Tokens.com Corp. (OTCPK:SMURF) Q4 2021 Earnings Conference Call April 4, 2022 4:00 PM ET
CompanyParticipants
Andrew Kiguel – Chief Executive Officer
Ian Fodie – Chief Financial Officer
Conference Call Participants
Operator
Welcome to the 2021 financial results 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. During the question-and-answer session, if you have a question, please press 1 on your touchtone phone — please note, the conference is being recorded.
I will now turn the call over to Andrew Kiguel. Mr. Kiguel, you may begin.
Andrew Kiguel
Thank you. First, welcome, everyone, to the tokens.com conference call for the 2021 audited financial statements in Q4. First off, I want to just apologize for filing slightly after we said we were going to, the auditors made a last-minute request for an extra 24 hours just to complete their work. Obviously that was done very late in the process, so we didn’t have much choice around that. Part of that related to there being some accounting shifts on the treatment of things like warrants that are not related to tokens or crypto at all, but just required some extra time to account for them for the satisfaction of the auditors. So again, apologies on that.
Moving into the results for 2021. It was a very busy year for management, and we accomplished a lot. Keeping in mind that Tokens.com is still a fairly new company with a limited operating history. The operations began in 2020 with a focus on crypto staking, which we still believe is a crucial part of the infrastructure for deep-buy DeFi and NFTs. And this involved using our balance sheet to purchase an inventory of tokens and staking them to own compensation in additional tokens.
Today, Tokens.com has evolved to have 3 Web3 verticals. The first vertical remains that of purchasing and stake in tokens. We use proof-of-stake technology to earn additional tokens. The second vertical is Metaverse Group. It’s the majority-owned subsidiary that’s focused on building a vertically integrated digital real estate business. And the third is our wholly owned subsidiary called Hulk Labs, which is focused on NFT assets and investing in crypto-based games that have token returns attached to them. Across these 3 verticals, we leverage our human resources and our knowledge base and utilize synergies across these businesses to make sure that they’re successful. And thus far, we feel very confident about the success of all them. From a high level, our investment approach is to identify the key trends happening in the crypto and Web3 sectors, purchase assets and build businesses linked to the macro growth of these assets. We remain confident that our assets and businesses are poised for further growth in 2022 and beyond.
I’ll now talk a little bit about some of the operational highlights from 2021. As I said, it was a busy year. We did our initial IPO raise of CAD 25 million in equity last March, which was followed by a listing of the NEO Exchange in Canada. The NEO is a senior Board in Canada that is home to pretty much all of the crypto blockchain public companies here.
We also commenced trading on the Frankfurt Stock Exchange and in the U.S. on the OTC venture market. We’ve purchased numerous tokens in the year, Bitcoin, Binance Coin, Polkadot, Axie Infinity, Ethereum, Terra Luna, Shiba Inu, and Solana.We acquired majority control of Metaverse Group, and I’ll talk a little bit about that later. While under control of Metaverse Group, we did at the time what was the largest Metaverse real estate transaction in history and the purchase of the Fashion District in Decentraland and we immediately turned around and announced an agreement to lease out that land to Decentraland to host the first ever Fashion Week, which was held in March 2022. We’ve successfully grown Metaverse Group from really just being a business that helps some assets into being a fully integrated real estate business with several employees in several different areas.
And finally, at the — in November of 2021, we closed a CAD 6 million unit offering consisting of long common share 0.5 warrant. In terms of 20 and 21 highlights, most notably, we continue to grow our assets, positive staking margins, net gains on revaluations of digital assets and the same thing for Q4. In terms of the capital markets review, we certainly haven’t been happy with where our share price has been. We do believe this is temporary, the backdrop has been tough, causing volatility for not just our company, but for all small caps and particularly those in the small cap — in the crypto sector, I should say.
With myself as the largest shareholder, nobody wants their share price to reflect their value more than I do, and I certainly have not sold a share to date. But in terms of the backdrop, crypto has dropped from all-time highs in November. There’s been substantial interest rate fear and inflation fears that have really been causing a lot of volatility. And of course, the Russian invasion of the Ukraine, which has resulted in some sectoral shifts with capital. What has resulted though is our company today is stronger than it was in November when we hit our all-time highs, yet we’re trading at far lower prices. We’re continuing to explore ways to remedy this, keeping in mind that this industry is volatile and that we’re building this business for the next 5 years, not just for the next 5 months.
