Company Announcements

25 Oct 2022

Tekcapital Plc

("Tekcapital", the "Company" or the "Group")

Tekcapital plc provides CFO Update

Tekcapital Plc (AIM: TEK, OTCQB: TEKCF), the UK intellectual property investment group is pleased to present the October 2022 CFO Newsletter Update.

Whilst the last few months have seen some of the most challenging economic times in recent memory, we have continued to make strong progress with our portfolio companies, from product roadmaps to go-to-market efforts. Before we dive deeper, let's take a step back and discuss our overarching strategy with regards to our portfolio companies.

For each portfolio company the strategy is to grow the business so that it can make a meaningful impact on people's lives through the commercialization of their unique technologies. Concomitant with this, the financial goal is to deliver liquidity events (such as an IPO's or trade sales) for each portfolio company early in their life cycle (such as the Initial Public Offerings undertaken by each of Belluscura Plc, Innovative Eyewear Inc.) whilst retaining meaningful ownership of the companies until they grow to scale.

One key criterion behind each investment from Tekcapital is the presence of a US$1b+ addressable market. As an example, in the case of Innovative Eyewear Inc, the US eyewear market alone is expected to be worth US$29b in 2022 (https://www.statista.com/outlook/cmo/eyewear/united-states), with 1% market penetration equal to US$290m in annual sales.

We believe that early IPO of portfolio companies, with Tekcapital retaining significant stakes, are advantageous to the companies, their investors and Tekcapital. These capital injections can accelerate product roadmap/R&D, scale-up hiring especially for sales and marketing efforts, improve economies of scale and provide more commercial opportunities. Following Innovative Eyewear's example, it allowed the company to hire sales executives that previously helped grow sales of companies like Luxottica, New Balance etc., and onboard eyewear designers who previously designed for leading eyewear fashion brands. We believe strengthening the quality of the team and skillset help maintain and enhance a competitive advantage, and significantly improve the chance of achieving goals such as 1% market penetration. While a public listing is not a guarantee of long-term success, we believe the brand exposure, investor interest and access to capital that come with it, improve the likelihood of a profitable exit for Tekcapital.

Besides a clear focus on increasing chances of the commercial success of each company and therefore their valuation, this early liquidity event strategy also means less reliance on Tekcapital for funding the growth of its portfolio companies. At the moment, both Belluscura Plc and Innovative Eyewear Inc are no longer funded by Tekcapital. We envision Microsalt joining this group after their planned 2023 IPO. This will also give the Company more flexibility regarding new, exciting potential investments in its pipeline. This means less dilutive funding for Tekcapital, especially given Tekcapital's relatively small overhead. Tek's low overhead is a notable feature in itself - Tekcapital helps fund, manage and assist with multiple operational aspects of many companies using a small handful of employees.

Tekcapital plans to provide shareholder returns via special dividends upon meaningful sales of its portfolio company shares. Whilst Tekcapital ideally seeks to grow each company to at least a US$100m+ valuation before any major sale of its shares in portfolio companies, it also considers its own capital requirements, as well as the potential to provide special dividends to its shareholders.

In summary, Tekcapital is actively engaged in building multiple companies with proprietary technologies, coupled with star power management, each addressing a serious market need in billion-dollar verticals. Having raised approximately US$25m since its IPO, which has been utilized to build net assets of over US$70m as of 31 May 2022, the Company's goal is to deliver significant returns on invested capital whilst bringing leading innovations to market, coupled with opportunities for special dividends along the way.

Guident CORP ("Guident")

In September Guident and its partner Perrone Robotics gave fully autonomous rides, with an extra safety layer, to the Broken Sound Country Club (BSCC) members, in hopes of securing another customer for its state-of-the-art Remote Monitoring and Control Center. The BSCC management supported Guident and Perron for the autonomous electric vehicle showcase, and provided autonomous rides to the club members.

Also together with Perrone Robotics, Guident participated in the Lake Nona Verizon Innovation Hub, showcasing precision-guided self-navigation. Guident also attended MOVE: Mobility Re-imagined on September 27-28 in Austin, Texas.

The Regenerative Shock Absorber project is undergoing more rigorous testing, as the company is working with one of world's leading automotive companies on manufacturing a prototype in accordance with industry standards. This month, the Company evaluated real-world conditions in their testing lab in Boca Raton, Florida. With precise force and displacement measurements, Guident aims to demonstrate the advantages of the modern energy-harvesting shock absorber over traditional oil-filled shock absorbers. R&D breakthrough going from prototype to production was successfully achieved.

