Animoca Brands, the NFT and Metaverse firm, hopes to pass a resolution at its annual general meeting (AGM) on December 23 that would replace its auditor, DFK Collins, with Hall Chadwick. This is according to the distributed agenda. 

Animoca has arguably been slow to file its recent audit reports, not completing its 2020 report until mid-2023. The report included comments from DFK Collins, which noted that for Animoca to “continue as a going concern” would be “dependent upon” it “raising new equity funds as and when required” as well as “support from the convertible note holders.” It would also need to “convert cryptocurrencies into fiat currencies as and when required.”

However, despite these comments, it is important to note that DFK Collins also said that its “opinion is not modified in respect” of these matters.

Read more: Animoca Brands has a web3 portfolio worth $1.5B because it said so

At the time of this audit being published, Yat Siu, Animoca Brands’ executive chairman, noted to the Australian Financial Review that the firm didn’t think these issues were “a going concern issue” and added that Animoca has “a reasonable cash position, a reasonable equity position.” 

Since the audit period covering through the end of 2020, Animoca Brands has continued to raise money, including:

• On May 13, 2021, the company announced that it had completed a capital raise of US$8,888,888.
• On May 28, 2021, the company entered into subscription agreements with “sophisticated and professional investors,” raising US$9.4 million.
• On July 1, 2021, it completed the second tranche in its May 13, 2021 raise, bringing in US$50 million.
• On October 20, 2021, Animoca raised US$80 million from “sophisticated and professional investors.”
• On January 18, 2022, the company announced it had completed a capital raise of US$358,888,888.

An attachment to the AGM agenda notes that Hall Chadwick believes it is “prepared to audit the financial statements for” 2021, 2022, and 2023. 

Siu previously told CoinDesk in September of this year that Animoca was “midway through the audit, which is a critical piece of the IPO puzzle” for the firm, also confirming at the time that DFK Collins was conducting that audit. 

Protos has reached out to Animoca Brands about this desire to change auditors. Animoca Brands was not able to comment on why it had decided to switch auditors, noting, “Unfortunately, due to disclosure requirements, we cannot comment on this prior to the general meeting on 23 December.” Additionally, when asked why DFK Collins was not able to complete the 2021 audit that was in progress, Animoca Brands communicated that “We have noted in the past (including in the Chairman’s Letter in the 2020 annual report that you cited) that the business of Animoca Brands poses complex challenges for financial reporting and auditing. We have completed substantial work towards the audit of the 2021 financials and plan to transition seamlessly to a new auditor with full cooperation between both audit firms.” Furthermore, when asked if this would delay any IPO plans, Animoca Brands noted that it expects “the change in auditors to support Animoca Brands’ plans to list on a public exchange.” Finally, it noted that definitive timelines for the outstanding audits will need to wait as “the shareholder meeting will provide the company with authorization to switch its auditor, at which point the new auditor can formally begin work on outstanding audits with a timeline created.”

Update 2024-12-04 18:20 UTC: To ensure clarity, we have added comments from Animoca Brands, expanded a quote from the 2020 report, and changed the headline.

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A US-based crypto fund is reportedly offering to buy up secondary shares in prominent crypto firms, including Animoca Brands and Chainalysis at an up to 80% discount.

C1 Fund, which was launched by former Coinbase lawyers and investors, apparently has up to $500 million at its disposal and is specifically looking to acquire private holdings in crypto firms valued at no less than $300 million in their last funding round.

According to a pitch deck seen by the Australian Financial Review, C1 wants to make the purchases for between $20 million and $50 million and it has reportedly met with a number of venture firms.

The deck says, “Due to current market conditions in the public and private markets, hyperinflation, and rising interest rates we believe the digital assets market offers very attractive valuations in the secondary market.”

Read more: The crumbling empire of Fred Schebesta, Australia’s self-titled Crypto King

Animoca, which was dropped from the Australian Securities Exchange (ASX) for governance, personnel, and non-compliance issues in 2020, is currently worth just shy of $8 billion. During its last raise, it saw shares sold for around $4.50 but C1 says it will take them off investors’ hands for as little as $1.12.

Chainalysis is valued at somewhere in the region of $8.4 billion and C1 has told investors that there are $30 million worth of secondary shares available for $15 — a more-than-60% discount on its latest capital raise.

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Animoca Brands, the delisted Australian blockchain gaming juggernaut and prolific crypto VC, announced Monday that its web3 investment portfolio was internally valued at $1.5 billion dollars across 340 companies at the end of April, according to an unaudited “investor update.”

The report also highlighted several other key numbers: digital asset holdings of $211 million (USDC, USDT, BUSD, ETH, and BTC), “other digital assets” and third party tokens valued at $659 million and, most curiously, digital asset reserves “not reflected on the Company’s balance sheet” of $4.2 billion.

Amusingly, this last category reflects the self-reported, unaudited value of Animoca Brands tokens used for its, often troubled, blockchain gaming ecosystem, including the Sandbox (SAND), REVV token, PRIMATE token, and a slew of other proprietary tokens issued through its numerous portfolio companies.

This update was shared despite having failed to produce several outstanding Annual General Meeting reports and their requisite financial audits and documentation dating back to 2015, according to the Australian Securities Investing Commission (ASIC).

The company addressed this ongoing non-compliance in its latest ‘investor update’: “The Company continues to work towards completion of its outstanding financial reporting requirements.”

Animoca Brands are brands you already know

Animoca Brands is one of the largest players in the NFT gaming space, capitalizing on partnerships and crypto investments with some of the most widely known brands in the industry, including BAYC and Otherside by Yuga Labs, and Cryptokitties and NBA Top Shots creators Dapper Labs.

However, the conglomerate currently exists in an uncommon legal limbo in Australia; it was delisted from the Australian stock exchange (ASX) for governance, personnel, and non-compliance issues in 2020.

Animoca has lightly pivoted from mobile games to web3-powered gaming. However, branding and intellectual property (IP) licensing remains one of the firm’s core strategies — giving it access to a steady supply of goodwill and marketing reach. Of note, the firm has released products with IPs from Disney, Square-Enix, WWE, Snoop Dogg, the Walking Dead, Planet Hollywood, and MotoGP.

Before leading the charge into the NFT gaming space, it was a traditional mobile games developer, releasing projects tied to global IPs like Garfield, Ben 10, and Doraemon. However, Apple delisted it from its App Store in 2012 for violations relating to cross-promotion of their own games, according to Animoca Brands chief exec Yat Siu.

Read more: Paolo Ardoino clashes with hedge funder over shady Tether disclosure

The current company went public in 2014, through a reverse merger with a mineral exploration and mining company known as Black Fire Minerals. The failed gold and copper venture, working in Australia and Namibia, divested itself of all mining assets prior to the transaction. Not exactly a typical web3 origin story.

As an unlisted but still public corporation, the firm is still obligated to comply with communication requirements and reporting standards applied to “disclosing entities” in Australia, due to the continuing public ownership of shares. This has proved challenging for Animoca, and they have not pursued listing on any other exchange despite claiming to prioritize this move.

Animoca Brands’ operations are located entirely in Cyberport, Hong Kong, placing them beyond the reach of much of ASIC’s enforcement.

Animoca’s statements suggest their business is staying hot despite the chill taking hold of NFT markets — yet it remains to be seen if they will be able to substantiate their lofty self-valuations with third party audits and regulatory approved reporting. Attestations and updates only do so much in the way of proof, being much better for deflecting criticism and maintaining hype.

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