Question and answer session. During the question and answer session, if you have a question, please press raise hand located at the bottom of the screen. Please note that this conference is being recorded. I will now turn the call over to Andrew Kiguel. Andrew, you may begin.
Thanks, Jennifer, and thanks everyone for joining our Q2 investor call. On the call today is Martin Bui, CFO, and we will answer questions at the end of my sort of notes here. Just to jump in quickly on Q2, on the surface was a non-eventful quarter. However, there's been a lot going on. We've made several changes at the management level to broaden the team. All the promotions were made from within the company of people that we've known and been working with. You may have read we made an offer to acquire the minority of Metaverse Group that would result in us owning 100% of the business. We're excited to blend the teams together to bring Lorne Sugarman into the management team and add him to the board of directors.
We still expect that to close towards the end of this month. Metaverse Group had a great quarter with $258,000 in revenue. To put that in perspective, it's a 140% increase in revenue over the previous quarter, and that quarter was also a 100% increase over the quarter before that. When you look at, we have a business here that we're bringing fully into this that's been growing the past few quarters at 100% top line, over 100% top line quarter-over-quarter. The fashion show in March was a success again. This year it was almost all entirely held on our land. Key clients that we were designing for were DKNY and Lancia, which is the automobile company from Italy.
Company also did some groundbreaking work for KB Home, which is one of the largest home developers in the U.S. The pipeline there remains robust and it feels able to maintain this level of growth, which again, has been over 100% quarter-over-quarter. We have a new website. I'd encourage people as well to go and check out the new website at metaversegroup.com. Moving over to Hulk. Hulk has not performed to expectations. We've made some changes there. We made the decision to end the player network for now. There isn't enough liquidity in the games to make that profitable endeavor. The market just hasn't moved the way we envisioned it would. We've added a new management in Hulk. We're using all the tools that we've created there to create a new Web3 gaming studio.
We've already been advising large businesses on tokenomics for games. We've been hiring devs there, we're looking to potentially launch our own game there hopefully this year. We're speaking to legal counsel on that to make sure we meet any regulatory requirements with respect to launching any Web3 games. I think that's something really exciting for us. I think we've seen a gap in the market and, in terms of mobile Web3 games that we'd like to fill. There'll be more to come on Hulk in the near term and the things we're building there. You know, as a note, it's very common for new tech businesses to pivot with the market. This is a good thing that we're doing this. You don't manage to get entrenched in sticking endlessly with a vision that isn't working, I think flexibility is key to success.
Hulk has, you know, some incredible people working there. We have some very good IP and it's really just a function of applying it to some market. The staking business has been steady. Sales there, revenues are lower, and that's because the inventory is much smaller due to token sales in the past and the fact that token prices are still depressed from all-time highs in 2021. That business is largely dependent on the state of the crypto markets, but it's also a cushion of capital for our business. As you know, we have well over CAD 10 million and it's relatively easy to liquidate. Our cash flow, when you remove one-time items such as the investment in Metaverse Architects, was under $250,000 for the last six months.
I would encourage anyone to find another public company that is able to maintain overhead at such a low level. This last quarter we were net income positive. Our assets grew by $3.7 million, and we have approximately $0.30 per share in asset values. In Metaverse Group, we have a business that's growing at over 100% per quarter and a whole bunch of other exciting initiatives, but we're still trading at $0.15 per share, which is increasingly disappointing to us. The Metaverse Group deal, once it closes, you know, we believe is a huge win. We'll end up issuing approximately 20 million shares there to integrate a business in with $4 million in cash, $3.7 million in assets, and a robust pipeline of revenue and clients, high-profile clients as well.
I think we have a hidden gem in our domain names. Domain names are still important in the world. You know, Citibank is projecting that by the end of the decade, everything will be tokenized, and the use of Web3 will be measured in the billions of users, and that the market will be measured in the trillions of dollars. To put that in perspective, we have about 12 domains, several of which are focused around Tokens.com, things like tokens art, tokens trade, tokens gaming, and of course Tokens.com. I suspect that our domain names are gonna be worth a lot of money in the next few years as large retail-based businesses come searching for those domains.
