Lokotech Group (LOKO) Investor Update summary

Business and product update

• Transitioning from R&D to production phase for dual-use ASIC, with engineering wafers soon moving to full-scale tape-out and commercial production targeted for Q3 next year.

• ASICs offer 35%-80% lower energy consumption than competitors, with flexible form factors and a 12nm production node, and can be used for both mining and edge AI applications.

• PowerPool acquisition supports profitable growth, with net revenue averaging EUR 3,400 in November and projected to reach EUR 2.8 million in 2025 under optimistic assumptions.

• Edge AI use case for the ASIC is being benchmarked and could become a significant revenue stream, with potential for licensing or joint ventures in the future.

• Arctic Core data center business is expected to launch before year-end, providing conventional and secure data storage services.

Commercial agreements and market outlook

• A flexible framework agreement was signed, with the final order value determined by a second payment before production; initial client interest is at the upper end of the range.

• Market is described as winner-takes-all, with the company targeting to double or replace current hash rate, representing a billion-dollar-plus addressable market.

• Products are positioned for both large institutional miners and individual users, with minimum order quantity set at one blade.

• Self-mining target is 8%-12% of total hash rate, supporting quality control and advanced RMA processes.

• No debt except for seller's credit on PowerPool; strict amortization of R&D investments and positive cash flow expected in 2025, driven by PowerPool.

Technical progress and competitive differentiation

• Tape-out process is on schedule, with 99% of chip area DRC-clean; GlobalFoundries selected as manufacturing partner, with capacity secured for initial production.

• ASICs are more energy efficient than Bitmain’s 5nm chips, with features like gradual degradation, server-grade front-end PSU, and open USB protocol for plug-and-play.

• Security measures implemented to prevent reverse engineering, including physical chip protections, encrypted communication, and custom processor design.

• Prototypes are mining for testing and validation, with scaled-up engineering wafers to follow.