COOL PEOPLE RIDE ELECTRIC

SHAREHOLDER REPORT APRIL, 2007

MESSAGE FROM THE CHAIRMAN

CONTENTS Dear Shareholder,

We'll forever look back on 2006, with the unveiling ofthe Vectrix Electric MAXI Scooter at EICMA in Milan,Italy in November, as our launch year. It was the yearour people, our suppliers, our dealers, and our backersall invested heavily in moving Vectrix from an advancedtechnology development company to a sophisticatedmanufacturing and marketing company.

As you will see in the pages that follow, 2007 will godown as the year that Vectrix starts manufacturing andshipping product, opens flagship stores, generates revenue, and starts competing on the world stage.

We are ready. We are in the process of securing the human and informa-tion resources necessary for success. We have made outstanding hires in quality control, financial control, accounting, human resources management, vendor management, sales, marketing, and production. We have also invested over $1.2 million in hardware, software, and training for our CRM, ERP, and financial control systems. We are assembling an accomplished international team to support the Company's criticalfunctions in four countries (United States, UK, Poland, and Italy).

The global launch of the Vectrix Electric MAXI Scooter, and the anticipatedrapid growth of our operations, requires capital. I am pleased to inform you that Vectrix has engaged Hong Kong Shanghai Bank Plc (HSBC) asour financial advisor. Headquartered in London, HSBC is one of the largestbanking and financial services organizations in the world.

We are the acknowledged leader in our field and at the center of an urbantransportation revolution. Simply stated, we are the only company in theworld that is producing and marketing large, powerful two-wheeled electricvehicles. Moreover, as the first mover in our market, we continue to exploreand evaluate new technologies that will dramatically enhance our alreadysuperior performance, and add significantly to our product offering andcompetitive differentiation.

The Vectrix dream of becoming the first mass-produced, street-legal, zero-emission electric vehicle company in the world is now a reality. Forthose of you who have invested in and supported Vectrix Corporation, it is a time to be both proud and optimistic.

Sincerely,

Andrew MacGowanCEO and Chairman of the Board

In The News.…………………………..............4

Marketing Highlights………………….…....6-8

Sales & Dealer Development………......10-12

Engineering………...............…...............13-15

Product Development ..…….......................16

Production…………………….................17-18

Logistics & Strategic Partnerships......19-20

Market Overview....…………......................21

Financial Report..……………………….......22

Andrew MacGowanChairman & CEO

A REVOLUTION IN TECHNOLOGY, DESIGN, AND PERFORMANCE.

IN THE NEWS

To innovate and lead, with strategic business partners, in the creation andintroduction to international markets,world class, zero-emission transportationtechnologies for the mutual benefit of theCorporation's shareholders, customers,employees, and the environment.

Vectrix offers commuters, fleet operators,municipalities, and delivery service companies FREEDOM:

FREEDOM from traffic jams

FREEDOM from parking restrictions

FREEDOM from increasing gas prices

FREEDOM from emissions

FREEDOM from noise pollution

FREEDOM from the dirt and grime ofconventional motorcycles

FREEDOM from expensive maintenance

FREEDOM from the guilt of damagingour planet.

Vectrix offers its shareholders theopportunity to invest in a company thathas enormous potential for growth, theopportunity to be part of an urban trans-portation revolution, and the opportunityto really make a difference.

COOL PEOPLE RIDE ELECTRIC!

OUR MISSION

HIGH PRICE FOR GOING GREEN"Unlike other electric scooters,the Vectrix eco-scoot looks andperforms like a petrol-poweredscooter but with 0% carbonemissions."

MY MEAN CLEAN MACHINE "A new electric maxi scooterhas the performance and rangeto beat urban gridlock."

ZERO EMISSIONI MA PRESTAZIONI"…Vectrix is the only electric maxiscooter capable of competing withgasoline-powered maxi-scooters.…"

VECTRIX, IL GENIO "…Electric Power: 300 km with 1 euro.The first maxi scooter with batteriescapable of high performance: 20 kwof peak power, 110 km/h of maximumspeed. The recharge time is about 2 hours…."

VECTRIX ELETTRIZZANTEALTERNATIVA

"The Vectrix electric maxi scooterarrives from the USA: It doesn't fear the traffic block, you can driveit with a normal driving license, and it recharges in about 2 hours."

DAL VECTRIX ELETTRICO LA PROMESSA DI CITTÀ SILENZIOSE

E SENZA EMISSIONI“A power electric heart: With 1 euro ofelectricity you can cover about 200 km.You save money without hurting theenvironment!”

TWO WHEELS GREEN"Vectrix's new maxi-scooterlooks good, performs well, andis a friend of the Earth."

A LEAN, GREEN ELECTRIC MACHINE

"It is easier to ride than a gearedbike and smoother than a petrolmodel.”

EL FUTURO YA ESTA AQUI"The Vectrix electric maxi scooterhas arrived and is ready for sale.Vectrix will make urban trans-portation history."

4

PLUG AND PLAY "Driving this scooter couldrecharge your batteries."

To be the first zero-emission, high-per-formance, street-legal, mass-produced,international consumer electric vehicle.

OUR VISION

OUR PROMISE

MARKETING HIGHLIGHTS

6

MARKETING HIGHLIGHTS:

Vectrix achieved some major marketingsuccesses in 2006:

• The Global Press Launch in November generated considerable media coverage.

• The EICMA Show generated 20,000 consumer contacts, 180 dealer registrations, and 3000 test rides.

• Vectrix participated in over 40 events.

• The Vectrix website had over 100,000 unique visitors.

