M Health Limited ABN 25 009 121 644

Level 1 33 Ord Street West Perth Western Australia 6005 Telephone: + 61 8 9420 9300 $Fax: + 61894812690$

22 September 2004

Ms Marian Tang Senior Companies Officer Australian Stock Exchange Limited Exchange Plaza 2 The Esplanade PERTH WA 6000

Dear Marian

M HEALTH LIMITED - REINSTATEMENT TO OFFICIAL QUOTATION

The board of directors of M Health Limited (M Health) request that Australian Stock Exchange Limited (ASX) reinstate M Health's securities to official quotation as soon as practicable.

We confirm that M Health is in compliance with the Listing Rules and, in particular, Listing Rule 3.1 and the market is fully informed.

Please note the following matters:

As part of the recapitalisation, M Health completed a consolidation of its capital. $(a)$ Holding statements for the securities, post consolidation, have been despatched by the Company's share registry;
The holding statements for the additional securities issued by the Company have (b) also be despatched by the Company's share registry;
The appointment of the Administrator was terminated on 8 July 2004. A copy of $(c)$ the termination certificate was announced to the ASX on 8 July 2004; and
$(d)$ M Health has completed a capital raising of \$1,750,000. An Appendix 3B in relation to the various share issues has been lodged with ASX.

Attached is the following information for pre-reinstatement disclosure:

1. Annexure A

a. Distribution of security holders
b. Statement of Restricted Securities
c. Capital Structure
d. Statement of Compliance with Listing Rules
e. Statement of Top 20 Holders of Listed Equity Securities
Statement of Financial Position $f_{\cdot}$
g. Use of Funds Expenditure Budget
h. Terms and conditions of 1 cent Options 31 December 2007
Terms And Conditions Of Converting Preference Shares i.
Terms and conditions of 40 cent Options - 31 December 2005 i.
1. Annexure B
a. Background
b. Suspension of Trading of Company Shares and Appointment of Administrator
c. Future of the Company
d. The Business Metabolism Test and Intellectual Property Know-How
e. Material Contract Future Health Joint Venture

All enquiries relating to the Company should be directed to Gary Steinepreis on 08 9420 9300.

Yours faithfully

G Gerinepreis

Gary Steinepreis Director Encl.

Annexure A

Distribution of security holders

Analysis of numbers of listed equity security holders by size of holding:

Category			Number of Shareholders
ı		1,000	353
1,001		5,000	137
5,001		10,000	64
10,001		100,000	159
100,001	and over		107
			820

Statement of Restricted Securities

Capital Structure

The capital structure of the Company is summarised below:

	Shares Number
Shares on issue	272,616,768
Options
Unlisted 40 cent Options exercisable on or before 31 December 2005	1,666,667
Unlisted 1 cent Options exercisable on or before 31 December 2007	30,000,000
Total Options on Issue	31,666,667
Convertible Cumulative Preference Shares (CCPS)
Series A	1,003
Series B	1,003
Total CCPS on Issue	2,006

Statement of Compliance with Listing Rules

I confirm that M Health is in compliance with the Listing Rules and, in particular, Listing Rule 3.1 and the market is fully informed

Statement of Top 20 Holders of Listed Equity Securities

M HEALTH LIMITED ABN 25 009 121 644

Top 20 holders of ORDINARY FULLY PAID SHARES - 17 Sep 2004 ORDINARY FULLY PAID SHARES

