Mr. Andrew Kiguel reports

TOKENS.COM TO ACQUIRE AI AND ROBOTICS BUSINESS

Tokens.com Corp. has entered into a share purchase agreement dated April 4, 2024, to acquire all of the issued and outstanding shares of Simulacra Corp., a Nevada-based technology company. Simulacra owns and operates three subsidiaries focused on the integration of artificial intelligence and high-quality humanoid robots that improve the human experience through connection, learning and play. It is expected that the transaction will close on or about April 16, 2024. All amounts herein are expressed in U.S. dollars, unless otherwise stated.

Since 1997, Simulacra has been producing realistic silicone humanoid figures. In the past four years, Simulacra has generated revenues of $15.6-million ($21.1-million (Canadian)) and gross profit of $12.1-million ($16.3-million (Canadian)). The transaction is expected to be revenue accretive to Tokens.com shareholders. More information on Simulacra can be found on its website and an investor deck.

Utilizing its intellectual property and design expertise, Simulacra is positioned to expand beyond its current sectors of entertainment and marketing into other markets that benefit from high-quality, natural-looking, humanoid robots and personalized AI systems, such as health care (elderly care and mental health) and education. Through its customized AI and realistic robots, Simulacra is positioned to be a leader in the newly emerging AI companionship market.

"At Tokens.com, we have been at the forefront of Web3 and blockchain technologies over the last few years. Our move into AI and robotics is a natural extension of our scope. We are excited to enter this sector with industry leaders in the AI/robotics space," said Andrew Kiguel, chief executive officer of Tokens.com.

On the completion of the transaction, Matt McMullen, the founder and chief executive officer of Simulacra, will join Tokens.com as president and as a director. Mr. McMullen and Shrike Holdings Inc., another Simulacra shareholder, will also become new insiders (as defined in policies of the TSX Venture Exchange) of the company.

"We are on the cusp of a very exciting time as humans and technology create new ways of interacting and connecting through AI and robotics," said Mr. McMullen. "As we explore this new frontier, we are eager to share these opportunities in the public markets. This transaction with Tokens.com will greatly accelerate our strategic growth and market penetration."

"While other tech companies are building robots to replace human workers in warehouses, Simulacra's robotics serve the more immediate use case for AI and robotics: human connection, learning and play," said Mr. Kiguel. "While most AI tools available today are filtered for content and viewpoints, Simulacra's AI technology enables humans and robots to foster genuine connection through unfiltered, human-like conversation. We see our robots used in homes, hospitals and even in the c-suite. We even intend on using AI to assist in board governance."

Subsequent to the completion of this transaction, Tokens.com will provide investors with exposure to: (a) blockchain, through its cryptocurrency inventory; (b) social media, Web3 gaming and the metaverse, through its 15.3-per-cent ownership interest in StoryFire; and (c) AI and Robotics, through its 100-per-cent ownership of Simulacra.

"At Tokens.com, we invest in technologies that disrupt the norm and define the future. We have broken ground in the past through investments in metaverse real estate and crypto assets such as crypto-punks and Shiba-Inu. Our goal is to continue to tap into growth via unconventional opportunities that would be overlooked by other technology companies," said Mr. Kiguel.

Transaction consideration and other details

Tokens.com will issue 75 million common shares to Simulacra shareholders in consideration for the acquisition. This will equate to approximately 38 per cent of the outstanding common shares of Tokens.com on the completion of the transaction. The common shares issued to Simulacra shareholders will be escrowed for 12 months and then gradually released between months 12 and 24 following the closing date. Tokens.com will also grant an aggregate of 7.5 million stock options in exchange for the cancellation of 567,101 stock options of Simulacra.

In addition, Simulacra shareholders will have the opportunity to earn an additional 10 million Tokens.com shares if Simulacra achieves revenue targets of $8-million within any 12-month period during the first 24 months following the completion of the transaction and an additional 10-million Tokens.com shares if it achieves revenues of $10-million with any 12-month period between months 24 and 48 following the closing date.

