FundamentalVR and Device Authority Update

REACH

8 February 2021

Tern Plc

("Tern" or the "Company")

FundamentalVR contract and Device Authority partnership

Tern Plc (AIM:TERN), the investment company specialising in the Internet of Things ("IoT"), is pleased to provide a further update on the recent activities of two of its portfolio companies, Device Authority Limited ("Device Authority") and FVRVS Limited ("FundamentalVR").

Highlights

·    Device Authority has formed a strategic partnership with EPS Global, a worldwide provider of integrated circuit ("IC") programming and secure provisioning services, and Intrinsic-ID, a leading global provider of security IP for embedded systems based on physical unclonable function ("PUF") technology. The partnership is designed to enable customers to be able to access end-to-end security lifecycle management and secure the provisioning of PUF-enabled devices.

·    Fundamental VR has secured an important contract from a new client to create a simulation in the field of regenerative medicine, valued at approximately £0.5 million in its initial phase, and a further £0.2 million over the following three years for enhancements.

Commenting Al Sisto, CEO of Tern, said:

"I am delighted to be able to report two further strategic developments from our portfolio companies.

"We are delighted with the announcement of Device Authority's three-way partnership, as it exemplifies the advantages of combining advanced technologies to create a 'Secure by Design' solution for customers. This partnership is designed to solve a complex global IoT security problem, which currently requires disparate solutions that create significant overhead, administration and barriers to scale, by providing a secure, automated and highly-scalable chip to cloud capability. It can also be flexibly adopted at the design stage, to cover wide-ranging customer technical security, IoT device enablement and provisioning of service requirements. The partnership will focus on the manufacturing and automotive markets, which are experiencing growing adoption of end-to-end solutions.

"The further contract win by FundamentalVR is, I believe, strategically important for them and provides recognition of their expertise in the growing area of regenerative medicine.  Utilising FundamentalVR's technology will allow surgeons to practice a very delicate procedure through a realistic simulation, delivering significant benefits for both the patients and the medical professionals involved.

"We look forward to announcing further developments with our portfolio companies as they arise."

Device Authority

Tern has a 56.8% holding in Device Authority (A shares) and as at 30 June 2020 this had a book valuation of £13.8 million. Tern holds convertible loans totalling approximately US$4.3 million and Tern also holds 12,406 B shares in Device Authority. Device Authority's B shares are non-voting, and in conjunction with its C shares, participate in 25% of the net proceeds on a liquidity event.

Device Authority, a global provider of identity and access management ("IAM") solutions for the Internet of Things (IoT), has announced a strategic partnership with EPS Global ("EPS Global"), a worldwide provider of IC programming and secure provisioning services, and Intrinsic-ID, a leading global provider of security IP for embedded systems based on physical unclonable function ("PUF") technology. PUFs can be used as robust and lightweight solutions to secure IoT devices. The partnership is designed to enable customers to be able to access end-to-end security lifecycle management and to secure the provisioning of PUF-enabled devices.

EPS Global provides secure provisioning services from its global network of secure programming centres, and through their ecosystem of partners delivers a complete end-to-end security solution for their customers' connected devices. Through this new partnership, customers will be able to protect their IoT devices, applications and data in the field through Device Authority's KeyScaler^â platform.

To solve security problems in IoT systems, such as authentication, product lifecycle management, reverse engineering and cloning, each device needs an unclonable identity. This consists of a secret key, a public key and a certificate. A significant challenge in IoT security is how to insert these credentials into the device and the IoT application via an automated approach, with security lifecycle management in mind. Intrinsic-ID's technology creates the secret key of the unclonable identity from within, derived using the intrinsic randomness in uninitialised static random-access memory ("SRAM"). This secret key is not stored, but is dynamically regenerated from the SRAM PUF.

Device Authority's partnership with EPS Global and Intrinsic-ID is designed to enable customers to securely provision devices at any point in the supply chain and manage the security lifecycle of these devices into the enterprise. Customers will be able to seamlessly access a global network of secure programming centres to service their secure provisioning requirements, from prototypes to high volume usage.

Darron Antill, CEO of Device Authority, commented: "This partnership makes absolute sense for our joint customers. Device Authority with EPS Global and Intrinsic-ID is able to secure the IoT lifecycle for customers. Collaboration as early as possible in the IoT device lifecycle yields stronger security and further supports the 'Secure by Design' approach. EPS Global and Intrinsic-ID are closely aligned with our technology and customer-focused vision, which can be seen in our 'Enterprise IoT Security Blueprint' guide, available on our website. We look forward to providing a joint solution to new and existing customers who are prioritising IoT security."

Colin Lynch, CEO of EPS Global, commented: "We are delighted to join up with Device Authority and Intrinsic-ID, as our mission to make it easy to secure any smart device, and make the connected world safer aligns closely with both companies.  At EPS Global we have given thought to the process of how our customers develop and deploy secure designs in the most seamless and cost-effective manner, and this strategic partnership is a natural progression in our evolution into an end-to-end security partner for our customers. Intrinsic-ID's PUF technology provides an additional level of hardware security, utilising the inherent uniqueness in each and every silicon chip."

Kamal Khan, IoT Security Global Director at Intrinsic ID, commented: "Our SRAM PUF-based security solutions are a backbone for applications such as secure key generation and storage, device authentication, flexible key provisioning and chip asset management.  This partnership with Device Authority and EPS Global provides our global customers with a secure provisioning solution for these applications.  EPS Global's secure way to provision devices at the chip level in a secure production environment provides full protection to the devices throughout the supply chain, establishing a 'Root of Trust' at device creation."

FundamentalVR

Tern has a 26.9% holding in FundamentalVR and as at 30 June 2020 this holding had a book valuation of £3.0 million.

Following the four contract wins announced by FundamentalVR in late November and early December 2020, and in February 2021, for a combined value of approximately £2.3 million, FundamentalVR has secured an important further contract win.

The contract is for a new client and is to create a simulation that utilises FundamentalVR's unique HapticVR technology in a new use case, in relation to an implant for regenerative medicine, forming an integral part of the client's new offering.  This contract is valued at approximately £0.5 million in its initial phase, and a further £0.2 million over the following three years for enhancements.

The virtual haptic process simulation being built will enable surgeons to practice a challenging medical procedure, and so improve the successful deployment when they operate in real-life.  The HapticVR simulation being produced by FundamentalVR also has a secondary benefit of being able to be used as a tool by sales forces to demonstrate the system in a more holistic, memorable and immersive way than simply showing and demonstrating the implant to a surgeon.

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