Our financial statements, which Ian will review in a second, provide a picture at a point in time as [ implemented ] by accounting rules, but we do believe that there’s far more value in our business that isn’t reflected in those figures. For example, our domain name is carried at book value, although we received far higher valuations for it. Hulk, our newly formed entity in January, it’s making a lot of progress is not even reflected in those numbers. Metaverse Group has carried at book value, although we have premised into a leading operating business in the Metaverse sector and it’s been valued at multiples higher than what we’re carrying it at.
Keeping in mind, when we’re talking about the Metaverse that Citibank put out a report, I believe, this week saying that they believe the Metaverse is an $8 trillion to $13 trillion market by 2030. That’s only 8 years away. Metaverse Group is at the forefront of all this. We started that from a small land acquisition company to now, again, a fully operating business with recurring revenues, several tenants and a lot of online advertising.
Other things that are noted, the Oasis Rose tokens that we own were not fully reflected in this audit. That’s partially due how it’s contracted to us, which will be fully reflected not until May. And there was also many onetime noncash items against us, such as the charge against the warrants issued on our last fund raise, which again, some of these new accounting treatments required us to take some noncash write-downs of that.
As I mentioned, although the market may not recognize that we do believe we’ve been creating a lot of substantial value within the company. The company is being run very [indiscernible], as you can see from our management fees and salaries. So maybe with that, I’m going to turn it over to Ian to provide you with an overview of the financials.
So, Ian, are you there?
Ian Fodie
Yes, I am. Okay. Can you hear me?
A – Andrew Kiguel
I’ll turn it over to you. Yes, we can hear you. And I’ll turn it over to you to walk through the financials at the end of that, you can turn it back over to me, and we can take some Q&A.
Ian Fodie
Wonderful. Thanks, good afternoon everybody. just going to quickly run down the — both the year-end numbers and our Q4 because it continues the trend that’s happened in Q3 for us. So very quickly, our revenue for the year was approximately CAD 1.1 million, and we had operating expenses totaling CAD 6.3 million. What that transpired to after other adjustments was a net loss attributable to Tokens.com shareholders, and I say attributable to Tokens.com shareholders is because we have the minority or the noncontrolling interest of Metaverse, that has an impact on our financial accounts now. So the net loss for Tokens.com shareholders was CAD 8.2 million. However, when we look at adjusting that net income for noncash and onetime items like share-based comp, listing expenses, the revaluation of digital assets.
And as Andrew has already mentioned, the new accounting issue of the revaluation of the warrant liability, that net loss turns into a positive net income of $0.7 million for the year. Likewise, our comprehensive loss attributable to Tokens.com’s shareholders was $3.9 million. And once again, once that gets adjusted for noncash, it would show an adjusted net income of $1.6 million. From a perspective of Q4, we had revenue of $300,000, operating cost of $3.3 million, which created a loss for our shareholders of $3.7 million. But once again, removing all of the noncash and onetime charges would turn into an adjusted net income of $0.1 million. Likewise, the comprehensive loss of $1.6 for Q4 would turn into a net income of $4.3 million. So you can see the impact that the noncash and onetime charges has on our operations.
As far as cash flow is concerned, Andrew has already mentioned that the fundraising the company has done. The financing for the company has contributed a total of $32.0 million for the company. We’ve used $3.6 million of that in our operating expenses, and we have invested $20.7 million. So what that has done is that it’s created a net inflow of cash for the year of $7.7 million. So we have cash left on our balance sheet at the end of the year of $9.7 million. When you add that to the assets that the company has, we have a total current assets of $40.1 million and an extremely strong working capital number, part of the working capital of CAD 38.7 million. So as Andrew has already mentioned, the company is in an extremely advantageous position to continue to work on our strategy for the new year.
Andrew, I’ll pass it back to you.
Andrew Kiguel
Thanks. So again, I’m a little bit biased, but I do believe that we’re very undervalued by any metric, especially when you start incorporating in the valleys and where these businesses are today, every CEO wants to see the company share price go up, and we’ve been working very hard as a management team to demonstrate the value that we have and to attract more investors. And we give you the commitment that we’re going to continue to work hard to do that.