As the entire world shifts towards tokenization, as a package, all of our domain names centered around the Tokens.com brand are gonna be very valuable to the right buyer if we choose to go in that direction. Overall, stepping back, we have ownership in five Web3 businesses. Our largest growing subsidiaries has revenues growing at over 100% a quarter. We have cash and liquid tokens of over $17 million, $0.30 in asset value, plus a bunch of highly valuable domain names that aren't included on the balance sheet. Our main growth isn't tied to crypto prices, but obviously we benefit if they go up. We have close to 20 people on staff, and yet we're trading at about a 50% discount to our asset value.
In looking at this, it tells me, you know, maybe we're doing things wrong, maybe we need to make more changes. We're looking at a whole bunch of new initiatives. We're looking to get more aggressive in the balance of this year to promote our story, and to focus on our growth. Our cash and liquid token now is at some $17.2 million, and that's higher than our market cap. The street value these days when you talk to people for cash or liquid assets is about $2 of equity or more for cash. If you were just to value our cash just based on that and what things are trading, that's about $0.35 per share, just at the cash value, not including the businesses.
This tells me that the market doesn't really care that we're better capitalized than most other, you know, crypto companies and our small cap crypto peers have had to do poorly timed dilutive deals just to survive. We've held in. We have not issued any meaningful equity since 2021. While our peers businesses have sort of continued to shrink, we've continued to grow. Obviously, that hasn't been reflected in the share price. In terms of new initiatives, we're starting to look at several acquisitions in the Web3 space and in the AI space. Lorne Sugarman and I are currently doing due diligence on several companies. There's still a lot of bleeding going on with many good companies out there that have great IP that are running out of money.
I think we have an amazing platform that they can join, being able to use, you know, either cash or paper to grow businesses. So we have capital, and we have a proven ability to be able to incubate businesses from ideation to revenue. And if we need to sell tokens to build businesses or to buy businesses, we are definitely gonna consider doing that. Again, to summarize, we've got five businesses in the fold. We plan to grow them, build more, acquire more that fit our criteria. My goal is still to grow revenue this year, but also to make changes this year to try and get our share price back to where it should be and where it was.
I can't promise that the share price is gonna go up, but I think what the market is telling us is, you know, we need to start disrupting things within the business to try and make some changes and, you know, see where we can go. Maybe with that, I'll open it up for questions right now. Martin is on the call, and he can answer anything related to financial questions. I'm happy to answer questions related to the business. Jennifer, I'll turn it over to you.
Thanks. For those that are listening in, if you have a question, there is a raise hand button on the bottom of the screen. You can select that, and I can let you ask a question. The first question is from Bill.
Hi, Andrew. Can you hear me?
Yes. Hi, Bill.
Great. Thanks for taking my questions. I just was hoping to get a little bit more color on the consulting revenues. You know, obviously a massive jump this quarter from last. Can you provide a bit more on a, like, kind of a breakdown on where the consulting revenue came from? Was it, was it pertaining to the Metaverse Fashion Week? How should we look at that line item going forward?
Yeah. I think there's a couple ways to look at it. I think the simplest way to look at it is when we first started Metaverse Group, the idea was we were gonna buy metaverse real estate, which we still have several million dollars worth, and rent it out. What we started realizing is there's a gap in the market. You had all these big brands out there, and, you know, we've mentioned some of the big brands we're working with, including, you know, we're hoping to launch some other really impressive names in the next few months. The companies were like, "We don't wanna just rent the land.
If we did that, we wouldn't know what to do with it. Where the consulting revenues come in is we sort of sit down and we say, "Okay, what are you trying to achieve? Where do you wanna take the business?" We help with the ideation. We help with the event creation. We help with the design and build of a project. Once it's there, we help them sort of do things. You know, I can give some examples. You know, with Lancia, which is the, you know, luxury automobile brand from Italy, they did a during the fashion show, a reveal of a new automobile they were launching. Part of this is consulting revenues is working with them to build that stuff up. KB Home.
You know, KB Home is, I think, the fourth largest home builder in the United States. We've built three model homes for them online. You can go into the metaverse. You can walk around these houses. Like, how far is the bathroom from the kitchen and where are the bedrooms? How big is the garage and the backyard? We have the ability for you to customize them. You can say, "I don't like the color of the backsplash. I'd like a different, you know, stain on the hardwood floor. I'd like different pendants and chandeliers hanging from the walls." You can click different things, and once you've got something designed to the way you like it, you can click through, and it takes you right to a KB Home representative, and you can start having a conversation about the home and the price.
