Chairman’s Statement

Introduction
2021 has been a further year of significant progress for Bidstack resulting not only in increased revenues for the year, but also, for the first time, in material certainty in respect of minimum revenue levels for FY22 and FY23. In addition, capital availability and substantial gross margin improvements place the Group in a strong position for continued growth.

I am pleased with the Company’s progress in 2021, which has prioritised improving the quality of revenues and gross margin alongside strategic investments in key talent and operations. During the year Bidstack deliberately elected not to pursue some lower margin revenue opportunities and has, instead, improved margins through concentrating on developing high quality, higher margin activities.

The undoubted highlights of 2021 both came at the end of the year, proving that the Company was following the appropriate, long-term approach.

In December 2021 Bidstack entered into two industry leading agreements:

The first, with a global leading AAA digital interactive entertainment company, will provide Bidstack with access to a world-class mobile games portfolio including exclusive access to one of the world’s largest sporting franchises.

The second, a ground-breaking initial two-year partnership agreement with Azerion Holding B.V. (Azerion), the leading pan- European digital entertainment and media platform, is expected to grow Bidstack’s global sales footprint exponentially thanks to Azerion’s established team of over 1,000 employees operating across 26 offices in 18 countries.

2021 Highlights

• Successful raise of £10.86m (before expenses) in July 2021.
• Secured a revenue stream of a guaranteed minimum of US$30 million advertising spend over two years, commencing 1 March 2022.
• Signed a landmark commercial partnership with Azerion, the leading pan-European digital entertainment and media platform, who are now Bidstack’s exclusive commercial partner across its inventory from March 2022 until March 2024.
• Signed a multiple format advertising agreement covering the mobile portfolio of one of the world’s leading AAA digital interactive entertainment companies which includes exclusivity for one of the publisher’s biggest sporting franchises.
• Brand count doubled year-on-year to 70 (FY20: 35).
• Publisher portfolio nearly tripled year-on-year to 58 (FY20: 20).
• Growing global footprint: active in over 30 markets (FY20: 17).
• Structural improvement in gross margins, associated with optimising and scaling in-game advertising revenue.

As a result, FY21 gross margins have improved significantly, to 36% (FY20: 13%) and, while revenues for FY21 were below market expectations, audited gross profit and year-end cash were in line with market expectations. In addition, after audited non-cash charges and exceptional items, net losses were also in line with market expectations.

Progress in 2021

Publishers and Developers
During FY21, Bidstack has made significant progress in onboarding titles across stadium, racing and open world environments as well as Unity, Unreal and custom games engines adding 38 titles to its portfolio of games.

These titles include the following:

In July 2021, the Company’s portfolio was bolstered by its exclusive partnership with mobile games company Nordeus, for its flagship football management game “Top Eleven”, a partnership with Rebound Capital Games for its mobile title Tennis Manager 2021 and a partnership with T-Bull S.A. (WSE: TBL), one of the largest mobile game developers in Poland, for its free-to-play title Racing Classics PRO: Drag Race & Real Speed.

In August 2021 the Company announced a partnership with Motionlab Interactive for its leading mobile game, PDC Darts Match and a partnership with the independent Turkish developer Suji Games commencing with its free-to-play simulation title Hyper Airways.

The Company announced the addition of Football Kicks, the third title from Slovakian mobile games studio Inlogic, in September 2021 adding to previous titles Soccer Cup and Tennis World Open.

October 2021 brought the announcement of an exclusive partnership with Toronto based game studio Tangent Interactive Media Inc. for its interactive story game Storylines: Fashion & Passion, which is scheduled for release in Spring 2022.

In November 2021, Bidstack announced a new partnership with Wildlife Studios Limited, creators of one of the world’s most popular mobile tennis games, Tennis Clash and the addition of three new and exclusive titles from Dovetail Games, Train Simulator 2022, Train Sim World 2 and Bassmaster Fishing 2022.