PUBLIC RELATIONS PROMOTES AWARENESSOF THE VECTRIX ELECTRIC MAXI SCOOTER

Vectrix's Public Relations strategy is focused on building awareness and support amongst politicians and institutions, and motivating consumers to consider the Vectrix Electric MAXI Scooter as a viableurban transportation solution.

THERE ARE 4 PILLARS TO THE PUBLIC RELATIONS STRATEGY:

1. PR and lobbying efforts to gain support from politicians and institutions.

2. B2B alliances with organizations such as ACI Consulting, ATAC, and ENEL.

3. Attendance at key events at which consumers, dealers, media, and opinion leaders can test ride the Vectrix ElectricMAXI Scooter.

4. Media relations to create interest and build awareness.

THE VECTRIX REVOLUTION GENERATESCONSIDERABLE MEDIA COVERAGE

After 10 years of design anddevelopment, the Vectrix ElectricMAXI Scooter was officiallylaunched to the internationalmotoring media on November 7th and 8th in Rome, Italy. TheGlobal Press Launch attractedkey motoring journalists fromaround the world who got to testride the new Vectrix Electric MAXIScooter on the streets of Rome.The following week at EICMA(International Motorcycle Show) in Milan, the Vectrix Electric MAXIScooter was presented to the trade and consumer media.

The results were impressive. Over 40 journalists attended the Rome PressLaunch and over 200 media contacts were established at the EICMAShow. "The Vectrix Revolution" generated considerable media interest and produced excellent media coverage. In Italy, Vectrix was featured on 10 TV stations, including SKYNews and LA7, and in 30 publications, including the most important motoring magazines (Motosprint, Due Ruote,and Motociclismo) and national newspapers (La Repubblica, Il Corrieredella Sera, and Il Sole 24 ORE). Vectrix was featured on 30 online mediachannels and in 15 of the top national newspapers in the UK, Spain,Portugal, Germany, and Australia.

In addition to this phenomenal media success, Vectrix made contact with over 40 delegates from municipalities, the ministry of environment,the ministry of transportation, and trade associations.

Marketing highlights for 2007 include:

• Following the success of the product launch in Italy, the Vectrix Electric MAXI Scooter will be launched in the UK, Spain, Greece, Portugal, USA, and Australia during 2007.

• Vectrix will participate in over 45 events.

• Vectrix will provide scooters for the America's Cup in Valencia, Spain and for the Formula 1 Monaco Grand Prix.

• An international "Cool PeopleRide Electric" marketing campaign will roll out.

CARLO DI BIAGIO UNVEILS THE MAXI SCOOTER AT THE GLOBAL PRESS LAUNCH.

3000 TEST RIDE THE VECTRIX ELECTRIC MAXI SCOOTER AT EICMA

Riding hot on the heels of the success of the Global PressLaunch in Rome, Vectrix movedstraight to EICMA (InternationalMotorcycle Show) in Milan. A record-breaking 530,000 people packed the halls duringthe six days of the show, beating the previous record set in 2005 by 30,000.

The entire Vectrix team fromaround the world came toEICMA to unveil the VectrixElectric MAXI Scooter and demonstrate its extraordinary performance on a dedicated test track. Two new projects, the 3-Wheel Concept Scooterand the Vectrix Premium Scooter, were also unveiled.

Vectrix signed up over 20,000 contacts at its 240m² custom-designedbooth. Visitors included motorcycle enthusiasts, politicians, VIPs, journalists, investors, and over 180 prospective dealers. Entertainmentfrom magicians, live bands and fashion models kept the crowds comingand the excitement buzzing.

Outside the exhibition hall, the Vectrix Village featured a 1600m² test track,3 exhibition trucks, and 20 production scooters. During the six days ofEICMA, 3,000 people got to experience the thrill of riding the VectrixElectric MAXI Scooter.

"The enormous level of interest in the Vectrix Electric MAXI Scooter demonstrates the public's eagerness for a realistic, environmentally-friendlyalternative to gasoline-powered transportation," said Carlo Di Biagio, COOSales and Marketing.

MARKETING HIGHLIGHTS

7

45 EVENTS PLANNED FOR 2007

Vectrix's participation in high-profile eventshelps to build awareness of the Vectrix ElectricMAXI Scooter and provides excellent opportu-nities for consumers, dealers, the media, andkey influencers to test ride the scooter.

In 2006, Vectrix participated in 40 events,including the Global Press and PublicAdministration Launch in November in Rome,the 64th International Motorbike Show (EICMA)in Milan, EVER 2006 in Monte Carlo, MOTOH2006 in Barcelona, SWICH in London, andRUOTATI in Florence.

The primary focus for 2007 will be to extend the brand awareness, expand the Ride & Driveprogram, and support new store openings.There will be 45 events and 5 store openings in 2007.

MAJOR EVENTS FOR 2007 INCLUDE:

THE VECTRIX DEDICATED TEST TRACK AT EICMA.CUSTOM-DESIGNED EXHIBITION TRUCK

VECTRIX AT EICMA

• MOTORCYCLE FAIR - Madrid

• WELL TECH - Milan

• MOTORSHOW - Tokyo

• ECOMONDO - Moscow

• SUMMER ROADSHOW - Events at major European beaches and coastal resorts.

