MACH7 TECHNOLOGIES LIMITED — Interim / Quarterly Report 2010

Oct 29, 2009

==> picture [112 x 102] intentionally omitted <==

30 October 2009

ASX and Media Announcement

APPENDIX 4C - Quarterly Report for entities admitted on the basis of commitments

FOR THE QUARTER ENDED 30 SEPTEMBER 2009

HIGHLIGHTS:

• SafetyMed terminates existing strategic alliance agreement with Exelint International Co. (“Exelint”) to pursue exciting new global opportunity.

• SafetyMed signs letter of intent with major Hungarian Medical Products Manufacturer, Dispomedicor Zrt. (“Dispomedicor”) (www.dispomedicor.hu).

• Estimated €25million (Euro dollars) Joint Venture Entity (“JVE”) Project for production and worldwide marketing of safety and conventional medical products.

• Core products to include a full range of SafetyMed designed SecureTouch Retractable Syringes and Dispomedicor designed Safety Needles as well as a full range of conventional needles and syringes and other high volume medical devices.

• Significant Hungarian Government involvement expected via grants and Governmental Bank Finance

€25 MILLION(AU$50 MILLION) JOINT VENTURE PROJECT

Under the letter of intent, the project is expected to take the form of a new Hungarian based entity (JVE) in which SafetyMed and Dispomedicor will hold equal share. Equity partners will also be sought to fund part of the proposed JVE.

The JVE will be the planned freehold owner of a 12,000sqmtr site located in central Debrecen, (Hungary’s second largest city) upon which the new facility will be built. This site shares a common boundary with one of Dispomedicor’s existing facilities with easy access to the sterilisation plant.

==> picture [118 x 82] intentionally omitted <==

Safety Medical Products Limited 25 Fenden Road, Salisbury Plain, South Australia Australia, 5109 ACN 007 817 192 Phone: (08) 8285 5226 Fax: (08) 8285 3228 Email: info@safetymed.com.au Website: www.safetymed.com.au ASX Code: SFP SafetyMed® is a registered trademark of Safety Medical Products Ltd

In exchange for its equity stake, Dispomedicor will transfer some of its existing syringe manufacturing business to the JVE to take advantage of the latest manufacturing technologies that will be incorporated in the new facility as well as replacing any products currently outsourced.

Intellectual property (“IP”) for SafetyMed’s and Dispomedicor’s safety devices will also be contributed under license to the JVE, as part of the parties planned equity contribution.

SafetyMed will also be required to manage the initial JVE strategic setup as the final part of their initial equity contribution under the letter of intent.

Under the letter of intent, both companies will sell into the JVE at a fair commercial value any relevant hardware and inventory that will be required for production in the new facility. This includes SafetyMed’s automated assembly machine as well as an anticipated further three new machines to be built by SafetyMed’s subsidiary Baratex Pty Ltd (“ProControl”).

SAFETYMED AND DISPOMEDICOR SYNERGIES

Dispomedicor is the largest manufacturer of disposable medical products in Hungary and dominates the local market as well as exporting to more than 30 countries.

It owns one of the two largest Gamma Sterilisation plants in Europe that is based at their Debrecen site and has been in business for over 50 years employing nearly 400 people.

Dispomedicor also manufactures the sterilised feminine hygiene products that SafetyMed imports and markets into Australia under its other JV being Pureste Pty Ltd (“Pureste”).

SafetyMed has built a strong relationship with Dispomedicor over the last twelve months whilst building the Pureste business.

During this time Dispomedicor expressed a keen interest in the SafetyMed SecureTouch Retractable Syringe and the synergies that could be gained since both companies had such a similar product range.

Discussions progressed to a point where two of the SafetyMed Directors, Mr. Riemelmoser and Dr. Nicholas visited the Dispomedicor Facilities in Hungary in early August when strategic JVE planning commenced.

HUNGARIAN GOVERNMENT SUPPORT AND INCENTIVES

The Hungarian Government is totally committed to attracting “smart” industry to their country in an effort to provide long term highly skilled employment as well as create import replacement opportunities.

Hungary has ascended to be an active member of the European Union (EU), however has not yet fully qualified for Membership to the Economic and Monetary Union (EMU) and thus cannot adopt Euro Dollar conversion. Unemployment reduction is one of the critical factors for the Hungarian Government to achieve in order to meet its self imposed Euro adoption deadline of 2012.

The Hungarian Government through its Investment and Trade Development Agency has already indicated the JVE would qualify for a 35% grant of the total estimated €25Million project cost.

Dispomedicor has also had advanced discussions with the Hungarian Governmental Bank where potentially a further 60% of project funding would be provided if required.

Other significant incentives including tax breaks and employment subsidies are also available and advice received so far indicates that the JVE meets the required criteria.

To be able to establish a major business such as this in the heart of the second largest city in Hungary prior to their EMU membership should bring with it a host of other advantages once membership is attained.

LEADTIME

It is anticipated that it will take 12 months from securing funding to have the plant fully operational with expectations of sales revenues in the order of €45MILLION (AU$90 MILLION) achieved by year 5.

