SCIDEV LTD — Proxy Solicitation & Information Statement 2010

May 30, 2010

ABN 25 001 150 849

Level 3 2 Elizabeth Plaza North Sydney NSW 2060 Australia P.O. Box 1507 North Sydney NSW 2059 Australia

Phone: 02-9925-8170 Fax: 02-9925-8110 Email: mail@intec.com.au Website: www.intec.com.au ASX code: INL

Companies Announcements Office 31 May 2010 Australian Securities Exchange

Notice of Extraordinary General Meeting

Please find attached the Notice of Intec's 30 June 2010 Extraordinary General Meeting with the accompanying Explanatory Statement (with attached Directors' Report to Shareholders) and Proxy Form.

These documents are being printed and mailed out to all shareholders early this week.

Yours faithfully Intec Ltd

Philip R Wood Managing Director and Chief Executive Officer

ABN 25 001 150 849

Level 3 2 Elizabeth Plaza North Sydney NSW 2060 Australia P.O. Box 1507 North Sydney NSW 2059 Australia

Phone: 02-9925-8170 Fax: 02-9925-8110 Email: mail@intec.com.au Website: www.intec.com.au ASX code: INL

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is given that an Extraordinary General Meeting of shareholders of Intec Ltd ('Intec' or 'the Company') will be held as follows:

Time: 10:00 am

Date: 30 June 2010

Place: Intec Ltd Head Office, Level 3, 2 Elizabeth Plaza, North Sydney NSW 2060 Australia

This notice should be read in conjunction with the accompanying Explanatory Statement.

This notice is accompanied by a Proxy Form for those shareholders wishing to vote by proxy. Please follow the instructions at the end of the Proxy Form carefully.

SPECIAL BUSINESS

Resolution 1 - Ratification of Convertible Note Issue to La Jolla Cove Investors Inc.

To consider and, if thought fit, to pass the following resolution:

"That for the purposes of ASX Listing Rules 7.1 and 7.4 and for all other purposes, approval is given for the ratification of the issue of the La Jolla Note, and the Company's ordinary shares upon conversion thereof, to La Jolla Cove Investors Inc. on the terms set out in the Explanatory Statement."

Resolution 2 - Approval of Issue of Securities to La Jolla Cove Investors Inc.

To consider and, if thought fit, to pass the following resolution:

"That for the purposes of Item 7 of section 611 of the Corporations Act, and for all other purposes, approval is given for the acquisition of a relevant interest in the Company by La Jolla Cove Investors Inc. and its associates to the extent and on the terms set out in the Explanatory Memorandum."

Resolution 3 – Consolidation of Shares

To consider and, if thought fit, to pass the following resolution:

"That the Company consolidate its share capital as detailed in the attached Explanatory Statement so that each ten ordinary shares on issue in the capital of the Company at the record date of 8 July 2010 is consolidated into one share, with fractions rounded up."

Voting Exclusion Statements

In respect of Resolutions 1 and 2, the Company will disregard any votes cast on those resolutions by the person, and associates of that person, being the persons as detailed in the Explanatory Notes who participated in the issues or who may participate in the proposed issues, and a person who might obtain a benefit, except solely in the capacity of a holder of ordinary securities and any associates of those persons.

However the Company need not disregard any vote by any such persons on Resolutions 1 and 2 if:

• it is cast by any of them as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or
• it is cast by any of them who is chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

OTHER BUSINESS

To transact any other business that may be properly brought before the meeting.

Dated: 28 May 2010

By order of the Board

Robert J Waring Company Secretary

NOTICE OF INTEC LTD EXTRAORDINARY GENERAL MEETING

EXPLANATORY STATEMENT

This Explanatory Statement sets out information in connection with the business to be considered at the Extraordinary General Meeting of Intec Ltd to be held on 30 June 2010.

SPECIAL BUSINESS

The following items of special business will be considered at the meeting.

RESOLUTION 1 - RATIFICATION OF FIRST CONVERTIBLE NOTE

A Background

(a) Introduction

The approval of Shareholders is being sought for Resolutions 1 and 2 in connection with the Company's capital raising initiatives as first announced to the ASX on 17 November 2009.

Resolution 1 seeks to ratify the terms of issue of a convertible note (La Jolla Note) issued to La Jolla, with a face value of US$1,500,000.

(b) Key terms of the first La Jolla Note

The key terms of the first La Jolla Note are as follows:

• i. The first La Jolla Note has a face value of US$1,500,000.
• ii. The first La Jolla Note has been drawn down in six US$250,000 monthly instalments from 23 November 2009.
• iii. The first La Jolla Note bears interest at 4.75% per annum, payable monthly.
• iv. The first La Jolla Note is unsecured.
• v. The first La Jolla Note must be repaid upon maturity (16 November 2011) unless converted in whole or in part into Shares at the election of La Jolla at any time at the lesser of A$0.25 or 80% of the 3 lowest volume weighted average daily prices during the 15 trading days prior to the election to convert, subject to a floor price of A$0.010 at which the Company can refuse conversion and may redeem the La Jolla Notes at 120% of the outstanding face value.

(c) About La Jolla

La Jolla is a private investment company based in the United States that provides financing to small- to mid-sized publicly traded companies, via convertible debenture and equity financing together with stock loans and asset backed loans. It can also provide merger and acquisition assistance, business development, marketing strategies and assistance with business negotiations. See http://wwwxljcinvestorsxcom/ for more information.

