Welcome to the Tokens.com Q2 Financial Review conference call. My name is Richard and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press zero one on your touchtone phone. As a note, this conference is being recorded. I'll now turn the call over to Mr. Andrew Kiguel. Sir, you may begin.
Thank you. On the line today you have myself, our CFO, Martin Bui, Deven Soni, who's head of Hulk Labs, and Lorne Sugarman, who's the head of Metaverse Group. Just to start, Tokens.com, we're a Web3 technology company. We purchase and build service-based businesses around cryptocurrency assets. We're currently focused on three areas: crypto staking, the Metaverse, and crypto gaming. We own and operate businesses within each of these segments. The staking operations occur within Tokens.com , the Metaverse operations occur within a subsidiary called Metaverse Group, and the crypto gaming operations occur within a subsidiary called Hulk Labs. All three businesses are tied together by the utilization of blockchain technology being linked to high-growth macro trends within the Web3 area. Through shared resources and infrastructure across these three business segments, we're able to efficiently incubate these businesses from inception to revenue generation.
I'll note that as of right now, all three business segments are revenue positive, and we think that's quite significant given that Metaverse Group and Hulk Labs are at very early stages of their inception as operating businesses. Each business owns its own cryptocurrency assets that are used to generate revenue, and those assets are not linked to the performance of the actual businesses. A more detailed description is available in the MD&A, which is the one that filed yesterday on SEDAR and is also available through our website. Now, as a result of these businesses owning cryptocurrency assets, Tokens.com is required to revalue these assets at the end of every reporting quarter. That means our financial statements have a positive or negative non-cash impact based on the market price of the digital assets we own at the end of that quarter.
It's a specific shot or a viewpoint in time on the date at their price, which is at the last day of every quarter. Tokens.com and our subsidiaries, we do not engage in the lending of tokens, digital assets, or in using any derivative products to enhance our returns. That's not our business. We do not engage in the act of trading or hedging of any crypto assets. Now, moving to the quarter, Q2 was not a good quarter for cryptocurrencies or the digital assets that we own. This was widespread across all crypto and capital markets. This resulted in us having to take some non-cash revaluation losses in the quarter, which Martin, I'm gonna turn it over to him to walk through.
Again, we note that these are non-cash revaluation losses and are not tied to the operational growth within our staking business, Metaverse Group or Hulk. We can talk a little bit more about that, but each of the businesses within those business segments are tied to services that we provide by leveraging those assets and are not specific to the actual market price of those assets. Our balance sheet remains healthy. We have more than sufficient capital to withstand an extended period of time here without raising any new capital. We've purposefully built the business that way because we know that this is a volatile space and we always wanna make sure that the company's longevity and balance sheet is healthy.
We do note that we're seeing improved crypto asset pricing since the end of Q2, and if that continues, that'll be reflected in our Q3 results. As an example, the staking assets that we own have increased by approximately 60% since the end of Q2, which means over the course of that time, and what you're seeing there is already somewhat outdated. This also benefits us in that we own over 3,000 ETH along with a whole bunch of other tokens that have also continued to appreciate. ETH having appreciated by 78% since the end of Q2 to August 12th. In terms of the overall, you know, viewpoint and message here that as a small-cap stock, the impact of a demand for supply can be quite drastic on our shares.
We have certainly not been happy with the performance of our share price this year. Obviously, that's due to widespread concerns in the market over crypto, macro. There was a war, inflation, rate hikes. There's a whole bunch of things going on that has made 2022 a bit of a strange year. We acknowledge that last year was a very good year and that there was probably a little bit of hype in there across all asset sectors. Right now, you know, we're doing our best to sort of, you know, make sure we continue to tell our story. We continue to be very optimistic about our assets and the growth that we have in them.
One of the reasons that we're seeing some weakness in our share price right now is that there was an institutional shareholder that had a change in management. As a result, the new portfolio managers are looking to move out old positions. Again, being a small cap stock, that has probably impacted us more drastically than it would if we were larger. In terms of our other peers in the small cap crypto space, everybody's sort of been hurt. We certainly have not seen the recovery that the larger cap, more liquid crypto stocks have seen. Again, we think that's temporary. We feel very confident about our business. We feel confident about the areas that we are participating in and in those businesses.