Subsequent to the closing of the transaction, it is expected that Tokens.com will have a total of 195,995,592 common shares outstanding and 1,469,950 in-the-money options outstanding. The company also has 1,902,540 deferred stock units (held 100 per cent by directors on the board) and 9,777,289 warrants outstanding with an exercise price of $1.15 (Canadian) that expire in November, 2024.

The transaction is subject to customary closing conditions, including approval from the TSX Venture Exchange. Each of Simulacra and its shareholders is an arm's-length party to the company. No broker, agent or finder's fee is payable in connection with the transaction.

Simulacra subsidiaries

(i) Realbotix

Realbotix builds customized ultrarealistic robots that are AI enabled. These robots look, talk and move like humans, invented for use in entertainment, companionship, health care and education markets.

(ii) Anthropomorphic figure dynamics

AFD is a unique division that caters to government and health care projects that require highly realistic humanoids. This would include previous contracts with the U.S. military and John Hopkins Hospital.

(iii) Abyss Creations

Abyss Creations builds companionship-based humanoid figures that have the ability to be integrated with AI features. Abyss is the creator of award-winning, realistic humanoid dolls.

Completion of strategic review

Subsequent to the completion of this transaction, Tokens.com will have completed its strategic review (which was announced in November, 2023). Highlights of the changes made since announcing the strategic review include: (1) the disposition of non-profitable, early-stage businesses in a manner that still provides shareholders with upside exposure to Web3 and metaverse growth; (2) a successful move to the TSX-V to enhance liquidity and profile; (3) the contemplated expansion of the business into AI and robotics, including the proposed revenue accretive acquisition of Simulacra and its subsidiaries; and (4) the listing for sale of the company's domain name, Tokens.com and certain other intellectual property, with a view to rebranding the organization in a manner that captures its evolving profile and business interests.

Humanoid robotics market

Simulacra is focused on the convergence of AI software and hardware to enable humanoid robotics. The robotics sector is estimated to exceed $24-trillion in revenue annually according to ARK Investment management. Goldman Sachs predicts the humanoid robot market is anticipated to be $13.8-billion by 2028 and $38-billion by 2035. The growing use of technology in education is fuelling the deployment of humanoid robots in schools and driving the market's growth for the education and entertainment application segment. By blending entertainment and functionality, humanoid robots are revolutionizing how humans interact and engage with technology in various sectors.

Artificial intelligence market

According to MarketsandMarkets, the global AI market was valued at $150.2-billion in 2023 and is expected to grow at a compound annual growth rate of 36.8 per cent from 2023 to 2030. AI is revolutionizing multiple industries, emerging as a key driver for the advancement of technologies such as big data analytics, robotics and the Internet of Things. The rise of AI tools highlight the sector's mainstream appeal. With its current trajectory, the AI industry is poised to be a powerful tool for technological innovation, propelling advancements in the near future.

Conference call

A call will be held on April 8, 2024, at 4 p.m. EST, with Mr. Kiguel and Mr. McMullen, to discuss the transaction and to answer questions from investors and other interested parties.

Webinar information

Date:  April 8, 2024

Time:  4 p.m. ET

To join the webinar, please register. Upon registration, a Zoom link will be e-mailed to the registered e-mail address. The webinar will be available by computer, tablet and smart phone devices. In addition, a dial-in phone number will be provided in the e-mail upon registration. Callers dialling in using a telephone will automatically be placed in a listen-only mode. The question period will not be available to dial-in callers.

About Tokens.com Corp.

Tokens.com is a technology investment company that focuses on disruptive businesses that are defining the future. The company's assets provide shareholders with exposure to AI, blockchain, robotics and Web3. Tokens.com also owns an inventory of cryptocurrencies and a collection of top-ranked crypto-related domain names.

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