Rank	Name	Units	% of Issued Capital
ſ	OCEAN VIEW WA PTY LTD	11,015,673	4.04
$\overline{2}$	CASTLE SPRINGS PTY LTD	10,900,000	4.00
3.	BLUE MOUNTAIN ADVISORS LIMITED	10,600,000	3.89
4	MR RICHARD LYNN	10,500,000	3.85
5	ELLIOT HOLDINGS PTY LTD	10,000,000	3.67
6	PARAMOUNT ADVISORS LIMITED	10,000,000	3.67
7	SAVANNAH GLOBAL LIMITED	9,750,000	3.58
8	ASCENT CAPITAL PTY LTD	9,350,000	3.43
9	PETERSVIEW PTY LTD	9,250,000	3.39
10	RUBY COMMERCIAL LIMITED	8,350,000	3.06
$\blacksquare$	FLUE HOLDINGS PTY LTD	6,115,667	2.24
12	LEISUREWEST CONSULTING PTY LTD	6,000,000	2.20
$\overline{13}$	N&J MITCHELL HOLDINGS PTY LTD	5,050,000	1.85
$\overline{14}$	TAYCOL NOMINEES PTY LTD	5,000,000	1.83
15	HOPETOUN NOMINEES PTY LTD	4,900,000	1.80
16	FIRST DISTRIBUTION SERVICES LIMITED	4,323,000	1.59
$\overline{17}$	SIAFU SECURITIES PTY LTD	4,203,125	1.54
18	CLODENE PTY LTD	4,200,000	1.54
19.	FOPAR NOMINEES PTY LTD	4,000,000	1.47
20	MS JACQUELINE MARY STEINEPREIS	4,000,000	1.47
Totals:		147,507,465	54.11

Statement of Financial Position

M HEALTH LIMITED Statement of Financial Position as at 21 September 2004

	Notes	Ŝ
CURRENT ASSETS
Cash assets	1	1,240,000
TOTAL CURRENT ASSETS		1,240,000
NON-CURRENT ASSETS
Plant and equipment		185,000
TOTAL NON-CURRENT ASSETS		185,000
TOTAL ASSETS		1,425,000
CURRENT LIABILITIES
Unsecured creditors		125,000
TOTAL CURRENT LIABILITIES		125,000
NET ASSETS		1,300,000
EQUITY
Contributed equity	$\overline{2}$	7,327,140
Accumulated losses		(6,027,140)
TOTAL EQUITY		1,300,000
Note
1. Cash assets:		S
Opening balance
Placement of Shares at 0.25 cents each		125,000
Placement of Shares at 0.5 cents each Placement of Shares at 1 cent each		325,000
Payment to satisfy obligations under Deed of Company Arrangement		1,300,000 (510,000)
Closing balance		1,240,000

2. Contributed equity:		S
Opening balance		5,577,140
Placement of Shares at 0.25 cents each		125,000
Placement of Shares at 0.5 cents each		325,000
Placement of Shares at 1 cent each		1,300,000
Closing balance		7,327,140

Reconciliation to Use of Funds Budget:

Total funds raised under the Capital Raisings	1,750,000

Utilised as follows:
Repayment of Joint Venture Loans - TMC Assets	(185,000)
Repayment of working capital loans - Adminstrator	(325,000)
Current cash assets	1,240,000
Creditors – repayment of rental costs and other set-up costs	(50,000)
Costs of recapitalisation	(75,000)
Net working capital	1,115,000

Use of Funds - Expenditure Budget

The expenditure budgets outlined below have been prepared to meet the commitments of the Company. It is noted that programs and budgets are dependant on results. These programs can therefore change depending on the results of the work.

	Year 1	Year 2
	S	S
Total funds raised under the Capital Raisings	1,750,000

Utilised as follows:
Contribution to the Future Health Joint Venture, Business
development and repayment of Joint Venture Loans (Note 1)	242,500	200,000
Review and evaluation of new projects (Note 4)	250,000	150,000
Total general working capital budget	492.500	350,000
Repay Working Capital Loans (Note 2)	365,986
Working capital including expenses associated with the
recapitalisation proposal (Note 3)	264,514	277,000

Total funds utilised	1.123.000	627.000

Notes:

The contribution to the Future Health Joint Venture comprises:

(i)	TMC Assets	\$185,000
(ii)	Establishment Costs	5,000
(iii)	Premises Costs	2,500
	Repayment of Joint Venture Loans	\$192,500
(iv)	Initial Funding	\$20,000
(v)	Future premises costs (estimate)	\$30,000
		\$242,500

Funding by the Company of its contribution to the Future Health Joint Venture has been by way of the Joint Venture Loans.