As a point of note, I mentioned that crypto prices are up quite significantly since the end of last quarter. We had other significant changes as well. We've added to our accounting area. We've added a new CFO, Martin Bui, who's on the call. Ian Fodie has remained with us in support of that as well, and as our Corporate Secretary. Our subsidiary in Q3, Hulk Labs, has received a VC investment at a pre-money valuation of $8 million. Again, we're still continuing to see positive growth, positive changes within our businesses, despite the fact that our share price isn't reflecting that at this stage. Maybe with that, I'm gonna turn it over to Martin Bui, and he'll give you a quick summary of the financial statements, and then turn it back to me for our closing and to answer some questions.
Martin?
Thank you, Andrew. Before continuing, I would like to remind everyone that all amounts in the financial statements and also on this call are in U.S. dollars, unless stated otherwise. Yeah. Just continuing on Andrew's point on the, you know, crypto market and the non-cash revaluation loss. I want to get that out of the way, you know, because our cryptocurrency assets are treated as intangible, and we need to revalue them to their market prices at the end of every reporting period end. There is always a swing and fluctuation in their values every reporting period.
For Token, at the end of Q2, its non-cash loss was $14.8 million for the three months ending Q2 2022, with $12.5 million recorded on the income statement and $2.3 million recorded in other comprehensive income to offset previous gains that we recorded in prior periods. For the six months, the total, this total non-cash loss was $18.3 million, with $14.8 million recorded on the income statement and $2.5 million in other comprehensive income. Again, I stress that these are all non-cash losses that have no impact on our operations. Loss on disposal of our crypto assets was $1.7 million for the three months and $1.96 million for the six months.
You know, as I finally got the non-cash accounting losses out of the way, I want to shift, you know, focus more on the operating numbers and, you know, areas where we do have control over. Our staking business generated higher revenue than last year. It's $205K this quarter compared to $193K in Q2 2021, 6.2% increase. On a six-month basis, staking revenue was $499K compared to $258K of last year, 93% increase. Our Metaverse Group subsidiary generated lease revenue of $35K and $45K for the three-month and six-month period, respectively. There's no comparable number for last year because this is our new business, and as Andrew mentioned earlier, the growth has been very impressive.
For our operating expenses, we were also able to lower the expenses during Q2 2022. Our total expenses were $753K for the quarter, compared to $2.2 million for the same quarter of last year. On a six-month basis, operating expenses were $1.7 million, compared to $2.4 million of last year. Total net loss for the three months was $11.9 million and $4.1 million for the six months, compared to losses of $8.5 million and $8.7 million for the three-month and six-month of last year.
Comprehensive losses was $14.2 million for the three months and $7.6 million for the six months, compared to losses of $11.3 million and $8.6 million for the three-month and six-month of last year. These losses were impacted by the non-cash revaluation losses that I mentioned earlier. Just to sum up everything that I've just said, despite a very difficult quarter, we were still able to grow our operations. What happened in the cryptocurrency market has very little impact on our operations. Our token have been, and as to staking and generating yield, the Metaverse Group is generating better and bigger revenue numbers, and Hulk is also revenue positive, which will be reflected on our next quarter.
We have a very healthy balance sheet, and our current cash balance should be sufficient enough for operation in the next 12 or 18 months at the very least. With that, I thank everyone for listening, and I will now pass over the call to Andrew.
Thanks, Martin . Again, just to close out, you know, Tokens.com, we have three businesses that are tied to Web3. Hulk Labs and Metaverse Group are early-stage businesses that have just started to produce revenue, and have a ton of growth. The company owns more tokens today than it ever has in the past. We've driven costs down, and each of the three business units is now self-sufficient. The macro trends continue to be in our favor. Despite the frustration that we all feel, with respect to the share price, when we look to the future, we still remain confident that we're in the right places with the right businesses and growing.
We said the balance sheet is healthy, we're viable, we're growing, and I believe we're more than the value of just our assets, you know, because we have these service businesses that leverage these assets and continue to grow. Our hope is that this is, you know, temporary. As the year continues and people continue to see the growth that we're doing, and recognize that our losses are non-cash, don't actually impact our operations at all, that we'll continue to get some more attention and hopefully that there's an improvement in our share price that's, you know, commensurate to what we believe that we're worth. Operator, maybe with that, we'll turn it over to questions.
Thank you. We will now begin the question and answer session. If you have a question, please press zero one on your touchtone phone. If you wish to be removed from the queue, please press zero two. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question on the line, please press zero one on your touchtone phone. Our first question on the line comes from Mr. Joe Gomes. Please go ahead.
Good morning, everyone. This is Joshua Zoepfel fulfilling for Joe Gomes. Just my first question is regarding just the leasing activity in Decentraland. Are you guys seeing just a pickup, an increase over this past quarter? Just kind of some color on that would be great.
