Newsletter

October 11, 2005

Volume VI, Issue 88

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:

Comments in the BLOG

There are a number of new BLOG postings for you to review, each of which went up yesterday. There has been a lot to comment on coming all at once, and rather than clutter your inbox with issues you might not care about, I chose to use the BLOG. Visiting the BLOG is voluntary- you can go read the content if you choose to and have an interest. Here are direct links to yesterday's postings:

Market Commentary: In light of the recent huge run up in energy price and the "FED Speak" concerning inflation, is the traditional 4th quarter rally in jeopardy? Click Here to read the commentary and submit your thoughts or questions.
Family Room Entertainment: Chairman George Furla held the first shareholder conference call in the company's history last week. There was a lively and lengthy question and answer period, but no new information to change my view that this stock is likely to continue grinding lower indefinitely. Click Here to read the commentary and submit your thoughts or questions.
American Water Star: AMW fell apart over the last 4 trading days, dropping below the previous support level of $.20. Despite no news from the company, I ferreted out an SEC filing that might explain the swoon in the stock. Click Here to read my comments and submit your own comments or questions. My information is limited to the press releases and the SEC filings as I have no contact with the company any longer.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question.

Health Sciences (OTC BB: HESG): SHUGR™ Breaks Into Independent Drug Store Market

Just before the market opened today, HESG was out with news disclosing another new customer for the world's best sugar substitute. Today's announcement completes a triangle of retail- SHUGR™ can now be found in nutrition and vitamin specialty stores, grocery stores, and drug stores.

Value Drug, a purchasing co-op for independent pharmacies nationwide has placed an initial order for SHUGR™ for distribution to the stores it represents. Value Drug has been around since 1936.

In my view, this order is important because it represents a new type of retail outlet- the independent drug store market. In the last month HESG has now announced that SHUGR™ has been picked up by nutritional stores, grocery stores, and now drug stores. These three represent the specialty retail environment. Once more consumers learn about the product, perhaps the next step might be the warehouse stores and discount chains; i.e. Costco, WalMart, etc.

Anecdotally I am hearing there are more orders around the corner. SHUGR™ is traction, but needs to get viral. People need to be telling each other they found the ideal sugar substitute. It needs to fly off the shelves.

HESG is working on point-of-purchase displays for stores, which should also help spark sales. An informational point-of-purchase display will make the product an impulse item. First time buyers can become long term users.

HESG has excellent support in the $.70 to $.75 range. A decent volume surge should take this stock back into the $1 range. Those who followed my advice in the last BLOG entry know I have been a big proponent of accumulating this stock at the $.75 range. Don't pay more- there's no reason to. Own it at the right price for the eventual break out.

On the plus side, a little mo to the upside could yield a level of nearly $1, which equates to 24% ROI from current levels. I think there will be significant resistance at about $1, but it could be clear sailing to that level if the company can keep delivering the goods.

I am very interested in your opinion of both SHUGR™ as a product and HESG as a stock. To that end, I have created another BLOG entry specifically for comments and question on SHUGR™ or comments on the stock's potential for appreciation.

According to the company, over 2,000 people ordered free samples of the product as a result of the OTC Journal's efforts over the summer. By now, everyone has received their free sample, and should have tried the product.

Please visit the BLOG entry and share your impressions- either negative or positive. No question is too dumb to ask- no comment will be refused unless it is obscene. If you have some negative comments on the stock, try to give us some facts to back up your thoughts.

Click Here to access the BLOG entry for your comments and questions.

Here is the complete text of today's news for your review.

Press Release Source: Health Sciences Group, Inc.

Health Sciences Group Receives Purchase Order for Shugr from Value Drug

Tuesday October 11, 8:30 am ET

LOS ANGELES--(BUSINESS WIRE)--Oct. 11, 2005--Health Sciences Group, Inc. (OTCBB:HESG - News), provider of innovative nutraceutical products and functional food ingredients derived from natural sources, announced today that it received a purchase order for Shugr from Value Drug Company. Value Drug Company, incorporated in 1936, is a wholesale purchasing cooperative located in central Pennsylvania.

"We are delighted to have received this purchase order from Value Drug," said Fred E. Tannous, co-Chairman and Chief Executive Officer of Health Sciences Group, Inc. "This is a result of our efforts to expand the distribution of Shugr beyond the specialty retail and grocery channels into the drugstore category. Value Drug is a well established and respected purchasing cooperative in the drugstore category, and we look forward to working with them to get Shugr into their cooperative purchasing network."

Shugr is the first natural, zero-calorie sweetener made from sugars that occur naturally in such good-tasting, healthy foods as fruits, vegetables, corn and dairy products. Erythritol is a naturally occurring sugar commonly found in melons, grapes, mushrooms and soy. Tagatose comes from dairy products, but does not affect people who are lactose intolerant. Tagatose also provides an added health benefit -- prebiotic fiber that promotes intestinal health, much the way yogurt does. Maltodextrin is derived from corn sugar, which is non-GMO and gluten-free. A trace amount of sucralose is added to give Shugr its "high note." All of these ingredients carry a GRAS (Generally Recognized As Safe) designation for food safety from the U.S. Food & Drug Administration.

About Value Drug Company

Value Drug Company, based in central Pennsylvania, is a wholesale purchasing cooperative. Incorporated in 1936, Value Drug Company has been working with independent pharmacies and drug stores to stay competitive in today's growing market. For more information and to order products, including Shugr(TM), contact 800-252-3786.

About Health Sciences Group, Inc.

Health Sciences Group identifies, develops and commercializes innovative nutraceutical products derived from natural sources to provide consumers and medical professionals with preventative healthcare alternatives. The company markets its own line of proprietary products based on novel technologies with clinically supported, GRAS-certified ingredients under its Swiss Research(TM) and Swiss Diet(TM) brand names. For more information, visit www.HSciences.com and www.Shugr.com.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, the independent authority of the special committee to act on the matters discussed, the successful negotiation of the potential acquisition and disposal of transactions described above, successful implementation of the company's business strategy, and competition, any of which may cause actual results to differ materially from those described in the statements. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent Form 10-QSB and Form 10-KSB filings with the Securities and Exchange Commission.
Contact:

Health Sciences Group, Inc.
Bill Glaser/Fred E. Tannous, 310-242-6700

Source: Health Sciences Group, Inc.

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