REG - Tern PLC - Company and Portfolio Update

TernAnnouncement

21/11/2023 07:00

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RNS Number : 0519U  Tern PLC  21 November 2023

21 November 2023

 

Tern Plc

("Tern" or the "Company")

 

Company and Portfolio Update

 

Tern Plc (AIM:TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, is pleased to provide an update on the
Company and its portfolio companies.

 

Portfolio Company Update

 

Device Authority Limited ("Device Authority")

Current holding: 53.8%

Convertible loan notes of £0.7 million and short-term loan of £0.1 million

Device Authority is a global leader in Identity and Access Management (IAM)
for connected device ecosystems, enabling organisations to achieve 'Zero
Trust' security at scale.  Zero Trust is a security framework requiring all
users, whether in or outside the organisation's network, to be authenticated,
authorised, and continuously validated for security configuration and posture
before being granted or keeping access to applications and data.  Device
Authority's KeyScaler® platform is specifically designed to automate and
manage IoT machine identities throughout their entire lifecycle, providing
end-to-end device, data, and operational trust.

 

In an important evolution of the KeyScaler solution, Device Authority launched
KeyScaler-as-a-Service ("KSaaS") in 2023.  Now KeyScaler's primary delivery
model, KSaaS' infrastructure-free approach to automated supply chain security
brings the full power of KeyScaler delivered as a cloud service. This frees up
internal resources for critical tasks and speeding up incident response.
 Aside from the enhanced security benefits, reducing the need for hard to
find IoT security expertise and eliminating manual processes, Device Authority
believes that KSaaS is already delivering significant returns on investment
for its customers.  KSaaS has quickly established a strong and growing
customer base, including several large companies in the energy, automotive,
medical device, and government sectors.  Earlier this year, Device Authority
was awarded the Microsoft 2023 Rising Azure Technology Partner of the Year
Award, a significant recognition of Device Authority's impact in cloud-based
security.

 

More recently, Device Authority has also launched a preview of KeyScaler AI, a
new solution responding to market requirements for artificial intelligence
("AI") security and evolving customer needs.  KeyScaler AI leverages internal
platform data and external threat intelligence to enable new levels of
automated security response, made possible by AI and machine learning.  It
also creates an end-to-end trust chain that establishes explicit trust between
devices and the data they generate, thus aligning to the US National Institute
of Standards and Technology (NIST) Zero Trust Architecture guidance.

 

Device Authority continues to receive recognition and endorsements from key
analysts including ABI Research and Quadrant Knowledge Solutions and has also
recently been recognized by Microsoft as a Global award winner for its SaaS
based service KSaaS in Azure, and in November 2023 as a key partner in
Microsoft's Mobility and Manufacturing Industry Go To Market Strategy.

 

The business continues to scale, having appointed several new key personnel in
the US this year.  Device Authority is winning new customers including
recently, FujiFilm, GE Healthcare and Baker Hughes, whilst other existing
customers are now scaling their use of Device Authority's products.

 

For more information visit: https://www.deviceauthority.com
(https://www.deviceauthority.com)

 

FVRVS Limited ("FundamentalVR")

Current holding: 12.1%

 

FundamentalVR, is a global leader in immersive surgical training, founded with
the mission to accelerate human capability in surgery and medicine through
virtual technologies to improve patient outcomes.  The company's innovative
approach helps accelerate the industry shift towards digital surgery,
addressing the competency gap at scale in training for intelligent operating
rooms.  Its purpose-built Fundamental Surgery platform allows for full
rehearsal of medical and surgical procedures, and its patented HapticVR™
technology mimics the physical touch, weight, resistance, and feedback of
surgical actions and accurately simulates the sensations of soft tissue, bone
textures and muscle.

 

Over 15,000 competency-building sessions have been conducted by FundamentalVR
globally, which is accredited by and affiliated with institutions such as the
American Academy of Ophthalmology (AAO), American Academy of Orthopaedic
Surgeons (AAOS), and the Royal College of Surgeons of England. FundamentalVR
remains committed to elevating performance and training skilled surgeons and
operating room teams at scale.