Yeah. I'm gonna just say one thing, and then I'm gonna turn it over to Lorne Sugarman. The one thing with the business in the Metaverse Group is that primarily we're dealing with the marketing and advertising areas of various firms and clients. Those areas haven't really been impacted by the fact that, you know, cryptocurrencies are down. We're still continuing to see a large inflow of people looking to work with us, and that the businesses have gone beyond just leasing land to us actually providing, you know, media and, you know, building virtual storefronts for people, hosting events, virtual advertising.
That business is continuing to sort of leverage the fact that we own this metaverse land and being able to turn that into creating a revenue business that's again based on advertising and media as opposed to the performance of cryptocurrency. Maybe, Lorne, do you wanna just touch upon that for a second?
Sure. Thank you. You know, the short answer, you know, I think Andrew's done a great job in describing the services we provide and how the rental of the land works in conjunction with the broader services that we provide. Typically, we provide one of those services where we're building out a virtual space or helping other large or small entities determine the right place for them to locate in the metaverse. I would suggest to you that the number of rentals, as well as the number of interested parties continues to grow. The pipeline continues to grow, and so the business remains very strong in the context of obviously tougher markets or tougher crypto markets, as we're all well aware of. I think that's where I'd leave it.
Yeah. Perfect. Thank you so much for that. Another question, I just kinda wanna turn it over to Hulk Labs. I just kinda wanted to see just the update on just the Play Group acquisition, how that's coming along, as well as like just building of that player base in the Democratic Republic of the Congo and Tanzania.
Yeah. For the people listening, what we're doing there is right now we're using our own capital, but we're intending to sort of Uberize the crypto gaming space. I'll let Devin explain a little bit of how that's gonna work. We're essentially building a platform to connect players to people who have gaming assets. People that find this rewarding but don't wanna be playing a game 24 hours a day, seven days a week, can come to us and have several people playing a game for them seven days a week, 24 hours a day. We're planning on building the service. Again, it's gonna be like the Uber of the crypto gaming space, which is a massive space that continues to grow.
Deven, I don't know if you wanna add a little bit to that and talk about Play.
Sure. Thanks for the question. To clarify, you know, we're very happy with the progress of the Play acquisition. The real focus is, you know, in this quarter and next to build the tooling infrastructure that make it possible for us to, you know, have a lot of players, you know, playing a lot of NFTs and games in a way that we can track and securely manage. Today, we have about 150 players, you know, playing actively with our assets with a wait list of about 2,600 players waiting to onboard.
You know, our goals are really to be able to onboard those players in the next few months as we have you know, more tracking abilities and more administrative abilities, which is what we're kind of building today. The goal, as Andrew mentioned, is really to build you know, the leading platform that matches people that own in-game assets with players that want to play and monetize those assets.
To add to that, right now, as we're building, we're testing that out in the sense we're eating our own cooking by using our assets. The returns that we've been seeing in that area have been. You know, these are not based on huge investments, but the investments that we're making are seeing returns about 25% per month. If you can imagine, as we continue to build this out and generate capital and then be able to connect other people that want players and be able to take a fee for connecting them. Again, just like how Uber connects drivers and passengers, we're gonna be doing the same thing there and collecting a fee for that with access to thousands and thousands of players through this ERC contract that we have.
Again, when you're talking about and looking at our business, we're a lot more than the value of our assets. There's like real businesses here that are being built that are leveraging these assets to build some pretty significant things in the Web3 area.
Yeah. Great. Thank you so much for the color on that. This is a question I have. I know you guys have a sustainable capital structure right now for probably the next 12 months, you guys said in the MD&A. You guys have about like roughly $5.7 million in cash. I just wanted to see if like, is there ever a chance that there may be a time that you might issue more securities or even willing to take on debt to for just a larger asset purchase?
Okay. Let me tackle the debt question first. We have a line of credit with Genesis Global Trading in New York. That's in DCG with Barry Silbert Company against our assets, which is currently mostly undrawn. That's a real tricky business in the crypto space. Because it's so volatile and you have these moments in time like we had in Q2 or even how we had in March 2020, where stuff can just capitulate really quickly, and it can put the company in a position where, you know, we can end up sustaining serious losses. It's been our position to really not use a lot of leverage. We've definitely seen a lot of opportunities, but our inclination is to have it there as safety. We're not planning to really use much of it right now.
