Hello, welcome to the Tokens.com year-end financial review conference call. My name is Cheryl, and I will 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. If you'd like to ask a question, you could do so by pressing zero one on your touchtone phone. Please note that this conference call is being recorded. I will now turn the call over to Andrew Kiguel. Sir, you may begin. Thank you very much. Welcome everyone. On the call today from Tokens.com is myself, Andrew Kiguel, the CEO, Martin Boyd, our CFO, Deven Soni, our COO, and Jennifer Karkula, our Communications Head. In terms of reviewing the year, I mean, 2022 has been a frustrating year on many counts. It's been frustrating for sure on the share price, although as a company, I feel like we've achieved quite a lot. Unfortunately, that's always overshadowed by what has been generally a bad year in cryptocurrency and in the markets as a whole. You know, today, I do believe we're a better company than we were a year ago when we had, you know, close to a $400 million market cap. In terms of things we can control, such as, you know, reducing our overhead, building good businesses, I think we've been successful. In areas that we can't control, such as crypto price, our share price, and macro events, we've obviously suffered through that. With that, maybe let's just dig into some of the key things of the year for stakeholders and shareholders to understand. In terms of our year-end cash and crypto balance is approximately $13.1 million or CAD 18 million. That's equivalent to $0.13 or CAD 0.18 per share. You know, one of the questions that I always get asked is, you know, what is the capitalization of the company? You know, we've seen so many bankruptcies in the space that people are always very concerned about everything going on there. Some people, "Hey, we're all capitalized. We have, you know, an inventory of liquid tokens plus cash." I don't foresee us requiring any capital next year. Company is well capitalized. In terms of total assets, you know, $20 million, $20.1 million or close to CAD 28 million. That's equivalent to $0.20-$0.28 per share. I list these out, you know, because at last look, we're trading at around, you know, $0.08 per share or something like that, U.S. and about CAD 0.11. Certainly feel we're undervalued and that the intrinsic value, even in the audited statements for some of our businesses, isn't reflected. Our startup subsidiaries, Metaverse Group and Hulk Labs, both became revenue positive this year. Not huge numbers yet, again, these are nascent businesses in areas that we're continuing to grow and build and innovate. Some of the key highlights of the year, the Metaverse Fashion Week, which was hosted in the digital land owned by Metaverse Group, attracted over 100,000 visitors, over 60 brands. Hulk Labs was only launched at the beginning of this year in the Play-to-Earn gaming sector, which I think we've made a lot of great inroads, they're doing some really exciting things there. Metaverse Group has, you know, had a really great year. Lots of big tenants such as, you know, Forever 21, Skechers, The UPS Store, and there's a whole bunch more that are gonna be announced in the new year that the company has landed and is working on. They hosted the digital version of the Miami Fashion Week, entered into an exclusive or into a partnership with Air Miles. Lots of positive things there. On the Hulk side, that continues to grow. We entered into an exclusive partnership with the Democratic Republic of Congo. There's now a workforce of well over 1,000 players. We did the acquisition of Plate Group, which has a proprietary software tool that we'll use to integrate potential investors in Play-to-Earn into the gaming economy. We did a completion of a small strategic investment round in Hulk Labs at a $8 million pre-money, which works out to about an $11 million post-money. Again, Hulk Labs on our balance sheet is carried, I believe at almost zero, yet the market sees this as the intrinsic value as being much higher. When I look at some of the year, I think, you know, it's been a really frustrating market. You know, I struggle with the fact that there's been so many disappointed shareholders, and I try to respond to everybody. Obviously, I can't control the share price. I note that while we've fallen a lot, we've fallen in line with other crypto companies, especially the small- cap ones. Management remains aligned. We own 25% of the company, the management and the board. We have a view, as I say in the press release, to listen, I'm creating value in the long term. What do I mean by that is I've always tried to be careful stewards of capital. There's no Hail Marys here. O ne thing I'll talk about we've been approached by about seven different other public crypto companies that are looking to merge or buy us. Nothing has resulted anything when we sort of scratch the surface, everybody looks at us and it's the cash that they're interested in because we are so well capitalized. Although we're in what is considered