Ann: Clarification, page-29

An interesting subject.

Protecting the brand while servicing the lower end of the market with a cheaper product branded differently doesn't necessarily involve cutting margins does it ?

Chang is happy to run a high risk business model providing Bikes As A Service which means he needs to raise heaps of capital to fund the ownership of all the bikes as banks would work on a very low loan to value ratio, if in fact they were even interested, given the depreciating nature and mobility of the product together with the uncertainty of the cash flow.

He's basically on a mission to provide himself with a job while taking considerable risk with other peoples money. A prime equity hungry WGAF if it doesn't work, it's not my money, business strategy that the Wolves of Wall St get rich by selling the, 0 to 10m in 10 years growth story to punters.

VMT has absolutely no appetite for such a high risk play. It's attractive as a growth investment because it's about growing profitable revenues and shareholder value by funding growth from profits not dilution of shareholders.

Whilst doing what Charged is doing does not fit VMT's strategy selling flat packs at a good margin to them does.

it's a case of leaving that part of the market to others or leveraging the brand and R&D investment to sell 50% of the bikes in flat pack form at a good margin to a potentially very big customer.

The discount on early sales they are giving in return for equity helps make the Charged story profitable in the early days to support their efforts to attract the necessary equity funds. At the end of the day it is a sweetener to win the work which comes with the possibility of an equity bonus if all goes well.