B Deemed and Actual Share Issues Resulting from the First La Jolla Note

ASX Listing Rule 7.1 effectively limits the number of shares that can be issued by an ASX-listed company, without shareholder approval within a 12-month period, to an additional 15% of its pre-existing capital. At the Annual General Meeting held on 19 November 2009 Shareholders ratified prior issues of Shares pursuant to ASX Listing Rule 7.4. The Company was therefore able to issue the first La Jolla Note at that time.

Once issued, both La Jolla Notes may be converted to Shares at any time based on the formula referred to in Section A(b)(v) above. ASX Listing Rule 7.2 contains an exemption to the "15% rule" for issuance of shares on the conversion of 'convertible securities' where the issuing entity (the Company) "complied with the listing rules when it issued the convertible securities." At the Funding Commencement Date (18 November 2009), and in accordance with the Note to ASX Listing Rule 7.1.4 (c), the deemed number of the Company's shares to be issued under the first La Jolla Note for which approval under ASX Listing Rule 7.4 is sought as follows:

Existing Intec Shares on issue 18 November 2009					821,253,724

Maximum allowed to be issued under Listing Rule 7.1 (15%) 123,188,059

Resolution 1 therefore seeks for the purposes of ASX Listing Rule 7.4 to ratify the issue of the first La Jolla Note and the number of Shares deemed to be issued pursuant thereto being 123,188,059, which can be approved by shareholders under this Listing Rule.

Intec has now fully drawn down the first La Jolla Note, and a series of ASX announcements from 17 November 2009 have previously advised, that La Jolla has now converted a majority portion of this debt into Intec Shares as shown in the table below, all of which have been sold on-market.

La Jolla	US$ amount	A$ Amount	Exchange	A$ Price	Intec Shares
Conversions			Rate	per share	Issued
4/12/2009	$50,248	A$55,000	0.9136	A$0.0118	4,661,017
22/12/2009	$80,019	A$90,000	0.8891	A$0.0119	7,563,025
22/01/2010	$100,496	A$110,000	0.9136	A$0.0114	9,649,123
28/01/2010	$99,220	A$110,000	0.9020	A$0.0112	9,821,429
18/02/2010	$202,860	A$225,000	0.9016	A$0.0088	25,568,182
3/03/2010	$202,230	A$225,000	0.8988	A$0.0083	27,108,434
25/03/2010	$206,460	A$225,000	0.9176	A$0.0072	31,250,000
15/04/2010	$256,410	A$275,000	0.9324	A$0.0064	42,968,750
Total/Average	$1,197,943	A$1,315,000	0.9131	A$0.0083	158,589,960

Pursuant to and in accordance with ASX Listing Rules 7.4 and 7.5, the following information is provided in relation to the La Jolla Notes and resultant Intec Shares issued on their conversion:

• a) A La Jolla Note, with a face value of US$1,500,000 has been issued, with Shares to be issued upon conversion of part or all of a La Jolla Note on the terms set out above.
• b) Specifically, the number of Shares and issue price depend on the prevailing US$/A$ exchange rate and the Company's Share price at the relevant time. See the above table for details. The La Jolla Notes are issued with a face value of US$1,500,000. The issue price of Shares on a conversion of some or all of a La Jolla Note will be calculated on the basis set out above.
• c) The terms of the La Jolla Notes are set out above. The Shares issued upon conversion are fully paid ordinary shares in the capital of the Company and are issued on the same terms and conditions as the Company's existing Shares.
• d) The La Jolla Note and Shares upon their conversion have been and will be issued to La Jolla

and/or its nominee(s).

e) Funds raised from drawdowns following the issue of La Jolla Notes are for working capital. The issue of any Shares on conversion of part or all of a La Jolla Note does not raise funds for the Company, but reduces the debt amount owed by the Company to La Jolla.

RESOLUTION 2 - APPROVAL OF ISSUE OF SECURITIES TO LA JOLLA COVE INVESTORS INC.

A Introduction

(a) Introduction

The approval of Shareholders is being sought for Resolution 2 in connection with the Company's capital raising initiatives as first announced to the ASX on 17 November 2009.

Resolution 2 will facilitate the issue of the second La Jolla Note, with a face value of US$1,500,000 to provide working capital to support:

• Green Resources' project developments in China;
• Industrial waste processing at Burnie;
• Spent pickle liquor recycling project in Victoria;
• Approved national and international minerals processing project opportunities; and
• General working capital purposes.

Subject to the satisfaction of a number of conditions precedent, including Shareholder approval for La Jolla to acquire a relevant interest in the Company upon conversion of the La Jolla Notes in certain circumstances, the Company will issue the second La Jolla Note.

(b) Key terms

The key terms of the second La Jolla Note are as follows:

• i. The second La Jolla Note has a face value of US$1,500,000.
• ii. The second La Jolla Note is to be drawn down in US$250,000 instalments progressively on a month by month basis from the date of issue.
• iii. The second La Jolla Note bears interest at 4.75% per annum, payable monthly.
• iv. The second La Jolla Note is unsecured.
• v. The second La Jolla Note must be repaid upon maturity unless converted in whole or part into Shares at the election of La Jolla at any time at the lesser of A$0.25 or 80% of the 3 lowest volume weighted average daily prices during the 15 trading days prior to the election to convert, subject to a floor price of A$0.010 at which the Company can refuse conversion and may redeem the second La Jolla Note at 120% of the outstanding face value.

