Realbotix Corp.

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Hello and welcome to the RealBotics Q3 financial call. We have a virtual video here from Aria, which I will share with you guys. She will be introducing our call.

Hello and welcome to the RealBotics Q3 financial review conference 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 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. Andrew, you may begin.

Thank you, Aria and Jen. Also on the call, we have Martin, CFO, and Matt, our founder of Robotics and our COO. I'll do a quick walkthrough of the highlights of the quarter, and then we'll open it up for questions. So, in terms of key highlights, obviously, there's been a lot of changes. In the last quarter, we completed the acquisition, and then subsequently after that, we did a full rebrand from Tokens.com to Robotics. So the acquisition closed on April 18th. On July 9th, the shareholders approved the name change and the rebrand at the AGM. In terms of financials, our total assets have increased significantly from the end of the year, which they were at $9.9 million. This is all in U.S. dollars, to $3.5 million at the end of this last quarter. A couple of things I would note. that could not include the digital assets that will return to us from genesis and that also takes a very conservative view of things such as our domain name tokens.com which is for sale which is currently carried at zero value in terms of revenue we started seeing a little bit of an impact from the robotics acquisition but really not much of significance we expect shareholders to see the bigger impact of that in the quarter we're in right now. We would expect the numbers to be a lot higher and for this fiscal year to be the highest revenue for us in our short history. In terms of net income, for people who are not aware, we have to revalue our digital assets or crypto every quarter. And that gets flowed into our net income line. So they don't put it into the revenue. So if it's up, it goes in there. And if it's down, it also flows into the net income line. As a result of the nine-month performance of crypto over to the end of June, we had a gain which led to net income of $3.4 million for the nine months ended June 30, 2014, compared to that loss for the same period the prior year. In terms of other sort of news or things to talk about, we note here we did receive close to 200 Ethereum back from Genesis Global. As people may be aware, they hold a small percentage of our assets in custody when they went bankrupt. They are emerging from bankruptcy. There was a distribution plan that's approved and we're now starting to receive assets back. This was started by receiving 189 Ethereum from them, leaves a very small amount left. Martin, how much Ethereum is left with Genesis?

We have 150 left.

150 Ethereum left with them. And then we're also expected to receive some of the Solana. They've told us we'll receive 30% of what's held with them. So again, some good progress there. And we still feel pretty confident based on the current distribution plan we'll get all of that back. But again, overall, it's not a huge percentage of what we own. That is really kind of the key. In terms of the operations, things are going very well. I think you can ask questions to Matt, but the relationship so far is going extremely well. The relationship with Starwalk is also going extremely well. We're happy with how that's progressing and the doors that are being opened. The things that we're working on are all, what I would say, exciting things. new um and you know we're venturing into this new territory that i think will pay off for shareholders recognize the share price has been anemic over the last few months i think that's partially because of the you know us being into summer small cap hasn't been in favor crypto has had a bit of a rough three months uh and in addition we just haven't done all the marketing and pr that we're going to start doing here after labor day so maybe with that I'm going to turn it back over to you, Jen, and we can open it up for questions.

Yeah, so if anybody has questions, go ahead and press that raise hand button on the bottom, and I'll give you access to speak.

Go ahead, Kev.

Hey, Kevin.

Hi, Andrew. Thanks for having me on the call. And congratulations on the robotics buy. Is there any way you could quantify the revenue change you're hoping to recognize in September, the September quarter?

Like put a number as to what we, well.

Maybe a range, not a number.

Sure. I think it'll be for this next quarter between one and two million. And for the quarter of July, August, September?

Yeah, it will be approximately around that range. No, this is not guidance for sure.

How would you recommend investors view your backlog and your target market, maybe insights on the business model in general?

