[Nick Hargrave]

https://www.londonstockexchange.com/news-article/BIDS/proposed-cln-share-reorganisation-and-vst-update/16172781

There is obviously a lot to take in with this announcement, but my conclusion is its good news, at least in the face of the bad situation the board put the company in.

My over-riding view is that this is driven by Irdeto protecting their value. As I stated at the time of their £5m investment at 2.85p per share last year, strategic investments are strategic for the investor, not the investee. With the share price where it is due to the company’s communication and expectation management failings, funding options were clearly running low and management got creative with the VST transaction. This was clearly leaking value to insiders, specifically the CEO and CSO as well as former Chairman Donald Stewart who remained seemingly intent on extracting value for himself even after our EGM action led to his departure from the board. With Irdeto being on the board they will know exactly the current potential of the following, which has given them enough comfort to put up another £2.4m:

1. An Azerion settlement in the near term, potentially for millions.
2. The revenue potential of upcoming commercial deals that VST was aiming to agree. I hypothesise, from the wording of the VST transaction announcement in September that stated, “We have grown from having a one team, two games, one sport technology pilot, to a league-wide initiative”, that on the back of the Washington Commanders agreement and Bidstack integration in Pro Era NFL, the second game is EA’s Madden NFL and that the NFL as an organisation is closing in on a commercial deal. EA’s Madden is obviously a huge game in the US and the NFL certainly know a thing or two about making money from sponsorship and advertising.

This Irdeto loan, therefore, strikes me as a bridge to get to one of those outcomes (or others) and may allow for some of the CLN to be undrawn or repaid in cash. The company is now funded to get to those outcomes and protects their original £5m investment while taking security over the business and potentially ending up with 100% of the business and the IP if the company does not now succeed – if the full CLN is drawn and converted at the 0.275p level, assuming the company is successful in getting to cash generation on the back of this funding, Irdeto will own 55% of the company. If this reasoning is indeed true, it would make the otherwise horrific terms of the CLN much more palatable after the board’s actions/inactions drove the share price down and limited options to the point where a CLN could not be agreed with any conversion premium.

The share consolidation is clearly a good thing, reducing the shares 1,000-fold while increasing the share price 1,000-fold so the company is no longer viewed as a penny stock, or this case a fraction of a penny stock.

Since the announcement of the VST transaction I have been in communication with the Chairman, David Reeves, who has proven open to dialogue. Today’s news was obviously not disclosed to me as our discussions were focused again on what the company / board can do to improve communications and sentiment on the basis that the VST transaction was going ahead. In summary, I made the following points that David says he and the board are listening to:

• Investors are still waiting for the promised investor presentation which needs to happen soon, particularly in light of these significant corporate actions.
• The CEO remains in ‘hiding’. I believe I am right is saying that he has never done a presentation to all shareholders and his complete lack of communication or seeming interest in the value of his own shareholding simply adds to the narrative that all is not well.
• It is difficult at a company with a sub £5m market cap and ongoing cash constraints to justify a non-critical CSO role.
• There is no CFO after the most recent person in the role was making excellent progress in reducing an unnecessarily bloated cost base.
• While the board is now a more reasonable size of 5 rather than 8, it still lacks a fresh, independent voice with easily identified expertise in investor communications and corporate finance.
• An update on the Azerion dispute is needed with a current view on the chances of success, where I believe the market has been attributing a low probability of a positive outcome, at least in a time frame that is useful.
• The Venatus agreement needs explaining in more detail to allow investors to better understand the strategy and commercial potential.
• There remain Advisory Board members. It has never been clear to shareholders what input they provide and how they are remunerated. They may receive no remuneration but from a perception standpoint it appears that people can leave the company but still benefit from being on this Advisory Board i.e. Francesco and Glen. Is there any tangible value that these advisors have brought to the company that can be communicated to shareholders? If not, perception can be changed by disbanding this non-critical board. If this board is having substantive input and isn’t remunerated, why not invite someone focused on investor communication and corporate finance to join it?
• With no visible track record of successful delivery on which to base any level of trust, the share price has been tangible evidence that shareholders were no longer willing to make an investment based on faith. They need facts and now is the time.

Today’s announcement, that effectively puts Irdeto in the driving seat and has seemingly boxed off the potential insiders’ transaction is the opportunity for the company to come out swinging and change the narrative. With the cost cutting initiatives of the previous CFO and the US sales team departing in the wake of the Venatus agreement, the potential for investors to realise value from the company may now finally be approaching if Irdeto can deal with management and the board finally take action to protect and grow minority shareholder value

• This topic was modified 6 months, 2 weeks ago by Nick Hargrave.

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[Nick Hargrave]

https://uitspraken.rechtspraak.nl/#!/details?id=ECLI:NL:RBAMS:2023:6762&showbutton=true&keyword=bidstack&idx=1

A new update to the Azerion litigation published yesterday. The interesting point on this decision is that it looks like Azerion are struggling to make their case on their argument that the inventory wasn’t made available as they are arguing they need to see the EA doc in order to make their defence. Now they can’t see it, perhaps their case is relatively weak. In the meantime, EA was already confirmed from the previous court docs but this now confirms Madden as the exclsuive AAA game. That suggests my hypothesis that the 2 games and 1 team is NFL related and a deal with the whole NFL is in the offing, which could have been the basis for the VST transaction. If BIDS find the Azerion defence, which they now have sight of, fairly weak they may be able to push for an expedited settlement. In the meantime, they are presumably in line for their usual H2 £1m+ R&D tax credit (given the last fundraise said £5m spend earmarked for sports tech build) and no seeming rush on the CLN docs again point to the hypothesis Irdeto are bridging to these events landing

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