(c) The Company's capital structure and effect of converting the La Jolla Notes

The Company currently has 1,027,333,736 Shares on issue (inclusive of 158,589,960 Shares already issued to La Jolla through partial conversion of the first La Jolla Note and then fully sold by it) and 18,260,000 unlisted options (vested and unvested) on issue.

As the number of Shares to be issued on conversion of some or all of a La Jolla Note is dependent upon the US$/A$ exchange rate and the Company's prevailing Share price, the following table shows the potential dilutive effect if La Jolla were to fully convert the remaining principal amount (US$302,057) of the first La Jolla Note and all of the second La Jolla Note to Shares. Note that for the purpose of calculating the percentage of voting power, the starting number of Shares is the

Conversion price	Maximum numberof Shares to beissuedto La Jolla	Total number ofShares afterLa Jolla issue1	% ofVoting power(after sales to date)
Assume Exchange Rate of A$1 = US$1.00
0.002	901,028,500	1,928,362,236	46.7%
0.004	450,514,250	1,477,847,986	30.5%
0.006	300,342,833	1,327,676,569	22.6%
0.008	225,257,125	1,252,590,861	18.0%
Assume Exchange Rate of US$1 = A$0.90
0.002	1,001,142,778	2,028,476,514	49.4%
0.004	500,571,389	1,527,905,125	32.8%
0.006	333,714,259	1,361,047,995	24.5%
0.008	250,285,694	1,277,619,430	19.6%
Assume Exchange Rate of US$1 = A$0.80
0.002	1,126,285,625	2,153,619,361	52.3%
0.004	563,142,813	1,590,476,549	35.4%
0.006	375,428,542	1,402,762,278	26.8%
0.008	281,571,406	1,308,905,142	21.5%
Assume Exchange Rate of US$1 = A$0.70
0.002	1,287,183,571	2,314,517,307	55.6%
0.004	643,591,786	1,670,925,522	38.5%
0.006	429,061,190	1,456,394,926	29.5%
0.008	321,795,893	1,349,129,629	23.9%
Assume Exchange Rate of US$1 = A$0.60
0.002	1,501,714,167	2,529,047,903	59.4%
0.004	750,857,083	1,778,190,819	42.2%
0.006	500,571,389	1,527,905,125	32.8%
0.008	375,428,542	1,402,762,278	26.8%

current total issued capital of 1,027,333,736 Shares, including 158,589,960 Shares already issued and to be ratified at this general meeting.

This assumes that the Company does not issue any further Shares other than under Resolutions 1 and 2.

(d) Directors' Report

1

In accordance with ASIC requirements, the Company has utilised the relevant qualifications and experience of its own Board to provide the Directors' Report attached to this Explanatory Memorandum. Shareholders are urged to carefully consider the Directors' Report which states the opinion of the Board that the transaction that is the subject of Resolution 2 is fair and reasonable to non-associated Shareholders.

B Regulatory Requirements - Sections 606 and 611 of the Corporations Act

Pursuant to section 606 of the Corporations Act, a person may not increase its voting power in a company in excess of 20% unless a takeover is made for all shares or another exception applies. Resolution 2 seeks the Company's shareholders' approval for acquisitions of 20% or more, which is an exception to the prohibition.

A general explanation of what approvals are necessary, and why, is set out below.

(a) Section 611 of the Corporations Act

Section 606(1) of the Corporations Act provides that a person must not acquire a relevant interest in issued voting shares of a listed company if the person acquiring the interest does so through a transaction in relation to the securities entered into by or on behalf of the person and, because of the transaction, that person's or someone else's voting power in the listed company increases (i) from 20% or below to more than 20%; or (ii) from a starting point that is above 20% and below 90%.

Under section 608(1) of the Corporations Act, a person has a relevant interest in securities if they are the holder of the securities, have power to exercise, or control the exercise of, a right to vote attached to the securities or have power to dispose of, or control the exercise of a power to dispose of, the securities.

Under section 610 of the Corporations Act a person's voting power in a company is the total of the votes attaching to the shares in that company in which that person has a relevant interest, and that person's associates (within the meaning of the Corporations Act) have a relevant interest.

Section 606(1A) of the Corporations Act provides that a person may acquire a relevant interest in shares of a listed company under one of the exceptions set out in section 611 of the Corporations Act without contravening section 606(1). Under item 7 of section 611 of the Corporations Act, an acquisition that was approved previously by a resolution of shareholders passed at a general meeting of the company is exempt from section 606(1).

If the Company issues the La Jolla Notes to La Jolla without Shareholder approval, La Jolla may not be issued with Shares on conversion equal to or more than 20% of the Company. Accordingly, for the purposes of item 7 of section 611 of the Corporations Act, Resolution 2 seeks approval from Shareholders for La Jolla to acquire a relevant interest in the Company upon the conversion of the La Jolla Notes in excess of 20% of the issued share capital of the Company with the percentage dependent upon the A$ and US$ exchange rates and the Company's Share price.

C Item 7 Section 611 of the Corporations Act and ASIC Regulatory Guides 74 and 111

In order for the Company to comply with the requirements of the Corporations Act, the Company provides the following information pursuant to ASIC Regulatory Guides 74 and 111. In addition, a Directors' Report is annexed to this Explanatory Statement as a further requirement of ASIC Regulatory Guides 74 and 111.

(a) The identity of the allottee or purchaser and any person who will have a relevant interest in the shares to be allotted or purchased.

