VECTION TECHNOLOGIES LTD — Annual Report 2024

Sep 30, 2024

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FY24 Results & Outlook

Next-Level XR: Vection’s AI-Powered Evolution

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Originating in XR technology, Vection has expanded to include hardware, IoT, and 3D services. The company is poised for its next growth phase through AI.

Vection is a technology company that enhances operational efficiency, reduces costs, and supports sustainability (" ESG" ) in the B2B sector.

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B2B sector.
AI EXPANSION
ESG
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AI enhances Vection’s product offerings with complete Spatial Computing solutions powered by the evolved SmartXR tech stack for smarter, scalable . applications SCALABLE SPATIAL COMPUTING

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FY24 highlights

Delivered 30% YoY revenue growth to $34m.

YoY net cash from operating activities up 114% to $1m.

Global customers, including Coca Cola, Ferrero, and more.

Strategic acquisitions of Invrsion, MYR and TDB to power XR + AI.

Strong R&D focus to lead XR + AI innovation and stay ahead of industry trends.

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FY24 strong revenue growth

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$50
$44m Highlights:
$45
•
FY24 total revenue of $34m.
$40
$34m •
$35 30% YoY revenue growth.
$30 • Pro-forma FY24 revenue of $44m
$25
TDB.
$20
$15
$10
$5
$0
FY18 FY19 FY20 FY21 FY22 FY23 FY24
Vection TDB Acquisition
Millions
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• Pro-forma FY24 revenue of $44m , including the proposed acquisition of TDB.

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FY24 strong EBITDA growth

		2024	2023	Change
		$ '000	$ '000	%
Loss before income tax expense		(9,663)	(10,968)	(12)
Add: depreciation and amortization expense		2,331	1,217	92
Add: finance costs		976	240	307
Less: interest revenue		(25)	(212)	(88)
EBITDA		(6,381)	(9,723)	(34)
Share-based payments expenses		163	1,860	(91)
Impairment of assets		3,139	3,205	(2)
Acquisition costs		981	-	-
Non-operating and discontinued costs		1,083	3,156	(66)
Underlying EBITDA (non-IFRS)		(1,015)	(1,502)	(32)

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Highlights:

• 34% YoY EBITDA growth.

• • 34% YoY underlying EBITDA growth.

• The audited annual report conservatively reinstated previous impairments compared to the unaudited report, despite solid company prospects for the CGU to improve over the next 12 months. • FY24 loss includes non-cash charges such as depreciation and amortisation, impairment of assets, and share-based expenses, totaling $6 million.

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FY24 Financial Review
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FY24 results

	L	2024
		$ '000
Revenue		32,828
Other income		1,438
Interest revenue		25
Expenses
Changes in inventories		341
Variable cost of sales		(24,634)
Employee benefits expense		(6,712)
Consulting and professional fees		(2,014)
Depreciation & amortisation		(2,331)
Impairment of assets		(3,139)
Share-based payments		(163)
Other expenses		(4,326)
Finance costs		(976)
Total expenses		(43,954)
Loss before income tax expense		(9,663)

Highlights:

• Total revenue grew to $34 m.

• 30% YoY revenue growth.

• EPS increased by 64% YoY to $0.875, from $(2.399)

• Total non-cash charges of $7m, including:

• Changes in inventory: $0.3m.

• Depreciation & amortization: $2m.

• Impairment of assets: $3m

• Share-based payment: $0.2m.

• The audited annual report conservatively reinstated previous impairments compared to the unaudited report, despite strong company prospects for the CGU to improve over the next 12 months.

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FY24 results

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Highlights:

	L	2024
		$ '000
Current assets
Cash and cash equivalents		7,602
Trade and other receivables		14,905
Inventories		1,339
Total current assets		23,846
Current liabilities
Trade and other payables		19,353
Contract liabilities		165
Borrowings		7,503
Lease liabilities		145
Employee benefits		100
Income tax payable		391
Total current liabilities		27,657
Total current net assets		(3,811)

• Total current assets: $23.8m.

• Following the period's end, the Company raised $2m via a placement.

• Current liabilities include expenses that are not yet payable or non-cash in nature:

• Pre-payments: $0.8m.

• Severance pay provisions: $3.2m.

• • Other provisions: $1.3m.

• Borrowings of $7.5m, represent debtor financing with traditional European banks and have an average interest rate of 4.58%. These borrowings get extinguished at the time of the customers’ payment.