a speculative area, being in crypto, the metaverse, and Play-to-Earn gaming, we have been adults at the table here. We've tried to manage things carefully. We haven't gone out and blown everything. You know, like I said, I think that shows up on our balance sheet. I'll mention again, 2022 is marked with a lot of losses. Most of those are non-cash. I'll repeat, we have to revalue our token inventory quarter to quarter and our NFT inventory quarter to quarter. What that means is if we bought something at $1 and it trades to $2, we can show that gain of $1. If it drops back to $1 the next quarter, nothing changes in terms of what we're holding, but it's always reflected as these non-cash losses, which again, don't impact the growing businesses that we have, but certainly makes the income statement look fairly unattractive. In terms of the market, I've already talked about, you know, this has been one of the worst years, you know, in terms of the S&P and the Nasdaq on record. There's been a ton of macro factors including, you know, 7 interest rate hikes in the United States, high-profile bankruptcies and failures, fraud, places like FTX and, T erra Luna. You know, it's been a bad year. Whereas 2021, I would say, was full of over-valuated assets, which was really a result of the economic stimulus that the government added into the, into the system post COVID. Everything sort of came back and went the other way. Whereas I think we may have been overvalued towards the end of 2021, certainly, things have swung the other way, and I think we're significantly undervalued today. In terms of our operations, and then after this, I'll move it over to Martin. You know, we've been an early mover in lots of areas such as the Metaverse, Play-to-Earn gaming. These are all areas that we remain highly confident are gonna be impactful in the future. Again, we've been overshadowed by the poor performance of cryptocurrency this year and high-profile failures in the sector. We're still feeling quite confident we're in the right areas. We do have an eye on the long term. It's, you know, as I said, it's a struggle for us, and it's frustrating to see people disappointed in our share price. Again, we're looking at this with a long-term perspective. We did recognize that the 2020 crypto prices were volatile to the downside. Our ownership of cryptocurrency has been sort of resulted in, you know, some significant non-cash losses related to the revaluation of these assets. We have taken steps post the quarter to sell down some of those crypto assets in favor of holding cash. Right now, our crypto inventory is primarily in the form of ETH. The reason why is we just don't know where the market's gonna go. You know, there's talk about, you know, Binance potentially having issues and other things. You know, we just wanna make sure that the company is well capitalized regardless of what happens in the crypto market. We've taken a lot of steps to reduce corporate overhead and preserve capital. As I said again, as of, you know, September 30th, we held $5.8 million in cash and $7.3 million in crypto token techs, respectively, for $13.1 million in terms of what I would call cash or cash equivalents, and approximately CAD 18 million in cash equivalents. I'll note again, we're not a crypto exchange. We don't engage in performance enhancing derivatives or leverage products. We do not custody assets for other people. There's no room here for things like embezzlement or anything else. We only custody our own assets. We don't have external clients for whom we manage assets for. As we look forward, again, there's more information in the MD&A regarding Metaverse Group and Hulk Labs and the rest of these businesses. W e're really focused on positioning these businesses to be leaders in the space. I continue to be excited about what we're building in those areas. W e did pivot a little bit away from just being a pure staking company. I think that's a positive thing. I don't think that these new businesses are adequately reflected in our financial statements or in our share price. O ver time, we think this will benefit the shareholders. With that, maybe I'm gonna turn it over to Martin to give a quick review of the financial statements, and then, we'll open it up for Q&A. Great. Thank you, Andrew. Hello, everyone. Thank you for attending the call today. I understand this is not really the best time of the year for the call, so I promise I'll be quick so that we can turn over to Q&A with Andrew. Like I said, I won't be going over the financial statements in details. I believe the shareholder and supporter of the company, which we're always grateful for. You understand these periodic revaluation of our cryptocurrencies and other items such as warrants, which create these non-cash accounting gains or losses every reporting period that really do not matter to our operations. I won't go over those, but I'm happy to take any questions regarding the financials later. Before I proceed, I want to remind everyone that all the numbers presented