MEMPHASYS LIMITED. — Capital/Financing Update 2008

Jun 2, 2008

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Letter from the Chairman

Friday 30 May 2008

Dear Shareholder,

As announced on 26 May 2008, following shareholder feedback, the Board agreed to replace the Converting Note issue with a Share Purchase Plan (SPP) exercisable at 8¢ per share. I am pleased to inform you that you are eligible to participate in the SPP, under which you may purchase up to $5,000 of ordinary shares in the Company at 8¢ per share, a significant discount to the current share price.

I am pleased to report that NuSep continues to make significant progress. Some of the significant recent developments include:

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• The delivery of the first MF10 unit to the Australian National University in Canberra on Monday 26[th] May 2008.

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• The Westmead Fertility Centre in Sydney has submitted the SpermSep clinical study results for publication. In addition, the SpermSep clinical trial results have been covered by the media including the Channel 7 Sunrise programme and on Sky News. Links to these clips can be found on NuSep’s investor webpage and I encourage you to view them.

While we continue to make significant progress this growing Company requires additional funding to achieve its goals, hence the decision to conduct an SPP at 8c per share. I encourage you to take up this offer as in addition to being an attractive price you will not pay any brokerage or other transaction costs. Your Directors have, and continue, to be supportive of NuSep and will be taking up their SPP entitlements, subject to shareholder approval.

The funds raised by the SPP will be used to:

1. Expand sales with a view of achieving profitability on a monthly basis by: Expanding the sales and marketing of the precast gels, particularly in the US; Growing the sales of the MF10 proteomics instrument; and

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• Expanding NuSep's product range by introducing new and innovative products.

• Complete the development and achieve initial sales of the SpermSep CS10 by:

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• Undertaking the next clinical trial of the SpermSep CS10 instrument in order to commercialise this unit in the IVF market; and

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• Completing the development and launch of the SpermSep CS10 instrument for sale in the ICSI market.

If you wish to participate in the SPP, you can apply for any amount between $500 (6,250 shares) and $5,000 (62,500 shares). Some suggested application amounts are set out below:

Number of shares	Application amount at issue price of $0.08 per share
12,500	$1,000
31,250	$2,500
62,500	$5,000

This letter, including the enclosed document titled "Terms and Conditions of the Share Purchase Plan" and the attached Application Form, constitute the terms and conditions of the NuSep SPP. To participate in this Offer, you need to complete and return to the Company the enclosed Application Form, together with your cheque by Monday 23 June 2008.

I encourage you to read all the information relating to the SPP before deciding whether to participate. Any decision to participate in the SPP should be made after considering your own objectives, financial circumstances and needs. If you are in any doubt as to the action you should take, you should consult your professional adviser.

Shareholder approval will be required as the SPP issue price of 8¢ represents a 30% discount from the closing price on Friday 30 May 2008 and the issue may involve more than 15% of the Company's currently issued share capital. NuSep will hold a General Meeting on Monday 30 June 2008 to approve this SPP and to allow Directors to take up their SPP entitlements.

If after reading the enclosed documents you have any questions regarding the SPP, please contact the Company Secretary, Mr Prakash Patel, on 02 8977 9000.

Once again, thank you for your ongoing support of the Company. We look forward to meeting with you at the General Meeting on Monday 30 June 2008.

Yours sincerely,

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Nicholas Caré

Chairman

Share Purchase Plan

This is an offer to eligible shareholders ( Eligible Shareholders ) to subscribe for additional shares in NuSep Ltd (ACN 120 047 556) ( NuSep or Company ) under the terms and conditions of the Share Purchase Plan ( SPP ) set out in this document and the Application Form ( Offer ). This Offer is not renounceable and is personal to the shareholder detailed in the Application Form.

Key dates and information

Offer closes: 5.00pm Sydney time on 23 June 2008 Offer opens on: 2 June 2008 Record date: 30 May 2008 Allotment date: 4 July 2008 Commencement of trading on ASX: 7 July 2008 Price per share: $0.08

Important notice

The market price of shares in NuSep may rise or fall. This means that the subscription price you pay for the shares under the SPP may be less than OR exceed the market price of the shares at the time of allotment of the shares under this Offer. You are encouraged to seek your own financial advice. We also recommend that you consult relevant newspapers in relation to share price movements of shares in NuSep prior to accepting this Offer.

