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THE ANGLO SCIENTIFIC EIS FUND

A GROWTH PORTFOLIO OF IDENTIFIED HOLDINGS WHICH IS OPEN FOR INVESTMENT ALL YEAR

The Anglo Scientific EIS FundApproved by Innvotec Limited which is Authorised and Regulated by the Financial Conduct Authority - FRN 122365

INFORMATION MEMORANDUM

Enterprise Investment Scheme (EIS)

“INVESTING IN COMPANIES WITH TECHNOLOGIES AND PRODUCTS THAT ADDRESS

REAL AND GLOBAL NEEDS”

ENTERPRISE INVESTMENT SCHEME

FOR THE ANGLO SCIENTIFIC EIS FUND (AN “EVERGREEN” EIS)

INFORMATION MEMORANDUM

Innvotec Limited is authorised and regulated by the Financial Conduct Authority as a small authorised UK Alternative Investment Fund Manager (FRN 122365)

Investment into the Fund is only for Applicable Investors defined as (1) professional clients, (2) retail clients who confirm that in relation to an investment in the Fund they have received regulated investment advice or investment management services from an authorised person, (3) retail clients who are venture capital or corporate finance contacts (4) retail clients who self-certify or are certified as sophisticated investors, (5) retail clients who are certified as high net worth investors or (6) retail clients who certify that they have not invested and will not invest more than 10% of their net investible assets in non-readily realisable securities.

C R E A T I N G S O L U T I O N S

angloscientific


A GROWTH PORTFOLIO OF IDENTIFIED HOLDINGS WHICH IS OPEN FOR INVESTMENT ALL YEAR


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All third party trademarks and trade names are hereby acknowledged.

IMPORTANT NOTICE

This Information Memorandum contains information relating to investment in the Anglo Scientific EIS Fund (“the Fund” or “AS EIS Fund”) that will comprise a Portfolio of investments in EIS Qualifying Companies.

It is dated 1st July 2017 and constitutes a financial promotion pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and is both issued and approved by Innvotec Limited (“Innvotec” or the “Fund Manager”), which is authorised and regulated by the Financial Conduct Authority (the “FCA”) to carry on investment business in the United Kingdom as a Small Authorised UK Alternative Investment Fund Manager.

This document describes the arrangements by which Investors who wish to make venture capital investments in EIS Qualifying Companies appoint Innvotec to act as their common discretionary investment fund manager and to manage the investments made on their behalf.

This document may not be distributed without the agreement of Innvotec and may only be distributed in compliance with the FSMA and the rules of the FCA.

This document does not constitute, and may not be used for the purposes of, an offer or inducement by any person in any jurisdiction outside the United Kingdom. This document and the information contained in it are not for publication or distribution to persons outside the United Kingdom.

This Information Memorandum does not constitute an approved prospectus in accordance with section 85(7) of FSMA nor does it constitute a public offer of shares in the United Kingdom or elsewhere. The Fund is a complying EIS Fund, is not a collective investment scheme within the meaning of Section 235 of the FSMA nor is it subject to the marketing restrictions introduced by the FCA in respect of “non-mainstream pooled investments”.

By accepting this document and/or signing up to the Fund Management Agreement by signing an Application Form, the recipient by his or her action, warrants, represents, acknowledges and agrees that he or she is a person to whom this document may lawfully be communicated without violating applicable laws and that he or she has read and will comply with the contents of this Information Memorandum.

Investments in unquoted shares such as those that will be made by this Fund carry higher risks than investments in quoted shares. Potential investors should be aware that no established market exists for the trading of shares in unquoted companies.

The value of an Investor’s Portfolio of holdings, and any income arising from it, can fall as well as rise and an Investor may not recover the full amount of money originally invested. Past performance is not a guide to future performance.

Attention is drawn to the Risk Factors outlined in this Information Memorandum on page 33 and 34 which should be read and considered carefully. This investment product is designed for Applicable Investors as defined in this document only and is not be suitable for all investors. Potential investors are recommended to seek independent advice from an investment advisor authorised under the Financial Services and Markets Act

2000, and an appropriately qualified taxation adviser before investing. Those who do not have the necessary professional experience cannot rely on the content of this document.

Please note that none of Innvotec Limited, Innvotec (Nominees) Limited, Anglo Scientific Limited, Anglo Scientific Investments Limited or any of their agents or employees is able to provide any advice about whether a person should invest in this product.

Any references to tax laws or tax rates in this Information Memorandum are subject to change by the government or HMRC and tax benefits depend on personal circumstances.

Innvotec has taken all reasonable care to ensure that the facts stated in this Information Memorandum are true and accurate in all material respects, and that there are no material facts, the omission of which would make misleading any statement made in this Information Memorandum. However this document is not intended to constitute a recommendation or provide advice to a prospective investor. Any statements of opinion or belief contained in this document regarding future events or outcomes constitute Innvotec’s own assessment and interpretation of information available to it at the date of issue of this document and no representation is made that such statements are correct or that the objectives of the Fund will be achieved.

Reliance on this Information Memorandum for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested.

It is very important that you read carefully and fully understand this document and the risks involved with the arrangements described so you can decide whether they are right for you. The opportunity is not suitable for all and the “key” risks are highlighted in this document.

The Fund is not an “Approved” fund as defined by section 251 of the Income Taxes Act 2007. It is designed as an “Evergreen Fund” with Commitment being received all year round and investment into Portfolio Companies being made on or around the traditional quarter days. The Manager intends that all Commitment to the Fund received will be “fully invested” each quarter.

Any income tax, capital gains or other tax relief will depend on personal circumstances and, if any person is unsure of his or her own potential tax liabilities or what tax reliefs may be available to him or her then he or she should seek professional advice from a qualified tax adviser.

Applications may only be made and will only be accepted subject to the terms and conditions of the Fund Management Agreement, a copy of which is available on request from Innvotec and satisfactory completion of the Application and the accompanying Appropriateness and Client Suitability Form.

Information Memorandum for the Anglo Scientific EIS Fund.July 2017

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INFORMATION MEMORANDUM FOR THE ANGLO SCIENTIFIC EIS FUND (“THE FUND”)

CONTENTS


angloscientific

CONTENTS

IMPORTANT NOTICE 4

INTRODUCTION FROM THE FUND MANAGER 6

KEY FACTS 7

INVESTMENT SUMMARY 8

FUND OVERVIEW 10

EXIT STRATEGY 13

THE OPPORTUNITY 14

THE ANGLO SCIENTIFIC TEAM 17

THE INNVOTEC TEAM 22

ANGLO SCIENTIFIC EXAMPLE PORTFOLIO COMPANIES 23

THE FUND’S OPERATION & STRUCTURE 27

FUND FEES & CHARGES 29

RISKS 30

HOW TO INVEST & ADMINISTRATION DETAILS 32

APPENDIX 1 – GLOSSARY OF TERMS 33

APPENDIX 2 – TAXATION 35

APPENDIX 3 - SUMMARY OF THE AS EIS FUND MANAGEMENT AGREEMENT 36

APPENDIX 4 - THE INNVOTEC AND ANGLO RELATIONSHIP 38

APPENDIX 5 - PHAGENESIS CASE STUDY 39


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INTRODUCTION FROM THE FUND MANAGER

Dear Investor,

Innvotec Limited “Innvotec” is once again pleased to provide this regular update on the performance of the Anglo Scientific EIS Funds since the inaugural Fund was launched in 2009.

After seven consecutive years of annual funds, in 2015 we changed the status of the Fund to “Evergreen” to meet the growing demand from investors for year-round access to EIS opportunities. The focus of the AS EIS Evergreen Fund remains the same as the previous annual funds - namely; making EIS Qualifying investments into a portfolio of identified, technology-based companies that have been founded by Anglo Scientific, or in which Anglo Scientific has had, or continues to have, an on-going role.

The AS EIS Fund is a growth fund - i.e. its key objectives are to give investors the opportunity to make a meaningful capital gain on their commitment, and at the same time, access the generous tax benefits available under the EIS rules.

The Fund invests in emerging, innovative companies that have the potential to be “best of breed” on a world stage and are assisted in their development by the highly-experienced team of entrepreneurs at Anglo Scientific. The combined expertise of Innvotec and Anglo Scientific ensures the portfolio companies have access to a wealth of support to help to minimise risk and take advantage of the very significant potential within each.

Regular and in-depth reporting to investors on the progress of the Fund has always been, and will continue to be, high on Innvotec’s list of priorities. Investors in the Fund pay no initial charges and management fees are not levied until such time as the Fund has received its first returns. The Fund Manager’s Performance Fee is not payable until investors have received back 140% of their commitment so our interests in the AS EIS Fund are fully aligned with yours. We hope that you find this Information Memorandum and accompanying literature of interest. Please do not hesitate to contact us if you would like any further information or have any questions.

We look forward to welcoming you as an investor.

Yours faithfully

John MarsdenManaging Director

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KEY FACTS

Minimum Annual Fund Size £1 million over a twelve month period or other such amount at the sole discretion of the Fund Manager.

Maximum Annual Fund Size£40 million over a twelve month period.

Minimum Investment£5,000.

Maximum InvestmentNo maximum but income tax relief under EIS is only available on up to £1million of investment per tax year.

Closing dateThe Fund is ongoing (“Evergreen”) with no final closing date. Investments into Portfolio Companies will be made on a quarterly basis on, or around the normal quarter days.

Initial ChargesThere is no initial charge to Investors, meaning that relief is available on 100% of Commitment.

Subsequent Charges1.5% Annual Management Fee deferred until funds from sales of investments are received. In the event that there is insufficient cash to pay the accrued Management Fees in full the Fund Manager has agreed to bear such cost.

The Fund Manager is entitled to 30% of all profits subject to the Investment Hurdle being met.

There are no other costs or transactional fees.

Investment HurdleAn Investor receiving at least 140% of their initial Commitment to the Fund, which equates to a 100%, CGT free return on the net (after income tax relief at 30%) sum invested. This Investment Hurdle is not a guaranteed or minimum target return to Investors.

Anglo Scientific LimitedAnglo Scientific is Innvotec’s long term, contracted strategic partner in its EIS Funds. Anglo Scientific is responsible for identifying opportunities within its own “stable” of emerging, technology- focused businesses (as are deemed suitable by the Manager for EIS investment) and providing on-going support to Portfolio Company management.

CustodianAll shares in EIS Qualifying Portfolio Companies will be registered in the name of Innvotec (Nominees) Ltd with the designation “AS EIS”. At all times the Investor remains the beneficial owner.

EIS Tax ReliefA 100% EIS Investment. The Fund will only invest in Enterprise Investment Scheme (EIS) Qualifying Companies.

“Evergreen” EIS FundThe intention is for Investors to have an all-year-round opportunity to Commit with investment into underlying Portfolio

Companies being undertaken on a quarterly basis.

Fund FocusAn investment product focused on Capital Appreciation.

Investment will be made into existing EIS Qualifying Companies set up by Anglo Scientific and in which Anglo Scientific continues to have a significant and on-going managerial role.

Should there be any excess Commitment the Manager reserves the right to invest up to 15% of such excess into companies identified by Anglo Scientific for strategic investment.

Investment PeriodThe timing of investment into Portfolio Companies may vary, but the intention is that all Commitment is invested inside three months.

ManagerInnvotec Limited has been making investments in start-up and early stage opportunities for nearly 30 years and has been involved in raising and managing EIS and SEIS Funds for 8 years.

Portfolio ApproachEach Investor will have their own Portfolio. The underlying shares in each EIS Qualifying Company will be held in a separate account by Innvotec (Nominees) Ltd, (the custodian to the Fund) but the beneficial ownership in the shares will reside at all times with individual Investors who will receive their EIS certificates (one per portfolio company) directly to enable them to claim the appropriate tax reliefs.

The Manager believes the target Portfolio is well-balanced offering Investors the prospect of exits at regular intervals.

