MEMPHASYS LIMITED. - Capital/Financing Update 2011

==> picture [416 x 51] intentionally omitted <==

==> picture [416 x 52] intentionally omitted <==

==> picture [416 x 51] intentionally omitted <==

NuSep Share Option Prospectus

An invitation to Eligible Shareholders for a grant of one Option for every three shares issued to participating shareholders under the Nusep Share Purchase Plan and the November 2010 Placement

Participants in the Share Purchase Plan and the November 2010 Placement are not required take any action in relation to the grant of Options under this Prospectus.

NuSep Holdings Ltd ABN 33 120 047 556

The securities offered by this Prospectus should be considered speculative. This Prospectus is an important document and requires your immediate attention. It should be read in its entirety. If you have any queries about any part of the Prospectus you should consult your accountant, stockbroker, solicitor or other professional adviser. This Prospectus replaces the Prospectus lodged by the Company with ASIC on 3 February 2011.

Table of Contents	Table of Contents
Table of Contents .....................................................................................................................2
Corporate Directory..................................................................................................................3
Timetable and Important Dates...............................................................................................3
Important Notice .......................................................................................................................3
1.	Details of the Options Offer............................................................................................7
1.1.	Description of the Offer ..............................................................................................7
1.2.	Shareholder approval of the Options........................................................................7
1.3.	Requirement to hold your Shares until 28 February 2011 ......................................7
1.4.	Actions required by Eligible Shareholders...............................................................8
1.5.	Option Rights...............................................................................................................8
1.6.	ASX Quotation .............................................................................................................8
1.7.	Indicative Timetable ....................................................................................................8
1.8.	CHESS ..........................................................................................................................9
1.9.	Taxation Implications..................................................................................................9
1.10.	Fractional Entitlements ..........................................................................................9
2.	Effect of Offer on the Company......................................................................................9
2.1.	Use of funds.................................................................................................................9
2.2.	Effect on capital structure ..........................................................................................9
3.	General Prospectus Information..................................................................................12
3.1.	Nature of this Prospectus.........................................................................................12
3.2.	CHESS ........................................................................................................................12
3.3.	Continuous Disclosure and Documents Available for Inspection .......................12
3.4.	Litigation.....................................................................................................................12
3.5.	Secured Debt .............................................................................................................13
3.6.	Lease Agreement.......................................................................................................13
3.7.	Governing Law...........................................................................................................13
4.	Risks ...............................................................................................................................13
4.1.	General Risks.............................................................................................................13
4.2.	NuSep Specific Risks................................................................................................14
5.	Rights and liabilities attaching to NuSep Shares & Options.....................................14
5.1.	Rights and liabilities attaching to NuSep Shares ..................................................14
5.2.	Rights and liabilities attaching to NuSep 35¢Share Options................................15
6.	Additional Information...................................................................................................18
6.1.	Taxation......................................................................................................................18
6.2.	Expenses....................................................................................................................19
6.3.	Interests of Directors ................................................................................................19
6.4.	Consents of named parties ......................................................................................19
7.	Directors’ Authorisation and Statement......................................................................20
8.	Definitions ......................................................................................................................20

Corporate Directory

Directors

Mr J. Manusu (Executive Chairman) Dr C. H. Nair (Managing Director and CEO) Mr I. Howard-Sorrell (Non executive Director) Mr W. Spee (Non executive Director)

Secretary and COO Mr P. Patel

Registered Office 324 Burns Bay Road Lane Cove, NSW 2066 Australia Tel: +61 2 8415 7300 Fax: +61 2 8415 7399 Web page: www.NuSep.com

Share Registry Registries Limited Level 7, 207 Kent Street Sydney, NSW 2000 Phone: +61 2 9290 9600 Fax: +61 2 9279 0664

Timetable and Important Dates

EVENT	DATE
Shareholders informed of the Share Purchase Plan Offer	Thursday 9thDecember 2010
Closing Date of Share Purchase Plan Offer	Friday 24thDecember 2010
Prospectus lodged with the ASIC and ASX.	Friday 11thFebruary 2011
Dispatch of Prospectus	Monday 14thFebruary 2011
General Meeting to approve the issue of the Options	Monday 28thFebruary 2011
Allotment and issue of Options**	Wednesday 2ndMarch 2011
Holding statements dispatched	Friday 4thMarch 2011
Normal Trading of the Options	Thursday 10thMarch 2011

These dates are indicative only. Directors may vary the dates and times of the Offer without prior notice. As such, the date on which the Shares are expected to commence trading on ASX may vary. **Subject to shareholder approval.

Important Notice

About this Prospectus

This Prospectus is dated 11 February 2011 and was lodged with ASIC on that date and replaces the Prospectus lodged with ASIC on 3 February 2011. Neither ASIC nor ASX take responsibility for the contents of this Prospectus.

The expiry date of this prospectus is 2 April 2011. No Options will be issued on the basis of this Prospectus later than 13 months after 11 February 2011.

The potential tax effects of participating in the Offer will vary between investors. All investors should satisfy themselves of any possible tax consequences by consulting their own professional tax advisors.

The Company will apply, within seven (7) days after the date of issue of this Prospectus, for the Options offered under this Prospectus to be granted official quotation by the ASX.

This document is important and should be read in its entirety. Your investment decision in relation to the Offer should be based on the information contained in this Prospectus and disclosures made to the market by the Company. If in doubt, you should consult your stockbroker, solicitor, accountant or other professional adviser without delay. In particular, the Company draws your attention to those matters identified by the Company as representing risks to the Company in section 4 of this Prospectus. Neither the Company, the Directors nor any other party associated with the preparation of this Prospectus guarantee that any specific objective of the Company will be achieved or that any particular performance of the Company will be achieved.

