MEMPHASYS LIMITED. — Audit Report / Information 2007

May 9, 2007

RSM Bird Cameron Corporate Pty Ltd

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T+61 2 9233 8933 www.rsmi.com.au

13 April 2007

The Directors NuSep Ltd 22 Rodborough Road FRENCHS FOREST NSW 2086

Dear Sirs

Investigating Accountant's Report

$\mathbf{f}$ Introduction

• $1.1$ This report has been prepared at the request of the Directors of NuSep Ltd ("NuSep" or "the Company" to accompany the lodgment of the listing application with the Australian Stock Exchange ("ASX"). The Prospectus, dated 14 December 2006, as lodged with the Australian Securities and Investments Commission ("ASIC"), relates to a 1:1 non renouncable rights issue to raise \$2,467,296 by the issue of 4,934,592 fully paid ordinary shares in the Company at an issue price of 50 cents per share with one attaching option at no additional cost for every 4 new shares issued pursuant to the Prospectus.
• $1.2$ This report has been prepared in accordance with the general disclosure requirements of the Corporations Act 2001 to accompany the Company's listing application with the ASX, and does not form part of the Prospectus.
• $1.3$ The future prospects of the Company, other than the preparation of a pro forma Balance Sheet for the Company, assuming completion of the proposed transactions, are not addressed in this report. This report also does not address the rights attaching to the shares to be issued pursuant to the Prospectus, nor the risks associated with the investment.

Liability limited by a scheme approved under Professional Standards Legislation

RSM Bird Cameron Corporate Pty Ltd ABN 82 050 508 024 Licensed Investment Adviser No.255847

Maior Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra

RSM Bird Cameron Corporate Pty Ltd is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

Kanang Baratin,

$\overline{2}$ Scope of Examination

• $2.1$ You have requested RSM Bird Cameron Corporate Pty Ltd to prepare an Investigating Accountant's Report on the following:
• the unaudited Balance Sheet of the Company as at 31 October 2006 (the "Historical $\bullet$ Financial Information"); and
• the pro forma Balance Sheet of the Company as at 31 October 2006, assuming $\ddot{\phantom{1}}$ completion of the capital raising and the transactions summarised in Note 1(b) to the financial statements (the "Pro-Forma Financial Information").
• The Historical Financial Information has been extracted from the unaudited financial report of $2.2$ NeSep as at 31 October 2006 representing the assets and liabilities of the Company as the time of demerger from Life Therapeutics Limited.
• $2.3$ The Directors of NuSep are responsible for the pro forma financial information included in this report.
• 2.4 Our review has been conducted in accordance with Australian Auditing Standards AUS 902 "Review of Financial Reports". We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:
• an analytical review of the financial information; ٠
• review of the application of accounting standards and policies; $\bullet$
• examination of financial records; and $\bullet$
• enquiries of management. $\bullet$
• $25$ These review procedures were substantially less in scope than that would be required in an audit examination conducted in accordance with Australian Auditing Standards, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

$\overline{\mathbf{3}}$ Background

• $3.1$ The Company was incorporated in June 2006 and commenced business on 1 November 2006.
• $3.2$ The company issued a prospectus in December 2006 for a rights issue to raise additional capital.
• $3.3$ NuSep hopes to list on the ASX in April 2007.

$\overline{\mathbf{4}}$ Subsequent Events

$4.1$ Apart from the matters dealt with in this report, having regard to the scope of our work, to the best of our knowledge and belief, no material transactions or events outside the ordinary business of the Company have come to our attention that are not otherwise disclosed in the Prospectus, which require further comment upon or adjustment to, the information referred to in this report, or which would cause the information in this report to be misleading.

$\overline{5}$ Opinion on historical and pro forma financial information

• 5.1 In our opinion, based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the financial information set out in the Appendix to this report does not present fairly:
• $5.1.1$ the unaudited Balance Sheet of the Company as at 31 October 2006; and
• the pro forma Balance Sheet of the Company as at 31 October 2006 adjusted to include $5.1.2$ funds proposed to be raised pursuant to the Prospectus and the completion of the transactions summarised in Note $1(c)$ to the financial statements.

6 Declaration

• RSM Bird Cameron Corporate Pty Ltd is a licensed investment adviser under the Corporations 6.1 Act 2001 and is beneficially owned by the partners of RSM Bird Cameron, a large national firm of chartered accountants.
• 6.2 Mr A J Gilmour CA is a director and authorised representative of RSM Bird Cameron Corporate Pty Ltd and a director of RSM Bird Cameron. He has professional qualifications and experience appropriate to the advice offered.
• 6.3 RSM Bird Cameron Corporate Pty Ltd has acted as Investigating Accountant for the Company but has not been involved in the preparation of any other part of this Prospectus. Accordingly, we make no representations as to the completeness and accuracy of the information in any other part of this Prospectus. RSM Bird Cameron Corporate Pty Ltd has not made and will not make any recommendation, through the issue of this report, to potential investors in the Company as to the merits of the investment.
• 6.4 RSM Bird Cameron Corporate Pty Ltd will receive a fee for the preparation of this report based on actual hours spent on the assignment at normal professional rates. RSM Bird Cameron Partners are the auditors of the Company and will receive professional fees in relation to the statutory audit of the Company. With the exception of the above fee, neither Mr A J Gilmour, RSM Bird Cameron Corporate Pty Ltd nor RSM Bird Cameron Partners will receive any other benefits, either directly or indirectly, from the preparation of this report and have no pecuniary or other interest which could be regarded as affecting the ability to provide an unbiased opinion in relation to the proposed transaction.

