Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our AI and Technology Conference. The next presentation is from 01 Quantum. Please note you may submit questions for the presenter at any time. You can also view a company's availability for one-on-one meetings by clicking "Book a Meeting." At this point, I am very pleased to welcome Andrew Cheung, President and Chief Executive Officer of 01 Quantum, which trades on the OTCQB Venture Market under the symbol OONEF, and on TSXV under the symbol ONE. Welcome back, Andrew.
Thank you, and very happy to be here again today. Thanks, Lily. Let me just start by introducing myself. I am Andrew Cheung, President and CEO of 01 Quantum. As you can see the tagline here, fundamentally, we just make everything quantum safe. Let me, before I get into exactly the detail of what we do and the opportunity here, let me give you a little bit snapshot about the environment that we are in. As we all know, quantum computer development has been going on very quickly in recent two, three years. As a matter of fact, the excessive computing power of quantum computer has therefore created an unprecedented cybersecurity threat for the world, or AKA Q-Day, which is the date when the bad guys starting to use quantum computers to do the dirty works.
Obviously on and after Q-Day, everything that we use under the sun, whether you're using AI or remote access or email or whatsoever medical equipment or anything, would be totally vulnerable against the power of quantum computer that the hackers would kind of like seeing everything you have. The trillion-dollar question that many people ask around is exactly when Q-Day would come. While there's no definitive answer to that questions, there are a lot of writings on the wall that you can referring to. First of all, the current consensus from the like of Google, Microsoft, D-Wave, IonQ or whatsoever, are all pointing towards about 2029 would be the year when they are one after another having what they call the full scale fault-tolerant quantum computer, which is good enough to do the hacking.
Obviously, quantum computers are not designed to do hacking, but this is actually the side effect of their excessive computing power. Not surprisingly that President Trump has issue an executive order about three months ago asking all the agencies to get ready by 2030. I bet you that the year 2030 is not a randomly picked year. It is as the result of all these writings on the wall, right? I think the most disturbing fact is you really don't need Q-Day to become vulnerable to quantum computers because of a very famous attack called the HNDL, Harvest Now, Decrypt Later. This means like the hackers are getting hold of your data today, they just cannot decrypt, but they simply hold onto it until they get hold of a quantum computer, then they decrypt.
And then recently, when I say recently, it is only the recent three, four months, the development in AI is helping making this worse because things like you probably read a lot on the news that the Claude Mythos is helping breaking a lot of the cybersecurity. So the hackers can get hold way easier getting hold of your data. And yes, again, they just hold onto it until they get hold of a quantum computer before they do the hacking. So our job at 01 Quantum basically is to make sure this doesn't happen. Our opportunity therefore is huge. But before we get into that, let me just give you a snapshot about who we are. 01 is not a startup.
We have been a public company for many years, and we are indeed a collection of a lot of seasoned executives, inventors, scholars, professors, and we have more than 200 years total of experience in the cybersecurity and the quantum world. So the opportunity that we are tapping into is huge. Basically, the total addressable market predicted by the industry statistic expecting to grow from virtually zero to over CAD 2.8 billion by 2030, before the coming of Q-Day. And, what distinguish ourself is that we are not creating our encryption engines trying to license for our customers to do the job. Instead, we are giving it away as long as our customers are using our product to protect their environment and stuff like that.
And more importantly is that we have already signed up a very impressive worldwide global large partners such as Hitachi in Japan or CGI in our backyard, Thales in France, PwC in Asia, and Utimaco in Germany, et cetera. And it is also backed by a strong IP portfolio. But most importantly to the investor is that we have a very low valuation, so representing a good investment entry point from here. So I would say that, as I said, we have our product. We are not just licensing technology for other people to do the work. And we already have a quantum-safe end-user product available in the world in the areas of AI, remote access, digital asset, and email security. And I will go into these one by one. And I would say, if there is one thing that is representing our largest opportunity moving forward, it would be AI.
