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applications. These include determining the presence of foreign substances such as oil in water and determining water quality, among many others.

Imagine a $5 hand held device that can tell someone if the water they are about to consume is healthy or unhealthy to drink. Or if the oil present in their beach sand came from a specific deepwater oil well in Louisiana—yes ALL oil from EVERY well site has a unique spectral signature. Javelin LLC co-founder Peter Purdy stated, “I have worked in the optical solutions field for over twenty years. With the Visualant SPM technology we can differentiate our product for testing at the molecular level due to its very low cost. It is a transformative technology with a broad array of potential applications.” Matthew Creedican, Javelin co-founder, added, “We have been aggressive in pursuing Visualant’s technologies for our testing applications and the extreme competitive advantage SPM brings in size, cost and durability. We are excited about a number of the current environmental applications we currently are working with as well as future iterations of the technology.”

The VSUL Unique Value Proposition

The Javelin license is the first of multiple licensing opportunities for the SPM technology we expect to see in medical and agricultural diagnostics and in other fields.

VSUL’s unique value proposition is its ability to deliver molecular level/photon level readings with a $5-$10 device—with very healthy margins. We are aware of NO other technology with such attributes.

In addition, unlike most transformational technology companies we review and research, VSUL’s application is NOT a replacement all- or-nothing technological advance. Mostly it’s


an augmentation or “redundancy” strategy that makes existing protocols work better, faster and cheaper.

This is key to our judgment as to market acceptance—vast improvement for little cost makes for MUCH higher ROI.

The VSUL Business Model: Ever-Growing Operating Cash Flow & Ever-Growing Licensing Revenues

VSUL has a business model that works NOW. With a plan to acquire vertical market distribution with leading companies—and with their first major acquisition in TransTech Systems, Inc. complete and others lined up—VSUL is among the only cash flow positive emerging technology companies we have ever found.

And VSUL is a very fast growing company—they are on ramp to $60 million in revenues and gross margins in the 30% range by 2013 (blended for new licensing and existing products).

Summary: Our estimate of enterprise and strategic value of Visualant’s Spectral Pattern Matching technology results in a private market valuation of the company’s forecasted sales and margins at $2.25 a share (DCF model at 16% percent discount). We assume an additional $3 million additional equity capital raised during 2011.


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