That's where the consulting revenue comes in, is in sort of putting together all these things, which is sort of over and above just collecting money for renting out the land. What we're finding is the business is far more lucrative and better growth if we can start doing more of this consulting and be more of like an agency, a Web3 branding agency, your entry point into the metaverse, as opposed to just collecting rent from, you know, from the land. That business is also growing to be more, what I would say, metaverse agnostic. We've been hiring people there where, you know, Look, Roblox is clearly the giant in the space. 65 million users a day. 65 million. What we've said is, "Look, we don't need to sort of hitch our wagon to Decentraland or Sandbox or everything else.
We want the ability to provide services for anybody in any metaverse. We now have the ability to go out and build for people inside Roblox. When we're talking to clients, it's not about go to Decentraland or go here. We give them the options, and we're getting this consulting revenue by providing this sort of, you know, whole, like, you know, A to Z white glove service to get you your creation, what you have in mind into a metaverse.
Great. I appreciate that color. One more, if I may. You know, the company holds a fairly sizable amount of cash relative to cash OpEx, and I can see in the MD&A that you note that, you know, some of these staking rewards that have been generated may be used to help pay for operating expenses. Can you speak a bit more to, like, the likelihood of that happening in the near term? You know, I understand that the Shapella upgrade happened, but, you know, you guys seem like you have a decent amount of runway. What's the appetite for keeping tokens staked versus using them for liquidity?
Look, I think some of this is coming out of the frustration of lack of market recognition. You know, I went through one of the things I wrote before, and I gave it a lot of thought, which, you know, I think we have a really interesting company. We provide exposure to things that I don't think any other public company can do. As I said, while a lot of our small cap peers have been sort of shrinking in size, our businesses have been growing. I think we've been excellent stewards of capital. You know, we haven't really done equity anything since 2021. I think, Bill, when I think about this, it's like, okay, we're sitting on this. The market's not recognizing or, you know, really caring about what we're doing.
Maybe we need to start making some changes and using our tokens and our cash to grow the business. As I said before, we're starting to look at, you know, potential acquisitions. Right now, we're looking at about four. There's a lot of things, for example, where AI can integrate really nicely into things with metaverse. Lorne and I have been very, you know, focused at talking to companies in that space. If the market doesn't care about the fact that we have cash and they want growth, then, you know, again, subject to conversations with the board and doing things that are accretive and we think will pan out.
I think we need to start getting more aggressive, and I think we need to start shaking things up a little bit because clearly the market's not appreciating what we've done thus far, so, you know, we need to do more.
Great. Thank you. Sorry, I lied. One more question. I know that you've managed that you're actively seeking ways to scale, examine potential acquisitions, and, you know, pursue other growth opportunities for the remainder of the year. You know, what else In this space right now, what's exciting you? You know, what's keeping your eye on outside of Tokens.com and the Metaverse Group? Any color you can provide there?
Yeah. Look, I've been doing a lot of work looking into demographics, and, you know, I talk about this with people, which is like Generation Alpha and Generation Z. I call them the Alphas. This is gonna be the largest cohort in history, you know, replacing the baby boomers. Huge spending power. They live and breathe metaverse. What I'm sort of looking at is, you know, there's all this talk about AI. I don't think people are realizing yet that where AI is going to really start taking place and flourish is gonna be in the metaverse. I talk to people every day, they're like, "Oh, the metaverse is dead. The metaverse is dead." No, the metaverse isn't dead. You got like Nike, adidas, L'Oréal, Amazon, like everybody's building stuff. There's billions of dollars going in.
If you start thinking about the potential for AI within the metaverse, that's gonna be the killer app or the killer business model. Imagine you can start creating 3D virtual stores that are manned by AI-driven avatars. You can start doing things like virtual banking, stores, all of these things. I, you know, I do a ton of reading every day, and I just see brand after brand after brand after brand entering the space. I read the media, and the media is like, "Oh, the sector's dead." The media's just looking to sensationalize things and write stories. It's certainly not the experience we're having because, you know, like I said, we have a fairly robust pipeline of companies we're working with, including like, you know, top four accounting firm in the world, like some of the top food companies.
