

The operating cash flow in Q2 was about -4.6 million...

Yeah. ...and

the cash balance ended at 13 million. Mm-hmm.

Given these figures, it would appear as if you would need a major deal or a deal or external financing of some sort for year end. What are your thoughts on the financial planning?

You're right that we did in Q2 the rights issue, which was, well, the chairman and myself, we subscribed for it, the whole thing, and then it was oversubscribed, and that strengthened the financial position in the company considerably just before the summer. We are looking into the financials.

We certainly are, and what we need to live on is the commercial contracts. The other one is the strategic investor project that we have looked at as well.

I think these two projects or these two revenue streams that are in a way helping each other. If we are getting sales traction, it will be much more easy to attract strategic investors as well in parallel.

I don't think it's binary like you say. I think we're aware of the financial situation, and we are considering our options what to do.

The main thing we want to do is to sign deals, as you said, major deals, in order to leave those financial discussions behind us.

Yeah. In connection with the rights issue, Tiärnås Corporate Finance was engaged to attract new strategic investors.

Yeah.

Are there any updates on this process?

It's ongoing. It's been a little bit on the slow side due to summer vacation.

We're working on that, and I think what has happened is that our financial situation is sort of stronger, as I said. We have moved forward quite a lot with the commercial discussions into many of those opportunities we have at hand.

I would also say that the fact that we got a patent approved in India is also making the whole situation look stronger for us. That helps in the dialogues that Olof from Tiärnås is sort of having in the market, yeah.

Okay. That's my next question actually, because I'd like to turn to the market situation now and your position.

As you describe in the report, you have proven that your solution works. It's the title of your CEO statement, From Proof to Position.

Yeah.

Have you done any updates on your offering?

No, technically, it's sort of the same products. We are doing work on it always, but technically, it's sort of still very much the same product.

I think what is becoming clear and this is why we are structuring in a way the market update on the system level, we really understand that we need to be part of the system. That is sort of one level.

Then on the service level, the ones that are serving end users like you and me so we can pay even offline, that's another level. We're working that way, but it's not the product itself that has sort of changed.

It's sort of our go-to-market is clearly structured in those two components, and we're very aware of that. I think that's a necessity in order to go to market with an offline product like we have.

Understand. I'd also like to encourage all viewers to send in your questions in the chat function in this webinar, we can address them as we go along.

First, let's address the India patent, which was a milestone for you. Has this changed how you discuss with RBI and NPCI and banks since?

Yes, I would say yes. Before, it was that let's try our technology for the market as a vendor-neutral system-level architecture, and then later, we can bring in service providers who could deliver an offline wallet on that system.

We've been, in a way, working closely with the system operator, NPCI, to set this up, and the spec's all ready. We're ready to go to the banks as well.

I think what has changed is that we are not just a sort of a technology provider. Now we are a technology provider with rights to the architecture that...

You have a business proposal now?

Yes. We've had several discussions, actually, during this months since we last spoke here with RBI as well as with NPCI.

We've asked them because it's their product. Initially here, we're talking about the digital rupee.

Are you our counterparty for sourcing in our technology, or is it NPCI? We've been directed to that we should have the commercial discussion with NPCI.

That's what we had. We're still having conversations with RBI, keeping them abreast of what is happening in our discussions with NPCI.

There is a meeting, probably two meetings with RBI planned for just to the end of the month. Then GFF is coming up, the Global Fintech Fest, early September, where we have a good chance to meet in person as well with both people from NPCI as well as RBI, as well as the banking community that is supposed to implement the offline wallets as well, yeah.

The project that you were running with NPCI and the two banks...

Yeah.

...is it completed, or where are you now in that process?

What we are doing is that it's two separate things. In a way, there's an infrastructural thing with NPCI.

That is one level. That's the system level, in order to have the technology that the system can accept and process offline payments.

That's the system level. On the service level, then the idea is that we have signed agreements with two banks there, IDFC and Axis Bank, and that's also progressed.

