Annual Report & Accounts and Notice of AGM

Bidstack Group PLC

20 June 2023

 

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.

20^th June 2023

Bidstack Group Plc

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

Final Results for the year ended 31 December 2022

Annual Report & Accounts 2022

Bidstack Group Plc (AIM: BIDS), the in-game brand activation platform, is pleased to announce its final results for the financial year ended 31 December 2022 ("Annual Report").

The 2022 Annual Report & Accounts will be available for download today at http://www.bidstack.com/financial-reports/annual-report-2022/ and will be posted to shareholders shortly thereafter.

Financial Performance Highlights

●     Revenue up 101% at £5.3m* (FY21:£2.6m)

●     Gross profit up 298% at £3.7m (FY21: £0.95m)

●     Gross margin improvement to 72%** (FY21: 36%)

●     Loss after tax £7.7m (FY21: £6.3m)

●     Cash balance at 31 December 2022 up 21% at £8.7m (31 December 2021: £7.1m)

*Unaudited gross billings, including all revenues and Azerion minimum revenue guarantee invoiced for FY22, were c.£9.3m (FY21: £2.6m), in line with contractual arrangements previously indicated. However, as a result of the net accounting treatment of revenues in accordance with IFRS 15, Bidstack's reported revenues for FY22 are £5.3m.

** Gross margin has risen significantly as a result of the net accounting treatment of revenues and corresponding costs of sales towards servicing the Azerion contract in accordance with IFRS 15. Excluding this treatment the unaudited adjusted gross margin would be closer to 40%. 

Operational Performance Highlights

●     Successful placing raising proceeds of c.£10.5m in October 2022, including a significant investment by Irdeto B.V., a world leader in digital platform cybersecurity, taking a 13.5% stake in the Company;

●     Growing global network of premium developers and publishers with over 250 titles (FY21: 58) across in-game, in-menu and rewarded video. This includes an addition of two further titles with a AAA game publisher and a multi-year renewal with Sports Interactive's Football Manager;

●     Growing revenue per agency holding group as the number of blue chip brands rise as intrinsic in-game becomes a key growth initiative;

●     Partnership with Unity, a cross platform game engine as a Unity Verified Solution recommended tool for game developers across all platforms; 

●     Onboarding of additional resellers with MMP Worldwide (MENA), AdScholars (India), Totally Awesome (APAC), TNK Factory (South Korea) and Omega Media (Vietnam);

●     Internet Advertising Bureau (IAB)/The Media Rating Council (MRC) have recognised standards for in-game advertising. Advertisers now have clear benchmarks on how to measure campaign success; and

●     Enterprise customers licensing Bidstack's technology such as mobile ad-tech company Adways and multi-year deal with metaverse franchise SimWin Sports.

Post Period End Highlights

●     Revenues for H1 2023 expected to be approximately £2.0m (H1 2022 £2.05m) showing Bidstack's strong recovery following re-engagement with agencies and programmatic platforms after the termination of the Azerion commercial partnership in December 2022. The prior year comparison included a minimum revenue guarantee which contrasts with the high quality of commercial revenue generated through the Company's internal sales team this year;

●     Following a comprehensive business review the Company has implemented a cost efficiency and restructuring programme to reduce average monthly cash burn by approximately 40% going forward; 

●     Bidstack filed comprehensive claims against Azerion in Dutch courts demanding the full amounts owed by Azerion under the agreement of 16 December 2021; and

●     The Group is currently negotiating a convertible loan facility with a strategic investor and expects to be able to make further updates in due course.

Trading Update

●     Launch of programmatic "open marketplace" advertising with live connections across The Trade Desk, Magnite, Media Math and Xandr;

●     A pipeline of brand and performance programmatic platforms including OpenX, Equative, Stackadapt and Adform to be integrated in the coming year;

●     Roster of resellers with experience in gaming and new media channels across APAC, MENA, LATAM and EMEA are being onboarded;

●     Reinforcing product with attribution and viewability through integrations with Kochava and solutions with IAS and MOAT;

●     Highlights across the gaming network include Ubisoft's marquee mobile franchise Hungry Shark Evolution and organic growth within publishers such as Miniclip adding further titles. Publisher retention and feedback remains strong driven by account management, advertising activity and platform development; and

●     First-ever NFL club to partner with Bidstack Sports and adopt Bidstack's technology to operate real world and virtual stadiums in partnership with StatusPRO's NFL Pro Era, a fully licensed virtual reality game.