So maybe with that, operator, we can turn that over to questions, please.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question on line comes from Joe Gomes [ph]. Please go ahead.
Unidentified Analyst
Good afternoon.
A – Andrew Kiguel
Hi, there.
Q – Unidentified Analyst
So a couple of questions here on the numbers first and then maybe after those when you get to the bigger picture. But you were saying the revenues in the fourth quarter came in at around CAD 300,000, which would be down from what it was in the third quarter. Just trying to get an idea of what was behind that sequential decline in revenue.
Andrew Kiguel
So some of that has to do with the fact that cryptocurrencies dropped. So the way the revenue is recorded and Ian can step in, but it’s the value of the token on the day that we state it if the prices of crypto are going down, that will be reflected in as lower income — sorry, lower revenue.
Unidentified Analyst
Okay. And the nice thing that I saw there, the staking yield in the quarter — fourth quarter was 28.4% for the full year was 19.2%. What drove the staking yield up in the fourth quarter? And do you expect going forward to continue to see those types of staking yields? Or do you think that will come down?
Andrew Kiguel
So the way we calculate those staking yields is based on our cost basis. So part of the answer is the same to the first question I answered, which is I’ll give you an example. If we’re mining Ethe or sorry, stake in Ethe at CAD 1,000, let’s just say Ethe was CAD 1,000, we’ve taken Ethe and we received something that’s worth $1,000. That’s recorded as revenue. If at the end of the quarter, that has gone to CAD 2,000, we can record the upside on that, and we record our yield based on that upside. And so while the yield in Ethe might only be approximately 6% if the value of Ethe has doubled back or to 12%, if it’s tripled, that would go 3x the amount. And so I can give you another example with the Oasis Rose token that we hold. When we originally purchased that, it had a CAD 0.03 — it had an 18% yield or payment in additional Oasis tokens because that token has gone up by over 1,000%, but let’s just say 1,000% that 18%, when we value it into fiat terms, is more like 180% staking return on our investment and that’s how we measure it.
So really, when you’re looking at things like the staking and the revenue, it’s just the function of that moment in time and where crypto happens to be at that point.
Unidentified Analyst
Okay explanation. And if you look at the operating expenses in the fourth quarter and then we take out the share comp and the onetime expenses, it looks like it would have roughly been about CAD 2.1 million for the quarter. Anything else to adjust that? Or is that kind of a good number, a good run rate going forward here on the quarterly OpEx side?
Andrew Kiguel
Could you repeat that? I just want to make sure I understand it.
Unidentified Analyst
Sure. So if I was looking at — let me just pull that up to here. So I’m looking at the MD&A that you guys filed and it says your operating expenses for the 3 months were CAD 3.3 million include noncash share-based payments of CAD 394,000 and onetime financing and listing expenses of CAD 773,000. So if I take that roughly CAD 1.1 million, let’s call it, CAD 1.2 million subtracted from the CAD 3.3 million that gives me a normalized, so to speak, operating expense of about CAD 2.1 million. Is that CAD 2.1 million a good number going forward for where you see those operating expenses, excluding the noncash share.
Andrew Kiguel
Yes. That seems high to me. And I’m happy to do an off-line walk through with Ian and I to go through that, but that number feels about CAD 1 million high.
Ian Fodie
Okay. And Andrew, if I can add on to that, this. You got to remember that in Q4, we have to make an accrual for our audit fees for the year. So that’s a onetime hit in Q4. Also, our advertising and investor relations activities have been extremely strong throughout the current year because the company was launched, and we got a lot of exciting things going on, a lot of activity. And I think we anticipate the annualized levels of those costs to be a little bit less moving forward as well. But certainly, the professional and consulting fees number has the full year’s audit accrual in there.
Unidentified Analyst
Okay, that makes sense. Thank you for that. If I can get 1 or 2 more in here. So you mentioned the fashion show on the Decentraland land there. How did that go? What did you accomplish with that? And what kind of the key takeaways from holding that event?