• FESTIVAL OF SPEED - Goodwood, England

• LONDON MOTOR SHOW - London

• MOBILITY INTERNATIONAL CONGRESS - Paris

• EICMA - Milan

• WORLD ENERGY CONGRESS - Rome

• EVS 23 - Anaheim, USA

VECTRIX SPECIAL FINANCING PACKAGE -PLUG & GO

In conjunction with Gruppo Generali, Vectrix is offering an innovative and flexible finance package - Plug & Go. Customers make an initial payment, which is equivalent to the purchase price of a traditional gasoline-powered maxi-scooter, followed by 48 monthly payments thatequal the operating costs of the gasoline scooter. Included in this pricecustomers receive:

• 4 YEARS OF INSURANCE

• 4 YEARS OF SCHEDULED MAINTENANCE

• 4 YEARS OF WARRANTY

• 4 YEARS OF ROAD-SIDE ASSISTANCE

MONTHLY PAYMENTS = GASOLINE-POWERED MAXI SCOOTER OPERATING COSTS

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INITIAL PAYMENT

€6,299

48 MONTHLY PAYMENTS€149 X 48

VIS STREAMLINES ORDERING, DELIVERY,AND CUSTOMER SERVICE

The Vectrix Information System (VIS) enables Vectrix and its dealers andsuppliers to work together efficiently to provide customers with the verybest purchasing and customer service experience.

The web-based VIS facilitates rapid data exchange throughout the salesand distribution chain. It utilizes a customized version of Microsoft'sCRM (Customer Relationship Management) system that receives infor-mation from consumers and dealers via Vectrix's UWS (Unified WebSite). Dealers use CRM to enter orders and interface with the iScala sys-tem that is used by the production plant in Poland. Customized cus-tomer service software is also being developed for the VAPs (VectrixAssistance Points).

The VIS allows dealers to manage all pre and post-purchasing commu-nications with their customers, including running marketing campaigns,managing prospects, responding to inquiries, organizing test rides,tracking deliveries, sending invoices, scheduling servicing, and manag-ing after-sales service and communications.

"The VIS is an incredibly powerful system that will help to streamlineordering, delivery, and customer service," said Giuseppe De Giovanni,Corporate Affairs Manager, Vectrix Europe. "The VIS will help us to meetour goal to provide unsurpassed customer service."

VECTRIX LAUNCHES ALINE OF ACCESSORIES

VECTRIX HAS LAUNCHED A LINE OF ACCESSORIES THAT INCLUDES HELMETS, GLOVES, CARGO BOXES, LEG COVER, AND APPAREL.

VECTRIX OPENS ITS FIRST FLAGSHIP STORE IN MARCH 2007

The opening of Vectrix's first Flagship store on March 5, 2007 on ViaAppia Nuova in Rome was a great success. The first Vectrix AssistancePoint (VAP), located next door to the Via Appia Nuova store, was alsounveiled at the same time.

Vectrix's "Diamond" Flagship store opened on March 30 on Via Veneto,one of the world's most recognized retail streets.

To promote the opening of the two Rome Flagship stores, a marketingcampaign has been launched that features advertisements on 170 citybuses and in 70 cinemas, a poster campaign at Ciampino Airport and inPiazza dell'Esquilino, and a team of Vectrix riders handing out invitationsfor test rides.

Flagship stores provide anideal venue to showcaseVectrix's products, offer testrides, build the brand, and getclose to the customer. EachFlagship store will also managea network of Shop-in-Shopsand VAPs within its territory.Vectrix will own the two RomeFlagship stores, and independ-ent dealers will own all otherFlagship stores.

The plan for 2007 is to open additional Flagship stores in Italy, Spain,Switzerland, Portugal, Greece, Australia, England, and the US. Stores inSingapore, Malaysia, New Zealand, and Scandinavia are planned for 2008.

The Vectrix Electric MAXI-Scooter will also be available through a numberof other sales channels, including Shop-In-Shops, independent dealers,scooter rental, fleet sales, B2B, and consumer direct. After-sales and technical assistance will be provided by a network of VAPs.

SALES &DEALER DEVELOPMENT

VAPS TO PROVIDE AFTER-SALES AND

TECHNICAL ASSISTANCE

Vectrix is establishing a network of VectrixAssistance Points (VAPs) that will provideafter sales and technical assistance. EachVAP will be managed by one of severalFlagship stores in major cities in Europe,Australia, and the USA.

The first VAP opened in March, 2007 next door to the Via Appia Nuova Flagshipstore in Rome. Each VAP will feature state-of-the-art diagnostic and servicingequipment, trained technicians, and spare parts and accessories.

ROME VAP

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VECTECHS PROVIDETRAINING AND

ASSISTANCE TO VAPS

A team of technicians (the VECTechs), with representatives from the R&D, Sales & Marketing, and Production departments,has been established to provide trainingand assistance to the Vectrix AssistancePoints (VAPs). The VECTechs have organized formal training, developed a qualification program, written the VAP operating manual, and defined the VAPspare parts stock and the necessary toolsand machines. The VECTechs have alsodeveloped an operating procedure in the event of a product recall.

VECTRIX FLAGSHIP STORE, VIA VENETO, ROME

VECTRIX FLAGSHIP STORE, VIA APPIA NUOVA, ROME

ENVIRONMENTAL IMPACT COMPARISON

HAMPSHIRE POLICE EVALUATE THE VECTRIXELECTRIC MAXI SCOOTER

The Vectrix Electric MAXI Scooter isthe perfect fleet vehicle as manycommercial fleets, including postoffices, dispatch companies, andpolice forces, are looking to reduce costs and carbon emissions.

The Hampshire Constabulary is thefirst UK police force to evaluate theVectrix Electric MAXI Scooter. Formal trials will begin in May, 2007when Vectrix will hand over to theHampshire Constabulary its first PITO(Police Information Technology Organization) approved Police motorcycle.

John Bradley, Fleet Manager for Hampshire Constabulary, said: "I am veryexcited by this new motorcycle technology and look forward to carryingout further evaluation of the Vectrix product within a policing environment.As Fleet manager for the Hampshire Constabulary that operates a fleet of1000 vehicles that covers 15 million miles per year, I believe it's importantto constantly consider the environmental impact of our fleet operation.”