In December 2021, Bidstack entered into an agreement with a leading, global AAA game publisher. The multi-year and multiple advertising format deal gives the Company the ability to place advertising across the publisher’s mobile portfolio. The deal also gives Bidstack exclusivity to one of the world’s largest sporting franchises.

In the same month the Company’s portfolio of games was further extended through three new gaming partners: Gold Town Games (World Hockey Manager), Spinoff Games (Disc Golf Valley) and, one of Europe’s top mobile game developers for an award-winning life simulation title.

Advertisers and Brands

In April 2021, Bidstack’s brand activations were publicly recognised in the Campaign Media Awards 2021 by winning the Fashion & Beauty category with Publicis’ Starcom UK for Paco Rabanne, which significantly increased its online sales, spontaneous awareness and propensity among young men to see its “Invictus” fragrance as a great gift for men in their early twenties through its in-game campaign.

During the year Bidstack worked with leading brands across travel, technology, apparel, luxury and food delivery platforms. This highlights the growing diversification of the roster of brands and campaign spend evolving from test spend to recurring on-plan spend which provides visibility.

Also in December 2021, Bidstack entered what the Directors believe to be one of the industry’s largest programmatic in-game advertising deals to date, a landmark commercial partnership with Azerion, the leading pan-European digital entertainment and media platform. The deal gives Azerion’s SSP and sales teams exclusive access to all of Bidstack’s advertising formats and will see Azerion become Bidstack’s sole external reseller. The initial two-year partnership will grow Bidstack’s global sales footprint exponentially thanks to Azerion’s established team of over 1,000 employees operating across 26 offices in 18 countries.

Azerion has subsequently listed on the Euronext Amsterdam through a SPAC on 1 February 2022 where they will continue to grow their digital entertainment and media company.

Product
Bidstack announced in February 2021, the results of its work with leading media measurement vendor Moat by Oracle (“Moat”) to verify in-game inventory as a trustworthy media channel. The campaign was run with Dentsu’s DGame on Football Manager 2021 in the UK on behalf of a leading global financial institution that measured general invalid traffic (“GIVT”). The analysis of Bidstack’s PC inventory compared to Moat’s benchmark performed 3.5x better than the industry and more than 99% observed impressions were verified as GIVT free.

In October 2021, Bidstack launched a new mobile ad format for brands with its innovative ‘in-menu’ format offering clickable display banners allowing brands to deliver integrated ads into game menus, user interfaces and loading screens which can be placed on a programmatic basis. Ads appears as in-game banners alongside other menu items and players can click on the ad to discover more. In-menu ads mean that game developers can now run integrated campaigns across two separate locations within the game with Bidstack; backing up the brand awareness campaign appearing in the gameplay with clickable interactive ads in menus, loading screens and other user interfaces.

2021 also saw material developments with the IAB, the Company’s industry trade body, in defining “in-game” as a new formal advertising category and providing scalable guidelines. The establishment of an IAB US committee, of which Bidstack is an active member, is expected to expand the foundational framework which is being delivered in the UK. Progress is encouraging, with key industry stakeholders across the value chain unified in creating industry standards which should enable frictionless growth.

Board and Advisory Committee Appointments
On 22 April 2021, Lisa Hau joined the Board as an Executive Director and Glen Calvert became an independent Non- Executive Director.

Prior to joining Bidstack in May 2020, Lisa led investor relations at WPP PLC following five years as an equity research analyst heading up coverage for the European media and internet sector with Jefferies, a leading multinational investment bank.

Glen is the founder of Kaizan.ai, an AI start up that augments the intelligence of teams, having been COO of Fnatic Ltd, widely regarded as one of the biggest brands and most successful esports teams. Previously Glen was a founder and CEO of programmatic marketing company Affectv and, prior to that, a member of the founding team at Struq, an advertising personalisation platform, which was acquired by Quantcast in 2014. Glen joined Bidstack’s advisory Board in August 2020.

