FastForward Inn Ltd - Agreement

23rd July 2018, 06:00

RNS Number : 3708V
FastForward Innovations Limited
23 July 2018
 

FastForward Innovations Ltd

("FastForward" or the "Company")

Initial US$6 million investment into Investee company, Factom Inc.

SAFE Agreement with Factom, Inc.

Option to advance up to additional US$9 million on the same terms

The Board of AIM-traded FastForward Innovations Limited Company is pleased to announce that it has today executed a Simple Agreement for Future Equity ("SAFE Agreement") with investee company, Factom, Inc. ("Factom") under the terms of which the Company has advanced US$6 million (the "Initial Safe Advance") to Factom, which sum shall be converted at a future date at a 25 percent discount to the price of Factom's proposed Series B fundraising (terms yet to be announced). In addition to the Initial SAFE Advance, the Company has the right to invest up to an additional US$9 million, on the same terms, by not later than 30 September 2018.

The Initial Safe Advance will be funded from existing cash resources, as well as part of the funding available to the Company following a US$800,000 loan to the Company by Mr Lorne Abony, the Company's Chief Executive Officer. The loan from Mr Abony is a 12 month unsecured term loan at an annual interest rate of 7 per cent. (the "Abony Loan"). The Abony Loan will be repayable on the earlier of 20 July 2019 or the date the Company completes a debt or equity fundraising realising gross proceeds of greater than US$1 million. Exercise of the additional investment under the SAFE Agreement is dependent on the Company raising further funds.

The funds invested will, among other things, be used to expand Factom's US engineering team to deliver two critical processes prior to its proposed Series B fundraising: 1) build the Software-as-a-Service (SaaS) platform to be efficient and responsive to scale customer growth, and 2) accelerate the product roadmap to deliver more product features and increase revenues. In addition, Factom intends to use funds to increase the company's proprietary patent pool from 14 to 20+ US patents, build a stronger enterprise marketing and sales team, and invest in tooling needed to scale customer operations and minimize back office overhead.

Commenting on the SAFE Agreement terms Lorne Abony, FastForward's Chief Executive Officer, noted:

 

"The US$6 million invested under the SAFE is FastForward's biggest investment to date, and in addition, we have the right to increase the size of our investment on the same terms by 30 September 2018. We have been negotiating terms with Factom as an early investor in its proposed Series B fundraising for the last 6 months and we believe the SAFE structure - common in the US - gives FastForward real upside on the successful close of the Series B round, as well as protecting Factom and giving it the best possible chance to raise its Series B round at the highest price it can achieve. The SAFE Agreement positions FastForward as an early investor in the round - not the lead investor and ultimately, the lead investor will set the price. We look forward to updating the FastForward shareholders regarding pricing and other Series B terms later in 2018."

 

Paul Snow, CEO at Factom, was delighted to secure FastForward's support:

 

"We are delighted to close the SAFE Agreement with FastForward. We are based in Austin, Texas and it has been a pleasure getting to know Lorne as we grow. We believe Lorne and his team at FastForward will be a huge asset to Factom as it moves forward with its Series B round and continues the development of our innovative business. Factom has had a great year with 2017 all about educating the market on the incredible opportunity Blockchain represents as a means of keeping data secure and untampered. 2018 has been the year for executing our business model. I am happy to say we are hitting the projected milestones on time and on budget while building extremely valuable partnerships, such as the one with FPT Software, and further partnerships that will be announced in due course.  We have grown at over 200% in the year to 30 June 2018 (vs same period of 2017), and the blockchain industry as a whole continues to grow, with Factom at the forefront of disrupting the financial services/data security sector."

Jim Mellon, Chairman of FastForward praised the work Factom is doing and the enormous potential of the blockchain industry:

"Blockchain is a technology with enormous potential and we have great confidence, along with many other industry advocates, that Factom is at the forefront of this hugely disruptive space. Tim Draper of Draper Associates, the high-profile tech venture capital firm which led Factom's Series A round, remarked in Cointelegraph in November 2016 that the Factom team has the opportunity and the potential to build a company greater than Oracle and Palantir and IBM combined - we share that view. FFWD's strategy is centered around identifying the highest quality management teams in the sectors we invest in; we consider Factom's team second to none in the industry and their technology at the very forefront of the disruption that is already taking place in the financial services sector. As Lorne Abony recently stated, FFWD continues to look at opportunities that complement our positions in Factom and Vogogo and the Board remains of the view that Blockchain provides a real opportunity to deliver value growth for our shareholders.

Lastly, I would like to thank Lorne for his generosity advancing the US$800,000 on short notice. To secure the deal with fierce competition the Initial SAFE Advance needed to be US$6 million; the Company was in a closed period with its accounts due, and was in negotiations with (and had made commitments to) Vogogo, Leap Gaming, Intensity and others, and Lorne immediately put his hand in his pocket to support the Factom deal. I and the other Directors are very grateful for him doing so on an unsecured basis (at a time when he continues to draw no salary). He has great faith in what FastForward is doing and the potential of our investment portfolio, and that faith is shared by the rest of the Board. Bravo Lorne."

About Factom Inc.

Factom's software, a Blockchain as a Service (BaaS) model, allows enterprise companies, SMBs, and Government organizations to maintain a permanent and immutable, time-stamped record of their data, creating SmartProvenance™ capable of proving the negative case using identity, ownership and time, all tied to the Factom blockchain. Factom's BaaS reduces the cost and complexity of conducting audits, managing records, sharing data across companies, supply chain management and complying with government regulations. Factom also utilizes a unique two-token model to secure data with better integrity, security and a stable cost model not affected by cryptocurrency fluctuations and eliminates cryptocurrencies for its customers needed by other blockchains to operate. 

