HYTERRA LTD — Capital/Financing Update 2008

May 22, 2008

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ASX Announcement

Company strategic review

23 May 2008: The Board of BrainZ Instruments (ASX:BZI) has begun a review of the BrainZ business. The objective is to maximise shareholder value through evaluating strategic alternatives including continuing the current process of organic growth, considering possible Original Equipment Manufacturer (OEM) partnerships or integrating some or all of the assets of BrainZ into a broader business.

Background

The BrainZ board continues to believe that the market opportunity is substantial and that the BRM is competitive with other available bedside monitors. However, data from controlled clinical trials comparing outcomes with or without interventions based on bedside BRM monitoring are now not expected until 2010. Such clinical data are believed to be necessary to drive higher sales and reach a tipping point where bedside brain monitoring of at-risk neonates becomes a standard of care.

In this context, the company’s current cash burn is approximately NZ$200,000 per month, versus 31 March 2008 cash reserves of NZ$3.462m.

The BrainZ board has previously announced initiatives to control the company’s cash burn (while minimising impairment of long term prospects and competitiveness) as well as exploring M&A opportunities.

Directors believe that BrainZ may need to change its business model to deliver value to shareholders within a reasonable timeframe. The strategic review will therefore evaluate alternatives including (1) integrating BrainZ into a broader neonatal business (in order to achieve the necessary critical mass and capital), and/or (2) appropriate OEM arrangements, and/or (3) entering partnerships with parties with an interest in specific products (such as RecogniZe).

The current international distribution agreement with GE contains a right of first refusal in the event that the review process results in a sale proposal for part or all of the BrainZ business.

ENDS

Enquiries: Richard Smith Rudi Michelson Chief Executive Officer Monsoon Communications BrainZ 03 9620 3333 +1 443 280 2920

About BrainZ

BrainZ (ASX: BZI) is a New Zealand based medical technology company specializing in the research, development, manufacturing and sale of bedside brain monitoring technology. The BRM3 Brain Monitor, BrainZ’s second generation product, is a unique bedside tool that assists in the detection of brain injury and seizure activity in neonates. It has been specifically designed to assist intensive care staff with clinical decision-making in conjunction with other clinical data and in the direction of care on a day-to-day basis.

The BRM3 has received regulatory approval in most major markets and is in use in over 20 countries worldwide. BrainZ dominates the local Australian and New Zealand markets via direct sales channels. BRM2 monitors are also installed in over 40 leading US hospitals. BrainZ has an exclusive agreement with GE Healthcare, a leading supplier of patient monitoring systems, for the distribution of BRM3 Brain Monitors in the North American, European, Middle East and Asian markets.

BrainZ Instruments was established in 2001 to commercialize pioneering neonatal brain research from the Auckland University’s Liggins Institute.