Tokens.com Corp. (OTCQB:SMURF) Q2 2022 Earnings Conference Call August 16, 2022 10:00 AM ET
Company Participants
Andrew Kiguel – CEO
Martin Bui – CFO
Deven Soni – COO
Lorne Sugarman – CEO, Metaverse Group
Conference Call Participants
Josh Zoepfel – Noble Capital Markets, Inc.
Operator
Welcome to the Tokens.com Q2 Financial Review Conference Call. My name is Richard and I’ll 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. [Operator Instructions] As a note, this conference is being recorded.
I will now turn the call over to Mr. Andrew Kiguel. Sir, you may begin.
Andrew Kiguel
Thank you. On the line today you have myself; our CFO, Martin Bui; Deven Soni, Devon, he is Head of Hulk Labs; and Lorne Sugarman, he is the Head of Metaverse Group. Just to start, Tokens.com, we’re a Web3 technology company. We purchase and build service-based businesses around cryptocurrency assets. We’re currently focused on three areas, crypto staking, the metaverse, and crypto gaming.
We own and operate businesses within each of these segments. Our staking operations occur within Tokens.com, the metaverse operations occur within a subsidiary called Metaverse Group, and the crypto gaming operations occur within a subsidiary called Hulk Labs. All three businesses are tied together by the utilization of blockchain technology linked to high growth macro trends within the Web3 area.
Through shared resources and infrastructure across three business segments, we are able to essentially incubate these businesses from inception to revenue generation. I’ll note that as of right now, all three business segments are revenue positive and we think that’s quite significant given that Metaverse Group and Hulk Labs are very early stages of an inception as operating businesses.
Each business owns its own cryptocurrency assets that are used to generate revenue and those assets are not linked to the performance on the actual businesses. A more detailed description is available in the MD&A, which is filed yesterday on SEDAR, and is also available through our website.
Now, as a result of these businesses owning cryptocurrency assets, Tokens.com is required to revalue these assets at the end of every reporting quarter. That means our financial statements will have a positive or negative non-cash impact based on the market price, digital assets will be owned at the end of that quarter. It’s a specific shot — or point in time on the date that they’re priced, which is at the — at the last day every quarter.
Tokens.com and our subsidiaries, we do not engage in the lending of tokens, digital assets or using any derivative products to enhance our returns. That’s not our business, we do not engage in the act of trading or hedging of any crypto assets.
Now, moving to the quarter, Q2 was not a good quarter for cryptocurrencies or the digital assets that we own. This was widespread across all crypto and capital markets. This resulted in us having to take some non-cash from valuation losses in the quarter, which Martin I’m going to turn it over to him, we’ll walk through.
Again, we note that these are non-cash revaluation losses and they’re not tied to the operational growth between the staking businesses — I’m sorry within our staking business Metaverse or Hulk. We can talk a little bit more about that. Each of the businesses within those business segments are tied of services that we provide at leveraging those assets, and are not specific to the actual market price of those assets.
Our balance sheet remains healthy. We have more than sufficient capital to withstand an extended period of time here without raising any new capital. We purposely built the business that way, because we know that this is a volatile space and we always want to make sure that the company’s longevity and balance sheet is healthy.
We do note that we’re seeing improved crypto asset pricing since the end of Q2 and if that continues, that’ll be reflected in our Q3 results. As an example, the staking assets that we own have increased by approximately 60% since the end of Q2, which means over the course of that time and what you’re seeing there is already somewhat outdated.
This also benefits us in that we own over 3,000 Eth along with a whole bunch of other tokens that have also continued to appreciate Eth to have appreciate by 7% and 8% since the end of Q2 to August 12.
In terms of the overall viewpoint and the message here that as a small cap stock, the impact of a demand or supply can be quite drastic on our shares. We have certainly not been happy with the performance of our share price this year. Obviously, that’s due to widespread concerns in the market over crypto, macro, there was a war, inflation, rate hikes, there’s a whole bunch of things going on that has made 2022 a bit of a strange year.
We acknowledge that last year was a very good year and that there was probably a little bit of hike in there across all asset sectors. And right now doing our best to sort of make sure get the mixture, we continue to tell our story, we continue to be very optimistic, our assets and the growth that we have in them.
One of the reasons that we were seeing some weakness in our share price right now is that there was an institutional shareholder that had a change in management. As a result, the new portfolio managers are looking to move out old positions. Again, being a small cap stock that has probably impacted us more drastically than it would if we were larger.
In terms of our other peers in the small cap crypto space, everybody’s sort of been hurt. We certainly have not seen in recovery that the larger cap and liquid crypto stocks have seen. Again, we think that’s temporary, we feel very confident about our business. We feel confident about the areas that we are participating in and in those businesses.