Shares issued on conversion of the La Jolla Notes will be issued to La Jolla Cove Investors Inc, a private investment company based in the United States which provides financing to small- and mid-sized, publicly traded companies.

(b) Full particulars (including the number and the percentage) of the shares in the Company to which the allottee or purchaser is or will be entitled immediately before and after the proposed acquisition.

La Jolla currently holds no Shares in the Company.

If Resolution 2 is passed and La Jolla converts all of the principal amount then outstanding under both La Jolla Notes, the number of Shares to be issued to La Jolla will depend upon the Company's then current Share price and the exchange rate between the US and Australian dollars. Assuming a conversion share price of A$0.004 (a 20% discount to the current Share price (A$0.005)) and an exchange rate of A$0.80 per US$, the maximum number of Shares La Jolla may acquire is 563,142,813 or 35.4% (assuming Resolutions 1 and 2 are passed and no further Shares are issued). Further details of the voting power La Jolla may acquire based on alternative assumptions are set in the table above.

(c) The identity, associations (with the allottee, purchaser or vendor, and with any of their associates) and qualifications of any person who it is intended will become a director if shareholders agree to the allotment or purchase.

It is not presently intended that any person be appointed as a Director as a consequence of the allotment or purchase of the La Jolla Notes.

(d) A statement of the allottee's or purchaser's intentions regarding the future of the Company if shareholders agree to the allotment or purchase, and in particular: (i) any intention to change the business of the Company; (ii) any intention to inject further capital into the Company, and if so how; (iii) the future employment of the present employees of the Company; (iv) any proposal whereby any property will be transferred between the Company and the allottee, vendor or purchaser or any person associated with any of them; and (v) any intention to otherwise redeploy the fixed assets of the Company.

On the basis of information currently known, La Jolla's intentions are:

• to use its expertise to assist the future development of the Company's business;
• not to change the business of the Company;
• not to inject further capital into the Company other than as set out in this Explanatory Memorandum;
• to maintain the present employees of the Company;
• apart from the lending and repayment of cash, not to acquire from the Company any property other than Shares; and
• not to redeploy fixed assets of the Company or change significantly the Company's existing policies in relation to financial matters or dividends.

Final decisions regarding these matters will only be made by the Company and La Jolla at a time after consideration of all relevant material and information at that time. Accordingly, the statements set out in this section are statements of current intention only, which may change as new information becomes available or as circumstances change.

(e) Particulars of the terms of the proposed allotment or purchase and any other contract or proposed contract between the allottee or purchaser and the Company or vendor or any of their associates which is conditional upon, or directly or indirectly dependent on, shareholders' agreement to the allotment or purchase.

The key terms of the two La Jolla Notes are as follows.

Term	Description
Purchase Price	US$3,000,000 (two consecutive La Jolla Notes of US$1,500,000 each). The
	Purchase Price will be funded by La Jolla through minimum payments of
	US$250,000 per month to the Company, commencing on or about 23
	November 2009, subject to certain terms and conditions (including no event
	of default), until the entire principal balance is advanced in full to the
	Company.
Interest Rate	Interest Rate 4.75% per annum, payable monthly on the outstanding funded
	and non-converted principal amount.
Maturity Date	16 November 2011 in relation to both of the La Jolla Notes, unless earlier
	fully converted pursuant to the Conversion section below.
Conversion	The number of Shares into which the La Jolla Notes may be converted is
	equal to the dollar amount of the proportion of the La Jolla Note being

	converted, divided by the Conversion Price. The Conversion Price is equal
	to the lesser of:
	(a)A$0.25; or
	(b)80% of the average of the three lowest VWAP daily prices during
	the 15 trading days prior to the election to convert.
Floor Price	The La Jolla Notes will include a floor price of A$0.010, such that if the
	Shares are trading on the public market at or below such level at the time La
	Jolla seeks to convert all or a portion of the outstanding principal balance of
	the La Jolla Note, the Company may elect to refuse such conversion in
	exchange for the redemption of the portion of the La Jolla Note that La Jolla
	sought to convert plus any accrued and unpaid interest at 120% of the
	amount.
Short Sales	So long as the La Jolla Notes are outstanding, neither La Jolla nor its
	affiliates will at any time engage in any short sales or similar activities with
	respect to the Shares.
Conditions to	There not having occurred any event or development, and there being in
closing	existence no condition having, or which reasonably and foreseeably could
	have, a material adverse effect.
Expenses	Each party will be responsible for its own expenses.
Fees	None.
Jurisdiction	California, USA

(f) When the allotment is to be made or the purchase is to be completed.

The La Jolla Notes are to be drawn down in US$250,000 instalments progressively on a month by month basis from on or about 23 November 2009. The La Jolla Notes are issued in this way to provide cash flow certainty for the Company.

The Shares will be allotted on conversion of part or all of a La Jolla Note. The La Jolla Notes may be converted at the option of La Jolla into Shares at any time prior to the Maturity Date.

(g) An explanation of the reasons for any proposed allotment

The allotment of Shares will occur upon conversion of part or all of the La Jolla Notes. Funds raised from the issue of the La Jolla Notes will be used for the purposes set out above.