●     Multiple negotiations progressing across sports leagues, teams and publishers.

Outlook

The US sales team is now fully integrated providing materially improved revenue visibility. Bidstack is also increasing the strength of its relationships with key games publishers and developers through cross-selling the Group's products. In addition Bidstack's reseller network is expanding and automated open marketplace revenue is starting to appear.

The Directors believe that Bidstack's strategy positions the Company well for future growth with its growing global footprint being serviced by additional resellers and the Company's programmatic open marketplace offering now taking root. Bidstack is making robust progress with its key commercial partners and is attracting interest from other significant industry players. As the market continues to develop, further accretive and multi-year enterprise partnership opportunities are coming to fruition.

For FY23, the Board currently expects the Group's results to be in line with market expectations.

James Draper, CEO of Bidstack, said:

"FY22 was a year where Bidstack made the operational shift from early stage to a scale up business. Bidstack grew its market share in the industry, which can be measured across indicators such as the growing number of agencies activating blue chip global advertisers, our new markets, our increased portfolio of games and the growing size of average campaign budgets. 

The US team is now well integrated and hitting the ground running providing the business with ever improving visibility of growing revenue. There is solid momentum in relation to the publishers and game developers as we cross-sell our products and organically grow the portfolio of games.

Current trading reflects our rapid commercial adjustment following the termination of the sales agency arrangements with Azerion. Following a thorough debrief of the market intelligence gained through our relationship with Azerion and, having reignited our agency relationships directly, we are now beginning to roll-out our new look reseller network and automated open market revenue is beginning to flow into our network.

As we look ahead to H2 2023, the intrinsic in-game market remains resilient as major catalysts, such as additional gaming platforms, begin to explore in-game advertising. We believe this will increase the volume of high-fidelity titles within our network and drive increased revenues. Larger screens will command a higher price point from marketers. Publishers are expressing their desire to utilise our technology for monetisation, content management systems (CMS) and as a marketing channel. We have rolled out promising proof of concepts in the sports genre, unifying publishers, licence holders and sports teams. 

We have reviewed our cost base and reduced our average monthly cash burn significantly going forward, to preserve and extend our runway. The alignment ensures that our resources are being maximised for sustainable and accelerated revenue generation.

We are obsessed at Bidstack in ensuring our technology is fully utilised by our clients, the game developers. Generating brand activation revenue, improving player engagement through one-to-one messaging from publisher-to-gamer via our CMS, and a toolset that through our sports offering, can save them money whilst improving the authenticity of the gaming environment."

-ENDS-

Contacts

Bidstack Group Plc

James Draper, CEO

SPARK Advisory Partners Limited (Nomad)

Mark Brady / Neil Baldwin / James Keeshan

[phone]

Stifel Nicolaus Europe Limited (Broker)

Fred Walsh / Tom Marsh

 [phone]

Extracts from the Annual Report

Chairman's Statement

Introduction

This is my first statement since becoming Chairman of Bidstack in September 2022 and I would like to thank Donald Stewart, the outgoing Chair for all his hard work during his tenureship since the public listing in August 2018 and I am pleased that he remains a Non-Executive Director of Bidstack.

Looking back at 2022, it has been a year in which Bidstack has strengthened its position in many important areas as a leading platform in native in-game advertising activation technology. It has also been a year, where, coming into 2023, Bidstack has set itself up to become more strategic, more predictable in terms of earnings and profit and more in control of its commercial operations through direct sales to its clients and partners thus maximising global growth opportunities.

The 2022 financial numbers speak for themselves:

·      Revenue up +101% to c.£5.3m* (FY21: £2.6m)

·      Gross margin at c.72%** (FY21: 36%)

·      Cash balance at 31 December 2022 up 21% at £8.7m (31 December 2021: £7.1m)

·      Loss after tax £7.7m (31 December 2021: £6.3m)

(*Gross billings including all gross revenues and gross Azerion minimum revenue guarantee for FY22 were £9.3m (FY21: £2.6m), in line with our contractual arrangements.)

