VSM MedTech Ltd. (TSX:VSM), world leader in the emerging clinical market for magnetoencephalography (MEG) functional brain imaging systems, will receive a contribution of $350,000 from the Canadian Government.

The funding will offset part of the cost of a $1.5 million electronics redesign initiative planned for the next generation of CTF MEG(TM) systems. The support will be provided on a cost-incurred basis during 2006. The objective of the initiative is to substantially reduce the cost of manufacturing CTF MEG systems by the end of 2006, without sacrificing performance.

"In the emerging clinical market for MEG, we have earned the lead position with superior technology and customer service," said Jack Price, President and Chief Executive Officer of VSM. "This important electronics redesign should allow us to increase our gross margins on MEG systems and will therefore improve our prospects of achieving break-even status in 2007."

The redesign will reduce the size and cost of the electronics sub-system, improving system performance in the clinical environment. The redesigned electronics sub-system will allow VSM to make use of off the shelf, commercially available computers and components and will also be more energy- efficient during operation. The new MEG electronics will facilitate remote monitoring and servicing, further improving support capabilities and reliability.

Customers worldwide have purchased 38 CTF MEG systems since 1993 including the nine sales agreements announced during 2005. Because MEG uses a non-invasive approach in an environment that is comfortable for the patient, it is gaining medical acceptance worldwide for real-time, high-resolution mapping of brain function. Long-recognized as a leading-edge research tool, MEG is increasingly in demand in the much larger clinical market for the diagnosis and treatment of neurological disorders.

About VSM MedTech Ltd.

VSM MedTech develops, manufactures and markets medical devices for the diagnosis and treatment of neurological disorders and cardiovascular diseases. Targeting significant global market opportunities, VSM equips healthcare providers with noninvasive technology that improves the standard of patient care.

This document may contain forward-looking statements, relating to the Company's operations or to the environment in which it operates, which are based on VSM's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond VSM's control. A number of important factors, including those set forth in other public filings, could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. VSM disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For further information: please contact: Alan Bayless, Vice President, Investor Relations, VSM MedTech Ltd., Tel: (604) 472-2427, email: abayless@vsmmedtech.com, web: www.vsmmedtech.com

Source: newswire