Hi everyone, and welcome to Market Focus at Västra Hamnen Corporate Finance. Today's webcast will be all about Crunchfish and its Q1 report and latest events.

I'm standing here with the CEO, Joachim Samuelsson. Very much welcome, Joachim.

Thank you, Martin. Glad

to have you here.

Thank you.

Between all the travels?

Yes, it's in the middle of travels. I'm between London and Mumbai right now.

Great to have you here in Malmö for once. I just want to remind everyone who's watching to send in your questions, and we will address them as we go along.

Let me just start with the financials for Q1. Another quiet quarter sales-wise.

Any comments?

We are a product company, what we are supposed to do is to get revenue from our products. Essentially what we do is what's called non-recurrent engineering.

It is that you charge fees for developing, in a way, the integrating the product, which is non-recurrent, meaning that, yeah, we do it once and then when it's done, then yeah.

It's delivered.

It delivers something. That's like a consultancy company, and that's not what we are.

Essentially, this quarter, most of our revenue is from NPCI. It's more than half of that revenue is actually from the project we're doing with NPCI.

That's what we have recognized in the Q1 numbers.

Okay.

Yeah.

Yeah. Looking at costs, they were very close to our expectations, no surprises.

Is this the level we can expect going forward, or...? Maybe even a little bit,

well, it depends. I think, as we move on, this quarter has a lot of marketing costs because we are at a lot of conferences, and they are not free to attend.

I think it is about this level. We don't have major plans to do anything crazy or all of a sudden spend too much money, I would say roughly, yes.

Yeah.

We noted a interest payment of 263,000 Swedish kronor. What is that related to?

It's actually not an interest. This is something we have already paid.

It is when we did our financing round last year. One component of that was that we were getting an opportunity to borrow 10 million krona.

That project had a 5% sort of upfront cost. Whether we use it or not, we've already paid it.

We did that last year when we got the 14 million last year, it's all paid. We put it as, yeah, a prepaid expense on the balance sheet.

Now, what we do in Q1, we took half of it, and we're going to take the other half in Q2. It's not interest, it's actually an upfront cost for, yeah, for the financing of this loan that we have a choice to use it or not, 10 million.

We have to draw on that in Q2. If we don't draw on it, then it's basically we have paid that 500,000 krona last year and then it's over.

Just for the possibility to use it,

yeah. We took that.

I don't know, likely we would probably not. We will actually have a board meeting, yeah, after this today, and that will be one of the topics if we should do that.

We have just done a rights issue, and we also are pursuing potentially direct investments from strategics, chances are that we will not use it.

Yeah. Speaking of the rights issue, which was carried out in the beginning of Q2, not included in the report, but quite close to the end of...

The

numbers for our cash situation and everything is before that, yeah.

On Q1.

We've added about, I think, 14.5 million in cash. I think we now have all the invoices from our lawyers and Nordic Issuing here in Malmö who is emitting all the shares.

It came in very close to expectations. I think it's not above 500,000 that we expected, it's good.

Yeah. Could you just explain the motive behind the issue?

We needed money.

Yeah.

Yeah. Just look at the cash situation.

I think it's 4.7 million. That wouldn't carry us through for the whole year before revenues would start kicking in, yeah, we need to do it.

We did it in a quite an unusual way, in the way that myself and the chairman, we subscribed for the whole share, at all shares. At the get-go, it was already 100%...

Secured.

Secured, yeah, without any cost. Sometimes we use Västra Hamnen, but we actually cut you out as well, no money to you, but also no money to any guarantees.

We signed up for everything, but obviously we cannot just assign shares as a directed issue to ourselves in the board, we have to open up. We did a rights issue and asked shareholders.

We got another 1 million of those 5 million shares was subscribed to by other shareholders. We got sort of about 4 million shares was between the chairman and this new company that is not a shareholder, but now coming in is Granito Growth.

They're

coming in now as the, I think, fourth largest shareholder, where Göran, our chairman, he's the CEO of that company. Then I got some,

yeah,

I'm actually also personally now on the top 10 list, not just with my holding company. Göran and I, we are eating into the shareholding of this company.

You're strongly committed to the company.

We are.

Yes. Speaking of this, you mentioned you're looking for additional funding or at least to attract new investors through this

TRMS

Corporate Finance. Who are they?

It's a one-man shop. It's a boutique sort of corporate finance company, Olof Rüetschi.

