Netscientific Regulatory News (NSCI)

Strictly embargoed until: 07.00, 13 March 2024

NetScientific plc

("NetScientific" or "NSCI" or the "Company" or the "Group")

Business, Strategy and Portfolio Update

London, UK: NetScientific plc (AIM: NSCI), the deep tech and life sciences VC investment group, is pleased to provide a business, strategy and portfolio update for the year ended 31 December 2023, and the period to date.

Highlights of 2023 and year to date

· The Group has a portfolio of 23 companies (including EMV Capital) and expects a modest increase in Fair Value of the privately held assets as at 31 December 2023 (compared to 31 December 2022).

· Across the Group's portfolio, an aggregate amount of c.£52.2 million was raised through equity and venture debt by 13 companies through to 31 December 2023.

·  Significant increase in Capital Under Advisory by £6.6 million of Capital Under Advisory1 (£23.5 million 2023).

·  A proprietary trade profit of £0.5 million in the period to 31 December 2023 in respect of the secondary sales of a £1.4 million position across two portfolio companies.

· Increase in fees generated by EMV Capital for the period to 31 December 2023, covering approximately half of the core Group's costs, whilst providing infrastructure and services to the Group and its portfolio companies.

· Several portfolio companies achieving significant operational milestones and key fundraisings.

· Strengthened Board with the appointment of Charles Spicer as Chair in May 2023, and key strategic hires to expand and deepen transactional and portfolio management capabilities.

· EMV Capital has recently received direct FCA authorisation, enabling it to expand and deepen its corporate finance and fund management activities.

· Final results for the year to 31 December 2023 expected to be announced by the end of May 2024.

1 being the amounts associated with carried interest or profit share agreements, typically between 10% and 20%

Strategy update

NetScientific remains focused on positioning itself as a leading deep tech venture capital ("VC") investor, both in the UK and internationally. The Board believes that the Company will be well placed to take advantage of the shift in the VC industry towards deep tech opportunities across life sciences, industrials, sustainability and other major sectors.

The Board has agreed key strategic objectives for 2024 and beyond, aiming to build on the progress achieved last year. These include continuing to:

· Grow the value of the NetScientific stakes (both Fair Value and Capital Under Advisory) in portfolio companies - adding value for our shareholders and syndicated investors through capital efficient investment in core portfolio companies and active management (including the provision of value creation services).

· Progress the Group's fund management practice - this will provide the Group with additional annual recurring revenue (in the form of management fees) and carried interest return potential, create potential liquidity events and scale the Group's funding capacity. The Group is actively exploring opportunities to take on the management of two existing funds and, subject to the agreement of terms, hopes to announce progress in respect of each in due course.

· Identify and create effective routes to exit for portfolio companies - such exits should increase the Company's balance sheet strength, allowing it to pursue its 'evergreen' investment strategy. The Group is actively mapping out exit strategies for several portfolio companies. A current example of this is set out in more detail below in respect of ProAxsis Limited.

· Build a resilient, high-performance firm - the Group is focused on scaling and developing its team and operating platform, building it to an institutional grade firm and allowing it to scale its investment and fund management opportunities.

· Achieve financial sustainability - the Group aims to move towards core operating costs being covered through operational income (corporate finance fees, value creation services fees, and fund management fees) and secondary trading income (through the profitable exit of full or partial holdings in portfolio companies) with the objective to achieve financial independence for NetScientific.

To complement this strategy, the Board is in advanced stages of implementing a carried interest scheme to incentivise and compensate key Group employees and fund management teams in line with VC industry standards. This proposed scheme is designed to help the Group to retain and attract talent as it continues to grow and pursue exit and fund management opportunities. It is believed such a scheme will further align management interests with those of the shareholders. A further announcement with the details of such carried interest scheme will be made in due course.

Portfolio highlights of 2023 and year to date

During the period, many of the Group's portfolio companies made substantial operational and financial progress on their business plans. Key highlights include:

· ProAxsis Limited (81.9% direct holding and a further 8.7% advised holding) - Strengthened its Board with the appointment of Alan Markey as Chair and Professor Steven Myint as Non-Executive Director. The company is intensifying the development of its Patient Point of Care product range, leading to improved patient outcomes in respiratory disease, and exploring strategic options to scale-up its market access.

In particular, the company has appointed EMV Capital and an external adviser to explore options for a potential sale of the company (full or partial) to a new strategic owner better placed to provide the funding, resourcing and infrastructure to scale the business to its full potential. The company is about to commence a marketing exercise and at this early stage is not in negotiations with a potential purchaser. In the meantime, EMV Capital continues its mandate to procure further third party funding for the company. Further announcements will be made when appropriate.

· Glycotest, Inc. (52 .7% direct stake and a further 5.8% advised holding) - Secured a $1 million investment from Fosun Industrial Co., Limited, alongside private investment of c.$800,000 syndicated by EMV Capital. Completed enrolment in a clinical validation study for its HCC Panel. The company is now positioned to move expeditiously through sample assay and data analysis, with the objective of demonstrating superiority of the Glycotest HCC Panel relative to AFP Tumour Market Test for the identification of patients with curable early-stage liver cancer.