Factom's BaaS platform uses powerful application programming interfaces (APIs) that are easily integrated into customer environments without the need for custom code development. Factom is developing a robust revenue model that will continue allowing customers to plan and scale their businesses with a predictable cost model as new features are designed. By using a BaaS business structure, Factom begins generating revenue early and allows for metrics driven management and efficient customer growth,

Factom's series A funding (completed in March 2017) was led by Tim Draper of Draper Associates, along with Medici Ventures (the VC arm of Overstock.com) and Stewart Title along with other strong VCs, who assisted in closing a strong mix of top institutional and strategic investors in a round raising approximately US$8.03 million resulting in a post money valuation of approximately US$38.03 million.

During 2018, Factom announced a number of partnerships including with FPT Software, a company based in Vietnam with over 10,000 employees and an IT services focus. Crucially, Factom delivered the final stage of its technical milestones, the fully decentralized Factom protocol. Factom now has a significant number of parties running the Factom protocol, where no one party has majority control, and the protocol itself is a Byzantine Fault Tolerant (BFT) multi-leader, consensus algorithm, the only one of its kind in production today. Furthermore, the Factom Blockchain is dedicated exclusively to proving the recorded data exists (proof of the existence) and as such, it far surpasses both Bitcoin and Ethereum, as well as all other "proof-of-work" networks, never designed to secure data. Because Factom is engineered specifically for data, smart contracts work much better and the identity of block signatures are verifiable and auditable for most countries' accounting standards, unlike almost all other public blockchains.

Current and former clients of Factom include the Department of Homeland Security and IPRD Solutions, Inc. and a grant from the Bill and Melinda Gates Foundation in 2017. Factom also works with a number of banking, financial services and insurance industry clients. Factom was the first US company to sign a BaaS contract in China with WanCloud, a Chinese subsidiary of Wanxiang Group in 2017. WanCloud is preparing to launch its sales of Factom's APIs through a cloud-based API sales engine exclusively in China. Factom also won top prize for writing a proposal to Wanxiang Smart Cities initiative to use Factom's BaaS sold from WanCloud to record city data. Plans are still developing for expansion into Asia with the rapid growth of China and Japan in blockchain in 2018.

As at 31 March 2018, Factom had gross assets of US$1,407,035 and for the year ended 2017 reported a loss of US$4,672,163.  For further information on Factom and its business and operations, and its management team, please visit its website at www.factom.com

Details of the SAFE Agreement

Under the terms of the SAFE Agreement the Company has advanced US$6 million to Factom (with the option to advance up to US$9 million more on the same terms by 30 September 2018), such funds to be converted to shares of Factom's capital stock at a future date in accordance with the terms set forth in the SAFE Agreement. In particular:

-     in the event Factom completes a qualified financing pursuant to the terms of the SAFE Agreement prior to the 12-month anniversary of the SAFE Agreement (the "Long-Stop Date") the amount advanced (the "Purchase Amount") shall be converted to the class of shares issued by Factom in such financing at a 25 percent discount to the relevant issue price of such preferred stock financing;

-     if Factom fails to complete a financing, then the Purchase Amount will be converted to shares of a new series of preferred stock at a default price per share on the terms set forth in the SAFE agreement;

-     the SAFE Agreement includes certain situations where the Long-Stop Date can be extended by 90 days to finalize and close definitive transaction documents;

-     in the event of a liquidity event prior to the Long-Stop Date the Company can elect to receive a cash payment equal to the Purchase Amount or Common Stock of Factom at a price equal to 75% of the price of the liquidity event (for example a sale or merger); and

-     the SAFE Agreement contains customary representations and warranties from each party.

NOTHING IN THIS PRESS RELEASE IS INTENDED TO CONSTITUTE AN OFFER FOR THE SALE OF SECURITIES AND ALL TERMS HEREIN ARE PROVIDED ONLY AS SUMMARISED INFORMATION. THE ACTUAL TERMS OF THE SAFE AGREEMENT SUPERSEDE ALL INFORMATION PROVIDED HEREIN.

Details of the Abony Loan

The Abony Loan was advanced at the request of the Company and the terms of the Abony Loan were approved by the Company's independent directors for the purposes of the transaction, being Mr Mellon, Mr Burns and Mr McDermott. The size of the Abony Loan meant that the transaction did not constitute a related party transaction under the AIM Rules. A summary of the terms of the Abony Loan are set out below:

·              US$800,000 advanced (no fees or set-off or contribution to costs);

·              12 month repayment term;

·              Unsecured;

·              annual interest rate of 7 per cent.;

·              accelerated repayment if Company completes a debt or equity fundraising realising gross proceeds of greater than US$1 million; and

·              standard events of default and warranties from both parties.

For further information on the Company please visit www.fstfwd.co or contact:

FastForward Innovations Limited

info@fstfwd.co

Sue Saunders / Ian Burns

 

Beaumont Cornish Limited (Nomad)

James Biddle / Roland Cornish

Tel: +44 207 628 3396

 

Optiva Securities Limited (Broker)

Graham Dickson Tel: +44 (0) 203 137 1902

 

CAUTIONARY STATEMENT

The AIM Market of London Stock Exchange plc does not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. All statements, other than statements of historical fact, in this news release are forward-looking statements that involve various risks and uncertainties, including, without limitation, statements regarding potential values, the future plans and objectives of FastForward Innovations Ltd and the future plans and objectives of Factom, Inc. There can be no assurance that such statements will prove to be accurate, achievable or recognizable in the near term.

Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral forward-looking statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Neither FastForward Innovations nor Factom, Inc. assumes any obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

 


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Companies mentioned in this announcement