MEMPHASYS LIMITED. — Capital/Financing Update 2009

Jul 9, 2009

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Thursday, July 09, 2009

Dear Shareholders,

It is with great pleasure that I advise Shareholders that NuSep is now relisted on the ASX and will continue to trade as NuSep under the ASX code of NSP. NuSep is a vibrant and exciting company with significant upside.

The NxGen Deal

The Board of NuSep had recommended the NxGen deal to shareholders as the ideal way of acquiring a profitable company. In spite of all the efforts of the Board and NxGen, for a number of reasons, the proposed acquisition of NxGen will not be proceeding. NuSep is currently seeking to recover costs associated with the deal from NxGen.

An Opportunity taken to turn NuSep into a Profitable Company

Over the last six months the management and Board of NuSep have worked in the background to restructure NuSep into a profitable company. We can now report that the Gels Division is trading profitably and that NuSep is forecast to make a profit of $500,000 this financial year. At a share price of $1 per share this means NuSep will be trading on a PE of 2 times the 09/10 year forecast results. We have achieved this by cutting costs, most notably by relocating our business from Frenchs Forest to Lane Cove, Sydney and by increasing sales of the Gels and MF10.

Forecast for the 09/10 Financial Year

Below is an overview of the 09/10 financial year forecast. A more detailed analysis of this will be provided to the market as a separate announcement.

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SpermSep SpermSep
Diagnostics, Instruments, Consumables, Gels Direct,
THE 09/10 PROFIT FORECAST
$410,000 $270,000 $70,000 $630,000
Sales $4m
Gross Margin $2.56m ,
Net Profit $0.51m
MF10
EBITDA $0.56m
Consumables,
$200,000
MF10
Gels Thermo,
Instruments, 09/10 Sales
$1,510,000
$910,000
by Division
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NuSep Ltd 324 Burns Bay Rd Lane Cove NSW 2066

Postal Address P.O. Box 823 Lane Cove NSW 1595

Contact Details Email info@nusep.com Telephone +61 2 8977 9000 Web www.nusep.com Facsimile +61 2 8977 9099 ABN 33 120 047 556

Increased Sales

• The Gels Division has seen sales increase over the last year. Forward orders are also strong with our main customer Thermo-Fisher quadrupling their monthly orders. The business is now CASHFLOW POSITIVE and PROFITABLE.

• The MF10 instrument, like many new technologies, was slow to take off but has seen a steady accelerating growth in sales. Furthermore, sales of the highly profitable MF10 consumables are now becoming an important part of our business.

• The Diagnostic distribution business continues to generate significant profits.

• NuSep will more than double this business over the next 12 months.

• Finally, behind the scenes NuSep has redesigned the SpermSep CS10 in order to make this a fully disposable system. First sales are expected to occur early in the 2010 calendar year. There has been extensive media and market coverage of the project over the last year with the successful completion of the initial clinical trial.

Reduced Costs

• By relocating our business to a new site in Lane Cove, Sydney NuSep will save over $1m pa on rent alone. Total building related savings are estimated to be over $1.3m pa.

• The Gels pass rate is now consistently over 90%. Maintaining this pass rate increases the gross profit on the gels to over 30%. Higher volume also reduces the per unit fixed/overhead costs.

• Reduction in the R&D costs associated with the completion of the MF10 development project. These resources will be redeployed into the sales area increasing the sales of the MF10.

• Reduction in the salaries. The Executive Directors have taken a 20% reduction in their salary and all other salaries have been frozen. Total head count is also significantly down and this will provide an additional $0.5m in savings in the 2010 year. This has been achieved while increasing production output and sales.

The Future

The Board and Management have transformed NuSep into a viable profitable company. There is significant upside as sales of the MF10 and the SpermSep grow with gross margins of over 80%. NuSep is fortunate that it sells into existing high growth markets. In addition, the US Government announced a further injection of $US10 billion into biotechnology through additional funding for the US National Institute of Health. These funds will further accelerate the growth in NuSep’s markets.

Share Consolidation

As part of the proposed NxGen acquisition the share capital of NuSep has been consolidated on a 20 for 1 basis. There are now approximately 2.3m shares on issue. The last trade was at 5¢ per share which translates to $1 per share on a post consolidation basis. Once trading commences it will be on a post consolidation basis.

The SPP

The Company requires $1m in current working capital needs which would be used for strengthening our Balance Sheet and reducing our current liabilities/ aged creditors which was initially expected to have been paid out as part of the NxGen acquisition. In order to address this issue the Board has announced a Share Purchase Plan (SPP) limited to $2m. I am pleased to announce that $1m of this SPP has been underwritten by the Board and some significant shareholders. This shows the confidence both the Board and the Company’s main shareholders have in the future of NuSep.

Further details of the SPP will be provided shortly, but it is the objective of the NuSep Board to make this SPP attractive to our 1,000 smallest shareholders. It is the Board’s objective to enable our smallest shareholders to acquire a meaningful holding in NuSep at a discount to the current price without incurring any brokerage or other costs.

Finally, we will produce a quarterly newsletter to update shareholders on developments. If you would like to receive this publication please register your email address on our website.

I look forward to updating you on our developments as they occur.

Yours sincerely,

John Manusu Executive Chairman