Placing to raise ?2m and Notice of General Meeting

VPhase plc

("VPhase" or the "Company" or the "Group")

Placing to raise £2 million and Notice of General Meeting

VPhase plc, (AIM:VPHA), a leading developer of energy saving products for residential and commercial properties, is pleased to announce that is has conditionally placed 100,000,000 new ordinary shares of 0.25p each ("Ordinary Shares") at a price of 2.0p per share to raise gross proceeds of £2.0 million (the "Placing"), which was arranged by Ambrian Partners Limited ("Ambrian") with institutional investors. The Placing is conditional upon amongst other things the passing of a special resolution by the members of the Company at a General Meeting of the Company called for 9.00am on Monday 25 October 2010 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB.

Reasons for the Placing

The funds will be used to accelerate the Company's commercial development within the UK and other geographical territories, and for general working capital purposes as appropriate. Such commercial activities will include a campaign to increase consumer awareness, including TV advertising, increased promotion to utilities, social housing groups and independent electricians and additional resource to manage the increasing number of overseas enquiries that the Group is receiving. The Directors also believe that the strengthening of the cash position and balance sheet of the Company will be positively viewed by the parties with which it is seeking to enter into commercial arrangements.

Details of the Placing

The Company has entered into a conditional placing agreement with Ambrian, under which Ambrian has agreed to use its reasonable endeavours to procure placees for up to 100,000,000 new Ordinary Shares of 0.25p each ("Placing Shares") at a price of 2.0p per share ("Placing Price"). The Placing Price represents a discount of 23.8 per cent. to the official closing market price of 2.63p of an existing Ordinary Share on 5 October 2010, being the latest practicable date prior to the release of this announcement. Assuming the maximum number of Placing Shares are issued pursuant to the Placing, such shares will represent 12.47 per cent. of the Company's enlarged issued share capital and following the Placing, the Company will have a total of 802,210,361 Ordinary Shares in issue.

The Placing Shares are being offered to existing and new institutional and other investors subject to the terms and conditions set out in the placing letters which have been sent out by Ambrian to placees. The Placing is not being underwritten.

General Meeting

A circular containing a notice of a General Meeting of the Company, convened for 9.00am on 25 October 2010 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB, has today been posted to shareholders of the Company outlining the terms of the Placing and seeking authority from shareholders to exclude statutory pre-emption rights for shareholders. This will allow the Directors to allot the Placing Shares in connection with the Placing ("the Resolution").

The Directors unanimously recommend that shareholders vote in favour of the Resolution to be proposed at the GM as they intend to do so in respect of the 18,858,420 ordinary shares beneficially held by them, representing approximately 2.7 per cent. of the entire issued share capital of the Company.

In addition irrevocable undertakings to vote in favour of the Resolution have been given by Energetix Group PLC in respect of 343,855,008 ordinary shares and Energetix (Nominees) Limited in respect of the 12,489,498 ordinary shares beneficially held by them, together representing 50.7 per cent. of the entire issued share capital of the Company.

Accordingly, the Company is in receipt of irrevocable undertakings to vote in favour of the Resolution in respect of 375,202,926 ordinary shares, representing approximately 53.4 per cent. of the existing ordinary share capital of the Company.

A copy of the circular will also be available from the Company's website at www.vphase.co.uk

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will occur, and dealings in the Placing Shares will begin, at 8.00 am on 26 October 2010. The Placing Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares in issue, including the right to receive any dividends and other distributions declared following Admission.

Comment

Commenting on the placing, Rick Smith, Chief Executive Officer said: "The Board is delighted to have secured this funding, and looks forward to working alongside our existing and new shareholders to drive the business forward. This is an exciting stage of VPhase's development, as we continue to accelerate commercial development of the product in the UK, and then expanding into other geographies."

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About VPhase PLC

VPhase plc provides a product that reduces the energy consumption of many domestic electrical appliances.

The Company has developed a Voltage Optimisation product designed to be attached to the consumer unit (fuse box) in order to control the incoming voltage for selected circuits to a target set point of 220 volts. This is slightly higher than the minimum design point for electrical items in Europe, thereby ensuring that electrical appliances in the home operate closer to the voltage condition for which they were designed.

Independently verified tests by VPhase have demonstrated that the product can typically save around 10% of the electricity across a range of domestic products including fridges, freezers, central heating pumps, televisions and other items, even 'energy-saving' light bulbs. This should equate to savings for the typical homeowner of between £40 and £135 per annum.

In addition, there is evidence that the life of electrical appliances can be extended by the use of this product; light bulbs, in particular, have demonstrated at least two times longer life when on a circuit managed by the voltage optimisation product as compared to those without the product.

www.vphase.co.uk