Target CompaniesSome of the target Portfolio Companies from within the Anglo Scientific “stable” of technology-focused businesses are outlined in this Information Memorandum although by the time investment is made there is no guarantee that all of the target companies will still be available to receive investment.

TermThere is no fixed term for the Fund, the intention is to seek the maximum number of exits from the Investors’ Portfolio between years four and seven. The ultimate date of termination of an Investor’s Commitment will depend upon the Manager’s ability to generate sufficient exits from the Portfolio to ensure that only a minimum of shares in Portfolio Companies are distributed in specie to Investors.


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INVESTMENT SUMMARY

THE INVESTMENT OPPORTUNITY

This is an opportunity from Innvotec Limited “Innvotec” to invest in the Anglo Scientific EIS Fund (“AS EIS Fund” or the “Fund”).

Innvotec has been raising AS EIS Funds for eight years. These Capital Appreciation funds have historically combined and will continue to combine the skills and know-how of both Innvotec and Anglo Scientific.

Whilst the Fund has now moved to “Evergreen” status, the focus has not changed over time - it remains the creation of a Portfolio of EIS Qualifying investments in technology based companies that have been founded by Anglo Scientific. Importantly, Anglo Scientific will continue to play a key role in the on-going development of the companies and will oversee and steer them to potentially very profitable exits.

The AS EIS Fund benefits from all the usual EIS tax advantages.

INVESTMENT STRATEGY

The AS EIS Fund is “Growth” focused with the sole aim of maximising returns for Investors. In order to achieve this, Innvotec works very closely alongside Anglo Scientific. The Fund possesses the following key attributes and objectives: • A growth fund that aims to provide Investors with the

opportunity to make significant gains across a small Portfolio that is largely identified at the outset.

• Many of the companies that the Fund invests in will have developed to a point where each has started to, or is poised to, deliver J-curve growth in revenue, profit and value.

• Innvotec is targeting a similarly high return to that of the existing AS EIS Funds which, as of the date of this document, have a current average uplift on cost of 28% (funds for 2009-2016) before taking into account the benefits of tax reliefs.

• Ongoing active management of the Portfolio Companies by Anglo Scientific helps to reduce risk and enhance prospective returns for Investors.

• The companies the AS EIS Fund will invest in are selected from a group that are already known to the Fund Manager. Every company in the Portfolio will either be; a) at the latter stages of core technology development; b) have developed and certified products and starting market entry; or c) been recently formed with technology undergoing on-going development.

• Increasingly Anglo Scientific is being sought out by existing and independent companies to assist in their development and growth. After due diligence, such assistance may be provided alongside an investment (“a strategic investment”) by the Fund.

It is this breadth of knowledge of the companies and where they are in their development and value cycle that offers Investors the prospect of a balanced Portfolio. This combination makes the AS EIS Funds an attractive and easily understood proposition.

Phasor Antenna

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FUND DETAILS - WHY INVEST?

In the crowded world of EIS Funds, the Anglo Scientific Fund is believed to be unique, combining simplicity, transparency and tax relief on 100% of Commitment. A quarterly investment programme ensures little elapsed time between Commitment and Investment, and speedier receipt of the Investor’s EIS certificates.

The AS EIS Fund is a Capital Appreciation Fund that has a balanced Portfolio combining private companies at the start of their journey with those that possess the potential to provide “exits” in the near and medium terms.

Anglo Scientific builds businesses around proprietary technology that is at the “cutting edge” and which addresses demand from markets that are truly global. The AS EIS Fund provides private investors with the opportunity to invest in such businesses.

The AS EIS Fund has been established for over eight years and reflects the strength of the collaboration between Anglo Scientific and Innvotec. To date, the AS EIS Fund has made 74 separate investments in 12 of the companies formed by Anglo Scientific.

Based on conservative British Venture Capital Association valuations and other venture industry standards, as at 30th June 2017, the AS EIS Funds (2009-2016) show an average uplift on cost of 28%. Crucially, the prospect of much higher growth and increased IRR is considered yet to come.

At the time of writing the performance of the Fund compares favourably both against its peer group of EIS Funds as well as the FTSE 100. It is important to note that these returns are in addition to the tax reliefs available on making the investment.

The AS EIS Fund takes a distinctly different approach to investment and value appreciation compared to typical UK-based venture capital and EIS funds. Important points include:

• The target companies that will receive funding have already been identified and most, perhaps all, will have received prior investment under EIS.

• Anglo Scientific applies rigorous criteria when evaluating and selecting technologies to exploit. Its experience in actively managing and building companies is, from an investor’s perspective, proving to be a successful formula for minimising risk and maximising potential returns.

• The Fund’s fee structure provides Investors with further evidence that their interests are paramount. The Performance Fee only rewards the Fund Manager for delivering real and meaningful returns across the Portfolio as opposed to rewarding mediocrity. The Performance Fee cannot be drawn until Investors have been repaid their gross Commitment plus 40% prior to any tax reliefs.

• The investment model adopted by the Fund means that the Investor largely knows which companies his or her Investment will be deployed in and how their funds will be utilised. Unlike other fund managers, Innvotec does not have to sift through business

plans from unknown companies and management teams in an attempt to identify those with the most attractive prospects. The AS EIS Fund comprises a Portfolio of technology-rich companies all of which are managed or overseen by the experienced and trusted team at Anglo Scientific.

• Quarterly investment into an identified portfolio of companies, nearly all of which will have received prior investment under EIS, means Investors will receive their HMRC certificates in a timely manner.

• Innvotec and Anglo Scientific both have significant and complementary experience and knowhow combining to create a winning association.

Overall, the Fund will provide Investors with a combination of experience in growth fund management and entrepreneurial excellence.

EIS TAX BENEFITS

The Fund has not been “Approved” by HM Revenue and Customs for Approved Investment Fund (“AIF”) status. Being “Unapproved” provides more flexibility to the Fund Manager.

Approval only covers certain administrative matters and in no way bears on the commercial viability of the investments to be made, nor does it guarantee the availability, amount or timing of relief from income tax or capital gains tax.

Income tax relief under an unapproved Fund is either granted in the tax year in which the investments into Qualifying Companies are made (and the shares issued) or in the prior tax year at the Investor’s option.

Investors in EIS Qualifying Companies can, depending on their individual circumstances, benefit from a number of tax advantages including the following:

• Income Tax Relief of up to 30% on shares subscribed.

• Capital Gains Tax (“CGT”) exemption on disposal of the EIS investment.

• Deferral of Capital Gains Tax on disposal of other assets.

• Loss Relief (giving a current aggregate income tax relief, for top rate tax payers of up to 61.5%) which can be offset against income tax or CGT liabilities.

• 100% Inheritance Tax (“IHT”) relief after two years.

Further information on Taxation can be found on page 38 and in the Innvotec “Know More About: Tax Efficient Investing” guide.

The taxation situation depends on the individual circumstances of the Investor and may change in the future.

Details of the current companies being targeted and also the historical performance of the AS EIS Funds are available in a separate document, a copy of which is available on request.


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FUND OVERVIEW

A PROVEN STRATEGY

Finding good investment opportunities that also reduce the tax burden (both Income and Capital Gains deferral as well as generating tax-free returns on gains) is an attractive proposition for a private investor. It is in this important area that the Anglo Scientific EIS Fund is building a good reputation as a capital appreciation or “growth” fund.

Anglo Scientific builds businesses around proprietary technology that is at the “cutting edge” and which addresses demand from markets that are truly global. The Anglo Scientific EIS Fund gives private investors the opportunity to invest in such businesses.

This is now the ninth year of the Anglo Scientific and Innvotec long-term, contractual collaboration. As in previous years, Investors will be given the opportunity to invest in an identified Portfolio of companies founded, nurtured and developed by Anglo Scientific.

Prior Funds have made over 70 separate investments in 12 companies formed by Anglo Scientific. The Funds currently show an average uplift on cost of 28% based on BVCA and industry standard valuation criteria and with the real prospect of higher growth yet to come. The Funds’ performances compare favourably against their peer group of EIS Funds as well as the FTSE 100.

AN INNOVATIVE APPROACH

Investors seeking to take advantage of tax efficient investments have many different fund managers and funds to choose from. Innvotec, through a combination of good performance, a selection of interesting Strategic Partners and accompanying funds, an undiluted focus on capital appreciation and simple, transparent fee structures, aims to be the Fund Manager of choice.

Innvotec always has, and always will, put the best interests of clients first. In our opinion, not all fund managers do!

As a new breed of growth capital fund manager, Innvotec differs from other alternative investment houses in terms of how it works and its approach to investing. Innvotec aims to maximise investor returns by working with talented third party organisations (its Strategic Partners), such as Anglo Scientific, that excel in their respective fields and bring experience that is complementary to Innvotec’s fund management and investment expertise.

Innvotec utilises its know-how and experience to work alongside entrepreneurial groups (Strategic Partners), in this case Anglo Scientific, that wish to raise money (usually in a fund), but who do not have the expertise or the regulatory approvals to do so.

By working in this way, Innvotec is able to benefit from an additional level of expertise and skill, as well as quality, filtered deal flow, which few, if any, alternative investment managers investing with a similar remit possess internally.

This innovative approach is especially important in Innvotec’s capital growth funds, that epitomise and are at the centre of Innvotec’s investment philosophy.

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WHY STRATEGIC PARTNERING?

Innvotec’s business model is to work with aspiring groups/ companies (such as Anglo Scientific) with specialist skills and knowledge. Typically, these groups have a bias toward technology and have been active in supporting early stage ventures. They may wish to have an investment fund to supplement their efforts, but may not have the requisite investment expertise or regulatory approvals to do so.

Innvotec believes that by adopting this business model and accessing quality resource, Innvotec-managed funds have a structure that is unique in the world of tax-efficient investment.

This model benefits Innvotec by giving it access to relatively large numbers of able and knowledgeable personnel, either internally or within its Strategic Partners, to call upon at all stages in both the pre-investment and post investment phase. The combined team working on each fund possesses all the relevant skills necessary to ensure a quality, well-managed portfolio offering the prospect of significant returns.

In each fund, there is a clear delineation of duties between Innvotec and its associated Strategic Partner. The schematic in Appendix 4 shows the working relationship between Innvotec and Anglo Scientific for the AS EIS Fund.

Innvotec, with its FCA approvals, is solely responsible for fundraising and investor reporting, all investment documentation and the approval of all investments. The Strategic Partner is responsible for sourcing opportunities, carrying out initial due diligence and providing post-investment support.

The Strategic Partner model assists in individual Portfolio Company fundraising exercises. Innvotec and Anglo Scientific have together raised in excess of £50m for direct investment ie outside of the AS EIS Fund, in those companies within the total Anglo Scientific portfolio of companies. Long term contracts are in place between Innvotec and each of its Strategic Partners including Anglo Scientific.

Across its various private-client funds, Innvotec has assembled a portfolio of over 100 companies at various stages of development, of which nine are in the stable of Anglo Scientific EIS funds.

THE MARKET OPPORTUNITY

HMRC is becoming increasingly insistent that companies funded through tax reliefs should be real companies taking real risks. This has resulted in the closing of tax “loop-holes” whereby investors’ money could be deployed in secure assets such as those supported by feed-in tariffs.

If a private investor wishes to take advantage of the generous tax reliefs available under the EIS legislation, their money must now be directed at smaller, private companies. For those investors seeking capital appreciation, this means the type of young and emerging companies that have been the focus of Innvotec’s business since its inception.

An innovative approach, recent success, increased corporate visibility and working with an ever-increasing number of quality Strategic Partners is putting Innvotec, and the Growth funds that it manages, in front of an increasing number of advisers and investors.

In conjunction with its Strategic Partners, Innvotec now offers a diverse range of tax-efficient funds, all of which unquestionably meet HMRC’s objective of channeling EIS investment into those businesses for which the scheme was designed.