We've signed a technical trial agreement with Axis during the quarter here, and IDFC, the other bank, is our customer since before as well. They need the specification on the system level in order for them to be able to integrate sort of the work.

The system level needs to be completed first, and then they can move on.

Yes, yes. It needs to be system level first.

That's what we've been working with for a long time. Now, I think partly with the patent as well, but also the work we've done is that we're asking system-level compensation for all the work we've done and the fact that it is using our intellectual property here on the Indian market.

Things are progressing in India.

Yes, yes they are.

Should we move on to the Philippines perhaps? You mentioned GCash.

How close are you for a deal with GCash or the Philippines?

The Philippines has developed in a really good way during this three months as well. GCash, they have a very structured process.

When we spoke last time, we had positive signs from their product team and the technical team that they wanted to go ahead with us, but then they have now put us into their what they call the innovation team, which are the ones that prepare new innovation for the GCash solution. We are working with them closely.

We've signed an agreement for what will now happen in terms of technical testing, but in parallel, we've also given them commercial proposals as well, which they have, yeah, they wanted to have one clarification last week, and we've sent them that. This is what I think is good, that we are progressing not just try it out if it works, but also we are at the stage of commercial discussions as well.

We've also had this was coordinated by the central bank of the Philippines, they call BSP. They brought together the whole ecosystem.

This is the major banks, the payment networks, the equivalent of Swish, which is called InstaPay. They brought all together and discussed that we believe, from the central bank perspective, that this solution that Crunchfish is coming with is very important for the Filipino market.

Then this whole ecosystem had a chance to say what do you think in front of the central bank. They all agreed.

This is I would say this is, as I think we've discussed before, this is sort of for the whole Philippines going for our technology, which is extremely encouraging, almost like we're now doing in India. What's good with GCash is that they are a front-runner.

It's like a closed-loop wallet. It's one management, and they control...

They can make the decision, irrespective of the infrastructure. Yeah.

Yes,

yes. This is the plan, that they want to do that.

They have 80 million Filipinos have their wallet, the GCash wallet. It's just like in Sweden with Swish, everybody sort of has Swish on their phones, everybody has GCash in a way.

They have also a very strong network of merchants that can accept those payments. GCash can move independently on their own, and we think they're going to be a fast track for us, and that's going well.

I'm also very encouraged that the central bank is taking this so seriously and coordinating sort of with and mentioning this opportunity with govern offline for the Filipino market, and sort of drives in a way the project. I do expect that will take longer time to get the whole ecosystem behind it than just doing it with one player like GCash.

The Philippines has developed positively in sort of two ways, both on a single wallet level, but also ecosystem-wise.

It's

been a good, I think the Philippines has developed well.

That's good. Let's travel to the Caribbean.

Caribbean, yeah, we travel the world, globetrotters.

Where are you in this process?

We we we wrote in the in the Q2 report that we are expecting in the Q3 a a board decision. It's not a done deal yet, but everything points in our direction.

I think the board has taken some sort of principal decision in our favor. There's still there're still some clarifications that the board have asked the management team to sort out.

We had a meeting yesterday quite late, actually, and there's another one on Monday. We're sorting out the details now.

It's still we we have to write we have to discuss about contracts and things like that, but commercially, technically, I I think it

What will this central bank do with your solution? They will adopt it and implement it?

Yes.

Yes, they have already a working CBDC platform, a central bank digital currency platform in the Caribbean, and but a lot of Caribbean countries, they are island states, the infrastructure is with internet connectivity, and sometimes even power, is sort of a problem sometimes. Having offline is sort of a priority for them.

We're quite happy that it looks like the approach that we are taking with govern offline has appealed to them, and it's looking very promising. We haven't announced it yet because we feel we're not there yet, but we're close.

That's back to your question, will we get sales this year? I think this is a good candidate which is looking very, very good in the near term even.

Yeah.

Interesting. Let's go to the Middle East and talk about Mercury.