Investments in NuSep are not deposits with or other liabilities of NuSep and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. NuSep does not guarantee a particular rate of return or the performance of NuSep, nor does the Company guarantee the repayment of capital from NuSep.

Should the exact amount payable not be tendered, NuSep reserves the right either:

• (a) to accept the application for a lesser number of shares at the issue price equal to the amount tendered (rounded down to the nearest whole number); or

• (b) to return the Application Form and money, and you will be deemed not to have applied for any shares under this Offer.

No interest will be paid on any application money returned to you.

Significance of sending in an Application Form

If you do not wish to apply for shares under the SPP, do not fill out the Application Form.

If you participate in the SPP by completing and returning the Application Form:

• (a) you acknowledge that you are an Eligible Shareholder;

• (b) you confirm that you have not applied for more than A$5,000 of shares under the SPP and any similar arrangement in the 12 months prior to your application, even though you may have received more than one offer under the SPP or received offers in more than one capacity under the SPP;

• (c) you agree that your application is made on the terms and conditions of the SPP set out in this document and the Application Form;

• (d) you accept that you will not be able to withdraw or revoke your application once you have sent it in;

• (e) you authorise NuSep (and its officers or agents) to correct any error or omission in your Application Form and to complete the Application Form by the insertion of any missing details;

• (f) you acknowledge that NuSep may at any time determine that your Application Form is valid, in accordance with the terms and conditions, even if the Application Form is incomplete, contains errors or is otherwise defective;

• (g) you accept the risk associated with any refund that may be sent to you by cheque to your address shown on NuSep's register;

• (h) you are responsible for any dishonour fees or other costs NuSep may incur in presenting a cheque for payment which is dishonoured;

• (i) you acknowledge that NuSep has not provided you with investment advice or financial product advice, and that the Company has no obligation to provide this advice, concerning your decision to apply for and buy shares under the SPP;

• (j) you acknowledge that NuSep is not liable for any exercise of its discretions referred to in these terms and conditions; and

• (k) you irrevocable and unconditionally agree to the terms and conditions of the SPP and agree not to do any act or thing which would be contrary to the spirit, intention or purpose of the SPP.

General

The offer of shares under the SPP is in accordance with the Australian Securities and Investments Commission Class Order 02/831 that grants relief from the requirement to prepare a disclosure document for this Offer.

Terms and Conditions of the Share Purchase Plan

1. Participation

• 1.1 All persons registered as holders of fully paid ordinary shares of NuSep Ltd (ACN 120 047 556) ( NuSep or Company ) at the relevant record date (as stated on the accompanying Application Form) may participate in the Share Purchase Plan (" SPP ") except for those shareholders whose address in NuSep's share register is in a country whose laws or regulations make it, in the reasonable opinion of the directors of NuSep, unlawful or impracticable for the SPP to apply to them ( Eligible Shareholders ).

• 1.2 Participation in the SPP is optional and is subject to these terms and conditions.

• 1.3 The issue of shares under the SPP is subject to shareholder approval at the General Meeting of the Company on 30 June 2008.

• 1.4 This offer made under the SPP is personal to the shareholder detailed in the Application Form and is not renounceable ( Offer ).

• 1.5 The issue price for each share under the SPP was determined by the Company following the close of trading on 23 May 2008 to be $0.08 per share. The issue price was determined by using the lowest price the share has traded in the preceding 8 week period prior to the announcement of the SPP.

• 1.6 The market price of shares in NuSep may change between the date of this Offer and the date of issue of the shares to the applicant. This means that the issue price may be less than or exceed the market price of the shares at the time of allotment of the shares under this Offer. Eligible Shareholders should consider obtaining their own independent advice from a broker or financial or other professional adviser before making a decision to acquire shares under the SPP.

