VECTION TECHNOLOGIES LTD — Merger & Acquisition 2021

Jun 14, 2021

15 June 2021 | Australia

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ASX RELEASE

VECTION ACCELERATES EUROPEAN EXPANSION VIA STRATEGIC ACQUISITION

Real-time software company Vection Technologies Ltd ( ASX:VR1 ) ( Vection Technologies , Vection or the Company ) is pleased to announce that it has signed a binding agreement to acquire 100% of the issued capital of technology company and DELL Platinum and OEM partner, JMC Group Srl ( JMC ).

This transaction will expand Vection’s XR integration capabilities to drive further differentiation and growth.

Highlights:

• Binding Agreement signed to acquire leading European based technology company, JMC Group (JMC)

• Acquisition immediately value accretive - Combined Group would deliver revenues exceeding $10M (based on FY20 unaudited financials)

• All scrip deal at minimum of A$0.10 per share, represents a favourable acquisition and demonstrates vendor’s long term commitment to Vection

• Acquisition brings direct control and third party technology endorsement via long standing partnership agreements for integrated XR with DELL and Toshiba Tec (among 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

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

Overview:

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 ).

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AUGMENTED REALITY INDUSTRIAL IoT CAD

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 ). 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. 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

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Address: 642 Newcastle Street, Leederville WA 6007

Phone: +618 6380 2555

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During the last three fiscal years, JMC has achieved an average of ~$9M in unaudited revenue with ~$1M in unaudited adjusted EBITDA, while closing the year ended 31 December 2020 with a positive net operating working capital (including all liabilities) position of ~$1.8M.[1] During the last twelve months, JMC has substantially increased its recurring revenue from AI and XR solutions, specifically in the media sector, expected to provide further growth opportunities for the combined group’s technology portfolio.

JMC will be purchased in an all scrip deal at a minimum of A$0.10 per share, representing a maximum dilution of ~6% for existing shareholders. It is intended that JMC’s Founder and CEO Jacopo Merli will be joining the Vection management team to drive further growth within the EMEA region. Further details on the terms and conditions of the acquisition are set out below. The Company is fully funded to expedite its global expansion and distribution growth strategy in the global arena to establish itself as technology leader.

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.

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• Synergies | combined group

1 Adjusted EBITDA based on calculations provided by management of JMC and reviewed by management of Vection and unaudited (period FY18-FY20). Net operating working capital includes all liabilities and is unaudited.

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

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

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

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

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

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Gianmarco Biagi, Managing Director of Vection Technologies, commented that this transaction represents a significant step in the Company’s vertical growth strategy to assist companies in their digital transformation plans via next generation integrated XR solutions.

“Vection’s executive team is adhering to the stated growth strategy to establish itself as a global technology company with a strong XR foundation, deeply integrated with innovative enabling technologies (including AI) and strong vertical competences. Via this acquisition we gain a significant technological and geographical advantage and the addition of key management within the European region, unlocking significant global growth opportunities for the Company. We remain focussed on completing our 2021 M&A acquisition strategy via the expansion in the U.S. while progressing on our previously stated commercial objectives.”

In commenting on the acquisition, JMC’s Founder & CEO, Jacopo Merli, said “we share Vection’s global vision of bringing together next-gen technologies with XR to enable companies to make the leap to the fourth industrial revolution. We are truly excited to pursue this opportunity and to grow the combined business across the EMEA region and abroad in the coming months.”

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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:

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AUGMENTED
further aggressive growth across geographies and verticals, as shown below: REALITY
INDUSTRIAL
IoT
$10M+
CAD
$3M+
$1M+
$0.4M
FY18 Revenue FY19 Revenue FY20 Revenue FY20 Revenue
Vection [1] Vection [1] Vection [1] inc acquisitions [1]
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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 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

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

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Conditions Precedent:

Completion of the acquisition is subject to and conditional upon satisfaction of a number of conditions on or before 30 September 2021 (or such other date as agreed between the parties in writing) including, but not limited to:

1. Completion of due diligence at Vection’s sole satisfaction;

2. The parties obtaining all relevant approvals from regulators and third parties;

3. The parties entering a full form sale and purchase agreement to more fully document the terms of the acquisition; and

4. Mr Jacopo Merli entering into an employment agreement with JMC and the Company on terms acceptable to the parties. It Is agreed that subject to compliance with the ASX Listing Rules, that Mr Jacopo Merli's remuneration will include 3 performance rights (to be issued under the Company's Employee Incentive Scheme) with each performance right to vest in €100,000 worth of shares (with a floor price of A$0.10) on the achievement of relevant milestones over the first 3 years of the employment agreement. The relevant milestones will be agreed as part of the employment agreement.

Consideration for the Acquisition:

At completion of the acquisition, Vection will issue to the shareholder of JMC, Mr Jacopo Merli, €4,000,000 worth of fully paid ordinary shares determined at an issue price of the higher of A$0.10 and the volume weighted average price of the shares for the 5 trading days prior to settlement.

exchange rate for the 2021 financial year. Based on exchange rate of 0.62448 (being the average RBA exchange rate for the financial year to 30 April 2021), the maximum number of shares to be issued will be 64,053,292. The Company will issue these shares under its Listing Rule 7.1 capacity and accordingly, no shareholder approval will be required for the transaction. The consideration shares issued will be subject to voluntary escrow for 18 months from settlement.

The Company expects for the transaction to settle in July 2021.

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Investor Relations Contact Details:

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CAD

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

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

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

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

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

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

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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 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

About JMC Group:

JMC Group 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).

For more information please visit the Company’s website: jmcgroup.it/en/home-2/

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ASX release authorised by the Board of Directors of Vection Technologies Ltd - all dollar values and dilution percentages referred to JMC and contained in this release are unaudited and based on an AUD/ € exchange rate of 0.62448 (being the average RBA exchange rate for the financial year to 30 April 2021).

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INDUSTRIAL IoT CAD

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

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

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

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

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