Options Issue Offer

This is a Prospectus for an offer of Options to acquire continuously quoted securities (as defined in the Corporations Act) of NuSep Holdings Ltd ( Offer ) and has been prepared in accordance with section 713 of the Corporations Act. Accordingly, this Prospectus does not contain the same level of disclosure as an initial public offering prospectus. The Offer is not underwritten.

For persons accessing the on-line version of the Prospectus, the Offer is available to such persons accessing the Prospectus from within Australia and New Zealand only. The Prospectus may be accessed on the internet at www.nusep.com. The Company will make available a paper copy of the electronic Prospectus and Application Form if requested at no charge.

The main purpose of this document is to provide information in relation to the Offer. NuSep is required to issue a Prospectus for this Offer under, ASX Listing Rule 7.1. During the last 12 months the Company has issued shares under the 15% issue entitlement rule and shareholder approval is required for the issue of these proposed Options.

Disclaimer

No person is authorised to give any information or to make any representation in connection with the Offer, which is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by NuSep Holdings Ltd in connection with the Offer.

Foreign Jurisdictions

This Prospectus does not constitute an offer of, or an invitation to subscribe for, any Options in any place in which, or to any person to whom, it would be unlawful to make such an offer or invitation. The Options being offered under the Prospectus are offered in New Zealand in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand). No action has been taken to register or qualify the Options being offered under the Offer or otherwise permit a public offering of the Options in any jurisdiction other than Australia and New Zealand. This Prospectus may not be distributed to, or relied on by, persons outside Australia or New Zealand.

Privacy

The Company and the Share Registry collect, hold and use your personal information in order to, service your needs as an investor, provide facilities and services that you request and carry out appropriate administrative functions. All personal information will be collected in accordance with the National Privacy Principles as set out in the Privacy Act 1988. The law requires that some of the information is required to be collected. The Company and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers (including the ASX for the purpose of confirming compliance with the ASX Listing Rules) or as otherwise required under the Privacy Act 1988.

Definitions and Abbreviations

Certain terms and abbreviations used in the Prospectus have defined meanings as set out in the glossary in Section 8.

Financial Amounts

All financial amounts shown in this Prospectus are expressed in Australian dollars unless otherwise stated.

==> picture [154 x 20] intentionally omitted <==

==> picture [154 x 19] intentionally omitted <==

==> picture [154 x 20] intentionally omitted <==

Letter from the Chairman

9 February 2011

Dear Shareholder,

On behalf of the Board of NuSep Holdings Ltd ( Company ), I would like to thank all of those Shareholders who participated in the recent November 2010 placement and Share Purchase Plan ( SPP ). This capital raising has enabled NuSep to undertake the investment in SingaPharm, a blood plasma fractionation plant in Singapore using NuSep’s PrIME technology.

This Prospectus sets out the terms of the share options exercisable at 35¢ per share, expiring on 1 September 2012 ( Options ) that are to be issued to Eligible Shareholders. Eligible Shareholders will receive one Option for every three shares taken up under either the November 2010 placement or SPP. These Options are listed and will trade on the ASX under the code ‘NSPO’.

The issue of these Options is subject to:

Shareholders approving the issue at the Company’s 28 February 2011 General Meeting; and
On the condition that the Eligible Shareholders’ Shareholding as at 5.00 pm on the Issue Date (17 January 2011) is not less than their Shareholding as at 5.00 pm on the General Meeting Date (28 February 2011).

The record date for the issue of the Options is 28 February 2011.

If an Eligible Shareholder does not hold the same or more shares in the Company at 5pm on 28 February 2011 compared to their shareholding on Monday, 17 January 2011 they will forfeit their Option entitlement and will not be issued any Options under this Prospectus.

This Prospectus sets out the terms and conditions for the share options which Shareholders will consider at the General Meeting on 28 February 2011. The impact that these Options may have on the Company are outlined below:

The total number of Options that could be issued underthisProspectus	3,968,253 Options
The Total funds that could be raised if all ofthese Options are exercised	$1,388,888
The total number of shares that would be issuedifallthe Options are exercised	3,968,253 Shares
The expanded Share Capital of NuSep if all the Options under this Prospectus were exercised	77,019,425

I refer you to the SPP booklet 9 December 2010 for details of that offer.

The funds raised from the exercise of Options issued under the Offer will be used to provide equity funding to strengthen the Company’s financial position and for future working capital needs. Details of the SingaPharm project are set out in the December 2010 Shareholder Newsletter.

I invite you to read this document thoroughly and particularly you should be aware of the following Company specific risks:

Financial risks . The ability of the Company to implement its business strategy may require it to raise additional funds. No assurances can be given that such funding will be available or that it will be available on terms attractive to the Company;
Litigation . The Company is the plaintiff in legal proceedings against NxGen to recover $660,000. The Company is also the plaintiff in a US patent case against Expedeon. At the time of this Prospectus NuSep is not involved in any other litigation.
Failure to achieve sales growth . Failure to achieve sales growth from existing products;
Clinical trial litigation . Litigation arising from the clinical studies undertaken by the Company.

A more detailed analysis of the risk associated with an investment in NuSep are outlined in section 4. You should read this document in conjunction with all of the publicly available information relating to the Company, including the 2010 Annual Report and the December 2010 Shareholder Newsletter.

Once again the Board of NuSep thanks its Shareholders for participating in the November Placement and December 2010 SPP.