Like, we're hiring people and looking to keep up with this growth, yet there's perception and optics out there that this thing's gonna disappear, which again, makes no sense. You have 65 million users. What I think I was reading today, there's like 400 million monthly users, different monthly users in different metaverses. These kids are all gonna start getting older, they're gonna demand this type of level of service and 3D interaction in everything they do. When I think about this, you know, what kind of things are we looking at? Where do I see growth? I think there's gonna be... You know, the metaverse, I call it's gonna unify things like financial services, delivery online, the use of AI, gaming, and social media.
Great. I appreciate the color. Those were really well informed. Thank you.
Thanks, Bill. The next question is from Joshua.
Hi. Can you guys hear me?
Yes.
Yes.
Hi, Joshua.
Great. Hi. I just wanna kinda speak with this Metaverse Fashion Week. I know that kind of, this year's attendance was probably pretty low. Like I said on Decentraland, I said about 26,000 from 108,000 last year. I know you guys said that it was pretty much gonna be low, you know, a lower attendance this year. Was that kinda like below expectations, do you guys think? Besides that, what was just the feedback of the event, and, you know, do you expect any more like events probably?
The numbers were probably lower where I was expecting maybe on the lower end of my expectations, but we knew and I think we had signaled that the numbers were gonna be lower. I would say this, I think the people that attended this year, last year, there was a novel factor. I think the people that attended this year were more like the hardcore users. The fashion show overall there was better. Like, while I think there was some good last year, there was some things to sort of, you know, settle into. I think it was a better show this year. I think the technology was better. I think, you know, the ability to integrate in to pay for things using your credit card. I think there was a whole bunch of other new technology developments from last year.
From that perspective, it was a win. From an attendance perspective, sure, it looks lower. You gotta remember, for us, we're not the initiators of that. You gotta think of us like we're the conference center, and people come to us, and they build, they do stuff on our land, and so we get compensated, obviously, better if there's 1 million people at the event. We're still gonna get compensated even if one person shows up. We're compensated as well for doing these builds. We did DKNY and a few other fashion brands where we're getting compensated to do this stuff. Yes, obviously, we want the longevity to be there. We think the market will come back. You know, overall, we're not super concerned. In terms of other events this year, we're having conversations.
Fashion is like a no-brainer with the metaverse because you can do all kinds of interesting things. You know, the team, I would say, is consistently working on more events and doing more things in the sector. There's nothing that I can disclose at this time.
Okay, perfect. That's fine. I guess shifting over just I guess the Hulk Labs , you know, I was thinking, how does the, you know, company believe they could be successful with this subsidiary, especially with this change? Like, kinda what competitive advantage do you guys have?
Right. We're not looking to fix anything. You know, we made the decision to really shut down part of that business, but I'll tell you why we think that there's something there. Number one, the business doesn't cost us anything. Like, it's break even with its own revenues and the stuff going on there. From an overhead perspective, it's pretty low, and it has its own balance sheet that'll last it another 12 months or a little bit longer. Here's the things that I think are interesting with WOW there. We've got a couple guys working there who are recognized as being gameonomic experts in the world. They're based in Australia, and they have these huge Discord followings. Essentially, people seek our advice there. This is another piece of the consulting revenue.
People seek our advice as to how do you structure the economics in a game. What's happened with the Web3 gaming, where you have all these tokens, is I think that, you know, they call it farm and dump, which basically the game economic aspect of it is so easy. There were so many tokens, it creates this inflation and ends up making the tokens worthless. That's kinda what happened and dried up the liquidity in the space. We have guys that have been doing analysis on gaming calculators. We have a wallet interface that allows us to connect what I would say several wallets to gamers that's still there and create a dashboard. When we start looking at it, we're like, okay, we have all the capabilities of designing a game.
We know exactly what's wrong because we've analyzed over 250 games. We publish free calculators for these games on the whole website. We started looking at saying, okay, there's definitely a lack of quality games out there, especially mobile, which is when we look at Africa, we say, you know, we take internet for granted, but that entire country is starting to come online, and they're not doing it through computers, they're doing it through mobile phones. We start piecing these things together. We start looking sort of AI and some of the things that are out there, which we've been employing in sort of some game ideation, and we see a gap in the market. You know, are we gonna be successful there for sure? No.