As a point of note, mention that crypto prices are up quite significantly since last quarter and we had other significant changes as well. We’ve added to our accounting area, we brought in a new CFO on the call.
Ian has remained with us in support of that, as well as our Corporate Secretary. Our subsidiary in Q3, Hulk Labs has received VC investment at a pre-money valuation of $8 million. And so again, we’re still continuing to see positive growth, positive changes within our businesses, despite the fact that our share price isn’t reflecting that at this stage.
So, maybe with that, I’m going to turn it over to Martin, and he’ll give you a quick summary of the financial statements and then turn it back to me for a closing and to answer some questions. Martin?
Martin Bui
Thank you, Andrew. Before continuing, I would like to remind everyone at all amounts in the financial statements and also on this call are in U.S. dollars unless stated otherwise.
Yes, so just continuing on Andrew’s point on the crypto market and the non-cash revaluation laws, I want to get that out of the way, because our cryptocurrency assets are treated as intangible, and we need to revalue them to their market prices at the end of every reporting period. And so there’s always a swing and fluctuation in their values, every reporting period.
So, for Token at the end of Q2 this non-cash loss was $14.8 million for the three-month ended Q2 2022 was $12.5 million recorded on the income statement, and $2.3 million recorded in other comprehensive income to offset previously gains that we recorded in prior periods.
For six months, the total — this total non-cash loss was $18.3 million, with $14.8 million recorded on the income statement and $2.5 million in other comprehensive income. Again, I stress that these are all non-cash losses that have no impact on our operations.
Loss on disposal of our crypto assets was $1.7 million for the three months and $1.96 million for the six months. So, no — as I finally got no non-cash accounting losses out of the way, I want to focus more on the operation numbers and know areas where we do have control over.
So, our staking business generated higher revenue than last year. It’s $205,000 this quarter compared to $193,000 in Q2 2021, 6.2% increase. On a six-month basis, staking revenue was $499,000 compared to $258,000 of last year, a 93% increase.
Our Metaverse Group subsidiary generated these revenue of $35,000 and $45,000 for the three months and six months periods, respectively. There is no comparable numbers for last year, because this is our new business and as Andrew mentioned earlier, the growth has been very impressive.
For our operating expenses, we were also able to lower the expenses during Q2 2022. Our total expenses were $753,000 for the quarter compared to $2.2 million for the same quarter of last year. On a six-month basis, operating expenses were $1.7 million compared to $2.4 million of last year.
And total net loss for the three months was $11.9 million and $4.1 million for the six months compared to losses of $8.5 million and $8.7 million for the three-month and six-month of last year.
Comprehensive losses was $14.2 million for the three months and $7.6 million for the six months compared to losses of $11.3 million and $8.6 million for the three-month and six-month of last year. Again, these losses were impacted by the non-cash revaluation losses that I mentioned earlier.
So, just to sum up everything that I’ve just said, despite a very difficult quarter, we were still able to grow our operations. What happened in the cryptocurrency market has very little impact on our operations. Our token have been — and as do staking and generating you — the Metaverse Group is generating better and bigger revenue numbers, and Hulk is very — is also revenue positive, which will be reflected on our next quarter. We have a healthy balance sheet and our current cash balance should be sufficient enough for operation in the next 12 or 18 months, at the very least.
And with that, I thank everyone for listening and I will now pass over the call to Andrew.
Andrew Kiguel
Thanks martin. So, again just to close out Tokens.com, we have three businesses that are tied to led three. Hulk and Metaverse Group are early stage businesses that are just starting to produce revenue, and have a ton of growth. The company owns more tokens today than it ever has in the past. We’ve driven costs down and each of the new business units is now self-sufficient.
And macro trends continue to be in our favor and despite the frustration that we all feel, with respect to the share price. When you look to the future, we still remain confident that we’re in the right places with the right businesses and growing.
That said, the balance sheet is healthy revival. We’re growing, I believe, we’re more than the value of just our assets, because we have these service businesses that leverage these assets and continue to grow.
So, our hope is that this is temporary. As the year continues and people continue to see the growth that we’re doing and recognize that our losses are non-cash, don’t actually impact our operations at all, that will continue to get some more attention. And then hopefully, that there’s an improvement in our share price that’s commensurate to what we believe that we’re worth.
So, operator, maybe with that, we’ll turn it over to questions.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions]
Our first question on the line comes from Mr. Joe Gomes. Please go ahead.