It's just too dangerous seeing the volatility that's out there right now. In terms of raising additional equity, I mean, look, are we seeing a ton of amazing opportunities and ways for us to make new capital right now that we're not taking advantage of because we don't have the capital to do so? Yes. Am I in a position where I feel that our stock is adequately valued to issue equity? Not today. I just, you know, I think we're drastically oversold. I think the sector is oversold, and I think I'm seeing, you know, crypto here on a potential rebound. I look at the macro forces like, you know, the Metaverse, crypto gaming, the increased use of staking, especially now that, you know, Ethereum is on the verge here of finishing their conversion, the Merge to proof-of-stake.
I just look at our future and the things that we're in, the areas that we're in as being high growth and a positive direction. For me to go and issue equity or raise capital at these prices doesn't make sense. In the future, we will always make an analysis to say, does it make sense to, you know, is it accretive? What are the uses of capital? Always with an eye on shareholder, you know, value creation. Although it doesn't seem like we've created any shareholder value based on our share price, I can tell you today the business is stronger than it's ever been in before. Like I said, we own more tokens than we have before. I'm more excited about our business than I ever had been before.
The market isn't recognizing this, which tells me that it's not the right time to even consider raising equity.
Okay. Perfect. Yeah, thank you. Just one more from me, if I may, before I head back into the queue. I know you guys talked about the Metaverse Architects acquisition back in February, I believe. I know you guys launched an advisory service practice in April. I was wondering if there's any, like, maybe synergies in between those and if there's maybe an option to acquire more Metaverse Architects and maybe do a tuck-in towards advisors.
Yeah. These are all synergistic. As the business started, and this is gonna be a background, we started off by wanting to own the assets. The digital land to me is like prepaid advertising space or space that can be usable for various things. What's really been guiding us in Metaverse Group is the demands of our clients. Like I said, we put in here, we've now serviced over 18 clients and have a long pipeline of new ones and ones that we're planning to announce, you know, some big wins. All of these things fit together. The advisory services came because we started getting a lot of calls from people who are like, "Can you please explain this to us?
Can you guys walk, like, how do we do this? The Metaverse Architects and that investment is because we want to have, you know, the ability to have almost in-house ability to create these virtual structures and buildings. It's about making the business, you know, integrated across all fronts so that when a client approaches us, they can ask us for anything related to the Metaverse, we can deliver it. I think that's one of our distinctive advantages is that not only do we own a ton of land, but we own the music hub, we own the fashion area. These are two very hot areas. When we're approached, it's more than just about a lease. It's about the construction, it's about the build, it's about, you know, hosting the party, it's about the media.
We're encompassing a whole bunch of things here that are really being driven by our clients that are asking to see this.
Thank you. Again, for any questions on the line, that's zero one on your touch-tone phone. Our next question on line comes from Mr. Bill Papanastasiou. Please go ahead.
Hi, guys. Good morning.
Hey, Bill.
You know, obviously a challenging quarter, given the lower spot price which had, you know, these non-cash evaluations hit the PNL. When I look at the stock price and the tape, it's clear divergence between where Tokens.com is trading today in comparison to the assets that are held in the portfolio. Obviously, you guys have a significant holding of Ethereum. The Ethereum network is planning on conducting the transition to The Merge in mid-next month. Just wondering if you could touch on some of the implications it might have to your portfolio and whether the company's strategizing ahead of time in order to perhaps deploy more capital into the token. Based on on-chain data, it appears that a lot of Ethereum tokens are sitting on the sidelines and some big whales are accumulating.
Just wondering what your thoughts are on that.
Yeah. The first thing is we've been staking Ethereum. Like The Merge and everything happening next month has actually been planned for a couple of years. You know, the roadmap's there, although the timing hasn't been set until more recently. We've been staking Ethereum now since, like, 2020. The viewpoint for us has always been that this is the clean energy alternative to mining Ethereum or mining anything because you use ownership. Not only that, but it provides a lot of improvements over proof-of-work such as the, you know, volume of transactions and, you know, help bring down, you know, the gas fees on Ethereum. We see this all as positive.
The fact that this is happening next month and that people are accumulating, like I said, we've seen ETH up close to, you know, 78% since the end of the quarter. We'd love to be accumulating and staking more ETH. The ETH staking returns are expected to possibly double or more than double in the next, call it, four to five weeks. That all bodes very positively for us because, you know, if you look at what we've done, is we continue to accumulate ETH where we can. You know, this is I think a great opportunity to buy it and the fact that The Merge is coming. Again, I don't have a crystal ball, and there's a whole bunch of macro things like I said, the war, interest rate hikes, you know, fear of recession that are hard to predict.