On 23 July 2021 Bryan Neider joined the Board as an independent Non-Executive Director and Chair of the Audit Committee.

Bryan, a Certified Public Accountant, is a technology, media and gaming veteran who brings more than 25 years of experience from his tenure at Electronic Arts, a global leader in digital interactive entertainment, where he served in a variety of leadership roles. Bryan is currently CEO of AbilityPath, an organisation creating opportunities for greater independence for children, youth and adults through diverse, individualised education and support services. He also serves on several not-for-profit boards, is a founding Board member for Santa Clara University’s Centre for Innovation and Entrepreneurship, is an advisory Board member for the College of Business and Economics at California State University, serves on the boards of three technology start-ups and has been an advisor to a venture capital fund in Silicon Valley. He was appointed to the Bidstack Advisory Committee in October 2019.

On 1 February 2021 the Company announced it has accepted the resignation of Derek Wise from the Board to pursue other business interests.

On 22 April 2021 Mike Hayes stepped down from the Board and onto the Company’s Advisory Committee, to continue supporting Bidstack’s journey with his valuable industry experience with game developers and investors.

On 30 September 2021, John McIntosh resigned from his Executive Board position as Chief Financial Officer in order to pursue other business opportunities. Since then Bhavesh Hirani, Head of Finance, has been acting as Interim Chief Financial Officer of the Company. Bhavesh is a qualified Chartered Management Accountant and joined Bidstack in November 2020 from Reward Insight Ltd, an award winning customer loyalty platform. He previously held roles with Ministry of Sound, Playphone Inc and Havas Media.

I would like to take the opportunity to thank each of Derek, Mike and John for their respective service on the Board and Board Committees, their sage advice and their valuable contributions to the growth and success of the business.

Financial Summary
The summary income results for the Company for the year under review are as follows:

The Company raised £10.86m (before expenses) in July 2021 as a result of a placing and subscription of 543,157,516 million new ordinary shares with institutional and other investors, including certain directors, at 2 pence per share.

The Company ended 2021 with cash reserves of £7.1 million (2020: £2.35 million). While the Company is currently well capitalised, the Board remains focussed on maintaining improved gross margins and managing the Group’s operational costs that allow Bidstack to deliver against signed opportunities and deliver additional long-term value for Shareholders.

Outlook and Prospects
There are many reasons to face Bidstack’s future with confidence.

With contractually guaranteed minimum revenues of US$30m scheduled to arise over the next 24 months, Bidstack has significant revenue visibility for FY22 and FY23. The Company has a robust pipeline of additional AAA and independent titles in contract or in active negotiation stage.

Over the coming months, the arrangements with Azerion will be implemented and rolled out, and the multiple ad format deal with one of the world’s leading AAA game publishers is expected to facilitate the deployment of significant demand by advertisers and brands.

In addition, the Company will remain focussed on its gross margins in the coming year.

In 2022 progress has continued to be encouraging. So far this year Bidstack has:

• announced a global partnership with GroupM’s Xaxis to scale brand investment into Bidstack’s gaming portfolio;
• commenced the roll out of its media sales partnership with Azerion in multiple markets to scale advertising spend across gaming portfolio in line with the Board’s expectations;
• experienced rapid growth of its portfolio of games from 58 to over 100 across all ad-formats: in-game, in-menu and rewarded video growing DAUs, impressions, markets and addressable audience;
• participated in the IAB’s first ever PlayFronts for the gaming industry in New York, which is an annual marketplace dedicated to advertising and partnership opportunities, showing the development of the industry.

The Board expects that revenues for FY22 will be considerably greater than FY21 but still significantly second-half weighted. This is supported by top-line visibility underpinned by a 2-year minimum revenue guarantee. The phasing will reflect onboarding and ramping up of the contract throughout the year.

We believe that Bidstack is now well established, both in terms of product and revenue generation, as a leading player in the in-game digital advertising industry.

Donald Stewart
Chairman

27 April 2022