Middle East now, yeah.

Mercury. How is this collaboration progressing?

Yes.

Mercury have done their homework. We sent them sort of technically what it would take for them.

If we step back one step maybe, Mercury is like NPCI in three countries. They take on the role of being the system operator for central bank payment systems, very similar to NPCI's role in India.

Mercury has that role in three Middle Eastern countries. They have worked during since we spoke last time, they've worked with their integrators, or their sort of, yeah, technical providers, to scope what do we need to do in order to have govern offline from Crunchfish integrated.

They've got that scoped, and they got an offer. Mercury have told us that we have accepted that offer, but before we start, they now want to go to the central banks in those three countries and basically say that we can do this before we actually start committing and doing all the work and integrating it.

Is this what you want? This is also very positive, that we feel that Mercury is moving ahead as we thought.

It's been summer holiday. We had a meeting with them when they I shouldn't say they complained, but they said it was 54 degrees, it's

Pretty hot.

It's been an enormously hot summer, but and there's been some vacation time as well. I like that they've done their homework with their technical integrators, and yeah, it's yet another project which is moving towards now decision, and after that, then, yeah, commercials and integration.

Yeah. Very good.

We've received a question from a viewer, and would you like to address investors who are disappointed in the development of on the lack of tangible commercial results? What's your comment?

Yeah. Yeah.

I I I think we are coming with a new approach with offline payments. It's has taken longer time than expected, that's for sure.

It's, yeah, what can I say more than that? It it is it is a complicated set up that we do.

I I think Long,

long sales cycles with the institutions.

Certainly long sales cycle. I think also if we're looking at India, that we had India already 2023 approved by the regulatory, our solution was approved.

Then NPCI, they did a competing product, which, by the way, is very similar to us as well. India is now sort of sitting with both UPI Lite X as well as what we've done, which is essentially using our patented technology.

The fact that they did that made it difficult for us to do deals in India. Since then, we have continued with India, and now we're back, and we have now a stronger position.

That certainly took time for us. We are moving now into other markets.

I think the other thing is that the other main market for our product has been CBDC, central bank digital currency, but that's been occupied by that you move money out on devices, and then you transfer a token just like you transfer a bank note. A lot of central banks have thought that's the way it should be done.

I'm very encouraged now that the approach that we call govern offline, where the money stays in the back end, you just you reserve it there, and that's our patented approach, that is winning ground. India was certainly doing the other approach with CBDC before, but they are now, with our help, looking at

Have they completed their move to they were in a project

They did the other approach before, but what I'm saying is that central banks around the world thought that they're going to do just like the issue of bank notes, now we're going to do something very similar. We have convinced them, and we have good, strong argumentation for that, that You need a solution which is banking-friendly and implementable and governed.

That means that the reserve, pay, and settle paradigm that we have always talked about is winning round. I'm very happy about the Caribbean here, that's sort of a central bank digital currency project where they are, yeah, they have also tried doing the other approach, but failed.

They're going to ours. What takes time is that I think we've come with a new approach, and it's been much longer to get it to commercials than certainly what I thought.

The promising is that we have a strong position in many places, and discussions are about commercials now, not about if it works or not, or if we should have your solution or not. Now it's about, yeah, trying to make commercials out of what we have.

We're certainly getting closer, but it's been a long journey, for sure.

Yeah. We have a question regarding all the tests and projects that you're running, evaluating your product.

Do you charge for those?

We typically charge, but this is not what we think we can live on. We can't overcharge because then they don't want to try it.

We have a fee which sort of covers, yeah, at best cost, but this is not a major revenue stream in any way. We typically charge something, yeah, to cover costs, but this company needs to sell systems and to sell offline wallets in those systems.

That is what that's the future for us, not to do proof of concepts, really.

Of course. I urge you to keep sending in questions, or we will address them as they come in.

In the meantime, let's go back to Europe.

Now in Europe, yeah.

