Tern PLC (TERN.L) Investment in FundamentalVR and Portfolio Update

Investment in FundamentalVR and Portfolio Update

Notice of Interim Results and Investor Presentation

Tern Plc (AIM:TERN), the investment company specialising in the Internet of Things (“IoT”), announces that it has made a further £530,000 investment in its portfolio company, FVRVS Limited (“FundamentalVR”), and provides an update on the recent activities of the Company and its portfolio companies, together with announcing the date of release of the Company’s interim results for the six months ended 30 June 2021 and a planned investor webinar.

Highlights

· Strong business momentum continues across all of Tern’s principal portfolio companies.

· Further investment by Tern of £530,000 in FundamentalVR in the form of convertible loan notes as part of a wider fund raise by FundamentalVR from its existing institutional and other shareholders.

· FundamentalVR has seen increased adoption of its virtual reality simulation solutions and continues to gain traction as a result of the challenges of social distancing and the reduction in elective surgeries, together with the introduction of new capabilities .

· Device Authority has continued to accelerate its annual recurring revenue growth through its subscription base and its modularised licence platform, KeyScaler, aided by the increasing focus on IoT security, the launch of product enhancements and the securing of further distribution partnerships.

· Wyld Networks has continued to make significant progress following its IPO on NASDAQ First North in Stockholm on 2 July 2021, including the signing of further distribution partnerships in South America and South East Asia, and an agreement with Chevron.

· InVMA continues to enjoy growing sales and a strong sales pipeline. The global deployment of AssetMinder® has been further aided by the opening of InVMA’s US operation with global professional services firm DEXIS now offering AssetMinder® to customers in Belgium and France.

· Talking Medicines has continued the role out of its PatientMetRx® data service and a leading global pharmaceutical company has recently signed a commercial agreement with Talking Medicines to start using PatientMetRx ® .

Commenting Al Sisto, CEO of Tern, said :

“I am very pleased that the positive business momentum previously reported has continued and all of our portfolio companies have performed well in the year to date. We expect this momentum to continue, building on recent commercial successes, as our portfolio of IoT focussed businesses seek to provide innovative and practical solutions to meet real world needs. In many instances the wide-ranging effects of the Covid-19 pandemic has accelerated the adoption of these solutions and we believe all of Tern’s portfolio companies are well positioned for the future.

“With the proceeds of the recent fundraise in July we are also well positioned to support the further growth of our portfolio companies, including the additional investment in FundamentalVR announced today, and we look forward to providing additional updates at the time of the release of our interim results on 14 September 2021.”

Portfolio Update

FundamentalVR

FundamentalVR, of which Tern currently owns 26.9% of the equity, has completed a £1,160,000 funding in the form of convertible loan notes from Tern and its other existing institutional shareholders who participated in the last FundamentalVR syndicated funding round in October 2019. Tern has subscribed for £530,000. In addition, FundamentalVR is anticipating raising further funds in the form of advanced subscription agreements from certain of its existing Enterprise Investment Scheme (EIS) investors.

Interest is payable by FundamentalVR on the convertible loan notes at a rate of 10% per annum and they are convertible into FundamentalVR equity at a 20% discount to the next equity fund raising price, assuming it raises a minimum of £5 million.

FundamentalVR delivers virtual reality (VR) haptic ‘flight simulators’ for surgery creating a safe, measurable and repeatable space to refine skills. FundamentalVR’s goal is to transform the way surgeons prepare, practice, and refine their skills. It has built an immersive, surgical simulation application platform, Fundamental Surgery, to provide medical professionals with the opportunity to rehearse, practice, and test themselves within a safe, controllable space that is as close to real-life as possible.

The proceeds of the fundraise will be used by FundamentalVR for a number of initiatives targeted at the further growth of the business and for general working capital purposes.

Based on FundamentalVR’s latest statutory accounts for the year ended 31 December 2019, as at that date it had net assets of £3,393,976 and incurred a loss for the year of £1,603,520.

The adoption of FundamentalVR’s haptics virtual reality simulation solutions, as a credible alternative to in-person and on human learning, has accelerated as a result of the challenges of social distancing and the reduction in elective surgeries. Both medical device and pharmaceutical companies are adopting the platform to facilitate the introduction, sales and marketing of new products that require repetition as part of training in the use of these new devices and drug therapy. During the year to date, FundamentalVR has experienced expanded interest in its platform from new customers and repeat sales to its existing customer base.

FundamentalVR has also continued to innovate and recently added advanced simulated soft tissue capabilities with kinesthetic haptics to its portfolio.

Device Authority Limited (“DA” or “Device Authority”)

During 2021, Device Authority has continued to accelerate its annual recurring revenue growth through its subscription base and its modularised licence platform, KeyScaler. This has been aided by Device Authority being part of the FIDO Alliance that has created a new onboarding standard to secure the IoT, together with further governmental pressure on major companies in a number of territories to increase cyber security.

Device Authority continues to build on its success within the automotive and transport markets with growing sales from a number of existing clients as their components move to volume production and the addition of new client wins in the automotive, automotive supply chain and shipping industries. With smart connected technologies being adopted in these markets, transfer of ownership and public key infrastructure (PKI) management throughout the lifecycle of the automobile or engine is becoming increasingly relevant.

In addition to new customer wins, Device Authority have entered into further distribution partnerships, including with Crossroads Innovation Group, to expand its reach within the US public sector, and with Medigate, an IoT device security and asset management company dedicated to the healthcare sector.

Earlier this month, Device Authority joined the Ericsson IoT partner ecosystem to help enterprises leverage the full Ericsson IoT ecosystem value. This partnership incorporates the tools and necessary processes with a view to increasing the return on investment for IoT customers, using cellular connectivity as the foundation . The partnership with Ericsson is in addition to Device Authority’s existing partnerships with leading IoT ecosystem providers, including AWS, DigiCert, Entrust, HID Global, Microsoft, PTC, Thales, Venafi and Wipro, amongst others.

