Executives from Flag Ship Acquisition (NASDAQ:ETHZ) used a recent investor presentation and Q&A session to outline the company’s strategy of acquiring cash-flowing real-world assets, tokenizing those assets, and distributing yield to token holders through a regulated exchange partner.
Business model centered on acquiring and tokenizing cash-flowing assets
Management said the company has been building pipelines in “multi-hundred billion-dollar verticals” to source real-world assets that it can hold on its balance sheet for yield and cash flows, and then tokenize over time. The company described its approach as using capital on its balance sheet—both cash and proceeds from gradually selling down Ethereum—to purchase assets that generate cash flow.
Liquidity.io positioned as core exchange partner
Management highlighted its investment in Liquidity.io in fall 2025, describing Liquidity as a regulated financial institution with multiple licenses that allow it to securitize assets on its exchange. The company said Liquidity is FINRA regulated and has a transfer agent and broker-dealer license, as well as a KYC platform incorporating facial recognition tied to TSA’s database.
Liquidity.io is expected to be the company’s primary exchange partner for Ethereum Layer 2 tokens representing physical assets held on the company’s balance sheet. Management said it expects to tokenize assets “one by one” onto Liquidity and indicated it is accelerating capital allocation into cash-flowing, U.S. dollar-denominated assets in the second quarter.
Timeline: reverse merger, platform partnerships, and first engine token
Management said the company became public through a reverse merger in August of last year and initially raised a combination of Ethereum and cash. Early efforts focused on creating an equity partnership with Liquidity.io to enable tokenization, followed by investments meant to establish origination pipelines in other asset categories.
The company described several key initiatives:
- Zippy (modular mortgages): Management said Zippy is partnered with a “very large financial institution” and has become one of the largest originators of modular mortgages in the U.S.
- Karus AI (auto loans): The company said Karus analyzes more than $1 billion a month of car loans and provides data to buyers including insurance companies, banks, and other financial institutions. Management said the relationship provides access to a dealer network and supports buying loans at the point of origination.
- Aero Engine Solutions (aerospace): Management said it partnered with Aero Engine Solutions to source refurbished CFM56 engines for leasing and tokenization.
In January, management said it tokenized two aircraft engines—described as the first such engines brought onto a blockchain—through a partnership involving a large U.S. airline, adding that demand is building for additional CFM56 engines to be tokenized.
Jet engine token structure and expected yield
Discussing the initial aerospace token, management described the CFM56-7B as the most ubiquitous engine on single-aisle aircraft globally, produced by GE Aerospace and Safran. The company said new-engine backlogs have supported growth in the refurbished market and characterized the market as having a supply-demand imbalance potentially lasting 15 years.
According to management, the two engines were placed on a three-year lease with a large U.S. airline, paid monthly. The company cited a yield “right around 12%,” and said holding the lease through termination could result in “around 16%” over a three-year period. Management also noted a residual guarantee on the engine value at the end of the lease.
The token was described as providing direct collateral in the engine, with monthly cash-flow payments distributed to token holders until lease completion, at which point capital is returned. Management characterized it as a “liquidating token.” The company said it is considering structuring future engine tokens to pass through certain tax benefits, including bonus depreciation, potentially via K-1 reporting.
Revenue drivers, token distribution plans, and Q&A takeaways
Management outlined four revenue sources:
- Revenue from holding assets that generate yield and cash flow
- A small origination fee on each token
- Asset management fees for underlying tokenized assets
- Small transaction fees as tokens trade
Management said the majority of revenue “today” comes from holding and cash-flowing the assets, and that success should be judged by how much capital is deployed into the targeted verticals.
On token distribution, management said it has not aggressively marketed the initial aerospace token, emphasizing that the priority was ensuring the platform’s mechanics worked properly. The company said it plans to build a broader “menu” of offerings before expanding distribution, with a focus on banks and registered investment advisers rather than near-term retail advertising. Management said the tokens are currently geared toward accredited investors, but it is working toward future offerings under Regulation CF and Regulation A after the first token was issued under Regulation D.
In the Q&A, executives addressed several investor questions:
- Stock trading below NAV: Management attributed part of the disconnect to Ethereum’s decline since the original offering and said it has been gradually reducing Ethereum exposure as it allocates more capital into U.S. dollar assets, with the goal of decoupling from Ethereum correlation.
- Cross-listing tokens: Management said it is considering cross-listing, but noted limited availability of licensed venues; it mentioned Securitize and Figure as other platforms in the market.
- Regulatory framework: Management said it is following U.S. securities laws and using securities counsel for offerings, adding that clearer tokenization regulation could benefit firms that already operate within a regulated framework.
- Buybacks vs. deploying capital: Management said it is prioritizing deploying capital into physical assets to ramp revenue and cash flow rather than repurchasing shares at this time.
Looking ahead, management said it aims to allocate capital monthly across its initial three verticals—targeting approximately one engine purchase per month (citing $6.5 million per engine), about $5 million per month in mortgages, and about $5 million per month in car loans. Management also said it is working toward commercial real estate tokenization and expects to provide more details on fractionalizing real estate interests “this spring.”
About Flag Ship Acquisition (NASDAQ:ETHZ)
1180 Life Sciences Corp., a clinical-stage biotechnology company, develops therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases. Its product development platforms include fibrosis and anti-tumor necrosis factor (anti-TNF) platform, which is under Phase IIb clinical trials that focuses on fibrosis and Anti-TNF; Synthetic Cannabidiol (CBD) Analogs platform, which is under preclinical trials that are man-made derivatives of CBD; and a7nAChR platform, an immune suppressive, which is under preclinical trails that focuses on alpha 7 nicotinic acetylcholine receptor.