You completed Phase 2 in the Digital Pound Lab in the UK. Mm-hmm.

What happens now?

The Phase 2 is sort of a phase in their digital lab. I think they are wrapping it up.

They gave some indication, they published something on their website of who's been involved. I think in September, they will wrap the whole phase up.

I think for us, it's not that the central bank or the Bank of England have not taken a decision to just roll this out. For us, this is more validation of our govern offline approach, and we're getting a validation from that it's been tested in an environment with a very respectable central bank.

We're happy with that. It's more about credentials for being involved with them, rather than there is sort of a direct sort of next step with them.

I think, yeah, there's sort of no commercial next step immediately because they haven't taken the decision yet to go forward with a digital pound yet in the UK market.

They are also evaluating different options and...

No, this is not just offline, it is for should we have a digital pound or not, really, and offline is one component. I think we've done a good job to show them that you don't have to bring money down on devices.

You could actually implement it in this govern offline way. I think they fully understand now that that option is available to them.

Yeah.

Yeah.

That's the Bank of England. How about the EMU, the ECB?

There, they wrote a spec a few years back, which was on that, again, immediate model, and they are going ahead with that, and they awarded that project. We met people at a conference where they are signaling to us that we want you to stay involved and we are an innovation pioneer for the digital euro as well, and they indicated that we want to explore how we can get you more involved.

Over the summer, nothing has really progressed from that conference that were in May last year. Right now, I don't have any, and that's why we don't write much about digital euro project in the report this year, it's

Long cycles.

These are very long cycles,

yeah.

Yeah.

I'm running out of questions, if you have any, please send them in. I'll ask you, there's a lot going on, obviously.

Could you tell me three things that you could see happening for Crunchfish during the second half?

It is that we got that contract with IDFC FIRST Bank back in 2023, also small system for doing SMS-based payments for the digital rupee for IDFC only. Now finally, we are getting to selling our system, and I think commercialization, to basically commercialize what we've done.

What everybody's been so disappointed about that why hasn't it happened. I think that is what is certainly next.

Sort of

from technical proof to commercial proof.

Commercial, or basically commercial revenue. We didn't want to write that because our top number didn't really show any, and as low on revenue.

That's why we wrote it that we have a position. That position needs to be now converted into commercials.

That's one. I think the other one is that we're working on, as I said before, on the system level.

In India, that's very interesting. That's the whole ecosystem of India.

We're doing similar things with Mercury as well, that we are on the system level working there, which is one level for revenue and as an opportunity, but then there is a whole ecosystem of wallet sales underneath as well. The system-level implementation that we decided on already last year is turning out to be right.

I think that's good. I think the third one, probably be that we are as you said, we travel the world, we've been in many places in this discussion here.

I think our approach is seen and recognized increasingly as a very strong offline approach, both if you have an instant payment system, like a Swish system, or if you are a central bank. I think we are a very credible sort of player.

You mentioned where we were, let's travel to Europe, and you talk about digital pound, but we do mention another project in Europe as well, and that's a European country where we are in quite advanced now discussions with It's early, but we got the right level of people we're talking to, both from their major wallet, but also from the ones that are working with merchants and is accepting payments. Both those are keen, and we're going to have meetings with them.

I would say the third one is that the opportunity is not just in a few places, it's actually happening, yeah, it's multiple places around the world, really. I'm pleased.

Compared to where we were 1 year ago, we are much further. Just compared to where we were 3 months ago, we are much further.

It's been a strong quarter since we spoke last time, but we haven't yet turned it into revenues, and that's what we need to do to make this a sustainable company.

Yes. Thank you, Joachim, for coming and talking about this, and thank you for watching.

We will certainly be following the news for Crunchfish. Looking forward to have a chat in a couple of months,

I

think, again. For you who's watching, don't forget to subscribe to Västra Hamnen's YouTube channel so you don't miss the next update about Crunchfish.

That's all for now. Thank you, and goodbye.

Thank you.