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Expose for accounting geeks: Tern – what on earth is going on with regard to the valuation of the convertible loan note in Device Authority?

By Tom Winnifrith, the Sheriff of AIM | Tuesday 19 October 2021

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Device Authority Limited states that it has filed abbreviated accounts because it qualifies as a small company which it is why it only files a balance sheet and selected notes. However, even based on the limited information provided we can see that AIM listed bag of puff Tern (TERN) is providing approximately 2/3rds of the current funding to Device Authority in terms of cumulative advances and accrued interest as shown below:

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