Göran has worked with them a lot. Göran, he is chairing and involving with, as a CEO, in many companies, and they have very positive experience working with Olof.

Göran suggested we should use him. Our motivation why we are doing this is that it's not primarily for the money.

It is actually to try to find, as we have announced, we want to find strategics. That means that companies in our space that have a strategic reason for maybe advancing their own business complementing with what we do, and that will help us to get more distribution strength into the market.

We have something quite unique, and if we can have some potential partner company that have not just become a partner, but they've also invested into us, we believe that they will have a more vested interest to actually see us succeed. We said we're looking for, yeah, $2 [million?]

to $5 million. It could come from one, but it could also come to sort of maybe even up to five, five companies putting in $1 million each.

We have started this project with TRMS here with Olof, and we've sent out teasers and we are now getting some responses back and following up with management presentations. That's where we are.

Nice. You're not bound into any specific geography, or you're looking...?

The bigger the better,

because this could be global companies that

we have global ambitions, and if we can have global companies getting our govern offline approach into global payments rails, that helps us to put govern offline everywhere.

Yeah. I see.

Yeah. Let's leave the financials for now and turn to the projects and ongoing discussions.

Let's start with the pilot project with NPCI in India. Where are you now?

It's an interesting project, to say the least. We've started already sort of the work specifying what to do and everything sort of last year.

I think, yeah, we are a little bit annoyed because they're changing the goalposts a little bit. We have to sort of chew that in, and we just have to adjust.

I'm actually traveling now to Mumbai and I'm going to meet with RBI, their CBDC team, as well as their executive director. Because RBI is also annoyed, because they want this to be out.

This is their product. This is the Digital Rupee.

NPCI is implementing it, but it's their product. They put the requirements, and they are above NPCI in terms of hierarchy.

We have delivered, but last week they came with a new change, which was very unexpected to us. We can accommodate, and the motivation was that they wanted to be aligned with UPI as well, which is a good thing, because the Digital Rupee project is quite small in some sense.

It's 15 banks and the total volume is sort of in the tens of millions of users. UPI is 500 million users, so that's the big fish.

In a way, we're happy, but I know our tech team is not another. They just adding a little bit of technical steps because to be more aligned with what they have done previously with what's called UPI Lite X.

Not necessarily a bad thing, but it means that, okay, we will have to adjust a little bit now again to deliver. The spirits are good.

It's friendly conversations, and I think, yeah, we are moving forward even if it's sometimes one step in another direction that we didn't plan for, or we had agreement on what it should be and all of a sudden there's some other higher-up boss that comes in. That's a little bit what's actually taking some time, but we are...

What about the banks that are participating, IDFC...?

They are also a bit annoyed because RBI is pushing them.

Okay.

They can't do anything because before NPCI delivers the specs, what can the banks do? RBI called in the CEO of the banks.

Think of that. This is the top of the bank, and this is a project somewhere four levels below, and telling, "You better have this ready, you."

It creates ripple effects, it's a bit, yeah. It's going forward a little bit slower, but again, I think as long as it's moving in the right direction, and right now with this last change, they're just indicating that it's not just for the Digital Rupee, this is potentially also now aligned with the big fish, which is the UPI rail.

I'm not unhappy about it.

No. Could you tell us anything about the timelines of the project?

According to RBI, it was April.

Okay.

It was last month.

Yeah.

The demand to the CEOs was, "This has to be out in April." Then this sort of came sort of just a couple of weeks back, and now this has to be adjusted for because someone said.

I think it is a little bit uncoordinated by what RBI wants and what NPCI sort of all of a sudden changes their product rules sort of. As soon as possible.

I'm going to talk to RBI, as I said. I have a big meeting actually.

I think there's about 10 people coming, it's the whole team, and I have a chance to align with them. What can we do?

What pressure could you put on?

Because

I think they need to step in, not just to the banks, but also to NPCI, because NPCI is the, that's the middleman who has to deliver the system.

Yeah. NPCI need to finish this first before you can onboard the other banks.

This is a system has to set up in a way that the system rules that the service provider applies to. Yes, so that's why.

I'm going to meet with IDFC First Bank, I'm going to meet with Axis Bank. I meet with them as well.

I think the key is not them. The key is NPCI needs to move, and key to that is that RBI tells them to do that.

I see.

So.

The market and we are speculating about potential deals,

and

deal structures. I just wanted to ask you about this.

