31 July 2019
Animoca Brands 2Q19 Update: Positive Operating Cash Flow with Record Cash Receipts and Revenues
Animoca Brands Corporation Limited (ASX:AB1) (“the Company”) today released its Appendix 4C for the three-month period from 1 April 2019 to 30 June 2019 (2Q19 or “the Quarter”).
Positive operating cash flow of $2.9 million received during the Quarter
The Company recognised record cash receipts of $9.1 million for the Quarter and $13.2 million for the first half of 2019
Record unaudited revenues of approximately $8.7 million for the Quarter and $13.0 million for the first half of 2019
Positive operating cash flow and record cash receipts
During the Quarter, receipts from customers grew 117% quarter on quarter from $4.2 million to a record $9.1 million.
Operating cash outflows during the Quarter included $4.1 million in administrative and corporate costs, of which $1.2 million was for one-time cash payments, including cash payments of $0.8 million for Earn-Out Payments to the founders of TicBits Oy which was acquired by the Company in 2016. Therefore administrative and corporate costs for the Quarter were $2.9 million, not including the one-time payments.
The Company ended the Quarter with $10.2 million in cash and $3.2 million in digital assets, which represents a net increase of 93% and 206% on the cash and digital assets, respectively, from the end of Q1 2019.
Record quarterly revenues
Animoca Brands received record unaudited revenues of approximately $8.7 million in the Quarter, the highest such quarterly result in the Company’s history. The Company estimates that its unaudited revenues for the first half of 2019 totalled $13 million, the strongest in the Company’s history.
Milestones during the Quarter
During the Quarter, the Company announced a partnership and investment into Lucid Sight, the Los Angeles based developer with a games portfolio that includes the blockchain game MLB Champions™, an officially licensed product of Major League Baseball and the Major League Baseball Players Association, as well as Crypto Space Commander (CSC), the PSVR game Herocade, Polyrunner, Star Drive, Z-Strike, and 405 Road Rage. The Company also became Lucid Sight’s partner to promote, market, and distribute Lucid Sight games in Asia.
The Company also announced the acquisition of Stryking Entertainment, a leading Germany-based company and the operator of the popular fantasy sports game Football-Stars. Stryking holds an official license from the Bundesliga, the top-tier German football league, for the right to use all club logos and player pictures. Stryking also has a license from renowned German football club Bayern Munich, one of the most followed football teams globally with more than 60 million social media followers. Football-Stars will add blockchain gaming elements, starting with the integration of a collectible game using non-fungible tokens (NFTs) centered around real football players and clubs.
The Company completed a heavily oversubscribed strategic capital raise of A$4.6 million at a 4.2% premium to the 30-day VWAP from international blockchain investors, Australian institutional investors, and existing shareholders. Animoca Brands received considerable support from top tier fund managers and institutions including Perennial Value Management, SG Hiscock, and existing shareholders Sun Hung Kai, Katherine Yip-Ribeiro (founder of Pacific Alliance Group and co-founder and partner of Vina Capital), and Moses Tsang (founder of Goldman Sachs Asia Pacific).
Animoca Brands announced that it acquired a 75% stake in Hong Kong-based mobile games developer Skytree Digital Limited, whose management team includes accomplished entrepreneurs and executives, as well as one of the world’s top eSports players of Hearthstone® (the most popular digital trading card game with over 100 million players). The acquisition will significantly and cost-effectively increase the Company’s development capabilities relevant to its recent licencing arrangements for major international sports brands (F1®, Major League Baseball, Bundesliga, Bayern Munich). Skytree is a multiple award-winning game development studio with a portfolio of successful titles including Hachi Hachi and Trillionia, which have 5 million downloads.
Animoca Brands announced that it has participated in the seed round of funding for Experimental Group Ltd., the Argentinian blockchain gaming studio behind CryptoWars, the first fully decentralized game. CryptoWars is a popular blockchain-based strategy game and the first of its kind to run entirely on smart contracts (all in-game items are fungible and non-fungible tokens).
Animoca Brands further announced that the Company and Brinc Limited entered into a mutual investment for US$750,000 in shares. The Company led a pre-seed investment round into Brinc’s subsidiary Brinc AOA with an investment of US$750,000 (~A$1.06 million), and Artesian - Australia’s largest and most active early stage venture capital firm - also invested US$750,000 (~A$1.06m) in Brinc AOA. Animoca Brands and Brinc will collaborate on the establishment of an esports and gaming accelerator.