I think what we've done is we've done a lot of work. We understand the Web3 gaming market extremely well. We've got some really talented people on the team there. I've sort of said, if the current strategy or the previous strategy wasn't working, shut it down, and let's create something here that'll, you know, we think will work. That's where we're at. Like I said, it's not gonna require a big investment from Tokens.com. I've told them that. I said, "You guys gotta work with what you have, and let's build something interesting.
Yeah, great. Thank you so much. I kinda wanted to go back to the metaverse and just talk about, you know, I know you guys made lots of investments across a number of metaverses. I just kinda wanted to see where we are today, just the status of those investments, just outside of Decentraland. What is the company doing on those other properties?
Right. We're still working with a lot of properties. Most of our land in Decentraland is rented out, like we're collecting, you know, some revenues there. It's not huge. The consulting revenues are a lot bigger in the design stuff that we're doing. We're basically just holding those for now. I'll make a note. We haven't actually bought any land in any metaverses now in probably well over a year. I think there was obviously a trend that went on there in 2021. We started buying land before the increase. We bought into the increase as well, but I don't think we've bought any land since 2021. Part of it is we're just banking it for now. The prices are obviously off significantly. We think those prices will eventually come back.
You know, we've seen this happen in all kinds of various assets, like including Bitcoin and different tokens, but there's utility there. We're not planning on buying more land. We're becoming metaverse agnostic, and we're shifting. Like I said, that business that was already pivoted to, you know, providing consulting revenues to what I would call large international brands as opposed to, you know, trying to make $5,000 per plot rental. I still think we own, like, over 500 plots. You know, things like, not just Decentraland, but Sandbox and, you know, I think there's over like 14 or 15 different places. We'll continue to hold those and see. You know, I think down the road, they might have some additional value. I don't see a point in selling them right now, but they're currently valued.
We did a whole audit on them. Martin, what's the last valuation on that land? It was about $2.7 million?
That is correct.
$2.7 million was the audited value based on the current trading prices, not including the fact that that's being valued to empty land, and our land actually has buildings on it and tenants on it. I think that valuation is probably understated, but that is definitely reflective of today's prices for that land.
Okay, perfect. Yeah. Last one, if I may. Martin, this might be more for you, but I guess I saw like in the MD&A that professional fees kinda doubled from previous quarter. Can you kinda speak to what drove that?
Yeah. It's basically just an accrual of audit fees for the year. It's basically it.
Getting an audit. There's an issue in this in Canada in that companies are discouraged from auditing in crypto. For the companies that do audit in crypto, they tend to charge more than what you might expect for an audit. That's not distinct to us, that's to the whole industry. You know, we're still hoping as more companies hopefully start auditing in this space, that prices will come down.
Okay, great. Yeah, thank you guys so much for it, and good luck in the future. Thank you.
Thanks, Joshua.
Thanks, Josh. The next question is from Philip.
Hi, Philip. You're up.
I'll just put Philip back into the queue.
Yeah, let's put Philip back in the queue. Philip, we can't hear you.
We also have a question. It's from a phone number. If your phone number starts with 419, you are okay to ask a question.
419, if you want to ask a question, you're on mute.
Yeah, this is Adam. I'm the 419. Are you guys able to hear me now?
Yes.
Yes.
Okay. Apologies if this was touched on, would like some clarity with the Metaverse Group, with the consulting income, how much of that is one time? How much of that's recurring? Are you guys utilizing things like smart contracts so that you're able to get royalties in the future if things are successful? My fear is, are these much larger companies taking a flyer and just tossing, you know, $30,000, $40,000, $50,000 at Metaverse Group to help them get set up? And then are they gonna just do this on their own, or are these long-term contracts? How is Metaverse Group gonna demonstrate the value and maintain relevance and prevent these companies, these much larger companies from just utilizing us up front?
