Prepared remarks
Good afternoon, everyone and thank you for participating in today's conference call to discuss Avax One's financial and operating results for the first quarter ended March 31, 2026. Joining us today are the company's Chief Executive Officer, Jolie Kahn; and Chief Financial Officer, Chris Polimeni. By now, everyone should have access to Avax's First Quarter 2026 earnings press release, which was issued earlier this afternoon at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of the company's website at www.avax-one.com. This call will also be available for webcast replay on the company's website. Following management's remarks, we'll open up the call for your questions. Please be advised this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements. For important risks and assumptions associated with such forward-looking statements, please refer to the company's SEC filings. Now over to you, Jolie.
Thank you, operator, and thank you all for joining us today. The first quarter represented an important transition period for Avax One as we laid the groundwork for our evolution into a power-first digital infrastructure company. Over the past few months, we have formally expanded into AI and high-performance computing infrastructure, laying the groundwork for our continued transformation. We broadened our Bitcoin mining platform and oriented the business around scalable behind-the-meter power assets that we believe can support long-term growth and profitability. Additionally, we furthered our Avalanche treasury strategy, which continues to provide a differentiated source of yield generation, ecosystem alignment and strategic optionality. The combination of these initiatives reflects deliberate repositioning of our business around the physical and digital infrastructure we believe will define the next phase of artificial intelligence and the on-chain financial economy. Over the past several years, the investment narrative around AI infrastructure has largely centered on hyperscale data centers and multi-gigawatt campuses. While that market is critical for four-tier model training, we believe a significant and increasingly important segment of AI demand is emerging outside and smaller than the hyperscale ecosystem. Enterprise inference workloads, edge AI applications, regulated industries and midsized compute operators increasingly require dedicated, reliable and geographically distributed infrastructure that hyperscale providers are not structurally optimized to deliver. These customers are constrained by latency requirements and data sovereignty considerations, operational resilience standards and access to power. Across North America, utility interconnection queues and transmission constraints continue to extend timelines for new compute deployments by multiple years. We believe the market is entering a period where access to dedicated, cost-efficient power becomes the defining competitive advantage in AI and compute infrastructure. That is the opportunity we are positioning Avax One to address. Our strategy is centered on modular behind-the-meter AI/HPC infrastructure deployed in energy-advantaged regions. We are currently advancing our first 10-megawatt Tier 3-ready critical power facility in Alberta, Canada which is designed around dedicated flared natural gas generation, battery energy storage integration and modular microgrid architecture. Over the past several weeks, we have continued to make tangible progress on that deployment initiative. We previously engaged BlueFlare Energy Systems to support front-end engineering and design activities for the site, and earlier this month announced the selection of ASCENT Consulting as our engineer for the project. ASCENT will lead engineering and design as the project advances from conceptual planning into detailed engineering and AESO-ready deliverables. The project is on schedule for in-line deployment readiness during the first quarter of 2027. We believe these milestones are important because they demonstrate prompt execution against our stated strategy. Our footprint is in one of the most attractive power and infrastructure markets in North America with significant demand emerging around AI and high-performance computing deployments. Our objective is to position Avax One within what we believe is a multibillion-dollar infrastructure opportunity developing across the region. We believe this approach creates several advantages. First, it materially shortens deployment timelines relative to traditional grid-dependent hyperscale deployments. Second, it enables us to target the growing 'missing middle' of AI demand—workloads typically ranging from 1 to 50 megawatts that require dedicated capacity but are underserved by hyperscale economics and conventional colocation providers. And finally, our approach enables disciplined incremental scaling rather than pursuing multibillion-dollar campuses; we can deploy capacity in modular phases aligned with customer demand and capital efficiency in the tens of millions of dollars instead. Importantly, we believe this strategy aligns directly with where AI infrastructure demand is heading. As AI applications move from centralized metal training towards inference, real-time decision-making and enterprise deployment, infrastructure increasingly needs to be distributed, resilient and regionally positioned. Our