 

In September 2023, FundamentalVR was featured in Meta's global campaign on the
real impact of virtual reality today.  In collaboration with their partner,
Orbis International, FundamentalVR is contributing to the metaverse by
harnessing immersive technologies to train surgeons on cataract procedures
worldwide. For more information visit:
https://about.meta.com/metaverse/impact/
(https://about.meta.com/metaverse/impact/) .

 

FundamentalVR has continued to build its annual recurring revenues (ARR)
during 2023.  With important contract wins from both existing and new
customers across a variety of procedural areas, including ophthalmology,
endovascular and urology.  The company also continues to build awareness in
the medical device marketplace and receive recognition for its leading
platform.  It is building a healthy pipeline of customers and new customer
opportunities for the remainder of the year and beyond.

 

For more information visit: https://fundamentalsurgery.com
(https://fundamentalsurgery.com)

 

Wyld Networks AB (publ) ("Wyld Networks" or "Wyld")

Current holding: 25.1%*

 

Wyld Networks, quoted on the NASDAQ First North Growth Market in Stockholm,
enables affordable connectivity across the globe in areas where wireless
coverage is unavailable.  The company specialises in providing wireless
connectivity between IoT sensors and Low-Earth-Orbit satellites via its Wyld
Connect solution. Wyld's IoT network management platform, Wyld Fusion, can be
used in a diverse range of sectors and use cases including energy, utilities,
agriculture, logistics, maritime and environmental monitoring.

 

Shipping of Wyld Connect terminals, modules and modems began in October 2023,
following extensive in-field testing, and data is flowing via satellites to
Wyld Fusion. Wyld has customers on the network in North, Central and South
America, Europe, the Middle East and Australia.  With currently SEK92 million
in orders and over 60 customer and partner agreements signed to date, Wyld
anticipate significant growth in 2024 as they continue to pioneer satellite
IoT and meet the significant demand for data in currently unserved areas.

 

Recent contracts and partnerships signed by Wyld Networks include:

·    with Argentinian agricultural technology company, IOF, to implement
Wyld Connect to manage assets in the field and provide 'digital identity'

·    with PLF Australia to deploy Wyld Connect satellite IoT services in
rural Queensland

·    with Vracity and Brinja to develop infrastructure asset monitoring in
the Kingdom of Saudi Arabia

·    with Novecom to deliver satellite IoT services in rural Australia.

 

In addition, Wyld announced on 17 October 2023 that it had delivered a LoRaWAN
(Long Range Wide Area Network) satellite-to-satellite connectivity solution as
part of a joint European Space Agency (ESA) sponsored programme with Eutelsat
and Thales for telemetry and control to support satellite IoT networks.

 

For more information visit www.wyldnetworks.com (https://wyldnetworks.com/)

 

* Pursuant to Tern's funding facility announced on 12 June 2023, under which
£500,000 is currently drawn down, Tern is required to maintain in escrow
shares in Wyld at a value of not less than 1.5 times the value of outstanding
amounts drawn down and accrued interest, as security for the Facility.

 

Talking Medicines Limited ("Talking Medicines")

Current holding: 23.8%

Convertible loan notes of £0.2 million

 

Talking Medicines uses Advanced Data Science and Artificial Intelligence to
empower healthcare advertising agencies, enabling them to consistently win and
retain their Pharma clients whilst achieving improved productivity, with swift
project delivery.  Talking Medicines is seeking to revolutionise the US$30Bn
spent on healthcare marketing, through unlocking strategic intelligence within
conversational data.  Talking Medicines empowers customers to gain strategic
advantages in analysis, measurement, and enhanced brand equity through
structuring conversational data.

 

Talking Medicines is particularly focused on scaling its presence in the US,
having built out its sales operations in 2023 in New Jersey, New York City,
and Philadelphia.  Significant customer wins include onboarding eight new
global healthcare advertising agencies who in turn have full coverage of the
top 20 global pharmaceutical companies.

