Tern Plc : Statement re Issue of Loan to Device Authority

1 March 2018

Tern Plc (the "Company", or the "Group")
Issue of Loan to Device Authority

Tern Plc (AIM: TERN), the investment company specialising in the Internet of Things ("IoT"), announces that it has paid $360,581 to its portfolio company, Device Authority ("DA"), representing the second tranche of a convertible secured loan announced on 28 December 2017. Following this payment, Tern's total convertible loan note position with DA is $871,913.

The total funds secured by DA through this second facility are $1,688,684 from DA's existing shareholders, including Tern.

In providing this support, DA's shareholders, including Tern, are pleased by the progress DA is making to expand its pipeline of opportunities. This is evidenced by the recent integration of DA's KeyScaler IoT security platform into AMD's new processor which helps AMD customers apply and advance the use of internet of things (IoT) principles to a growing number of applications such as industrial systems, smart cities, inventory management, medical displays, and point of sale.

Device Authority's KeyScaler platform adds value to AMD's IoT solutions by delivering secure device provisioning, policy-based credential management and end-to-end data security for their gateways.

The first and second tranches of the convertible loan note (together the DA Loan") accrue an interest coupon of 5% and are convertible automatically on an equity fundraising in DA of at least USD$2.5 million to be completed before 30 June 2018 ("Qualifying Fundraising"). The conversion will be into the most senior class of shares issued on the Qualified Fundraising at the lowest fundraising price per share.

If the Qualifying Fundraising is not completed before 30 June 2018, but DA is able to procure an exit, the providers of the loan can elect to either receive 300% of the principal amount of the loan notes held by them, or to convert the loan and accrued interest into Class A Preference Shares of DA at a conversion price of £0.036681585 per share.

Providers of the DA Loan shall also be issued 2.6 warrants ("Warrants") for each $1 of Loan Notes subscribed for by them (rounded down to the nearest whole number). The Warrants shall have a term of seven years and be exercisable from the earlier of (i) immediately prior to an exit; (ii) immediately following completion of a Qualifying Fundraising; or (iii) immediately following completion of the second tranche and give each Warrant holder the right to subscribe for one Class A Preference Share of DA for each Warrant held by them at an exercise price of £0.036681585 per share.

Al Sisto, CEO of Tern, said:

"As a significant investor, we have long been persuaded of the quality of the Device Authority management team and product suite, evidenced by our decision to participate in this convertible loan note. DA is helping its customers achieve their strategic objectives in IoT and to increase the pace of adoption as companies continue to migrate to cloud first technologies and recognise the need to protect identities and data, wherever it is accessed."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

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