Josh Zoepfel
Good morning, everyone. This is Josh, filling for Joe Gomes. Just my first question of this is regarding any subleasing activity into Metaverse Land. Are you guys seeing this a pickup and increase over this past quarter? Just kind of some color on that would be great.
Andrew Kiguel
Yes, I’m going to just say one thing, and then I’m going to turn it over to Lorne Sugarman. The one thing was the business in the Metaverse Group is primarily we’re dealing with the marketing and advertising areas of various firms and clients. Those areas haven’t really been impacted by the fact that cryptocurrencies are down, we’re still continuing to see a large inflow of people looking to work with us and that the businesses have gone beyond just leasing land, to us actually providing media and building virtual storefronts for people, hosting events, virtual advertising, and that businesses continue to sort of leverage the fact that we own this Metaverse Land and being able to kind of stop into creating a revenue business that’s again, based on advertising and media as opposed to the performance of cryptocurrency but maybe Lorne, do you want to just touch upon that for a second?
Lorne Sugarman
Sure. So thank you. The short answer, I think Andrew has done a great job in describing the services we provide and how the rental the Land works in conjunction with the broader services that we provide. Typically, we provide one of those services where we’re building out a virtual space or helping other large or small entities determine the right place for them to locate in the Metaverse.
But I would suggest to you that the number of rentals as well as the number of interested parties continues to grow, the pipeline continues to grow. And so the business remains very strong in the context of, obviously, tougher markets or tougher crypto markets, as we’re all well aware of. So, I think that’s where I’d leave it.
Josh Zoepfel
Perfect, thank you so much for that. And some of the questions that’s going to want to turn it over to Hulk Labs. So, I just kind of wanted to see just the update on just the Playte Group acquisition, how that’s coming along, as well as like the building of that player base, and the Democratic Republic of Congo and Tanzania?
Andrew Kiguel
Yes. So, for the people listening, what we’re doing there is right now we’re using our own capital, but we’re intending to sort of uberrize, the crypto gaming space, and governance, a little bit of how that’s going to work. But we’re essentially building a platform to connect players to people who have gaming assets. And so people that find this rewarding, but don’t want to be playing the game 24 hours a day, seven days a week, and come to us and have several people playing a game for them seven days a week, 24 hours a day, we’re kind of building the service, again, it’s going to be like the Uber of the crypto gaming space, which is a massive space that continues to grow. But Devin, I don’t know if you want to add a little bit to that and talk about Playte.
Deven Soni
Sure, thanks for the question. To clarify we’re very happy with the progress of the Playte acquisition. The real focus is in this quarter and next are to build the tooling and infrastructure that make it possible for us to have a lot of players playing a lot of a lot of NFTs and games in a way that we can track and securely manage.
Today, we have about 150 players playing actively with our assets with a waitlist about 2,600 players waiting to onboard. And our goals are really to be able to onboard those players in the next few months, as we have more tracking abilities and more of administrative abilities, which is really what we’re kind of building today.
But the goal, as Andrew mentioned, is really to build the leading platform that matches people that own in-game assets with players that want to play and monetize those assets.
Andrew Kiguel
And to add to that, right now, as we’re building, we’re testing that out in the sense we’re eating our own cooking, by using our assets. And the returns that we’ve been seeing in that area have been — these are not based on huge investments, but the investments that we’re making are seeing returns about 25% per month. So, if you can imagine, as we continue to build this out, and generate capital, and then be able to connect other people that want players and be able to take a fee for collecting them again, just like how Uber connects drivers and passengers, we’re going to be doing the same thing there and collecting a fee for that with access to thousands and thousands of players through this VRC contract that we have.
And so again, when you’re talking about and looking at our business, we’re a lot more than the value of our assets. There’s like real businesses here that are being built. They’re leveraging these assets to build some pretty significant things in the Web3 area.
Josh Zoepfel
Yes, great. Thank you so much for the color on that. This is a question I have it just — I know you guys have a sustainable capital structure right now for the next 12 months. You guys said MD&A and you guys have about like roughly $5.7 million in cash. Just I just wanted to see if like, is there ever a chance that there may be a time that you might issue more securities or even willing to take on debt to purchase a larger asset purchase?
Andrew Kiguel
So, let me talk with a debt question. First. We have a line of credit with Genesis trading, which is out in New York, that’s in DC, [indiscernible] company against our assets, which is currently mostly undrawn. That’s a real tricky business in the crypto space. Because it’s so volatile and you have these moments in time that we have in Q2 or even how we had in March 2020, we’re stuck to just capitulate really quickly, and it can put the positions of the company in a position where you know we can end up standing serious losses.