You've previously mentioned a structure based on number of users and recently you've talking a lot of the bankable opportunity for you for this. Will it be a combination, or how do you see it?

Absolutely a combination. I think last year we understood, this was the big announcement when we stood here actually a year ago, we said the system is one thing.

The system, they receive payments, they don't make them. They receive them and they process them.

Right now when we are working with NPCI, they're the system operator. They're going to receive offline payments and they're going to process them.

We at that point last year, we didn't really have figured out what is the business model for this split, that there is the system on one side, and the other side is this service level. The service level is where we go to a bank who enable their users and they can pay per user.

What do we do for the system? You have followed us, and we've worked with a long time with the system.

Aren't we getting anything from the system? Yes, we are.

The way we have figured out to do that, and that's something is new for this that we've really I think thought it through, is that in order to use our system, we don't move money from, if we're going to pay offline, I don't move it to your device. Instead, the money is reserved in the banking sector.

That is good for the banks. Banks do not like to take out retail deposits.

They need that. That's their baseline in order to lend out money.

They have to have things on their balance sheet. What we do, we keep the money in the bank with our offline model.

Also, and this is, the banks are happy with this, they don't pay interest for what you have reserved, because you, Martin, you have now access it offline. You don't have the money offline, the money is with the bank, safe and secure, but you have access to it.

You don't really, asking for interest is very similar in a way that you go to an ATM, except that there you actually take out money, but the money is reserved. It creates what's in banking term is called a free float.

They don't pay interest, and they're getting funding from their user base without paying interest. That is an economic incentive, or economic sort of value for the bank.

What our business model is now, we want the system to set up rules that every single reservation done with our technology should, that economic value of that should be shared with us. That has nothing to do with number of users for our on, that's on the service side.

This is regardless of who's going to deliver the offline wallet. The offline wallet, I think most people will actually charge per user, something like that.

That's what we had with IDFC two years ago. The reservation is our system.

We want to share the economic upside that the bank are getting from having interest-free...

Deposits.

Deposits. This is something that the system will set up, and also administer to sort of take out money from the banks and give to us, because that's what we require.

That's the model. We are having two components: system-level, which is reservation-based, sort of a portion of that, and then there is per user.

Per user.

The good thing here if you think back to NPCI again, I don't mind if they take UPI Lite X, because they're not going to charge for it. They typically just work for free for the banks.

They will just push it out everywhere. That will go quickly.

The system puts it out. I'm very happy with that.

It's going to be maybe harder for me to sell in offline wallets and charge per user, but all these wallets will make reservations,

and

I get a tick from that. That's the biggest part of our model.

Have you presented this to the infrastructure or the bank,

or? The banks don't really care.

They are getting resilience and they're going to make money out of this. They just have to share a little bit of that upside.

I have to sell the model to the system operator that needs to put this part of the rules. I did present it in London yesterday, and the executive director of RBI was there and he said, "Come see me on Monday, we sort it out."

We have talked to, when I was in Philippines, I met the central bank there. What they like about our model is that we don't add any transaction fees.

There is no additional transaction fee even if you pay offline. They asked us in when I met with the Philippines here in February, "So where do you make money?"

I told them, "This is how we make it," and they said, "That's brilliant." They liked it.

We are getting positive reactions for that model. This reservation is uniquely tied to our way of doing it.

If you move money out, you haven't reserved anything. If you think the card rails, the way they do it, there's no reservations.

You can pay offline,

but

there's a credit risk.

Credit risk, yes.

Yeah.

Just before we move on to talk a little bit about the Philippines, I remind everyone who's watching to send in your questions if you have them, and we will address them as we go along. The Philippines.

Last we stood and talked about the Q4 report, we talked a little bit, you've just been in Manila.

We put it in

as

this was Q1 stuff, because I was there in, that was sort of early February and we stood here that was sort of mid-February. We decided because we thought it was exciting, because in the Philippines, I met with the central bank, I met with the major wallet GCash, I met with the people who are doing the BancNet, connecting all the banks with payments infrastructure, and I also met with the equivalent of Swish, called InstaPay.

I met with the most leading bank as well in terms of innovation, RCBC. All are interested, every single one, and they're still interested.

Now it's up for a decision from, I think where we're closest is that GCash, this is now up for a management decision. For them, it is to build or buy.

They can, they're thinking, "Should we build it ourselves?" I don't think they should, but that's what they're thinking.

Can they build it themselves?

Technically, yeah. We have built it, I guess they can.