• Payables include 5.1 million in provisions, of which 2.2 million are not yet payable and/or are non-cash in nature

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FY24 results

	L	2024
		$ '000
Non-current assets
Intangibles assets		21,638
Property, plant and equipment		536
Right-of-use assets		135
Financial assets		52
Total non-current assets		22,361
Non-current liabilities
Borrowings		1,370
Lease liabilities		18
Employee benefits		725
Deferred tax liabilities		1,319
Other financial liabilities		5,562
Total non-current liabilities		8,994
Total net non-current assets		13,322

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Highlights:

• Total non-current assets: $22m.

• Other financial liabilities of $5.6, are non-cash in nature and related to the potential share-based consideration payable for the acquisition of Invrsion.

• Borrowings have an average duration of 5 years and an average interest rate of 1.22% .

• Total net asset: $ 9.6m.

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FY24 results

	L	2024
		$ '000
Cash flows from operating activities
Receipts from customers (inclusive of GST)		36,201
Net cash from/(used in) operating activities		1,074
Cash flows from investing activities
Net cash used in investing activities		(3,314)
Cash flows from financing activities
Net cash (used in)/from financing activities		(1,683)
Net decrease in cash and cash equivalents		(3,923)
Cash and cash equivalents at the beginning of the financial year		11,359
Effects of exchange rate changes on cash and cash equivalents		166
Cash and cash equivalents at the end of the financial year		7,602

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Highlights:

• Net cash from operating activities of 1, 1m, up 112% YoY (FY23: $(7)m)

• Cash and cash equivalents at the financial year's end equal 7.6m.

• Following period end the Company raised $2m through a placement.

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Technology & Outlook
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Why AI and Spatial Computing?

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INFORMATION

AI and Spatial Computing are pivotal in transforming how businesses interact with digital information and the physical world.

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AI enhances our XR
existing platforms
by enabling intelligent real-time analytics
and more personalized user experiences.
Spatial Computing allows for the seamless
integration of digital and physical spaces,
leading to innovative solutions for
.
complex business challenges
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Real-World Data, Data, Images, Text, Video, Pixels, Voxels, Wearer Data, Digital Assets, etc.

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SMART XR

CONNECTIVITY

5G/6G, IoT, Connectivity, Cloud Computing, Edge Computing, WiFi 6, etc.

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SOFTWARE

HARDWARE

Head-Mounted Displays (HMDs), Pins, Wearables, Robots, Sensors, Cameras, Audio Devices, Input Devices, Processing Units, etc.

Operating Systems, AI (including Generative AI), Computer Vision, Content Creation Software, Development Tools, Tracking and Calibration Software, Cloud Services, Games Engines, etc.

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Vection’s High Growing Sector

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Spatial Computing is rapidly growing as industries recognize its potential to revolutionise . interactions between humans and digital data

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105.9
97.4
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Hardware Software Services
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GLOBAL STATISTICS
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Market Value (2022) CAGR (2023-2032) $ 105.9 BN > 19 % Market Value (2032) $ 560.9 BN

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SEGMENT VALUATION
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Hardware segment Augmented Reality Market Share (2022) (AR) segment Market Share (2022) 45 % 40 % REGIONAL ANALYSIS North America Market Share (2022) > 30 %

Spatial Computing Market Size, by component, 2021-2032 (USD Billion)

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Source: www.gminsights.com

Vection’s Ecosystem

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XR AI
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Benefits of SmartXR

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ENHANCED STREAMLINED SUPPORTING
OPERATIONAL EFFICIENCY COST REDUCTION GREEN INITIATIVES
Accelerate decision-making Minimize physical travel and Achieve sustainability goals (ESG)
and optimize workflows through training expenses with virtual by minimizing resource usage and
real-time data visualization simulations, reducing the need reducing emissions through
and interaction. for physical prototypes. efficient, technology-driven
operations.
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SmartXR Workflow Example

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Digital twin Maintenance solution Decentralized GPU Visualization through Conversational AI
(i.e. Render Network) HMD (i.e. Apple Vision Pro)
Vection Technologies’ Allows greener, faster Allows for a better Human-like interactions
Vection Technologies’
EnWORKS solution for and more secure data customer visualization for a natural conversation
3D Modelling Services.
transmission thanks to
with a digital twin in the with the model.
step-by-step guides.
Blockchain. real-life environment.
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–
Annexure
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Acquisition
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ACQUISITION OF THE DIGITAL BOX