Andrew Kiguel
Sure. So that event was held by Decentraland on our property. We are the virtual landlord. But we did some of the things as well. But I think — I’ll tell you what we did and then I’ll tell you what I think that demonstrates to the market. So the first thing was that the majority of the show was held on our lands, and we were compensated for that. Number two, there were several top brands that were there on our land, such as Dolce Gabana, Jacob & Co and many others, with some of the brands, and I’ll point to Forever 21 is a good example, we went and provided them what I would call a full stop shop for everything that they needed. And so we designed their building, we designed the NFTs for them. We helped coordinate the sale. We helped coordinate their fashion show, including the music and DJ.
And on something like that, we’re compensated not just for the rental of the land and the building of the building, but also a portion of any NFT sales. So in stepping back, what did this whole thing really demonstrate? Well, when we initially bought the land in the Fashion District, I think there was a lot of people who were skeptical as to how we would be able to monetize this. What I think we have validated which is exactly what we said, which is that we are able to charge rents, we are able to create a business around this that involves digital advertising, which a lot of groups are now paying us for. It involves providing design and architecture services in the Metaverse. It involves being able to host events.
And when you put that all together, it really starts looking a little bit like a SaaS model with recurring revenue because, again, these are things that keep coming back. And right now, within that business, we are talking to, I would say, in the dozens of groups about further rentals, some of them from the fashion show, whole bunch of new ones. The event itself got great coverage in all kinds of newspapers like Vogue, The Wall Street Journal again, what that led to is a bunch of parties and brands and retailers that didn’t participate that contacted us immediately after the show to say, “Hey, when are you guys doing this again?
How do we participate? How can you help us create a footprint in the Metaverse. And so I believe that what we’ve done is we had a thesis that we could buy the land and use it to generate recurring revenue, and we’ve now validated that at the very beginning point of starting to build that.
Unidentified Analyst
Okay, great. That was excellent. I appreciate that. And one more, if I may. You talked a little bit about Hulk Labs and kind of just launching and getting that off. I mean how much do you expect to expand on this platform in 2022? And any plans to acquire a company in the P2 play to earn field or space or just more looking at organic growth through Hulk?
A – Andrew Kiguel
So I can’t comment right now on the acquisition side. That is, I would say, a material non-public, but what I would say is that I would expect, based on our plans, we are looking to build Hulk as big or bigger than Metaverse Group. And so it’s probably going to be a combination of both organic and acquisitions that we’re looking at there. We’re super excited for that business and what we’re doing there.
Unidentified Analyst
Great. It’s exciting times. Thank you, Andrew. I’ll get back in queue.
Andrew Kiguel
You’re welcome.
Operator
Thank you. [Operator Instructions] Our next one comes from Robert Alcatraz [ph].
Unidentified Analyst
Thank you. Hi, Andrew. General question about the NASDAQ listing. I know you’ve mentioned that in the past as a stated goal. I know a lot has happened since then. Is that still a goal? If so, is that a long-term goal or more of a short term? I know there’s not a lot you can say on that. But can you kind of give us a high-level timetable type of thing?
Andrew Kiguel
Sure. So number one, yes, it’s still a goal. I think our business is well suited to the NASDAQ, and it would open us up to a whole new broader investor audience that really wants to get exposure to what we’re doing. To my knowledge, we are still probably one of the only public companies that provides people this direct exposure to Web3 assets like the Metaverse Group and operating businesses that are earning revenue within these areas. The process for the NASDAQ is really this. We’ve been investigating to make sure, number one, we meet the criteria to list there. We’re making sure that the cost base is in lining of anything else, and there’s an application process. We can’t — we don’t know how long the application process will take. We’re certainly looking to engage into that. And I would say it’s a goal. We’d love to be able to do it this year. But I don’t have anything beyond that to report other than to say dead square and a radar and we’d like to get there as soon as we can.
Unidentified Analyst
Okay. Thanks, Andrew.
Operator
Our next question on the line comes from Dave Brownie [ph].
Unidentified Analyst
Yes, Andrew; a great job in terms of what you’ve accomplished so far from really ground zero to where you are. So again, good job on that. I had a couple of questions. If you could comment to the group, will the staking operation continue to be kind of the hard rock basis part of the business. And the real, real upside is in the other 2 sectors. Could you comment on that?