It’s been our position to really not use a lot of leverage. We’ve definitely seen a lot of opportunities. But our inclination is to have it there a safety, we’re not planning to really use much of it right now. It’s just too dangerous seeing the volatility that’s out there right now.
In terms of raising additional equity, I mean, are we seeing a ton of amazing opportunities and ways for us to make new capital right now that we’re not taking advantage of because we don’t have the capital to do so? Yes. And my in a position where I feel that our stock is adequately value to issue equity? Not today. I just, you know, I think we’re drastically oversold. I think the sector is oversold, and I think I’m seeing you know, crypto here on a potential rebound. I look at the macro forces, like, the metaverse, crypto gaming, the increased use of staking, especially now that Ethereum is on the verge here of finishing their conversion emerged proof of stake.
I just look at our future and the things that we’re in the areas that we’re in is being high growth and positive direction. So, for me to go and issue equity, or raise capital at these prices doesn’t make sense.
In the future, we will always make an analysis to say does it make sense to — is it accretive? What are the uses of capital? always with an eye on shareholder value creation and although it doesn’t seem like we’ve created any shareholder value based on our share price, I can tell you today, the business is stronger than it’s ever been before. Like I said, we yield more tokens than we have before. I’m more excited about our businesses have ever had them before. The market is recognizing this, which tells me that it’s not the right time to even consider raising equity.
Josh Zoepfel
Okay, perfect. Yes, thank you. And then just one more from me, if I may, before I head back into the queue is I know you guys talked about the Metaverse architects, what is it back in — I think, I believe in February. And I know you guys launched a advisory serve practice you guys in April. I was wondering if there’s any, like maybe synergies in between those? And if there’s maybe an option to acquire more Metaverse architects and maybe do a tuck-in towards advisors?
Andrew Kiguel
Yes, so these are all synergistic. So, as the business started is going to be a backroom, we started off by wanting to own the assets. The digital land can be used with prepaid advertising space or space that can be usable for various things. And what’s really been guiding us in Metaverse Group is the demands of our clients and what they said we put in here, we’ve now serviced over 18 clients and have a lot of pipeline of new ones and ones that we’re planning to announce some big wins.
But all of these things fit together. So, the advisory services came because we started getting a lot of calls from people who were like, can you please explain this to us? Can you guys walk with how do we do this? The Metaverse, architects and that investment is because we want to have, the ability to have almost in house ability to create these virtual structures and buildings. It’s about making the business, integrated across all fronts. So that when a client approaches us, they can ask us for anything related to the metaverse, we can deliver it.
And I think that’s one of our distinctive advantages is that not only do we own a ton of land with you and the music hub, we own the fashion area. These are two very hot areas. With we’re approached, it’s more than just about a lease. It’s about the construction. It’s about the bill. It’s about hosting the party, it’s about the media. We’re encompassing a whole bunch of things here that are really being driven by our clients asking to see this.
Operator
Thank you. [Operator Instructions] Our next question on line comes from Mr. Bill Peppa [ph]. Please go ahead.
Unidentified Analyst
Hi, guys, good morning.
Andrew Kiguel
Hey, Bill.
Unidentified Analyst
You know, obviously a challenging quarter, given the lower spot price which had, these non-cash valuations at the P&L, but when I look at the stock price and the tape, it’s clear divergence between where tokens.com is trading today in comparison to the assets that are held in the portfolio. Obviously, you guys have a significant holding of the Ethereum. The Ethereum network is planning on conducting the transition to the merge in mid next month.
Just wondering if you could touch on some of the implications it might have to your portfolio and whether the company’s strategizing ahead of time in order to perhaps deploy more capital into the token, based on chain data, it appears that a lot of Ethereum tokens are sitting on the sidelines and some big whales are accumulating, just wondering what your thoughts are on that?
Andrew Kiguel
Yeah. So the first thing is we’ve been staking the Ethereum like the merge, and everything happening next month, has actually been planned for a couple of years, you know, the roadmaps there, although the timing hasn’t been set until more recently. So we’ve been staking Ethereum now since like 2020. And the viewpoint for us has always been that this is the clean energy alternative to mining, Ethereum, and for mining anything, because we use ownership. And not only that, but it provides a lot of improvements over proof of work, such as the volume of transactions and help bring down the gas fees on a Ethereum.
We see this always positive, the fact that this is happening next month, and that the people are accumulating the concern, we’ve seen ETH, up close to 78%. Since the end of the quarter, we’d love to be accumulating things taking more, ETH staking returns are expected to possibly double or more than double in the next, like four to five weeks. That all bodes very positively for us. Because you know, if you look at what we’ve done is we continue to accumulate ETH where we can, this is, I think, a great opportunity to buy, the fact that the merge is coming.