Additional developments are expected in the coming months. Notably, Guident's CEO Harald Braun is visiting Europe for discussions with multiple potential customers on last mile delivery solutions.

Innovative Eyewear Inc ("Innovative Eyewear")

The company has been delivering on its promise to expand its sales and marketing capabilities. In general, the IPO has helped take the company to the next level in terms of organizational structure, talent procurement, product roadmap, brand awareness and more. The company is building a strong foundational structure to solidify its position as an early mover in the tech eyewear space. The profile of Innovative Eyewear's new hires in the sales vertical represent talent that helped grow one of the leading eyewear companies in the world and helped build one of the leading athletic brands. Both hires bring significant contacts and experience in the optical and apparel industries.

We view the licensing of the global lifestyle brand Nautica® for smart eyewear was a major victory for the company. With Nautica products present in over 1,700 stores worldwide, the deal empowers Innovative Eyewear access to the renowned fashion brand to produce and sell fashion branded smart eyewear worldwide. The team is working hard on designing and manufacturing the product to be launched by Q1 2023. The strategy of licensing global fashion brands on top of the Lucyd house brand sales is an interesting one. It's worth noting that Luxottica, the world's largest eyewear manufacturer, helped build their multi-billion dollar business by licensing fashion brands and producing eyewear under these brands. We believe that smart eyewear is a new platform opportunity to replicate this strategy - pursuant to our belief that in the future, most eyewear sold will be smart, since the smart eyewear produced under the Lucyd brand already has the same appearance and price tag of traditional eyewear but offers so much more functionality.

The scale of opportunity here is immense. Even just one category of eyewear, the safety glasses sector, represents a US$1b+ addressable market. You can see how busy the company is just by looking at their product roadmap, which includes the first Nautica smartglass release, the new quadrophonic Lucyd Lyte release, sport styles, safety eyewear, and the Vyrb social audio app's ongoing development. The company is showing an intense level of progress and promise, and has built a leading product line that competes well with well capitalized and storied tech brands.

Microsalt Inc ("Microsalt")

Microsalt is also making excellent progress. MicroSalt® shakers were debuted at the Expo East Food Convention in Philadelphia during the week of 28 September 2022, with initial sales underway with major retail chains and food distribution channels this October.  MicroSalt® shakers will soon be available for purchase on Amazon. As announced MicroSalt® has already received commitments from UNFI, North America's premier food wholesaler, for placement in several of its distribution centres.

The show was a success, and the company expects first shipments of the product to occur by November to UNFI.

Microsalt application testing has been successfully completed with some of the largest retail chains in the US.  Full production tests of snack foods with Microsalt applied were finished with outstanding results, with product flowing well and being applied at an even and consistent rate using the customer's equipment, is a significant milestone.

The company also successfully consummated a deal in the ready-meals market, partnering with Presty! Foods (https://prestyfood.com/) in their efforts to offer low-sodium solutions to their customer base. This also shows the breadth of addressable market segments for Microsalt's flagship product, which can be used to reduce sodium content without impacting flavor in a world of applications ranging from frozen foods to crisps to the restaurant table.

Finally, the company received its first bulk B2B ingredient order. According to Microsalt's CEO, the interest is also very high for bulk B2B Microsalt sales internationally.

Summary

All of our companies demonstrate steadfast commitment to operational excellence resulting in material progress across the board. Thus, we strongly believe each company has the potential to become US$100m+ business in the foreseeable future whilst improving quality of life across several crucial verticals. We continue to build momentum and hope to provide more exciting updates in the near future.

Konrad Dabrowski, CPA

Chief Financial Officer

Tekcapital plc

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About Tekcapital plc

Tekcapital creates value from investing in new, university-developed discoveries that can enhance people's lives and provides a range of technology transfer services to help organisations evaluate and commercialise new technologies. Tekcapital is quoted on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in the UK. For more information, please visit www.tekcapital.com.

LEI: 213800GOJTOV19FIFZ85

Forward-Looking Statements

This press release is for informational purposes only. The information herein does not constitute investment advice nor an offer to invest and may contain statements related to our future business and financial performance and future events or developments involving Innovative Eyewear, Inc., Lucyd or Tekcapital that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward to," "anticipate" "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material delivered to customers, stakeholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements may be based on the current expectations and certain assumptions of Tekcapital or Lucyd's management. Please note that these are subject to a number of risks, uncertainties and factors, including, but not limited to those described in various disclosures. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Innovative Eyewear Inc., Lucyd and/or Tekcapital may vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Neither Innovative Eyewear Inc, Lucyd nor Tekcapital intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.