Right. I think there's a few ways to look at that. You know, I think that the risk you're pointing out certainly exists for everything. The recurring revenue that we do have there comes from the land rental. Remember, in order for a company to do anything in any metaverse, you need to have somewhere to put it. It's a, you know, I always give, like, a Monopoly board example, which is like you need a piece of the land to build your thing. If everything is already owned, if you wanna build something big, you gotta come and play through somebody like Metaverse Group. In terms of I think what the competitive advantage that we're building is we're building a really good reputation with what I would call, like, large, almost Fortune 500 companies.
This is so new. Like, remember, like, two years ago, nobody even knew what this was. We're providing expertise there that they can't have. Like, you know, we understand how to build on the land. We understand the demographics of each of the different metaverses. We understand how to hold events, how to attract people. In terms of the NFTs, we have built stuff in there for royalties, but I think with the DKNY, I don't Meyers, you recall, those were just given away for free, right? They sold out immediately.
Yeah.
The NFT market, you know, Adam, has pivoted. People don't pay for NFTs anymore. They're being used as, like, access passes. They're being used as, like, free collectibles. I think the days of, like, people buying, you know, a bunch of NFTs and creating that royalty, I think there's still money to be made there for, like, Nike and some other larger companies. What we're finding with our clients is they're asking us to help them design things to create games. Back to your other question, which is what is our expertise in these consulting revenues, we have guys that understand how to design the economics of gamifying things with NFTs better, I think, than possibly anybody else in the world.
It's a real expertise to like, okay, this is what you want to achieve. How do you create the demand and make it last? That's where we've been sort of seeing the consulting revenues. Again, for whatever reason, you know, we're happy to take revenue from any legit client, but we've been working with some, like, really huge entities. They seem to be really happy with the work, which seems to attract more larger entities. I think they'll make a brand name there. You know, we've been shortlisted with a bunch of investment banks in the United States. I said we're gonna be launching soon with one of the largest food companies in the world.
There's lots of stuff in the pipeline that we're looking at. People seem to be coming and trusting us. In the future, do they decide to bring this in-house? Possibly. You know, again, I think we have a real way of creating, you know, a really strong agency business that is, as I said, continues to grow. At least the last couple of quarters, the top line's growing at over 100%.
Okay. I have one other question. It might be a silly question, but I follow a handful of your team leadership on Twitter, some of these guys seem to be pretty savvy with tracking meme coins and things like that. Is this not legal, or is there any reason that, with the healthy cash position, are you able to allocate $20,000-$30,000 to quote, "meme coins"? It seems like a couple 10x or 20x hits could significantly increase the balance sheet, even with just taking a small position in some of these, that it appears a lot of the leadership is able to track and chart and predict and kinda have a pretty good idea of highs and lows of these markets. Is there any division that's actually doing trading?
We're not doing trading right now. If you remember back to early last year, at one point, we had a CryptoPunk. We sold that. I think that ended up being sort of break even. We bought about $20,000-$30,000. It was Dogecoin. What was the other one? The other dog coin.
Shiba.
SHIB. Because you could stake it, that sort of fit into the business plan. You know, let me take it under more consideration. I think, look, it's a legitimate point. I guess it's just a function of do we wanna turn this into, like, a trading house? I think we can certainly find ways to do it legally. I think the premise right now has been, like... In 2020 and 2021, it was really easy to make a lot of money there. If you look at... I looked at a chart that I found on LinkedIn the other day, I wouldn't be able to find it immediately, but it showed all, like, the meme coins, like what has blown up. Generally speaking, most people end up losing money.
You gotta really time it well. It doesn't mean we wouldn't do it, but I can't say definitively yes or no that, you know, whether we would do it again. I think in the right opportunity and, you know, certainly I'll relay this back to our guys that study this stuff.
Okay. That's all I had. Thanks.
All right. Thanks, Adam. Is there any other questions from anybody on the call? If you have a question, you just have to press the raise hand button on bottom. Okay, it looks like we have no more questions. Thank you.
Okay. Well, like I said, thanks, everyone. Like I said, it's I understand the frustration that people have with the share price. I am frustrated with the share price. You know, the view this year is, you know, last year it was a little bit of the market is really bad, and any efforts would fall on deaf ears. I think the view right now, and in talking to the board and making these changes, is that we're planning to continue to make what we hope are positive changes, positively disrupt our company, and make changes that come up with a different outcome. You know, with that, I'll say, you know, thanks everyone, and have a good weekend.
Great. Thanks again .