Other police forces in Italy, France, and Spain are also looking forward to receiving bikes for testing before evaluating their order requirements.

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SALES &DEALER DEVELOPMENT

VECTRIX UK SUPPORTSADOPTION OF NEW

CHARGING NETWORK

THE VECTIX UK TEAM

VECTRIX UK PREPARESFOR MARKET LAUNCH

The Vectrix UK team has been busy prepar-ing for the UK market launch. Over 10 deal-ers have been appointed, including marketleaders Bullet Motorcycles Ltd., NICE CarCompany Ltd., and Scooterden Ltd. Trialsare being conducted with the HampshireConstabulary, testing and homologation isnow complete, and Vectrix exhibited at theMCN Motorcycle Show in London.

The official launch of the Vectrix ElectricMAXI Scooter will take place on April 30, May 1 and 2 at the New Spitalfields Market inLondon. The three day event will be attendedby celebrities, MPs, VIPs, and F1 drivers.Consumers will get to test ride the scooteron a specially constructed test track.

HAMPSHIRE POLICE CHOOSE VECTRIX

VECTRIX GETS AN EXCELLENT CLEANER DRIVE RATING

A Vectrix Electric MAXI Scooter that is charged with electricity made fromrenewable energy sources has a Cleaner Drive Rating of 3, comparedwith a rating of 32 for a 4-stroke 250 c.c. motorcycle, 58 for a large familycar, and 71 for an SUV.

The EU Project has developed a Cleaner Drive Rating methodolo-gy that quantifies the overall carbon impact and tailpipe emissions for different types of vehicles. The rating uses a weighted index of regulated emissions to give a single score out of 100 (the lower the score, the cleaner the vehicle).

Vectrix UK is support-ing Elektromotive in the introduction ofElektrobay, the world’sfirst truly generic electricvehicle refueling station.Elektromotive plans toinstall 250 Elektrobaycharging stations overthe next 12 months, with a goal to install1000 units throughoutthe UK over the next 3 – 5 years.

0 10 20 30 40 50 60 70 80 90 100

100

90

80

70

60

50

40

30

20

10

0

LOW IMPACT

HIGH IMPACT

TOTAL CLEANER DRIVE RATING IS SHOWN IN [ ] BRACKETS

LIFE

CYCL

E GR

EENH

OUSE

GAS

SCO

RE

LIFECYCLE AIR QUALITY SCORE

SUV: EURO 4 [71]

LARGE FAMILY CAR: EURO 4 [58]

4-STROKE 251-750 C.C. MOTORCYCLE:EURO 3 [32]

4-STROKE 250 C.C. MOTORCYCLE: EURO 3 [29]

VECTRIX: (UK MIX) [11]

VECTRIX: (GREEN TARIFF) [3]

EASY-TO-USE CHARGING STATION

VECTRIX SIGNS UPINDEPENDENT DEALERS

IN AUSTRALIA AND SPAIN

Exclusive independent dealers in Spain andAustralia have created Vectrix Corporationsin their respective countries to support thesales and service of the Vectrix ElectricMAXI Scooter.

Vectrix Australia was established in the Fallof 2006 and now has two pre-productionscooters for testing, a showroom inMelbourne, and an exhibition truck for roadshows. Managing Director, Charles Mannreports; "It's very exciting to bring the firsthigh-powered electric, two-wheeled vehicleto the Australian market."

EVO Compliance has been appointed byVectrix Australia to manage and conduct the Safety Testing, Analysis, and NationalCompliance Plate Approval of the VectrixElectric MAXI Scooter. The Compliance and Testing Program is on schedule to be completed in the early stages of 2007,with the registration of the Vectrix ElectricMAXI Scooter starting days after the program's conclusion.

By the end of 2007, there will be up to 50official Vectrix dealers in 8 countries (Italy,Spain, England, Portugal, Switzerland,Greece, Australia, and USA). Plans arealready underway to expand distribution to Japan, France, Germany, and Israel.

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VECTRIX USA DEVELOPS DEALER NETWORK

The US market for the Vectrix Electric MAXI Scooter is really starting toheat up. Vectrix USA has received over 400 dealer inquiries and over2,100 consumer reservations.

The first 700 Vectrix scooters that have been allocated to the US will startto ship to dealers' showrooms in Spring, 2007. With a limited number ofproduction scooters available in the US for the upcoming year, VectrixUSA has concentrated on establishing the best quality dealerships in theten cities that represent the strongest EV population centers: SouthFlorida; Scottsdale, AZ; Seattle, WA; San Francisco Bay Area; SouthernCalifornia; Austin, TX; Salt Lake City, UT; Portland, OR; and Newport, RI.The goal is to get demo vehicles to the dealers so that consumers canstart test riding the Vectrix Electric MAXI Scooter. As production rampsup, Vectrix will rapidly expand into additional markets.

In the build up to the US launch, the Vectrix Electric MAXI Scooter hasbeen included in recent editions of the Robb Report, Fast Company, and Popular Science. It has also been featured in displays at the BostonMuseum of Science and the Wired Magazine “New Products Store” inNYC. In addition, the Vectrix scooter will soon be on display at the Houseof Innoventions at INNOVENTIONS at Epcot® at the Walt Disney World®Resort in Lake Buena Vista, Florida.

“I am delighted with the response in North America to this truly revolutionary form of transportation,” said Jim Plagenhoef, Director of Sales for North America. “As I meet with our new dealers, I amimpressed at the number of concerned businesses dedicated to offering non-pollutant vehicles to the public.”

