Realbotix Corp.

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Hello and welcome to the tokens or 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.

Great. Thank you, Aria and Jen. Also, I want to call Martin, our CFO, and Matt, our founder of Robotics and our COO. We will do a quick walk through the highlights of the quarter, and then we will open it up for questions. In terms of key highlights, obviously, there have 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 RealBotics. 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 we were at $9.9 million. This is all in US dollars, to $3.5 million at the end of this last quarter. A couple of things I would note, that did not include the digital assets that were returned 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 RealBotics acquisition, but really not much of a significant. We expect shareholders to see the bigger impact of that in the quarter that 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 it fits 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 the end of June, we had a gain, which led to net income of $3.4 million, so the nine months ended June 30, 2004, compared to net loss for the same period the prior year. In terms of other news to talk about, we know 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're emerging from bankruptcy, there was a distribution plan that's approved, we're now starting to receive assets back. This was started by receiving 189 Ethereum from them, it leaves a very small amount left. Martin, how much Ethereum is left with Genesis?

We have 150 left.

150 Ethereum left with them. Then we're also expected to receive some of the Solana, they 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 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. 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, the doors that are being opened. The things that we're working on are all what I would say exciting, new, and 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 us being into summer, small cap hasn't been in favor, crypto has had a bit of a rough three months. 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 with that, I'm going to turn it back over to you, Jen, or we can open it up for questions.

Yes, 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?

Could like put a number as to what we can well.

Maybe a range, not a number.

Sure. I think it'll be for this next quarter between one and two million.

And

that's accurate for that for the quarter of July,

August, September. Yeah, it will be approximately 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 I would classify as is 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 a general status quo and I believe we have that in the deck can do sort of between two to three million annually with very limited marketing and we think we can scale that up significantly. That business is priced at 60% profit margin. The next business is the robotics business and that really is taking sort of the humanoid figures to the next level given their movement, the ability to speak and being able to integrate them 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 can 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. So that's the second business, which is the robotics, which I would say is got what I would say a massive market and 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 other 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 let Matt add a little bit into this, but our perspective is very different from what they're building in that, you know, we view robots that will go mainstream and be used in areas with 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. You 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 robotics industry is having amazing facial expressions. And our robots have up to like 18 motors in a 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 ours do. And they also don't look as real as ours do, especially in person. And so we talk 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 chat GPT. We're building our own LLM on top of a chat GPT 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 H.C. Wayne Knight. 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 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 compassionate or the relationship part of that AI, which means it can be a friend. It can be a boyfriend or a girlfriend. It's 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 on 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. We're a small company. We're not providing guidance right now. Remember, it's only been a couple of 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, 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 and it's open-source. So we leverage multiple different open-source models to use for our fundamental base 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 on a -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, 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 right now, I think we're a super exciting company, but very undervalued. I mean, 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 you 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 confuses what we are doing, like 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 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 accelerate our ability to advance our product. So 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 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 if anything, I think we've gotten the better part of that deal as far.

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

Thanks, Kevin. Again, if anybody else has any questions, go ahead and select that raise hand button on the bottom of your screen. And if somebody didn't see right now.

Okay, well maybe I'll just close it off and say, you know, back to Kevin's questions. The way to think about us is our primary business is we can build custom robots and custom AI suppliers. And I would encourage, you know, people to think about it in terms of, you know, conferences, media, think about an office space or a casino or other various places like 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, you know, doing things in crypto, that's three now robotics 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, we can make the share price go to $1 we would. That's clearly the biggest complaint that we get as a management team. But, you know, 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 that will lead people to buy the shares. So maybe with that, we'll close it out. And thanks everyone again, you can reach us through our website and encourage people to look at the new website robotics.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.