Working Capital Loans were applied by the Company in the following manner:

(i)	Payment to Administrator	\$325,000
(ii)	Gross rent for Term of Subiaco Store lease inclusive of GST	\$22,836
(iii)	Gross rent for Option of Subiaco Store lease inclusive of GST	\$18,150
		\$365,986

1. The expenses of the recapitalisation are estimated at \$75,000.
1. The Company proposes to allocate capital towards the review and evaluation of new projects. The Company will assess opportunities in the health, fitness and lifestyle industry for growth and revenue potential to complement the existing Business. These opportunities may be by way of direct investment. joint venture or staged investment based on the project meeting agreed hurdles or milestones. If no complementary opportunities are identified then the Directors reserve the right to allocate this capital towards other business sectors. In the event that a major acquisition is identified, the Company will seek shareholder approval to change the nature and scale of its activities. At this stage, the Directors have not identified nor given consideration to any other business sector.

Terms and conditions of 1 cent Options - 31 December 2007

The material terms and conditions of the Options are as follows:

$(a)$ each Option entitles the holder, when exercised, to one (1) Share;
$(b)$ the Options are exercisable at any time on or before 31 December 2007;
the exercise price of the Options is 1 cent each; $(c)$
$(d)$ subject to the Corporations Act, the Constitution and the ASX Listing Rules, the Options are fully transferable;
the Options are exercisable by delivering to the registered office of the Company a $(e)$ notice in writing stating the intention of the Option holder to exercise a specified number of Options, accompanied by an Option certificate, if applicable, and a cheque made payable to the Company for the subscription monies due, subject to the funds being duly cleared funds. The exercise of only a portion of the Options held does not affect the holder's right to exercise the balance of any Options remaining;
$(f)$ all Shares issued upon exercise of the Options will rank pari pasu in all respects with the Company's then issued Shares. The Company does not intend to seek quotation of the Options;
there are no participating rights or entitlements inherent in the Options and holders $(g)$ will not be entitled to participate in new issues of Options to Shareholders during the currency of the Options. However, the Company will ensure that, for the purpose of determining entitlements to any issue. Option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give Option holders the opportunity to exercise the Options prior to the date for determining entitlements to participate in any such issue;
$(h)$ in the event of any reconstruction (including consolidation, subdivision, reduction or return of capital) of the issued capital of the Company prior to the expiry date of the Options, all rights of the Option holder will be varied in accordance with the ASX Listing Rules; and
in the event the Company makes a pro rata issue of securities, the exercise price of the $(i)$ Options will change in accordance with the formula set out in ASX Listing Rule $6.22.2.$

Terms And Conditions Of Converting Preference Shares

4.9.1 Definitions

In these terms and conditions:

"EBITDA" for the financial years ending on 30 June 2004 and 2005 (as appropriate) means $A +$ B where:

$M^*$ $\Lambda$ ¹² = the audited profit or loss before taxation expense (or benefit), interest expense, amortisation charges and depreciation charges of The Metabolism Centre for the financial year commencing on 1 July 2003 and 2004 (as appropriate) and ending on 30 June of the immediate following year.

$"R" =$ the audited profit or loss before taxation expense (or benefit), interest expense, amortisation charges, depreciation charges and expenses associated with the claim by Barry Dorr of any related body corporate (as defined by the Corporations Act) for the period commencing on the day that it became a related body corporate and ending 30 June 2004 and 2005 (as appropriate).

"Issue Price" means A\$0.20.

"Completion" means completion of the share sale agreements.

"CCPS-A-Share" means a Series A Converting Cumulative Preference Share as referred to in Section 4.9.2.

"CCPS-B-Share" means a Series B Converting Cumulative Preference Share as referred to in Section 4.9.2.

