Cryptosoft is Terns most substantial investment,accounting for 95%of the companys potential portfolio return. Terns other investments areFlexian,PushTechnology, andSeal Software.The company owns between 1% and 0.5% of each of these businesses. So in many respects, Ternslong-term success is dependent upon the success, or failure, of Cryptosoft.
Todays trading update from Cryptosoft is full of good news. The companys new management team has been in place since1 July 2015 and is pushing forward with a new strategic plan.
Managements focusduring the past three months has been onmarketing, strategic partnerships and finding sales opportunities, several of which have been identified. And over the next four months, Cryptosoft will focus on turning these opportunities into concrete sales.
Whats more, since the beginning of July Cryptosoft has launched a new product, theV3 Data Centric Security Platform, and has developed strategic partnerships. The V3 Data Centric Security Platform is an updated version of the V2 version, which is already incommercial use withmajor UKand US companies.
Cryptosoft claims to bethe only supplier with a peer-reviewed, market-proven software security product, for Internet of Things and Machine-to-Machine applications.
Within todays trading update, Cryptosoft tells investors that the company will be looking to convert sales opportunities into bookable revenues over the next four months, giving investors a clear-cut time frame for growth.Indeed, now that the company has laid out this goal, investors have a benchmark to judge managements performance.
And a clear-cut goal is exactly what Tern needs to build investors trust. Since coming to market, the company has beenshrouded in controversy, despite the fact that it has rapidly becomeone of AIMs hottest stocks.
Like all early-stage investment businesses and small-caps, Tern needs to prove to investors that it can be trusted to hit growth targets, make sensible investment decisions and build shareholder equity. SoCryptosoftsprogress over the next four months will be a crucial factor in determining whether or not Tern is set for the big time.
Unfortunately,Cryptosoftssuccess isnt guaranteed. The company is a small player in an industry dominated by large tech giants. Theres nothing to stop these competitorsmuscling in on the companys target market while it tries to secure contracts. The tech sector is notoriously competitive and firmsneed to have deep pockets to fend off the competition.
Cryptosoft doesnt have the financial firepower to take on the likes ofVodafone,Blackberry, andSymantec, which has already secured morethan 1bn IoT devices.
Overall, the next four months will be a critical time for Cryptosoft and Tern. Investors could have a lot to look forward to.
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