• (h) The interests of the Directors in the resolution. None of the Directors have any interest in relation to Resolution 2.
• (i) The identity of the Directors who approved or voted against the proposal to put the resolution to shareholders and the relevant explanatory memorandum. All Directors have approved Resolution 2 and the Explanatory Memorandum.
• (j) The recommendation or otherwise of each Director as to whether non-associated shareholders should agree to the acquisition, and the reasons for that recommendation or otherwise. All Directors recommend that Shareholders vote in favour of Resolution 2 in order to provide working capital to the Company.
• (k) Any intention of the acquirer to change significantly the financial or dividend policies of the Company.

There is no present intention by La Jolla to change the financial or dividend policies of the Company.

(l) An analysis of whether the proposal is fair and reasonable when considered in the context of the interests of the Shareholders, other than those involved in the proposed allotment or purchase or those associated with such persons.

The Directors' Report is set out as an appendix to this Explanatory Memorandum.

The Board has concluded that the proposal is fair and reasonable to the non-associated Shareholders of the Company.

D ASX Listing Rule 7.1

ASX Listing Rule 7.2 exception 16 provides an exemption from the 15% limit imposed by ASX Listing Rule 7.1 for an issue of securities approved for the purposes of item 7 of section 611 of the Corporations Act.

E Directors' recommendation

The Directors recommend that Shareholders vote in favour of Resolution 2 for the reasons set out above and as contained in the Directors' Report.

RESOLUTION 3 – CONSOLIDATION OF SHARES

This resolution has been proposed to effect the consolidation of the Company's shares on the basis of one share for each 10 existing shares, with fractions rounded up. The passing of this resolution will effectively have no impact on each shareholding in the Company relative to other shareholders.

A The Company's Constitution

Clause 7 of the Company's constitution requires an ordinary resolution of members of the Company in order to subdivide (consolidate) its share capital. The passing of Resolution 3 will satisfy this requirement.

B Corporations Act, Section 254(H)

Section 254 (H) of the Corporations Act provides that a company may convert all or any of its shares into a larger or smaller number of shares by resolution passed at a general meeting of shareholders. The passing of Resolution 3 will satisfy this requirement.

C ASX Listing Rule 7.20

ASX Listing Rule 7.20 states that if an entity proposes to reorganise its capital, it must inform equity security holders in writing of each of the following:

• The effect of the proposal on the number of securities of the Company and the amount unpaid, if any, on the securities.
• The proposed treatment of any fractional entitlements arising from the reorganisation, and
• The proposed treatment of any convertible securities on issue.

The Company currently has a number of options on issue, the details of which are set out in the table below. In accordance with the Listing Rules and the terms of issue of the options currently on issue, the Share Consolidation will have the effect that the number of options will reduce in proportion to the ordinary share capital and the exercise price will increase in inverse proportion to the consolidation ratio as is set out below.

Options	Number pre shareconsolidation	Number post shareconsolidation (subject	Exercise price postshare consolidation
		to rounding)
Option to acquire	7,210,000	721,000	$1.10
ordinary shares at $0.11
on 30 August 2011.
Option to acquire	4,700,000	470,000	$1.50
ordinary shares at $0.15
on 25 September 2010.

(Unvested options1)	6,350,000	635,000	$1.50
Option to acquire
ordinary shares at $0.15
on 25 September 2010.

1 Post-reorganisation, these options will not vest, and may not be exercised, until the Trigger Price Threshold of $2.50 is met. To meet the Trigger Price Threshold, the price of Intec Ltd shares traded on the Australian Securities Exchange must have closed above $2.50 for 20 consecutive trading days or Intec Ltd must have received a bona fide offer for a majority or all of its shares whether by takeover or scheme of arrangement.

Following approval of Resolution 3, the number of shares on issue will be reduced from 1,027,333,736 to approximately 102,733,400. The precise number of post-consolidation shares on issue will depend on the effect of rounding up on each shareholder's individual holding. Fractional holdings will be rounded up.

In accordance with the Listing Rules and the terms of the proposed second Convertible Note Issue, the Share Consolidation will have the effect that the number of shares to be issued on conversion will reduce in proportion to the ordinary share capital as set out below.

Number of Shares (After Consolidation) to be issued upon Conversion of the Second Note

Exchange Rate	$0.60	$0.70	$0.80	$0.90
A$1 equals
Conversion Price (per share)
0.020	125,000,000	107,142,857	93,750,000	83,333,333
0.040	62,500,000	53,571,429	46,875,000	41,666,667
0.060	41,666,667	35,714,286	31,250,000	27,777,778
0.080	31,250,000	26,785,714	23,437,500	20,833,333

Percentage of Intec's total issued Shares (After Consolidation) upon conversion of the Second Note

Exchange Rate	$0.60	$0.70	$0.80	$0.90
A$1 equals
Conversion Price (per share)
0.020	54.9%	51.1%	47.7%	44.8%
0.040	37.8%	34.3%	31.3%	28.9%
0.060	28.9%	25.8%	23.3%	21.3%
0.080	23.3%	20.7%	18.6%	16.9%

Number of Shares (After Consolidation) to be issued upon conversion of the outstanding debt and the Second Note

Exchange Rate	$0.60	$0.70	$0.80	$0.90
A$1 equals
Conversion Price (per share)
0.020	150,171,417	128,718,357	112,628,563	100,114,278
0.040	75,085,708	64,359,179	56,314,281	50,057,139
0.060	50,057,139	42,906,119	37,542,854	33,371,426
0.080	37,542,854	32,179,589	28,157,141	25,028,569

Percentage of Intec's total Shares (After Consolidation) upon conversion of the outstanding
debt and the Second Note