6.5 RSM Bird Cameron Corporate Pty Ltd has consented to the inclusion of this report in the Prospectus in the form and context in which it appears. At the date of this report, this consent has not been withdrawn.

Yours faithfully

Andrew Critmons

A J GILMOUR Director

NUSEPLTD

PRO FORMA BALANCE SHEET

AS AT 31 OCTOBER 2006

	Actual at 31 October 2006 Date of de-merger	Pro Forma After Completion of Rights Issue 30 January 2007
	\$	\$
CURRENT ASSETS
Cash	300,000	2,767,296
Inventories	900,000	900,000
Receivables
TOTAL CURRENT ASSETS	1,200,000	3,667,296
NON-CURRENT ASSETS
Property, plant & equipment	2,900,000	2,900,000
Other assets	1,000,000	1,000,000
TOTAL NON-CURRENT ASSETS	3,900,000	3,900,000
TOTAL ASSETS	5,100,000	7,567,296
CURRENT LIABILITIES
Payable/Directors loan	300,000	300,000
Provisions for employee leave	220,000	220,000
TOTAL CURRENT LIABILITIES	520,000	520,000
Other Liabilities	1,000,000	1,000,000
TOTAL NON-CURRENT LIABILITIES	1,000,000	1,000,000
TOTAL LIABILITIES	1,520,000	1,520,000
NET EQUITY	3,580,000	6,047,296

The unaudited pro forma statements of financial position reflect adjustments for the transactions outlined in Note 1(b). The statements of financial position should be read in conjunction with the notes to and forming part of the financial statements.

NUSEP LTD

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

AS AT 31 OCTOBER 2006

$\mathbf{L}$ Summary of Significant Accounting Policies

The significant accounting policies that have been adopted in the preparation of this financial report are:

Basis of preparation $\overline{a}$ .

This prospectus will be issued during the company's financial year ended 30 June 2007. The Company will be required to prepare its annual financial report in accordance with the Australian equivalents to International Financial Reporting Standards (AIFRS). Accordingly the Balance Sheet has been prepared in accordance with AIFRS and other mandatory reporting requirements in Australia.

The financial report has been prepared using the accrual basis of accounting and is based on historical costs and does not take account of changing money values or current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

The Statements of Financial Position have been prepared on a going concern basis. The Company's ability to continue as a going concern is contingent upon raising additional capital to fund product commercialisation, administrative and corporate costs and working capital.

Pro forma balance sheet $\mathbf{b}$ .

The pro forma balance sheet for the Company has been included for illustrative purposes only. The pro forma balance sheet has been prepared by adjusting the Balance Sheet to reflect the financial effect of the following transactions as if they had occurred at 31 October 2006:

• $\ddot{i}$ 1:1 non renouncable rights issue of 4,934,592 fully paid shares of 50c each pursuant to this Prospectus raising \$2,467,296;
• $\mathbf{ii}$ Issue of 1.233.648 tradeable 50c options on the basis for 1:4 shares taken up under the rights issue;
• iii) Costs associated with the issue of the prospectus have been estimated at \$350,000 and will be covered by Life Therapeutics Limited as part of the demerger process;
• $iv)$ Shortly after the de-merger from Life Therapeutics the company received loan funds from 2 directors totaling \$300,000 for working capital purposes. The repayment of these directors loans is expected to be from the capital raising after the completion of this transaction.

NUSEP LTD

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

AS AT 31 OCTOBER, 2006

	Ref	31 October 2006 S
Note 2 Reconciliation of Cash
Cash balance as at 31 October 2006	1b(iv)	300,000 2,467,296
Funds raised pursuant to this prospectus Capital Raising Costs	1b(i) 1b(iii)	$\left( -\right)$
Repayment of Directors Loans	1b(iv)	$(-)$
Pro forma Cash Position		2,767,296

Note 3		Number of
Movements in Contributed Equity - Ordinary Shares	Ref	Shares	S
Balance as at 31 October 2006		4,934,592	3,580,000
Shares issued under this Prospectus	1b(i)	4,934,592	2,467,296
Costs of the Capital Raising	1b(iii)		$(-)$
Pro forma balance as at 31 October 2006		9,869,184	6,047,296

Movements in Option Premium Reserve	Number of Options s
Balance as at 31 October 2006 Options issued under this Prospectus	1b(ii)	2,650,000 1,233,648
Proforma balance as at 31 October 2006		3,883,648