Mobile Streams to acquire 49pc of KrunchData
Mobile content and data intelligence company Mobile Streams has agreed to acquire a 49% interest in KrunchData for £0.74m, it announced on Thursday.
The AIM-traded firm said the consideration would be made up of £0.5m in cash and 90,384,615 shares issued at 0.26p each, with an option to acquire the remaining 51% at any time in the next two years for £0.77m.
As part of the transaction, it agreed that the revenue share agreement, under which the company currently received 100% of the revenues from Streams Data, reducing to 50% from January 2022, would be terminated immediately.
Mobile Streams had signed a joint venture agreement with Krunch in November 2019, under which Krunch would provide expertise, software and systems under licence to enable Mobile Streams to build a second, complementary, revenue stream and to examine whether value could be extracted from its existing client data.
The board explained that the Streams Data business, which includes the bespoke data insight, intelligence and visualisation service provided under the joint venture, achieved first revenues in June, and the Streams software-as-a-service (SaaS) platform generated initial customer revenues in October.
It expected the Streams Data business to generate around £15,000 in monthly revenue for March, with revenues expected to increase to an estimated £25,000 per month following the contract with Quanta Media Group, announced on 18 March.
The existing agreement commits the company to pay Krunch for client set up costs, the costs of data clean-up and agreed software development at cost , but left it vulnerable to Krunch being able to terminate the agreement at 90 days' notice.
Following termination, the company said it would retain the rights to customer and client data, but not to the systems, software and intellectual property licensed to it by Krunch, and thus would be unable to continue operating the Streams Data business without significant further investment.
Additionally, the agreement included a revenue share deal, under which 50% of Streams Data revenues would be paid to Krunch from January 2022, for as long as the joint venture remained in place.
Given the risks and potential costs of the revenue share arrangement, the directors independent of Krunch had negotiated terms with the Krunch shareholders to enable Mobile Streams to secure the systems, software and intellectual property required to continue operating the Streams Data business, and to reduce future costs by terminating the revenue share agreement immediately.
For the year ended December, management accounts provided by Krunch showed revenue of £0.29m, a net profit of £0.01m, and net assets at year-end of £0.02m.
“The board is pleased to announce this agreement with KrunchData,” said non-executive director Nigel Burton.
“It removes a significant risk by securing access to and the rights to full ownership of the Krunch platform and intellectual property, as well as removing the potential future costs of the revenue share arrangement, whilst fully aligning the interests of the Krunch team with the company.
“Based on the expected growth of the Streams Data business, the terms agreed are highly attractive to the company, with the aggregate initial consideration below the level of the revenue share expected to be paid to Krunch under the existing arrangements in 2022 alone.”
At 1436 GMT, shares in Mobile Streams were down 6.08% at 0.24p.