Vmoto raises $5m & secures strategic joint venture

VMOTO RAISES $5 MILLION

SECURES STRATEGIC JOINT VENTURE

Announcement 2 OCTOBER 2013

HIGHLIGHTS

· FIRM COMMITTMENTS RECEIVED TO RAISE A$5 (£2.87) MILLION for continued growth

· PROPOSED JOINT VENTURE WITH A PRIVATE CHINESE ELECTRONIC TECHNOLOGY COMPANY

The Board of Directors of Vmoto Limited (ACN 098 455 460) ("Vmoto" or "Company") is pleased to announce:

· the receipt of firm commitments for a placement to raise $5 million to facilitate, among other things, the Company's continued growth in China; and

· the execution of a Joint Venture agreement with a private Chinese company, which focuses on the research, development and production of technology parts for the electric vehicle market.

Charles Chen, Managing Director, commented: "We are pleased with the reaction to Vmoto in Australia and the UK over recent weeks and welcome new high quality institutions and investors to our register. The growth opportunity we are seeing for electric scooters and electric vehicles in general in China and around the world is significant and these extra funds mean Vmoto is now fully funded for immediate operations, and will allow us to accelerate that growth over the next 24 months.

"The Joint Venture is an important deal for Vmoto and has the potential to provide the Company with several strategic benefits, including access to electric vehicle technologies central to the electric system. This in turn enhances Vmoto's IP and value add, enabling it to become a more integrated manufacturer. We also anticipate that the Joint Venture will increase both our revenues and profits and provide us with access to a more diverse base of electric vehicle products and markets."

PLACEMENT TO RAISE $5m (£2.87m)

Vmoto has received firm commitments from Australian and UK institutional and sophisticated investors to raise $5 million (before costs) at an issue price of $0.022 (£0.0127) per share (the "Placement"). The Placement was oversubscribed.

The Placement Shares will be issued in two tranches, as follows:

1. Tranche 1, comprising the issue of 54,545,455 Shares, is expected to be issued on or around 8 October 2013 pursuant to the Company's 15% annual placement capacity, to raise $1.2 million (before costs); and

2. Tranche 2, which is subject to Shareholder approval, will comprise the issue of the remaining 172,727,273 Placement Shares and raise a further $3.8 million (before costs).

The Company will be issuing a notice to Shareholders setting out details of the resolutions to be put to Shareholders at the general meeting to be held on or around 13 November 2013 in due course.

Use of Placement Funds

The Placement has been undertaken to ensure Vmoto can maintain and continue the significant growth path it is experiencing in China. Specifically, the funds raised will be used for:

1. Joint Venture investment (see below);

2. Continued expansion into China;

3. Product development;

4. Costs of the Placement; and

5. General working capital.

Director Participation

The Company's Directors intend to participate in Tranche 2 of the Placement. Shareholder approval will be sought for the Directors' participation in the Placement for the purposes of Listing Rule 10.11 and Chapter 2E of the Corporations Act.

The interests of the Directors following the Placement will be as follows:

General

Application will be made for the Tranche 1 Placement Shares (54,545,455) to be admitted to trading on AIM ("Admission") and it is expected that Admission and dealings in these Placement Shares will occur on AIM and the ASX on 8 October 2013. Following Admission, there will be 1,027,633,167 ordinary shares in the capital of Vmoto in issue. Application for the remaining Tranche 2 Placement Shares will be made upon shareholder approval. Following admission of the Tranche 2 Placement Shares there will be 1,200,360,440 ordinary shares in the capital of Vmoto in issue. All of the Placement Shares will rank pari passu with the existing ordinary shares in the capital of Vmoto currently in issue.

An Appendix 3B for the issue of the Tranche 1 Placement Shares will follow shortly.

PROPOSED JOINT VENTURE (JV)

Vmoto is pleased to advise that it has entered into a Joint Venture Agreement (50%:50%) with a private Chinese electronic technology company ("Chinese Co"). Chinese Co is a high tech Chinese company incorporated in 2008 which focuses on the research, development and production of technology parts for the electric vehicle ("EV") market. These parts, amongst other things, convert DC battery power into AC used by the electric motor and is crucial to the operation of an EV.

Chinese Co currently has annual sales of RMB50m (A$9m or £5.4m)* and annual production of 1 million units (unaudited). Its customers, of which Vmoto is one, include groups in China, Taiwan, Malaysia, Germany, South Korea and Australia. Such is the current production that their capacity is unable to keep up with demand.

The key terms of the JV are as follows:

· Vmoto will invest A$1.35 million into the JV, consisting of an initial equity investment of A$350,000 and a further working capital loan of A$1million;

· Chinese Co will utilise Vmoto's manufacturing facility in Lishui District, Nanjing and gradually close its existing factory within 2 years of the commencement of the JV;

· Chinese Co will provide its technology and new product and market development plan for existing and future Vmoto customers;

· Vmoto has the right to appoint one director, one supervisor, the general manager and chief financial officer to the JV; and

· After 3 financial years of operation, Vmoto has the option to acquire the remaining 50% of the JV for consideration calculated at 50% of 5x the JVs average net profit post-tax, (average for the prior two financial years), plus half of the JV's net assets .

The JV is subject to formal execution of Chinese regulation agreements which are expected to be completed by the end of October 2013.

ADDITIONAL DIRECTOR APPOINTMENT

To coincide with Vmoto's rapid development and its expanded shareholder base, the Company has undertaken to strengthen the Board and intends to appoint an additional strong Non-Executive Director by the end of 2013. The Company is in advanced discussions with one potential candidate and a further announcement will be made in this regard in due course.

AUTHORISED BY:

Charles Chen

Managing Director

For further enquiries, please contact:

PLACEMENT STATISTICS

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

About Vmoto

Vmoto is a global scooter manufacturing and distribution group and is listed on the Australian Securities Exchange (ASX) and on the AIM market of the London Stock Exchange. The Company specialises in high quality "green" electric powered two wheel vehicles and manufactures a range of western designed electric (and some petrol) two wheel vehicles from its low cost manufacturing facilities in Nanjing, China, marketed in Europe through its operation in Bremen, Germany and marketed outside Europe through its operations in Australia. Vmoto combines low cost Chinese manufacturing capabilities with European design. The group operates through two primary brands: Vmoto (aimed at the value market in Asia) and E-Max (targeting the Western markets, with a premium end product). As well as operating under its own brands, the Company also sells to a number of customers on an original equipment manufacturer ("OEM") basis.