We don't have a patents protecting here in the Philippines, but I think given that we want this would, I don't think it makes commercial sense for them to do that. I think it's better to use our system.

We also have had meetings with RCBC, this innovative bank. They could be an on-us banking solution.

They can start just them as well. Then we are continuing talking to InstaPay, which is there sort of equivalent to the Swish.

That's the open Swish system. Yeah.

The Philippine system is not dependent on the system operator in the same way as in India?

The system operator, the name of the company is called PPMI, and the system they have is InstaPay.

Yes. InstaPay is like the...

That's the Swish system. InstaPay is Swish.

We could start with, and we talked about that, I think, last quarterly report, we can start in a closed-loop system. GCash is a closed-loop system.

They are closed in the sense that they have the whole ecosystem themselves, but they're also connected to the open system of InstaPay, they have both. It's a good place to start with a company like GCash.

There's also actually others. It's called pawnshop, not P-O-R-N, I think it's P-A-W-N.

This is actually pantandel. It's huge in the Philippines, and there are two major major major chains.

We've met with them both. They could potentially also set up a wallet that actually could facilitate.

They have 30 million sort of customers each. We've met with them as well.

There's a lot of points of entry into the Filipino market.

Other regions, when we talked in April...

In February.

No, I mean before...

Oh, when we released the annual report. You're right.

I see you too often.

Try to catch you when you're home in Sweden. You mentioned interest from the Middle East as a consequence from the things that going on with Iran and the US and its allies.

Now you partnered with Mercury.

We have written about that quite a lot in the CEO word and sort of in the chapter for system operators, because they are a system operator. They are like NPCI, equivalent of NPCI in India.

Mercury is that. It's a joint venture between sort of a private company actually and the central bank.

Just like the NPCI is started by RBI, but with all the major banks. That's NPCI setup.

This is similarly, they are on top of everything, and they will do all sort of rails. They have a card rail, they have a instant payment rail, they are experimenting with CBDC, and they have a stablecoin implementation as well, all in UAE, the United Arab Emirates.

This is Abu Dhabi is the capital and Dubai. What happened here early in the Iranian sort of war here is that the Iranians they put a missile into the AWS, this is the Amazon Cloud Center.

A lot of the banks had all their banking operations in that cloud center. These banks, that was a wake-up call for them.

We can't just be online.

The central banks said to Mercury, which they are a joint venture with, "This needs to be solved now." It was a very quick deal.

We did very quickly. It's interesting with Mercury is that they do all rails.

This is a first opportunity actually to do resilience in our govern way on the card rails. I think that will echo into Mastercard and Visa, because I think if we show for their customers, for the banks, you can actually do resilience, but you have no credit risk all of a sudden.

That's interesting for them. Mercury is a white-label solution from Discover.

Discover is on EMVCo, this is technical, but EMVCo is the organization that is a collaboration of the card networks: Visa, Mastercard, JCB from Japan, UnionPay from China, Discover is one, Amex, yeah. Discover, what they do is to allow other sort of brands to make their own brand out of the Discover platform.

Discover is already approved to work with card terminals and everything, but you can put your own brand on it. That's what they've done in India.

RuPay in India, which NPCI runs, is underneath, it's Discover. Mercury, which is sort of the rail in the Gulf states, that is also Discover.

They have plans to do a pan-African card network, Mercury. It's going to be under this, again, it's Discover, but they just put a branding of it.

That's a good thing to get into.

Yeah. This partnership, has it resulted in any actual project discussions?

Oh,

yeah,

but

it's still early days and it's a war going on, I think this puts pressure on, I think, some of the conversations. There is also, the war is pushing that they need it sooner rather than later.

The war also means that there are sometimes delays in communications.

I see. Yeah.

You told me you just been in London.

In?

In London.

In London, yeah. At the Digital Money Summit.

Yeah. You're participating in this called the Digital Pound Lab.

Yes.

What do you expect from this? We

have already delivered, we've delivered and shown how govern offline can work with the digital pound. Very similar to how we've shown that govern offline can work with the digital euro.

Very similar. We've shown that, and they call it phase two in the Digital Pound project.

We have delivered and we're actually going to have a closing meeting with them, I think it's early June. We have discussions with them of how they will actually now officially put this on their website and write something about it from the banks' perspective, not our perspective.

This will probably come out. They will have a one meeting in September, because this phase two, we were very early in that phase, we are already done.