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Proprietary multisensory, generative artificial intelligence (“ AI ”) cutting-edge technology. Market-leading company recognized by Gartner as one of the top AI Avatar vendors, integrating AI technology within Vection virtual and augmented reality customer offering. Established, multi-faceted business with 3,000+ customers and 100+ resellers . Former Apple COO , Marco Landi, to join Vection’s board, adding significant expertise and credibility. Adds ~$10m in revenue and ~$1m in EBITDA for Vection based on FY24 pro-forma.

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. Strengthens competitive advantage to support market growth and opportunities

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The Digital Box: Acquisition Rationale

Enhancing Human-Machine Interactions

• Core Vision: Use AI to improve interactions in various sectors (healthcare, real estate, manufacturing, banking, gaming, and more).

• Vection's Suite of Technologies:

• Not a single product

• Includes hardware and software solutions

• Focuses on virtual and augmented reality (VR & AR)

• Key Features with Acquisition:

• AI-powered VR & AR interfaces

• Facial animation and speech generation

• Immersive interactions

• Real-World Example:

• Digital human pharmacist

• Can converse and understand emotions via VR headset or AR glasses

• Future Vision:

• Realistic virtual humans

• Seamless blend of AI with VR & AR

Vection is building a future where AI and VR/AR transform human-machine interactions.

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Transaction Overview

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• Vection has entered into an agreement to acquire 100% of The Digital Box Group and its interest in its three subsidiaries (QuestIT 75%, The Digital Box France 100%, The Digital Box Inc 100% and Upmedia).

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Transaction
Consideration1
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• 157,014,000 VR1 ordinary shares at Settlement

• Up to 54,813,000 VR1 ordinary shares are available, subject to certain financial performance hurdles (revenue, EBITDA, and asset impairment) to be met over the FY25 financial year.

• The transactions is expected to be underlying EBITDA positive and EBT neutral in FY25, and EBT positive in FY26.

• Addition of $10.5m in structured long-term debt, expected to be serviced via existing cashflows.

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Operating Model
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• After completion, the Digital Box’s management team will remain a core part of the business.

• Digital Box will operate as a wholly owned subsidiary of Vection while integrating its technology into its portfolio.

• The Digital Box will continue to operate in the market, servicing its current customers while offering the integrated technology suite to accelerate growth and synergies.

• Target completion date in Q3 FY25.

1. Subject to conditions precedent and excluding advisory fees.

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About the Digital Box

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One of the top AI Avatar Vendors
At a glance:
3,000 Customers
100 Resellers
FY24 revenue
$10m
FY24 EBITDA
$1m
Features:
•
Large language models
•
Sign language understanding
and processing
•
Omnichannel capabilities
•
Virtual Human capabilities
•
Emotions AI detection
•
Voice cloning
•
100% integrability
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• A European-based, privately owned company founded in 2013 with 100 workforce today.

• Market - leading natural language processing AI technology improving business processes (from virtual employees to marketing).

• Existing integrations with OpenAI and other open - source libraries.

• Combines proprietary technology with an extensive ecosystem of thirdparty integrations to deliver omnichannel capabilities.

• SaaS and service business model.

• Uniquely positioned to increase adoption of XR technologies with smart decision-making and conversational AI

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The Digital Box introduces critical AI capabilities to Vection

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• Multisensory conversational artificial intelligence.

• First Digital Human capable of communicating in Italian Sign Language (LIS).

• No-code platform

• Proprietary technology.

• Empathetic engagement.

• Omnichannel.

• GDPR compliant.

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Via the transaction, Vection strengthens its capabilities in AI towards Spatial Computing

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SPATIAL COMPUTING ECO SYSTEM:

INFORMATION

Real-World Data, Data, Images, Text, Video, Pixels, Voxels, Wearer Data, Digital Assets, etc.

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SMART XR

CONNECTIVITY

• 5G/6G, IoT, Connectivity, Cloud Computing, Edge Computing, WiFi 6, etc.

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SOFTWARE

HARDWARE

• AI and Spatial Computing are pivotal in transforming how businesses interact with digital information and the physical world.

• AI enhances Vection’s existing XR platforms by enabling intelligent real-time analytics and more personalised user experiences.