Yours sincerely,

John Manusu Executive Chairman

1. Details of the Options Offer

1.1. Description of the Offer

This is an invitation to persons who successfully subscribed for Shares under the Share Purchase Plan ( SPP) and the November 2010 Placement and who have a Shareholding as at 5.00 pm on the General Meeting Date (28 February 2011) that is not less than their Shareholding as at 5.00 pm on the SPP Issue Date (17 January 2011) ( Eligible Shareholders ).

The record date for the issue of the Options to Eligible Shareholders is 28 February 2011.

Eligible Shareholders will be issued with one Option for every three shares that they subscribed for under either the SPP or the November 2010 Placement.

For example, if an Eligible Shareholder subscribed for 15,000 Shares under the SPP and, as at 28 February 2011, held the same number (or more) of Shares that it held as at 5.00 pm on the SPP Issue Date, that Eligible Shareholder will be entitled to be issued 5,000 Options.

By way of further example, if an Eligible Shareholder subscribed for 8,000 Shares under the SPP and 10,000 Shares under the November 2010 Placement, and, as at 28 February 2011, held the same number (or more) of Shares that it held as at 5.00 pm on the SPP Issue Date, that Eligible Shareholder will be entitled to be issued 6,000 Options.

Each Option is exercisable at 35¢ per Share and expiring on 1 September 2012, for every three shares successfully subscribed for under the SPP and November 2010 Placement. These Options are listed on the ASX under the code of ‘NSPO’.

The full terms and conditions of the Options offered under this Prospectus are set out in Section 5.

1.2. Shareholder approval of the Options

This Offer is subject to the Company obtaining shareholder approval at its General Meeting on 28 February 2011.

If shareholder approval is not obtained for the grant of the Options, no Options will be issued. As noted in the SPP documentation, should shareholder approval for the issue of these Options not be obtained at the General Meeting, the Company will not refund the monies raised under the SPP. The Company will also not refund monies raised under the November 2010 Placement.

1.3. Requirement to hold your Shares until 28 February 2011

To be eligible to be issued Options, eligible shareholders must hold the same number or more Shares as at 5.00 pm on Monday, 28 February 2011 ( Record Date ) as they did when the SPP shares were issued on Monday, 17 January 2011 ( Eligible Shareholder ).

Eligible Shareholders will be issued with one Option for every three shares that they subscribed for under either the SPP or the November 2010 Placement.

1.4. Actions required by Eligible Shareholders

Participants in the SPP and the November 2010 Placement are not required to take any action to be issued the Options under the Offer. Subject to the conditions noted above, the Options will be issued automatically.

1.5. Option Rights

The Options have a nil issue price. There is no brokerage, commissions or other participation costs payable in respect of any issue of Options under this Offer.

There is no obligation to exercise any Option. If the Option is not exercised, the exercise price is not payable.

1.6. ASX Quotation

The Company will apply for the quotation of all Options issued under this Prospectus on ASX within seven days after the date of this Prospectus. Subject to approval being granted, quotation of the issued Options is expected to commence within five Business Days after their date of issue.

If approval for the quotation of the Options is not granted by the ASX within three months after the date of this Prospectus, the Company reserves the right to withdraw the Offer and not allot any of the Options under this Prospectus.

It is the responsibility of each Option holder to determine their holding of Options before trading in them. Holders who sell Options before they receive their holding statement do so at their own risk.

1.7. Indicative Timetable

EVENT	DATE
Shareholders informed of the Share Purchase Plan Offer	Thursday 9thDecember 2010
Closing Date of Share Purchase Plan Offer	Friday 24thDecember 2010
Prospectus lodged with the ASIC and ASX.	Friday 11thFebruary 2011
Dispatch of Prospectus	Monday 14thFebruary 2011
General Meeting to approve the issue of the Options	Monday 28thFebruary 2011
Allotment and issue of Options**	Wednesday, 2ndMarch 2011
Holding statements dispatched	Friday 4thMarch 2011
Normal Trading of the Options	Thursday 10thMarch 2011

These dates are indicative only. The Company may vary the dates and times of the Offer without notice.

** Subject to Shareholder Approval.

1.8. CHESS

The Options issued under this Prospectus will participate from the date of commencement of quotation in the Clearing House Electronic Subregister System (CHESS), operated by ASX Settlement and Transfer Corporation Pty Limited. They must be held in uncertificated form (i.e. no Option certificate will be issued) on the CHESS subregister under sponsorship of a sponsoring participant (usually a broker) or on the issuer-sponsored Subregister.

Arrangements can be made at any subsequent time to convert a holding from the issuer-sponsored subregister to the CHESS subregister under sponsorship of a sponsoring participant or vice versa by contacting the sponsoring participant. Holding statements are expected to be dispatched in accordance with the Listing Rules.

1.9. Taxation Implications

1.10. Fractional Entitlements

Fractional entitlements under the Offer of below 0.5 will be rounded down to the next whole Option and fractional entitlements of 0.5 and above will be rounded up to the next whole.

2. Effect of Offer on the Company

2.1. Use of funds

The funds raised from the exercise of Options issued under the Offer will be used to provide equity funding to strengthen the Company’s financial position and for future working capital needs.

2.2. Effect on capital structure

The potential effect of the Offer on the capital structure of NuSep depends on:

Any new issues of Shares (for example pursuant to the exercise of any employee options) or options, other than under this Prospectus;
Whether shareholders approve the issue of these Options at the General Meeting on 28 February 2011; and
How many Eligible Shareholders have not traded their SPP shares and therefore will be entitled to receive the Options under the terms of the Offer.
The tables below illustrate the potential effect of the Offer on the capital structure assuming that:
Shareholder approval for the grant of Options is given at the Company’s General Meeting;
No Options are exercised before the General Meeting; and
All Eligible Shareholders will become entitled to receive Options.