Andrew Kiguel
Sure. In my mind, when I process what we’re doing, it’s really all part of the same technology, which is the utilization of blockchain technology across the different verticals with consumers. I still really like the staking business. I think in staking, we’re really part of the supporting infrastructure of Web3 of the Metaverse of DeFI and NFTs. And I think that’s a really important place to be and I’m still super excited about that business. What’s happened since though is that the metaverse side has really taken off, and there’s a lot of excitement there and that business has been growing faster. That’s a full operating business now with over 10 employees. We’re hiring people on the customer service side and trying to keep up to the demand. And so I think it’s a mix and a balance where capital is going to go to is where we see the opportunities. We certainly won’t be selling any of our staking portfolio. And we’ll see how we can continue to grow it while also leveraging these 2 operating businesses.
Again, both operating businesses are always focused in on owning assets first, liquid assets first, that we can then apply services and businesses to generate revenue. And again, we’re at the early stages of all 3 of those verticals, but we’re starting to see that progress where all 3 of those verticals are now revenue positive. And for a business that in a sense can still be considered a start-up, I think we’re doing a pretty good job there.
Unidentified Analyst
Let me just expand on the — in the way of a question regarding the the gaming business and so forth. What do you see just kind of simple statement, the upside potential in that part of the operation?
Andrew Kiguel
So the upside is massive. If you look at other gaming guilds that are out there in terms of comparable to what we’re building, they have private valuations in the several billion dollars side. So if you were to look at our market cap today versus where I think we will have built over the course of the next 6 months, it would be comparable in size to these private businesses that have valuations in the billions. So I don’t know where the value sits are going to stay. And obviously, we’re evaluated differently as a public company. But I’m super excited about what we’re doing there. And again, you’ll continue to put out there that we hope the market will continue to recognize what we’re doing because we think we’re really on the cutting edge here in all of these areas and with respect to what we’re doing.
Unidentified Analyst
Those comments excellent in terms of the 3 basic businesses. Could I ask as a last question, Andrew, the gentleman before me asked about the NASDAQ listing and so forth. In reality, is it probably for us, people — or all the people that are on the line today that are interested in the company and share price improvement. Is it realistic to think, Andrew, that it may take a NASDAQ listing before you obtain the real sponsorship that’s necessary for share price increases.
Andrew Kiguel
That’s a good question, and I wish I had the crystal ball to know that. I can tell you back in November, when crypto prices were hitting all-time highs in mid-November, so were we. And so this company still remains largely linked and leveraged to whatever happened in the crypto world. And look, even in the Metaverse, Metaverse real estate is really just an NFT. It’s a type of NFT different than the ones you’re hearing about, but that’s what it is. And so we’ll always remain highly tied to what’s happening in the crypto space. We didn’t have a problem achieving spectacular volumes and really good share price back through from — I think it was from September, October, November, I don’t know what it’s going to take. We’re going to keep working hard. I think a NASDAQ listing notionally could help improve our liquidity and access to new investors, but we’ve also shown that the in the right market that our share price can perform under the current circumstances as well.
Unidentified Analyst
Just to finish up, Andrew. It seems to me from all I read in the report plus what you — you and your number wizard have shared today that — and probably I’m not very objective about this, but the share price at these levels look like a give away. So with that, again, I want to thank you and continue on with your good work.
Operator
Thank you. [Operator Instructions] Our next one on line comes from Kevin Dede [ph].
Unidentified Analyst
Hi, Andrew. Thanks for taking the questions. Just a quick follow-up on your fashion show. I appreciate the insight you offered on the corporate side. I was just wondering if you had any feedback or insight as to who watched it, I guess, within the Metaverse and whether or not you had access to any of that data, we will have access to that data. I believe it’s still being put together, but there’s a couple of interesting touch points we can give you. This one I find really fascinating. So Forever 21, we built the facility for them. It was on our — basically, the who’s who of the fashion show was on our land. And Forever 21 was a good one because we had a relationship with them beyond them just sort of doing the work and that we helped them build it structure and put something really unique and immersive together for them. This is an interesting statistic.
The amount of time that people in the Forever 21 shop spent there was over 20 minutes. I believe it was 24 minutes was the average time spent in the store. Let’s compare that now to a website. Most people who go to a website, especially for a brand or for shopping, don’t spend that much time. And I think we were all pleasantly happy to see numbers like that because it just to validate why can start using this as the next iteration of the Internet, the exideration of shopping, branding and advertising. If you can go in and somehow engage a potential client and an environment that’s fully surrounded for — with your things for 24 minutes, that’s a pretty good metric. Agreed it be comparable to having them in your store, bricks and mortar.