Again, I don’t have a crystal ball. And there’s a whole bunch of macro things like as I said, the war, interest rate hikes, fear of recessions that are hard to predict. But absent that the pathway for ETH And for all other proof of stake tokens that we’re holding that we’ve been behind now for a couple of years, is hugely positive.
Like I said, taking a step back, you look at the impact of NFTs and forget about NFTs in terms of like being textured or you know, age or crypto punks, we’d like that stuff too. But if you look at the macro implications of being able to provide a digital signature to something that exists virtually or physically, these are game changers in terms of how this is going to be used in the future, and through staking things like Solana, Polkadot, and ETH, we’re really at the infrastructure that we get paid, as transactions occur on the block on these tokens, which are only going to continue to use the metaverse when three metaverses are all built on these tokens and rely on staking. NFT’s, decentralized, finance all of these things happening in technology today.
And like I said, I this is going to be the 13th sector, the top sector, the S&P 500 at some point. This is a massively fast growing sector. And we’re playing it from the infrastructure level.
On the staking front, we’re playing it from the asset level through staking to the metaverse group, and it Hulk and as well building these businesses that are going to play into these trends. And so what I see what’s happening here with respect to ETH merge being completed in the middle of September, that’s hugely positive. And ETH been positioned there now for a while, so we’re happy to see it happening.
Unidentified Analyst
Great. Thank you for the color on that. Next I want to shift gears who the metaverse group segment of the business, you’ve been able to maintain a robust cohort of about 18 paying tenants during the quarter, and has more than 75 in the pipeline. Now, I believe that the company also mentioned in the past that you’re looking to cater towards the passion, music and sports space, are you able to provide any updates in terms of locking in arrangements or arrangements in the pipeline that cater to these different categories?
Andrew Kiguel
Well, we’re having various conversation and well, to be fair, the clients that we’ve been landing most recently have been more in like the financial institutions area. We’re having tons of conversations with various people on the music side, the celebrity side, these things take time, and we’ll explain why they take time.
Number one, there’s a lack of sort of knowledge and understanding. So we get a lot of calls from people are like we want to be in the metaverse really do and then you have to sort of walk through and say what is realistic? Let’s talk about which metaverse, let’s talk about visitor traffic. What is the end goal? Is it advertising? Is it awareness of the brand? Is it you’re trying to generate costs for yourself?
And so we get inbound from pretty much every sector and I think because we own the music hub, and a big part of the fashion district that certainly adds an advantage to us in those areas. But to be honest, the big clients that we’ve been landing lately have been in areas that have been more of a surprise to me.
And it’s like, it’s certainly been like very large financial institutions, cosmetics, places like that. So it tends to be very good. Look, frankly, we’ll talk to anybody because we can provide eight services for whatever a client is looking for.
Unidentified Analyst
Great. Thank you. And lastly, I just want to touch upon that remaining segment of the business Hulk Labs, congrats on the strategic financing. Maybe you can speak to that process of negotiating the partnership with the Democratic Republic of Congo and touch on what should we expect in terms of the economics in the DRC versus other existing key to the markets? And why Tokens, particularly the Democratic Republic of Congo story as an opportunity to capitalize and roll out the Hulk Labs platform?
Andrew Kiguel
I’ll turn that over to Devin, he’s best to speak to it.
Deven Soni
Sure. Hey, Bill. Great questions. I think a big part of our thesis on crypto gaming, overall, is that it has a really strong potential to onboard the next, several 100 million users to crypto blockchain and wallets. And, when we look at the fact that, there’s, hundreds of millions, if not billions, of people, globally that are that are just tremendously underemployed. And, this gaming sector enables people to really, create this kind of global transfer of wealth, that’s really kind of the first thing that drew us to the sector.
When we think about Africa and the Congo, some of the main reasons, we really chose to focus on that part of the world was, a very young active population, that already spends a lot of time gaming, the DRC, specifically has, population or 90 million people. On top of just the gaming, we see that a lot of the focus, globally in PDE, had been in places, like the Philippines and Indonesia, where there’s, probably, arguably more internet connectivity, easier kind of connected audience to reach.
Because of that, in the early days of play to earn, we were seeing significant saturation in the market, so that the prices that people and the revenue shares that, games and asset owners would need to pay, were in the, 60%, 70% of earnings range, what we found with the DRC was, a population that was really eager that had, a lot more, people in humans that we’re not being kind of focused on in this area.
