Tern Regulatory News (TERN)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE PUBLICATION OF THIS ANNOUNCEMENT THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE WITHIN THE PUBLIC DOMAIN.

20 December 2021

Tern Plc

("Tern" or the "Company")

InVMA Fund Raise and Update

Tern Plc (AIM:TERN), the company focused on value creation from Internet of Things ("IoT") technology businesses, is pleased to announce that its portfolio company, InVMA Limited ("InVMA") has completed a £2,125,000 equity fund raise (the "InVMA Fund Raise"), including £1,925,000 from institutional investors Mercia and Foresight and the founders, and £200,000 from Tern, at a significant valuation uplift from the previous book valuation of Tern's holding.

Highlights

· £2,125,000 institutional funds raised by InVMA, led by fund managers Foresight and Mercia, investing from the Midlands Engine Investment Fund and the Northern Powerhouse Investment Fund respectively

· Tern has invested a further £200,000 in InVMA's equity

· Simplified InVMA capital structure with all outstanding secured convertible loan notes held by Tern and other shareholders converted into InVMA equity

· Tern's holding in InVMA's equity is now 36.8% with the unaudited book valuation of Tern's holding, valued at the InVMA Fund Raise valuation, increasing from £1.2 million as at 30 June 2021 to £2.2 million (after including the current investment of £0.2 million)

· InVMA is today being renamed Konektio

Commenting Al Sisto, CEO of Tern, said:

"We are very pleased that InVMA, now being renamed Konektio, has secured a significant institutional investment in order to fund the next phase of its growth. We welcome the Mercia and Foresight funds as our partners, alongside the management and founders of Konektio, to help the business achieve its significant potential.

"This fund raise is in line with our model to undertake syndicated institutional raises to help drive the growth of our portfolio companies, at incrementally higher values, prior to seeking to ultimately exit at hopefully a significantly higher value still. We believe that Konektio has a very bright future and we look forward to reporting on its further progress in due course."

InVMA Fund Raise

Prior to the InVMA Fund Raise, Tern had a holding of 50% in InVMA and as at 30 June 2021, the date of Tern's last published book valuation, this holding had an unaudited book valuation of £1.2 million, including £175,000 of outstanding convertible loans. Since 30 June 2021, Tern has provided a further £150,000 to InVMA in the form of convertible loan notes.

Post the InVMA Fund Raise, in which Tern has invested a further £200,000, Tern's holding in InVMA is reduced to 36.8% (before any dilution on exercise of any future InVMA employee share options), but this holding now has an increased unaudited book valuation of £2.2 million. Including the InVMA Fund Raise, Tern has invested approximately £1.5 million in InVMA and this revised book valuation represents an approximate 44% uplift to the amount invested by Tern to date.

The capital structure of InVMA has also been simplified, with all of the outstanding InVMA secured convertible loan notes held by Tern and others being converted in line with their terms into equity at a 20% discount to the InVMA Fund Raise's pre-money valuation. InVMA is now valued in total at approximately £5.9 million on a post-money basis at the InVMA Fund Raise price and is held 36.8% by Tern, 30.7% by the incoming institutional Investors and 32.5% by its management and other shareholders.

InVMA Update

InVMA provides an Industrial IoT Software as a Service (SaaS) platform to Original Equipment Manufacturers (OEMs) and aftermarket customers, as well as the connected product market. The software enables remote asset monitoring and management to drive productivity improvements. The Company's primary product, AssetMinder, is machine agnostic and allows manufacturers to diagnose issues and proactively prescribe services plans, ultimately reducing downtime and improving operational efficiency.

InVMA has seen significant increase in sales of AssetMinder in 2021. This business growth has led to the recent recruitment of six additional staff in the UK and the USA, accelerated product development, an increased channel and partner sales network, a material investment in new branding and the strategic decision to open its first overseas office in North Carolina, in the USA. The InVMA Fund Raise is designed to enable the company to have an appropriate level of working capital to further scale its business in 2022.

As part of its rebranding and positioning for the next stage of its development, from today InVMA is changing its name to Konektio. InVMA's name change to Konektio, reflects its ambition to be a company that creates true connected Industrial IoT communication and collaboration solutions for a wide range of businesses, taking advantage of the industrial sector's desire for digital transformation. This is achieved by rolling out its value-driven SaaS product, AssetMinder, with considerable customisable features to allow customers to choose what is right for them.

AssetMinder captures usage and performance data from smart sensors, providing advanced insights to unlock data-driven intelligence that optimises processes, condition monitoring, machine uptime and profitability across a range of industries including manufacturing, transportation, utilities, smart infrastructure, and food processing. AssetMinder's technology is already deployed across thousands of assets, providing valuable insights and recommendations to people maintaining and managing critical devices and infrastructure.

The business has launched a new website under the Konektio branding which may be seen at www.konektio.com.

Peter Stephens, Chief Executive Officer of Konektio, commented: "We are entering the exciting scale-up period of our business and fully expect to significantly grow revenues over the coming months, leveraging the power of our solutions and the reach of our channel partners, including Dexis, ECA, PTC and u-blox. The institutional investment secured, including further support from Tern, will help us achieve these goals.

"I believe that the next industrial revolution is about empowering people to do more with less and our rebrand to Konektio reflects that. It cuts through the buzzwords and the terminology to focus on what our technology does best."

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