The crossover between AI and quantum safety. So if I ask you one question here that, hey, if there is one single factor that is preventing AI from achieving the maximum adoption, what is that? I believe everyone knows it is privacy, right? So people worrying about the data that you are feeding into the AI model. And recently, there are a lot of debate even saying if you are using AI model to help crafting your business plan or even worse, doing your coding, that AI Operator can potentially become your competitor because they know exactly what you are doing, and they can do something maybe even faster and better than what you are doing, right? So what we have been created was about starting about two years ago. We have now a patent protected technology that would allow users to encrypt the data before doing the AI inference.
This market is believed to be extremely huge, growing from virtually zero all the way to about CAD 5.4 billion by 2032. The encrypted AI market segment by itself is still CAD 850 million. Even further filtered down to what our initial focus in the finance, government, and healthcare represents CAD 650 million. The technology sounds very simple. Basically, the patent that we have is the process of encrypting the user input before feeding into the AI model so that the AI model would not know the question. In this illustration here, for example, we are using an image recognition AI model as an example that you are feeding the picture of a jet fighter is encrypted, becoming gibberish picture feeding into the model for image recognition.
It gives you the answer, which is also gibberish encrypted, and only the user having the private key to decrypt the answer back as a fighter jet F-35. This kind of technology is extremely important for confidential industry, such as legal, national defense, and things like that. As we speak yesterday, we have been invited in a Canadian government military private demonstration to showcase this technology. I think it would not be a coincidence that we also receive a U.S. patent number. About two days ago, we made the announcement. This technology is fully protected by our private IP. In terms of the timeline, we are right there, bang on as the stage three that we are now. We actually demonstrated, as I said yesterday, to the federal government.
Three months ago was the first time we announced and demonstrated in the Toronto Machine Learning Summit, TMLS, in June. We are on the way to have something we call the marketplace, which we allow other model vendors to host the model on our platform so that their users can safely use the hosted model in a totally privacy preserved fashion that the user data would not be visible to the AI model. In other words, the question and round trip back to the user are totally encrypted, exactly like the example we are showing here and doing demonstration. That is AI. This is representing the highest potential revenue for us in the coming years. Most importantly is that we have already, as I mentioned, compared to our competitors, we have already helped some customers created quantum safe product and is currently available.
The first one is from Hitachi in Japan. About a year and a half ago, they came to us and asking us to help converting their remote access application to become quantum safe. This is music to our ear because they were offering a one-time engineering fee plus ongoing revenue, a royalty share moving forward. We spent about a year and delivered the product earlier this year. They were so happy about it that right now, as we speak now, Hitachi is actively marketing this quantum safe remote access in Japan. The market size is big. We are not talking about billions of dollars, but it is still huge. Expecting to grow from CAD 45 million -CAD 72 million. We are having some very healthy double-digit royalty. Not talking about some wishy-washy sub 1% royalty, but we are talking double-digit royalty from them.
That is remote access from Hitachi. The other project we have done was from a Panama-based crypto foundation, which they asked us to create a product for them called qVAULT, which is to serve the cryptocurrencies industry, whereby they want the customer to be able to lock, they call quantum locking, their cryptocurrencies such as Ethereum, Hyperliquid, and things like that, to become quantum safe, totally shielded against quantum computing attack. This market is extremely huge because all CAD 4 trillion digital asset must eventually be quantum safe before Q-Day, and we have made this happen. This product, again, has been delivered about three months ago, so they are now actively marketing. The financial terms is also similar to Hitachi.
They came to us and offering us a one-time engineering fee, plus ongoing revenue in the form that we have received 22.5 million of this quantum token. They are now marketing this quantum gas token. For every dollar worth of this token they successfully market, it will represent CAD 22.5 on our balance sheet, which we value it as zero, virtually zero at the beginning. So every dollar worth would be counting into our gains moving forward. That is the cryptocurrencies. The third one is that we have our own email security product, which is a plugin to the Microsoft Outlook. You can imagine that for most corporations, they are using Microsoft Outlook as their default email client. Now, with this product, which is already available on our website, they can click the compose screen and there will be an additional quantum encryption button.