So, we started dipping our toes in the water and spending time, evaluating the market. And we also found a, kind of a population and a set of partners that were very amenable to, to us, making investments in the region, training players, and just, we see it as a strong foothold to the rest of Africa, where we’re also, we also have players in places like Tanzania, we’re evaluating Nigeria, so it wasn’t sort of, the Congo is the only place where we had to be, it was just a place where we found really amenable partners that were, willing to give us, sort of access facilities at, recruit players and things like that.
And, to-date, it’s worked very well, there’s a really large active, waitlist and folks that want to, kind of work with us, and you guys think that’s going to continue to grow over the following quarters.
Andrew Kiguel
Yeah, but let me let me add to that, a bit Bill, to show you the significance, what we’re building there. So there’s something like over 400 million daily video gamers. And there’s for sure migration, if you look at where all the venture capital raised over the last 12 months has been going into this play to earn crypto gaming. And so new games are being generated all the time, and providing an opportunity for people to play these games and earn a return and be rewarded for playing the game that is convertible into Fiat cash.
So let’s go back what we’ve done there. We’ve hired the talent that we now own, what I would say is the premier gaming calculators that we offer for free on the hall collapse website. So you can go to the website and say, okay, what are the games offering now? And it’s a little bit similar to if you’ve ever been to crypto mining space where you can go in look at a machine and say, what’s the hash rate?
What’s your price of electricity, overlap, what sort of profitability number? We’re offering that for free to build a community. You look at the DRC we don’t have access to 1000s of players and we said we have a huge way, let’s say, we’re eating our own cooking right now by having the 150 players play for us. And then to play it, we’re going to have the platform that’s going to connect, almost when you say, investors, to players.
And if you look at the numbers we have now like owning IT, which games are the most profitable at any given moment we have access with the players and the way to connect people that can be a very interesting investment opportunity that’s not correlated to the market. And then again, very early stages for us, we’re returning 25% a month, based on people playing these games for us. That’s where I see the excitement in this business and what we’re building.
And again, you can look at the value of the assets in Hulk Labs. But that’s not where the value is, the value is here. And what we’re building the fact that, this business was started in January is now revenue positive. And you look at the milestones we’ve achieved to create what our vision is. I think that’s pretty significant, even if the market doesn’t recognize it today.
Unidentified Analyst
Great. Thank you, and congrats on being revenue positive across all the three segments of the business.
Andrew Kiguel
That’s obviously as of Q3 not in Q2, Hulk Labs revenue positive as at this quarter.
Operator
Thank you. Our next question on the line comes from Mr. Dave Browning [ph]. Please go ahead.
Unidentified Analyst
Yes, Andrew, thank you for you and the staffs attention to all these matters and bringing us up to speed very well done. I just had a couple of them. Couple of thoughts really pretty basic. One, regarding the sustainability and the amount of working capital you have for purposes of expanding the areas of interest that company has.
And then second of all, it curious to me, just from a simple share price supply and demand standpoint. We’ve gone through this terrible, I guess, I could say long term capitulation over the last number of months and share price. And from all technical considerations, it seems that the share price is pretty well washed out. And I think you touched on that by saying over.
So that was just one curious thing over and above the working capital thing in regard to this pricing. We’ve had some pretty substantial moves and both ETH and Bitcoin as well as some of the blockchain companies and yet, – and yet, tokens this verse mirthless, then kind of languishing down on the bottom. My question regard to that, Andrew? Is it not pro appropriate that to believe that as the coin space really gets more following and return to investor enthusiasm, if you will? Why? Why wouldn’t the share price of Tokens go right up with all the coins? So there’s two questions working capital and the idea about tracking where the coins?
Andrew Kiguel
Okay, let me address the second question first. I get a lot of questions. I spend a good portion of every day talking to interested parties or investors or potential investors. And the reality of it touched upon it before we’re a small cap stock, we’ve been pretty diligent and not over issuing equity. We wanted to think intentionally to keep a tighter for long term that creates value over the long term.
The small cap stocks in the space, haven’t really been tracking the — what’s happening for sure the larger ones have been seeing increases there. When it comes to the question of coin, I think, as I said earlier, there is there’s an institution or maybe two institutions that have changed the portfolio manager.
As a result, there is selling pressure, I believe on the stock that’s not related to the performance of the stock or the assets that we own, but as a result of a specific mandate within the universe entities, as a small cap stock, and because our liquidity isn’t great, we’re going to see potentially big swings down, as we’ve seen, and potentially big swings up as we’ve also seen last fall.
That’s just a function of the fact that, we have about 96 million shares outstanding and 7 million shares outstanding. There’s a good 25% of that is going by the Board and Management. And so, it makes it tough for me as a seller, and the markets not quite there ready to absorb it. It’s frustrating. Because I’m the largest shareholder, this impacts me more than anyone else.