Andrew Kiguel
Correct. And so when you think about the promise that we have this area built out, and I don’t know if you went and saw it, Kevin, but I mean it’s a whole neighborhood with tons of things going on and there were shows like people performers and DJs, you go there and you walk around, if we can start communicating to people, hey, this is a way to have someone spend this much time in your store, almost the equivalent to a bricks-and-mortar or physical store, that will only help us to attract more and more tenant. And we put out all these press releases, I mean, I hope people don’t think they’re fluff when they’re putting them out all the time with like, hey, we signed a new tenant. We signed a new tenant. What I’m trying to do is communicate to people, we had a thesis. We are now validating our thesis, people will pay us to provide design, architecture and leasing services online advertising for them in the Metaverse.
And I think that’s really significant because people, frankly, 6 months ago didn’t know if this was going to work. we had a VC tell us that they — from what the research they’ve done, they don’t know of any other Metaverse company that’s collecting the rent in the Metaverse. And so when you start looking at this and comparing it — and again, I know this is a bit of a stretch, but you start comparing it to other companies that make revenue this way.
You’re talking about Google, you’re talking about Facebook/Meta. We’re charging people for this advertising revenue and the ability for them to engage with potential customers to advertise and reach in the demographic in a way that hasn’t been done before. We’re really breaking ground here.
Unidentified Analyst
So speaking to your point on rents, given the influx of interest that you’ve had post show, is there an opportunity for you to adjust rents higher?
Andrew Kiguel
Yes. In fact, what we’re doing is we’re coming up with a different model. what we’re finding to be more lucrative and exciting for us and the conversations we’re having with various groups as this. Rather than us giving you a rental fee or a charge for the land for the digital land, why don’t we partner, we create the building together. We each contribute to the building of the development of the land. However, subsequently, we would share in any NFT sales that you make. And so the potential for this is huge. If you look back and you see what Adidas did with Steph Curry, the basketball player, I believe it was in under 1 minute they sold $20 million of digital shoes, okay? If we are able to create good partnerships with good brands, good retailers and create a sort of a JV where, hey, we can design this for you, we can create the NFTs we can create the event, and we get a portion of the sales of NFTs, that’s a far more lucrative model than collecting a few thousand dollars in just digital rent.
Unidentified Analyst
Andrew, could you just remind us of some of the other properties you own and the opportunities they present an offering or perhaps Tokens.com, rather, offering other interactive events?
Andrew Kiguel
Yes. So we own across 7 different Metaverse. I don’t have everything in front of me, but we own a lot in Sandbox. We own Sandbox would be a good comparable to Decentraland. However, it’s still in beta version, but that’s where SnoopDog is, did a spot land there. We also own Somnium Space space. Somnium Space is the one that’s backed by the Winklevoss brothers. It’s more of a higher resolution VR focused Metaverse. We own in SuperWorld, which is a recreation of the world. We’ve bought a bunch of stuff there in the equivalent of Miami and New York. We’ve bought one called NFTs world, which is linked to the platform used by Minecraft. So installed user base there. But — and there’s a couple of others that we own in, but we have a fairly deep portfolio, and we’re certainly on a daily basis, exploring how this happens.
The one that’s easiest to monetize on today is Decentraland because it’s not in beta and it’s easily accessible by a lot of people. What I always say is the central land has only approximately 45,000 parcels available for development, okay, that can be owned that are owned. Their growth rate last year was 3,300%. They’re surpassing 1 million, I guess, registered users. At some point, if they’re able to continue on this growth rate and continue to build this business and there’s 5 million, 10 million, 20 million people using their service or that Metaverse what’s each one of those 45,000 parcel is going to be worth. And what are people going to be willing to pay in terms of advertising revenue in order to access that demographic. And that’s, again, the thesis that we’re starting to prove out, which is if we buy large contiguous estates in these Metaverses we can then approach brands like Forever 21.
We also announced the deal with SKECHERS, large brand and work with them to create immersive experiences for consumers to go in, shop around, learn about the brand, they can access this new demographic and then we can continue to sort of grow that across various metaverses. We’ve already been talking about replicating tokens TOWER, which I haven’t even talked about, but replicating that in Sandbox as well.