When you click it, the email would be encrypted end-to-end from the sender all the way to the recipient. End-to-end encrypted so that even the CIA or FBI intercept it with the message, they have no way of decrypting. Even we cannot decrypt because we don't have the private key that only the recipient has. There is no master key or whatsoever. The market is extremely huge also, as obviously there are 730 million business email addresses in the world. If only 10% are serious and wanting some degree of quantum safety, paying $3 a month, that is a $2.6 billion potential recurring revenue up for grab that we are tapping into. As kind of like before I summarize, basically you can see that we have already spent close to $10 million reaching where we are today. All the heavy R&Ds expenditure have been expensed.
They are all in the rear-looking mirror. We are now going into the revenue generation stage. All these are dovetailing into our impressive global partnerships all the way from Hitachi in Japan, as mentioned before, CGI in the backyard, Utimaco in Germany, Thales in France, and QLF in Panama, et cetera. I am going to take a quick pause here before entering into the Q&A. Our CFO, Jeff Kilborn, is here with us, and Jeff can get into the explaining about the financial pictures and where we sit today.
Thanks, Andrew. We actually had a fantastic month of September. Finished the month up about 50%, and that was really on the strength of company-related news. We had a steady stream of positive news flow, as well as tailwinds just being in the industry that we are in. It is very topical right now. We are seeing a lot of uptick in trading volumes. I will plug the OTC, we actually have fantastic volumes OTC as well. We have just a hair under 3 million CAD of cash, zero debt, which admittedly is not a king's ransom. However, as Andrew indicated, the heavy lifting on the R&D expenditure is in the rearview mirror. Based on our historical burn, we have a couple of years of runway. Of course, with revenue coming in, we expect our cash flow to turn positive.
We still believe it is a great entry point. Again, the volumes are there, so it is an easy story to get into. The future looks positive and more positive news to come out in the very near term as well.
I am pretty sure there will be a lot of questions from the audience, so maybe let us jump right into the Q&A session. If we have more time, we can talk about more. Let us jump right into the Q&A.
Sure, let us do that. Andrew, I keep hearing a lot of conflicting opinions about the quantum threat. Some say it is decades away, and some say it is already here. Who should we listen to?
Oh, this is a very good question. Usually, I don't understand why the first question is always the best. I think bottom line is you shouldn't listen to any business leader. Don't listen to me, don't listen to other people in other product saying whether it is yesterday or whether it's decades away. I think we should listen to what the government says. As I mentioned earlier in the presentation, President Trump has written his executive order about three months ago, in June, asking all the agencies to get themselves ready by 2030. That 2030 is definitely not a randomly picked number. This is a result of the current consensus from the like of IBM, Microsoft, Google, D-Wave saying that on 2029 they will be delivering, one way or the other, a full-scale fault-tolerant quantum computer.
What I think here is that, this is just my opinion, personal opinion, is that while 2029 is only a little more than two years away, the most disturbing fact is that there will be something coming out from the closed world. We have no idea of the vendors in China. Just like DeepSeek, if you remember, I believe there will be a DeepSeek alike event in quantum computing. Between now and 2029, if there is nothing coming out, then 2029 is the Q-Day. If someone from, for example, China says, you never heard of the name of the company, they said, "This is our quantum computer, and it has 2,000 qubit, and this is cracking RSA," then Q-Day would arrive suddenly in 2028 or whatever. I think, again, the short answer is, I think, listen to the government.
If the government says 2030, we should get ourselves ready before that.
Okay. Thank you. Here's a great question. The new patent, and thanks for following our news flow, Luca. The new patent covers use in enterprise government and defense. Are you in talks with any defense buyers?
Yes, we are. As I mentioned briefly, yesterday we were presenting at the Canadian military test site they call Area X.O. I do not know whether they picked that name from Area 51, but they call it Area X.O. We were presenting there to all these federal government agencies and military. It is a private show, a private exhibition, showcasing all these cybersecurity-related technology or military-related technology, and specifically what they want to see is our encrypted AI technology, which is covered in the patent, whereby you can encrypt. What we are demonstrating was exactly like how I show on the screen here, that we encrypt a picture becoming gibberish before feeding into the AI model for inference, and then the answer back is gibberish, then decrypting back to the real answer. This is very, very useful for things like a military drone.