Absent that, the pathway for ETH and for all other proof of stake tokens that we're holding, that we've been behind now for a couple of years, is hugely positive. Like I said, I mean, taking a step back, you look at the impact of NFTs and forget about NFTs in terms of like them being pictures or, you know, Apes or CryptoPunks. We like that stuff too, but if you look at the macro implications of being able to provide a digital signature to something that exists virtually or physically, this, these are game changers in terms of how this is gonna be used in the future. Through staking things like Solana, Polkadot, and ETH, we're really at the infrastructure of that.
We get paid as transactions occur on the block on these tokens, which are only gonna continue to be used. The Metaverse, Web3 Metaverses, are all built on these tokens and rely on staking. NFTs, decentralized finance, all of these things happening in technology today. Like I said, this is gonna be, you know, the thirteenth sector or the twelfth sector of the S&P 500 at some point. This is a massively fast-growing sector, and we're playing it from the infrastructure level on the staking front. We're playing it from the asset level through staking with the Metaverse Group and at Hulk, and as well building these businesses that are gonna play into these trends.
When I see what's happening here with respect to, you know, ETH merge being completed in the middle of September, that's hugely positive, and we've been positioned there now for a while. We're happy to see it happening.
Great. Thank you for the color on that. Next I wanna shift gears to the Metaverse Group segment of the business. You know, you've been able to maintain a robust cohort of about 18 paying tenants during the quarter and have more than 75 in the pipeline. Now, I believe that the company also mentioned in the past that you're looking to cater towards the fashion, music, and sports space. Are you able to provide any updates in terms of locking in arrangements or arrangements in the pipeline that cater to these different categories?
Well, we're having various conversations and you know to be fair the clients that we've been landing most recently have been more in like the financial institutions area. We're having tons of conversations with various you know people on the music side, the celebrity side. You know, these things take time, and I'll explain why they take time. Number one, there's a lack of sort of knowledge and understanding. We get a lot of calls from people who are like, "We wanna be in the Metaverse. We wanna do." Then you have to sort of walk through and say, "What is realistic? Let's talk about which Metaverse. Let's talk about you know visitor traffic. What is the end goal? Is it advertising? Is it awareness of the brand?
Is it, you know, you're trying to generate buzz for yourself? We get inbounds from, you know, pretty much every sector. I think because we own the Music Hub and a big part of the Fashion District, that certainly adds an advantage to us in those areas. To be honest, the big clients that we've been landing lately have been in areas that have been more of a surprise to me. Like I've said, they've been like, you know, very large financial institutions, cosmetics, places like that. It tends to be varied. Look, frankly, we'll talk to anybody because we can provide, you know, A to Z services for whatever a client is looking for.
Great. Thank you. Lastly, I just want to touch upon that remaining segment of the business, Hulk Labs. Congrats on the strategic financing. Maybe you can speak to that process of negotiating the partnership with the Democratic Republic of Congo and touch on what should we expect in terms of the economics in the DRC versus other existing P2E markets and why the tokens particularly the Democratic Republic of Congo, sorry, as an opportunity to capitalize and roll out the Hulk Labs platform there.
Right. I'll turn that over to Deven. He's best to speak to it.
Sure. Hey, Bill. Great questions. You know, I think a big part of our thesis on crypto gaming overall is that it has a really strong potential to onboard the next several hundred million users to crypto blockchain and wallets. You know, when we look at the fact that there's you know hundreds of millions, if not billions of people globally that are just tremendously underemployed and you know this gaming sector enables people to really you know create this kind of global transfer of wealth. That's really kind of the first thing that drew us to the sector.
When we think about Africa and the Congo, some of the main reasons we really chose to focus on that part of the world was a very young, active population that already spends a lot of time gaming. You know, the DRC specifically has a population of 90 million people. On top of just the gaming, you know, we see that a lot of the focus globally in P2E had been in places like the Philippines and Indonesia, where there's probably arguably more internet connectivity, easier kind of connected audience to reach.
Because of that, you know, in the early days of play-to-earn, we were seeing significant saturation in the market, so that the prices that people and the revenue shares that, you know, games and asset owners would need to pay were in the 60%-70% of earnings range. What we found with the DRC was you know, a population that was really eager, that had you know, a lot more you know, people and humans that were not being kind of focused on in this area. We you know, started dipping our toes in the water and spending time you know, evaluating the market.