are in US dollars unless otherwise stated. Our revenue for the nine months was $678K compared to $1.1 million for the 12 months of last year. If we annualize our nine-month revenue, we get very close to last year despite the markets have changed significantly. This is because of the two new revenue streams that we added throughout the year from our two subsidiaries, Metaverse Group, Metaverse Group, and Hulk Labs. Our operating expenses for the nine months are $2.7 million, a 60% decrease from the 12 months of last year's of $6.3 million. Excluding shares-based compensations, our real cash expenses come to about $2.5 million. If we look at our cash balance at the end of the years of almost $6 million and how little debt we have, it shows that, again, Tokens.com is capable of paying for our overhead and cash expenses for the next 14 to 20 months without a need to raise capital. This is excluding the revenue that we earn with the Metaverse Group, which is 100% in cash. The liquid tokens that we have available to sell, management is always looking for ways to reduce our overhead. Again, I just want to point out a few highlights that really matter to our operations, and I'll turn the call back to Andrew. Thank you everyone for listening. Thanks, Martin. Just before I open it up to questions again, you know, my view is I think we're a better company today than we were 12 months ago, although we had a, you know, much larger market cap 12 months ago. You know why? I think, you know, we have more cash, a straightforward business. I think our business, compared to other public crypto companies, is a lot better than most of them out there. Again, why? Because we've been good stewards of cash. Our businesses have more growth potential. You know, we're not involved in highly regulated businesses or have to custody other people's assets. Again, this has been a year of struggle on the Capital Markets for us. We're working hard to try and continue to get our story out there. You know, we're hoping that 2023 has, you know, better things in sight for us from a public market perspective. Operator, with that, I can turn it over to questions. Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press zero one on your touchtone phone. Again, to ask a question, please press zero one on your touchtone phone. Our first question comes from Joshua from Capital Markets. Your line is now open. Hey, good morning, guys, and thank you for taking my question. I just wanted to ask first, obviously with the market kind of being the way it is, just kind of with FTX's issues and, you know, maybe potentially Binance's, are you guys noticing something, anything in the regulatory market and what that might mean for you guys? Nothing for us. You know, most of the regulatory oversight involves protection of people's assets. We don't custody assets for anyone. You know, if you go through our businesses, on the staking side, we're staking our own assets. They remain in our custody, and we earn a yield for helping the, you know, validate blocks on the blockchain. On the Metaverse Group side, a lot of what's being done there, it's almost turning into what I would call sort of this marketing agency business, where we're landing big tier one clients and dealing with the marketing departments of these clients. These people aren't necessarily concerned with the price of crypto. They're like, "What can we do here to create something immersive as a way of interacting and becoming, you know, better ways of us interacting with our clients?" At Hulk Labs, you know, similarly, we're using our own assets. We have this player network that are playing games on our behalf and, you know, earning revenue for us. There's nothing really that we're doing that could get regulated, to answer your question. Perfect. I know you guys obviously have a lot to deal with in the Decentraland, but I know you guys kind of own also other, like, just Metaverse parcels. Can you guys, can you provide us an update just on those? Sure. Metaverse Group owns now in 12+ different Metaverses. A lot of the attention does go to Decentraland, and I think 40% or 50% of the digital real estate owned is in Decentraland. Decentraland has the advantage of being somewhat more advanced than some of the other players. You know, Metaverse Fashion Week, and I know Decentraland has come under some criticism in the last few months over the number of people that are in it, or visitors. We found for our events, we've been able to attract people. The fashion show attracted 108,000 visitors. We recently did a music festival that I believe attracted over 10,000 people. You know, it's just an easy place to do that. In terms of Metaverse Group, the idea is to remain Metaverse agnostic. The new installations that are being done there are being done across several Metaverses and trying to get integrated with, you know, things like Twitch and YouTube and areas like that to create a broader presence and to be more sort of touch points with potential clients for brands. P erfect. Thank