"Preference Shares" mean the CCPS-A- Shares and CCPS-B-Shares.

"Preference Shareholder" mean the holder of a CCPS-A- Share or CCPS-B-Share.

4.9.2 Type and Price

The Company may issue preference shares which will be known as "Series A Converting Cumulative Preference Shares" and "Series B Converting Cumulative Preference Shares" each at the Issue Price and on the terms and conditions herein.

4.9.3 Dividend

Preference Share dividend

Preference Shareholders are entitled to receive the dividend specified in this Section $4.9.3.$

Dividend rate

The dividend is fixed at 5% of the Issue Price of each Preference Share. The dividend will be computed from the issue to the conversion date of the Preference Share on the basis of a 365 day year and pro rata for part of a year.

Dividend entitlement

The time for the entitlement to a dividend is 5.00pm (WST) on 30 June of each year during the period from the issue to the conversion date of the Preference Share.

Dividend date

Dividends shall be paid if the Company has funds legally available for the payment of dividends within 30 days after the Preference Shareholder becomes entitled to the dividend.

Books closing date

Dividends are payable to the registered holders of each Preference Share as they appear in the register for the Preference Shares at 5.00pm (WST) on 30 June of each year during the period from the issue to the conversion date of the Preference Share.

Method of payment

Dividends shall be deemed paid if paid by cheque or direct debit on (or as soon as practicable after) the date determined by the Directors that a dividend is to be paid to the account or address nominated by the Preference Shareholder.

Preferential

Dividends on the Preference Shares shall rank in priority to dividends on the Shares.

Cumulative

Dividends on the Preference Shareholders will be cumulative.

Pari Passu

Dividends on the Preference Shares shall rank pari passu with all other Preference Shares.

4.9.4 Redemption

The Preference Shares are not redeemable.

4.9.5 Conversion

Conversion

The Preference Shares will convert into Shares in accordance with this Section 4.9.5.

Conversion formula for the CCPS-A Shares

The CCPS-A Shares each convert into Shares as follows:

i. if the EBITDA is less than \$2,000,000 for the financial year ending 30 June 2004, then each CCPS-A Share converts into one Share:
ii. if the EBITDA is more than \$4,000,000 for the financial year ending 30 June 2004, then each CCPS-A Share converts into 12,500 Shares; or
iii. if the EBITDA is more than or equal to \$2,000,000, but less than \$4,000,000 for the financial vear ending 30 June 2004, then each CCPS-A Share converts into the number of Shares as determined in accordance with the following formula:

$$
\left\langle \left[ \left( \frac{\text{EBITDA} - \$2,000,000}{\$2,000,000} \right) \right] *6,250 \right\rangle + 6,250
$$

Conversion formula for the CCPS-B Shares

The CCPS-B Shares each convert into Shares as follows:

i. if the EBITDA is less than \$5,000,000 for the financial year ending 30 June 2005, then each CCPS-B Share converts into one Share;
ii. if the EBITDA is more than \$10,000,000 for the financial year ending 30 June 2005, then each CCPS-B Share converts into 12,500 Shares: or
iii. if the EBITDA is more than or equal to \$5,000,000 but less than \$10,000,000 for the financial year ending 30 June 2005, then each CCPS-BA Share converts into the number of Shares as determined in accordance with the following formula:

$$
\left\langle \left[ \left( \frac{\text{EBITDA} - \$ 5,000,000}{\$ 5,000,000} \right) \right] * 6,250 \right\rangle + 6,250
$$

Automatic conversion

The CCPS-A-Shares and CCPS-B-Shares will automatically convert to Shares in accordance with this Section 4.9.5 within 15 Business Days after the release to ASX of the audited financial reports for the Company for the years ending 30 June 2004 and 2005 respectively.

Statements

As soon as practicable after conversion of any Preference Share, the Company shall dispatch statements or certificates in respect of the Shares issued as a result of the conversion.