(** Gross margin arising as a result of the net accounting treatment of revenues and corresponding costs of sales towards servicing the Azerion contract in accordance with IFRS15. Excluding this treatment the Board believe that adjusted gross margin would be closer to 40%)

There are a considerable number of key highlights on which I will comment:

At a time when fundraising was generally very difficult in the industry:

·      A successful placing, raising proceeds of £10.5m in October 2022, demonstrating the confidence of our existing investors. This included a significant first investment by Irdeto B.V., a world leader in video games protection and anti-piracy technology taking a 13.5% stake.

Making huge strides by:

·      Growing the Bidstack global network of leading developers and publishers with over 250 titles (FY21: 58) across in-game, in-menu and rewarded video. This includes an addition of 2 further titles with a AAA global game publisher and a multi-year renewal with Sports Interactive's Football Manager. 

Expanding, commercial activity in North America where a significant portion of Bidstack's potential business exists by:

·      An increased focus on the US market. The commercial team in the US now comprises ten people.

At the same time, making significant inroads into all UK and European markets by:

·      Educating and growing markets such as the UK, France, Netherlands, Spain, Germany, Nordics, Portugal and Belgium in advertising across Bidstack's extensive gaming inventory

Expanding Bidstack's global reach by:

·      The onboarding of additional resellers with MMP Worldwide (MENA), AdScholars (India), Totally Awesome (APAC), TNK Factory (South Korea) and Omega Media (Vietnam) and;

In the area of advancing technology and standardisation in the industry:

·      By forming a partnership with Unity, a cross platform game engine as a Unity Verified Solution recommended monetisation solution for game developers across all platforms;

·      By catalysing the Internet Advertising Bureau (IAB)/The Media Rating Council (MRC) to recognise standards for in game advertising. Advertisers now have clear benchmarks on how to measure campaign success;

·      Acceleration of the adoption of Bidstack's SDK by developers and publishers as breadth of ad-formats in addition to in-game, in-menu now includes rewarded video, the most transacted ad unit in gaming;

·      Early success with enterprise customers licensing Bidstack's technology such as mobile ad-tech company Adways and metaverse franchise SimWin; and

·      This is the launch of our enterprise platform business and across 2023 we expect to announce multiple partnerships through our "low touch", high margin solution.

Operational challenges

The road in 2022 has not, however, been without obstacles on the way.

I will comment on the principal one.

The appointment of Azerion in 2021, as a global reseller of Bidstack's offerings, boosted Bidstack's sales capabilities in Europe but Azerion materially underperformed against mutual expectations in North America as well as across the rest of the world. Bidstack took immediate action to mitigate Azerion's shortfall by appointing its own experienced US sales team.

Azerion failed to remit properly invoiced sums due to Bidstack under the terms of the contract between the parties, resulting in Bidstack being awarded attachments (freezing injunctions) against Azerion in December 2022 and then defending Azerion's petition to have these removed in the Court of Amsterdam in January 2023. Following the judgement of the Dutch court in January, Azerion has provided Bidstack with bank guarantees for the amounts due to Bidstack under its initial claims. Azerion's purported termination of the contract on 30 December 2022 increased the quantum of Bidstack's claims materially. Following advice, the Board believes that, unfortunately, a court hearing on these claims is not likely to occur before Q4 2023.

Whilst this legal action is regrettable, it has meant that Bidstack now has far greater control over enabling the Company to become more agile globally.

With Bidstack's improving revenue visibility and a growing client list, the Board is confident in Bidstack's ability to operate independently of any Azerion relationship. 

As previously stated, Bidstack intends to vigorously continue pursuing Azerion in respect of its claims for unpaid invoices and breaches of contract.

Outlook, highlights for 2023 and beyond

As a Board we are excited by the future of the industry the Company has helped create, the use-cases for our technology. The management team, led by our Founder and Chief Executive James Draper, are focused on achieving our commercial and financial objectives.

Finally, thank you to our loyal and 'cornerstone' institutional and retail investors and our dedicated employees and partners for your support throughout 2022.

