TREASURY RESERVE FUND POLICY
of
1 FINANX AI TECHNOLOGIES, INC.
Effective as of: [●] 2026
1. Purpose and Scope
This Treasury Reserve Fund Policy (this “Policy”) sets forth the governance framework, investment mandate, risk limits, and operating procedures for the corporate Treasury Reserve Fund (the “TRF”) of 1 Finanx AI Technologies, Inc. (the “Company”). The TRF is a long-term corporate reserve composed primarily of digital assets, including 1FNXAI tokens and Bitcoin, held on the Company’s balance sheet and managed in accordance with U.S. GAAP.
This Policy applies to all TRF-related activities of the Company and its subsidiaries, including Finanxai Tech Limited, and to all employees, officers, and service providers who participate in or support such activities.
2. Mandate and Objectives
The TRF is managed as a policy-driven reserve, not as a trading book. Its primary objectives are:
-Preserve and grow corporate balance-sheet strength over the long term.
-Maintain sufficient liquidity buffers to fund operations and withstand stress scenarios.
-Concentrate exposure in scarce, liquid, digitally native assets within explicit limits.
-Operate under transparent, auditable, and repeatable governance processes.
The TRF is not intended to be a speculative vehicle. All activities must be consistent with this Policy and approved risk limits.
3. Strategic Asset Allocation
3.1 Target Mix
The TRF’s strategic asset allocation is:
-1FNXAI tokens: target 90% of TRF fair value
-Bitcoin (BTC): target 10% of TRF fair value
Both targets are subject to tolerance bands as described below.
3.2 Allocation Bands and Rebalancing Triggers
The Board of Directors (the “Board”) approves bands around target weights:
-1FNXAI: [80% – 95%] of TRF fair value
-Bitcoin: [5% – 20%] of TRF fair value
If allocations move outside bands due to market movements or transactions, the TRF team will prepare a rebalancing plan for review by management and, where required, the Board or its designee.
4. Liquidity and Buffer Requirements
4.1 Liquidity Buffers
The Company will maintain minimum liquidity buffers, sized to cover:
-Modeled operating cash needs over at least [6–12] months.
-Modeled stress scenarios, including concurrent drawdowns in 1FNXAI and Bitcoin, exchange outages, and counterparty failures.
Liquidity buffers may include:
-U.S. dollar cash and cash equivalents.
-Short-duration U.S. government securities.
-Highly liquid, unencumbered TRF assets that can be sold within defined timeframes under stress.
4.2 Staged Acquisition and Disposition
TRF acquisitions and dispositions will be staged to:
-Limit market impact and slippage.
-Preserve execution optionality during volatile periods.
-Comply with internal concentration, liquidity, and counterparty limits.
5. Permitted Assets and Constraints
5.1 Permitted Assets
The TRF may hold:
-1FNXAI tokens (on-chain, non-derivative, non-levered holdings).
-Bitcoin (BTC) (on-chain, non-derivative, non-levered holdings).
-U.S. dollar cash and cash equivalents.
-U.S. Treasury or other high-quality government securities with short duration.
Any expansion of the TRF universe beyond these categories requires prior Board approval and an update to this Policy.
5.2 Prohibited Activities
Unless separately approved by the Board under a distinct, risk-bounded policy:
-No lending, pledging, rehypothecation, or margining of TRF assets.
-No derivatives (options, futures, swaps, or structured products) referencing 1FNXAI or Bitcoin.
-No leverage at the TRF level.
-No yield-farming, liquidity mining, or staking of TRF assets.
6. Custody Architecture and Safeguards
6.1 Custodian Selection
TRF assets will be held with one or more institutional custodians that:
-Are reputable and, where applicable, regulated in recognized jurisdictions.
-Provide segregated accounts, robust cybersecurity controls, and audited internal controls.
-Support multi-signature or MPC key management.