After conversion

The Shares issued on conversion of any Preference Share will as and from 5.00pm (WST) on the date of allotment rank equally with and confer rights identical with all other Shares then on issue.

4.9.6 Issue of the Shares for no consideration

The Company shall not allot and issue the Shares for no consideration and shall record the allotment and issue in the manner required by the Corporations Act.

Reconstruction 4.9.7

In the event of any reconstruction, consolidation or division into (respectively) a lesser or greater number of securities of the Shares the Preference Shares shall be reconstructed, consolidated or divided in the same proportion as the Shares are reconstructed, consolidated or divided and, in any event, in a manner which will not result in any additional benefits being conferred on the Preference Shareholders which are not conferred on the Company Shareholders.

4.9.8 Winding up

If the Company is wound up prior to conversion of all of the Preference Shares into the Shares then the Preference Shareholders will have the right for each Preference Share held and not converted in the Shares to be paid cash for the Issue Price and any arrears of dividend in priority to the Company Shareholders but will have no right to participate beyond the extent specified in this Section 4.9.8 in surplus assets or profits of the Company on winding up.

4.9.9 Non-transferable

The Preference Shares are not transferable.

4.9.10 Copies of notices and reports

The Preference Shareholders have the same right as the Company Shareholders to receive notices, reports and audited accounts and to attend general meetings of the Company but are only entitled to vote in the circumstances referred to in Section 4.9.11.

Voting rights 4.9.11

The Preference Shareholders shall have no right to vote save for those circumstances listed in Listing Rule 6.3.

Terms and conditions of 40 cent Options - - 31 December 2005

The material terms and conditions of the Options are as follows:

each Option entitles the holder, when exercised, to one (1) Share; $(i)$
$(k)$ the Options are exercisable at any time on or before 31 December 2005;
$(1)$ the exercise price of the Options is 40 cents each;
subject to the Corporations Act, the Constitution and the ASX Listing Rules, the $(m)$ Options are fully transferable:
$(n)$ the Options are exercisable by delivering to the registered office of the Company a notice in writing stating the intention of the Option holder to exercise a specified number of Options, accompanied by an Option certificate, if applicable, and a cheque made payable to the Company for the subscription monies due, subject to the funds being duly cleared funds. The exercise of only a portion of the Options held does not affect the holder's right to exercise the balance of any Options remaining:
all Shares issued upon exercise of the Options will rank pari pasu in all respects with $(0)$ the Company's then issued Shares. The Company does not intend to seek quotation of the Options;
there are no participating rights or entitlements inherent in the Options and holders $(p)$ will not be entitled to participate in new issues of Options to Shareholders during the currency of the Options. However, the Company will ensure that, for the purpose of determining entitlements to any issue, Option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give Option holders the opportunity to exercise the Options prior to the date for determining entitlements to participate in any such issue;
in the event of any reconstruction (including consolidation, subdivision, reduction or $(q)$ return of capital) of the issued capital of the Company prior to the expiry date of the Options, all rights of the Option holder will be varied in accordance with the ASX Listing Rules; and
in the event the Company makes a pro rata issue of securities, the exercise price of the $(r)$ Options will change in accordance with the formula set out in ASX Listing Rule $6.22.2.$

Annexure B

Background

The Company was incorporated on 8 February 1985 as Ascot Mining NL. Since incorporation the Company has had a number of name changes and activities. Most recently the Company traded as Metabolism Health Limited, as a provider of proprietary services in the health, fitness and lifestyle industry. More specifically, the Company, through its subsidiary TMC, operated a weight loss business which utilised a model for identifying the presence of metabolic dysfunction and other causes of weight gain.

Whilst Metabolism Health Limited made progress on the development of its business model. continuing operating losses were sustained and the continuation of trading was dependant on the ability of the Company to restructure its business and to attract sufficient capital to fund activities in the future. Ultimately, these funds were not available to the Company and it was placed under external administration.

