BNN Technology PLC - Shareholder Update 14th April 2022

Dear Shareholder

Much has happened since our previous shareholder communication and whilst it has taken longer than originally hoped to reach our current position, we are very pleased to report we have achieved an agreed business-sale and can now make the necessary arrangements to call a General Meeting and seek shareholder approval.

We have encountered numerous challenges over the past six months, both at the Company level and a macro-economic level, in particular in relation to the Ukrainian War (and its impact on equity markets and capital markets) and the resurgence of COVID in China and Hong Kong (which has had a direct impact on both BNN’s business and the transaction).

At the Company level, it is with much sadness that we report the passing of our Chairman, Mark Hanson, who very sadly lost his battle against cancer earlier this year, and we offer our sincere condolences to Mark’s family. In his remembrance, we remind all shareholders that when Mark stepped into BNN’s Chairman role in January 2018, it was an extremely difficult time for the Company, and he led decisively on the removal of the previous Chairman and Non-Executive Directors, whom by then had subjected the Company to a damaging state of paralysis for several months, before overseeing a major restructure of the business. Subsequent to his appointment and the reinstatement of the Executive Directors, Mark worked tirelessly with BNN’s management to overcome numerous challenges, which he (and the other management) undertook with the determined and unwavering aim of initially salvaging and then maximising value for shareholders, including by focusing on the Company’s well-established lottery business.

In compliance with Companies Act requirements for public companies, we have recently appointed a replacement second director to the Company, Mr Simon Gurney, whilst at the same time, I myself continue with my directorship and also take over from Mark in the role of Chairman. By way of background on Simon, he is a member of the Gurney family, whom founded Gurney’s Bank which later merged with several other banks to form Barclay’s Bank, and is himself an experienced business owner and director in the technology and internet sector. I welcome Simon onto the Board and wish to thank him for the invaluable contribution he has already made to the Company since his recent appointment.

Regarding the progress we have made with our strategy to realise value for shareholders, we are pleased to report that we have now finalised terms and entered into a formal agreement to sell the two main Chinese subsidiaries of BNN to a Hong Kong company that has an expedited pathway to list on the NASDAQ market.

The Hong Kong company is in the gaming and lottery sector, with a particular focus on Asia and Africa, which include some of the fastest growing markets in gaming. The Company has a highly experienced and accomplished management team whom have developed large and successful gaming businesses in several key countries in the continents of Africa and Asia, including the second largest lottery operator in the People’s Republic of China and the number-one sports betting operator in several major African markets. A number of the members of the Hong Kong company’s management team also have considerable listed company experienced, including previously as part of the management of a very successful multi-billion-dollar NASDAQ listed gaming and technology company.

Despite the challenges faced by BNN since the collapse of its merger with MICT in March 2020, when COVID caused a major crash in global equity markets and economic confidence, the Company has been able to successfully advance its lottery business in China. To this end, two of BNN’s Chinese subsidiaries currently hold a number of valuable licences and contracts and are trading well, generating significant turnover as well as a seven-figure US dollar profit. The growth and other developments achieved in these two businesses has enabled BNN to negotiate terms of sale that are expected to generate in excess of $40m of value to shareholders, subject to the achievement of certain earn-out provisions.

Prior to seeking approval of the proposed transaction from BNN’s shareholders, we have recently reached agreement with the Company’s senior loan note holder to convert the circa £8 million of debt owing to them into equity (subject to the receipt of shareholder approval on the business sale transaction), which is on favourable terms to shareholders such is the loan note holder’s support towards the Company. The conversion will have a significant positive impact on our balance sheet.

Having achieved the above major milestones, we have begun to work with our UK legal counsel and other advisors to prepare a circular and a notice of a General Meeting for issuance to BNN’s shareholders. One of the primary purposes of the General Meeting will be to allow shareholders to vote on the approval of the proposed deal. On the basis that the proposed transaction is expected to deliver significant value to BNN’s shareholders, the Board will be whole-heartedly recommending its approval.

Whilst writing, I wish to take the opportunity to thank certain of our shareholders for their extraordinary effort in helping make possible the remarkable opportunity we have in front of us.

We look forward to updating you again in the coming weeks and writing to you with the shareholder circular and the notice of the General Meeting.

© 2022 BNN Technology PLC