There are companies entering now and they will close it up in September. I don't think we will wait from hearing from the bank until September about what we've done.

Commercially, I think they are experimenting with having CBDC in UK. I think they've taken a decision that they are favorable of doing it, but timelines are not set and it's a little bit just to position ourselves.

It's good, because Bank of England is Bank of England. It's not any small institution.

We're aligned. They put out a white paper or a design note in October last year saying that the immediate model, where you move money out to you, they think that's a premature model and they don't like that model.

They've said, "We're not going to start with that." That's very much in line with our thinking, that it should be something which needs settlement as well, and that's what we have.

I think they're quite happy with what we've done. Yeah.

Sounds promising. I myself, I'm running out of questions.

Oh.

I have a final one. You will hopefully be back in August here...

From my travels.

From your travels.

From vacation.

Vacation, perhaps, to talk about the Q2 report.

Yes.

What should investors be on the lookout until then?

I hope we have product revenue, sort of and what I mean is that we have set up not just NRE, non-recurrent engineering, but sort of that we have announced project that this is now going live. There is quite a few conversations going on, and, before London last week, I had three presentations, which was a lot, at the CBDC conference in Kuala Lumpur.

The story we have that we have in a way really put together in Q1, I don't know, I brought this notes. This is a good white paper.

It came out in March 2026. It's on our website under resources.

Go to if you haven't seen it. This resonates, because we don't talk technology.

We've just understood five years we've talked technology, no one have really understood what we're saying. Let's stop talking technology.

What we talk instead is about what is the impact of our technology, not technology itself, but what does it do for you? What we're having here, this is the traffic light model, that it needs to be banking-friendly, it needs to be implementable, this is for all the applications who are going to have it, and it needs to be what's called governed.

This is why we're calling it even the govern offline model. You govern, governance of money is done by the central banks, and any system would need to report back to the central bank.

Unless you have all three green, I don't think offline will work in a really good, serious way. We score on all.

This is the sort of the other model where you take out money from the banking system, they don't like that. You have to have hardware.

It's very complicated, and there's no ecosystem to support it. You create a parallel universe of digital money where you don't really have too much control.

In London, in KL, and I did this at the Digital Euro Conference, this narrative that we have resonates. People are coming up to me, "We want to drive on green.

We have a driver's license. We understand.

You don't drive on red." We are getting a lot of people now that understands the implications.

This is why we are, I said, I think, last time we talked, I think maybe we have up to sort of 10 opportunities. Now I would probably say that it's probably 20.

It's increasing, which we have. We have the big fish, NPCI, that we are still plodding along, even if they big organization and they do changes.

I'm actually happy where we are, even if no one would have been happier than me if we had revenues. What did you say?

Quiet quarter sales-wise. Yes, it is quiet, because there's no product revenues.

It's only sort of fees for integration,

and then

it won't be happy numbers until we really start to kicking that in.

We're looking forward to looking at those,

at those

coming up. Believe me.

Are we.

You need to keep traveling to create more opportunities.

I don't know. I'm actually heading tomorrow to a great, big conference.

It's the Indian Tech and Innovation Festival in Mumbai at the Jio Centre. This is where NPCI has their Global Fintech Fest.

100,000 people are coming, it's a huge place. They're going to have now, this is not just payments, it's anything to do with tech and innovation.

I present on Saturday there. Most importantly, I meet with RBI, which is sort of one of the most important central banks worldwide, to talk to them.

It's actually something which I hope will happen because the executive director, who came to the event in London as well, and I sat next to him during dinner. He offered that RBI should do a round table, and he said, "I want to bring our Swedish partner to the round table."

That's going to happen probably June 10th to 11th. The OMFIF, this is the organization that organized the Digital Money Summit, they were very happy, because RBI, as he said, "We don't talk much.

We do." They move fast, but they are very seldom you hear them presenting at conferences.

Now the executive director himself, which is the top dog of the whole organization, he said, "Yeah, we want to do something. Because I think we have a message to tell the world."

I'm very happy when he said, "And I want my Swedish partner to be part of it." I may have to go to London again June 10th, 11th, yeah, for that.

I think it will be a closed-door session, but still, it's good.

Looking forward to talk to you about that.

We can do that.

Other things and activities. Thank you for this session.

Thank you.

Thank you for watching. Don't forget to subscribe to our YouTube channel to not to miss any of our coverage of Crunchfish.

Until next time, see you later.

Thank you.