Device Authority has also continued to enhance and expand its product offering. It recently announced a new version of KeyScaler which includes enhanced support for Microsoft Azure Key Vault with its hardware security module (HSM) Access Controller. Cloud deployments allow for easier management and scalability for IoT devices and applications and the HSM Access Controller represents a new technology feature that enables flexibility for cloud deployment with secure key storage.

In addition, Device Authority has extended further the interoperability of KeyScaler and Microsoft Azure IoT with the goal of solving security problems and improving return on investment for its joint customers, specifically to address Enterprise Edge devices and sensor use cases in the retail, automotive, healthcare and industrial sectors.

Device Authority has been gaining further industry recognition and was highlighted in ABI Research’s ‘IoT Device Onboard and Lifecycle Management Competitive Ranking’ as a leader in its SPARK Matrix™ and IoT Identity and Access Management (IoT IAM).

InVMA Limited (“InVMA”)

During 2020, InVMA began to scale up its Industrial IoT connected asset software as a service (SaaS) product, AssetMinder®, from several initial pilot customers to create product adoption momentum which has continued in 2021. InVMA is experiencing further interest from large industrial customers who are looking to connect large numbers of assets to AssetMinder®, particularly as the Covid-19 crisis accelerated the need for contactless monitoring of factory and remote assets. To facilitate servicing this demand, particularly in North America, InVMA has opened a US operation, AssetMinder USA, based in Durham, North Carolina, USA.

InVMA continues to enjoy growing sales and a strong sales pipeline. The global deployment of AssetMinder® has been further aided by Dexis Consulting Group (DEXIS), the global professional services firm which provides, amongst other things, industrial maintenance solutions, now offering AssetMinder® to customers in Belgium and France.

During July 2021, Tern advanced £100,000 of convertible loan notes to InVMA, which carry a coupon rate of 8% per annum and are convertible into InVMA shares at a 20% discount to any future third party fundraising.

Wyld Networks AB (publ) (“Wyld Networks” or “Wyld”)

Wyld Networks has continued to make significant progress following its IPO on the NASDAQ First North Growth Market in Stockholm on 2 July 2021. In particular, it has continued with the commercialisation of Wyld Connect, its terrestrial low-power wide-area network (LPWAN) IoT module, securing further commercial deals, specifically addressing one of the issues hampering the growth and roll out of IoT applications, notably a lack of affordable global wireless connectivity.

As satellite IoT adoption accelerates, particularly in emerging markets, Wyld Networks has recently partnered with companies in South America and South East Asia to deliver its sensor-to-satellite solution, Wyld Connect, to the agriculture market, facilitating the affordable implementation of IoT connectivity and in line with Wyld’s go-to-market strategy of using resellers across the globe to help promote and commercialise Wyld’s solutions . In South America, agreement has been reached with two well established partners, the Wezen Group and the Colombian Fruit Group. In the Philippines, a partnership has been entered into with East-West Seed Philippines, a tropical vegetable seed provider in South East Asia, to bring remote sensor connectivity to the South East Asian seed production market.

Additionally, Wyld Networks has entered into a partnership with Chevron, the US-headquartered multinational energy company with 2020 revenues of over US$94 billion, to pilot Wyld’s satellite IoT solution to enable remote sensor connectivity within Chevron’s IoT infrastructure. Use of Wyld’s solution by Chevron has the aim of improving operational efficiency by cost-effectively collecting data from IoT sensors in remote locations within the Chevron oil and gas operational infrastructure, particularly where there is no cellular or wireless coverage. This data provides insight and information to help reduce equipment downtime and enable preventative maintenance to ensure improved operational efficiency within complex infrastructure in the oil and gas environment.

Wyld Networks also continues to work with multiple other resellers, including ASCOM, a global ICT solution vendor, and Alliance Corporation, based in North America.

Wyld also continues to promote its Wyld Mesh and Fusion solution, launched in 2020, which is an innovative solution for delivering location-aware, relevant and actionable content over 4G, WiFi and mesh networks for a range of applications in retail, venues, hospitality, transportation and smart factories. With the gradual opening up of venues following Covid-19 related restrictions, Wyld is seeing increased interest in Wyld Mesh and Fusion.

Talking Medicines Limited (“Talking Medicines”)

As previously announced, Talking Medicine’s ambition in 2021 is to establish its PatientMetRx® data service as the gold service standard provider of intelligence on patient experience by medicine. Tern is pleased to report that a leading global pharmaceutical company has recently signed a commercial agreement with Talking Medicines to start using PatientMetRx ® .

Talking Medicines also entered into a strategic partnership at the end of July 2021 with Closing Delta, a large US headquartered digital transformation consultancy and advisory firm, that helps pharmaceutical companies accelerate digital transformation, in particular now utilising PatientMetRx ® to measure patient confidence .

Notice of Interim Results

The Company advises that its interim results for the six months ended 30 June 2021 will be announced on Tuesday 14 September 2021.

Online Investor Presentation and Q&A Session

Tern’s management and senior management from two of Tern’s portfolio companies, Device Authority and FundamentalVR, will be hosting an online presentation and Q&A session at 5.30 p.m. BST on Tuesday 14 September 2021. This session is open to all existing and prospective shareholders. Those who wish to attend should email tern@investor-focus.co.uk and they will be provided with access details. Participants will have the opportunity to submit questions during the session, but questions are welcomed in advance and may be submitted to: tern@investor-focus.co.uk .

Enquiries

Tern Plc

Al Sisto (CEO)

Sarah Payne (CFO)

via IFC Advisory


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