Unidentified Analyst
Are your transactions, the rent that you’re collecting and advertising? Are they paid you in MANA token?
Andrew Kiguel
No. We’re doing the transactions in the fiat equivalent because that is the most frictionless way for many corporations to enter this. One of the appeals that we have from any corporation is that while we have a lot of crypto natives on the team, there’s also a lot of people from the financial world and from the real estate world. And so we can provide them with a frictionless entry point into the metaverse where they don’t have to figure out how to transact in MANA.They can just pay us in U.S. dollars.
Unidentified Analyst
Fair enough, Andrew. Thank you for your time and attention.
Andrew Kiguel
No problem.
Operator
Our next question on line comes from [indiscernible].
Unidentified Analyst
Hi, Andrew, thank you for this today. I want to say really quickly that I am glad to hear that the staking operation is still a focus for you. The staking operation is what brought me to this company for all of the reasons that you’ve previously discussed, the lack of customer acquisition costs. You’re not having to educate the entire world on what blockchain, is the cryptocurrency is. You’re just sort of gaining revenue by merely being a part of cryptocurrency. And I really like that process. I think all of us are wondering just how valuable the new lease agreements are, congratulations on all of that with Forever 21 in all of the major brands that you’ve been in communication with and relationships that you’ve built, but we all want to know sort of what the value with the lease agreements are. We know — I know that I’m probably not going to get details, but can you just go ahead and just let me know, I mean, when should we get, I guess, another audited financial statements?
Because obviously, the one that we got today is unfortunately so old. So much has happened with the company that so much has changed. So if you could just speak to that.
Andrew Kiguel
Sure. So I think when you’re talking about lease agreements and the value of , you’re talking about the value of Metaverse Group.
Unidentified Analyst
Yes, that’s right. right.
Andrew Kiguel
So when I look at — when we think about the verticals as a management team, and I agree with you, I love the staking business, and I think it’s one of the best businesses and if we can continue to build that, we will. What’s happened though though with the Metaverse Group is that there’s been so much what I will call low-hanging fruit and opportunities there to build that in sort of a its, this exciting operating business that is backed by real assets. What I would tell you is that relative to what we carry it on our books, the company was recently valued at close to 10x the amount we’re carrying it for. And that’s really all I can say on it. There’s a lot of value attributed to that operating business and what’s there. I don’t know that you’re going to see right off the back, like millions of millions of dollars of revenue. I think the business is still in its infancy, and it’s very early with respect to the Metaverse. But certainly, that business, the value of the land that’s there is certainly much higher today with a lease on it and that it’s been developed than it was when we bought it. And I would say that the team that we’ve assembled there in this, what I would call the infrastructure to grow the business certainly is not reflected in the financial statements that you — that we put out today.
Unidentified Analyst
Thank you, Andrew. I do want to say that even if the first lease agreement was for $1, it would be irrelevant to me because it would — because it just — it’s a proof of concept. It proves that you are capable of doing exactly what tokens was set out to do. And obviously, the goal being to eventually create revenue and bring in income Regardless, this is a new frontier. Okay so…
Andrew Kiguel
But it’s more than a $. I would say it’s a — it’s a lot more than the $1.
Unidentified Analyst
But. Are we thinking we won’t get any new audited financial statements until next March? Or could this be like a twice a year thing? Or…
Andrew Kiguel
So I’ll add 2 things to that. Auditing statements is, and you can ask Ian, our CFO, is one of the most painful things you could ever do in life. We’ve literally been up 24 hours a day to get the stuff out and done. One of the things that we’re going to do, which I think you’ll — so doing — it’s also expensive. So during this twice a year is not in the cards in the long term. However, we did go to our Board and ask that we change our year-end to September. And the reason why is everybody who has a calendar year-end, ends up scrambling through March to get their audits and get trying to get the attention of the auditors on your project versus the dozens of other people that are trying to file at the same time is challenging.
And so assuming that, that continues to go forward, we push that through, the next year end for us will be the end of September, and then we have approximately — I think it’s an how how long do we have after the end, before we file, is it 8 weeks?
[Technical Difficulty]
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