 

Talking Medicines has been recognized as the Gold Winner in the Artificial
Intelligence/Data Analytics Initiative category for 'The Perfect Marriage of
Curated Data + Specialized Large Language Model in Drug-GPT™' at the PM360
Trailblazer Awards 2023, run by the US pharmaceutical marketing trade
publication PM360, which celebrates outstanding achievement and innovation in
healthcare marketing.

 

For more information visit: https://talkingmedicines.com
(https://talkingmedicines.com)

 

InVMA Limited (trading as "Konektio")

Current holding: 28.3%

 

Konektio™ develops and provides Industrial IoT ("IIoT") software via a
Software as a Service ("SaaS") model to the industrial and manufacturing
sectors.  Their AssetMinder(TM) software enables remote asset connectivity,
monitoring and management, to deliver condition-based monitoring, predictive
maintenance, energy monitoring and machine optimisation, providing insights
that drive productivity improvements and cost savings.

 

As announced on 8 November 2023, Tern has decided not to invest further in
Konektio. Tern announced on 26 May 2023 that Konektio had agreed a £2.5
million equity fundraise, to be completed in two tranches.  The first tranche
of £1.2 million (the "Konektio First Tranche") completed in May 2023 and the
second tranche of £1.3 million (the "Konektio Second Tranche") is due for
completion in Q4 2023. Tern announced on 26 May 2023 that it had committed to
invest a minimum of £0.28 million in the Konektio Second Tranche, with an
option, at Tern's sole discretion, to increase its investment amount up to
£0.4 million.  However, given the business performance of Konektio and, in
particular, Konektio's monthly recurring revenue growth not having met Tern's
expectations, Tern decided not to invest in the Konektio Second Tranche.  As
announced on 26 May 2023, should Tern not fulfil its commitment to invest a
minimum of £0.28 million in the Konektio Second Tranche, 75% of Tern's
holding in Konektio will be transferred to a valueless class of Konektio
deferred shares, which is anticipated to take effect in due course.

 

Tern's percentage holding in Konektio and its unaudited book valuation will be
determined when, and if, Konektio completes the Konektio Second Tranche and
Tern will provide an update in relation to this at the appropriate time.  In
addition, Tern continues to explore routes for potentially realising value
from the Company's remaining holding in Konektio.

 

For more information visit: https://konektio.com (https://konektio.com)

 

Sure Valley Ventures UK Software Technology Fund ("SVV2")

Current holding: 5.9%

 

SVV2 is a venture capital fund investing in a range of private UK software
companies with a focus on companies in the immersive technology and metaverse
sectors, including augmented and virtual reality, artificial intelligence, and
security.  SVV2 currently has investments in two companies, RETìníZE
Limited, a creative tech company based in Belfast, and Opsmatix Systems
Limited which trades as Jaid, an innovative technology firm providing
AI-powered human communication solutions.  The SVV2 team continues to
evaluate further potential investment opportunities in its target areas of
immersive tech, SaaS, cyber security and IoT.  Many of the opportunities
being evaluated have artificial intelligence underpinning their technology,
which is in line with the fund's main investment strategy.

 

For more information visit: https://surevalleyventures.com
(https://surevalleyventures.com)

 

Tern's Management and Governance

 

At the Company's AGM held on 29 June 2023 (the "AGM") the resolutions to
re-appoint Al Sisto as a Director of the Company and to allow the Directors to
allot securities and disapply statutory pre-emption rights were not passed.
Although the other resolutions passed, significant votes were also received
against certain other resolutions.

 

Following the shareholder vote to not re-appoint Al Sisto as a director of the
Company at the AGM, Mr Sisto immediately ceased to be a member of the
Company's board (the "Board").  The Board accepted the results of the AGM's
shareholder vote, but then canvased shareholder views, including the views of
several larger shareholders who were understood by the Company to have voted
against the resolutions that were not passed.