Exchange Rate	$0.60	$0.70	$0.80	$0.90
A$1 equals
Conversion Price (per share)
0.020	59.4%	55.6%	52.3%	49.4%
0.040	42.2%	38.5%	35.4%	32.8%
0.060	32.8%	29.5%	26.8%	24.5%
0.080	26.8%	23.9%	21.5%	19.6%

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Th Co in she he consolida ompany to r any change eet or tax po ation is prop raise further e to the sub osition of th posed in ord r working c bstantive ri he Company der to reduc capital, as re ights and ob y. ce the Comp equired from bligations o pany's issue m time to tim of sharehold e share capi me. The con ders, nor an ital and bett nsolidation ny change t ter position will not res to the balan the sult nce

Se et out below w is an indic ative timeta able relating g to the shar re consolida ation.

Event	Date
Notice of Extraordinary General Meeting sent to shareholders	01 June 2010
Determination of proxies and eligibility to attend EGM	28 June 2010
Extraordinary General Meeting	30 June 2010
Notification to ASX that security holders have approved reorganisation	30 June 2010
Last day for trading in pre-reorganised securities	1 July 2010
Trading in the reorganised securities on a deferred settlement basis starts	02 July 2010
Last day to register transfers on a pre-reorganisation basis	08 July 2010
First day to register securities on a post-reorganisation basis	09July 2010
Despatch date	15 July 2010
Dates are indicative only. Intec reserves the right to vary the times and dates set out in the above and any

Da va ates are indi ariation to th he timetable y. Intec rese e above will erves the rig l be announ ght to vary t nced to ASX the times an X. nd dates set t out in the a above and a any

Ge eneral

Th ord Co he shares m dinary shar ompany. mentioned in res in the C n Resolution Company. ns 1 and 2 a The subsc all rank equ ribers to th ually in all he above is respects wi ssues are n ith the exist not related ting fully p parties of paid the

Yo ours sincere ely

Ph Ma hilip R. Woo anaging Dir od rector & Ch hief Executi ive Officer

ABN 25 001 150 849

Level 3 2 Elizabeth Plaza North Sydney NSW 2060 Australia PO Box 1507 North Sydney NSW 2059 Australia

Phone: 02-9925 8170 Fax: 02-9925 8110 Email: mail@intec.com.au Website: www.intec.com.au ASX code: Intec

DIRECTORS' REPORT TO SHAREHOLDERS

An Extraordinary General Meeting of Intec Ltd ("the Company" or "Intec") will be convened on 30 June 2010 to consider (inter alia) a resolution under Section 611 (Item 7) of the Corporations Act 2001 to approve the issue of two unsecured convertible notes (and resultant share issues thereunder) to La Jolla Cove Investors Inc. ("La Jolla").

1. INTRODUCTION

• 1.1 Using the relevant qualifications, skills and experience of the Intec Board, particularly the investment and corporate finance experience of Messrs. Trevor Jones (Chairman), Philip Wood (Managing Director & CEO) and Kieran Rodgers (Finance Director & CFO), we have prepared this Directors' Report to Shareholders to determine the fairness and reasonableness of the transactions referred to in Resolutions 1 and 2 as detailed in the Notice to Intec shareholders ("the Notice") for a meeting to be held on 30 June 2010.
• 1.2 On 16 November 2009, the Company entered into a Securities Purchase Agreement with La Jolla, a US institutional investor, whereby La Jolla may subscribe for up to two convertible notes ("the Notes"), each with a face value of US$1,500,000, so Intec can raise up to US$3,000,000 if both Notes are issued and fully drawn down. Intec has issued and fully drawn down the first Convertible Note ("the First Note") to La Jolla, with the issue of the second Convertible Note ("the Second Note") pending shareholder approval of Resolutions 1 and 2 in the Notice.
• 1.3 The basic terms of the Notes are as follows:

Purchase Price:	US$3,000,000 (2 Notes of US$1,500,000 each). The purchase price is
	funded by La Jolla through minimum payments of US$250,000 per
	month to Intec, subject to stated terms and conditions, until the entire
	principal balance is paid in full to Intec.

• Interest Rate: 4.75% per annum, payable monthly on the outstanding funded and non-converted principal amount.
• Maturity Date: 16 November 2011, unless earlier converted pursuant to the "conversion" section noted below.

Conversion:	The Notes may be converted at La Jolla's option into Intec's fully paidordinary shares ("the Shares"). The number of Shares into which theNotes may be converted is equal to the A$ amount of the Notes beingconverted divided by the conversion price. The conversion price shallbe equal to the lesser of:(a)A$0.25; or(b)80% of the 3 lowest volume weighted average price ("VWAP")
	daily prices of the Shares during the preceding 15 trading days.
Floor Price:	The Notes will include a floor price of A$0.01; such that if the Sharesare trading on the ASX at or below such level at such time as La Jollaseeks to convert all or a portion of the outstanding principal balancesof the Notes, Intec may elect to refuse such conversion in exchangefor the redemption of the portion of the Notes that La Jolla sought toconvert at 120% of the outstanding face value.
Short Sales:	So long as the Notes are outstanding, neither La Jolla nor its affiliatesshall at any stage engage in short selling or similar activity withrespect to Intec's shares.
Condition Subsequent
to Closing:	The Company obtaining shareholder approval to the issuance of theNotes under Section 611 (Item 7) of the Corporations Act.
Security:	The Notes will be unsecured.