Dr David Reeves

Chairman

Consolidated statement of comprehensive income

for the year ended 31 December 2022

	Note		Year ended		Year ended
			31 December 2022		31 December 2021
			£		£
Revenue	4		5,267,155		2,623,413
Cost of sales			(1,484,512)		(1,674,190)
Gross profit			3,782,643		949,223
Administrative expenses	5		(12,545,716)		(8,681,927)
Exceptional items	6		-		(222,555)
Total administrative expenses			(12,545,716)		(8,904,482)
Operating loss			(8,763,073)		(7,955,259)
Finance income	9		749		180
Finance costs	9		(2,998)		(3,392)
Loss before taxation			(8,765,322)		(7,958,471)
Taxation	10		1,079,136		1,661,027
Loss for the year			(7,686,186)		(6,297,444)
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Exchange gains on translation of foreign operations			113,358		10,589
Tax relating to items that may be reclassified	10		-		-
Other comprehensive income for the year, net of tax			113,358		10,589
Total comprehensive loss for the year			(7,572,828)		(6,286,855)
Loss per share - basic and diluted (pence)	11		(0.62)		(1.21)

The notes to the accounts published in the Annual Report form part of the financial statements.

Consolidated statement of financial position

as at 31 December 2022

Company number 04466195

	Note		31 December 2022	31 December 2021
ASSETS			£	£
Non-current assets
Intangible assets	12		765,454	248,760
Property, plant and equipment	14		56,623	46,519
Right of use asset	16		3,920	7,280
Total non-current assets			825,997	302,559
Current assets
Trade and other receivables	18		9,319,868	2,752,036
Cash and cash equivalents	19		8,662,039	7,086,906
Total current assets			17,981,907	9,838,942
Total assets			18,807,904	10,141,501
EQUITY AND LIABILITIES
Equity
Share capital	21		10,796,670	8,950,048
Share premium account	21		43,216,919	35,375,326
Share-based payment reserve	21		2,782,896	1,589,965
Merger relief reserve	21		6,508,673	6,508,673
Reverse acquisition reserve	21		(23,320,632)	(23,320,632)
Warrant reserve	21		-	71,480
Exchange reserve	21		123,947	10,589
Retained losses	21		(29,491,052)	(21,876,346)
Total equity			10,617,421	7,309,103
Non-current liabilities
Lease liability	15		614	4,180
Total non-current liabilities			614	4,180
Current liabilities
Trade and other payables	20		8,186,323	2,824,920
Lease liability	15		3,546	3,298
Total current liabilities			8,189,869	2,828,218
Total equity and liabilities			18,807,904	10,141,501

The notes to the accounts published in the Annual Report form part of the financial statements.

Consolidated statement of changes in equity

for the year ended 31 December 2022

	Share capital	Share premium	Share-based payment reserve	Merger relief reserve	Reverse acquisition reserve	Exchange Reserve	Warrant reserve	Retained losses	Total equity
	£	£	£	£	£	£	£	£	£
Balance as at 1 January 2021	6,234,261	27,984,716	1,282,556	6,508,673	(23,320,632)	-	71,480	(15,578,902)	3,182,152
Issue of shares	2,715,787	8,147,363	-	-	-	-	-	-	10,863,150
Costs of raising equity	-	(756,753)	-	-	-	-	-	-	(756,753)
Share-based payments	-	-	307,409	-	-	-	-	-	307,409
Loss for the year	-	-	-	-	-	-	-	(6,297,444)	(6,297,444)
Total comprehensive loss for the year	-	-	-	-	-	10,589	-	-	10,589
Balance as at 31 December 2021	8,950,048	35,375,326	1,589,965	6,508,673	(23,320,632)	10,589	71,480	(21,876,346)	7,309,103
Issue of shares	1,839,122	8,643,873	-	-	-	-	-	-	10,482,995
Issue of share options exercised	7,500	22,500							30,000
Costs of raising equity	-	(824,780)	-	-	-	-	-	-	(824,780)
Share-based payments	-	-	1,192,931	-	-	-	-	-	1,192,931
Unexercised lapsed warrants	-	-	-	-	-	-	(71,480)	71,480	-
Loss for the year	-	-	-	-	-	-	-	(7,686,186)	(7,686,186)
Total other comprehensive income for the year	-	-	-	-	-	113,358	-	-	113,358
Balance as at 31 December 2022	10,796,670	43,216,919	2,782,896	6,508,673	(23,320,632)	123,947	-	(29,491,052)	10,617,421

Warrants issued by the Company in the year ended 31 December 2018 were classified as equity on initial recognition and shown in the warrant reserve. As at 31 December 2022 the warrants lapsed unexercised and the amount previously recognised in the warrant reserve has been reclassified to retained losses.