· PDS Biotech Inc. (NASDAQ:PDSB) (3.5% direct holding) - Made substantial clinical progress across its pipeline of targeted cancer immunotherapies. Announced 75% of ICI-naïve patients alive at 36 months in the NCI-led triple Phase 2 combination trial for advanced HPV16-positive cancer patients. Also announced two year overall survival rate of 74% in Phase 2 trial of ICI-naïve HPV16-positive recurrent or metastatic head and neck cancer patients.

· Q-Bot Limited (14.3% direct holding and a further 32.4% advised holding) - EMV Capital led a £3.5 million fundraising for expansion in the UK, Europe, and the USA. Strengthening it Board with a proposed new Chair (in advance stages) and Malcolm Groat as Investment Director. Achieved 10,000 property surveys and around 4,500 installations in December 2023; won contracts in the Registered Social Housing sector; and commenced expansion into the Netherlands, exploring Belgium as a next market.

· Sofant Technologies Ltd (1.4% direct holding and a further 25% advised holding) - Made significant progress on product commercialisation, including advance orders with Inmarsat (now part of Viasat), with the European Space Agency and a global aerospace company, targeting commercial product launch in 2024. Previously completed a £1.2 million investment round, led by EMV Capital.

· Vortex Biotech Holdings Ltd (22.1% direct holding and a further 15.4% advised holding) - EMV Capital led and syndicated a £3.2 million fundraise. Vortex expanded its lab facilities at the London Cancer Hub's Innovation Gateway. Focused on generating studies with leading researchers including Imperial College London and University of Cambridge to highlight evidence of the technology. Appointed Paul Reeves as Chief Technology Officer.

· Ventive Limited (10.9% direct holding and a further 24.9% advised holding) - Secured c.£900,000 investment led by EMV Capital, non-dilutive funding from the £1.5 million DESNZ grant, and a £100,000 UK Government grant for 'net zero HVAC' systems. The company is scaling its team with strategic senior hires, and is completing the design, test phase and factory build for its modular heat pumps, as well as undergoing further enhancements to its passive air ventilation product range.

· DeepTech Recycling Technologies Limited (30 per cent. direct holding) - Secured a first investment of £1 million in advance subscription funding, led by EMV Capital, for commercialising its patented technology and developing commercial opportunities focused on scalable chemical recycling technology. The company is progressing its commercial operations with a transition into new premises and key strategic hires.

· Martlet Capital (1.0 per cent. direct holding and a further 5.9 per cent. advised holding) - Our strategic investment in Martlet Capital was focused on obtaining options on investments coming from the Cambridge high-tech cluster - one of the world's leading concentrations of deep tech companies. Martlet continued to grow its investment portfolio, including participation in funding rounds for Nu Quantum, Spotta, OctaiPipe and Xampla. EMV Capital is working closely with Martlet Capital to deepen the relationship between the two firms, expected to result in future projects and co-investments.

Dr Ilian Iliev, Chief Executive Officer of NetScientific commented:

"We have significantly advanced our strategic goals, focusing on a sustainable business model and enhancing the value of our portfolio holdings. We are generating fees and executing on secondary exits. Our goal is now to leverage our differentiated VC investment model at a critical time for the VC industry.

"With a more diversified investment approach, we are preparing for profitable investment returns and strategic divestments that align with our growth strategy. We are now also actively exploring new fund opportunities which fit our criteria and expertise."

Investor Meet Company presentation

A Business, Strategy and Portfolio Update presentation will be delivered online via Investor Meet Company on 19 March 2024 at 11.00 a.m.

The presentation is open to all existing and potential shareholders, or any interested parties. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 18 March 2024 at 9.00 a.m, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free to meet NetScientific via:

https://www.investormeetcompany.com/netscientific-plc/register-investor

-Ends-

The person responsible for arranging the release of this announcement on behalf of the Company is Edward Hooper, General Counsel and Executive Director of the Company.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

About NetScientific

NetScientific plc (AIM: NSCI) is a deep tech and life sciences VC investment group with an international portfolio of innovative companies.

NetScientific identifies, invests in, and builds high growth companies in the UK and internationally. The company adds value through the proactive management of its portfolio, progressing to key value inflection points, and delivering investment returns through partial or full liquidity events.

NetScientific differentiates itself by employing a capital-efficient investment approach, making judicial use of its balance sheet and syndicating investments through its wholly owned VC subsidiary, EMV Capital. The group secures a mixture of direct equity stakes and carried interest stakes in its portfolio of companies, creating a lean structure that can support a large portfolio.

NetScientific is headquartered in London, United Kingdom, and is admitted to trading on AIM, a market operated by the London Stock Exchange.

www.netscientific.net