you for that. Obviously you guys mentioned, early in this call and also on the MD&A and news release how you guys are just lowering overhead. I'm guessing what I'm looking at is this year, you know, it's like CAD 800,000 in professional fees and, roughly, say like CAD 400,000 in management fees. Is that a kind of a good number to look at going forward? M y target is that outside of like things like share grants and RSUs to the board, like in terms of cash spend, I'd like to get everything below CAD 1.5 million for 2023, so including salary fees, everything, audits, legal fees. Y ou also mentioned just how you guys were not needing to basically raise capital in 2023. How do you really plan on just investing in additional assets over this next year? The business is more than investing in assets. On the staking side, for sure, that means, we're not gonna be, you know, up deploying new capital into staking. That remains there as a reserve and earning it was 6.6% or 6.9% was the yield for us on our staking assets, in 2022. Metaverse Group and Hulk Labs are self-sustaining. They don't need new capital to grow. The growth in those businesses is more dependent on gaining customers. At the Metaverse Group side, it's a B2B play. There's a fairly large pipeline of businesses, that there's work being done for. Those, those installations will be announced in the new year. The investments in those businesses are really covered by their revenues. Same thing with Hulk Labs. Hulk Labs, well-capitalized. There's no asset investment requirement there. What I'll say, you know, if the market became buoyant again and, you know, our share price was, you know, just $3 or $4, we would certainly consider raising capital to deploy to other things like staking. As of right now, the key thing is make it through crypto winter. I think we can more than adequately do that. Sure, that might mean at the expense of, you know, just scaling into a whole bunch of new capital or new businesses. Okay. Thank you. Last before I go back in the queue is I know that now since you guys are now, you know, seeing positive revenue in both Hulk Labs and just your Metaverse divisions, do you guys have any kind of foresight to how maybe next year, how those revenues will look for both for your Play-to-Earn and Metaverse? Well, we do, but I don't want to provide guidance. Okay. I think we're too small in the area that, you know, there's some volatility. I would say internally we certainly have robust forecasts within each of the businesses. At this time, I'm not prepared to give, you know, guidance on revenue or earnings. Okay, perfect. Now I'll jump back in the queue. Thank you, guys, for answering my questions. No problem. Thank you. As a reminder, if you have a question, please press zero one on your touchtone phone. Our next question comes from Bill from Stifel. Your line is now open. Hey, guys. How are you? Good. Hey, Bill. Hey. My first question is in regards to the decrease in staking revenues for the period. You know, obviously asset prices came down in the quarter, but, you know, wanting to get a little bit more color on what management was doing during the quarter, that may have also contributed to the decrease in staking revenues. You know, my understanding is that you liquidated a substantial amount of or a substantial amount of tokens, following the quarter. You know, were you guys trying to unstake a lot of these assets in the third quarter, just given the lag in getting those tokens back after unstaking? If you can share some color on what proportion of the portfolio is staked today versus unstaked. Sure. In terms of the question, you know, staking is. It's somewhat of a passive business. The issue on the revenue and why it's lower is last year for staking ETH, which is primarily what we're staking now, and you earn an ETH, I think ETH hit a high of, what, $4,800 or something. Your revenue counts as $4,800. This year, ETH is trading at around $1,200. The staking, the amount of tokens that you stake doesn't increase because we're staking and getting paid in the native token, and so we're receiving a yield of whatever it is, 6.9% or close to 7% in ETH that we receive in ETH. Whereas the revenue last year would have been $4,800 for every ETH staked, this year it's only $1,200. It's not necessarily anything that management has done to decrease the revenue. Like I said, it's somewhat of a passively operated business. Frankly, it's just the price of crypto came down, the value of what we've been staking was less. Not that dissimilar to maybe a mining company where if, you know, you mined 10 Bitcoin last year versus 10 Bitcoin this year, same amount of Bitcoin you mined, same amount of work, the revenue is gonna be far less this year. In terms of what, you know, to your other question, disposal, we didn't dispose that much. We put out a press release, I think it was CAD 1.4 million. It was just a decision to say there was a whole bunch of other, you know, smaller tokens that we were staking, like Oasis and NFTX and some