existing footprint provides a meaningful foundation for this transition through our Bitcoin mining and digital infrastructure operations in Alberta and Ohio, including approximately 300 PH/s of mining capacity in Alberta. We already have experience operating power-intensive infrastructure in energy-advantaged markets. Operational experience matters in a market where execution, permitting, procurement and uptime are becoming increasingly important differentiators. In parallel with our infrastructure strategy, we continue to build what we believe is one of the most differentiated digital asset treasury models in the public markets. Our Avalanche treasury remains a strategic pillar of our business. Avalanche has firmly established itself as the leading institutional blockchain system. Tokenized real-world assets on the network grew more than 10x in 2025, surpassing $1.3 billion in total value locked—a clear signal that tokenization on Avalanche has moved from experimentation to real financial infrastructure. From an institutional standpoint, JPMorgan's Onyx division, Apollo Global and WisdomTree leveraged an Avalanche Evergreen L1 under Singapore's mass project, Guardian, to demonstrate tokenized alternative investment portfolio management. BlackRock expanded its BYDL fund tokenization to $500 million on Avalanche, and these firms formally named Avalanche as a supported blockchain for stablecoin settlement. On the public sector side, the California DMV digitized 42 million vehicle titles on Avalanche, putting transfer times from weeks to minutes. We view our treasury position as strategic exposure to what is becoming a foundational layer of global institutional finance. That foundation is built on Avalanche's core technical advantages: scalability, customizable architecture and regulatory-oriented design. Within our treasury, the majority of our AVAX holdings are actively staked to generate yields, creating an operating flywheel where treasury assets contribute to funding operations and infrastructure development. We have also expanded into DeFi-enabled staking strategies such as our TreeHouse deployment designed to enhance the productivity of our holdings and diversify yield generation opportunities. We see this as an important evolution of the treasury strategy. Rather than simply holding digital assets on our balance sheet, we are focused on maximizing the productivity of those assets through staking, validator operations and carefully selected on-chain yield opportunities. Over time, we believe this creates a differentiated model that combines exposure to the long-term growth of the Avalanche ecosystem with recurring yield generation and strategic ecosystem participation. More broadly, we believe the convergence of AI infrastructure and on-chain finance is in its nascent stages. AI agents, tokenized financial systems and machine-native economies will require both compute infrastructure and programmable financial rails. We believe Avax One is uniquely positioned because we are building exposure to both sides of that infrastructure stack: physical infrastructure through modular AI/HPC data centers and digital infrastructure through our Avalanche treasury and ecosystem participation. Avax One was purpose-built to be a scalable, regulated public market gateway for investors seeking exposure to the growth of the on-chain economy and next-generation digital infrastructure. We believe regulation, operational discipline and real cash flow-generating infrastructure will matter increasingly over time as these industries mature. Importantly, we are not building a business dependent solely on token appreciation. We will own and operate low-risk infrastructure assets capable of generating diversified, sustainable cash flow across AI infrastructure, digital assets, mining operations and non-chain yield generation. We believe that combination of our infrastructure operational cash flow and strategic exposure to Avalanche and the on-chain economy positions Avax One differently from both traditional treasury companies and conventional infrastructure developers. We are still in the early stages of executing this vision but believe the groundwork established over the past few months and into the next quarter represents an important step in positioning Avax One for the opportunities ahead. Before I turn the call over to Chris, I want to address our NASDAQ listing status directly. As previously disclosed, we had received a deficiency notice related to our minimum stock price. We subsequently requested a hearing, and I am pleased to report that the NASDAQ Listing Qualifications Panel has granted us an exception with a period of time to regain compliance. This gives us a defined runway to execute on the business plan I just outlined. We've been given until July 6 of this year to have a closing bid price for 10 consecutive days of over $1. We are taking concrete steps to meet the conditions of that extension, which is why we've asked our shareholders to approve a reverse stock split at our annual meeting at the end of this month. We remain committed to maintaining our NASDAQ listing and believe the operational and strategic progress we are making positions us well to achieve compliance within the time frame provided. With that, I will now turn the call over to Chris to review our first quarter financial results. Chris?
