LSAI.L Regulatory News (LSAI)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Location Sciences Group PLC("Location Sciences" or the "Company")

Potential Defamation Action Against the Company

Location Sciences (AIM: LSAI), the leading location verification company, announces that it has received a letter before action (the "Letter") from Blis Global Ltd (previously known as Blis Media Limited) ("Blis") alleging that Location Sciences has made false statements and allegations regarding Blis which have the potential to cause Blis reputational harm and financial loss.

Location Sciences has taken legal advice in relation to the Letter and believes the claims made by Blis in the Letter are baseless and will take all necessary action to protect the interests of the Company. Further information relating to the Letter is contained in the appendix to this announcement set out below.

A further announcement on this will be made as appropriate.

Mark Slade, CEO commented "While this is a wholly unsatisfactory situation, and one which we would have preferred to resolve privately, this does show our shareholders why our technology is needed in this deeply opaque market. We hold true to a basic principle that it is simply not acceptable for supply side partners to alter the data they pass to our platform for verification. The biggest disappointment to me is that an industry that is in deep need of transparency, especially given the privacy implications to consumers, is so resistant to verification and transparency.

It is therefore important for the industry that brands and their media agencies act upon this type of behaviour and back third-party verification of the suppliers as a means to provide true transparency on how digital advertising campaigns are being delivered.

When this occurs, we believe the real power of location-based advertising will be revealed."

For further information please contact:

APPENDIX 

Summary

Shortly after a location-based advertising campaign went live at the beginning of September 2020, Location Sciences' Verify platform flagged a new, persistent anomaly related to data originating from Blis.

The anomaly was then investigated by Location Sciences and it became apparent as a result of those investigations that Blis was manipulating the data, in that it was not passing true raw data to the Verify platform. The effect of this data manipulation was to enhance Blis's quality scores within the Verify platform.

In performing its duties as the verification partner, Location Sciences then presented its findings and observations to the media agencies involved in the test campaigns for Unilever and Aldi, namely GroupM, Mindshare and Universal McCann.

As part of the Company's presentation to its customers, it set out its proposed next steps. Specifically to open joint discussion to discuss the findings with Verify customers and Blis and also for Blis to halt the manipulation of the true raw data being passed to Verify which, if it did so, would allow verification of actual location signals used to deliver the location-based advertising campaigns (this is the purpose of Verify).

Instead of seeking to resolve the issue with the Company, Blis engaged legal advisers and has threatened legal action against the Company on the grounds of potential defamation.

Location Sciences has significant evidence to support its position and is willing to share this information with an independent arbiter to assess and corroborate the position.

The directors are confident in the position taken by the Company and have taken every step, including taking appropriate legal advice, to protect the position of Verify in the marketplace.

Background to Blis Relationship

In early September 2019, Location Sciences entered a partnership with Blis in respect of "Verify", the Company's location data verification platform. At the time this partnership was announced, on 5 September 2019, Greg Isbister, CEO of Blis, commented: ​

"Transparency and data accuracy are at the core of our business, underpinning everything we do. ​Our proprietary technology, Smart Pin, filters out over 80% of the data received because it does not meet our quality and accuracy standards. Our clients turn to us for high-quality ​data to better understand their customers and drive engagement and sales. Being independently recognised by Location Sciences both for location data and signal quality accuracy adds a valuable layer of impartial authentication for our customers. We're proud to be the first in our industry to offer independently verified data on a global scale."

As per the quote from the CEO of Blis, at the core of the partnership agreed between Location Sciences and Blis was a commitment to transparency and data accuracy. However, as the partnership progressed, Location Sciences became concerned that Blis was not utilising Verify as the Company envisaged, i.e. to provide transparency to the accuracy and quality of the location data used to deliver location-based advertising campaigns.

Whilst publicly declaring that transparency and data accuracy was at the core of Blis's business, Blis made no attempt to incorporate Verify on its campaigns unless it was mandated to by the end-brand customer or media agency, where Location Sciences had already established a relationship. This was against the principle of the partnership, where both Location Sciences and Blis would promote the use of third-party verification as a means to advance transparency within the industry.

Furthermore, through numerous communications between Blis and Location Sciences' engineering teams, it became apparent that Blis was attempting actively to learn the proprietary nature of the Location Sciences software. This is disputed by Blis.

Nevertheless, Location Sciences continued to work in good faith with Blis with the objective of improving transparency within the industry.

Verify's Role in the Location-Based Advertising Industry

Location Sciences works with suppliers, such as Blis, to assist them with the process of analysing location data that they are able to obtain for onward provision to their end-brand customers (predominantly corporate customers running a location-based advertising campaign). In addition, and no less importantly, Location Sciences works with end-brand customers directly to sense-check the quality of location data that is provided to them by suppliers such as Blis.