• 1.7 Under the SPP, the minimum amount which any Eligible Shareholder may subscribe for is 6,250 shares for A$500. The maximum amount which may be subscribed for is 62,500 shares for A$5,000.

2. Operation

• 2.1 Eligible Shareholders may apply for up to a maximum of A$5,000 worth of shares under this SPP or a similar arrangement in any consecutive 12 month period. Eligible Shareholders that receive more than one application due to multiple individual shareholdings or joint shareholdings may only apply for a maximum of $5,000 worth of shares.

• 2.2 Any Eligible Shareholder who wishes to participate in the SPP must indicate on the SPP Application Form that they wish to take up the Offer and return the signed Application Form together with payment of the correct subscription amount to NuSep at the address provided by the closing date.

3.

Allotment of shares

• 3.1 Shares to be allotted under the SPP will be allotted as soon as reasonably practicable and are expected to be allotted by 4 July 2008.

• 3.2 Shares allotted under the SPP will rank equally in all respects with all other fully paid ordinary shares in NuSep on the date of issue.

• 3.3 Shareholding statements will be issued in respect of shares allotted under the SPP.

• 3.4 NuSep will, promptly after allotment of shares under this SPP, procure the shares to be listed for quotation on the official list of ASX Limited ( ASX ). Shares under the SPP are expected to commence trading on ASX on 7 July 2008 (subject to shareholder approval being received at the General Meeting on 30 June 2008).

• 3.5 NuSep may resolve to allot to any person fewer shares than that person applied for under the SPP if the allotment of those shares would contravene any law or the listing rules of ASX.

4. Costs of Participation

• 4.1 No brokerage, commissions or other transaction costs will be payable by participants in respect of the application for, and allotment of, shares under the SPP.

5. Dispute Resolution

• 5.1 NuSep may settle in any manner it thinks fit, any difficulties, anomalies or disputes which may arise in connection with or by reason of the operation of the SPP whether generally or in relation to any participant, or application, or shares and the decision of NuSep is conclusive and binding on all participants and other persons to whom the determination relates.

• 5.2 NuSep reserves the right to waive strict compliance with any provision of these terms and conditions. The powers of NuSep under these terms and conditions may be exercised by the directors or any delegate of the directors of NuSep.

NuSep Ltd ABN 33 120 047 556

Share Purchase Plan - Application Form

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	Record Date:	30 May 2008
	Close Date:	23 June 2008
	Issue Price:	$0.08 per share
	SRN/HIN

This document is important and requires your immediate attention. If you are in any doubt as to the action you should take, please consult your stockbroker, accountant or professional adviser. Please see instructions on how to complete this Application Form and where to send it.

A Offer Choice

Indicate your choice below by marking one box only. You may purchase a minimum of 6,250 shares for A$500 or a maximum of 62,500 shares for A$5,000

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Option 1 Option 2 Option 3 ……………………… [insert number of shares] 62,500 shares 31,250 shares at $0.08 per share = � � A$5,000.00 A$2,500.00 A$...................................... [insert amount]

B Payment Details

Record cheque details below

Drawer	Cheque Number	BSB Number	Account No.	Amount A$

PAYMENT INSTRUCTIONS:

• Only cheques or bank drafts in Australian dollars and drawn on a bank or financial institution in Australia will be accepted. Your cheque or bank draft must be made payable to “ Nusep Ltd - Share Purchase Plan” and crossed Not Negotiable. Please ensure that you submit the correct amount. Incorrect payments may result in your application being rejected.

• Payments must be made via cheque accompanying the Application Form.

• Cash will not be accepted via the mail or at Nusep Ltd.

• Payments cannot be made at any bank.

C Contact Details

Please provide a telephone number and contact name in case we need to contact you regarding your application.