Suspension of Trading of Company Shares and Appointment of Administrator

The Company's securities were suspended from trading on ASX on 15 January 2004 following a request from the Company and the appointment of an external administrator to its subsidiary, The Metabolism Centre Pty Ltd (TMC), on the same date.

On 19 January 2004, the Directors of the Company appointed Brian McMaster of Ernst & Young, as Administrator of the Company under Section 436A of the Corporations Act.

At a meeting of creditors held on 1 April 2004, the Administrator proposed to the creditors of the Company that it was in the best interests of creditors to enter into a deed of company arrangement. At this meeting, creditors voted in favour of the Company entering into a deed of company arrangement with Ascent Capital so that Ascent Capital may recapitalise the Company. On 4 April 2004, the Deed of Company Arrangement was executed by the relevant parties, a summary of which is set out in this Memorandum and nominees of Ascent Capital, being David Steinepreis, Hugh Warner and Gary Steinepreis were appointed Directors of the Company on 16 April 2004.

The Deed of Company Arrangement required that an amount of \$510,000 and certain assets of the Company be made available for satisfaction of the claims of creditors, to meet the costs of the Administrator and to acquire all intellectual property and certain assets from TMC. It also provided that the administration of the Company terminated following the passing of the resolutions at the Shareholders Meeting, payment of \$510,000, and the transfer of certain assets to the Trustee for creditors.

On 7 July 2004, Shareholders of M Health approved the Recapitalisation Proposal in its entirety and as a consequence. Ascent Capital arranged the Joint Venture Loans and Working Capital Loans to enable the Company to meet its obligations under the Deed of Company Arrangement. Accordingly, settlement of the Deed of Company Arrangement occurred on 8 July 2004 and the Company was released from external administration on the same date.

The Company changed its name to M Health Limited on 9 July 2004.

The Company has maintained its intellectual property, which primarily comprises know-how associated with its Business, and is continuing with the operation of the Subjaco Store. A description of the Business and the know-how is set out below.

Future of the Company

It is the present proposal of Ascent Capital to continue the Business of the Company and the purpose of this Prospectus is to give effect to the Deed of Company Arrangement and matters associated with the Deed of Company Arrangement, to allow the Company to continue the development of the Company's Business.

The Company has entered into the Future Health Joint Venture with Calchek to continue the activities of the Business. Calchek, through Healthy Attitudes which is the trading name of the Subjaco Store, will provide a range of fitness testing services to the active consumer including the measurement of the three energy systems (aerobic, glycolytic and phospho-creatine). Healthy Attitudes is a new business and has not currently provided these services in this demographic area. The Future Health Joint Venture relates only to the tests identifying the presence of metabolic dysfunction and other causes of weight gain and has no financial interest in, nor will it benefit from, the other service offerings of Healthy Attitudes.

As part of its contribution to the Future Health Joint Venture, the Company has negotiated a lease for the Subiaco Store, met the 2004 lease payments, contributed and will continue to contribute working capital and provided intellectual property and assets acquired from TMC, including the client database. The funds used by the Company to make these contributions were from the Joint Venture Loans and the Working Capital Loans. Calchek as part of its contribution to the Future Health Joint Venture will provide appropriately qualified personnel to operate the business of the Future Health Joint Venture from the Subiaco Store which comprises one testing room, a reception/waiting room and three consulting rooms. The initial working capital of \$20,000 (refer to the description of the Future Health Joint Venture below) is being provided to allow for a contribution to personnel costs, business development and also marketing, which is at the discretion of Calchek. On-going management and financial operations and the marketing of the Business is the responsibility of Calchek and not Mr John (see below) whose proposed role is relating to the technical aspects of the Business only.

The proposed staffing levels to be provided by Calchek will be one administrative staff member and one technical person. It is proposed that the technical person be David John BPE (Hons), Med. Mr John, a former director of the Company, developed the Business and has worked as an exercise physiologist since 1988. In the event that Mr John does not provide the technical services then Calchek, through Healthy Attitudes, will source other qualified personnel to undertake this role. At this stage, relevant qualified personnel are available in the market.