Thank you, Jolie. As a quick reminder, as we review our first quarter 2026 financial results, all comparisons and various commentary refer to the prior year quarter, unless otherwise specified. Total revenue for our first quarter 2026 increased materially to $2.5 million compared to approximately $300,000 in last year's first quarter, primarily driven by our Avalanche digital asset treasury strategy, which generated approximately $1.9 million in staking rewards in Q1 2026, coupled with the revenue from our Bitcoin mining business which generated approximately $600,000 in revenue this year. Our total operating expenses for the first quarter of 2026 were $47.1 million compared to $2.1 million in the first quarter of 2025. The expenses in Q1 2026 included $43.3 million of noncash charges related to several items: one, a $36.3 million unrealized loss on the change in the market value of our digital assets; two, a $5.3 million loss on digital asset transactions attributable to the deployment of our AVAX tokens in the TreeHouse network as tAVAX tokens; three, we had a $1.1 million impairment of liquid staking tokens; four, we had $300,000 of depreciation and amortization expense; and finally, a $300,000 charge incurred as a result of the vesting of shares issued in 2025 to several board advisers, board members and certain executives. So those noncash charges totaled $43.3 million of the $47.1 million operating expenses. In addition to these noncash charges, we also incurred certain one-time nonrecurring charges for costs related to reorganizing and restructuring our back-office operations, including severance, stay bonuses and certain duplicative costs totaling approximately $200,000. Adjusting for these noncash charges and one-time nonrecurring costs, the adjusted operating loss for the first quarter was $1.1 million. Our net loss for the quarter was $46.4 million, or $0.48 per diluted share, compared to a net loss of approximately $145,000 or $10.57 per diluted share in the first quarter of 2025. Adjusting for the noncash and one-time costs discussed previously, our adjusted net loss for Q1 2026 was $2.9 million or only $0.03 per diluted share. As of March 31, 2026, our cash and cash equivalents were $16.5 million. That, coupled with our restricted cash of $5.4 million and an escrow receivable balance of $5 million, results in total liquidity available to the company of $26.9 million. This is compared to approximately $27.5 million in total liquidity at the end of December 2025. We believe this cash balance provides us with approximately three years of operating runway without the need to raise any external capital and without taking into account any revenue generated by the company. As of March 31, the last day of our first quarter, Avax One held approximately 14 million tAVAX tokens with a net value of approximately $125 million. Since the inception of our digital asset treasury strategy last November, we've generated approximately $2.7 million in staking revenue, representing an annualized yield of approximately 6%. Looking ahead, we'll continue to maintain a prudent approach to capital allocation as we execute on the next phase of Avax One's growth strategy. We believe the market opportunity around AI/HPC infrastructure is substantial and we are positioning the business to participate in that growth through a capital-light, modular power-first approach. We continue to believe that our shares are trading at a meaningful discount to the intrinsic value of the business and to the long-term earnings potential of our platform. As a result, we will deploy capital in ways we believe will maximize long-term shareholder value, such as repurchases of our shares while preserving flexibility to execute on the opportunities we have in front of us. We believe Avax One is uniquely positioned at the intersection of two powerful secular trends: the rapid growth of AI infrastructure demand and the continued institutional adoption of digital assets and on-chain financial systems. With a growing infrastructure platform, exposure to energy-advantaged markets and strategic alignment with the Avalanche ecosystem, we believe we have established a strong foundation to scale the business and compound value over time. This concludes our prepared remarks. I will now open it up for questions from those participating in the call. Operator, back to you.
Questions and answers
Operator instructions. The first question we have is from Devin Ryan of Citizens Bank.
This is Noah Katz on for Devin. Lots of developments here to dive into. You're evolving your business into a power-first digital infrastructure company. As we think about the company over the next few years, how should we think about the connection between the Avalanche treasury and the data center build-out? More specifically, are these two parallel opportunities, or do you see a path where you can more deeply and directly integrate them over time?