For example, they would have an AI model there that they can analyze aerial picture feeding in, whether it is a tank versus a truck or a bird versus a drone and things like that. When the drone is down, they do not want this model to be in the hands of the bad guys. So, it is very important to be able to not only encrypting the picture, but also encrypting the model itself. Yeah, short answer to your question is that, yes, the patent is very important, and it could not come out more timely. It just got granted two days ago, and we are happy about that. Yeah.
Thanks, Andrew. Here is a very topical one based on what has been in the media in the last just 24 hours even. Can you elaborate more on how you are protecting cryptocurrencies and why the major tokens are still not quantum ready, even with their vast financial resources?
You are absolutely right. A lot of people ask a similar question, why the like of Bitcoin, Ethereum, or whatever, why are they still not quantum safe? Given the fact that the public key of any kind of crypto wallet is readily available on the blockchain, or anyone here can grab them. You do not even need Mythos to help you grabbing those public keys. So, all the hackers need would be a collection of the public key, and then they hold onto it, remember the HNDL, Harvest Now, Decrypt Later, and wait until they have a powerful quantum computer, then it will be up to their mercy of which wallet they want to empty first, right? Then why? They are not quantum safe, given their vast financial resources. It is because it is very difficult to do.
The same thing that making cryptocurrencies are so secure is also the same factor making it so difficult to become quantum safe, because you have all the things link up in the blockchain. Everything become historic, and then the chain data is also very limited. The quantum signature is too large to fit into the existing chain data. If you are making modification to the underlying data, it is basically a different wallet already. In other words, there is no solution. They just cannot do it without having to do a complete hard fork into a different wallet. The qLABS Foundation knows about this, so they came to us saying, "Hey, why don't you create Here is the engineering fee. Here are the tokens that we are going to give to you.
Why don't you create something called qVAULT, so that you would act like a quantum harbor for the cryptocurrency users so that before Q-Day, and/or if Q-Day suddenly happen, it is too quick that the like of the world of Bitcoin, Ethereum, cannot react fast enough to create this new chain," right? At least they can immediately park the current token, if not stolen yet, into the qVAULT. It is like putting things into a safe, right? Like the safety deposit box, which is totally shielded against quantum computers. Then when the new wallet become available, you put it into the quantum safe fashion. We have created something for them, and delivered in June. Now they are marketing this safe harbor in the crypto world.
Soon, we are going to run something called a Mythos Challenge, whereby we are going to challenge the world of hacker, putting some huge amount of crypto there to be hacked. We actually will literally publish the private key, so that the only thing left protected would be our quantum safe technology, and leaving it there for hackers to grab, and we will give them 30 days to do it. Anyway, I think that is kind of like digress a little bit about your question. Short answer to your question, this is a very difficult way to do, and that is why they are not doing it. What we have done, provided is a harbor to make it happen so that they won't suffer the delta time between Q-Day and the readiness in this change.
Okay. Thanks, Andrew. Maybe time for one more quick one here. The Crypto4A partnership brings an Ottawa HSM vendor into joint go-to-marketing efforts. Have any joint customer introductions started occurring?
Short answer first, the customer has not happened yet, has not signed up yet. We have just signed up with Crypto4A as a partner, and this partnership is about more the AI wrapping solution. Because if you remember, in this AI technology, it requires a private key to decrypt, right, the answer and the public key to encrypt the original user data. So you will require a HSM, hardware security module, to safely store the private key. We are partnering with Crypto4A, and we also partnering with Utimaco and Thales, who are the big four HSM manufacturer in the world. This is exactly what it is calling for. It is about this crossover between AI and quantum safety and privacy.
Okay. Thank you. Just a checking.
There is no more question.
We do have more questions. I am just wondering about time. How are we for time?
Got about 30 seconds left, so please wrap up and you can follow up with the rest of the questions later.
All right. Then we will leave it there. Thank you. Thanks, Andrew.
All right. I guess I can just, using this 30 second to kind of summarize a little bit. I think with all this opportunity here, it represents a very good entry point for investor at our low valuation because we just started our IR program, telling the world about what we have. I am very happy to be here today and looking forward to have more in the near future.