The Company’s actual position on completion of the Offer may differ from the position illustrated in the pro forma capital structures below.

Issued Shares — undiluted basis

The following tables illustrate the potential effect of the Offer on the capital structure assuming three different scenarios:

That none of the Options are exercised,
That only the Options subject to this Prospectus are exercised, and
That the Options subject to this Prospectus and the existing listed NSPO Share Options are exercised.

All of these scenarios assume that the Prospectus Share Options are approved at the General Meeting on Monday 28 February 2011.

Table 1 - None of the Options are exercised

	Total Issued Capital as at 28 February 2011	Total $ raised if none of the Prospectus Share Options are exercised	Dilution caused by the exercise of the Prospectus Share Options	Issued Capital if none of the Share Options are exercised
Current Issued Capital	73,051,172	-	0%	73,051,172
Existing 35¢ Share Options - ASX:NSPO	25,299,979	-	0%	-
Prospectus 35¢ Share Options Subject to shareholder approval	3,968,293	$0	0%	-
Total Potential Issued Capital	102,319,404	$0	0%	73,051,172

Table 2 - Only the Options subject to this Prospectus are exercised

	Total Issued Capital as at 28 February 2011	Issued Capital if only the Prospectus Share Options are exercised	Total $ raised if all the Prospectus Share Options are exercised	Dilution caused by the exercise of the Prospectus Share Options
Current Issued Capital	73,051,172	73,051,172	-	94.8%
Existing 35¢ Share Options - ASX:NSPO	25,299,979	-	-
Prospectus 35¢ Share Options Subject to shareholder approval	3,968,253	3,968,253	$1,388,888	5.2%
Total Potential Issued Capital	102,319,404	77,019,425	$1,388,888	100%

Table 3 - The Options subject to this Prospectus and the existing listed NSPO Share Options are exercised

	Total Issued Capital as at 28 February2011	Issued Capital if all the Share Options are exercised	Total $ raised if all the Share Options are exercised	Dilution caused by the exercise of all the Share Options
Current Issued Capital	73,051,172	73,051,172	-	71.4%
Existing 35¢ Share Options - ASX:NSPO	25,299,979	25,299,979	$8,854,992	24.7%
Prospectus 35¢ Share Options Subject to shareholder approval	3,968,253	3,968,253	$1,388,888	3.9%
Total Potential Issued Capital	102,319,404	102,319,404	$10,243,880	100%

Effect on financial position Basis of preparation

To illustrate the effect of the Offer on the Company, the following summary unaudited pro forma historical consolidated balance sheet has been prepared based on the Company’s audited consolidated balance sheet as at 30 June 2010.

The financial information is presented in an abbreviated form insofar as it does not include all of the disclosures applicable to annual financial reports prepared in accordance with the Corporations Act. However, the accounting policies adopted in the preparation of the summary pro forma historical consolidated balance sheet are consistent with the accounting policies adopted and described in the Company’s annual report for the year ended 30 June 2010 and should be read in conjunction with those reports.

The summary pro forma historical consolidated balance sheet reflects adjustments for the effect of the different Option take up levels described below. Column two assumes that only all Eligible Shareholders exercise their Options. It has been prepared on a fully diluted basis meaning that

3,968,253 Options will be exercised. The Company’s actual position on completion of the Offer may differ from the position illustrated in the summary pro forma consolidated historical balance sheet.

In particular, investors should be aware that the Company has undertaken an investment in a Singapore company called SingaPharm and will be required to contribute S$2m (A$1.5m) within the next 18 months. Further details regarding SingaPharm is contained in NuSep’s Shareholder Presentation presented at the 2010 Annual General Meeting and the December 2010 Shareholder Newsletter. Both of these documents are on NuSep’s website at www.nusep.com.

Pro forma UNAUDITED historical consolidated balance sheet

The table below sets out the pro forma unaudited historical consolidated balance sheet prepared on the basis described above.

Unaudited Pro forma - Statement of Financial Position	Audited Consolidated Accounts 30th June 2010 $	Unaudited Consolidated Pro Forma (Assuming only Prospectus Options are exercised)
CURRENT ASSETS Cash and cash equivalents Cash from capital raised Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets Property, plant and equipment Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Short-term provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other liabilities Long-term provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS NET EQUITY	1,200,641 - 1,899,368 387,065 82,557 3,569,631 450,000 1,372,615 12,324,820 14,147,435 17,717,066 1,968,178 157,835 2,126,013 2,698,580 49,435 2,748,015 4,874,028 12,843,038 12,843,038	1,200,641 1,388,888 1,899,368 387,065 82,557
		4,958,519
		450,000 1,372,615 12,324,820
		14,147,435
		19,105,954
		1,968,178 157,835
		2,126,013
		2,698,580 49,435
		2,748,015
		4,874,028
		14,231,926
		14,231,926

3. General Prospectus Information

3.1. Nature of this Prospectus

This Prospectus is a prospectus to which the special content rules under section 713 of the Corporations Act apply. That provision allows the issue of a more concise prospectus in relation to offers of securities in a class which has been continuously quoted by ASX for the 12 months prior to the date of the Prospectus.

3.2. CHESS

NuSep already participates in the Clearing House Electronic Sub register System, known as CHESS. ASX Settlement and Transfer Corporation Pty Ltd (ASTC), a wholly owned subsidiary of ASX, operates CHESS in accordance with the ASX Listing Rules and Securities Clearing House Business Rules. The Options will be CHESS approved securities.