INVESTOR CHARGING

Innvotec believes in straight-forward, transparent fee structures with no hidden or “add-on” charges. Annual Management Fees are at the lower end of the market norm and the Performance Fee structure ensures Investors make a considerable gain before the Fund Manager shares in any “upside”.

The policy of no initial charges results in 100% of Commitment being invested and Innvotec will only receive its accrued Annual Management Fee once the Fund receives cash from realisations.

MiRTLE from Radio Physics


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A DIFFERENT APPROACH

The Anglo Scientific EIS Fund and its predecessor annual funds represent a distinctly different approach to investment and value appreciation than that adopted by other UK-based funds offering investors similar objectives. Most noticeably:

• Those companies that will receive funding have already been identified and their details and progress to date are set out both in this Information Memorandum and in the separate and regularly updated data sheets that accompany this document.

• Anglo Scientific’s rigorous criteria for the selection of technologies and their experience in actively managing and building companies is proving to be a good formula for reducing risk and both generating and maximising the potential for returns.

• The fee structure puts Investors and their interests first by seeking to maximise the amount of Commitment that is invested and hence available for claiming under EIS. The Hurdle on the Performance Fee ensures the Fund Manager is only rewarded for delivering real and meaningful returns.

• Unlike most EIS funds there are no hidden charges or incremental costs.

Innvotec

Innvotec, the promoter and manager of the Fund, is probably the longest established independent fund manager investing in the capital growth sector in the UK.

Throughout its 30 year history, Innvotec has focused on investing in early stage companies, predominantly in the technology sector. It has raised over £100m and invested in more than 150 companies.

Innvotec is regulated by the FCA and is classed as a Small Authorised UK Alternative Investment Fund Manager (AIFM). Alongside its collaboration with Anglo Scientific in EIS investment, Innvotec works in collaboration with various Strategic Partners in the raising, management and investing of Seed Enterprise Investment Scheme (SEIS) and Social Investment Tax Relief (SITR) funds.

The Investment Model

Investors in the AS EIS Fund largely know at the outset which companies will receive their money and how it will be utilised. The unique partnership that Innvotec has with Anglo Scientific ensures that the underlying companies are managed by seasoned entrepreneurs with the experience and knowledge to guide them to successful growth and profitable exit. Progress against plan is intimately known by both Innvotec and Anglo Scientific and Investors in all of the AS EIS Funds receive regular and detailed updates on the progress of their individual Portfolios.

The reputation of the Anglo Scientific team is growing and this is leading emerging companies with their own innovative technologies and global aspirations to seek their help. If considered appropriate “strategic investment” may be made by the Fund into such companies providing there is an on-going and influential role in such businesses to be undertaken by Anglo Scientific.

Unlike some other EIS funds in the market, Investors in the AS EIS Fund never have to worry that the fund manager may not be able to find suitable investment opportunities in which to deploy their money. Nor do they run the risk that unknown management teams of investee companies will have the skill and knowledge to grow their businesses through to a profitable exit and thus achieve the capital gains that investors are seeking.

The AS EIS Fund provides Investors with a combination of the highly experienced fund management expertise of Innvotec, coupled with the entrepreneurial excellence of Anglo Scientific in growing high-potential, technology-based businesses.

A PROVEN STRATEGY

The business sectors targeted by portfolio companies and their stage of development means that most (if not all) are likely to be sold to larger and established companies as opposed to listing on main or junior markets.

Portfolio companies are likely to be sold when they have recently launched or are about to launch their innovative offerings. Larger, competitive companies with an installed base can see the threat(s) likely to be posed to their customer base from emerging technologies and the companies developing them. Alternatively the established companies can see the emerging companies starting to offer products that could prove complementary to those already in their sales channels.

This was very much the case with Phagenesis, the sale of which is highlighted in the Exit Strategy section of this document.

FUND OVERVIEW

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The intention is that Companies should “exit” the Investor’s portfolio on a regular basis from the fourth year of Investment onwards. The Investor’s portfolio should at any given time comprise holdings in companies that are at different stages of their development and exit paths thereby providing Investors with divestment opportunities at regular intervals.

The portfolio companies will be operating with technologies that are at the forefront of their business sector and, as such, are considered more likely to provide Investors with an exit via trade sale than listing on a major or minor stock exchange.

Such companies are likely to attract interest from would-be acquirers as and when they launch product and start to win initial customers. There comes a time when established providers see new entrants as either taking market share rapidly or their products being innovative and complementary and capable of being seamlessly channelled through existing sales and distribution routes.

PHAGENESIS CASE STUDY - APPENDIX 5

By way of example Phagenesis, a company invested into by the Anglo Scientific EIS Fund in 2010, was sold in August 2016 to Nestlé. Nestlé is focusing its business on high-margin health foods and the treatment pioneered by Phagenesis will have a positive and global impact to Nestlé by the sale of additional product through an existing, worldwide sales and distribution channel.

The Case Study in Appendix 5 highlights not only the Company per se, but also the roles played by Anglo Scientific executives in;

• Identifying within Manchester University the innovation in the treatment of dysphagia.

• Building the company and overseeing the recruitment of a high-quality management team.

• Raising the necessary investment to move the Company forward.

• Identifying the target buyer at an early stage.

There is a two year staged return to shareholders, including those in the AS EIS Fund, that is based on milestones being met and the most likely return is considered to be a 5.5 x return on investment.

It is this level of return that the Fund is targeting across all the investments to be made from this Fund.

EXIT STRATEGY


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WHY ANGLO SCIENTIFIC?

Based on its experience over many years, Innvotec believes that the all-important feature in successful growth-fund investment is the quality and composition of the management team in the underlying businesses. Across its portfolio Anglo Scientific typically provides business know-how and expertise as well as a thorough understanding of the technology brought into the portfolio company by the founding scientist(s) and / or academics. As the companies grow, executive level recruits with sector specific knowledge and experience are brought in to supplement the team. Such a formula is well suited to address the changing dynamics in growing a technology business and delivering on technology promise and business growth.

The Anglo Scientific approach to starting and building technology-rich businesses is well suited to the dynamics needed in today’s demanding and global world of ever-improving products and services.

OBJECTIVES OF THE FUND

This “Evergreen” fund is focused very much on capital appreciation providing investors with the opportunity to make significant gains across a small and identified portfolio of companies that have either developed to the point where each has started, or is poised to deliver, J-curve growth in revenue, profit and value or just started to develop its product.

The Fund is well-balanced and capable of generating exits at regular intervals.

As with the prior annual funds, Innvotec is targeting the Fund with delivering a minimum Return to Investors of at least 40% on their gross investment which equates to a 100% gain on the net Commitment (after EIS relief). This means that before a “success” fee can be drawn, Investors will have been repaid their gross Commitment plus compound growth of circa 6% pa.

A combination of rigorous project / technology selection at the outset and subsequent active management by Anglo Scientific of its portfolio companies has both reduced risk and enhanced prospective returns for existing shareholders. This includes investors in the prior annual AS EIS funds as well as those investing directly in the portfolio companies.

The companies into which the AS EIS Fund will invest are mostly at the latter stages of their core technology development and, by and large, are now starting to adjust their focus towards deployment of the technology and commercial exploitation. It is at the earlier stages of commercial exploitation/later stages of initial development that there is the greatest potential to generate significant and relatively quick capital appreciation, this, together with a balanced portfolio in terms of time to exit, makes the AS EIS Fund an attractive investment proposition.

Anglo Scientific has, on average, started one company a year and it is likely that an Investor’s Portfolio will contain one such business and, as such, development of the technology will be in its infancy.

The Manager reserves the right to make “strategic investments” into knowledge-rich companies where Anglo Scientific has been invited to introduce its expertise and know-how to supplement that of in-situ management, and has decided so to do.

WHAT IS ANGLO SCIENTIFIC LIMITED?

Anglo Scientific Limited has been commercialising innovative, proprietary technology for more than a decade.

It was founded by Henry Hyde-Thomson, Douglas Dundonald and Jon Moulton to commercialise scientific research. The team has since expanded through the recruitment of additional members with proven engineering, commercial and entrepreneurial skills and experience. The biographic details on pages 20 to 24 demonstrate the quality of the team and the individuals within it.

The team comprises experienced entrepreneurs and businessmen who have personally developed and patented technology; founded, built, managed and sold businesses; and invested their own money into the companies that they have helped found. They have also raised significant funds from business angels, venture capital and private equity investors and venture leasing companies for their portfolio companies. The team brings this wealth of scientific, commercial and financial experience to bear on each and all of the Anglo Scientific portfolio companies.

THE OPPORTUNITY

15

The Anglo Scientific Approach

Anglo Scientific creates businesses by identifying, acquiring, developing and exploiting world class patents, technical know- how and intellectual property, sourced from its network of academic, corporate and government organisations. New companies are set-up around the intellectual property and Anglo Scientific provides the executive management and back-up necessary to support these businesses during the various stages of their development, with the intention of helping to ultimately guide them to profitable “exits”.

Anglo Scientific selects its intellectual property for commercial exploitation on the strict application of five key selection criteria, which are:

1 World class technology: Access to technology which has the potential to be disruptive when compared to other known technologies and methodologies available around the world.

2 Defensible intellectual property: intellectual property inherent in the technology for which either a patent(s) is/are pending or has been granted or it is reasonably believed can be successfully defended.

3 Market potential: Technology that addresses or will address a global market with potential in the hundreds of millions of dollars.

4 The potential for the portfolio company to generate revenues

in excess of £75 ($100) million per annum inside ten years.

5 The potential to reach positive cash flow within a 5 year period with less than £15 ($20) millions of third party equity funding.

Taken together, this offers Investors the prospect of double-digit multiples on cost at the time of exit, and for most of the target portfolio, these returns are expected to materialise in the medium term.

Increasingly Anglo Scientific is being requested to provide this expertise to emerging companies that own technology but do not possess the skillsets to successfully commercialise it.

Anglo Scientific has formed twelve companies, much of the initial funding for which has been provided by the Anglo Scientific principals, who together have personally invested over £7 million in the assembled portfolio. Such companies have attracted further funding of approaching £80m from third parties (including the AS EIS funds) in a combination of equity, loans and grants. This leverage ratio of 11:1 based on the Anglo Scientific founding investment demonstrates the strong appeal to third parties of the Anglo Scientific approach and business model.

INNVOTEC

Innvotec is the manager of the Fund. Innvotec was established in 1986 and is authorised and regulated by the FCA as a Small Authorised UK Alternative Investment Fund Manager (AIFM).

Innvotec is probably the longest established independent fund manager in the UK that specialises in investment for growth-focused funds. It has historically focused on investing in early-stage companies possessing proprietary and innovative technology.

The team that will be assigned to the management of the Fund has a combined total of over 60 years of relevant experience of creating and managing appropriate investment portfolios and building value for clients. In support is an established team handling client liaison, finance and adminstration.

Innvotec has raised and managed over £100m of funding to date - primarily from institutional investors. It has put this to work in approximately 150 start-up and early-stage businesses. Innvotec has also been successful in helping these companies raise nearly £200 million from third parties.

Innvotec will be responsible for all aspects of managing the Fund and its assets, including reporting to Investors, in accordance with the Fund Management Agreement. This includes:

• Taking all reasonable steps to ensure that all Portfolio Companies have and retain EIS status.

• Making the decisions to invest.

• Working with Anglo Scientific to ensure that the underlying companies progress as planned.

• Dealing with Investor reporting and communication and distributing the realisation proceeds of the underlying investments.

The Fund Manager will provide its Services in accordance with the terms of the Fund Management Agreement, a summary of which constitutes Appendix 3 of this Information Memorandum and a copy of which accompanies the Application Form.

All communication with Investors in the Fund will be via Innvotec.Radio Physics Software


16

THE FUND

The Fund will invest in companies formed by Anglo Scientific and in which the Anglo Scientific Principals have both an equity interest and an on-going and active involvement in the management and development of the business. The underlying technology within each of the target investee companies will, at the outset, have satisfied the five key investment criteria set out on page 15.