We also found a population and a set of, you know, partners that were very amenable to us making investments in the region, you know, training players and just, you know, we see it as a strong foothold to the rest of Africa, where, you know, we also have players in places like Tanzania. We're evaluating Nigeria. It wasn't sort of a, you know, the Congo was the only place where we had to be. It was just a place where we found really amenable partners that were, you know, willing to give us, you know, sort of access to facilities, you know, recruit players and things like that. You know, to date, it's worked very well.
There's a really large active, you know, wait list of folks that wanna, you know, kinda work with us and, you know, I think that's gonna continue to grow over the following quarters.
Yeah. Let me add to that a bit, Bill, to show you the significance of what we're building there. There's something like over 400 million daily video gamers, and there's for sure a migration. If you look at where all the venture capital raised over the last 12 months has been going is into this play-to-earn crypto gaming. New games are being generated all the time and providing an opportunity for people to play these games and earn a return and be rewarded for playing the game that is convertible into fiat cash. Let's go back to what we've done there. We've hired the talent so that we now own what I would say is the premier gaming calculators that we offer for free on the Hulk Labs website.
You can go to the website and say, "Okay, what are the games offering now?" It's a little bit similar to if you ever were in the crypto mining space where you could go in, look at a machine and say, "What's the hash rate? What's your price of electricity?" Mobile app puts out a profitability number. We're offering that for free to build the community. You look at the DRC, we now have access to thousands of players. As you said, we have a huge wait list and we're eating our own cooking right now by having 150 players play for us. Through Play it, we're gonna have the platform that's gonna connect almost what you'd say, investors to players.
If you look at the numbers we have now, by owning the IT, by knowing which games are the most profitable at any given moment, we have access to the players and a way to connect people. That could be a very interesting investment opportunity that's not correlated to the market. Then again, very early stages for us. We're returning 25% a month based on people playing these games for us. That's where I see the excitement in this business and what we're building. Then again, you can look at the value of the assets in Hulk Labs, but that's not where the value is. The value is here in what we're building and the fact that this business was started in January, is now revenue positive.
You look at the milestones we've achieved to create what our vision is. I think that's pretty significant even if the market doesn't recognize it today.
Great. Thank you. Congrats on being revenue positive across all the three segments of the business.
That's obviously as of Q3, not in Q2. Hulk Labs, revenue positive as of this quarter.
Thank you. Our next question on the line comes from Mr. Dave Browning. Please go ahead.
Yes, Andrew, thank you for your and the staff's attention to all these matters and bringing us up to speed. Very well done. I just had a couple of thoughts, really pretty basic. One, regarding the sustainability and the amount of working capital you have for purposes of expanding the areas of interest the company has. Then second of all, it's curious to me, just from a simple share price supply and demand standpoint, we've gone through this terrible, I guess I could say long-term capitulation over the last number of months in share price. From all technical considerations, it seems that the share price has been pretty well washed out. I think you touched on that by saying oversold.
I have just one curious thing over and above the working capital thing in regard to this pricing. We've had some pretty substantial moves in both ETH and Bitcoin, as well as some of the blockchain companies. Yet Tokens has been kind of languishing down on the bottom. My question in regard to that, Andrew, is it not appropriate to believe that as the coin space really gets more following and return to investor enthusiasm, if you will, why wouldn't the share price of Tokens go right up with all the coins? There's two questions, working capital and the idea about tracking with the coins.
Okay, let me address the second question first. You know, I get a lot of questions. I spend a good portion of every day talking to, you know, interested parties or investors or potential investors. The reality is, I touched upon it before, we're a small cap stock. We've been pretty, I think, diligent in not overissuing equity. We wanted it, I think, intentionally to keep it tighter for long term because I think that creates value over the long term. The small cap stocks in the space haven't really been tracking what's happening. For sure the larger ones have, and we've seen big increases there. When it comes to the question of coin, I think, as I said earlier, there is, there's an institution or maybe two institutions that have changed the portfolio manager.
As a result, there is selling pressure, I believe, on the stock that's not related to the performance of the stock or the assets that we own, but as a result of, you know, a specific mandate within those entities. As a small cap stock and because our liquidity isn't great, we're gonna see potentially big swings down as we've seen, and potentially big swings up as we've also seen, you know, last fall. That's just a function of the fact that, you know, we have about 96 million shares outstanding, 97 million shares outstanding. You know, there's about 25% of that owned by the board and management. It makes it tough when there's a seller, and the market's not quite there ready to absorb it. I mean, it's frustrating. Look, I'm the largest shareholder.