And I’ve never sold a share. I don’t intend on selling any shares. But all we can do is sort of continue to sort of work our hardest, we don’t control the prices, I wish I was able to sort of, say, hey, this is a great buying opportunity, in my mind, given where the company is. But if it’s frustrating, it’s frustrating for sure, seeing asset prices go up and us not moving.
In terms of working capital, we’re good. I mean, you can see on the balance sheet, we will likely have a million US dollars available, we always run the business with respect to trying to prudent with shareholder capital, we try and run up the name of the business effectively when it comes to, people’s salaries, how we spend our capital, you can ask the people in the company or the people we deal with, we were always very prudent.
So I’m not concerned with working capital, worst case scenario for us is, we can sell tokens if we needed to. But our overhead, based on the cash we have in our overhead right now, each of the three businesses is pretty much self-sufficient from a revenue standpoint. So really, it’s just the things outside of operations like legal fees, accounting fees, exchange fees that we have to deal with.
And I feel that, we’re more than adequately prepared to handle that for at least 12 months or maybe even more, without needing to raise any capital. And if we ever did need to raise capital, we can go and sell some of our Ethereum, Solana, Polkadot, without having to do a bad deal in the market.
So working capital, I feel is solid. And again, I feel it’s frustrating. I don’t know how else to put it because like I said, it feels these calls all the time. And it doesn’t feel good as a CEO of a business, and going out and telling your story and feeling confident in the business. And then you look at your share price. And it’s down. Although from my perspective, the company’s a lot better off today than it was in November. But there are sellers in the marketplace where small caps are we’re going to be disproportionately affected during this type of time.
Martin Bui
So one more, one more thing, Andrew, if I might. I have been closely following staking yields, but as the return from your staking operations continue to hold up pretty well.
Andrew Kiguel
Within the staking terms, yes, I think the change in staking returns from Q1 to Q2, I think was down by about 1%. The average in the industry, most of our stuff was flat. Where it impacts us is that, if we’re receiving for staking a Ethereum, for example, you’re staking the Ethereum at and it was trading at $4,000.
That ends up being, $4,000 of revenue, when you’re staking Ethereum now and it’s at $1,900, when a couple of weeks ago was [indiscernible], we’re seeing a reduction in our revenue. But the return in the yield terms is we’re still receiving called 5% or 6% in East terms. And like I said, once the merger is completed, that’s expected to double and be somewhere between 10% and 14%, starting in about a month.
And so we’re not seeing any impact there is — I think there was a question earlier, but with the merge and everything. The staking and the proof of stake is the future of crypto. Every single new token, every single new project built without exception is built on proof of stake. Nobody built anything on proof of work anymore. And we’ve been there from the early days supporting this infrastructure.
So I don’t have any concerns about staking yields coming down at this point. I think the question is what happens to the price of crypto, if the price of crypto drops in half again, that’s going to hurt us. If the price of crypto doubles or triples that’s going to be a huge benefit as well.
Unidentified Analyst
Well, that that said just one last comment that if we do get a turn on the upside in the coin space, the opposite is got to happen in terms of helping the company as opposed to when coin prices go in thetoilet.
Andrew Kiguel
I would hope so again, I don’t predict and there’s like macro factors out there. And like I said if we have one person decides to sell tomorrow for reasons unrelated to the stock, but if you look at what happened in the past in the fall, most crypto hit all-time highs in November of last year. I don’t think that’s coincidental that we also hit our all-time high in November of last year as they’ve many publicly traded crypto stocks.
And so although, I continue to make the argument that this company is far more than its crypto holdings, because of these businesses that we’re building, we have traded to trade, not perfectly in line, but we have been shorted trading in line with the broader cryptocurrency market, which, like I said, in Q2, I mean, I think the market for staking Tokens was down about 70% in terms of spot price over the quarter, that’s going to hurt us. And you can see that in the non-cash write-downs. Again, it’s all non-cash, we haven’t sold anything. So it’s not a loss until you sell it right, in my opinion.
Unidentified Analyst
Andrew, thank you very much for your interest the staff and bringing us up to speed very helpful. And God bless. And we’ll hope a few people out there that are well thought out and learned in terms of what’s going on with a company, we’ll get on board. And we’ll see the stock up out of the dregs of $0.30 a share. Again, thank you very much.
Andrew Kiguel
Thank you, and we hope so too.
Operator
Thank you. Our next question on the line comes from Mr. Adam Brentlinger. Please go ahead.
Unidentified Analyst
Thanks. This is probably for Hulk and Deven. I want hopefully some more detail around the onboarding of the players. You mentioned around 150 players, and then 2,500 or so on the sideline. My questions are at what rate are we onboarding new players? What are the limitations to that rate? And what are the solutions? I think plate group is probably one of those solutions?