Being part of the Anglo Scientific “stable”, each company has benefitted and will continue to benefit and from the Anglo Scientific management and business model.

The number of separate investments to be held within the Fund will be a maximum of eight and a minimum of four. An overview of some of these are highlighted in this document. A separate document is available with more details of the current companies targetted for investment.

Whilst there will always be on-going development, the known target companies for the Fund have, in the main, met and overcome the initial technical challenges and are now starting to deploy and commercialise what has been developed. It is at these early stages of commercial exploitation that Innvotec believes there is the potential for significant capital appreciation. Each of the Anglo Scientific portfolio companies is an EIS Qualifying company and the Fund will invest via ordinary shares to remain eligible for EIS.

The Manager reserves the right to undertake investment in companies not started by Anglo Scientific but in which Anglo Scientific has been invited to provide expertise and know how and has accepted so to do.

The Annual Management Fee and Performance Fees have been structured to minimise costs whilst incentivising Innvotec and Anglo Scientific to achieve and, if possible, surpass the “Performance Hurdle”.

The Annual Management Fee is 1.5%. As all Investors’ Commitment is invested in the underlying portfolio, the Annual Management Fee is accrued until there is sufficient money in the Fund to meet this liability. Given the stage of development of the underlying Portfolio Companies this is only likely to come from exit proceeds. In the highly unlikely event that the accrued fees cannot be paid, the Fund Manager will write off any remaining monies owing to it from the Fund.

There is no initial charge meaning that 100% of an Investor’s Commitment is invested and thus attracts EIS relief.

All fees are subject to VAT.

Innvotec and Anglo Scientific together will be entitled to a Performance Fee calculated as 30% of all profits subject to the Investor receiving back a 40% uplift on his or her Commitment (the Hurdle Condition). The Hurdle threshold is calculated on the gross subscription from Investors. Apart from the fees as described above, there are no other fees to be paid by the Investor.

The Fund is structured such that each Investor enters into a separate Fund Management Agreement with Innvotec to provide a discretionary portfolio investment management service.

As there is no final Closing Date, Commitment to the Fund will be accepted at any time. Investments into portfolio companies will be made four times a year on or around the normal quarter days and the last working day before 5th April.

THE OPPORTUNITY

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THE ANGLO SCIENTIFIC TEAM

Anglo Scientific was founded by Henry Hyde-Thomson, Douglas Dundonald and Jon Moulton. Members of the team that will be involved in the underlying businesses are as follows:

Henry is an entrepreneur and founder / chairman of Anglo Scientific. Frustrated with poor internet connectivity on trains he invented a solution and set about commercialising it through 21Net (now a world leading provider of internet to high speed trains). He has founded and held Board and executive positions in a number of Anglo Scientific companies over the years. He is currently Director and CEO of SeeQuestor and an active Board member of Phasor Solutions.

Before starting Anglo Scientific, Henry was the founder and chairman of Speech Machines, a developer of Internet-based speech recognition systems acquired by Philips in April 2001.

Previously, Henry invented and developed ‘Unified Messaging’ (integrated voice/fax/email messaging) and was awarded US and international patents for the concept. Henry has over 20 years’ experience with high technology businesses, both in the UK and the USA.

Before becoming an entrepreneur, Henry graduated from Oxford University with first class honours in Physics, and after two years research in astrophysics then qualified as a Chartered Accountant with Peat Marwick Mitchell (now KPMG). In 1989/90 Henry was a Research Fellow in the Department of Computing at Imperial College, London.

HENRY HYDE - THOMSONChairman

Douggie is a founder and director of Anglo Scientific and currently chairs Radio Physics, Tharos and (the newly formed) Ateria Health.

Previously, Douggie served as an executive main board director of Anglo Pacific, a quoted (London and Toronto) public company. When an active member of the House of Lords, he held a position on the council of the Parliamentary Information Technology Committee. He is the honorary consul for Chile in Scotland. He has successfully established two investment organisations, in addition to running his family’s investment company.

He has been involved in technology companies both as an investor and director for the last 20 years and describes himself as a “firelighter”.

DOUGLAS DUNDONALDDirector


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Fred is a Director of Anglo Scientific, and is a co-founder and acting chairman of Apta Biosciences, a spin-out from Fujitsu in Singapore. Fred was also actively involved in setting up Phagenesis and Solus Scientific and continues to serve on their Boards.

Previously, Fred worked in Technology Mergers & Acquisitions with UBS Warburg in San Francisco. He has a wide variety of experience across different technology sectors and geographies, having worked with and advised public and private companies in the US, Europe and Asia.

Fred graduated from Harvard University with a degree in Computer Science and holds an MBA with a concentration in Entrepreneurial Management from London Business School.

FRED EDENIUSDirector

Vito is a director of Anglo Scientific and a founder/director of a number of the Anglo Scientific companies. Currently, Vito serves as Chairman of Phasor and as director of Microtest Diagnostics and of Radio Physics Solutions. He divides his time between Boston and London.

Before joining Anglo Scientific, Vito held C-level roles in a number of high growth technology companies in Italy, China, Spain & UK.

Vito graduated in Mechanical Engineering from the University of Florence and holds an MBA with a concentration in Entrepreneurial Management from London Business School.

VITO LEVI D’ANCONADirector

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Will is director of Anglo Scientific’s Asia operations. He is a founder / director of Apta Biosciences and SeeQuestor and is acting COO of both companies. He has held operational and Board roles in a number of other Anglo Scientific companies, particularly in life sciences.

He is an adviser to a Singapore Government fund for new medical technologies.

Before joining Anglo Scientific, Will worked in Mergers & Acquisitions at Lehman Brothers and Barclays Capital and prior to that in technology corporate finance at JP Morgan in Hong Kong, advising on a wide range of private equity and corporate transactions.

Will holds an MA from Oxford University.

WILL ADDISONDirector

Prof T. Forcht (Teo) Dagi is a Director of Anglo Scientific’s Healthcare Division, Chairman of Microtest Diagnostics and Executive Director of Apta Biosciences.

A neurosurgeon and a veteran venture capitalist with extensive international experience in public service. He has helped raise over $500 million in funds for portfolio companies and venture capital funds and has more than 15 years of successful experience in founding, managing and exiting companies in health care services and in the life sciences. He has operating experience in healthcare services, healthcare information technology and the biomedical sector, and he has served on boards of directors of publicly traded and privately held companies.

Dr. Dagi serves as Honorary Professor and Chairman of the International Advisory Panel of the School of Medicine of Queen’s University Belfast, Northern Ireland (UK), and Visiting Professor at Harvard Medical School. He chairs the Committee on Perioperative Care of the American College of Surgery and serves as a Director of the Council for Surgical and Perioperative Safety and the Anesthesia Patient Safety Foundation. He lectures in the Harvard Business School on healthcare innovation and in the Biomedical Entrepreneurship Program at the Harvard-MIT Program in Health Sciences and Technology on new technology development, assessment, and commercialization.

Dr. Dagi received an AB from Columbia University, his MD and MPH degrees from John Hopkins, and an MBA from the Wharton School. He was named the Joseph P. Kennedy, Jr., Fellow at Harvard, from which he also received a MTS degree in jurisprudence. He trained at the Massachusetts General Hospital and the Neurosurgical Unit of the Guy’s, Maudsley and King’s College Hospitals in London. He was President of the Georgia Neurosurgical Society and a Director of the American Association of Neurological Surgeons. Among other distinctions, he has been awarded the US Humanitarian Service Medal, and a DMedSc (Hon. Causae) from Queen’s University for contributions to medicine and public service. He was named the Sir Thomas and Edith Dixon Medalist for 2012 and was named to an ad hominem Fellowship in the Royal College of Surgeons Edinburgh in 2013. He is an editor of Neurosurgery and the Journal of Clinical Ethics, has published over 175 articles and co-authored or edited several books.

TEO FORCHT DAGIDirector, Healthcare


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Tristram Riley-Smith joined in January 2013 to lay the foundations for a new division, whithin Anglo Scientific, focusing on the security and resilience sector. He is a founder and Executive Chairman of SeeQuestor Ltd.

He has almost three decades of direct operational and policy experience in Government and National Security, including oversight of demanding compliance systems. He also has years of experience as an investor and supporter of early stage technology companies. Successful exits include: Corac, E-Therapeutics, Evi, and Graze.

Tristram’s great strengths are in strategic thinking and networking. His contacts extend to the USA (he was Counsellor in the British Embassy for three years after 9/11) and academia (in 2012 he was Visiting Fellow at Cambridge University’s Centre for Science and Policy). He is Director of Research at Cambridge University’s Department of Politics and International Studies and Champion to RCUK’s Partnership for Conflict, Crime & Security Research (PaCCS).

In 2014 he established The Academic Market-Place as a gateway for research commercialisation in the security space, to create jobs and successful industry in the UK: http://www.paccsresearch.org.uk/delivering-impact/academic-marketplace/

He has a PhD in Social Anthropology from Cambridge (working in Nepal and Thailand in the 1970s and 1980s). He is also the author of a highly-acclaimed book on the USA – “The Cracked Bell: America and the Afflictions of Liberty” (published in the UK and the USA in 2010).

DR TRISTRAM RILEY-SMITHDirector Security and Resilience

Ricky is an entrepreneur and investor with experience in a variety of start-up ventures in the fields of wireless communications, software development, 3D animation, biotechnology and e-commerce. He is a director of Anglo Scientific, Phasor Solutions and Microtest Diagnostics.

In the past, Ricky has had an eclectic career coupling his love of early stage technologies with a career in film. He has founded and served on the Boards of many early stage technology companies, was the managing director of Warner Brothers in Spain, has produced films with Almodovar and worked with the likes of Roman Polanski and Guillermo del Toro.

Ricky holds a Bachelor of Science degree from Northwestern University in Chicago.

RICKY POSNERDirector


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Jon is the managing partner of Better Capital, a leading European private equity business.

Jon was managing partner of Alchemy and director in charge of buy-outs at Apax. He was also managing partner at Schroder Ventures in London from its inception in 1985 until 1994 and before that with Citicorp Venture Capital in London and New York.

Jon is also an active Angel investor and a director of a number of private companies. Past chairmanships and directorships include Parker Pen, Sheffield Forgemasters, Xenova, Hornby Hobbies, RJB Mining plc, Technology plc, Brands Hatch and Haden Maclellan.

Jon is a graduate in chemistry and a Chartered Accountant.

Jon is a shareholder in Anglo Scientific, but is not a director or active in day to day management.

JON MOULTONShareholder and Founder


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THE INNVOTEC TEAM

John has spent 35 years in early stage venture capital, of which the last 30 years have been in fund management. His earlier years were as a financial director of an international music publisher. His involvement in venture capital started as a director of a venture backed media-technology business and then as part of a company doctoring team undertaking assignments in under-performing venture investments. John progressed to fund management in 1986 when he joined Baillie Gifford to head their team majoring on private technology investment before joining Innvotec in 1990 and becoming Managing Director in 2001. John is a qualified chartered accountant and is FCA authorised. He is also a business angel with personal investments in several private companies.

JOHN MARSDEN

Julie is a Director of Innvotec and has had a 27 year involvement with the company. After training in mathematics and operational research, her early career was with British Gas before joining Innvotec in 1990 as an integral part of a team managing a Corporate Venturing fund. She then left to co-found a specialist technology investment company which she helped to grow from start-up in 1997 to an AIM listing in 2004. She subsequently took on a number of non-executive and advisory roles to both fund managers and young businesses in which she invested in a personal capacity. In 2009 she was invited to join the Board of Directors of a Midlands-based venture capital house and, over the next six years, helped that company to double its total funds under management with three new venture capital funds investing in early and development stage businesses. Throughout her career she has continued to work with Innvotec and was instrumental in in the development of the AS EIS funds. Julie is FCA authorised.