The issue of the two Notes and the right to convert the Notes into Shares is the subject of Resolutions 1 and 2. Further details of the Notes and Resolutions 1 and 2 are outlined in the Notice and the Explanatory Statement attached to the Notice.

• 1.4 Under Section 606 of the Corporations Act, a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that person's or someone else's voting power in the company increases:
  • (a) from 20% or below to more than 20%; or
  • (b) from a starting point that is above 20% and below 90%.

Under Section 611 (Item 7) of the Corporations Act, Section 606 does not apply in relation to any acquisition of shares in a company that is approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer (or their respective associates) of the relevant company shares. Such a resolution also gives rise to exception 16 under ASX listing Rule 7.2 to "the 15% rule" under ASX Listing Rule 7.1. An expert report, or a directors' report to the same standard, is required under ASIC Regulatory Guideline 111 "Contents of Expert Reports" to report on the fairness and reasonableness of the transactions to be voted upon at a Section 611 (Item 7) meeting.

1.5 In the event that some or all of the unconverted balances of the Notes were converted into Shares, there would be certain circumstances in which La Jolla might obtain a shareholding of greater than 20% and might also increase the percentage after obtaining at least a 20% shareholding on conversion of the Notes and thus shareholder approval is required that allows La Jolla to convert all or part of the Notes into Shares.

• 1.6 Apart from this introduction, this Directors' Report comprises the following:
  • Summary of opinion.
  • Implications of the proposals.
  • Future directions of Intec.
  • Basis of valuation of shares in Intec.
  • Premium for control.
  • Fairness and Reasonableness of the Proposals pursuant to Resolutions 1 and 2.
  • Conclusion as to Fairness and Reasonableness.
  • Sources of information.

2. SUMMARY OF OPINION

2.1 In determining the fairness and reasonableness of the transactions pursuant to Resolutions 1 and 2 we have had regard to the definitions set out by the Australian Securities and Investments Commission ("ASIC") in its Regulatory Guide 111. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of "fairness" is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the "target" and irrespective of whether the consideration is scrip or cash. An offer is "reasonable" if it is fair. An offer may also be reasonable, if despite not being "fair", where there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Regulatory Guide 111 also states that in all cases, where an acquisition of shares by way of an allotment is to be approved by shareholders pursuant to Section 611 (Item 7) of the Corporations Act, a report by an independent expert (or a directors' report to the same standard) stating whether or not such an allotment would be are fair and reasonable, having regard to the interests of shareholders other than the proposed allottee (in this case, La Jolla), and whether a premium for potential control and/or increased control is being paid by the allottee, will be required. Regulatory Guide 111 also provides that such an allotment should involve a comparison of the advantages and disadvantages likely to accrue to non-associated shareholders if the transaction proceeds compared with if it does not.

Accordingly, our report relating to Resolutions 1 and 2 is concerned firstly with the fairness and reasonableness of the proposals from the point of view of the existing non-associated shareholders of Intec, and secondly whether the price payable for the potential to obtain a significant shareholding interest (by La Jolla) includes a premium for control and/or increased control.

2.2 In our opinion:

The proposals as outlined in Resolution 1 are, in view of the current financial state of the Company and the difficulty of raising capital in the current financial markets, on balance considered to be fair and reasonable to the non-associated shareholders of Intec.

The proposals as outlined in Resolution 2 are, in view of the current financial state of the Company and the difficulty of raising capital in the current financial markets, on balance considered to be fair and reasonable to the non-associated shareholders of Intec.

The Directors' opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report.

3. IMPLICATIONS OF THE PROPOSALS

• 3.1 As at 17 November 2009, there were 821,253,724 Shares on issue in Intec to 3,468 shareholders, of which the top twenty owned 25.21% of the current issued capital of Intec. Thus the Shares are quite widely held.
• 3.2 In addition to partial conversions of the First Note, the following placements of Shares were made during the period from December 2009 to the present.
  • 8,666,666 Shares to nominees of Martin Place Securities on 22 December 2009.
  • 8,000,000 Shares to nominees of Martin Place Securities on 23 December 2009.
  • 21,659,436 Shares to nominees of Green Resources on 7 January 2010.
  • 9,074,502 Shares to Merriman Curhan Ford on 3 February 2010.
• 3.3 There are currently the following unlisted Intec Share options:
  • 7,210,000 Share options exercisable at 11 cents each on or before 30 August 2011;
  • 4,700,000 Share options exercisable at 15 cents each on or before 25 September 2012; and
  • 6,350,000 Share options exercisable at 15 cents each on or before 25 September 2012. (These will not vest, and may not be exercised, until the Trigger Price Threshold of $0.25 is met. To meet the Trigger Price Threshold, the price of Shares traded on the ASX must have closed above $0.25 for 20 consecutive trading days or Intec Ltd must have received a bona fide offer for a majority or all of its Shares whether by takeover or scheme of arrangement).
• 3.4 In the event that the proposals noted in Resolutions 1 and 2 are passed and implemented, the potential issued capital in Intec may substantially increase if all or some of the unconverted balances of the Notes are converted by La Jolla into Shares.

As noted in Resolution 1, the Company has fully drawn down the First Note. La Jolla has converted US$1,197,943 of this debt into Shares, and has fully sold these on- market. The outstanding unconverted debt under the First Note is US$302,057.