Under CHESS, Shareholders will not receive a certificate but will receive a holding statement for their Options. A statement will be sent routinely to shareholders at the end of any calendar month during which the holder’s optionholding changes. A shareholder will be supplied with a statement at any other time on request, subject to payment of a charge for the additional statement.

3.3. Continuous Disclosure and Documents Available for Inspection

The Company is listed on ASX and its securities are quoted on ASX under the codes:

‘NSP’ for the fully paid ordinary Shares: and
‘NSPO’ for the 35¢ 1 September 2012 share options. The Options to be issued under this Prospectus will form part of this ASX code.

The Company is a “disclosing entity” for the purposes of the Corporations Act. As such, it is subject to regular reporting and disclosure obligations, which require it to disclose to ASX any information of which it is or becomes aware concerning the Company and which a reasonable person would expect to have a material effect on the price or value of securities of the Company. Copies of documents lodged with the ASIC in relation to the Company may be obtained from or inspected at an office of the ASIC. Copies of ASX announcements are available on ASX’s website at or the Company’s website www.nusep.com.

In addition, ASIC also maintains records in respect of documents lodged with it by NuSep. Copies of documents lodged with ASIC in relation to NuSep may be obtained from, or inspected at, an office of ASIC. NuSep will provide a copy of any of the following documents, free of charge, to any person who requests a copy before the General Meeting on 2 March 2011:

The Annual Report for the year ending 30 June 2010 (being the annual financial report most recently lodged with ASIC in relation to the Company before the issue of this Prospectus); and Any other document used to notify ASX of information relating to NuSep under the continuous disclosure provisions of the Listing Rules after the date of lodgement with ASIC of the annual financial report referred to above and before lodgement with ASIC of this Prospectus.

Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus completed. There is no excluded information as defined in s713(5) that has not been included in this Prospectus.

3.4. Litigation

NuSep commenced proceedings against NxGen Pharmaceuticals Pty Ltd (ACN: 127 297 143) (NxGen) in late 2009. NuSep is seeking to recover approximately $660,000 from NxGen which represents half of the expenses related to the acquisition by NuSep of NxGen which did not proceed.

This matter is currently before the Supreme Court of NSW and is next listed for a hearing on 11 February 2011. NuSep is unable to make any comment as to its prospects of success in this matter but will make a disclosure to the market once the outcome of the proceedings is known. NuSep has budgeted $100,000 to complete the NxGen litigation.

NuSep commenced proceedings against Expedeon Ltd in the United States for the alleged infringement of a NuSep patent. This matter is before the District Court of Georgia. NuSep has budgeted to spend $300,000 this financial year on this matter.

NuSep is otherwise not involved in any arbitration or alternative dispute resolution proceedings, nor, so far as the Directors are aware, are any such proceedings pending or threatened against the Company as at the date of this Prospectus.

3.5. Secured Debt

The Company does not have any secured debt.

3.6. Lease Agreement

In May 2009 NuSep signed a three year lease for a property at Lane Cove, Sydney from which it currently conducts its business. The annual rent for the premises is $170,000 including outgoings. The lease contains the standard types of provisions expected in a business lease agreement.

3.7. Governing Law

This Prospectus, the Offer and the contracts formed on acceptance of applications under the Offer are governed by the laws applicable in New South Wales, Australia. Each Applicant submits to the exclusive jurisdiction of the courts of New South Wales, Australia.

4. Risks

An investment in the Company is not risk free and investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to exercise the Options.

The securities offered under this Prospectus should be considered speculative because of the nature of the Company’s business and Applicants should consult their professional advisers before deciding whether to exercise the Options. The operations of the Company are subject to a range of business risks, both of a general nature and of a specific nature in respect of the business activities conducted by the company. There can be no guarantee that the Company will achieve its stated objectives.

4.1. General Risks

NuSep may be affected by any number of circumstances and conditions which are not within its control. Global events, political developments, world economic conditions and many other global and local conditions may affect the market and have an impact on the value of the Company’s market capitalisation. General risks associated with the Company are:

Economic conditions . The performance of the Company may be significantly affected by changes in economic conditions, particularly conditions which affect the biotechnology industry. The profitability of the business may be affected by factors such as market conditions, interest rates, inflation and consumer demand;
Geo-political factors . The Company may be affected by the impact that geo-political factors have on the various world economies or the Australian economy or on financial markets and investments generally or specifically;
Share market conditions . The Company, being a company listed on ASX, will continue to be subject to market forces that influence broad share market trends and the price of securities

of individual companies. Accordingly, the price of the Shares when quoted on ASX will be subject to varied and often unpredictable influences on the market for equities in general;
No guarantee of future earnings risk. There is no guarantee of profitability, dividends, return of capital, or the price at which the Shares will trade on ASX after quotation;
Uncontrollable factors . The Company will be exposed to general risk factors that are associated with conducting a business including litigation resulting from the breach of agreements or in relation to employees (through personal injuries, industrial matters or otherwise), strikes, lockouts, loss of service of key management or operational personnel, noninsurable risks, delay in the resumption of activities after reinstatement following the occurrence of an insurable risk, acts of terrorism and acts of God and other matters or force majeure events that may interfere with the business or trade of the Company; and
Product market factors. The Company may be affected by shifts in product markets and/or new products which replace existing product markets. Such shifts may replace existing products in an extremely short period of time making it impossible for the Company to replace these sales.