FUEL CELL ELECTRIC HYBRID MAXI SCOOTER ON DISPLAY AT BOSTON MUSEUM OF SCIENCE

MADRID VECTRIX STORE

ENGINEERING

NEW BEDFORD PILOT PRODUCTION FACILITY

A total of 42 pilot-productionVectrix Electric MAXI Scooters wereassembled during the summer of2006 at the New Bedford, US facility.This was a true team effort and provided the ideal opportunity to train and integrate Vectrix's production team from Poland withthe pilot assembly team. This effortwas lead by Steve Cox, Director ofManufacturing, and supported by all New Bedford personnel.

Twenty of the pilot-production scooters were shipped to Italy forthe Global Press Launch and for the November 2006 EICMA Show in Milan. The remaining 22 scooterswere used to support the engineer-ing development and testing program, which was essential to complete the scooter design.

The New Bedford pilot-production facility is currently inactive but will be used in the future to test new manufacturing methods andbuild prototypes.

THE PILOT ASSEMBLY TEAM AT THE NEW BEDFORD PILOT PRODUCTION FACILITY

MAJOR DEVELOPMENTSOF 2006

A number of major developments were achieved by the EngineeringDepartment during 2006:

• Completed pilot scooter design

• Completed initial tooling of body panels & plastics

• Designed, tooled, assembled and certified lighting system to SAE & EU standards

• Procured 60 sets of Pilot build components

• Installed & started up the New Bedford Pilot Assembly Line

• Built 42 Pilot-Production scooters

• Completed "Go to Production" design

• Defined & initiated the test program

PLANS FOR 2007 INCLUDE

• Achieve European, US, Canadian, and Australian homologation

• Complete test program

• Continuous product improvement

• Development of the Three-Wheel Scooter

• Development of Fuel Cell Hybrid demonstration scooters

NEW BEDFORD PILOT PRODUCTION FACILITY

13

14

ENVIRONMENTAL TESTING AT SOUTHWEST RESEARCH INSTITUTE (SWRI)

SWRI conducted a series of tests between July and November, 2006 to evaluate the durability of the Vectrix Electric MAXI Scooter and its components. Tests included Vibration and Shock; Wind, Rain, and PuddleSplash; High Pressure Wash; Salt Spray; Driving Dust and Sand; Humidity;and Thermal. Congratulations to Roger Bernier and the SystemsEngineering Team who supported this effort.

The Vectrix Electric MAXI Scooter performed extremely well in all of the tests. The scooter remained functional at temperatures down to -34 degrees Celsius and after being shaken on the vibration tabledesigned to make electronics fail.

EMC TESTING

WIND TUNNEL

VIBRATION TABLE

BRAKE TESTING AT LINK WEST

The purpose of brake testing at Link West was to ensure that the scooter braking system met European (93/14/EC), UnitedStates (FMVSS 122), and Canadian (CMVSS 122) homologationrequirements. To date, Vectrix has successfully tested a total of three braking systems. Dana DeCosta survived the extreme temperatures in Arizona to accomplish this mission.

ELECTROMAGNETIC COMPATIBILITY (EMC) TESTING

The EMC tests verified that the electronics on the scooter do not interfere with external electronic equipment and that external electricaland electronic equipment, such as cell phones, do not interfere withthe operation of the scooter. The scooter has also undergone testingto ensure that it meets European, United States, and Canadian EMCconductive requirements for devices that are plugged into the ACmains. EMC testing was completed successfully in March. Rui Friasand Carlos Matos are credited with solving the challenges of EMC.

15

ENGINEERING

BATTERY CHARGER DEVELOPMENT

A new battery charger has been developed by ESD in Bad Sassendorf,Germany that is extremely rugged andeasy to assemble. This cost effectivecharger has undergone extensive testing and went into production inFebruary, 2007.

ELECTROCRAFT MOTORDEVELOPMENT

Development of a second source motor at ElectroCraft is proceeding at a rapid rate. Two prototypes have been tested and both met the Vectrix ProductRequirements and actually demonstratedbetter acceleration than the baselinemotor. A third prototype was delivered in March, 2007 that incorporates a number of modifications to simplify the manufacturing process and meet the over-speed requirement.

VECTRIX AND PARKER HANNIFIN ARE DEVELOPING A PATENTEDDOCKING STATION THAT WILL SECURE AND CHARGE THE VECTRIXELECTRIC MAXI SCOOTER. VECTRIX IS ALSO WORKING WITHGERMAN SOLAR COMPANY, SOLON, ON INNOVATIVE WAYS TO USE SOLAR ENERGY TO CHARGE ITS VEHICLES.

HOMOLOGATION STATUS

European and US homologation is now complete. The VehicleCertification Agency (VCA) of the United Kingdom has been workingclosely with the Vectrix development team in New Bedford on the testing and homologation of the Vectrix Electric MAXI Scooter. After four months of stringent testing, the process is now complete, andVectrix achieved full European and US approval in April, 2007.

“This is an enormous accomplishment for Vectrix,” said Peter Hughes,V.P. of Technology. “I would like to recognize the Detroit, MI office of the VCA for its guidance and leadership throughout the entirehomologation process.”

Canadian and Australian homologation will be completed by the end of April, 2007.

The 3-wheel concept vehicle was unveiled atEICMA in November, 2007.The patented, variablefront suspension provides stability at low speeds,

excellent handling at highspeeds, improved braking

power, and the ability to parkwithout a kick stand.

The 3-wheel concept scooterprovides all the benefits of a 2-wheel vehicle withthe stability of a 4-wheelvehicle. It will be idealfor people with limitedriding experience andfor fleet operators.

PRODUCT DEVELOPMENT

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SPORT MOTORCYCLE CONCEPT

An urban motorcycle with breathtaking perform-ance, a radical seating platform for enhanced

rider comfort and control,aerodynamic styling toreduce drag, extensiveuse of aluminum andcarbon fiber for weightreduction, and largestable 16" wheels.