This impacts me more than anyone else. I've never sold a share. I don't intend on selling any shares. But all we can do is sort of continue to sort of work our hardest. We don't control the prices. I wish I was able to sort of, you know, say, "Hey, this is a great buying opportunity in my mind, given where the company is." You know, it's frustrating. It's frustrating for sure, seeing asset prices go up and us not moving. In terms of working capital, we're good. I mean, you can see on the balance sheet we have about $5.7 million available. We always run the business with respect to trying to, you know, be prudent with shareholder capital.
We try to run, you know, the business effectively, whether it comes to, you know, people's, you know, salaries, how we spend our capital. You know, you can ask the people within the company and the people we deal with, we are always very prudent. I'm not concerned with working capital. Worst case scenario for us is we can sell tokens if we needed to. Our overhead, you know, based on the cash we have and our overhead right now, like I said, each of the three businesses is pretty much self-sufficient from a revenue standpoint. Really it's just the things outside of operations like, you know, legal fees, accounting fees, exchange fees that we have to deal with.
I feel that we're more than adequately prepared to handle that for at least 12 months or maybe even more without needing to raise any capital. If we ever did need to raise capital, you know, we can go and, you know, sell some of our Ethereum or Solana or Polkadot without having to do a bad deal in the market. Working capital I feel is solid. Again, I, you know. It's frustrating. I don't know how else to put it because like I said, I field these calls all the time, and it doesn't feel good as a CEO of a business and going out and telling the story and feeling confident in the business, and then you look at your share price and it's down.
Although from my perspective, the company's a lot better off today than it was in November. You know, there are sellers in the marketplace, and we're a small cap, so we're gonna be disproportionately affected during this type of time.
One more thing, Andrew, if I might, I haven't been closely following staking yields, but does the return from your staking operations continue to hold up pretty well?
Within the staking terms, yes. I think the change in staking returns from Q1 to Q2, I think, was down by about 1%, the average in the industry. Most of our stuff was flat. Where it impacts us is that we're staking Ethereum, for example, when you're staking Ethereum at. It was trading at $4,000, that ends up being, you know, $4,000 of revenue. When you're staking Ethereum now, and it's at $1,900, where, you know, a couple of weeks ago it was down to $1,000, we're seeing a reduction in our revenue. The return in the yield terms is we're still receiving, you know, probably 5% or 6% in ETH terms.
Like I said, once the merge is completed, that's expected to, you know, double and be somewhere between 10% and 14%, starting in about a month. We're not seeing any impact there. I think there was a question earlier about the merge and everything. The staking and the proof-of-stake is the future of crypto. Every single new token, every single new project built, without exception, is built on proof-of-stake. Nobody builds anything on proof-of-work anymore. You know, we've been there, you know, from the early days supporting this infrastructure. I don't have any concerns about staking yields coming down at this point. You know, I think the question is, what happens to the price of crypto?
You know, if the price of crypto drops in half again, that's gonna hurt us. If the price of crypto doubles or triples, that's gonna be a huge benefit as well.
Well, that said, just one last comment that if we do get a turn on the upside in the coin space, the opposite's gotta happen in terms of helping the company as opposed to when coin prices go in the toilet.
I would hope so. Again, I don't predict, and there's like macro factors out there. Like I said, if we have, you know, one person decides to sell tomorrow for reasons unrelated to the stock. You know, if we look at what happened in the past, in the fall, you know, most crypto hit all-time highs in November of last year. I don't think that's coincidental that we also hit our all-time high in November of last year, as did many publicly traded crypto stocks.
Although I continue to make the argument that this company is far more than its crypto holdings because of these businesses that we're building, we have traded, too, not perfectly in line, but we have been sort of trading in line with the broader, you know, cryptocurrency market, which, like I said, in Q2, I mean, I think the market for staking tokens was down about 70% in terms of spot price over the quarter. That's gonna hurt us, and you can see that in the non-cash write-downs. Again, it's all non-cash. We haven't sold anything, so it's not a loss until you sell it, right? In my opinion.
Andrew, thank you very much for you and the rest of the staff and bringing us up to speed. Very helpful, and God bless. We'll hope a few people out there that are well thought out and learned in terms of what's going on with the company will get on board, and we'll see the stock up out of the dregs of $0.30 a share. Again, thank you very much.
Thank you, and I hope so too.
Thank you. Our next question on the line comes from Mr. Adam Brentlinger. Please go ahead.
Thanks. This is probably for Hulk and Deven. I want hopefully some more detail around the onboarding of the players. You mentioned around 150 players and then, you know, 2,500 or so on the sideline. My questions are, at what rate are we onboarding new players? What are the limitations to that rate, and what are the solutions? I think Play Group is probably one of those solutions. More so, what's your timetable to get to 10,000 or 100,000 players, or are those just completely unrealistic numbers? My concern as an investor is, are we able to scale fast enough to be prepared for the gaming to go prime time?