4.2. NuSep Specific Risks

Specific risks associated with the Company include without limitation:

Financial risks . The ability of the Company to implement its business strategy may require it to raise additional funds. No assurances can be given that such funding will be available or that it will be available on terms attractive to the Company;
Litigation . The Company is the plaintiff in legal proceedings against NxGen to recover $660,000. The Company is also the plaintiff in a US patent case against Expedeon. At the time of this Prospectus NuSep is not involved in any other litigation. See section 3.4 for more details.
Failure to achieve sales growth . Failure to achieve sales growth from existing products;
Difficulties with product launches . Difficulties or delays in completing product developments or product launches;
Difficulties with regulatory approval . Difficulties or delays in receiving regulatory approval or certification for products or processes;
Competition. The existence and extent of any competition for the products or processes to be developed by the Company – particularly from major international biotechnology companies;
Substitute products . The existence of substitute or improved products developed by competing companies;
Research and development programs . The success or failure of research and development programs by the Company;
Market development . The pace of market development for products and the costs involved in achieving market penetration and brand awareness;
Change in markets . Change in the markets for the products and processes sold by the Company;
Patent litigation . Patent litigation, including failure of existing patents or failure to gain patent licenses to yet unknown blocking patents. The Company is the plaintiff in a patent legal proceedings against Expedeon in the US. See section 3.4 for more details; and
Clinical trial litigation . Litigation arising from the clinical studies undertaken by the Company.

5. Rights and liabilities attaching to NuSep Shares & Options

5.1. Rights and liabilities attaching to NuSep Shares

A summary of the more significant rights and liabilities attaching to NuSep’s Shares is set out below. The NuSep Shares that will be issued if any of the Options pursuant to this Prospectus are exercised are ordinary shares, the capital on which is fully paid.

(a) Voting – At a general meeting of NuSep, every shareholder present in person or by proxy, attorney or representative has one vote on a show of hands and, on a poll, one vote for each fully paid Share held. On a poll, partly paid Shares confer a fraction of a vote in proportion to the amount paid up on the Share.
(b) Dividends – Dividends are determined by the Directors at their discretion. Any dividend relating to Shares is divisible amongst the Shareholders in proportion to the amount paid up on the Shares held by them. It is not currently intended that NuSep pay a dividend on Shares or that one be paid in the near future.
(c) Rights on winding up – Subject to the rights or restrictions attaching to any share or class of shares, if NuSep is wound up, the property of the Company available for distribution shall be divided among the members in proportion to the shares held by them, irrespective of the amounts paid up or credited as paid up on the shares. If the Company is wound up the liquidator may, with the sanction of a special resolution, divide the assets of the Company amongst the members and may determine how the division shall be carried out as between the members or different classes of members.
(d) Transfer of Shares – Except where required by law or the constitution of NuSep there are no restrictions on the transfer of Shares.
(e) Issue of further Shares – subject to the provisions of NuSep’s constitution and the Corporations Act, the Directors may issue further Shares on such terms and conditions as they may decide.
(f) Variation of class rights – the rights attaching to each class of Shares may only be varied:
(i) with the consent in writing of the holders of three-quarters of the class of issued Shares concerned; or
(ii) with the sanction of a special resolution of Shareholders, a special resolution being a resolution passed by a majority of not less than 75 per cent of Shareholders present and voting.

Full details of the rights attaching to the Shares are set out in the Constitution.

5.2. Rights and liabilities attaching to NuSep 35¢Share Options

5.2.1. Defined Meanings

Words used in these conditions and the rules of interpretation that apply are set out and explained in Section 10 of this Prospectus.

5.2.2. Issue of Options

The Directors on behalf of the Company may issue Options pursuant to this Prospectus subject to these conditions and to the provisions of the Constitution and the Corporations Act. The Directors may, subject to the provisions of the Constitution and the Corporations Act, from time to time, issue further options, including Directors, Employees and Consultants Options on terms and conditions of issue as they shall think fit.

5.2.3. Entitlement to the Options under this Prospectus

Each Eligible Shareholder will be allotted one (1) Option for every three (3) Shares subscribed for subject to:

Holding on 28 February 2011 the same number or more of shares that were held on 17 January 2011; and

Subject to shareholders approving the issue of these Options at the General Meeting on 28 February 2011.

For example an Eligible Shareholder that had subscribed for $15,000 Shares under the December 2010 Share Purchase Plan will be entitled to 5,000 Options under this Prospectus. In order for that Eligible Shareholder to receive these 5,000 Options:

shareholders must approve the issue of these Options at the General Meeting on 28 February 2011; and
his total shareholding at 5pm on Monday 28 February 2011 must be the same or greater than his shareholding at 5pm on Monday 17 January 2011.

5.2.4. Terms of the Options

The Options issued under this Prospectus have the following general terms:

Item	Details
ExercisePrice	35¢ perOption
Option ExpiryDate	1st September 2012
Exercise Dates	Any time up to and including the Option Expiry Date of 1st September 2012.
Publicly Tradable	NuSep intends to apply to the ASX for these Options to belisted underthe code of ‘NSPO’.
ExerciseRatio	1Optionconvertsinto1 fully paid Share