Sure. So we put out a press release a couple weeks ago to try and touch upon that, and I can go into that. So we have three product lines. The first is what we classify as humanoid dolls. They're used in all types of areas, like some of them are used in the military, some of them are used for adult purposes, some of them are used as a display. That business We believe just in terms of its general status quo, and I believe we have that in the deck, can do sort of between $2 million and $3 million annually with very limited marketing, and we think we can scale that up significantly. That business is priced at a 60% profit margin. The next business is the robotics business and technology. That really is taking those human entrepreneurs to the next level, giving them movement, the ability to speak, and being able to integrate them in with AI. That business is newly developing. We have sales there. I think we announced earlier this year a sale to an amusement park in the $1 million range. That will get recorded upon the... That gets recorded at what point that contract So which one were you... For the theme park contract to deliver the robots. When we deliver them? On the delivery. So that'll be over the course of, I would say, the next 12 to 18 months. We're having conversations with several other groups on delivering robots. And in the past, we have made several robotic sales. Not a ton. This is a new business. We are treading new territory here. Again, all products are sold with a 60% profit margin in terms of how we look at it. That's the second business, which is the robotics, which I would say is got, what I would say, a massive market. What differentiates our robots is they're social robots. They're meant for entertainment and media. They can be used in schools and hospitals. very different than the type of robots that you might see Tesla building or Boston Dynamics or Trigger AI. Those robots are meant to replace labor. They are robots that are created to lift heavy things, and they look like robots. I can add a little bit into this, but our perspective is very different from what they're building in that we view robots that will go mainstream and be used in areas where humans should look like humans. And our goal is to start creating robots that are indistinguishable from humans down the road. And I think we're already doing a pretty good job to see our videos that are robots look very human. The other area that's key for us is things like facial expressions. And so one of the holy grails of the robotic industry is having amazing facial expressions. And our robots have up to like 18 motors in the face that can create several types of expressions. So surprise, happiness, sadness, anger, various things. Other robots you see out there don't do that. They have a plastic face, maybe the lips move, but they don't have the ability to make the same level of expressions that artists do. And they also don't look as real as artists do, especially in person. And so we talked about the various use cases. This could be museums, theme parks, conferences, hospitals, schools. We're having conversations with people somewhat in all of those above categories to various degrees. And then the last piece in terms of our revenue model is the AI. Our AI is not like ChatGPT. We're building our own LLM on top of a ChatGPT layer, and it's meant to be social and provide companionship. It's not a task-driven AI. And so, Kevin, I think the way you think about it is if you were to use our AI, it can be at a convention center, and it might have your firm's name on it, so HCOA night, and somebody could walk up to it and get information about your firm, and it could deliver information in that regard. It could be used as a receptionist or a concierge. It could be a teacher's assistant and relay information. And so we view that as what we would call for now social AI, And then we also have the compassion or the relationship part of that AI, which means it can be a friend. It can be a boyfriend or a girlfriend or somebody that you just want to chat with. I think everybody likes to have somebody every day that they can communicate with. And there's certainly an audience out there for people that are looking for a friend. And we intend to make that usable in the robots. And we're also looking to create a subscription-based model out of that where we can license it out and it can be accessed via your mobile phone or your browser. That's further off. But again, all of these markets are quite large. You know, we're a small company. We're not providing guidance right now. Remember, it's only been a couple months since we purchased the business. And so we're sitting and sort of seeing where can we apply our efforts to create the most amount of revenue in the short term and then continue to build from there.

As you talk about and continue to work on AI, Andrew, is it mostly a proprietary effort, or do you hope to leverage development at Google or OpenAI or some of the other, I'd say, heavy-duty, advanced, and capital-intensive investments in AI?

I'll let Matt answer that question just to get him involved.

Yeah, so... For some clarity, typically out in the world, people who are developing their own LLMs are most of the time leveraging open source code that's been put out into the wild. So there are obviously multiple huge players involved in that, and many of them allow their models to be used as a springboard for developing your own LLMs. So what you end up with is, you know, essentially, let's say there was a recipe that a lot of people knew how to make bread, and they said, here's the ingredients, and then you go in and you start adding these other things, and you end up with something wholly different, even though it's still bread. So that's kind of how development is for a typical LLM model. It doesn't make sense to recreate the basis from which all of these systems have been created when it's already been done and it's open source. So we leverage multiple different open source models to use for our fundamental-based knowledge, and then we build a proprietary layer on top of that. So what we end up with is our own model that is ours alone, and everybody's going to take different angles when they're working on their own models, and we think that ours is extremely novel because we're taking a whole different angle, as Andrew mentioned. We are focusing on social interactions. For example, I believe that when people interact with each other in a day-to-day basis in the world, when you go into an auto parts store, you have social interaction with the person who's helping you find the transmission part that you need. And if you have a very sterile robot take that role, you take away that social interaction. And I believe that robots that are customer-facing and are interacting with human beings, being able to express and convey emotion and expression and have a simple conversation, you know, how's your day and how are the kids, things like that I think go a long way in cementing the relationship that human beings have with technology. So I hope that answers your question.