Thanks for the question. I believe that the answer is we can do both. Obviously, we can run them in parallel. But what's particularly interesting to us is to take advantage of some of the unique features of the Avalanche blockchain such as the compute, which is done with relatively small amounts of power compared to protocols that are built on Ethereum or Solana. So what that means is we can run powerful protocols on our 10-megawatt microgrid data centers rather than having to use the much larger data center. So we believe that over time, we will be able to integrate these strategies and that we'll be able to dovetail them in a very efficient manner.
Interesting. Okay. And then as a follow-up also on the infrastructure side: we've announced a data center in Alberta in the spec proposal with BlueFlare. Can you walk us through the development process from here, starting with engineering and permitting and construction to eventually get to contracting? And as you look towards Q1 2027, what are the most important milestones you need to hit to get to your target?
Well, obviously, we're looking at two different potential scenarios. One is where we would start from ground zero and the other is the potential opportunity to purchase a facility that already has the initial permitting and engineering complete. If we're able to do that, that would save us approximately two to four months in the timeline. But the way this is going to work is we have ASCENT in place. They're based in Calgary and they specialize in engineering for data center build-out. The permitting is obviously, if we go starting from square one, the first part of the process; the engineering happens at the same time. Then we go into the construction phase and at the same time as completing the initial construction is when we'll bring in potential tenants, and there's a lot of demand for this microgrid strategy. So all in all, we see this working and being able to have our first microgrid center up and running with a tenant by the end of Q1 of next year. The interesting thing is that these can be done in parallel. So as we find sites, if we're able to finance them, we could potentially run two or three of these in parallel on time.
Got it. Makes sense. If I could fit one more in: how are you guys thinking about the resource allocation across all three areas? And what would push you to allocate more capital to the data center, or the treasury, or the Bitcoin mining?
So the Bitcoin mining is the legacy business. And while we're building out the data center, we will continue to mine Bitcoin and possibly take advantage of power and available machines for short-term cash flow. Right now, that makes a lot of sense to us because, on a project basis, we are able to be cash-flow positive on our Bitcoin mining. But capital allocation will really depend in the short term on getting the first data center up and running as a priority for us. We're also, as everybody knows, looking at various opportunities to bring cash-flowing businesses on-chain that would benefit from being on the Avalanche blockchain. So we will evaluate allocations with our board and on a case-by-case basis.
The next question we have is from Allen Klee of Maxim Group.
As you—so the project in Alberta here, a 10-megawatt site: if this is moving to an AI-powered data center, it's going to be more demanding on power and water. What types of things will you have to do to address that in the construction and all the work you do?
Thanks for the question, Allen. I think a lot of those details will come out with the due diligence and the initial work that ASCENT is doing. I don't think that at this point I can really address all those questions, except to say that on the power side, we will be behind the meter, basically starting with flared natural gas. We'll also have redundancies built in. We'll have the BESS system, which is the battery energy storage system, and we'll also have the ability, in a rare case scenario, to disconnect from the grid. As far as any requirements for water, I haven't specifically been made aware of any issues there, so I assume that there won't be any problem. But again, that sort of detail we're going to rely on the engineers to brief us.
Got it. And as you get to construction and everything becomes power-ready and it becomes a very attractive asset, when you think about tenants, does it make sense to try to find one or multiple tenants?
That will depend on who we see. Obviously, we're going to look for financially solid, creditworthy tenants. Since we're starting out with microgrid centers at 10 megawatts, I can't imagine that we'd want a piecemeal approach with lots of small tenants. So my guess, although this is a bit premature, is that each microgrid facility would have one, maybe two or three tenants maximum.
I have a follow-up to that. Okay. That makes sense. And then also just in terms of the use of what is being used now: can you talk about what the current use is in Alberta?
The current use of what? The data centers?
Yes.
