BIDS.L Regulatory News (BIDS)

Certain information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon publication of this Announcement, this information is now considered to be in the public domain.

29 September 2023

Bidstack Group Plc

("Bidstack" or the "Company" or the "Group")

Proposed New Commercial Partnership

Bidstack Group Plc (AIM: BIDS), the in-game brand activation platform announces that it has entered into non-binding heads of terms in respect of a proposed commercial partnership with Virtual Sport Technology Limited ("VST"), a sports marketing agency, for a multi-year licensing agreement ("the Heads"). The definitive agreement following from the Heads ("the Agreement"), subject to contract, would be intended to accelerate Bidstack's positioning as a technology provider with marketing and sales being outsourced to specialist suppliers. The Company expects to sign the Agreement as soon as practicable; at which point a further announcement will be made.

Proposed multi-year licensing agreement with VST

Sports leagues and teams have long been identified as enterprise customers of Bidstack's platform. Until now, Bidstack and its competitors have been unable to monetise sports games within a fully licensed virtual stadium or track due to restrictions from official sponsors. By placing control of brand activations in the hands of relevant leagues and teams, these virtual stadiums or tracks become available to the owners of their real life counterparts. Bidstack would act purely as the technology provider, empowering sports teams and leagues to reach fans within their virtual stadiums or tracks with a level of targeting and flexibility that has not been possible before.

The main provisions of the Heads agreed with VST are as follows:

? Bidstack would provide VST worldwide third party exclusivity to provide access to Bidstack's proprietary video game content management platform to rights-holders including sports leagues, teams and publishers for an initial term of three years with a further three year extension mutually available;

? VST would pay Bidstack a licence fee of £1.5m (two equal instalments of £0.75m paid quarterly in advance);

? Bidstack would provide certain support services to VST in consideration of a quarterly service fee of £45,000; and

? Bidstack would capture upside of the growth potential through retaining a revenue share of 70 per cent.

As part of these arrangements, certain Bidstack employees would transfer their employment to VST with the consequent cost saving to Bidstack.

About VST

VST is a newly incorporated company formed to operate as a technology and media reseller to rights holders, principally in the sports sector.

Related party transaction

The Agreement will be a related party transaction for the Company because James Draper (Founder/CEO) and Lisa Hau (CSO) of Bidstack are shareholders and non-executive directors of VST. In addition, Donald Stewart (who incorporated VST and through Kepstorn Solicitors has acted for it) and who stepped down from the Bidstack board on 21 July 2023 is also a director and minority shareholder of VST.

Prior to finalisation, the Agreement will therefore be reviewed and approved by the Independent Directors, who have extensive experience in dealing with gaming and advertising licensing agreements, having consulted with SPARK Advisory Partners Limited, the Company's nominated adviser in compliance with AIM Rule 13. As the Agreement remains subject to contract, there can be no guarantee that the terms of the Agreement will be approved.

Dr. David Reeves, Chairman of Bidstack said

"Over the past several months, the Board and the Management team have diligently examined numerous possible financing options with the primary aim of securing the necessary capital to address the Company's immediate and mid-term funding requirements. After an extensive search for the best route to access capital by the Group, the Independent Directors believe this proposed agreement, albeit a related party transaction, represents the best value for shareholders at this present time.

"The Board also believes that this proposed commercial agreement builds on the inherent strengths of Bidstack's technology platform and provides greater certainty of continued financial viability."

James Draper, CEO said

"Over the last few months it has become clear that Bidstack's technology is of great interest to a number of potential commercial partners. The announcement on the 13 July 2023, in which we announced our partnership with the Washington Commanders and the NFL's officially licensed VR game 'NFL Pro Era', has seen the sports side of the business gain traction across a number of sports leagues and teams. We have grown from having a one team, two games, one sport technology pilot, to a league-wide initiative.

"This momentum, which we expected could have taken years to attain, has surprised all of us positively. As a result, we took the decision to outsource our contracted network of titles to Venatus, who we know well and trust. 

"Exploring both the sports and licensing use cases for our technology (outside of our advertising network), has created great interest from a number of sports-focused investors.

"As we have explored routes to funding and taking our technology to market, it's become clear to the Board that we must be creative in ensuring the best interests of Bidstack's shareholders, staff and other stakeholders are preserved.

"However, the interest in investing into Bidstack, as a public company, has proved challenging due to the global economic headwinds and volatile equity markets and the Company's share price. All deals we have explored would have been detrimental to shareholder value.

"This has led myself and Lisa Hau to take the decision to set up a net-new private company VST.

We have set up this new venture and approached the Independent Directors of Bidstack with an offer for VST to represent the sports side of the Bidstack business. VST will be the sales house representing and selling Bidstack's technology to the sports industry.

"Being a private company, VST has been able to attract longer-term strategic and patient capital.

"The commercial terms of the Heads have been reviewed and approved by Independent Directors, but remain subject to contract. I am delighted that we can propose this deal, which protects shareholder value for existing Bidstack shareholders and enables Bidstack to continue to explore the multiple technology use-cases we are discussing currently. 

"This reinforces, the Board's belief that Bidstack is the most innovative middleware technology in brand and fan engagement, within the video game sector."

-ENDS-

Contacts

Notes to editors

About Bidstack

Bidstack's technology empowers video game publishers to monetise and manage spaces within their virtual environments. Its platform provides real-time reporting, dynamic targeting and player communication tools for brand activations and fan engagement.