6.2 Key Management and Segregation of Duties
The TRF will adopt a segregation-of-duties model:
-Initiation: Requests for transfers originate from authorized personnel with limited approval power.
-Approval: Independent approvers confirm legitimacy and compliance with limits.
-Settlement: Custodian executes transfers pursuant to pre-agreed workflows.
Key management features include:
-Multi-signature/MPC schemes with geographically distributed key shards.
-Hardware security modules and strong access controls.
-Allow-listed addresses for outbound transfers.
-Periodic key-ceremony reviews and independent validation.
6.3 Incident Response and Business Continuity
The TRF will maintain written incident response and business continuity playbooks covering:
-Wallet compromise, custodian failure, and venue outages.
-Execution halts and staged migration of wallets or custodians.
-Escalation procedures to management and the Board.
Material incidents will be escalated promptly and disclosed where required.
7. Counterparty and Venue Standards
The Company will maintain a list of approved venues and counterparties (exchanges, OTC desks, brokers, banks) based on:
-Financial strength and historical performance.
-Regulatory posture and licensing status.
-AML/KYC, sanctions, and market-integrity controls.
-Incident and outage history.
Periodic reviews will assess continued suitability. Relationships may be suspended or terminated based on risk assessments.
8. Valuation, Accounting, and Reporting
8.1 Accounting Framework
The Company expects to adopt ASU 2023-08 for in-scope crypto assets effective January 1, 2025. Under this standard:
-1FNXAI and Bitcoin will be measured at fair value, with changes recognized in earnings.
-Required roll-forward and fair-value hierarchy disclosures will be provided.
8.2 Valuation Methodology
Valuation will:
-Identify a principal market for each asset.
-Prioritize observable inputs from qualified price sources.
-Specify a consistent measurement time for closing processes.
-Include controls for stale quotes, outliers, and venue disruptions.
The Company will maintain documentation for price-source hierarchies, overrides, and exception handling.
8.3 Internal Controls
The Company will maintain internal controls over financial reporting tailored to digital assets, including:
-On-chain-to-general-ledger reconciliations.
-Immutable audit logs for TRF transactions and approvals.
-Periodic independent reviews of valuation and custody controls.
8.4 Disclosure Practices
The Company expects to provide investors with decision-useful disclosures, including:
-TRF composition by asset and custody concentration.
-Liquidity buffer levels and stress-coverage metrics.
-Fair-value hierarchy and roll-forward tables.
-Sensitivity analyses (e.g., hypothetical 10%, 25%, 50% price shocks to 1FNXAI and Bitcoin).
9. Governance, Roles, and Responsibilities
9.1 Board of Directors
The Board has ultimate responsibility for TRF oversight, including:
-Approving this Policy and any material amendments.
-Approving strategic allocation targets, bands, and key limits.
-Reviewing periodic TRF reports and stress-testing results.
9.2 Management
Management is responsible for:
-Implementing this Policy and operating the TRF day to day.
-Ensuring compliance with concentration, liquidity, and counterparty limits.
-Providing regular reporting to the Board and relevant committees.
9.3 Risk, Audit, and Compliance Functions
Independent functions will:
-Review TRF activities for policy compliance.
-Evaluate the adequacy of controls and incident-response protocols.
-Support external auditor requests and regulatory inquiries.
10. Related-Party and Conflict-of-Interest Safeguards
No TRF assets will be acquired from, or disposed to, any related person unless:
-The transaction is pre-approved by the independent members of the Audit Committee.
-An independent analysis supports the fairness of pricing and terms.
-The transaction is documented and disclosed as required.
The TRF team and insiders are subject to insider-trading, blackout, and no-hedging/pledging policies with respect to Company securities and, where applicable, 1FNXAI.
11. Policy Review and Amendments
This Policy will be reviewed at least annually and may be amended by the Board based on:
-Changes in law, regulation, or accounting standards.
-Material changes in market structure or the Company’s business.
-Lessons learned from incidents, stress events, or control findings.