MEMPHASYS LIMITED. — Capital/Financing Update 2008

Apr 22, 2008

Tuesday 22[nd] April 2008

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Dear Fellow Shareholders and Potential Investors,

It is with great pleasure that I invite you to subscribe for the interest bearing 14% Converting Notes described in this prospectus. The proceeds of this capital raising of approximately $5 million will be used to expand sales and to complete the IVF clinical trials of the SpermSep CS10. You should read the prospectus for the full terms of the offer but the primary terms are:

Class of securities to be issued	Converting Notes
Interest Rate	14% pa
Interest Payment Dates	30thSeptember and 31stMarch each year
Note Term	3 years automatically converting on 30thSeptember
	2011 (if not previously redeemed or converted)
First Interest Payment	30thSeptember 2008
Security	Unsecured Notes
Issue Price	$10 per 14% Converting Note
Notes Conversion Rate	40 shares per Note or 25¢ per share
Maximum Application	1,000 Notes ($10,000.00)
Minimum Application	50 Notes ($500.00)
Liquidity	The Company will apply to have these Notes Listed
	on the ASX

Our April 2008 newsletter (lodged with ASX on 15 April 2008) outlines the successful clinical trial of the SpermSep at the Westmead Fertility Centre. There has been media coverage of the SpermSep over the last month including the Channel 7 Sunrise Show, Sky News and other print media.

NuSep has made significant progress since listing just under a year ago. Major developments include launching the MF10 instrument, achieving improved gel production rates and completing the initial SpermSep CS10 clinical trials. We have an active product development team who are working on developing a range of new products to be launched over the coming years.

As outlined in our IPO prospectus (lodged with ASX and ASIC on 14 December 2006), NuSep initially concentrated on improving the Gel manufacturing process so that Gel sales could be used to achieve a breakeven position or profits. I am pleased to report that we are well on the way to achieving a breakeven position. Manufacturing pass rates and production volumes are on target and Gel sales have increased significantly. Sales growth has been particularly strong since the appointment of Barry Holman as Vice President of

NuSep Ltd 22 Rodborough Rd Frenchs Forest NSW 2086	Postal Address P.O. Box 6126 Frenchs Forest NSW 2086	Contact Details Telephone+61 2 8977 9000 Facsimile +61 2 8977 9099	Emailinfo@nusep.com Webwww.nusep.com ABN33 120 047 556

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Sales in January 2008. As a result of this sales growth, NuSep has established its own sales and distribution office in Atlanta, US.

The Company currently is on budget and driving to achieve profitability. However, additional funding is necessary. The Board considers the best way to raise these funds is to offer a 14% Converting Note. Further, in order to minimise the interest expense, the Board has limited the number of Converting Notes to 500,000 on a first come first served basis with priority being given to the Company's current Shareholders. As a sign of our confidence in NuSep, the Directors have agreed to underwrite the Converting Notes issue to a maximum of $1million, subject to Shareholder approval.

We have set the minimum investment at $500 and the maximum at $10,000 in order to cater for our smaller shareholders. Below is a table setting out some examples of investment amounts and the correlating number of Converting Notes and shares.

Investment	Converting Notes	Shares on Conversion
$1,000	100	4,000
$5,000	500	20,000
$10,000	1,000	40,000

This prospectus contains detailed information on the proposed offer of Converting Notes and recent developments in NuSep's business. I recommend you read the prospectus carefully before deciding whether to invest in the Converting Notes. If you have any questions, you should consult your stockbroker, accountant, lawyer or other professional adviser.

Should you have any questions regarding this offer please contact the Company Secretary, Mr Prakash Patel on 02 8977 9000.

Finally, NuSep will hold an Extraordinary General Meeting (EGM) on Friday 30[th] May 2008 to approve the issue of the 14% Converting Notes. We will provide a further update on developments at that meeting and I encourage Shareholders to attend. As a general comment, I have been pleased by the number of Shareholders who have contacted me regarding their investment in NuSep. Our products address niche markets and it is often hard to gain information on these markets. Once again I would like to thank all Shareholders for their continuing support of the Company and look forward to meeting with many of you on Friday 30[th] May 2008.

Yours sincerely,

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Nicholas Caré Chairman