This concept premium scooter features a number of custom features, including premiumpaintwork, jaguar redleather seat, carbon fiber fenders, wirelessremote key switch system, 4-speakerstereo system, and digital rear camera.

PREMIUM SCOOTER

3-WHEEL DEVELOPMENT

PROGRAM

THE CORE PLATFORM DESIGNSUPPORTS MANY

STYLES AND TYPESOF POWERED TWO

AND THREE-WHEELEDVEHICLES HYBRID

SCOOTER

Vectrix and Parker Hannifin are continuing todevelop the world's first fuel cell electric hybridmaxi scooter. The onboard fuel cell unit keepsthe batteries charged, extends the range of thescooter, and provides charging flexibility (i.e.plug in or fuel cell charging).

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"MAKING IT HAPPEN"

WOLFGANG GOHL V.P. MANUFACTURING

A TRAINING CONCEPT FOR VECTRIXEMPLOYEES IN POLAND

Creating and maintaining motivated employ-ees over a long period of time is critical tothe future success of any company. This iscertainly the case with Vectrix because itslean manufacturing philosophy requires ahighly flexible and motivated workforce thatwill be able to quickly adjust to changes indemand for the product.

Vectrix Poland has developed a trainingprogram for all employees to ensure theypossess the skills required to do the job,good problem-solving techniques, and theability to work as a strong team.

The "Vectrix Academy" provides a trainingstructure for all employees.

1. A job description is created for eachfunction which describes what skills andcompetencies will be needed in the next 2-3 years.

2. Each employee is assessed on his/herstrengths and weaknesses. A gap analysisshows areas for improvement.

3. The identified areas for improvement are classified into soft and hard skills, andsorted into legal, knowledge-based, andbehavior-orientated training areas.

4. Over a two-year period, each long-termemployee will attend approximately 120hours of training, starting with "First DayPackage," which covers lean manufacturing,leadership and communication skills,positive feedback, basics of teamwork, etc.

5. Management will be reviewed every sixmonths, and shop floor operators will getweekly feedback from their team leader.

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PRODUCTION

VECTRIX POLAND MOVES TO A NEW FACILITY

During the first week in January, 2007, Vectrix Poland moved the assembly line and office to a new manufacturing facility in the ProLogisIndustrial Park just south of Wroclaw. This new facility is close to majorhighways and provides Vectrix with plenty of room for future expansion.

Vectrix, together with logistics partner Schenker, now occupies a4,000 m² assembly and warehouse space, with an additional 500 m² for offices and amenities. The Wroclaw Plant has the capacity to assemble up to 35,000 scooters each year.

STATE-OF-THE-ART TESTING EQUIPMENT

NEW VECTRIX WROCLAW PRODUCTION FACILITY

START OF PRODUCTION

On January 22, 2007, Vectrix Polandstarted production in its new facilityin Wroclaw.

The first two weeks were dedicatedto reviewing and approving allassembly and logistics processesbetween Schenker and Vectrix, andto conducting a final test of theVectrix business system, iScala. Onlya few scooters were built during thisphase, but the production rate wasgradually increased to five scooters per day over the following two weeks.

The first 50 scooters off the produc-tion line will undergo further testing,and some will be used by the salesand marketing team for test ridesand events. The Wroclaw Plantmoved towards full-scale productionduring March and April.

The very first scooter off the production line, serial # 0000001, was dedicated to Ignatius (the son of engineering manager, Slawek Prus), who has suffered serious health problems over the past few months.The scooter, Ignacius, will be on display at the plant as a constantreminder that people can get through difficult times with the help andsupport of others.

18

STEVE DOWNING TO LEADQUALITY INITIATIVES

Steve Downing joinedVectrix Corporation inNovember, 2006 to lead and implement corporate strategic quality initiatives globallyacross the companywith an emphasis oncontinual improvementand absolute customer satisfaction.

Mr. Downing has over 20 years experiencein leading international manufacturing andquality operations in defense, commercial,industrial, and consumer product industries.He also has extensive experience in newproduct development, transition to production, and international agencyapproval/product certification.

He has successfully developed andimplemented several certified QualityManagement Systems, continuousimprovement, supplier certification, and cost of poor quality programs inmulti-site global companies. His careerincludes leadership positions at CotoTechnology, where he led a turnaround in the company's quality organization that significantly improved product yields,product reliability, and cost of poor quality;Raytheon; The First Years; and KVH. Heearned a BS degree in MechanicalEngineering from the University of Maineand is a certified Mechanical Engineer,Quality Manager, and Quality Auditor.

QUALITY GOALS

• Less than 200 Parts Per Million defective rate

• Less than 2% Cost of Poor Quality

• ISO/TS 16949 Certified Quality Management System

• Excellent customer satisfaction ratings VECTRIX WROCLAW PRODUCTION TEAM

WROCLAW ASSEMBLY LINE

Steve Downing

WROCLAW ASSEMBLY PLANT

SCHENKER HANDLES SUPPLY CHAIN

Vectrix Poland has teamed up with Schenker, a world-leadinglogistics partner and subsidiary of Deutsche AG, to provide all outbound and inbound logistics,including warehousing, JIT delivery, field distribution, andspare parts management.

Components shipped from around the world are collected by Schenker trucks and deliveredto the "Schenker Warehouse,"adjacent to the Vectrix AssemblyHall in Wroclaw. Vectrix sendsSchenker a list of parts requiredfor each set of 10 scooters to be built. Schenker then picks the componentsfrom the shelves and delivers the parts on dedicated trolleys directly to theassembly line in the correct sequence to meet customer orders. All invento-ry transactions are communicated automatically between Vectrix's iScalabusiness system and Schenker's Warehouse Management System, HTS.