One of Location Sciences' key roles in the advertising sector is to identify the actual quality of location signals used to deliver location-based advertising campaigns as well as to detect actual or potential fraud. The role is analogous to that played by ratings agencies, such as Moody's, in the financial sector where inter alia data is analysed and assessed to rate credit and debt risk.

Consequently, the very essence of Location Sciences' purpose is to act as an independent third party to verify the accuracy and quality of location data that is obtained by suppliers and which is provided to the end-brand customer.

Blis's Data Manipulation

Shortly after a location-based advertising campaign went live at the beginning of September 2020, Location Sciences' Verify platform flagged a new, persistent anomaly related to data originating from Blis.

The anomaly was then investigated by Location Sciences and it became apparent as a result of those investigations that Blis was manipulating the data, in that it was not passing true raw data to the Verify platform. The effect of this data manipulation was to enhance Blis's quality scores within the Verify platform.

In performing its duties as the verification partner, Location Sciences then presented its findings and observations to the media agencies involved in the test campaigns for Unilever and Aldi, namely GroupM, Mindshare and Universal McCann.

Within the presentation made to Verify customers, while providing details of the data manipulation in the test campaigns, Location Sciences also set out four steps to resolve the situation, namely:

1. Open joint discussions to explore the findings with Verify customers and Blis;

2. Blis should halt the manipulation of the coordinates being passed to Verify and to submit true raw data to Verify and thus allow verification of actual location signals used to deliver the location-based advertising campaigns (this is the purpose of Verify);

3. Blis should provide plain text Device and Publisher IDs to enable additional validation (unlike other location suppliers these are currently anonymised by Blis);

4. Location Sciences would deploy a new patch to Verify to detect this form of direct data manipulation to ensure Verify results were a true and accurate reflection of how location-based advertising campaigns had been implemented.

Blis's Response to Location Sciences Findings

Instead of seeking to resolve the issue with the Company, Blis engaged legal advisers and has threatened legal action against the Company on the grounds of potential defamation.

Blis has cited a number of potential defamatory claims in respect of the findings and observations presented by Location Sciences to Verify customers and allege the Company directors are falsely mis-representing Blis and its business to its customers and clients.

In tandem with Blis threatening legal action against the Company, it contacted the Verify customers involved in the test campaigns and advised them that they had actually altered the data being passed to Verify to overcome "material flaws" in the product.

There was no communication by Blis to either the Company or Verify customers of this data manipulation until after Location Sciences had reported its findings and observations to the media agencies involved in the test campaigns for Unilever and Aldi.

Location Sciences Response

The detailed investigations undertaken by the Company show that Blis has manipulated data submitted by it to the Verify platform. The effect of this manipulation was that the Blis location-based advertising campaigns received and artificially high 'Quality Score' from Verify.

In addition to Blis's communications with Verify customers, where it has retrospectively advised those customers that it changed the data being supplied to Verify, Blis has also admitted to manipulating the data in written communication with the Company, which they have again retrospectively claimed to be to correct "material flaws" in the Verify platform.

As far as the Company is concerned, Blis has provided no evidence of any material flaw in the Verify platform and the purported issues raised by Blis have been investigated by the Company and found to have no material impact on the performance of Verify. It is further noted that Blis is the only user of the Verify platform that has raised any alleged flaws in the platform. Similarly, Blis is the only supplier using the Verify platform that has supplied data showing the anomalies which led to the findings presented to the media agencies involved in the test campaigns for Unilever and Aldi.

In the Company's view, the strategy of Blis in pursuing action against it is to detract from the fact that Blis has manipulated data being passed to Verify, the impact of which is to artificially improve the 'Quality Score' on its location-based advertising campaigns.

Location Sciences has significant evidence to support its position in this regard and has offered to share this with an independent arbiter as a means to resolve the dispute and provide a way forward for both parties.

The directors are confident in the position taken by the Company and have taken every step to protect the position of Verify in the marketplace.

About Location Sciences Group PLC:

Location Sciences is the pre-eminent global location verification provider to the $160 billion digital advertising industry. Working in partnership with brands, media agencies and suppliers to reduce ad-wastage and improve the effectiveness of location-based advertising campaigns.

The digital advertising market-place remains unregulated and un-monitored, with an estimated $19 billion wasted on ad-fraud in 2018. Location Sciences has developed Verify, the world's first independent location verification product. Utilising sophisticated machine learning and pattern recognition technologies, Verify detects location ad-fraud and shines a light on location data inaccuracy with the aim of bringing back integrity, transparency and trust to the market place.

Rule 26 website: www.locationsciencesgroup.ai

Verify website: www.locationsciences.ai

LinkedIn: https://www.linkedin.com/company/locationsciences

Twitter: @LocationSci