 

Following these discussions, on 10 August 2023, Tern announced a number of
proposed Board and management changes, which has resulted in the Board now
comprising solely of Non-Executive Directors, led by Ian Ritchie as Chairman,
with Alan Howarth, who chairs the Audit and Remuneration committees, and Sarah
Payne who stepped down as an Executive Director and Chief Financial Officer
and Company Secretary on 15 September 2023.

 

This announcement also confirmed that Mr Sisto, together with Mr. Leith, who
stepped down as an Executive Director, would continue to be members of Tern's
management team.  Mr. Sisto has retained the title of Chief Executive Officer
because the Board believes that it is important for Mr. Sisto to retain this
title (while not being a member of the Board) to allow him to effectively
execute his role as the primary liaison with the management and co-investors
of Tern's existing portfolio companies.

 

Following the changes announced on 10 August 2023, Tern's Non-Executive Board
now makes the Company's investment decisions and decides on Tern's strategy in
relation to its portfolio companies. Mr. Sisto's and Mr. Leith's
responsibilities are to implement the Board's decisions in relation to the
management and oversight of Tern's holdings in its portfolio companies.  Mr.
Sisto and Mr. Leith work with the Company's portfolio companies and report
back to the Board with information and updates (including providing
recommendations and advice) which are used to inform the Board's decisions.
Mr. Sisto and Mr. Leith are primarily responsible for relaying the Board's
views and decisions to the portfolio companies. In this capacity, as is common
in the venture capital industry, Mr. Sisto and Mr. Leith sit, as Tern's
representatives, on the boards of several of Tern's portfolio companies,
working with them to implement the Board's decisions, seeking to maximise
value for Tern's shareholders.

 

All investment decisions or other material decisions are reserved for the
consideration of the Board, which meets on a regular basis to consider and
vote on such matters, with only the Board members having a vote in this
respect.  Accordingly, Mr. Sisto and Mr. Leith no longer have a role in the
Board's decisions.  Tern's Non-Executive Chairman, Ian Ritchie, is
responsible for the running of the Board.  Further details, including a
summary of the key areas that are reserved for the Board, are contained in the
Company's latest Corporate Governance Statement, available on the Company's
website at www.ternplc.com/aim-rule-26/ (http://www.ternplc.com/aim-rule-26/)
.

 

On 26 September 2023, following further shareholder consultations following
the announcement of the Board and management changes, the Company held a
General Meeting at which the Directors were authorised to allot securities and
to disapply statutory pre-emption rights.

 

Online Investor Presentation and Q&A Session

 

The Company will be hosting an online presentation and Q&A session at 5.30
p.m. GMT today, Tuesday 21 November 2023.

 

Presenting will be members of Tern's management team and management from
Tern's portfolio companies Device Authority, Wyld Networks and Talking
Medicines.  This session is open to all existing and prospective
shareholders.  Those who wish to attend should register via the following
link where they will be provided with access details:

 

https://us02web.zoom.us/webinar/register/WN_Uouqd7FASNCpmPC1JS1QAQ
(https://us02web.zoom.us/webinar/register/WN_Uouqd7FASNCpmPC1JS1QAQ)

 

Participants will have the opportunity to submit questions during the session,
but questions are welcomed in advance and may be submitted prior to 3 p.m. GMT
on 21 November 2023 to: tern@investor-focus.co.uk
(mailto:tern@investor-focus.co.uk) .

 

Enquiries

 

 Tern Plc                                                       via IFC Advisory

 Ian Ritchie (Chairman)

 Allenby Capital Limited                                        Tel: 0203 328 5656

 (Nominated Adviser and Broker)

 Alex Brearley / Dan Dearden-Williams (Corporate Finance)

 Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)

 IFC Advisory                                                   Tel: 0203 934 6630

 (Financial PR and IR)                                          tern@investor-focus.co.uk (mailto:tern@investor-focus.co.uk)

 Tim Metcalfe

 Graham Herring

 Florence Chandler

 

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