VECTION TECHNOLOGIES LTD — M&A Activity 2021

Jul 29, 2021

30 July 2021 | Australia

==> picture [130 x 44] intentionally omitted <==

ASX RELEASE

JMC GROUP ACQUISITION BECOMES UNCONDITIONAL

Real-time software company Vection Technologies Ltd ( ASX:VR1 ) ( Vection Technologies , Vection or the Company ) is pleased to confirm the satisfaction of the conditions precedent for the acquisition of 100% of the issued capital of European technology company, JMC Group Srl ( JMC ), as previously announced on 15 June 2021.

Highlights:

• JMC Acquisition, as announced on 15 June 2021 becomes unconditional

• Once settled, the acquisition will be immediately value accretive - Combined Group would deliver revenues exceeding $10M (based on FY20 unaudited financials) 3D

• ● All scrip deal at A$0.10 per share, represents a premium to current share price and demonstrates vendor’s long term commitment to Vection

• ● Acquisition brings direct control and third party technology endorsement via long VIRTUAL

• standing partnership agreements for integrated XR with DELL and Toshiba Tec (among REALITY others)

• ● Acquisition provides well established and expansive footprint across Europe and the Middle East to advance Vection’s sales capabilities

• ● Broadened technology suite with IoT, AI and ICT for stronger XR integration opportunities AUGMENTED REALITY

• ● Company fully funded to accelerate its global distribution strategy following this acquisition

• ● CEO to receive aggressive performance based remuneration, aligned with the Company’s overarching growth strategy INDUSTRIAL IoT

• Key Transaction Terms: The conditions were satisfied on 29 July 2021 following the completion of due diligence, the execution of a full form sale and purchase agreement ( Agreement ) and the execution of Mr Merli’s CAD CEO agreement.

The settlement of the acquisition is expected to occur within the next 14 days.

Total purchase consideration is €4 million (being $6,391,223 at the agreed exchange rate of AUD$:EUR€ for the financial year dating 1 July 2020 to 30 June 2021 of 0.62585833) at $0.10 per share. Pursuant to the Agreement, Vection will issue ~64M fully paid ordinary shares under its Listing Rule 7.1 capacity on Settlement. The consideration shares issued will be subject to voluntary escrow for 18 months from settlement.

Vection has entered into an agreement with Mr Jacopo Merli to appoint him as JMC’s CEO following settlement. This agreement includes an offer made pursuant to Vection’s Employee Incentive Performance Rights Plan for the issue of performance rights which will convert into fully paid ordinary shares on the achievement of JMC of audited revenue and/or audited EBITDA targets aligned with the Company’s overarching global growth strategy. Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Address: 642 Newcastle Street, Leederville WA 6007

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

1

Phone: +618 6380 2555

==> picture [130 x 44] intentionally omitted <==

The key terms of the performance rights will be as follows:

• a. Class A Performance Rights will convert Into an aggregate of $159,780.57 worth of Ordinary Shares upon JMC achieving ~$8.8M1 in audited revenue or $0.5M1 in audited EBITDA in the applicable 2021 fiscal year.2

• b. Class B Performance Rights will convert Into an aggregate of $159,780.57 worth of Ordinary Shares upon JMC achieving ~$14.2M1 in audited revenue or $1.5M1 in audited EBITDA in the applicable 2022 fiscal year.3

• c. Class C Performance Rights will convert Into an aggregate of $159,780.57 worth of Ordinary Shares upon JMC achieving ~$20.8M1 in audited revenue or $3M1 in audited EBITDA in the applicable 2023 fiscal year.4

at the conversion price being the greater of $0.10 and the Company’s 5 day VWAP prior to the date that the performance milestone for the relevant performance right is determined achieved by the Company's auditor.

The performance rights are expected to be issued under the Vection’s Employee Incentive Performance Rights Plan to Mr Merli within 3 months. It is expected that, if all the final performance milestones are achieved, and the performance rights are converted at the floor conversion price, a maximum of 4,793,417 shares will be issued across 3 years.

Acquisition Introduction:

JMC is a European based technology company and DELL Platinum and OEM partner, designing, developing, and delivering high-level integrated business technology solutions for Industry 4.0, underpinned by a strong knowledge in Virtual Reality and Augmented Reality ( XR ), Internet of Things ( IoT ), Artificial Intelligence ( AI ) and Information and Communication Technology ( ICT ).

This acquisition will accelerate Vection’s expansion within the Europe, Middle East and Africa ( EMEA ) region while further integrating its XR portfolio with IoT, AI and ICT towards a 360° product suite for Industry 4.0. JMC’s strong growth history is expected to provide a more robust foundation for the combined group as it grows within the EMEA region.

significantly expanding its sales footprint across the EMEA region and providing direct access to, and control of key global partners including DELL Technologies inc ( DELL ) and Toshiba Tec Italia Spa ( Toshiba Tec ).

