Virtutone Networks Inc. Announces Closing of Brokered Private Placement

Virtutone Networks Inc.

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Virtutone Networks Inc. Announces Closing of Brokered Private Placement

Sherwood Park, Alberta, January 27, 2014 - Virtutone Networks Inc. ("Virtutone" or the "Corporation") (TSX Venture: VFX.V) is pleased to announce that it has closed its previously announced brokered private placement (the "Private Placement"). First Republic Capital Corporation ("First Republic") has acted as agent with respect to the Private Placement. The Corporation issued an aggregate of 13,331,798 units ("Units") of the Corporation to exempt buyers through First Republic at a price of $0.30 per Unit for approximate aggregate proceeds of $3,999,539.40, inclusive of 4,808,166 Units (aggregate gross proceeds of $1,442,449.80) issued today in the second and final tranche of the Private Placement.

Each Unit is comprised of: (i) one common share ("Common Share") of the Corporation; and (ii) one half of one common share purchase warrant ("Warrant") of the Corporation. Each whole Warrant will entitle to holder to purchase one Common Share at an exercise price of $0.40 for a period of two years from the date of the date of issuance (the "Warrant Expiry Date"). If, during the period commencing on the date that is four months and one day following the date of issuance and ending on the Warrant Expiry Date, the daily volume weighted average trading price of the Common Shares on the TSX Venture Exchange exceeds $0.40 for each day for a period of 20 consecutive trading days, then the Corporation may, from time to time, give the holders of the Warrants written notice (the "Accelerated Expiry Date Notice") of such occurrence within 30 days of such occurrence, in which case the Warrants will expire at 4:00 p.m. (Calgary time) on the 30th day following the giving of the Accelerated Expiry Date Notice (the "Accelerated Expiry").

In respect of the 4,808,166 Units issued today, the Corporation has paid First Republic and certain other sub-agents a cash commission of $115,395.98, representing 8% of the gross proceeds of the final tranche of the Private Placement and has issued to First Republic and certain other sub-agents 384,653 broker warrants ("Broker Warrants"), representing 8% of the number of Units sold in the final tranche of the Private Placement. Each whole Broker Warrant will entitle to holder to purchase one unit ("Broker Unit") of the Corporation at an exercise price of $0.30 for a period of two years from the date of issuance, subject to the Accelerated Expiry. Each Broker Unit shall be comprised of: (i) one Common Share; and (ii) one half of one Warrant ("Underlying Broker Warrant") of the Corporation. The Underlying Broker Warrants shall be subject to the same terms and conditions as the Warrants.

All securities issued today in the final tranche of the Private Placement are subject to a four-month hold period under applicable securities laws, which hold period expires on May 28, 2014.

The proceeds from the Private Placement will be used for general working capital and corporate purposes.

The securities offered pursuant to the Private Placement have not been, and will not be, registered under the United States Securities Act of 1933, as amended or any U.S. state securities laws and may not be offered or sold in the United States or to United States persons absent registration or any applicable exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Virtutone Networks Inc.

Virtutone Networks Inc. is a technology company based in Sherwood Park, Alberta and is listed on the TSX Venture Exchange in Canada. The Corporation is a leading supplier of wholesale telecommunication services. Additional information can be found on the Corporation's website at and under the Corporation's profile on

For further information, please contact Jason Allen at 780-702-5777.

Cautionary Statements

This news release contains forward looking statements. More particularly, this news release contains statements concerning the anticipated use of the proceeds of the Private Placement. Although Virtutone believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Virtutone can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The intended use of the proceeds of the Private Placement by Virtutone might change if the board of directors of the Corporation determines that it would be in the best interests of Virtutone to deploy the proceeds for some other purpose.

The forward looking statements contained in this news release are made as of the date hereof and Virtutone undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.