I guess, you know, at what rate are we getting players and what are the ceilings that you see on that network?
Sure. No, great questions. It's you know, something we think about on a daily basis. You know, the good news is, you know, we really look at scaling more like a switch turning on than we do you know, kind of a linear grind. You know, we know the demand is there for people to play with assets.
You know, I think that the challenge for us right now is that the entire industry does not have the tooling and the software required to do things at a you know, a level that we want in terms of security and trackability, and also from you know, the requirements that we have as a public company in terms of things like custody. A lot of what we're building internally today is you know, facilitating our ability to automate things that are right now very manual. Just as a very simple example, today, if we wanted to create 150 new wallets to add 100 new players, that would need to be done, you know, in a very manual way.
However, what we're doing is building tooling that says, "Hey, let's you know, flip a button and administer 100 wallets, you know, secure the private keys, give people access to those wallets in efficient ways.
You know, we really see it as a switch. Like I mentioned, we really see it as a switch. The 150 players that we have today are really, you know, working to give us data, that ensures the tooling that we build is something that can be used. You know, we feel really good that, you know, we should be able to get to that, you know, that 1,000-player-plus mark by the end of the year. You know, I don't see a barrier once we're, you know, from 100 to 1,000 to get to 10,000 or more. It's really about just.
You know, the other element I will say is, you know, some of the games we do find that are the most profitable are not the most scalable. You know, it's a bit of a balancing act of saying, you know, this game has a higher monthly yield and better tokenomics, but you can't actually buy, you know, 10,000 assets in it without dramatically impacting the price. These are all kind of things that we think about on a daily basis. You know, what I will say is that there are titles out there that we feel good about, that we can put 10,000 players into.
We have the access to, you know, 10,000 players, and we're diligently working on building the tooling, which will be ready in, you know, a matter of months to have us, you know, able to track, manage, monitor securely, you know, sort of the players and their performance.
Excellent. Thank you.
Thank you. Our next question comes from Mr. Scott Schultz. Please go ahead.
Yeah. Hi, Andrew. Just a quick one. Obviously we talked about a rough second quarter crypto and share price. Can you just talk about what impact that's had and kind of what your current status is for Nasdaq aspirations?
Yeah. You know, we're always, you know. We talk about the Nasdaq a lot. The couple things with the Nasdaq is you need a certain valuation and share price to get there. I believe that for us in looking at this, you need sort of a minimum, you know, I think depending on the different levels, but we're really looking sort of a $2-$3 share price, which means we'd have to spend some capital here and do a big consolidation. I don't. You know, back in November, we were trading at, you know, close to $4, that made a ton of sense. Today, if we were to do a roll-up to get it to those prices, I think we'd be taking away a lot of liquidity out of the market.
You know, I've also seen some sort of question marks around the Nasdaq's willingness to understand and accept our business plan. Look, these are all things that are on the radar. You know, had things continued to move in the direction that they were going in last November, it certainly would be a top priority. I think today the top priority is, hey, let's continue to build this business, get some recognition from the market, knowing that ultimately we would love to end up on the Nasdaq. You know, I can't do it with a $0.30 share price. You know, I'd have to do a 10-for-1 roll-up. You know, we'd have 9 million shares outstanding or something. I don't know if that's in the best interest of shareholders today.
Yeah, makes sense. That's all I had. Thank you, Andrew.
You're welcome.
We have no further questions at this time.
Okay. Well, look, thank you, everybody. Like I said, you know, management recognizes that things haven't been pretty this year. We're cognizant of it. We're not, you know. We're doing our best and trying to come up with strategies to get, you know, our story out there. We'll be at, you know, various conferences this coming fall that we'll be, you know, talking about our story and trying to get out to a larger audience. We're as frustrated as anybody who's held the shares through this time, and we're continuing to work by, you know, continuing to build the business. We're never taking our eye off sort of building this for the long term.
You know, hopefully at some point things turn, and people start to recognize the value of the things that we're building here within Tokens.com, and that this is still very unique. There's no other public company, I think, in the world that provides the exposure to Web3 and the assets that we have and the businesses that we have. You know, certainly that is a good thing, and at certain times it's a bad thing as, you know, it makes it harder to explain and to sort of convince people that they should have us in their portfolio. Like I said, we'll continue to work. We thank everybody for their support, and if anyone has questions, certainly through our website, we can be reached.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.