JULIE NEWMAN

The team assigned to the AS EIS Fund have significant experience and a proven track record. They are as follows:

THE INNVOTEC TEAM

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ANGLO SCIENTIFIC EXAMPLE PORTFOLIO COMPANIES

Every company the AS EIS Fund targets is in the process of delivering truly ground breaking products and services. With this strong competitive advantage, each company has the opportunity of achieving very high exit multiples, and delivering attractive returns. Given the nature of the businesses and their capacity to grow in value relatively quickly, it is likely that the opportunity to exit will occur before Portfolio Companies start to report meaningful sales.

Details of the companies being targeted at any point in time are available in a separate document which is available on request. The following are examples of companies in the current AS EIS portfolio that are likely to be recipients of investment from the Fund.

Apta is the owner of the third generation affinity reagent technology called “Seligos”. Affinity molecules for the life sciences constitute an annual market exceeding $70bn. The Apta solution is based on a proprietary type of molecule, called “Seligos”, that represent the next step in developing affinity molecules. Previous generations included antibodies, monoclonal antibodies built on

recombinant technologies, and antibody variants including aptamers. Seligos are engineered, “3D printable” molecules designed to provide targeted solutions for high value diagnostic, therapeutic and imaging applications. Apta is initially deploying the Seligo platform in carefully selected diagnostic applications, to address specific challenges that other affinity reagents have not been able to solve. Apta plans to launch 2 products in 2017 (both world firsts) - a point of care test for the mosquito borne viruses Zika, Dengue and Chikungunya and a diagnostic kit for a novel biomarker, the monitoring of which may result in improved pregnancy outcomes. Apta is collaborating with major hospitals in both programmes. They each represent >$50m p.a. revenue opportunities.

In addition to these current programmes, Apta has a short, medium and long term plan to deploy its technology to pursue: i) other high value diagnostic applications; ii) in vivo diagnostic products for enhanced cancer screening, and iii) the potential application of Seligos in therapeutic areas such as cancer, neurodegenerative disease & next generation antibiotics. The Apta executive team has considerable experience in building and leading life science companies from early stage to successful exit and has realised $ billions in value for investors.

There are multiple exit opportunities for investors. The Board believes Apta will have the opportunity to spin off, sell or license some of its products and applications over time, as well as potentially achieving an exit through a merger or acquisition. Once it has launched validated products to the market, depending on market conditions, an IPO may be plausible.


24

Microtest is focused on diagnostic testing that helps clinicians manage patients’ allergies more effectively.

Allergies constitute a large and growing problem worldwide. In Europe and the US alone, more than 200 million people are affected. Microtest’s mission is to improve the management of patients’ allergies by providing clinicians with more precise, cost-effective and well tolerated diagnostic tools than are currently available.

Microtest’s objective is to become a new and innovative provider of allergy tests, using technologies that bring demonstrable benefit to both clinicians and sufferers alike. Instead of testing against allergens (substances that cause allergic reactions) one by one to find those causing the problem(s), which is how most allergy testing is undertaken, Microtest offers a quick, accurate and convenient snapshot of a person’s state of sensitisation, i.e., reaction, to many allergens at the same time. It does this in vitro by carrying out testing of Immunoglobulin E (IgEs) on patient blood samples.

Microtest aspires to becoming highly profitable, attractive to would-be acquirers in a four- to five-year timeframe, and capable of providing shareholders with a significant return on their investment.

DxMicrotest


Phasor aims to exploit a multi $ billion opportunity in the communications industry. Phasor makes commercial Communications On The Move (COTM) faster, cheaper, more reliable, and available everywhere.

Ubiquitous high quality broadband connectivity is growing faster than ever. Business and leisure travellers expect the same level of connectivity on the move as they are used to at home, whether that is in flight, at sea or travelling over land. Commercial airlines, cruise ship companies and train operators are searching for solutions that can support the requirement of their customers and their operations. To meet this demand current antennas are insufficient.

Phasor has developed a new flat, electronic steerable antenna technology to allow travellers and operators of trains, aeroplanes, ships and military vehicles to obtain high bandwidth communications wherever they are.

The management team is already making good progress obtaining lucrative contracts. Over the past 18 months, Phasor has signed a number of contracts, worth over $100 million in aggregate development fees and initial antenna commitments.

25

Radio Physics designs, manufactures and markets standoff threat detection products and systems. Radio Physics is delivering the next generation of intelligent gun and bomb detection systems.

Unlike CCTV cameras and thermal imaging systems, which offer surveillance capabilities, Radio Physics’ products provide direct detection. This is a new capability, not currently available in the market.

Products:

• MiRTLE 30 is capable of detecting concealed threats at distances of up to 30 metres. • MiRTLE 10 is capable of detecting threats at distances from 5 to 10 metres.

Both versions are portable and battery-operated, and can be linked to CCTV and other networks with the aim of reducing the need for continuous monitoring by human operators.

RPS is now transitioning from a technology company to a product company and has begun to ship products to customers.

SeeQuestor is developing new tools allowing police and other security teams (Government and commercial) to identify, locate and track criminals and missing people. Essentially it “Finds People in Video”.

SeeQuestor will help tilt the playing-field in favour of those working to reduce crime and save lives by helping police and security teams search through vast amounts of CCTV data at speed to identify and disrupt “bad” guys or to find missing people.

The need for the service is huge. For example in London, 84% of CCTV directly relating to criminal activity currently goes unchecked, due to a lack of resources (Source: The Evening Standard 11th December 2013).

The team comprises individuals with a significant amount of experience, including a leading national security specialist, Dr Tristram Riley-Smith. The Company engaged in beta testing of its platform with major law enforcement agencies including the Metropolitan Police, Lancashire Police, The British Transport Police, SO15, The Arizona Police, Queensland Police, the FBI & Europol as well as several others and is now starting to sell systems and services to major police forces across the world.


26

Equine digestive health is highly important to the overall health, condition, performance and longevity of the horse. Tharos’ first product, “EquiNectar”, will be soft launched in 2017 having been successfully used in a study in racehorses, reaching back over 3 years. EquiNectar has been independently shown to decrease the quantity of short chain fatty acids (SCFAs, also called volatile fatty acids or VFAs) in the hindgut of the horse. The Directors believe this change is consistent with enhanced digestion of starch in the foregut of the horse, leading to improved condition and performance and the removal of unwanted toxins

from the gut.

Subsequent products will include a range of veterinary foods and potentially veterinary medicines directed towards colic and laminitis, two of the most important causes of equine mortality and morbidity. The Tharos scientific team comprises highly respected individuals within the scientific, veterinary and business arenas.

Estimates place the global horse healthcare market at around 26 billion USD, with the general equestrian industry worth multi-billions of dollars. Tharos, an equine health and performance business, addresses a significant market opportunity.

There are many similarities between the equine and human digestive systems and the same underlying knowledge will be deployed in Ateria Health Ltd, which has recently been set up to target treatment for digestive problems within humans. Ateria will be a candidate for investment from the Fund in the near term.


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THE FUND’S OPERATION & STRUCTURE

OVERVIEW

Innvotec intends to make investments only in EIS Qualifying Companies and to comply with the HMRC prescribed EIS rules to enable Investors to obtain any EIS reliefs to which they may be entitled. Each of the targeted investments at the time of writing has been classed as EIS Qualifying and each has already issued EIS 3 Certificates to existing private shareholders.

All investments will support those Investors wishing to take advantage of the benefit inherent in Inheritance Tax and Capital Gains Rollover Relief.

The Fund is an Evergreen Fund and it is Innvotec’s intention that Investors’ Commitment will be “fully invested” on or around the normal quarter days of 1st January, 1st April, 1st July and 1st October and the last working day before 5th April.

SELECTION OF FUND INVESTMENTS

Most of the investments to be made by the Fund have been identified and these are highlighted in this Information Memorandum and the documentation accompanying it. Innvotec will invest in these companies on behalf of Investors, on terms acceptable to Innvotec, providing each continues to fulfil the Fund’s investment criteria, strategy and objectives, and subject to the relevant company remaining an EIS Qualifying Company. Innvotec is not restricted to investing solely in those Anglo Scientific portfolio companies named in this document or in subsequent documentation, although, subject to receiving satisfactory proposals from companies started by Anglo Scientific and/ or in which Anglo Scientific has an ongoing involvement and on terms deemed satisfactory, it is Innvotec’s intention to do so.

To minimise any possible conflict of interest, the Fund will only participate in a funding round of an Anglo Scientific portfolio company where other parties, which may include Anglo Scientific Principals, are providing at least 25% of the total equity funds being raised, although the instruments used for such investments may differ from those of the Fund.

SALE OF INVESTMENTS, TERMINATION OF, AND WITHDRAWAL FROM THE FUND

Innvotec does not intend to sell any Investments within a minimum period of three years following the making of such investment as this would result in a loss of EIS Relief. However, there may be circumstances when Innvotec has no control or influence over the timing of the sale of Investments and this may result in the loss of EIS Relief. There may also be circumstances when Innvotec deems it to be in the best financial interests of Investors to dispose of or otherwise realise an Investment before the expiry of such minimum three year period, despite the loss of EIS Relief and reserves the right to do so.

Innvotec has sole discretion over agreeing to the timing of any disposals or realisations.

If there is a partial disposal or other realisation of an Investment, this will be carried out on the basis that each Investor disposes of a pro-rata number of his or her shares.

The composition of the envisaged Portfolio is such that the risk in the underlying technology is considered moderate. Most of the target companies have reached the point where they are in the initial throes of commercialising their first generation products, meaning risk is more commercial than technical.

In the event of a gradual realisation of Investments prior to termination of the Fund, the cash proceeds of realised Investments may be placed on deposit and held as Client Money in accordance with FCA rules or be invested in fixed interest government securities or other investments of a similar risk profile pending distribution to Investors. Proceeds will be paid out on termination of the Fund or in instalments in advance of termination, as determined by the Fund Manager, subject to the approval of HM Revenue & Customs.

Should any holdings not be realised within 10 years, an Investor can decide whether he or she wishes the Fund Manager to;

a) continue to manage the portfolio through to achieve exits from any remaining investments; or

b) try to sell all investments, assuming there is a market for the shares, and pay to him or her the proceeds of sale; or

c) transfer shares to the Investor for all of his or her investments then remaining in the Fund.

Investors are entitled to withdraw in full (but not in part) from the Fund at any time. Investors who withdraw from the Fund prior to the sale of all their holdings and within three years may lose any EIS reliefs and may incur external transaction and exit costs from such a withdrawal.

Given the nature of the underlying investments in the Fund i.e. shares in unquoted companies, and an undertaking to fully invest inside three months of Commitment, it is unlikely that there will be sufficient cash in the Fund to make any repayment or even part repayment in cash.


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THE FUND’S OPERATION & STRUCTURE

REPORTING AND POST-INVESTMENT MONITORING

Once an Investor’s Commitment has been fully invested, Investors in the Fund will receive details of the investments that have been made, including the number of shares purchased in each and the share price. Thereafter, six monthly reports will be sent to the Investor detailing their individual investment Portfolio, including the latest valuation.

Innvotec may appoint Innvotec (Managers) Limited, a subsidiary, to closely monitor all investments on its behalf. Innvotec may seek the right to appoint a non-executive director or board observer to each of the Portfolio Companies in order to represent Investors’ interests and to report to the Fund Manager. Every Portfolio Company will be required to provide Innvotec with regular management information, including management accounts and trading updates, to enable the progress of the company to be monitored closely.

DIVIDENDS

Given the nature of the underlying companies, Innvotec does not anticipate that any investment in a Portfolio Company will yield a dividend. In the unlikely event that dividends are received from any Portfolio Company, these will be distributed to Investors as soon as practicable after receipt. Any income received on shares held through the Fund may be subject to income tax in the hands of an Investor.