Telephone number Contact name Email address

D Declarations and Acknowledgments

By lodging this form with your cheque you acknowledge and confirm that you have read, understood and agreed to the terms and conditions of the Nusep Ltd Share Purchase Plan (SPP). Nusep Ltd may settle in any manner it deems appropriate, any dispute or anomalies which may arise in connection with or by reason of the operation of the SPP, whether generally or in relation to any applicant or application of shares. The decision of Nusep Ltd will be conclusive and binding on all persons to whom the determination relates. Nusep Ltd reserves the right to waive compliance with any provision of the SPP terms and conditions. The Directors reserve the right to withdraw the offer of shares under the SPP, or reduce the amount of shares that may be subscribed for under the SPP in any manner, at any time prior to allotment. Any excess application moneys will be refunded. No interest will be paid on any refunded application money.

NO SIGNATURE IS REQUIRED ON THIS FORM

THIS OFFER IS NON-RENOUNCEABLE

Application Forms and cheques must be received no later than 5.00 pm (Sydney time) on23 June 2008at:	Application Forms and cheques must be received no later than 5.00 pm (Sydney time) on23 June 2008at:
MAILING ADDRESS	DELIVERY ADDRESS
NuSep Ltd	NuSep Ltd
PO Box 6126	22 Rodborough Road
Frenchs Forest, NSW 2086	Frenchs Forest, NSW 2086

You should allow sufficient time for this to occur. The postal acceptance rule does not apply to the SPP.

Share Purchase Plan

By completing this Application Form and forwarding it with your payment, you (a) acknowledge that you have read and understood the Terms and Conditions of the Share Purchase Plan (SPP), (b) apply to subscribe for shares in accordance with the Terms and Conditions of the SPP, (c) certify that the aggregate application amount of ordinary Shares in the Company which you have applied for under this SPP (including through joint and beneficial holdings), even if you received more than one offer under this SPP, does not exceed A$5,000, and (d) represent and warrant that you:

• were the registered holder of one or more fully paid ordinary Shares in the Company (Shares) at 7.00 pm (Sydney time) on 30 May 2008 with an address in Australia and you do not hold Shares on behalf of another person who resides outside Australia;

• are not in the United States and you are not acting for the account or benefit of any person within the United States in applying for shares under the SPP; and

• have not received any documentation in relation to the SPP in the United States and you have not mailed, transmitted or otherwise distributed any documentation relating to the SPP in or into the United States.

How to complete this Application Form

• A. You have the choice to purchase a minimum of 6,250 shares for A$500 or a maximum of 62,500 shares for A$5,000. Indicate the number of shares you wish to purchase by completing the appropriate box.

• B. Please enter your cheque (or money order) details in Section B. Cheques or money orders must be drawn on an Australian branch of a financial institution in Australian dollars and made payable to "NuSep Ltd – Share Purchase Plan" and crossed "Not Negotiable". Enter the total dollar amount of the shares applied for in the box provided.

• C. Please enter a contact name and daytime telephone number so we may contact you regarding your Application, if necessary.

Lodgement instructions

The completed Application Form should be forwarded with your payment so it is received by the Company at the address set out on page 1 of this Application Form by 5.00 pm (Sydney time) on 23 June 2008 . If you are returning your Application Form by post, you should allow sufficient time for collection and delivery by postal services. The postal acceptance rule does not apply to acceptance of this offer. Your Application Form cannot be faxed to the Company as a cheque (or money order) payment must be attached to your Application Form.

It is not necessary to sign or otherwise execute the Application Form. If you have any questions as to how to complete the Application Form, please contact the Company Secretary at NuSep on telephone number (61 2) 8977 9000.

Privacy Statement

Personal information collected on this form by NuSep will be used to process your application, to maintain the Company's registers of securityholders, facilitate distribution payments and for other corporate actions and communications. Your personal information may be disclosed to NuSep's related body corporates, to external service companies such as print or mail service providers, or as otherwise permitted by law. If you would like details of your personal information held by NuSep, or you would like to correct information that is inaccurate, incorrect or out of date, please contact NuSep. In accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the Company in addition to general corporate communications. You may elect not to receive marketing material by contacting NuSep. You can contact NuSep using the details provided on this Application Form or by emailing cosec@NuSep.com.

Please return the Application Form with your cheque or money order so that it is received by NuSep on or before 5pm (Sydney time) on 23 June 2008