We're going to be building it, so it's not being used at all when we start from scratch unless we find, as Jolie mentioned, something to acquire that's already got some sort of support built in. If we do find something that has power and is permitted, as Jolie mentioned, we would mine Bitcoin for a little while here while we build out the rest of the 10-megawatt data center.
Okay. I'm sorry, but are there some areas where you're looking at—areas where they're currently mining Bitcoin that could be transitioned over?
I think for the most part, we're looking at starting from scratch, although if we find an opportunity where there is some initial infrastructure in place, we'll pursue that. Mining Bitcoin is a lot easier operationally: you get a connection to the power, you set up a generator and a container and plug the machines in and you can mine Bitcoin. The data center obviously requires more steps, and that's why we said that Bitcoin mining could be an interim revenue generator where it makes economic sense.
And then you mentioned the TreeHouse deployment for enhancing yield. Could you expand on what you're doing there?
Yes. TreeHouse is a DeFi protocol where we deployed 830,000 Avalanche tokens, and it works through the Vinci platform. There's an interest arbitrage mechanism that takes place where collateral, lending and borrowing happen using AVAX tokens under the Vinci platform. We deployed the tokens there in anticipation of getting some interest rate arbitrage on the lending, which would add to the staking yields to improve the overall yield.
Can you use the same Avalanche coins for staking and for this?
Once you deploy them into TreeHouse, TreeHouse then uses what they call tAVAX to mint sAVAX into the Vinci platform. If you wanted to unwind it or at the end of the program, you unwind it back out into Avalanche tokens again and you receive the incremental tokens that you earned through the TreeHouse and Vinci deals from the interest arbitrage. So you do convert it back to Avalanche tokens on the way out.
The next question we have is from Alex Handon of Sidoti & Company.
Congrats on the quarter. So on the AI/HPC aspect, if the initial 10-megawatt site is successful, which it sounds like you've made a lot of progress toward, what's the ability and opportunity for the team in terms of a repeatable or expandable playbook? Are you trying to focus on developing sites or owning and operating them for your own mining and beyond that, or more of a partner to hyperscalers and GPU cloud providers?
We see this as an alternative to the hyperscalers. We will develop the sites and then get tenants in, and the tenants will use them for AI/HPC compute or whatever use they have that can be managed within a 10-megawatt site. That's our goal.
Okay. And then just on the legacy business: I'm seeing more institutions launching Avalanche-based L1s for tokenization, payments and stablecoins. Where do you see Avax One sitting in that value chain going forward? Is it a treasury holder, validator, liquidity provider, infrastructure partner, interested in M&A in that space? Or is it really now fully transitioning to the AI data center space?
On the Avalanche side, it's all of the above. We are still looking at M&A opportunities to bring financial companies on-chain to build that business. We do operate a validator as well. So we're pursuing multiple avenues to promote and continue to build the Avalanche ecosystem.
Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd now like to turn the call back to Jolie Kahn for any closing remarks.
Okay. First of all, I'd like to thank everybody who participated today and for the continued support and interest in our story. And thanks very much for those who asked questions. I really do value your engagement and our ability to provide more information. As we look ahead, our focus remains on disciplined execution as we continue scaling Avax One at the intersection of AI/HPC infrastructure and the on-chain economy through Avalanche. We believe the combination of modular power-first infrastructure, a productive digital asset treasury and regulated public market structure positions us to participate in some of the most important long-term trends shaping digital infrastructure and financial technology. We believe that the combination of these facets is our greatest differentiator. We are still in the early stages of executing our combined strategy, but we believe the foundation we've established over the past several months positions Avax One well for the opportunities ahead. On behalf of the entire team and our Board of Directors and advisers, thank you for your continued support and confidence in Avax One. We look forward to updating you on our progress in the quarters ahead. We look forward to speaking with you again on our next earnings call in August. Have a good evening.
Thank you, everybody.
This concludes today's conference. Thank you for joining us. You may now disconnect your lines.