TAX ADVANTAGES

The Anglo Scientific EIS Fund will invest only in EIS Qualifying Companies and thereby allow the Fund’s qualifying Investors to utilise, if they wish, the resultant EIS taxation advantages.

As the Fund will have a close with investment four times a year on or around the normal quarter days, qualifying Investors should be in a position to claim EIS income tax relief on their investments through the Fund in respect of either the tax year in which the investment was made or the prior tax year for the amounts invested in the EIS Qualifying Companies.

Investors in EIS Qualifying Companies can, depending on their individual circumstances, enjoy some or all of the following tax advantages:

• income tax relief of up to 30% on up to £1 million of initial Commitment invested by the Fund on their behalf;

• income tax relief may be available to qualifying Investors, at their option, in the tax year of investment or the prior year ;

• capital gains tax (“CGT”) exemption on disposal of EIS investments;

• deferral of capital gains tax payable on disposal of any assets if investment in an EIS qualifying company is made within 1 year prior or 3 years after the capital gain was made;

• loss relief (giving a current aggregate income tax relief, for top rate tax payers, of up to 61.5%) which can be offset against income tax or CGT liabilities; and

• 100% inheritance tax (“IHT”) relief after investment held for two years.

Further information on Taxation can be found in Appendix 2 and in the Innvotec EIS, SEIS and SITR “Know More About: Tax Efficient Investing” guide.

Taxation treatment depends on the individual circumstances of the Investor and may change in the future.

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FUND FEES & CHARGES

INITIAL CHARGE

There is no Initial Charge meaning that 100% of Investors’ Commitment attracts EIS relief.

Innvotec will pay all legal, issue and start-up costs on behalf of the Fund.

An Investor can, at his or her own discretion, authorise Innvotec to make a payment from the initial Commitment to a nominated intermediary.

ADVISER CHARGE

Adviser charges are costs that you have agreed with your adviser, in payment for the advice they have provided you. If agreed between you and your adviser, Innvotec can facilitate any agreed charges.

INTRODUCING AGENT CHARGE

For non-advised (execution only) applications, a charge may be levied to an introducing agent if you have one, such a charge will be agreed in advance with you.

ANNUAL MANAGEMENT FEE

The Fund Manager will receive an Annual Management Fee equal to 1.5% per annum of the amount subscribed by an Investor. The Annual Management Fee will commence on the day immediately following the Closing Date. All Annual Management Fees are deferred until there is sufficient cash from exits to meet such costs.

Annual Management Fees and the Performance Fee (or part thereof) described above will be met from any interest received on cash held on deposit prior to investments being made in Portfolio Companies; from dividends (if any) received from Portfolio Companies; from the proceeds of sale or other realisation of investments; and from fees generated by Portfolio Companies.

Until such time as the charges and fees become due and payable, the retention of cash held in respect of each Investor will be held as Client Money (as defined in the FCA Rules) and be deposited with an Approved Bank.

If a holding of shares is subsequently disposed of or otherwise realised then the Annual Management Fee shall be reduced three months after such an event and pro rata by an amount equal to the value for which such a holding was originally acquired as a proportion of gross subscriptions.

If the Fund Manager determines, at its absolute discretion but acting reasonably, that a holding of shares has become worthless, then the Annual Management Fee shall be reduced pro rata by an amount equal to the value for which such a holding was originally acquired as a proportion of gross subscriptions.

PERFORMANCE FEE

The Fund Manager shall be entitled to a Performance Fee designed to align the Fund Manager’s interests with those of Investors.

However, the Fund Manager will not receive any Performance Fee unless the aggregate of Return Amounts are such as to provide the Investor with a 40% gain on his or her gross Commitment (equivalent to a 100% return on the net cost after EIS Income Tax relief). This is considered to equate to an annualised internal rate of return of circa 6% on his or her gross Commitment (the “Hurdle Condition”).

Once the Hurdle Condition is satisfied the Fund Manager will be entitled to a Performance Fee equal to 30% of the Net Return to Investors.

If the aggregate of the Return Amounts are insufficient to satisfy the Hurdle Condition and provide the Fund Manager with the full Performance Fee due, then the Fund Manager will receive such lesser amount of Performance Fee that is equal to the Return Amounts that are in excess of those required to satisfy the Hurdle Condition.

The meaning of the expressions “Return Amounts”, ”Net Return” and “Commitment” and the basis of calculation for the Performance Fee are set out in the Fund Management Agreement.

VALUE ADDED TAX (“VAT”)

All charges and fees referred to in this Information Memorandum are stated exclusive of VAT which shall be payable in addition thereto at the prevailing rate, if applicable.

NO ADMINISTRATION OR TRANSACTION CHARGES

Apart from the Annual Management Fees and Performance Fees, no other fees or expenses (including administration fees, transaction fees or costs for transferring investments into the name of an Investor entitled thereto) will be directly payable by an Investor to Innvotec or Innvotec (Nominees) Limited, the initial registered holders of all shares in the Portfolio Companies.

All incidental expenses, administration fees and Nominee’s fees will be borne initially by Innvotec and met out of the charges and fees described above.


30

RISKS

An investment in the Fund is subject to a number of risks. Before making any investment decision, prospective Investors should consider carefully the risks attaching to an investment in the Fund together with fully reviewing all other information contained in this document, including, in particular, the risk factors described below. This information does not purport to be exhaustive. Additional risks and uncertainties not presently known to the Fund Manager, or that the Fund Manager currently deems immaterial, may also have an adverse effect on the businesses of the Portfolio Companies. Potential Investors should consider carefully whether an investment in the Fund is suitable for them in the light of the information in this Information Memorandum and their personal circumstances.

INVESTMENT RISKS

The Investor’s Portfolio will comprise investments in companies that are unquoted, are likely to be neither profitable nor cash generative at time of investment and, as such, have to be viewed as carrying a higher than average level of risk.

• The value of shares can go down as well as up and this could result in an Investor incurring a partial or total loss of their Commitment. A potential Investor that cannot afford to lose all of his or her Commitment to the Fund should not consider subscribing.

• There is no guarantee that the valuation of shares in a Portfolio Company will fully reflect their underlying net asset value or that the shares may be acquired or disposed of at that valuation, or at all.

• The past performance of Innvotec, Anglo Scientific or the prior AS EIS funds is not a guide to the future performance of the Fund.

• The past performance of any investment(s) should not be regarded as an indication of the future performance of that or any investments made by the Fund. No guarantee can be given as to the performance of investments made by the Fund or the level of capital gains or income that will be generated by such investments.

• The Fund will invest in unquoted companies whose securities

are not publicly traded or freely marketable. Investment in

such companies can offer good investment returns but the market for their shares is often illiquid and uncertain by its nature and holding them therefore carries a higher degree of risk than quoted shares. For the same reasons therefore:

- It may take considerable time to realise any of the Fund’s investments or it may not be possible to realise them at all.

- It may be difficult to obtain accurate information to determine the current value of the Fund’s investments.

- There can be no guarantee that the commercial objectives of the Portfolio Companies will be achieved

- Market makers are unlikely to be prepared to deal in the Fund’s investments.

• Commitment to this Fund should not be considered a short-term investment. Should any withdrawal within a minimum period of three years after investments into Portfolio Companies be possible, it will result in the loss of EIS Relief on those investments. The Fund Manager’s intention is to begin to seek exits for the underlying investments made by the Fund after three years with the objective of an exit across the entire Portfolio within seven years, but given the stage of development of the companies it is probable that some investments may be held for longer than seven years.

• Many unquoted companies have small management teams and are highly dependent on the skill and commitment of a small number of individuals.

• Smaller unquoted companies requiring additional equity of the type provided by the Fund commonly experience significant change and carry higher risks than investments in larger or more established businesses.

• It is likely that all Portfolio Companies will require further equity, including a minimum of 25% from third parties. There is no certainty that such additional investment will be raised.

• Technology or scientific research related risks may be greater in small, unquoted companies. Although this may be justified by the potential of significantly higher returns from investment in such companies.

31

RISKS

• The level of debt (or any other prior ranking funding or securities) used by Portfolio Companies may significantly increase risk.

• The assets including IPR held by Portfolio Companies may be charged as security to other funders. Accordingly, if the terms set out in the security documents are not adhered to, the chargee may enforce its security and the Portfolio Company will no longer control those assets.

• The returns generated by the Fund may be affected by changes to bank base rates. The Portfolio Companies may have cash on deposit prior to beginning to trade and the profit generated from the trade may also be affected by the level of interest rates.

• Investors such as the Fund may be the holders of minority interests in Portfolio Companies and accordingly may have little or no ability to influence how the business of that company is conducted, which may also include sale of a Portfolio Company within the three year EIS qualifying period and a revocation of EIS status or adverse shareholder rights being imposed by a later investor.

• Changes in economic and political conditions, to include tax laws, can substantially and adversely affect equity investments in general and the Portfolio Companies’ prospects in particular.

This Information Memorandum contains forward-looking statements. These forward-looking statements reflect the Fund Manager’s view with respect to future events. Actual events could differ materially from those in the forward-looking statements including the result of factors beyond the Fund Manager’s control. Potential Investors are cautioned not to place undue reliance on such statements.

The Fund will invest in known but still relatively early stage opportunities that increase both the risks and the potential rewards. As an investment in the Fund is speculative, potential Investors are therefore recommended to seek independent financial and tax advice before investing. Please note that the Fund Manager is unable to provide you with advice about whether you should invest in this Fund.

TAXATION RISKS

• Whilst it is the intention of the Fund Manager to make investments in the identified unquoted companies which are qualifying under EIS legislation at the time of investment, the Fund Manager cannot guarantee that all investments will continue to qualify for any EIS Relief or IHT relief or indeed the continued availability of EIS reliefs to the Investor relating to any individual investment, as this depends on compliance with the requirements of the EIS legislation by both the Investor and the Portfolio Company.

• Where an Investor or a Portfolio Company ceases to maintain EIS status in relation to any individual investment, it could result in the loss of some or all of the available tax reliefs (with a consequent liability to pay tax or repay a prior refund of tax) together with a possible charge to interest thereon in relation to that particular investment (but not in relation to the other investments of the Fund). In such circumstances subscription monies will not be returned to an Investor.

• Following the admission of a Portfolio Company to the main market of the London Stock Exchange, it is likely that Business Property Relief for Inheritance Tax purposes will cease in respect of the shares in the Portfolio Companies.

• The sale or other disposal of shares in a Portfolio Company within the period of three years following their issue will result in any income tax saved as a result of the making of the investment becoming payable to HM Revenue & Customs.

• The levels and bases of reliefs from taxation may change or such reliefs may be withdrawn. The tax reliefs referred to in this document are those currently available and their value depends on the individual circumstances of Investors initially and throughout the holding life of the investments.

• The dates on which initial EIS Relief, Capital Gains Deferral relief and IHT relief are available will only be known once the Fund makes its underlying investments. Any delays in the investment into EIS Qualifying Companies will have a “knock on” effect on the opportunity to defer capital gains tax on an earlier disposal.

• The ability of the Investor to obtain the tax reliefs referred to in this document is subject to the Investor making the proper claims to HM Revenue & Customs within the requisite time limits and the Investor may lose such reliefs if the relevant claim is not so made.

• The Fund has been designed with United Kingdom resident tax payers in mind. It may not be appropriate or advantageous for a person who is not resident or who is not ordinarily resident in the United Kingdom for tax purposes to invest in the Fund.

• The Fund Manager will not normally take into account the individual tax positions of Investors and therefore actions of the Fund Manager or Portfolio Companies could give rise to a partial loss of the Investor’s EIS Relief or other tax advantages.

• An Investor should be aware that EIS Relief and Capital Gains Deferral relief is only available on the amount actually invested on his or her behalf in EIS Qualifying Companies, not on the total amount of his or her subscriptions to the Fund. Although in the aggregate this should be the same.

