Ann: Market Update, page-36

Good call, Gottalove.

I have a suspicion that the balance sheet does not paint an accurate picture with respect to the valuation of Vmoto's assets.

Specifically, I think the 'intangible assets' of the company are understated, as the balance sheet does not appear to reflect the benefits Vmoto receives from the relationship with Super Soco.

A significant number -perhaps most- of the units sold by Vmoto are Super Soco models, and so this company would directly benefit from the intellectual property of Super Soco: the innovative design features, as well as (in the case of the 'CU' model) the Xiaomi technology integrated into the scooter's design.

Of greater significance, however, would be the benefit gained from Super Soco's brand recognition: consider, for example, the substantial number of specialist websites and blog pages that have featured reviews or news updates on Super Soco products over the course of this year. A quick count of the results that popped up on the first four pages of an internet search showed dozens of articles focused on Super Soco, in a range of languages including French, Turkish, Spanish, Italian, and Russian.

Vmoto is selling these products in many countries in which these languages are spoken, and so they are effectively receiving free advertising.

In the annual report back in March, the total 'intangible assets' figure is listed as $595,533.

While I wouldn't want to venture a guess as to what a more accurate figure might be, it would certainly have to be much higher than the figure that is recorded in the financial statements.