The notes to the accounts published in the Annual Report form part of the financial statements.

Consolidated statement of cash flows

for the year ended 31 December 2022

		31 December 2022	31 December 2021
	Note	£	£
Cash flows from operating activities
Loss before taxation		(8,765,322)	(7,958,471)
Adjustments for:
Amortisation - Intangibles	12	71,528	31,195
Amortisation - Right of use asset	16	3,360	10,377
Depreciation	14	28,765	24,160
Equity settled share-based payments	5	1,192,931	307,409
Doubtful debts expenses		-	(2,073)
Interest received	9	(749)	(180)
Interest paid	9	2,998	3,392
Bad debts expense	18	1,456,236	-
Exchange differences on translation of foreign operations		113,358	10,589
		(5,896,895)	(7,573,602)
Changes in working capital
(Increase)/decrease in trade and other receivables	18	(8,199,385)	409,468
Increase in trade and other payables	20	5,361,405	961,182
Cash used in operations		(8,734,875)	(6,202,952)
Taxation received		1,254,451	892,895
Net cash used in operations		(7,480,424)	(5,310,057)
Cash flow from investing activities
Investment in intangible assets	12	(588,222)	-
Investment in property, plant and equipment	14	(38,869)	(42,291)
Net cash flow used in investing activities		(627,091)	(42,291)
Cash flow from financing activities
Proceeds from issue of share capital	21	10,512,995	10,863,150
Cost of issue	21	(824,780)	(756,753)
Interest paid	9	(2,998)	(3,392)
Principal paid on finance leases	15	(3,318)	(11,045)
Interest received	9	749	180
Net cash generated from financing activities		9,682,648	10,092,140
Increase in cash and cash equivalents in the year		1,575,133	4,739,792
Cash and cash equivalents at beginning of year		7,086,906	2,347,114
Cash and cash equivalents at the end of the year		8,662,039	7,086,906

The notes to the accounts published in the Annual Report form part of the financial statements.

Extracts from the notes to the financial statements

2      Summary of significant accounting policies

Basis of preparation

The consolidated financial statements consolidate those of the Company and its subsidiaries (together the "Group"). The financial statements have been prepared on a going concern basis in accordance with UK-adopted international accounting standards and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The effect on the economy may impact the Group in varying ways, which could lead to a direct bearing on the Group's ability to generate future cash flows for working capital purposes. The inability to gauge the length of such disruption further adds to this uncertainty. For these reasons the generation of sufficient operating cash flows remain a risk. Management is closely monitoring commercial and technical aspects of the Group's operations to mitigate risk and believes the Group will have access to sufficient working capital to continue operations for the foreseeable future.

Consolidation

The consolidated financial statements consolidate the financial statements of the Company and the results of its subsidiary undertakings Bidstack Limited, Pubguard Ltd, Bidstack SIA, Bidstack Technologies Ltd, Bidstack Sports Limited and Bidstack Inc., made up to 31 December 2022.

Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Although the consolidated financial information has been issued in the name of Bidstack Group Plc, the legal parent, it represents in substance continuation of the financial information of the legal subsidiary, Bidstack Ltd.

Going concern

The Board continues to adopt the going concern basis in the preparation of the financial statements as it is confident of the Group continuing operations into the foreseeable future, although material uncertainty exists in relation to the group's ability to raise funds to sustain its operations.

The Board's forecasts for the Group include revenue from existing business, additional future revenues from anticipated new lines of business, potential future capital in-flows, continued operating losses, projected cash-burn of the Group (and taking account of reasonably possible changes in trading performance and also changes outside of expected trading performance) for a minimum period of at least twelve months from the date of approval of these financial statements.

