REG - Bidstack Group PLC - Proposed New Commercial Partnership

BidstackAnnouncement

29/09/2023 07:00

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RNS Number : 1449O  Bidstack Group PLC  29 September 2023

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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

 Bidstack Group Plc

 James Draper, CEO                           via SPARK
 SPARK Advisory Partners Limited (Nomad)     +44 (0) 203 368 3550

 Mark Brady / Neil Baldwin / James Keeshan
 Stifel Nicolaus Europe Limited (Broker)

 Fred Walsh / Tom Marsh                      +44 (0) 20 7710 7600

 

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.

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