It is the intention of the Company to meet its obligations to the Future Health Joint Venture and for Calchek as manager of the Future Health Joint Venture to initially focus on the development of the Healthy Attitudes business which includes the Business of the Future Health Joint Venture at the Subiaco Store. The objective is to demonstrate the effectiveness of this business model prior to the Future Health Joint Venture making a decision on the future of the Business.

The Business - Metabolism Test and Intellectual Property Know-How

Metabolism, or metabolic rate, is a measure of the amount of energy the human body expends, both in maintaining its essential body functions and energy expended through exercise. Poor or inefficient metabolism may result in various health problems including:

Weight gain or obesity
Diabetes

The core of the Company's intellectual property know-how is the measurement of "resting" metabolic rate" to determine metabolic status. That is, to determine whether a person's resting metabolism is low, normal or high when compared to a predicted metabolic rate. A "slow" metabolism indicates that the body is using less than the normal number of calories, whereas a "fast" metabolism is indicative of a higher than usual number of calories being used. When a person's metabolism is low, they tend to feel the cold more, feel fatigued and/or put on weight more easily. In contrast, a person with a high metabolic rate feels the cold less than others around them, possesses higher energy levels and can have difficulty putting on weight.

The Company's intellectual property know-how measures metabolic rate through indirect calorimetry, which is the measurement of the amount of oxygen used and carbon dioxide produced while breathing. Indirect calorimetry is a technique used to measure a person's actual metabolic rate. Calorimetry measurement can also determine what type of fuel the body is burning (fat vs carbohydrate), in addition to measuring the number of calories that the body is expending while at rest.

A person's metabolic rate can be substantially affected by hormone imbalances. Testosterone, progesterone and oestrogen are sex hormones that can affect the metabolic rate by up to 20% at rest. Hormone levels can be accurately tested from saliva samples.

Low hormone levels can be corrected through medically prescribed hormone supplements. These supplements include both synthetic hormone mimetics that are typically used in hormone replacement therapy and bio-identical hormone supplements which are identical to the natural hormones produced by the body.

Healthy Attitudes plans to offer its clients a range of services which will include the Company's intellectual property know-how. The Future Health Joint Venture and the Company will be operating in an existing and a competitive market, which includes major healthcare operators and weight loss services companies. As the Company's intellectual property know-how is not protected by patents there are no barriers to entry to the market which the Future Health Joint Venture is targeting.

As part of the Company's contribution to the Future Health Joint Venture, the Company has contributed the TMC client database it acquired as part of the Deed of Company Arrangement. Healthy Attitudes will review this database to assist in the future marketing of the Business.

The purpose of the metabolism program is to:

Measure how many calories are expended and classify a client's metabolism as either slow, normal or fast:
Provide clients with eating guidelines to facilitate weight loss and maintain a $\bullet$ healthy nutritional status;
Monitor the nutritional intake of each client.
Determine whether a current diet or eating programme is causing weight gain;
Measure the effect of medications on metabolism:
Assess carbohydrate metabolism abnormalities, e.g. impaired glucose tolerance; and
Provide early indications of sex hormone imbalance through pathology testing.

The standard metabolism program includes:

An initial consultation with a metabolism consultant:
A saliva test to determine hormonal levels: and
Weekly appointments for one month to assess progress and provide health coaching.

The Company had established brand awareness prior to the external administration process and the Directors consider that most of this goodwill has been lost. The objective is to re-package the intellectual property and know-how with other complementary tests to expand the service offerings to clients. The Future Health Joint Venture allows the Company to test the effectiveness of this approach in conjunction with Calchek, through Healthy Attitudes.