other things that we said that weren't necessarily core to where we wanted the business to be going into the new year. The idea is if there is to be another, you know, what I would say, another failure in the sector from one of the big exchanges or something, there's another call it shoe to drop, we wanted to make sure that the tokens we own that were most susceptible to decreases in losses or sort of, you know, going in our favor, were really just removed from our books in favor of holding additional cash. Part of that was important because we had so many companies calling us up asking to see if we were, you know, interested, you know, in sort of doing a merger or being acquired, and everybody was really interested in cash. It's not that the company is up for sale, but I just sort of realized that, hey, if we're gonna survive here and we wanna be able to survive here for 1, 2 years if we're acquired, you know, holding on to some of these smaller tokens isn't really necessarily in a, you know, way to balance. If this market turns, we think it's gonna turn in favor of things like Bitcoin and ETH, and certainly we own enough ETH right now, that we'll get substantial upside in that turn while also preserving our cash balance in the event that it doesn't or it goes down further. Great. Thank you. I think just. Then and just to add to it, I think one of the things here, you know, it's good to focus on the assets, but I think one of the things that management has done, you know, relatively well this year is we've managed to grow two businesses that I think are not even, you know, adequately their intrinsic value is not reflected on our balance sheet. We've managed to do that while preserving a fair amount of cash. I think, you know, if you look at the balance sheet of a lot of our peers, they don't have a lot of cash left. I think that's been a good task of balancing those things. S taking revenues did come down sequentially quite a bit. Just moving on the recent OSC decision resulted in cryptocurrency assets moving from current to non-current. Can you provide a little bit more light on terms of the reasoning behind the decision? From my understanding, that results in that's likely due to the results of the portfolio being staked. Is that correct? I'll let Martin weigh in on this a little bit. The one thing that I'd say about this is we submitted. This was way back. We submitted a shelf perspective, I'd say 6 or 7 months ago for review by the OSC. I think it was. I t's publicly filed on SEDAR. The idea there was in the event we were looking to raise capital in the future to streamline it and also to make sure the OSC was familiar with our business. After a lot of like back and forth, the OSC asked a lot of questions, and we had a lot of really positive conversations, and they really looked at our business with a magnifying glass over the course of several months. At the end of all that, the only key item that they sort of had or, you know, recommended to us is that they wanted us to move the tokens that we held. This was not the NFTs or the digital land and Metaverse Group, but just the tokens that we held from being current to long-term. We did push back on it because we said, "Hey, you know, as we showed at post this last quarter, we can turn around and sell some of these assets when we need to if we were in favor of cash." You know, they were fairly adamant that this was the treatment they wanted to see on the balance sheet. You know, we didn't wanna create any issues, and so we acquiesced to that, and that's why it's shown like that. Martin, I don't know if there's anything else you wanna add as to the why? F or sure. I think the result of the OSC review is to give a better presentation of our digital asset to shareholder and reader of the financial statements. You know, for example. One thing we also do is we break down between the NFTs and the cryptocurrencies, and we move both of them to non-current assets. Which makes sense for NFTs because these are assets that, you know, we want to hold on, and to build business and revenue upon. The cryptocurrency is a little bit trickier because, you know, they are given our strategy of staking and holding these token over a long period of time. It makes sense to move it over to non-current. Operation-wise, those tokens are available to us to liquidate if we need to. Okay. Great. I think the positive thing there, Bill. T he positive thing there is that, look, we started off like certainly it wasn't like the OSC came and said, "Hey, here's what" Look, we had extensive conversations with them around our business. I think there was, you know, an earlier question about, you know, regulation in our, in our space. You know, after a lot of back and forth, the fact that we, you know, at the end of those conversations, that this was really the only issue that concerned them, and in my opinion, it's a fairly benign issue. It doesn't change any of the numbers. There was no restatement of financials required. I think that's a pretty good sign. Great