And then more so what’s your timetable to get to 10,000 or 100,000 players? Or are those just completely unrealistic numbers? My concern as an investor is, are they are we able to scale fast enough to be prepared for the gaming to go primetime? So I guess at what rate are we getting players? And what are the ceilings that you see on that network?
Deven Soni
Sure, no great questions. It’s something we think about on a daily basis. The good news is we really look at — look like look at scaling more like a switch turning on than we do kind of a broad linear grind. We know the demand is there for people to play with assets.
And I think that the challenge for us right now is that the entire industry does not have the tooling and the software required to do things at a level that that we want in terms of security and intractability, and also from the requirements that we have as a public company in terms of things like custody.
A lot of what we’re building internally today is facilitating our ability to automate things that are right now, very manual. So, just as a very simple example, today, if we wanted to create 150 new wallets to add 100 players, that would need to be done in a very manual way.
However, what we’re doing is building tooling that says, hey, let’s for the button and administer 100 wallets, secure the private keys, give people access to those wallets in efficient ways. So, we really — like I mentioned, we’re going to see this as a switch, so the 150 players that we have today are really working to give us data, that ensures a truly that we build is something that can be used.
So we feel really good that, we should be able to get to that 1,000 player plus mark by the end of the year, and I don’t see a barrier once we’re from 100 to 1,000 to get to 10,000 or more. It’s really about just — the other element, I will say is, some of the games we do find that are the most profitable, or not the most scalable. So, it’s a bit of a balancing act of saying, this game has a higher months yield, and better tokenomics, but you can’t actually buy 10,000 assets in it without dramatically impacting the price.
So, these are all kinds of things that we think about on a daily basis. But what I will say is that there are titles out there that we feel good about, that we can put 10,000 players into, we have the access to 10,000 players, and we’re diligently working on building the tooling, which will be ready in a matter of months to have us able to track manage, monitor securely sort of the players and their components.
Unidentified Analyst
Excellent. Thank you.
Operator
Thank you. Our next question comes from Mr. Scott Schultz [ph]. Please go ahead.
Unidentified Analyst
Yes. Hi, Andrew. Just a quick one. Obviously, we talked about a rough second quarter crypto and share price. What can you just talk about what impact that’s had and kind of what your current status is for NASDAQ aspirations?
Andrew Kiguel
Yes. So, we’re always — that we talk about the NASDAQ a lot. There’s a couple of things that the NASDAQ is you need a certain valuation, and share price to get there. And so I believe that for us and looking at this, you need sort of a minimum, depending on the different levels, but we’re looking at sort of $2 or $3 share price, which means we’d have to spend some capital here and do a big consolidation.
I don’t — back in November, you’re trading in close to $4. That made a ton of sense. Today, if we were to do a rollout to get it to those prices, I think we’d be taking away a lot of liquidity out of the market. I’ve also seen some sort of question marks around the NASDAQ’s willingness to understand and accept our business plan.
But these are all things that are on the radar, had things continued to move in the direction that they were going in last November, it certainly would be a top priority. Today, the top priority is, hey, let’s continue to build this business, get some recognition from the market, knowing that ultimately, we would love to end up on the NASDAQ.
But I can’t do it with a $0.30 share price, I have to do a 10 for one roll up. We have 9 million shares outstanding or something. I don’t know what that’s in the best interest of shareholders today.
Unidentified Analyst
Yes, makes sense. That’s all I had. Thank you, Andrew.
Andrew Kiguel
You’re welcome.
Operator
We have no further questions at this time.
Andrew Kiguel
Okay. Well, thank you, everybody. As I said, management recognizes that things haven’t been pretty this year. We’re cognizant of it or not. We’re doing our best and trying to come up with strategies to get our story out there. We’ll be at various conferences this coming fall that we’ll be talking about our story and trying to get out to a larger audience, or as frustrated as anybody who’s held wishes to this time, and we’re continuing to work by continuing to build the business. We’re never taking our eye off sort of going to us for the long-term. And hopefully, at some point, things turn and people start to recognize the value of the things that we’re building here within Tokens.com, that this is still very unique.
There’s no other public company I think in the world that provides the exposure to Web3, and the assets that we have and the businesses that we have. And so certainly that is a good thing. And sometimes it’s a bad thing, as it makes it harder to explain and to sort of convince people that they should have us in their portfolio. But we’ll continue to work, we thank everybody for their support. And if anyone has questions, certainly through our website, we can be reached.
Operator
And thank you, ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.
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