5.2.5. Exercise of Options

5.2.5.1. The Option Holder of an Option may at any time and from time to time during the Exercise Period give an Exercise Notice to the Company requiring the Company to issue fully paid Shares on exercise of one or more of the Options.
5.2.5.2. An Exercise Notice must be in writing, in the form attached to this Prospectus and must be delivered to the Company at Lane Cove together with the payment of 35¢ per Option to be exercised.
5.2.5.3. An Exercise Notice does not have effect until the Company has received and cleared a cheque for the full amount of the Exercise Price for all of the Options exercised.
5.2.5.4. The Company must within 10 Business days after it receives and clears a cheque in payment of the Exercise Price, allot and issue to the Option Holder the number of resulting Shares.
5.2.5.5. The Company must send or cause to be sent to the Option Holder a holding statement in respect of the Options held, any Shares issued on exercise of an Option and any unexercised Options after the Holder has exercised an Option within the time and in accordance with the time prescribed by the ASX Listing Rules after the first holding statement or other statement is sent.
5.2.5.6. If required by the ASX Listing Rules, the Company must tell the Option Holder in writing of the Exercise Price and Option Expiry Date of the Options within the time prescribed by the ASX Listing Rules after the first holding statement or other statement is sent.
5.2.5.7. Shares allotted upon exercise of Options will rank equally in all respects with other issued Shares from the date of allotment and will be held subject to the Constitution.
5.2.5.8. Any Option which has not been exercised by 5.00pm on the expiry date of 1st September 2012 lapses. Any Exercise Notice received after this date will be rejected.
5.2.5.9. The rights of an Option Holder may and will be changed to the extent necessary to comply with the ASX Listing Rules that apply to the reorganisation of capital at the time of any reorganisation.

5.2.6. Quotation of Shares

The Company will make application to ASX for admission to the official list of any Shares issued as the result of the exercise of any Option within 7 Business Days of the issue and allotment of those Shares.

5.2.7. New and Pro-Rata Issues

5.2.7.1. Option Holders cannot participate in a new rights issue of securities in the Company without first exercising the relevant Options. However, the Company will send a notice to each Option Holder at least 9 Business Days before the record date applicable to that new rights issue. This will give Option Holders the opportunity to exercise their Options prior to the date for the determination of Entitlements to participate in that new rights issue.

5.2.7.1.1. Option Holders who exercise their Options before the applicable record date for the new issue will be entitled to participate in that new rights issue.
5.2.7.1.2. Except as expressly set out in these conditions, an Option Holder does not have any right to change the Exercise Price of an Option or the number of Shares over which an Option can be exercised.
5.2.7.2. If the Company offers Shares by way of a Pro-rata Issue (except a bonus Issue) to the holders of Shares (whether renounceable or not), then either the Exercise Price of an Option will be reduced in accordance with the formula set out in ASX Listing Rule 6.22.2 or, if the Options are not quoted on the official list of the ASX and were issued with the approval of the holders of the ordinary Shares, then the Exercise Price or the number of Shares to be issued on exercise of the Option may be changed by an amount or number which in the opinion of the Directors provides a fair adjustment for the Pro rata Issue and as set out in ASX Listing Rule 6.22.2A.
5.2.7.3. If there is a bonus Issue to the holders of Shares in the Company then the number of Shares over which each Option is exercisable will be increased by the number of Shares which the Option Holder would have received under the bonus Issue if the Option had been exercised before the record date for the bonus Issue.
5.2.7.4. In the event of any reorganisation including subdivision, consolidation, reduction, return or cancellation of the issued capital of the Company on or prior to the Option Expiry Date, the rights of an Option Holder will be changed to the extent necessary to comply with the applicable ASX Listing Rules governing reorganisations in force at the time of the reorganisation.

5.2.8. Maintenance of Register and Transfers of Options

5.2.8.1. The Company will keep and maintain, or cause to be kept and maintained, a register of holders of Options. The Company must ensure that the register is managed and maintained so as to comply with the Corporations Act and the ASX Listing Rules.
5.2.8.2. Subject to the Constitution, ASX Listing Rules and SCH Business Rules, all Options are transferable. The provisions of the Constitution relating to a transfer of Shares apply, with necessary alterations, to a transfer of Options.
5.2.8.3. The Company must tell new Option Holders in writing of the Exercise Price and the Option Expiry Date. This information must be included in the holding statement or other statement in respect of the Options sent to Option Holders.
5.2.8.3.1. Except as required by law, the Company will not recognise a person as holding an Option on any trust.
5.2.8.3.2. Whether or not it has notice of the rights or interests concerned, the Company is not bound to recognise:
- (i) any equitable, contingent, future or partial claim to, or interest in, any Option; or
- (ii) any other right in respect of the Option,

except an absolute right of ownership of the Option Holder or as otherwise provided by these conditions or by law.

5.2.9. General Provisions

5.2.9.1. Severance

(i) If a provision of these conditions or its application to any person or circumstance is or becomes invalid, illegal or unenforceable then the provision must, as far as possible, be interpreted as narrowly as possible to ensure that it is not illegal, invalid or unenforceable.

(ii) If any provision or part of it cannot be so interpreted, then the provision or its part is taken to be void and severable. The remaining provisions of these conditions are not affected or impaired in any way.

5.2.9.2. Option Holders bound by Constitution

An Option Holder is bound by these conditions and by the Constitution to the extent that the Constitution relates to or governs the Options. 5.2.9.3. Waiver and Variation

(i) Subject to the ASX Listing Rules, SCH Business Rules and the Constitution, the Directors may by resolution: (a) waive strict compliance with any of these conditions; or

(b) add to, vary or otherwise change any of these conditions for any reason including to ensure compliance with the ASX Listing Rules either generally in relation to all Option Holders or as they apply to a particular Option Holder.
(ii) Any waiver, addition, variation or other change under clause 9.3(a) must not be made unless:

(a) any Option Holder affected by the waiver, addition, variation or other change so consents in writing; or

(b) the Directors reasonably consider that the waiver, addition, variation or other change is required to ensure compliance with the ASX Listing Rules or any law or requirement binding on the Company or does not adversely affect an Option Holder’s rights under these conditions.