Taxation treatment depends on the individual circumstances of the Investor and may change in the future.


32

HOW TO INVEST & ADMINISTRATION DETAILS

HOW TO INVEST

An Application Form which includes a copy of the Fund Management Agreement are available on request from Innvotec. The form should be completed in full and returned to Innvotec plus a cheque or a completed telegraphic transfer for the amount subscribed.

Innvotec is required to seek information from potential Investors to assess whether they have the knowledge and experience necessary to understand the risks connected with investing in the Fund. Potential Investors will therefore be required to complete the Appropriateness and Suitability Form which will accompany the Application Form.

The Fund is “Evergreen” which means that it has no final close. Commitment can be received at any time and an Investor’s Commitment will be invested in full and within three months on or around the normal quarter days. For those committing before 31st March 2018, they will be able to seek relief on their investment in either of tax years 2016/17 or 2017/18.

CLOSING DATE AND FUND SIZE

The Fund will be ongoing to applications received and there is no Closing Date.

The minimum subscription by an Investor in the Fund is £5,000 and in multiples of £1,000 thereafter. There is no maximum subscription, save for £40 million, the maximum amount of annual Commitment to the Fund, although EIS Relief for any Investor is only available for up to £1 million invested in all EIS Qualifying Companies in a tax year (whether invested through the Fund or otherwise).

The maximum aggregate subscriptions to the Fund over a rolling twelve month period is £40 million. If applications to subscribe in excess of this amount are received then subscriptions will be accepted by the Fund Manager in the order in which they have been received. Accordingly, subscriptions in excess of this amount will be returned by the Fund Manager to the relevant applicants.

The Fund Manager, at its sole discretion, reserves the right to increase the maximum size of the Fund should demand warrant such an increase.

Radio Physics - Detecting Threats

33

APPENDIX 1 - GLOSSARY OF TERMS

AIM The Alternative Investment Market of the London Stock Exchange plc.

Anglo Scientific Any one or more of Anglo Scientific Limited, its shareholders or managers.

Anglo Scientific Principals Any one or more of the founders, shareholders and/or managers of Anglo Scientific Limited.

Annual Management Fee The Annual Management Fee payable to the Fund Manager as mentioned in this Information Memorandum.

Application Form An application form to invest in the Fund in the form provided by the Fund Manager.

Applicable Investor Means (1) professional clients;(2) retail clients who confirm that in relation to investing in the Fund they will receive regulated investment advice or investment management services from an authorised person; (3) retail clients who are venture capital contacts or a corporate finance contact; (4) retail clients who are certified or who self-certify as sophisticated investors; (5) retail clients who are certified as high net worth investors; or (6) retail clients who certify that they have not invested and will not invest more than 10% of their net investable financial assets in non-readily realisable securities.

Approved Bank National Westminster Bank plc or any authorised banking institution in the United Kingdom that is a member of the Financial Services Compensation Scheme as may be nominated by the Fund Manager.

Capital Gains Deferral Deferral of CGT (section 150C and Schedule 5B of the Taxation of Chargeable Gains Act 1992).

Charges and Costs Any Charges and Costs, as set out in the Information Memorandum, which accrue for the account of the Investors or the Fund plus any value added tax thereon.

CGT Capital Gains Tax.

Client Appropriateness and Suitability FormMeans the questionnaire to be completed by each Investor accompanying the Application Form.

Closing Date There is no Closing Date as the Fund will be Evergreen with investments being made on a quarterly basis on or around the usual quarter dates.

CommitmentThe amount invested in the Fund by the Investor.

EIS Enterprise Investment Scheme as set out in Part 5 of the Income Tax Act 2007.

EIS Qualifying Company A company which is a qualifying company for EIS purposes.

EIS Relief Relief from income tax and certain other taxes under EIS legislation.

Evergreen StatusThe Fund has no fixed Termination Date with Commitment into the Fund being received on an on-going basis.

ExitA liquidity event such as the sale or flotation of an investee company. The ultimate result being the Investment is exchanged for a cash sum that is credited by the Fund Manager to the Investor’s account.

FSMA The Financial Services and Markets Act 2000 (as amended).

FCA The Financial Conduct Authority.

FCA Rules The rules contained in the FCA’s Handbook of Rules and Guidance as amended from time to time.

Fund The Anglo Scientific EIS Fund.

Fund Manager Innvotec Limited or such other fund manager as may be appointed under the Fund Management Agreement.

Fund Management Agreement The Fund Management Agreement to be entered into between the Investor and Innvotec Limited as the Fund Manager as summarised in this document and a copy of which is appended to the Application Form.

HMRC HM Revenue and Customs.

Hurdle Rate (or Hurdle Condition)The return to Investors before any Performance Fee is due to the manager.

Information Memorandum (IM)This information memorandum for the Anglo Scientific EIS Fund.


34

APPENDIX 1 - GLOSSARY OF TERMS

Initial Charge There is no initial charge payable by the Investor.

Innvotec Innvotec Limited (registered in England and Wales under company number 02030086) whose registered office is at Stable Cottage, Castle Hill, Rotherfield, East Sussex, TN6 3RR.

Investee Company A company in which the Fund Manager makes an Investment on behalf of the Investors.

Investor A person who completes an Application Form to invest in the Fund which is accepted by the Fund Manager and who so enters into a Fund Management Agreement with the Fund Manager and thereby invests through the Fund.

Nominee Innvotec (Nominees) Limited (which is a subsidiary of the Fund Manager) or such other nominee (which may be an associate of the Fund Manager) as may be appointed by the Fund Manager from time to time to carry out safe custody and related services in relation to an Investor’s investment in the Fund and to be the registered holder of investments in Portfolio Companies.

Performance Fee The Performance Fee payable to the Fund Manager as mentioned in this Information Memorandum and more fully described in Schedule 1 of the Fund Management Agreement.

Portfolio In respect of an Investor, the Investments made through the Fund which are allocated to him or her and which are registered in the name of the Nominee as nominee for that Investor.

Portfolio Company A company in receipt of investment or investments made by the Fund Manager, as the Investor’s nominee, using the monies invested by the Investors in the Fund.

Quarter Day1st January, 1st April, 1st July and 1st October, the days on or around which the Fund will make investments.

Strategic PartnerAnglo Scientific Ltd.

SubscriptionAcceptance of an Application Form completed to the Fund Manager’s satisfaction.

Subscription AmountThe amount notified to the Manager in the Investor’s Application Form and for which funds have been received.

Termination DateThere is no fixed date, the date will be determined by the Fund Manager giving Investors no less than one year’s written notice.

VAT Value added tax.

World Class In the case of a technology, a World Class technology means one that, in the opinion of the Fund Manager or (as the context so requires) Anglo Scientific, has attributes of a high standard compared to other known technologies then available around the world, and has the potential to address global markets.

35

APPENDIX 2 - TAXATION

PLEASE NOTE THAT FURTHER TAXATION DETAILS CAN BE FOUND IN THE INNVOTEC EIS, SEIS AND SITR “KNOW MORE ABOUT: TAX EFFICIENT INVESTING” GUIDE, WHICH SHOULD ALSO BE READ ALONGSIDE THIS DOCUMENT.

TAXATION

These notes are only intended to provide a brief summary of the tax advantages available under current legislation and HM Revenue & Customs (“HMRC”) practice. Legislation and HMRC practice may change. The rates of tax and tax relief may be altered and/or the levels and bases of reliefs from taxation may change. The tax reliefs referred to are those currently available, and are personal to the Investor. Their value depends on the individual circumstances of the Investor. Investors are advised to obtain advice from their own professional advisers as to their tax position in respect of their own portfolio.

SUMMARY

The EIS provides a range of targeted incentives for investment in unquoted companies, so long as the EIS criteria remain satisfied. A summary of the tax benefits for investors in qualifying EIS companies is outlined below and a more detailed explanation of each can be found in the Innvotec EIS, SEIS and SITR “Know More About: Tax Efficient Investing” guide.

Income Tax ReliefAvailable at a maximum of 30% on the first £1 million invested in any tax year.

Capital Gains Tax ExemptionAny capital gains realised on disposal of the shares are tax free provided EIS relief has not been withdrawn. This applies after the Relevant Period, which is currently 3 years.

Capital Gains Tax DeferralTax on gains on any assets can be deferred if a qualifying investment (which would include an EIS Qualifying Company) is made within one year before or three years after the date of disposal of the asset which gave rise to the gain.

There is no limit to the amount that can be invested in EIS companies for the purposes of Capital Gains Deferral Relief.

Loss ReliefLoss relief (giving a current aggregate of tax relief of up to 61.5% of the amount originally invested in an EIS Qualifying Company) is available should any investment of the Fund incur a capital loss, which can be set against income or capital gains.

Inheritance Tax (“IHT”) Business Property Relief 100% IHT relief is available (via Business Property relief), provided that the shares have been held for two years at the time of death.

Tax PlanningThe Anglo Scientific EIS Fund has not been “approved” by HMRC for approved fund status. EIS income tax relief under an “unapproved” fund such as the Fund is granted in either the tax year when the investment into an EIS Qualifying Company was made and shares issued or the prior tax year at the Investor’s request and not the tax year when the Fund is closed as will be the case with an approved fund. It should be noted that for Capital Gains Deferral purposes, and the three year period for CGT Exemption, it is the date the investment in the EIS Qualifying Company is made that is relevant.

As well as reading the Innvotec EIS, SEIS and SITR “Know More About: Tax Efficient Investing” guide, Investors should also take professional taxation advice where required.


36

APPENDIX 3 - SUMMARY OF THE AS EIS FUND MANAGEMENT AGREEMENT

Investors must read completely the full Fund Management Agreement, a copy of which is appended to the Application Form, before completing the Application Form. In signing the Application Form an Investor warrants that he or she has read and agrees fully to the terms and conditions of the Fund Management Agreement. In the event of any conflict between the provisions of the Fund Management Agreement and this summary, the provisions of the Fund Management Agreement shall apply.

The Fund Management Agreement sets out the agreement between Innvotec (the Fund Manager) and the Investor to constitute and manage the Anglo Scientific EIS Fund. The acceptance by Innvotec of a signed Application Form will constitute a binding agreement between the Investor and Innvotec. A full copy of the Fund Management Agreement is appended to the Application Form.

Fund Manager’s Duties, Responsibilities and Rights

The Fund Manager will:-

• at all times act in good faith and with reasonable care and due diligence;

• if an Investor exercises his or her right to cancel, return the amount of any Commitment paid less any charges the Fund Manager has already incurred for any service undertaken in accordance with the terms of this Agreement, the Investor will not be entitled to interest on such monies;

• in the case of there being excess Commitment to the Fund which is not, in the Fund Manager’s view, capable of being invested appropriately in accordance with the Investment Objectives and the Investment Restrictions, excess funds will be returned to Investors;

• deposit Commitment in an account pending investment or release in accordance with the Fund Management Agreement;

• have complete discretionary powers in relation to the selection of, or exercising rights relating to, and the management of the Fund’s investments;

• provide all administration services in relation to the Fund and its investments;

• arrange for the appointed Nominee to provide safe custody services in relation to the Fund’s investments and cash, with all cash being held by the appointed Nominee as Client Money until such time as it is invested in a Portfolio Company, released to the Investor or released to pay any of the Fund Manager’s fees or charges;

• in performing its Services, have regard to the objectives of the Fund and shall comply with all stated restrictions and all applicable laws;

• in effecting transactions for the Investor, the Fund Manager

shall seek to achieve the best possible result for the Investor in

accordance with the applicable requirements in the FCA Rules on best execution, the rules and regulations of any relevant market and/or clearing house and the Fund Manager’s best execution policy, save where the Investor requires the Fund Manager to use a particular broker, counterparty or execution venue;

• not lend investments or title documents to a third party and not borrow against the security of the Fund’s assets;

• send the Investor a report relating to the Investor’s Portfolio and cash in the Fund in a form complying with the FCA Rules at least every six months, in respect of the periods ending on or around 31 March and 30 September in each year or such other dates as the Manager decides;

• carry out a half yearly valuation of the Investor’s Portfolio in accordance with the valuation guidelines published by the British Venture Capital Association and/or similar organisations;

• receive charges and fees for its services as set out in the Information Memorandum;

• devote such time and attention and have (or shall have access to) all necessary competent personnel and equipment as may be required to enable it to provide its Services properly and efficiently, and in compliance with the FCA Rules;

• take all reasonable steps to prevent conflicts of interest from constituting or giving rise to damage to the interests of the Investor;

• set a date, which it shall notify to the Investor, on which the Fund will terminate;

• on or before termination of the Fund, sell all investments in the Investor’s Portfolio and/or transfer the shares into the Investor’s name or otherwise as the Investor may legally direct;

• give to the Investor not less than three months’ written notice of its intention to terminate its role as Fund Manager and if it does give such notice endeavour to make arrangements to transfer the funds to another fund manager;

• at all times keep confidential all information acquired in consequence of the Services, except for information which is in the public domain, or may be entitled or bound to disclose under compulsion of law, or is requested by regulatory agencies, or is given to its professional advisers where reasonably necessary for the performance of their professional services, or is necessary to disclose to the Nominee to enable the Nominee to perform its obligations in relation to the Portfolio or the investments of the Fund, or is authorised to be disclosed.