Finished and tested scooters are packed into reusable shipping crates,which are collected by Schenker and sent to dealers around the world.

Every week, suppliers receive updated information on the detailed productionschedule and the 12-month forecast. Schenker receives the same informa-tion, which it uses for scheduling transportation and warehousing workloads.

The supplier base includes approximately 20 strategic suppliers located allover the world and 40 other suppliers for standard and semi-standardparts. The Vectrix Electric MAXI Scooter uses about 500 components,screws and fasteners, which compares with over 2000 parts for a conven-tional gasoline-powered maxi scooter.

LOGISTICS UPDATE &STRATEGIC PARTNERSHIPS

19

SCOOTER IN A REUSABLE SHIPPING CRATE

THIS DIAGRAM SHOWS THE GENERAL LAYOUT AND MATERIAL FLOW. ALL COMPONENTS ARERECEIVED ON THE"SCHENKER" SIDE OF THEBUILDING WHERE THEYARE STORED IN THE WAREHOUSE BEFOREBEING DELIVERED TO THE ASSEMBLY LINE ACCORDING TO THE PRODUCTION SCHEDULE.

CLUSTER MANUFACTURINGIN WROCLAW WILL SAVE

COSTS AND REDUCETRANSPORTATION TIME

Vectrix is setting up cluster manufacturing inWroclaw with various suppliers. By April2007, Parker Hannifin SBC, which makesthe Vectrix V-200 electric motor, will move itsproduction line into the Vectrix manufactur-ing building. Vectrix’s battery charger sup-plier is also considering moving the assem-bly of the charger to the Vectrix Wroclawplant. Cluster manufacturing will result insignificant cost savings, reduced inventoryrisk, and shorter transportation time forcomponents.

LADISLAV BRAZDIL (ON RIGHT) AND HIS TEAM FROM ZLKL

ROBOT WELDED ALUMINUM FRAMES

Vectrix supplier, ZLKL, has invested morethan €2 million in a robot welding cell toproduce the special aluminum frame forthe Vectrix Electric MAXI Scooter. It willtake about 17 minutes to make a frame,which will then be shipped to the Vectrixplant in Wroclaw, about 3 hours drivingdistance away.

Component Warehouse(Schenker)

Motor Assembly(Parker SBC)

Supermarket /Receiving Inspection

Assembly LineOut-

bound

Mainte-nance Future

ExpansionTraining,Canteen,Meeting

Offices andSocial

In-bound

20

MAJOR STRATEGIC SUPPLIERS VECTRIX FORMS JOINTVENTURE WITH GOLDPEAK BATTERIES TOMANUFACTURE BATTERIESIN HONG KONG

Vectrix has formed a 49/51joint venture with GoldPeak Batteries to operate a battery production line inHong Kong. The factory will have an initialcapacity to produce 12,000 battery packsper year, increasing to 18,000 per year.Gold Peak will control manufacturing, andVectrix will control sales.

GOLD PEAK BATTERIES ASSEMBLY PLANT

PARKER HANNIFIN IS AKEY STRATEGIC PARTNER

Parker Hannifin(NYSE:PH) - theworld's leadingproducer of motionand control technologies and systems - is one of Vectrix's key strategic partners. In addition to the joint development of the world's first fuel cell electric hybridmaxi-scooter, Parker Hannifin is a significant investor in Vectrix, has a seat on the board of directors, and supplies the scooter's drive train.

VENDOR LOCATION COMPONENT

GP Batteries China Battery Pack

Parker-Compumotor Rohnert Park, CA Motor Controller

Parker-SBC Milan, Italy Motor

ESD Soest, Germany Battery Charger

Plastal Gliwice, Poland Body Panels & Air Plenum

Starpol Starpol, Poland Wiring Harnesses

Z.L.K.L Czech Republic Frame & Subframes

Polmo Kalisz, Poland Metal Fabrication

DESC Knoxville, TN Gearbox

JW Speaker Milwaukee, WI Lighting

Brembo Italy Brakes

Medallion Spring Lake, MI Instrument Pod

Marzocchi Bologna, Italy Front Fork

Grimeca Bologna, Italy Wheels

Prins Czech Republic Swingarms

Sachs Turino, Italy Shocks

Zadi Carpi, Italy Ignition Lock System

Pirelli Milan, Italy Tires

Renco Goleta, CA Encoder

Sport-Tech Elk River, MN Windshield

Robrady Design Sarasota, FL Scooter & Component Design

21

MARKET OVERVIEW

TOTAL NEW SCOOTER REGISTRATIONS BY VALUE (2002-06)

SOURCE: COUNTRY ASSOCIATIONS, ACEM, L.E.K. ANALYSIS

SCOOTER MARKET GROWTH

The scooter market in targeted marketsgrew annually at 12.8% in value from 2002-06, with Australia, Spain,Canada, and France exhibiting thestrongest growth.

CANADAUKAUSTRALIAGREECEGERMANY

SPAIN

FRANCE

ITALY

US

ZONING REGULATIONS

CHARGINGINFRASTRUCTURE

GOVERNMENTSUBSIDIES

ENVIRONMENTALCONCERNS

HIGH FUEL PRICES

TRAFFIC CONGESTION

MANY FACTORS ARE DRIVING CONSUMERS TO ELECTRIC SCOOTERS

ALL SCOOTERS ELECTRIC SCOOTERS

POOR PUBLICTRANSPORTATION

BIL

LIO

NS

OF

DO

LLA

RS

There are approximately 32 millionPowered Two Wheelers (PTW) in usein North America, Australia, and thetargeted European countries. Italy hasthe largest installed base as well asthe highest number of scooter sales.In 2005, scooters represented 30% ofall PTWs sold in Italy and more than50% of registered PTWs. In Italy, thePTW market has grown 6% annuallyfrom 2002-06, reaching $2.9B in 2006.