The Company announced the acquisition of 100% of the equity in Leade.rs, Inc, co-founded by Loic Le Meur, one of Silicon Valley’s most high-profile angel investors and tech entrepreneurs. Mr Le Meur has had substantial exits and investments in companies such as LinkedIn, Slack, Evernote, Lending Club, Teads, and Fair. Leade.rs is a networking and event matching platform for high-profile technology event speakers, and facilitates the generation of business and investment opportunities.
During the Quarter, Animoca Brands also auctioned the first ever officially-licensed F1® car collectible NFT, called “1-1-1,” for use in its upcoming game F1® Delta Time; this was followed by an auction for a second collectible F1® car, called “Monaco Edition,” in honour of the Monaco Grand Prix. The auction of the 1-1-1 generated 415.9 ether (approximately $160,000 at time of sale) and the auction of the Monaco Edition generated 108 ether (approximately $43,000 at time of sale) for the Company.
Animoca Brands received approx $3.6 million (US$2.5 million) in cash and digital assets via the issue, by its wholly owned subsidiary TSB Gaming Ltd., of SAFE convertible securities and SAND utility tokens to fund development of the upcoming blockchain version of The Sandbox, the highly anticipated blockchain title being developed by the Company’s subsidiary Pixowl. The investment was led by Hashed, the largest crypto assets fund and accelerator in South Korea, which has operations based in San Francisco and Seoul.
Animoca Brands also announced that it is acquiring 100% of Gamma Innovations Inc. (“Gamma”) to access new audiences and leverage distributed idle computing power. Gamma’s GammaNow computing engine is a desktop application that leverages users’ idle processing power. Gamma has a Software License and Development Agreement with Razer (HKSE: 1337), a leading global lifestyle brand for gamers. Gamma whitelabeled GammaNow to develop ‘Razer SoftMiner’, software that utilises users’ idle processing power to mine for ethereum (Gamma collects 50% of the value of tokens mined). In return, users receive Razer’s loyalty credits called Razer Silver.
Animoca Brands appointed Michael Ephraim as head of partnerships for Australia and New Zealand. Mr Ephraim has extensive gaming industry experience, having been previously MD of Sony Computer Entertainment (SCE) ANZ and VP SCE Europe for 22 years. At Sony he positioned PlayStation as a total digital home entertainment package by onboarding local services including Stan, Foxtel Play, ABC iView, and SBS OnDemand among others. Mr Ephraim was vice chairman of the Video Game Committee within AVSDA, leading to the establishment of the standalone games association IEAA, now known as IGEA, and he was also chairman of Showdown, a producer of esport tournaments and the exclusive distributor for Twitch media in Australia and New Zealand.
The Company appointed John Madden as financial advisor. Mr Madden has over 30 years’ experience with large and small listed entities, as well as multiple public unlisted companies. He is an expert in corporate governance and accounting standards, a Fellow of the CPA Institute, and a Member of the Institute of Company Directors. The majority of Mr Madden’s career has been spent with Rio Tinto in Australia and companies operating in the Asia-Pacific region.
The Company appointed Kevin Abosch as creative director. Mr Abosch is an internationally acclaimed artist based in New York City with works that have sold for over $1 million each. His art has been exhibited globally, including in Russia, Ireland, Colombia, and Switzerland, among others. Mr Abosch has worked extensively with digital tokens and the blockchain; his work entitled ‘Forever Rose’ (an ERC-20 token based on a photo) sold for US$1 million.
Appendix 4C attachments
For comparative purposes, the Company has attached the Appendix 4C for the Second Quarter, the three-month period ending 30 June 2019, and the First Quarter, the three-month period ending 31 March 2019. The First Quarter Appendix 4C is entitled “Historic Annexed Q1 Appendix 4C”. The Company had previously been given a waiver to preparation of the Appendix 4C by the Australian Securities Exchange and therefore, the inclusion of the Appendix 4C for the first quarter will enable the reader to review quarter by quarter performance.
About Animoca Brands
Animoca Brands (ASX: AB1) leverages gamification, blockchain, and artificial intelligence technologies to develop and publish a broad portfolio of mobile products including games such as The Sandbox, Crazy Kings, and Crazy Defense Heroes as well as products based on popular intellectual properties such as Formula 1®, Garfield, Snoopy, Thomas & Friends™, Ever After High and Doraemon. Animoca Brands’ portfolio of blockchain investments and partnerships includes Lucid Sight, Dapper Labs (creators of CryptoKitties), WAX, Harmony, and Decentraland. The Company is based in Hong Kong, Canada, Finland, and Argentina. For more information visit www.animocabrands.com or get updates by following Animoca Brands on Facebook or Twitter.