Nominee’s Responsibilities

The Nominee will act as custodian of the cash, investments and other assets of the Fund and will use reasonable care and skill in providing the Services it is to provide;

37

Investor Obligations, Agreement and Rights

The Fund established by this Agreement is set up on the basis of the declaration and undertakings made by the Investor in his or her Application Form. By completing the Application Form Investors will:-

• be deemed to have irrevocably agreed to the Nominee being appointed to exercise the powers and to carry out duties, on behalf of the Investors, in accordance with the Fund Management Agreement;

• indemnify the Nominee (in proportion to their respective interests in the Fund at the date of the claim to indemnify) from and against any and all direct liabilities, obligations, losses, damages, penalties, actions against the Nominee, judgements, suits against the Nominee, proper costs and expenses or disbursements (other than those resulting from the fraud, negligence, wilful default or breach of contract or the FCA Rules on the part of the Nominee) which may be imposed or incurred by or asserted against the Nominee in properly performing its obligations or duties in relation to any investments, cash or other assets of the Fund;

• provide the Fund Manager with any information which it reasonably requests for the purposes of managing the Fund pursuant to the terms of this Agreement;

• give any notices, instructions or other communications to the Fund Manager in writing in English and signed and sent to the Fund Manager at Suite 310, Business Design Centre, 52 Upper Street, Islington, London, N1 0QH (or to such other address as the Fund Manager may notify to the Investor) or except as otherwise specifically indicated.

The Investor may terminate this Agreement prior to termination of the Fund by written notice to the Fund Manager.

Complaints and Compensation

The Fund Manager has established procedures in accordance with the FCA Rules for consideration of complaints. Details of these procedures are available from the Fund Manager on request. Should an Investor have a complaint, they should contact the Fund Manager. If the Fund Manager cannot resolve the complaint to the satisfaction of the Investor, the Investor is entitled to refer it to the Financial Ombudsman Service.

The Fund Manager is obliged to notify the Investor, and hereby does so, that an Investor may have a right to compensation under the Financial Services Compensation Scheme, established under the Financial Services and Markets Act 2000, which provides compensation to eligible investors in the event of a firm being unable to meet its customer liabilities. Payments under the protected investment business scheme are currently limited to a maximum of £50,000, made up of 100% of the first £50,000. Further information is available from the Fund Manager on request.

Data protection

All data which the Investor provides to the Fund Manager is held by that party subject to the Data Protection Act 1998. The Investor agrees that the Fund Manager and the Nominee may pass personal data to each other and to other parties insofar as it is necessary in order for them to provide their Services as set in this Agreement and to HM Revenue & Customs, the FCA and any other regulatory authority which regulates them and in accordance with all other Applicable Laws.

Governing Law

This Agreement and all matters relating thereto shall be governed by and construed in accordance with English Law and the parties submit to the non-exclusive jurisdiction of the English Courts.


38

APPENDIX 4 - THE INNVOTEC AND ANGLO SCIENTIFIC RELATIONSHIP

COMPANY GROWTH ANGLO SCIENTIFIC INNVOTEC

AS identifies unfulfilled needs in growing market sectors & seeks out leading edge technologies with

the potential to meet those needs

Detailed due diligence alongside AS and, ifappropriate, independent review of AS due

diligence

Investment Proposal prepared for considerationby Innvotec IAC which recommends (or not) to

Innvotec Board. Board authorises investment

Formal verification undertaken on InvestmentMemoranda before being approved under

Innvotec’s FCA authorisation

Review and updating of due diligence.Agreement on terms of investment (subject to IAC

approval & sufficient commitments to investfrom external parties)

Role of Board Observer taken up under formalcontract. Observer attends Board meetings,investor presentations & provides corporate

governance oversight

INNVOTEC & ANGLO SCIENTIFIC- Monthly meetings -- Regular telecons -

- Discussions on future strategies to maximise investor returns -- Marketing events to both investors and advisers -

- Long-term contractual relationship -- Independent -

- Alternative Investment Fund Manager -

- Regulated since 1989 -- Suite of permissions including

holding & controlling client money and assets -

- Supervisory Committee -- Investment Advisory -

- Committee - - Fund raising -

- Investor reporting -

Half yearly reports to AS EIS investors onprogress of portfolio

INVESTOR RETURNS

Commercial opportunity evaluated, thoroughdue diligence carried out, IP secured, business

plan developed

AS, its principles, friends & family invest in aseed round. Some SEIS investment, part of

which may be from AS EIS

Funds raised to achieve next business planmilestone. Valuation at each round set by theBoard in discussion with potential investors

(including Innvotec).

Company formed around the lead scientist(s)with AS principles in key exec roles

Investment Memorandum prepared for eachfunding round

Industry & market specialists recruited into keyroles as company matures

AS roles increasingly non-executive

AS key in identifying & negotiating exit

Deal Origination Work

Opportunity Identified

Company Formed

Seed Round

Company Growth

Funding RoundsSeries A, A+, B…

Cashflow Breakeven

Further Growth

Profitability

Exit

INNVOTEC CORPORATE

39

PHAGENESIS CASE STUDY- EXIT TO NESTLÉ - ANNOUNCED 1ST SEP 2016

APPENDIX 5 - PHAGENESIS CASE STUDY

TERMS OF THE DEAL TO BUY PHAGENESIS

WEREN’T DISCLOSED, BUT A PERSON FAMILIAR WITH

THE ACQUISITION SAID MEDICAL-DEVICE MAKERS

OF PHAGENESIS’S SIZE TYPICALLY SELL FOR £100 MILLION ($131 MILLION). ”

”

THE U.K. COMPANY’S INVESTORS INCLUDE

LONDON-BASED INVENTAGES VENTURE

CAPITAL - WHICH IS LARGELY FUNDED BY NESTLÉ - AND LONDON-BASED

ANGLO SCIENTIFIC. ”

”

Source: www.wsj.com/articles/nestle-strikes-deal-to-acquire-dysphagia-treatment-device-maker-phagenesis-1472734306


40

COMPANY OVERVIEW- WORLD’S FIRST CLINICALLY PROVEN TREATMENT FOR DYSPHAGIA

The problem Dysphagia (a swallowing dysfunction) affects millions of people, including circa. 50% of stroke patients.

• Significant impact on health (3-6x higher mortality rate), quality of life, and cost of care (£ billions). • Before Phagenesis, no clinically proven treatment.

The treatment principlePharyngeal electrical stimulation (PES) creates neuro-sensory input “kick starting” reorganisation of the motor cortex.

The Phagenyx treatmentOnly 3 days of 10 minutes of electrical neuro-stim cycles, administered by doctor, nurse or therapist.

Phagenyx Base Station Phagenyx Catheter for enteral feeding + electrical neuro-stim

Key investment criteria identified in due diligence (2009)

• Clear market need – patients, doctors and health economics.• Groundbreaking technology with little effective competition.• Base unit plus consumable business model with >80% gross margins. • Estimated revenue potential of £300-500 million per annum.• Strong exit potential: acquisitive industry for unique.

Case Study - The Story of Mr K. (62 years old)

Jan 2014Hemispheric stroke

Feb 5th 2014Admission to rehab centre PA-Score 8/8 (Material enters deep into airway, no effort to eject)

April 10th 2014PA-Score 7/8 (Material enters deep into airway, cannot eject)

April 12th–14th 2014Pharyngeal Electrical Stimulation

April 25th 2014Mr. K. on normal diet, no supervision PA-Score 2/8 (near normal swallowing)PEG tube removed

Strong patent

portfolio

10+ clinical studies

published

£1M from Wellcome

Trust

Exceptional management

and board

Approved product on the market

400+ patients treated to

date

2010-2016:FROM CONCEPT

TO COMPANY

Phagenesis Today

APPENDIX 5 - PHAGENESIS CASE STUDY

41

• Prof. Hamdy, Manchester Univ: groundbreaking research on dysphagia from mid 90s; seminal studies published in top journals.

• In 2007, sets up Phagenesis with co-founder from Univ. tech transfer office to commercialise findings.

• Over next 2 years, try to

progress company, but with no management or employees (retained University jobs), no experienced Board, etc.

• Thus fail to obtain funding and Phagenesis stagnates at inception.

• 1st term sheet received mid 2015

• Phagenesis Board appoints 3 person negotiating team:

- Chairman: high level

relationships - CEO: clinical/operational

aspects - AS Director: point person

on all “deal points” during the 12 months of negotiations

• Final negotiated deal unanimously lauded by Company’s shareholders.

• AS also appointed by shareholders as “Sellers Agent” to act on their behalf in post-closing matters.

• 2009: AS introduced through investors who appreciates potential, but deems structure and team uninvestible.

• AS conducts extensive due diligence, secures robust current & future IP agreement with the University, writes new business plan, and builds experienced founding team inc. 2 AS Directors.

• On strength of restructured company, £2m raised in 2010 (AS investors + AS EIS Fund + new investors that AS attracts to investment).

• AS Principals serve as Exec. Chair & Exec. Director, Company grows to team of 18, secures CE Mark, £10m+ of further investment, etc.

• AS also provides its usual corporate services, e.g. Company Secretarial and Accounting until Company ready to hire own FD; primary contact for most shareholders.

• By 2013, Company grown to stage that it can attract Medtronic’s former head of Europe as Chairman, and in 2014 a “rising star” at Medtronic as CEO.

Before Anglo Scientific (1990s - 2009)

Company Launch (2009-2010)

Company Building (2010-2015)

Company Exit (2015-2016)

Identify and validate disruptive solution to big

market need, and structure into investible Company.

Build Company from within, recruit top world class industry talent when

Company ready.

Active role through to exit, working closely with

board and management.


angloscientificC R E A T I N G S O L U T I O N S

angloscientificC R E A T I N G S O L U T I O N S

angloscientific

FROM COMPANY LAUNCH TO EXIT


42

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Further Information

If any further information relating to the Fund is required please contact the Fund Manager, Innvotec Limited.

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9 Little Trinity LaneLondon

EC4V 2AD

t:+44 (0) 203 026 1883e: [email protected]

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Strategic Partner

Anglo Scientific LimitedThe Royal Institution of Great Britain

21 Albemarle StreetLondon

W1S 4BS UK

www.angloscientific.com

t: +44 (0) 1531 651 230e: [email protected]

Legal Adviser

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www.bdb-law.co.uk

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Anglo Scientific EIS Fund specifice: [email protected]

www.innvotec.co.uk

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