• Spatial Computing allows for the seamless integration of digital and physical spaces, leading to innovative solutions for complex business challenges.

Head-Mounted Displays (HMDs), Pins, Wearables, Robots, Sensors, Cameras, Audio Devices, Input Devices, Processing Units, etc.

Operating Systems, AI (including Generative AI), Computer Vision, Content Creation Software, Development Tools, Tracking and Calibration Software, Cloud Services, Games Engines, etc.

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Via the transaction, Vection Technologies broadens its customer portfolio

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The Digital Box Acquisition in Summary

• Highly technological complementary business with .

• proprietary AI

• Transaction to accelerate evolution of human to machine interaction via AI -powered virtual human interfaces.

• Strengthens Vection’s solutions portfolio, aiming to deliver revenue synergies.

• Complements Vection’s solutions for end-to-end spatial computing offering.

• Increases’ virtual and augmented reality adoption via smart interfaces .

• Former Apple COO , Marco Landi, addition to Vection’s board, adds significant expertise and credibility.

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–
Annexure
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–
Product Portfolio
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Product Portfolio – Design Review

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PROJECT PRESENTATION TRAINING MARKETING & SALES OPERATIONS & LOGISTICS AFTERSALES & SERVICE

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PRODUCTS & SPACES GARMENT CUSTOMIZATION
Speed up time to market in R&D: reduce the number of prototypes, Reduce time and costs in concepting and prototyping stages
errors and improve project evaluations. experimenting unlimited possibilities at the maximum level of realism.
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Product Portfolio – Project Presentation

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DESIGN REVIEW

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PROJECT
PRESENTATION
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TRAINING MARKETING & SALES OPERATIONS & LOGISTICS AFTERSALES & SERVICE

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RETAIL INDUSTRIAL REAL ESTATE
Simulate the customer experience to optimize Highlight all the technical solutions and The new generation of immersive tour accelerate
the customer journey and maximize revenues. innovations about your project/product. the return of investment for contractors.
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Product Portfolio – Training

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DESIGN REVIEW

PROJECT PRESENTATION

MARKETING & SALES

OPERATIONS & LOGISTICS

• AFTERSALES & SERVICE

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TECHNICAL TRAINING SOFT SKILLS TRAINING
Improve the onboarding sessions : XR Technologies makes training Simulate conversations or critical situations to prepare your employees for
sessions safer, more effective reducing logistic costs. a better environmental management.
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DESIGN REVIEW Product Portfolio – Marketing & Sales

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DESIGN REVIEW

PROJECT PRESENTATION TRAINING MARKETING & SALES OPERATIONS & LOGISTICS AFTERSALES & SERVICE

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PRODUCT EVENTS, MUSEUMS
STORYTELLING & PRESENTATIONS
VIRTUAL
RENDERING
SHOWROOM &
AUTOMATION
CONFIGURATORS
CUSTOMER
INTERACTIVE
EXPERIENCE
XR KIOSK
ANALYSIS
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Product Portfolio – Marketing & Sales

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DESIGN REVIEW

PROJECT PRESENTATION TRAINING

OPERATIONS & LOGISTICS AFTERSALES & SERVICE

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BEST IN CLASS IN 3D ASSET DIGITALIZATION
TEXTURE PRODUCTS ENVIRONMENTS
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Product Portfolio – Ops & Logistics

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DESIGN REVIEW Make faster, safer and more effective MAINTENANCE LOGISTIC
training on the job reducing coaching
Improve profits reducing errors, reworks and Increase the efficiency reducing picking time and
efforts. machine/plant downtime. errors with a wearable AR device.
TRAINING ON THE JOB
PROJECT
PRESENTATION
TRAINING
MARKETING
& SALES
OPERATIONS
& LOGISTICS
AFTERSALES
& SERVICE
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Product Portfolio – Aftersales

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DESIGN REVIEW

PROJECT PRESENTATION TRAINING MARKETING & SALES OPERATIONS & LOGISTICS

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SMART MANUALS CUSTOMIZABLE CONVERSATIONAL
& ASSISTANCE KIOSKS LINE AI PLATFORM
Improve customers support with AI-powered High quality kiosks to provide info and The customizable and integrable AI shaped to
manuals and real-time Remote Assistance. services to customers and visitors. assist your customers for any needs.
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VECTION TECHNOLOGIES