The Group forecasts assume that further equity fundraising will take place in the next twelve months in order to implement its growth strategy and operate as a going concern.  The Group is currently negotiating a convertible loan facility with a strategic investor to address its short term cash requirements. Although the Group has had past success in fundraising and continues to attract interest from investors, making the Board confident that such financing options will be available to provide the required capital, there can be no guarantee that such fundraising will be available and, accordingly, this constitutes a material uncertainty over going concern.

In addition to the above, the Board has considered various alternative operating strategies should these be necessary in the light of actual trading performance not matching the Group's forecasts given current macro-economic conditions and is satisfied that such revised operating strategies could be adopted, if and when necessary. Therefore, the Directors consider the going concern basis of preparation is appropriate.

2      Summary of significant accounting policies (continued)

Going concern (continued)

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement on pages 2 to 5.

The financial statements at 31 December 2022 show that the Group generated an operating loss for the year of £8.8 million (2021: £7.9 million); with cash used in operating activities of £7.5 million (2021: £6.2 million). Group balance sheet also showed cash reserves at 31 December 2022 of £8.6 million (2021: £7.1 million). The Group is dependent on further equity fundraising in order to operate as a going concern for at least twelve months from the date of approval of the financial statements.

New and amended standard, and interpretations issued and effective for the financial year beginning 1 January 2022.

The adoption of the following mentioned amendments, which were all effective for the period beginning 1 January 2022, have not had a material impact on the Group's and Company's financial statements:

·      Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use;

·      Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);

·      Amendments to IFRS 3 References to Conceptual Framework);

·      Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets

New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2023:

·      Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Amendments to IAS 1: Classification of Liabilities as Current or Non-current - Deferral of Effective Date - effective 1 January 2023*

·      Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies - effective 1 January 2023

·      Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors -Definition of Accounting Estimates - effective 1 January 2023

·      Amendments to IAS 12 Income Taxes - Deferred Tax Related to Assets and Liabilities arising from a Single Transaction - effective 1 January 2023

The following amendments are effective for the period beginning 1 January 2024:

·      IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)

·      IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current)

·      IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants)

Bidstack Group Plc is currently assessing the impact of these new accounting standards and amendments.

2      Summary of significant accounting policies (continued)

Revenue Recognition

Under IFRS 15, revenue is recognised to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. The underlying principle is a five-step approach to identify a contract, determine performance obligations, the consideration and the allocation thereof, and timing of revenue recognition. IFRS 15 also includes guidance on the presentation of assets and liabilities arising from contracts with customers, which depends on the relationship between Company's performance and the customers' payment.

The Group recognises revenue from the follow activities:

·      Revenue from Media contracts; whereby Group's inventory is sold to advertisers directly or programmatically;

·      Revenue from Sponsorship contracts; whereby the Group enter into a contract with the brand direct or advertising agency to provide a customized campaign in a chosen video game;

·      Revenue from Licensing contracts; whereby the Group enters into a contract that provides the exclusive licensing agreement of the Pubguard Technology;

·      Revenue from Minimum Guarantee; whereby the Group entered into an exclusive contract with Azerion as its provider of reseller services in relation to Bidstack SDK formats.

Revenue from contracts with customers is recognised when or as the Company satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when the customer obtains control of that good or service.

The Group identified the performance obligations that related to the above stated revenue activities as follows:

·      Revenue from Media contracts; based on agreed impressions that have been delivered between the campaign start and end date;

·      Revenue from Sponsorship contracts; the delivery of a customised placement of advertising into the agreed game;

·      Revenue from Licensing contracts; the point at which the brand rights were made available, and the point that exclusive licensing access to the Pubguard technology was provided; 

·      Revenue from Minimum Guarantee; for the provision of an agreed amount of in-game advertising inventory over the duration of the contract.

For each performance obligation that is satisfied over time, the Group applies a single method of measuring progress towards complete satisfaction of the obligation. The objective is to depict the transfer of control of the goods or services to the customer. To do this, the Group have adopted an appropriate output method. For the Group, that is the rights to access and use the brand assets and the provision of in-game advertising inventory over the period of the contract.

