The term “hiding in plain sight” is meant to convey something that appears obvious in hindsight but in the moment is difficult to perceive because it’s in a setting that masks its presence. I think many will look back at 2022 for Abaxx as the year that it was hiding in plain sight while it ticked off milestone after milestone on its way towards launching a physical commodities exchange in early 2023. Let’s look at some of the key highlights by quarter, and then look ahead to what investors may see from Abaxx in 2023.

2022 Q1:

The first quarter of 2022 saw a heavy focus on commercial activities as Abaxx (CN: ABXX OTC: ABXXF) looked to secure their core group of FCMs as well as generate interest and awareness in their full stack commodities exchange and clearinghouse. Towards that end key executives traveled to the Kingdom of Saudi Arabia “KSA” in January in order to participate in the Future Minerals conference and also meet with KSA officials to discuss the Abaxx Exchange. During the month of March, the company went to CERA week in Houston, the Futures Industry Association “FIA” conference in Boca, and was a co-sponsor of the FT Global Commodities Summit in Lausanne Switzerland.

In hindsight the focus on commercial activities in Q1 laid the groundwork for promoting the Abaxx Exchange and the Smarter Markets vision to global commodities and trading firms. It’s very possible that the future Abaxx Exchange strategic partners and Future Commission Merchants “FCM”s were engaged and put on a glide path to committing to the Exchange during this period.

Another notable development during this period was the LME nickel crisis, which resulted in the LME cancelling nickel trades and infuriating traders who lost out on millions had the LME allowed the trades to process. As this Financial Times article noted in March:

Many executives said they would look at alternatives to the London benchmark for nickel to trade... One intriguing answer floated at Boca Raton would be to consider futures based on blockchain technology. A smart contract could authenticate the quality and track shipment of the metal. Crucially, advocates say, it monitors customers' market positions in real time.

Out of this debacle, the Abaxx Exchange emerged as a potential alternative to the LME to host several key global metals contracts, including nickel.

Of course another key company milestone during this period was the spin out and launch of Base Carbon (CN: BCBN OTC: BCBNF)—the first internally incubated “SpinCo” by Abaxx. Abaxx investors received a 1 for 14 dividend representing about a 2.5% dividend yield at the time. Furthermore, Abaxx held onto 19.34 million Base shares along with a 2.5% royalty on all future Base Carbon royalties. Base also is in the process of developing proprietary technology leveraging ID++ for tracking the measurement, reporting and verification “MRV” of carbon credits.

2022 Q2:

In early May, Abaxx disclosed that they signed two critical contracts with respected software developers and implementers Exberry and Baymarkets. Baymarkets was set to assist with developing custom back end clearing software for the Abaxx Exchange, and Exberry was signed on to assist with developing supplemental front-end trading applications that end users may interact with. Both Exberry and Baymarkets have Web3 experience and were signed on to leverage their expertise in order to allow Abaxx Exchange to thread the needle where they could meet traditional trading and clearing requirements for firms that didn’t want Web3 products, but also enable the future deployment of Web3 contracts should clients and the industry move in that direction.

In my opinion, these contracts with Exberry and Baymarkets were the clear signal to the market that Abaxx was serious about moving forward with bringing on the talent and resources required to expedite the launch of their exchange in Singapore. Prior to this point there were some questions and concerns that Abaxx may not have sufficient expertise and human capital to expeditiously upgrade their clearing software or front-end trading console. By signing these contracts and committing financial resources to this effort, it made clear to future exchange participants and FCMs that Abaxx was ready to move forward with the FCM on boarding process, which once started would take approximately 6 months to complete.

2022 Q3:

With much of the Exchange and Clearinghouse technical work completed internally by Abaxx and supplemented by external vendors Exberry and Baymarkets, Abaxx announced in August that they were able to move forward with officially on boarding FCMs. As described above, the FCM on boarding process had been noted on several occasions by management to be a formal period that would likely take 6 months to complete. Key milestones during this period would be: data integrations connections with Internal Service Vendors “ISVs” and FCMs, end-to-end testing to resolve any final bugs or gaps in functionality, User Acceptance Testing “UAT”, training materials to be developed and distributed to UAT participants, and end user training prior to go-live.