==> picture [25 x 25] intentionally omitted <==

3D VIRTUAL REALITY

==> picture [25 x 25] intentionally omitted <==

AUGMENTED REALITY

==> picture [25 x 25] intentionally omitted <==

INDUSTRIAL IoT CAD

Via its offices in Europe and the Middle East, direct sales force and long-term clients within the media & communications, energy, manufacturing, automotive and retail industries, the acquisition will allow the Company to accelerate its commercial growth from a position of strength.

• (1) Based on the AUD$/EUR€ exchange rate for the fiscal year 2021 (July 2020 - June 2021) of 0.62585833.

(2) Audited revenue of €5.5M and audited EBITDA of €291k.

• (3) Audited revenue of €8.9M and audited EBITDA of €938k.

• (4) Audited revenue of Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041€13M and audited EBITDA of €1.9M.

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

2

Address: 642 Newcastle Street, Leederville WA 6007

Phone: +618 6380 2555

==> picture [130 x 44] intentionally omitted <==

Acquisition Rationale:

This acquisition represents a strong value proposition for Vection, delivering scale and technology integration opportunities while generating a significant uplift in revenue and earnings, with minimal dilutionary impact on existing shareholders. With no cash payable, the acquisition is fully funded and provides the Company with:

• Technology | Integrated XR solutions for Digital Transformation (DX) : Business solutions integrating Vection’s XR software suite with JMC’s infrastructure and hardware capabilities.

• Technology | Integrated XR and Artificial Intelligence (AI) solutions : Integration of AI technologies within Vection’s XR software suite to solve real business problems in an innovative way.

• Commercial | Established sales and distribution footprint across the Europe, Middle East and Africa (EMEA) region to leverage for the growth of the XR software suite distribution.

• Commercial | Direct access to key partners including DELL and Toshiba Tec.

• Commercial | Increased technology portfolio aimed at introducing Vection’s Software Suite within client companies’ workflows, including new verticals (for example the media and communications industry).

• Commercial | Stronger market credibility underpinned by a bigger group within the EMEA region, aimed at generating increased commercial opportunities for the wider Vection group and the ability to establish Vection as the next big technology leader to compete in the global stage.

• Synergies | there is potential for significant synergies and cost savings to be achieved in the combined group

Acquisition Strategy:

Following the launch of its verticalization and M&A strategy at the beginning of calendar year 2021, swiftly followed by the establishment of Vection Health, the Company’s healthcare and pharma vertical division, and the acquisition of Blank Canvas, the Company’s real estate vertical division, Vection has achieved yet another milestone in its aggressive expansion maintaining minimal dilution for its shareholders (~0.4% Blank Canvas and ~6% JMC), while gaining significant size to enable further aggressive growth across geographies and verticals, as shown below:

==> picture [341 x 168] intentionally omitted <==

----- Start of picture text -----

$10M+
$3M+
$1M+
$0.4M
FY18 Revenue FY19 Revenue FY20 Revenue FY20 Revenue
Vection [1] Vection [1] Vection [1] inc acquisitions [1]
----- End of picture text -----

==> picture [25 x 25] intentionally omitted <==

3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT CAD

• 1 Respectively (left to right): Audited revenue for Vection in FY18, Audited revenue for Vection in FY19, Audited Revenue for Vection in FY20, and Audited revenue for Vection in FY20 plus unaudited revenue for Blank Canvas in FY20 plus unaudited revenue for JMC in FY20.

• Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

3

Address: 642 Newcastle Street, Leederville WA 6007 Phone: +618 6380 2555

==> picture [130 x 44] intentionally omitted <==

Investor Relations Contact Details:

Gianmarco Biagi - Managing Director (Europe Based) Email: gianmarco.biagi@vection.com.au Phone: +39 051 0142248

Gianmarco Orgnoni - Director and COO (Australia Based) Email: gianmarco.orgnoni@vection.com.au Phone: +61 8 6380 2555

About Vection Technologies:

Vection Technologies Ltd (ASX:VR1) is a multinational software company that focuses on real-time technologies for industrial companies’ digital transformation.

Through a combination of our 3D, Virtual Reality, Augmented Reality, Industrial IoT and CAD solutions, Vection Technologies helps companies and organisations to innovate, collaborate and create value.

For more information please visit the Company’s websites:

vection.com.au

mindeskvr.com blankcanvas.studio jmcgroup.it

ASX release authorised by the Board of Directors of Vection Technologies Ltd.

==> picture [25 x 25] intentionally omitted <==

3D VIRTUAL REALITY

==> picture [25 x 25] intentionally omitted <==

AUGMENTED REALITY INDUSTRIAL IoT CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

4

Address: 642 Newcastle Street, Leederville WA 6007 Phone: +618 6380 2555

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA