VRX Vectrix S

    RNS Number : 3225F
  Vectrix Corporation
  08 October 2008
   

    Date:                    8 October 2008 
    On behalf of:        Vectrix Corporation ("Vectrix" or "the Company")
    Embargoed until: 0700hrs

    Vectrix Corporation
    * Pre-Close Statement
    * Trading Update

    Vectrix Corporation (AIM: VRX), the world leader in high performance zero emission two wheel vehicles, is pleased to provide the
following trading update for the financial year ended 30 September 2008, prior to entering its close period.

    During the year the Company sold 1,184 bikes to dealers ("Sell-In") representing a 156% increase over the previous financial year
(FY2007: 462). These were split between 204 bikes sold-in in the first half of the year and 980 bikes sold-in in the second half. The
'half-on-half' growth rate of 380% was a direct result of Vectrix's move from being an R&D development stage company into an organisation
fully focussed on commercialising its product.

    In North America, Sell-In for the year was 455 bikes of which 432 were in the second half (H1 2008: 23). This growth is attributed to
Vectrix's strategy to focus on developing a North American dealer network. In Europe, Sell-In for the year was 729 bikes of which 548 were
in the second half (H1 2008: 181).

    As agreed with our auditors, revenue for the year is currently accounted for on the number of units sold to end users ("Sell-Out"). The
Company anticipate Sell-Out for the year of 754 bikes, resulting in an increase in revenue of 738% to $6.7 million (FY2007: $0.8 million).
Revenue for the second half of the year is expected to be $4.8 million, an increase of 152% on the first half of the year (H1 2008: $1.9
million).

    The Company also saw significant growth in its distribution business during the year. Its dealer organisation, which is defined as
"dealer points of sale", expanded to 160 dealer points of sale from 38 at the close of the previous financial year. This represented an
increase of 122 dealer points of sale or 321% growth. This growth occurred in both North America and Europe with virtually all the growth
occurring in the second half of the year. Vectrix believes that its continued focus and success in building a distribution network is
critical to supporting the long term objectives of the Company. As a result, for the first time in the Company's history, Vectrix will enter
a new financial year with a backlog of orders for its product.

    For the new financial year Vectrix is introducing an expanded Product Family. The flagship product will be called the Vx1 and will be a
refreshed version of the current Vectrix bike. A new model identified as the Vx1e will be introduced in spring 2009. The Vx1e uses the same
platform and drive train as the Vx1, but features a more urban commuter driver profile with slightly less acceleration and top speed and
will create an exciting new price point. In addition, in summer 2009, the Company will introduce an entry level model called the Vx2. The
Vx2 will be a smaller and more compact electric equivalent of a 50cc internal combustion engine (ICE) bike and use both US and European
designs. The Company expects to add additional power profiles to this product up to the electric equivalent of a 150cc ICE motor bike. Like
the Vx1 and Vx1e, the Vx2 will have the distinctive style and quality consumers have come to expect from Vectrix. The expanded product line
creates a "Product Family Strategy" and provides the consumer with a Vectrix product equivalent to 50 - 350cc ICE bikes, which is the largest electric two wheel range in the world.
Additionally, the Company is introducing a line of new accessories. All of these new products and accessories will contribute and support
the Company's growth in the new financial year. Vectrix is positioned in the market as a high end product offering with exceptional
technology, engineering, performance and quality. Vectrix's "Product Family Strategy" will build on the current Vectrix brand image,
positioning our products in a way similar to the way high end automotive companies have positioned their products. 

    As part of our strategy to streamline Vectrix operations, the Company has been consolidating its operations in Europe under a single
management umbrella known as 'Vectrix Europe', which will be headquartered in the UK. This organisation is tasked with supporting the
existing dealer base in Europe as well as expanding distribution through aggressive dealer development programs. This consolidation is
creating efficiencies in all areas of the business, from sales and distribution to accounting and taxation.

    Vectrix will continue to build the Vx1 and Vx1e at its plant in Poland although current production levels continue to result in a lower
absorption of fixed overheads than desired. As a result, the Company is looking at alternatives to optimise the facility. The Company has
also entered into a supplier agreement for the Vx2 product where final assembly will be completed under its supervision in the Peoples
Republic of China. Current cash balances (referred to below) reflect prepayments to this supplier in the amount of $494,000. The agreement
includes additional milestone payments that will total approximately $1.48 million. 

    Much of the acceleration in sales during the second half of the financial year is as a result of the previously announced pricing
strategy. This has also resulted in a significant reduction in inventory to approximately $8.8 million at the year end, while also
conditioning consumer expectation for model price increases for 2008 and the new 2009 model year offerings. 

    At the year end, the Company had net working capital, including cash and short term investments, of approximately $14.4 million.
Although the Company is not at a cash flow breakeven point the cash position remained adequate in the second half of the year and has been
assisted by a programme of aggressive restructuring actions to reduce cash consumption. The Company expects use of existing cash and results
from its expanded product line to provide adequate working capital for the new financial year.

    Commenting on the Trading Update, Michael Boyle, CEO, Vectrix Corporation said: "The second half of the financial year has been an
exciting time at Vectrix. Strategies to stabilise the business are taking hold, cost reductions have proved effective and the acceleration
of Sell-In, as a result of the focused expansion in distribution, is continuing. All of these factors, coupled with the expanded 2009
product strategy will allow us to take further steps towards achieving the success we expect from these markets and our business."

    The Board of Vectrix looks forward to providing shareholders with a comprehensive update when it announces its Preliminary Results for
the year ended 30 September 2008 on 15 January 2009.

    - ends -

    Enquiries:

    VECTRIX Corporation                                           www.vectrix.com 
    John McGuinness, Chief Accounting Officer       (401) 848-9993

    HSBC
    Nick Donald / Nic Hellyer                                      +44 (0)20 7991 8888

    Redleaf Communications                                     vectrix@redleafpr.com
    Emma Kane / Paul Dulieu                                    +44 (0)20 7822 0200

    Notes to Editors

    * Vectrix listed on AIM in May 2007 and is the developer of the world's first high performance, zero emission, electric two wheel
vehicle which is at least 10 times more powerful than existing electric power two wheel vehicles.
    * Vectrix Corporation is dedicated to developing and commercializing zero emission vehicle platform technologies focused on two-wheel
applications. 
    * Vectrix is headquartered in Middletown, Rhode Island, USA, has a modern production facility in Wroclaw, Poland and a test facility in
New Bedford, Massachusetts.
    * Vectrix was awarded the 2006 Frost & Sullivan Award for Technology Innovation and Leadership in Alternative Vehicle Technologies.
    * Transportation is the largest single source of air pollution in the world. A typical motor scooter produces significantly more carbon
monoxide and hydrocarbon emissions than a large diesel truck, and far more than a modern low emission automobile. The Vectrix scooter
utilizes innovative zero-emission technology, offering customers a clean, affordable, and much needed alternative.




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