5.2.9.4. Notice of Expiry

The Company must send an Option Holder before the Option Expiry Date of the Options any notice required by Appendix 6A.6 of the ASX Listing Rules to be sent to Option Holders.

5.2.9.5. Dividends and voting

An Option does not confer on its Option Holder:

(i) any entitlement to any dividends or other distributions by the Company; or

(ii) any right to attend or vote at any general meeting of the Company.

5.2.9.6. Governing law

These conditions are to be construed according to and are governed by the laws of the State of New South Wales, Australia. Each of the Company and the Option Holder submits to the non-exclusive jurisdiction of the Courts in and of the State of New South Wales in relation to any dispute arising under these conditions.

5.2.9.7. Foreign Exchange

Subject to the ASX Listing Rules, the Directors may in respect of Options offered, issued or granted to or held by an overseas person denominate the Exercise Price in a currency other than Australian dollars. The Directors may make such arrangements as they see fit concerning any foreign currency gains or losses arising from such denomination of the Exercise Price in a currency other than Australian dollars including the retention of any foreign currency gains by the Company or the bearing of any foreign currency losses by the Company.

6. Additional Information

6.1. Taxation

The issue of the Options under the Prospectus may have taxation implications for their holders. If you have any doubts regarding the possible taxation consequences of participating in the Offer, you should consult your professional tax adviser for advice. Neither NuSep nor any of their officers, employees, agents and advisers accepts any liability or responsibility in respect of the taxation consequences connected with an investment in the Options.

6.2. Expenses

The expenses of the Prospectus payable by NuSep, including legal fees, consultancy fees, registry costs, printing and mailing, are estimated to amount to approximately $70,000.

6.3. Interests of Directors

A full disclosure of the interests of Directors, experts and promoters of and to the Company are set out in the table below.

Directors are not required under the Company’s Constitution to hold any Shares. As at the date of this Prospectus, the Directors have relevant interests in securities in the Company as set out in the table below:

Director	Number of Shares	% of Issued Capital	Number of Prospectus Options	Registered Holder
Mr John Manusu	1,833,944 Shares 687,366 35¢ Share Options 508,923 Shares 135,349 35¢ Share Options	2.51% 0.7%	5,000 -	Direct Mancu PtyLtd
Dr Hari Nair	1,038,680 Shares 416,667 35¢ Share Options	1.42%	-	Direct
Mr Iain Howard Sorrell	902,328 Shares 479,167 35¢ Share Options	1.24%	5,000	Direct
Mr William Spee	130,721 shares 556,667 35c Share Options 2,521,109 Shares 500,000 35c Share Options	0.52% 3.45%	- 5,000	Direct Cafalo PtyLtd

In total the Directors hold 9.83% of the Company’s issued capital. The non-executive Directors are to be paid fees for their services as Directors as determined by the Directors in an amount not exceeding in aggregate a maximum sum that is from time to time approved by resolution of the Company. Since 1st July 2010 NuSep has incurred $50,000 in director fees to the non executive Directors. No director fees were paid to the executive Directors. The current maximum aggregate sum is $250,000.

The Directors are entitled to be paid or reimbursed for all travelling and other expenses properly incurred by them in attending and returning from Company or Board meetings or otherwise in connection with the business or affairs of the Company. The Directors may also receive remuneration for extra services outside the scope of the ordinary duties of a Director.

No amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given to any adviser, for services rendered by the advisor in connection with the promotion or formation of NuSep or in connection with the Prospectus except as disclosed in this Prospectus.

6.4. Consents of named parties

Registries Limited has given and has not before lodgement of this Prospectus withdrawn its written consent to be named in this Prospectus as the Company’s share registry. Registries Limited has not authorised or caused the issue of, and takes no responsibility for, any part of this Prospectus.

7. Directors’ Authorisation and Statement

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with sections 716 and 720 of the Corporations Act, each of the Directors have consented in writing to the lodgement of this Prospectus with ASIC and the inclusion of any statements in this Prospectus attributable to them.

J Manusu

Executive Chairman On behalf of the Board of the Company

8. Definitions

Applicant has the same meaning as Eligible Shareholder. ASIC means Australian Securities and Investments Commission. ASX means ASX Limited (ACN 008 624 691).

Board means the board of Directors unless the context indicates otherwise.

35¢ Share Options means the Options to be issued under this Prospectus. Business Day means a day other than a Saturday or Sunday on which banks are open for business in Sydney, New South Wales.

Cents or ¢ means Australian cents unless otherwise stated.

CHESS means ASX Clearing House Electronic Subregistry System. Closing Date means 5.00 p.m. on Friday 24[th] December 2010.

Company or NuSep means NuSep Holdings Ltd (ACN 120 047 556). Constitution means constitution of the Company as at the date of this Prospectus. Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company from time to time.

Dollars or $ means Australian dollars unless otherwise stated.

Eligible Shareholder means those people or organisations that have taken up the November 2010 Placement or the December 2010 Share Purchase Plan. General Meeting or GM means the meeting of Shareholders held on Monday 28[th] February 2011.

Listing Rules or ASX Listing Rules means the official Listing Rules of ASX. NuSep means NuSep Holdings Ltd, ABN 33 120 047 556

Official List means the official list of ASX.

Option Offer or Option means the offer to acquire additional NuSep share options exercisable at 35¢ per share which expire on 1 September 2012 and are listed on the ASX under the code ‘NSPO’.

Quotation means official quotation on ASX. Shares means one fully paid ordinary share in the capital of the Company. Shareholder means a holder of Shares in NuSep. Share Registry means Registries Limited ACN 003 209 836.