The Group identifies the transaction price that relate to the above stated revenue generating activities as follows:

·      Revenue from Media contracts; based on the Group's rate card by CPM multiplied by the agreed number of impressions;

·      Revenue from Sponsorship contracts; based on the cost set by the game developer. The Group implements a cost plus model for sponsorship;

·      Revenue from Licensing contracts; determined by the contract over the duration of the term;

·      Revenue from Minimum Guarantee; the minimum guarantee's transaction price is included within the contract .

2      Summary of significant accounting policies (continued)

Revenue Recognition

The Group have applied a practical expedient which allows an entity to apply the accounting for a contract with a customer to a portfolio of contracts with similar characteristics if the entity reasonably expects the effects on the financial statements of applying IFRS 15. The Group have assessed the contracts and is comfortable that the effects on the financial statements of applying IFRS 15 would not differ materially from applying this Standard to the individual contracts (or performance obligations) within that portfolio.  

The Company assesses the contract with the customer to identify the separate performance obligations which would consist of an 'access rights' and the 'provision of in-game advertising inventory'. The Company transfer of the in-game advertising inventory sold usually coincides with the delivery of that inventory and the customer being able to utilise it. The Company principally satisfies its performance obligations at that point in time and recognises revenue on delivery.

The Group recognises a contract asset when revenue has been recognised on satisfying performance obligations but have not yet been billed to the customer. Contract assets relate to impressions that have been delivered but not billed to the customers. Contract liabilities are recognised when the Group has an obligation to transfer goods or services to the customer for which consideration has been received from the customer. Contract liabilities relate to advanced payments from customers against a campaign.

Net finance costs

Finance costs comprise interest on bank loans and other interest payable. Interest on bank loans and other interest is charged to the Statement of Comprehensive Income over the term of the debt using the effective interest rate method so that the amount charged is at a constant rate on the carrying amount.

Finance income comprises interest receivable on loans to related parties. Interest income is recognised in the Statement of Comprehensive Income as it accrues using the effective interest method.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is recognised as the amount of corporation tax payable in respect of taxable profit for the current or past reporting periods using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated.

Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is calculated using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.

With the exception of changes arising on initial recognition of a business combination, the tax expense/(income) is presented either in the income statement, other comprehensive income or equity depending on the transaction that resulted in the tax expense/(income).

2              Summary of significant accounting policies (continued)

Taxation (continued)

Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors.  Deferred tax assets and deferred tax liabilities are offset only if:

- the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and

- the deferred tax assets and deferred tax liabilities relate to corporation tax levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously.

- Research and Development Tax Credits are recognised as receivables when an inflow of economic benefit is certain, until then a contingent asset in respect of probable Corporation Tax is disclosed.

Valuation of investments

Investment in subsidiary undertakings are accounted for at cost less impairment. Advances to subsidiaries are initially recorded at fair value based on a market rate of interest and subsequently at amortised cost. The difference between funds advanced and fair value is recorded in investments.

Impairment of fixed asset investments

Fixed asset investments are assessed for the presence of impairment indicators, if any indicators are present then an impairment review is conducted. An impairment review of Goodwill is conducted annually, any resulting impairment loss is measured and recognised on a consistent basis.

Leased assets

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

-       Leases of low value assets; and

-       Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the incremental borrowing rate on commencement of the lease is used.

On initial recognition, the carrying value of the lease liability also includes:

-       amounts expected to be payable under any residual value guarantee;

-       any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option being exercised.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

-       lease payments made at or before commencement of the lease;

-       initial direct costs incurred; and

2      Summary of significant accounting policies (continued)

-       the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Leased assets (continued)

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement.

An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the fair value of Bidstack Group's share of the identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, Goodwill is measured at cost less accumulated impairment losses.

Intangible assets

An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably, the asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.

Amortisation is charged on a straight-line basis and is included in administrative expenses through the profit or loss. The rates applicable, which represent the Directors' best estimate of the useful economic life, are:

-       Website costs - 5 years

-       Trademarks - 10 years

-       Brand - 5 years

-       Software - 5 years

-       Research and Development - 5 years

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs. Depreciation is provided on all items of property, plant and equipment, so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

-       Computer equipment - 33.33% straight line

-       Office equipment - 20% straight line

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2      Summary of significant accounting policies (continued)

Financial assets (continued)

The Group classifies all of its financial assets as loans and other receivables. Financial assets do not comprise prepayments. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are initially recognised at fair value and are subsequently stated at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The Group's financial assets held at amortised cost comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.