As customers of the JVE, SafetyMed and Dispomedicor will retain their current territories and purchase product from the new entity at far more economical rates (given expected synergies). New territories will be opened up and either directly marketed into by the JVE through SafetyMed, or Dispomedicor or the appointment of suitable distributors.

IN CONCLUSION

This is the ideal opportunity for SafetyMed to complete its goal of producing and making available for market its full range of Safety Syringes as well as the added benefit of being a partner in the production and sales of a full range of standard syringes and other high volume medical products on a global scale.

This global opportunity for SafetyMed may require new management skill and expertise; to this end, the board will in the future consider the need for new board members or managers with the relevant skills and expertise especially in relation to SafetyMed’s global business needs.

Under the proposal, SafetyMed will retain its IP; Australian Production will move offshore; and its Salisbury Facility will be used solely as a sales, storage and distribution centre for the JVE’s new medical product range and the Pureste sterilised feminine hygiene products.

CASH AT 30 JUNE 2009

Cash and cash equivalents as at 30 June 2009 amounted to $345,857. The SafetyMed group currently has available finance facilities amounting to $9.67 million of which $2.67 million has been utilised.

On the 28 October 2009 the Company announced a Share Purchase Plan that will raise a maximum of $1,030,056 from the issue of up to 22.9 million shares.

For further information please contact:

Mr. John Riemelmoser Managing Director Safety Medical Products Limited Ph (08) 8285 5226 Fax (08) 8285 3228 Email info@safetymed.com.au

About Safety Medical Products Limited

SafetyMed is a company focused on developing and marketing a unique range of innovative Safety Products led by its flagship SecureTouch Retractable Syringe.

About the ‘Pureste’ feminine hygiene product range

SafetyMed, via its 50% owned subsidiary, Pureste Pty Ltd ( ‘Pureste’ ) has developed the first and only range of sterilised tampons, pads and panty liners to be marketed and distributed across Australia and New Zealand through leading retail outlets and pharmacies.

Further information of the Pureste product range please visit: www.pureste.com.au.

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Name of entity

Safety Medical Products Limited

ABN 26 007 817 192	Quarter ended (“current quarter”)
26 007 817 192	30 September 2009

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes 1.7 Other (provide details if material) Direct purchases Consulting & professional fees Net operating cash flows	Current quarter $A’000	Year to date (3 months) $A’000
	1,289 (371) (124) - (2) (15) - 6 (104) - (907) (149)	1,289 (371) (124) - (2) (15) - 6 (104) - (907) (149)
	(377)	(377)

• See chapter 19 for defined terms.

24/10/2005

Appendix 4C Page 1

Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $A’000	Year to date (3 months) $A’000
1.8 Net operating cash flows (carried forward)	(377)	(377)
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other Net investing cash flows 1.14 Total operating and investing cash flows	- - - - - 1,300 - - 20 - - - -	- - - - - 1,300 - - 20 - - - -
	1,320	1,320
	943	943
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other (provide details if material) Share issue costs Repayment of Convertible Notes Net financing cash flows	- - - (104) - - (50)	- - - (104) - - (50)
	(153)	(153)
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.20 1.23 Cash at end of quarter	790 (444) -	790 (444) -
	(346)	(346)

• See chapter 19 for defined terms.

24/10/2005

Appendix 4C Page 2

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.24 Aggregate amount of payments to the parties included in item 1.2 1.25 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
	130
	-

• 1.26 Explanation necessary for an understanding of the transactions

Consists of director fees, salaries and superannuation to directors, and consulting fees paid to director-related entities.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Not Applicable

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

Not Applicable

Financing facilities available

Financing facilities available
3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	1,170	1,170
	8,500	1,504

• 3.1 Loan facilities exclude Convertibles Notes of $700,000.

3.2 Credit standby facilities include bank overdraft facilities, trade finance facilities and the documentary letter of credit facility.

• See chapter 19 for defined terms.

24/10/2005

Appendix 4C Page 3

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other (provide details) *	352	209
	(506)	(653)
	500	-
Total: cash at end of quarter(item 1.23)	346	(444)

*SafetyMed have renegotiated the banking security with the Company’s bankers, National Australia Bank following the disposal of Bagot Press assets; the security has been replaced with a $500,000 three month term deposit that has been extended to 31 December 2009. The term deposit will be released on maturity subject to Pureste sale targets being achieved.

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	Not Applicable	Bagot Press trade and assets
		N/A -disposed of trade and assets only. Safety Medical Products Ltd retained company as 100% subsidiary.
		$1,300,000
		$1,300,000
		Manufacture and supplier of specialised printing and general consumables to thepharmaceutical industry.

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2

• This statement does give a true and fair view of the matters disclosed.

Sign here:

==> picture [109 x 42] intentionally omitted <==

Date: 30 October 2009

(Director)

Print name: John

Riemelmoser

• See chapter 19 for defined terms.

24/10/2005

Appendix 4C Page 4

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. 9.2 - itemised disclosure relating to acquisitions  9.4 - itemised disclosure relating to disposals  12.1(a) - policy for classification of cash items  12.3 - disclosure of restrictions on use of cash  13.1 - comparative information

5. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

24/10/2005

Appendix 4C Page 5