In addition to the 333,333,333 SAND, the Investors have been issued a SAFE (simple agreement for future equity). The SAFE provides for a valuation cap for TSB Gaming equal to US$10 million (A$14.4 million) pre-money. If TSB Gaming stock is issued to the Investors under the SAFE, it will be standard preferred stock.

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Under the SAFE the Investors have the following rights:

• ​Equity Financing: if there is a future equity raising, each Investor would be issued shares of standard preferred stock based on the greater of (a) such Investor’s investment divided by the lowest price per share of standard preferred stock (which is the price of the preferred stock issued to investors investing new money in TSB Gaming in connection with the Equity Financing), and (b) such Investor’s investment divided by the SAFE price (which is equal to the Valuation Cap divided by TSB Gaming’s pre-equity financing capitalization).

• Liquidity Event: each Investor would automatically be entitled to receive a portion of the proceeds equal to the greater of (a) the Investor’s investment (the “Cash Out Amount”), or (b) the amount payable on the number of shares of common stock of TSB Gaming as would result from application of a formula calculated based on the Valuation Cap (Please refer to the Annexures for further details on how an Equity Financing or a Liquidity Event would operate under various scenarios).

• Dissolution Event: each Investor would be entitled to receive a portion of the Proceeds equal to such Investor’s investment, but subject to payment of higher ranking claims (such as those of creditors and promissory notes). 

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The SAFE would automatically terminate on the earliest of an Equity Financing, Liquidity Event, or Dissolution Event.

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The Annexure to this announcement includes tables setting out the possible range of stockholding that the Investors could hold in TSB Gaming in the future based on different Equity Financing and Liquidity Event scenarios.

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The funds raised through this transaction will be used to grow the development team and infrastructure for the Game Platform, support marketing efforts through acquisition of creators and IP licenses, and provide for security, legal, and compliance expenses as well as general and administrative costs. The Company expects that the sale of SAND tokens will be treated as revenues, while proceeds from the SAFEs will be treated as liabilities, subject to confirmation by the Company’s auditors.

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As part of the Partnership Agreement with Klaytn, TSB Gaming will make The Sandbox available on to Klaytn’s Main Net, at which time TSB Gaming will obtain the right to exchange a maximum of US$200,000 (approximately A$288,000) worth of SAND tokens for $400,000 (approximately A$576,000) worth of Klay tokens. Klay is the ERC-20 token that will be powering Klaytn’s network that will allow partners’ decentralized applications to run on its permissioned blockchain. Klay will be available on exchanges starting later this year, will be usable in other Klaytn partners’ applications. 

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In addition, TSB Gaming has entered into an Advisory Services Agreement with Hashed wherein Hashed will provide services to The Sandbox game platform (including but not limited to business, strategy, promotion, public relations, networking, and potential listing services for the SAND utility tokens) in return for a payment of 55,555,555.56 SAND tokens with a worth of US$400,000.
 

Management commentary

Yat Siu, co-founder and chairman of Animoca Brands, said: “We are honoured that domain-expert companies such as Hashed and Klaytn, among others, have chosen to join us in this journey of helping bring blockchain to the masses through gaming. This is a major milestone for the company, validating our blockchain strategy and the NFT-centred blockchain and brand partnerships on which we have been working recently, such as Formula 1.”

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Arthur Madrid, CEO of Pixowl and of TSB Gaming, commented: “The Sandbox offers everyone access to a new economic model where players and creators fully participate in the value creation chain and can benefit from the new paradigm where content is the platform.”

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Sebastien Borget, COO of Pixowl and of TSB Gaming, said: “Our vision for the future of decentralized gaming is that NFTs are a catalyst for mass adoption. Players will benefit from NFT interoperability across games, giving items a value beyond their utility based on factors such as an emotional attachment to their creator, the fame of previous owners, or track record across games.”

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Jason Han, the Project Head of Klaytn, stated "We are very excited at the opportunity to bring The Sandbox to the Korean gaming market; this game is one of the first of its kind, allowing for user-generated non-fungible tokens to be traded in-game." 
 

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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 Garfield, Snoopy, Thomas & Friends™, Ever After High and Doraemon. Animoca Brands’ portfolio of blockchain investments and partnerships includes Dapper Labs, WAX, Harmony, and Decentraland, and it is also the exclusive China distributor of CryptoKitties. 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.

 

Contact: press@animocabrands.com