Realbotix Corp. (XBOTF) Earnings Call Transcript

When we deliver them.

On the delivery. So that will be over the course of, I would say, the next 12 to 18 months. We're having conversations with several other groups on delivering robots. And in the past, we have made several robotic sales, not a ton. This is a new business. We are treading new territory here. Again, all products are sold with a 60% profit margin in terms of how we look at it. 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 Figure 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 and that we view that 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 great job to see our videos that our robots looked very human. The other area that's key for us is things like facial expressions. And so one of the holy grails of the robotic industry is having amazing facial expressions. And our robots have up to like 18 motors in the face that can create several types of expression. 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 talked about the various use cases. This could be museums, theme parks, conferences, hospital, 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 HC Wainwright 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 compassion or the relationship part of that AI, which means it can be a friend. It can be a boyfriend or a girlfriend or somebody that you just want to chat with. I think everybody likes to have somebody every day that they can communicate with. And there's certainly an audience out there for people that are looking for a friend. And we intend to make that usable in the robots. And we're also looking to create a subscription-based model out of that where we can license it out and it can be accessed via your mobile phone or your browser. That's further off. But again, all of these markets are quite large. 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 the development at Google or open AI 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.

Yes. 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 typical LLM models. It doesn't make sense to recreate the basis from which all of these systems have been created when it's already been done and it's open source. So we leverage multiple different open-source models to use for our fundamental 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 is 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 day-to-day basis, in the world. When you go into an auto parts store, you have social interaction with the person who's helping you find the transmission part that you need. And if you have a very sterile robot take that role, you take away that social interaction. And I believe that robots that are customer facing and are interacting with human beings being able to express and convey emotion and expression and have a simple conversation how is 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. 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 is any flexibility in that? Or any color you might want to add? .

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

We should have our early internal prototypes in the next 2 weeks. And over the course of the next month or so, we should be able to start sharing it with various people for beta testing.

So we're highly advanced on the AI front. We are selling actual humanoid robots. And we have another sort of business attached to that, that also is revenue positive, plus we hold a bunch of crypto. So I dare anyone to find a more interesting or exciting public company on the planet right now than we are. But the general message I'm getting from some people is that does it confuse 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 Star Walk investment. What do you think that offers Realbotix at this juncture?

Yes. It so far has been going extremely well. And so I want to make sure I'm not providing any material nonpublic. So Star Walk 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 have opened a lot of doors for us. And what I would say that they do is they accelerate our ability to advance our products. So 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 insights into other parts of the business in terms of people that we're hiring on sales, I whole bunch of different areas. So I would say a rate 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 thus far.

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

[Operator Instructions] There's nobody in the queue right now.

Okay. Well, maybe I'll just close it off and say, back to Kevin's questions, the way to think about us is our primary business is we can build custom robots and custom AI for clients. And I would encourage people to think about it in terms of conferences, media, think about an office space or a casino or these 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 doing things in crypto, Web3 and now robotics and AI. But again, management feels positive. We're working. We realized that the biggest weakness we have right now is trying to get some attention to our share price. And that is harder than you think, trust me, if we could make the share price go to $1, we would. That's clearly the biggest complaint that we get as a management team. But we're working with various people to try and get some more attention to get to more PR and I'm again hoping that once we get more attention on what we are doing and how unique we are, that will lead people to buy the shares. So maybe with that, we'll close it out. And thanks, everyone. Again, you can reach us through our website. I encourage people to look at the new website, realbotix.ai. There's a new customer website for robots that should be ready in about 8 weeks. And we'll share that as well publicly, and that will have some brand-new content as well. Thanks, everyone.