With the mid-August announcement investors were able to project out that Abaxx could potentially be ready for a launch as early as the mid-to-late February given the 6 month ramp period from on boarding.

To celebrate this initiative with their core FCMs and potential strategic exchange and clearing partners, Abaxx hosted a cocktail reception in Singapore during the APPEC conference. Based on the recap video provided by Abaxx following the reception, several notable firms were present at the reception including Trafigura, BHP, Malaysian energy producer Petronas, and the DRW trading group among others.

Abaxx also reaffirmed their interest in pursuing a US based senior exchange listing on either the NASDAQ or NYSE during Q3, and that their SmarterMarkets podcast had passed one million downloads in late September.

2022 Q4:

As a part of the ramp up to the exchange and clearinghouse launch, Abaxx announced in November that they had completed integration to core FCMs and ISVs such as CQG. These integrations laid the groundwork for the commencement of end-to-end platform testing as well as UAT. Abaxx also later revealed during their Q3 investor call that they had initiated a 100 day internal readiness plan which was put into motion on November, 15th, implying an internal launch date of February, 23rd could be possible. Taken together, the announcement of FCM onboarding in early August, and the announcement of a 100 day internal readiness countdown, were both consistent with a 6 month FCM on boarding projection. This should tell investors that the company remains on course for a late Q1 or early Q2 launch of their Singapore Exchange and Clearinghouse.

Additionally, Abaxx disclosed in Q4 that they had advanced four physically-delivered contracts into the third and final phase of product development with two additional physically-delivered contract in phase two of contract drafting. It can likely be assumed that the four contracts in the final phase of contract development are their carbon futures contract (which was disclosed as being submitted to the Monetary Authority of Singapore “MAS” for review in October) as well as three LNG contracts with delivery points in Europe and Asia respectively. Based on prior disclosures from management about interest in a nickel and gold, investors can probably surmise that these metals are the phase two contracts mentioned by Abaxx.

Lastly, Abaxx’s Ian Forrester provided a sneak peak live demonstration of their Abaxx Exchange console including ID++, Abaxx Messenger and Abaxx Verifier applications during their Q3 conference call. While this demonstration was brief, it illustrated that Abaxx’s core technology had significantly advanced over the course of 2022 to the point where it could be beta tested by industry participants utilizing the exchange.

Looking Ahead to 2023 Q1 and Beyond:

In many ways 2022 was a transformational year where a lot of the hard, but uncelebrated work was advanced on both the Exchange and Tech. This necessary work sets the stage for what could be an explosive 2023 for both Abaxx Exchange and Abaxx Tech. Below are some of the upcoming catalysts that I think investors may see in coming months and year ahead:

• European LNG benchmark pricing white paper submission to EU.

• Submission of LNG contracts to MAS for final review and approval.

• Strategic partner(s) announcement for Abaxx Exchange and Clearinghouse. These partners are likely to take a direct ownership stake in Abaxx Exchange, thus diluting Abaxx Tech’s stake in Abaxx Exchange, but not diluting Abaxx Tech shareholder’s interest in Abaxx Tech. Potential partners are likely to provide funding for regulatory capital (i.e., clearing fund) as well as working capital for Abaxx Exchange during the next 18 months while the Exchange ramps to profitability.

• Regulated Market Operator “RMO” approval from MAS.

• Approved Clearinghouse “ACH” approval from MAS.

• Approval of physically-delivered LNG and Carbon contracts by MAS

• Submission and approval of Abaxx’s first precious and battery metals contracts to MAS, likely nickel and gold.

• Development and drafting (in concert with industry partners) of additional energy, battery metal, and precious metal contracts.

• Commercial launch of Abaxx Exchange and Clearinghouse.

• Publication of an ID++ White Paper.

• Commercial launch of ID++. Commercial launch of Abaxx Tech Web3 productivity applications Abaxx Verifier, Abaxx Messenger, Abaxx Vault and Abaxx Drive.

• Further developments at SmarterMarkets including the launch of a SmarterMarkets social media platform.

• Second spinoff company that may aim to build out infrastructure for countries looking to raise capital for carbon credit projects that are above and beyond that countries NDC.

• Further discussion around long term strategic plan for iron ore assets.


Disclosure: I am long Abaxx Technologies #ABXX and Base Carbon #BCBN via their US ADRs ABXXF and BCBNF