vsg the next tox!

HC Members,
It's time for me to share why I have become so bullish on VSG.

2006/7 Potential Earnings of $10.2m

Australian Sales* 20,000 @ $10 Profit** $0.2m
Export Sales*** 1,000,000 @ $10 Profit $10.0m
Operating Profit $10.2m
Tax @ 30% $3.0m
Net Profit $7.2m
Shares OnIssue**** 206m
Potential EPS 3.5cps
Current Share Price 2.6cps
Potential PE at Current Share Price 0.74
Potential Share Price at PE of 5.0 17.5cps
Potential Return if Investing Now @2.6cps 673%

* Austrailian sales based on minimum order from distributor of 20,000 units for first year. Australia represents 1-2% of the global market for Asthma spacers so I have used 2% in calculating global sales volume in units to be conservative.

**Bottom line operating profit per unit supplied from VSG are after overheads.

*** Export key markets are Japan, USA (FDA approval already granted in January 2005, launch start of 2006) and Europe.

**** I have used the current number of shares on issue in my calculations as the options on issue are a way out of the money but that may change going forward. Even if these got exercised then the SP compared to today would still rise at in multiples of 100%!

It is interesting to note that the US National Institute of Health has given a grant of $1m to VSG for clinical trials which are currently underway. Previous Australian trials have proven remarkably successful with a 60% improvement in medical adherence in children and 38% in adults. When the results of the clinical trials come out this will become the Asthma spacer of choice.

I have accumulated a large number of shares in this company in recent weeks. My investment strategy is to find companies with great future earnings potential (and with some strong secondary evidence to back it - like director buying) that the market hasn't necessarily recognised yet.

It is also interesting to note that a director has bought 3.3m shares from March - June at prices between 2.5 and 3.2 cents, providing strong evidence that a strong
upward move in the SP is imminent.

Please as usual do your own research before investing.

P.S. I will continue to trade TOX over the coming months since it will move higher but VSG is now at its infancy stage compared to TOX when its share price was at 1 cent.