ITALIAN CITIES ENFORCING STRONGER TRAFFIC RESTRICTIONS

CITY ADMITTED WEEKDAYS ADMITTED SUNDAYS

ROME

FLORENCE*

OTHER(MILAN, NAPLES, GENOA, PALERMO)

Additional restrictions may be imposed for higher city pollution

NON-CATALYTIC CONVERTER PTW VEHICLES

CATALYTIC CONVERTER PTW VEHICLES

ZERO EMISSION PTW VEHICLES*Zero emission only in pedestrian precints

EV ONLY PARKING

FINANCIAL REPORT

CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS)

CAPITALIZATION TABLE AS OF APRIL 15, 2007

22

CASH INVESTED SHARES OUTSTANDING

925,000

$116,584,513 174,510,648 $116,584,513 174,510,648

175,435,648

2,702,171 1,933,339

14,798,000 20,077,130

39,510,640

214,946,288 $116,584,513

1925,000 shares of Series B non-Voting, non-Dividend paying, no redemption feature Preferred Stockwhich are convertible into shares of Common Stock at a conversion rate of $1.00 divided by 75% of theinitial per-share offering price of Common Stock in the event of an IPO.

2This represents the unissued balance of 20% of the outstanding Common Stock, and will be capped at20,175,000 shares. The Board has approved the issuance of 14,610,792 shares of restricted stock toexecutive management, effective upon the filing of an amendment to the Company's Certificate ofIncorporation increasing the Company's authorized common stock. The restricted stock will vest on April12, 2010. The balance of the shares (5,466,338) will be available for future grants to other employees.

PREFERRED SERIES B1

COMMON STOCKTOTAL COMMON STOCK ISSUED

TOTAL COMMON & PREFERRED

FINDER/BROKER WARRANTS @ $.50-$1.00INVESTOR WARRANTS @ $0.75EXISTING EMPLOYEE/DIRECTOR STOCK OPTIONS @ $0.46-$1.50AUTHORIZED FOR ISSUANCE UNDER EQUITY INCENTIVE PLAN 2

COMMON STOCK ISSUABLE UNDER WARRANTS, OPTIONS & EQUITY INCENTIVE PLAN

TOTAL COMMON STOCK AND EQUIVALENTSTOTAL CASH INVESTED (INCLUDING INTEREST ON BRIDGE)

CFO REPORT

In July, 2005, theVectrix Board ofDirectors authorizedthe issuance of up to $20 million of ConvertiblePromissory Notesand then, one yearlater, increased theauthorization to upto $50 million. On August 1, 2006,all convertible note holders as of thatdate signed the First Amendment tothe Notes that increased the aggre-gate financing of the Notes to anamount not to exceed $50 millionand that extended the due date toJune 1, 2007 on all of the previouslyissued one-year convertible promis-sory notes, unless otherwise con-verted. Vectrix issued the Notes tofinancial institutions, primarily privateequity funds based in the UK andGermany and certain high net worthinvestors in the UK, Italy, and the US.

On March 30, 2007, Vectrix closedon $26.2 million of subscriptions forCommon Shares priced at $0.90 pershare from a group of institutionsand high net worth investors basedin Switzerland, UK, Greece, and theUS. The Notes, plus accreted inter-est, converted into common sharespursuant to their terms.

Our top five shareholders accountingfor just over 50% of our commonshares outstanding are: RAB CapitalPLC, I-Sol Ventures GmbH, RicchiVermongensverwaltungs GmbH,Morgan Stanley International, andParker Hannifin Corporation.

Our cash plus subscriptions receiv-able balance is $28 million, and weestimate that we are funded throughearly 2008.

Our view was that it would take aboutten years and $100 million to get thescooter to market. In fact, it has takeneleven years and about $87 million.

DraftFY2006 FY2005 FY2004 FY2003 FY2002 FY2001 FY2000 1996 - 1999

EXPENSES

Research & Development $14,126 $7,309 $2,090 $992 $778 $864 $516 $5,105

General & Administrative $6,873 $9,302 $3,025 $1,604 $1,232 $1,587 $1,026 $2,892

Acquired Technology $0 $0 $0 $0 $0 $0 $0 $957

Loss from Operations ($20,998) ($16,661) ($5,115) ($2,597) ($2,011) ($2,451) ($1,542) ($8,954)

Other Income $5 $21 $2 $1,000 $0 $0 $0 $0

Interest Income (Expense) Net ($4,258) $3 ($35) ($94) ($40) ($3) ($1) ($917)

Net Loss ($25,252) ($16,635) ($5,148) ($1,691) ($2,050) ($2,454) ($1,543) ($9,871)

Christopher Moe, CFO

Vectrix CCorporation11 Touro Street, Suite 201 Newport, RI 02840phone: +1 401 848 9993fax: +1 401 848 9994email: info@vectrixusa.comwebsite: www.vectrix.com

Vectrix EEurope Via Papirio Carbone, 1500178 Rome, Italyphone: +39 06 71280295fax: +39 06 71279760email: info@vectrixeurope.comwebsite: www.vectrix.com

Vectrix UUnited KKingdomElm Farm, Suite 1Hensting LaneEastleigh, Hampshire SO50 7HH United Kingdomphone: +44 (0) 1962 777600fax: +44 (0) 1962 777620email: abamberg@vectrix.co.ukwebsite: www.vectrix.co.uk