It definitely helps, Matt. Thanks. Two more, if I may, Andrew, promise I'll keep it to two. First one on the existing crypto, according to balance that you have, according to MD&A, your plan is to convert it to dollars through the course of the next 12 months. I'm wondering if there's any flexibility in that or any color you might want to add.

it's a good question so yes there's some flexibility in that but I think the ultimate goal is for us to transition away from being a crypto company I know that's probably not possibly consistent with your coverage base but the idea here is like right now I think we're a super exciting company that's very undervalued I mean we have we're building our own proprietary AI which is Matt, how many weeks away from being ready?

We should have our early internal prototypes in the next two weeks. And over the course of the next month or so, we should be able to start sharing it with various people for beta testing.

So we're highly advanced on the AI front. We are selling actual humanoid robots. And we have another sort of business attached to that that also is revenue positive. Plus, we hold a bunch of crypto. So I dare anyone to find a more interesting or exciting public company on the planet right now than we are. But the general message I'm getting from some people is that it confused what we were doing with AI and robotics and crypto. And so the idea is we're not rushing out to sell our crypto. We still haven't sold any of our Ether or Solana. But at some point, as the cash needs of the business grow, we will use that. It's more of a treasury management than a strategy today.

Does that make sense? Absolutely. Thank you. And last but not least, I was hoping you could add some insight on the StarWalk investment. What do you think that offers robotics at this juncture?

Yeah. It so far has been going extremely well. And so I want to make sure I'm not providing any material on click. So Starwalk is essentially two individuals from New York that are very well connected and have a lot of doors that they can open for us. And so what that partnership really does is it allows us to use them almost as extended salespeople as an extended business development group. And so far, they've been exceptional. I can't quite disclose who we are talking to right now, but they've opened a lot of doors for us. And what I would say that they do is they accelerate our ability to advance our products. So, you know, earlier when I said we're in conversations with various groups and companies in the entertainment and media space, they're the ones that have opened those doors for us. And those are doors that as a small company probably would have required a lot more work from our perspective. In addition, they've provided some insight into other parts of the business in terms of, you know, people that we're hiring on sales, a whole bunch of different areas. So I would say right so far, it's been a 10 out of 10 for us. And, you know, if anything, I think we've gotten the better part of that deal thus far.

Thank you, Andrew. I appreciate the color and good luck with the endeavors. Thank you.

Thanks, Kevin. Again, if anybody else has any questions, go ahead and select that raise hand button on the bottom of your screen. Right now.

OK, well, maybe I'll just close it off and say, you know, back to Kevin's questions. The way to think about it is our primary business is we can build custom robots and custom AI supplies. And I would encourage people to think about it in terms of conferences, media, think about an office space or a casino or other various places. The use cases for what we build are quite large and global. And when you add on top of that our proprietary companionship and social AI, I think we're doing things that are special. Now, again, I would say The things that we're doing are more on the speculative side. They always have been with this company in terms of doing things in crypto, Web3, and now robotics and AI. But again, management feels positive. We're working. We realize that the biggest weakness we have right now is trying to get some attention to our share price, and that is harder than you think. Trust me, if we could make the share price go to $1, we would. That's clearly the biggest complaint that we get as a management team, but we're working with various people to try and get more attention, to get some more PR. And I'm, again, hoping that once we get more attention on what we are doing and how unique we are, that will lead people to buy the shares. So maybe with that, we'll close it out. And thanks, everyone, again, to reach us through our website. I encourage people to look at the new website, realbotics.ai. There's a new customer website for robots that should be ready in about eight weeks. and we'll share that as well publicly, and that'll have some brand-new content as well. Thanks, everyone.

Goodbye.