Financial liabilities

Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost,

using the effective interest method.

Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new share or options are shown in equity as deduction net of tax before proceeds.

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted.

As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the income statement is charged with fair value of goods and services received.

Functional and presentation currency

Items included in the financial statements of the Group are presented in Pounds Sterling (£) which is also the Parent Company's functional currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income

4      Segmental information

During the year ended 31 December 2022 and the year ended 31 December 2021, the Group operated one business segment, that of the provision of native in-game advertising across the US and in EMEA.

The revenue has been segmented based on geographical regions US and EMEA, and by revenue type. This is used by the chief operating decision makers to perform their role.

	31 December 2022	31 December 2021
	£	£
Revenue by Geographical Region
US	167,627	863,691
EMEA	5,099,528	1,759,722
	5,267,155	2,623,413

The Group's revenue included 1 (2021: 5) customers making up more than 10% each during the year.

	31 December 2022	31 December 2021
	£	£
Revenue by Type
Customer 1	4,112,331	642,270
Customer 2	-	377,375
Customer 3	-	361,758
Customer 4	-	289,239
Customer 5	-	267,914
All other customers	1,154,824	684,857
Total revenue	5,267,155	2,623,413

The Group recognises a contract asset when revenue has been recognised on satisfying performance obligations but have not yet been billed to the customer. Contract assets relate to impressions that have been delivered but not billed to the customers. Contract liabilities are recognised when the Group has an obligation to transfer goods or services to the customer for which consideration has been received from the customer. Contract liabilities relate to advanced payments from customers against a campaign. Further details of the Group's contract assets and liabilities can be found in Note 18 and Note 20, respectively.  

The Group does not ordinarily have returns, refunds or other similar obligations in respect of their performance obligations as the Group's obligations are around the delivery of impressions or a hardcoded customised asset. The Group ensures that the customers are happy to proceed in advance of going live. Should there be a discrepancy between what the customer sees as delivered on their 3^rd party verification system and what the Group has billed, a credit note is issued.

As at 31 December 2022, the Group did not have any unsatisfied long-term contracts.

 

 

11   Loss per share

Basic and diluted loss per share

The calculation of basic and diluted loss per share is based on the loss attributable to ordinary shareholders of  £7,686,186 (2021: loss of £6,297,444) and the weighted average number of ordinary shares in issue for the year of 1,235,295,798 (2021: 519,507,993). The basic and diluted earnings per share are the same given the loss for the year, making the outstanding share options and warrants anti-dilutive.

21   Share capital and reserves

Allotted, called up and fully paid			Ordinary 0.5p shares	Share capital	Share Premium
			No.	£	£
As at 01 January 2022			931,531,573	8,950,048	35,375,326
Issue of placing shares			369,324,411	1,846,622	8,666,373
Cost of raising equity			-	-	(824,780)
As at 31 December 2022			1,300,855,984	10,796,670	43,216,919

All ordinary shares are equally eligible to receive dividends and the repayment of capital and represent equal votes at meetings of Shareholders.

The following describes the nature and purpose of each reserve within owner's equity:

Share capital: Amount subscribed for shares at nominal value.

Share premium: Amount subscribed for share capital in excess of nominal value, less costs of share issue.

Share-based payment reserve: The share-based payment reserve comprises the cumulative expense representing the extent to which the vesting period of share options has passed and management's best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest.

Merger relief reserve: Effect on equity of the consideration shares issued over their nominal value.

Reverse acquisition reserve: Effect on equity of the reverse acquisition of Bidstack Limited.

Warrant reserve: The warrant reserve comprises the cumulative expense representing the extent to which the vesting period of warrants has passed and management's best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest.

Exchange reserve: The exchange reserve represents foreign exchange differences in re-translation.

Retained losses: Cumulative realised profits less cumulative realised losses and distributions made, attributable to the equity Shareholders of the Company.

 

END