Material Contract - Future Health Joint Venture

The following is a summary of the material terms of the Future Health Joint Venture:

Ascent Capital and Calchek and/or its nominee has entered into a joint venture in relation to the intellectual property owned by the Company and related assets on the following terms:

The joint venture shall take effect if the Recapitalisation Proposal occurs which i) expression shall be defined as creditor and Shareholder approval of Ascent Capital's Recapitalisation Proposal, the appointment of Ascent Capital's nominees as Directors of the Company, the removal of the Company from external administration and the reinstatement to trading of the Company's securities to ASX.
iîì The Company shall have a 50% interest and Calchek and/or its nominee shall have a 50% interest in the joint venture.
The joint venture shall operate from premises at 239 Hay Street, Subiaco, Western iii) Australia (the "Premises").
$iv)$ The Company will provide the following to the joint venture:
the Premises inclusive of operating outgoings such as electricity and $(a)$ telecommunications, including the funding for the lease on the Premises;
$(b)$ initial funding of \$20,000 in cash;
all intellectual property owned by the Company which relates to the joint $(c)$ venture:
$(d)$ the TMC Assets which includes office and consulting rooms fit-out, computers, telephone system and metabolism testing equipment and other establishment costs of $$5,000$ ; and
$(e)$ the right to acquire up to five (5) calorimeters from the liquidator of TMC, provided that Ascent Capital has been successful in negotiating this option.
$V)$ Calchek will provide the following to the joint venture:
appropriately qualified personnel with the relevant experience to operate the $(a)$ equipment and processes for analysis;
$(b)$ management of the financial operations of the joint venture and Premises to be conducted by Calchek and not Mr John whose proposed role is relating to the technical aspects of the Business only.
At the end of the first year of the joint venture the Company will have the option to $\mathbf{vi})$ subscribe a further \$100,000 in funding to retain its 50% interest in the joint venture. If the Company contributes these funds they shall again be used by agreement by the joint venture parties to further the exploitation of the intellectual property.
In the event that the Company elects not to contribute the extra \$100,000 its joint vii) venture interest will be diluted to 10%.
After the second year of the joint venture the parties shall assess the commercial viii) viability of the intellectual property and make a decision (with voting rights based on their proportional interest in the joint venture) whether to continue the joint venture or sell the joint venture assets. At this stage, the parties will be required to agree new terms and conditions for the basis of operating the Business. In the event that these terms and conditions can not be agreed, the joint venture will follow the procedures as detailed below in clauses (i), (ii) or (iii).

The Company also proposes, as part of its commitments, to review and evaluate other opportunities in the health, fitness and lifestyle industry to increase sales and market awareness of the Future Heath Joint Venture's services.

Since the execution of the Future Health Joint Venture the parties have acted in good faith and agreed the following additional terms:

$(i)$ In the event of a dispute, which includes a dispute in relation to clause viii) above with respect to the second year of joint venture operations, that the parties agree to use a professional arbitrator and be bound by the decision of the arbitrator. The costs for the arbitration will be paid for by the joint venture.
$(ii)$ If either party is in breach of any term of the joint venture the other shall be entitled to terminate if the breach is not cured within 30 days.
$(iii)$ The joint venture may be terminated by default or mutual agreement. U_pon termination:
$\mathbf{1}$ the party intending to continue carrying on the business of the joint venture shall acquire the interest in the assets held by the joint venture of the party not so continuing at a price agreed between the parties and in the event that this price can not be agreed then the dispute resolution procedure is followed: or
in the event that both parties agree to terminate then the assets held by the joint $2₁$ venture will be sold and the proceeds will be split in accordance with voting rights based on their proportional interest in the joint venture, at that time.
The position of "the right to acquire up to five $(5)$ calorimeters from the liquidator of $(iv)$ TMC, provided that Ascent Capital has been successful in negotiating this option." has been clarified. This clause was included to facilitate an expansion of the Business, if determined by the Future Health Joint Venture. The purpose was to have a mechanism to acquire, for a reasonable cost, an important component of the Business know-how. There is no impact on the Company if the option is not negotiated or exercised as the calorimeters can be acquired from other parties, if required.