for that. Just moving on to a couple other questions. Wanted to touch a little bit more on that earlier question on operating expenses. It appears that, you know, cash OPEX would have come down sequentially had it not been for that doubling of professional fees in the quarter. Can you shed some light? You know, it's great that you guys are trying to cut costs on a go-forward basis, just given the challenging market environment. Can you shed some light on what caused that uptick in professional fees? And how should we look at that expense line going forward? Thanks. Martin, I don't know if you wanna talk a little bit about it. I mean, I'd have to go back and check. Martin probably has some more details on it. I would say is some of the things are things that we'd pre-committed to. Professional fees, I believe that may include some things like legal costs. E arly during the year and especially, we had been engaging in some marketing programs, different IR programs and things that I think over the course of time we just decided we didn't need. That's, you know, today. Our overhead's pretty low. It's basically the four people here from a corporate side, it's the four people here on the call. There are payments that come up to us from the subsidiaries as well. Each of the three subsidiaries is self-sufficient in terms of its costs. T here's like some small things that we outsource on a monthly basis that can be terminated with 30 days notice if we needed to. O verall, this is the leanest the business has been, I think in its history. Yet, like I said, we're made to be pretty well capitalized. Martin, I don't know if you have specifics on those professional fees. For sure. T he obvious, the most significant change from last quarter is the addition of Metaverse Group and Hulk Labs. These are this increase is primarily just additional costs incurred within the Metaverse Group and Hulk Labs, which has to be consolidated into Tokens' financial statements. I think that that is the reason why there's an uptick there from last quarter. And to your question, Bill, like between Hulk Labs and Metaverse Group might have been the only two technology companies this year who were actually hiring people and growing. What I mean by that, it's not like we were grossly out and hiring a ton of people. Certainly there's like, you know, three or four people at Metaverse Group that were hired and two or three that were hired at Hulk Labs throughout the year as those businesses continue to grow and have more, you know, demands in terms of human resources. Okay, great. Last one, just before I head back into the queue is, can you share some color in terms of the player onboarding at Hulk Labs? You know, subsequent to the quarter, you announced that more than 1,000 players had onboarded. You know, where does that number sit today? You previously gave guidance of trying to ramp it up to 10,000 players. How's that looking? Any color you can provide on that's great. Sure. I was gonna turn that over to Deven, to respond. Sure. On the Hulk side, I think we're still dedicated to growing the player base in as capital-efficient a way as possible. A few of the games we were playing during the last two quarters were heavily reliant on a couple of Token ecosystems that did not fare as well over the last couple of months in particularly Solana. Solana-based games obviously are denominated in the price of Solana, which has taken a hit more than other crypto tokens. Because of that, I think temporarily some of the popularity changed a bit. We took an active decision to slow down player acquisition because we are also really envisioning a bunch of really top-tier mobile-friendly Play-to-Earn games coming out in Q1, so the next three months, that we're kind of wrapping up for building tooling for. You know, the players today are igher than the 1,000 we press released lower than 2,000. I think our goal really is the tooling is built for us to scale very rapidly from, you know, that mid-range thousands to 10,000. The player demand is there. We're really just waiting for the right titles to jump into. Those kind of appear hopefully in mid-Q1. That's really where you're gonna see an uptick. Great, guys. Thank you. Appreciate the color. Thank you. At this time, I show no further questions in queue. I will turn it back to the presenters for closing comments. T hank you very much, everyone. I thank investors for their patience. Certainly, this has been, and for myself as the largest shareholder, it has not been a fun year. W e're working away and we're trying to build value at the company. I think if there's further questions from anyone please reach out to us. I think everyone has the ability to access us either at contact@tokens.com or me directly, and we can respond with further answers. Again, fingers crossed that 2023 is a better year and we'll keep an eye on us. I think we have some exciting things in the works that hopefully the market will recognize next year. Thanks. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.