The actual maximum number of Shares that may be issued cannot be reliably estimated, in part because the Notes are denominated in US dollars and the US$/A$ exchange rate varies. Also the number of Shares that may be issued on conversion (at La Jolla's option) is dependent on the amount drawn down under the Notes and then converted.

If it is assumed that the Second Note is to be issued on say 1 July 2010, and were then fully drawn down and, together with the outstanding debt of the First Note, all converted to Shares at A$0.004 (a 20% discount to the current Share price (A$0.005)) but there was no interest capitalised (interest is payable on a monthly basis) and the exchange rate was AUS$1 equals US$0.80, a total of approximately 563 million Shares would be issued on full conversion.

We set out below a table of potential Shares and percentages that may theoretically be issued on conversion of the Notes assuming no further sales by La Jolla and no Share issues to other parties.

Exchange RateA$1 equals	US$0.60	US$0.70	US$0.80	US$0.90
Conversion Price(per Share)
A$0.002	1,250,000,000	1,071,428,571	937,500,000	833,333,333
A$0.004	625,000,000	535,714,286	468,750,000	416,666,667
A$0.006	416,666,667	357,142,857	312,500,000	277,777,778
A$0.008	312,500,000	267,857,143	234,375,000	208,333,333

Table 2: Percentage of Intec's total issued Shares upon conversion of the Second Note

Exchange RateA$1 equals	US$0.60	US$0.70	US$0.80	US$0.90
Conversion Price(per Share)
A$0.002	54.9%	51.1%	47.7%	44.8%
A$0.004	37.8%	34.3%	31.3%	28.9%
A$0.006	28.9%	25.8%	23.3%	21.3%
A$0.008	23.3%	20.7%	18.6%	16.9%

Table 3: Number of Shares to be issued upon conversion of the outstanding debt and the Second Note

Exchange RateA$1 equals	US$0.60	US$0.70	US$0.80	US$0.90
Conversion Price(per Share)
A$0.002	1,501,714,167	1,287,183,571	1,126,285,625	1,001,142,778
A$0.004	750,857,083	643,591,786	563,142,813	500,571,389
A$0.006	500,571,389	429,061,190	375,428,542	333,714,259
A$0.008	375,428,542	321,795,893	281,571,406	250,285,694

Table 4: Percentage of Intec's total Shares upon conversion of the outstanding debt and the Second Note

Exchange RateA$1 equals	US$0.60	US$0.70US$0.80		US$0.90
Conversion Price(per Share)
A$0.002	59.4%	55.6%	52.3%	49.4%
A$0.004	42.2%	38.5%	35.4%	32.8%
A$0.006	32.8%	29.5%	26.8%	24.5%
A$0.008	26.8%	23.9%	21.5%	19.6%

Based on the above numbers and assumptions, the potential Shareholding of La Jolla would be between approximately 19.6% and 59.4% if both the whole of the Second Note and the outstanding debt of the First Note were converted to Shares.

3.6 The Company will have received US$3,000,000 if both of the Notes are issued and the monies are fully drawn down. The First Note has been fully drawn down and, subject to the passing of resolutions 1 and 2, Intec can draw down on the Second Note at a minimum monthly amount of US$250,000. For the purposes of this report, we assume the whole US$3,000,000 will have been drawn down by 31 December 2010.

If we assume both Notes are drawn down in full and are due to be repaid at 16 November 2011, the interest payable in US dollars would be approximately US$132,000. (It is not planned to draw down on the Second Note all at one time. It will be drawn down on a monthly basis. Furthermore, La Jolla has to date converted the majority of the debt into Shares and, were this to continue, the interest payable should be substantially less. The interest already paid on the First Note is only approximately A$6,000).

4. FUTURE DIRECTIONS OF INTEC

• 4.1 The Company proposes to expend funds from the drawdown of the Notes to provide sufficient working capital for the operation of the Company and the development of current projects, particularly in Australia and China.
• 4.2 There are no plans to acquire assets or businesses from, or sell assets or businesses to, La Jolla.
• 4.3 No dividend policy has been set and is not proposed to be set until such time as the Company is profitable and has a positive cash flow.
• 4.4 The Company may seek to raise further funds by way of share equity issues and/or industry corporate transactions, subject to market conditions.

5. BASIS OF VALUATION OF SHARES IN INTEC

5.1 Shares in Intec

• 5.1.1 In considering the proposals as outlined in Resolutions 1 and 2 we have sought to determine if the potential conversion prices of the Notes are greater than or equal to the current fair value of the Shares on issue and then conclude whether the proposals are fair and reasonable to the existing non-associated Shareholders of Intec.
• 5.1.2 The proposals pursuant to Resolutions 1 and 2 would be fair to the existing non-associated Shareholders if the conversion prices of the Shares under the Notes are greater than or equal to the implicit value of the Shares currently on issue. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on the Shares for the purposes of this report.
• 5.1.3 The valuation methodologies we have considered in determining the current technical value of a Share are:
  • Capitalised maintainable earnings/discounted cash flow;
  • Takeover bid the price which an alternative acquirer might be willing to offer;
  • Net asset backing and/or wind-up value; and

• The market value price of the Shares.

5.2 Capitalised Maintainable Earnings / Discounted Cash Flow

5.2.1 Intec currently does not have a reliable cash flow or profit history from its current business undertakings and therefore this methodology to value the Company as a whole is not appropriate. It is noted that the loss for the year ended 30 June 2009 totalled over A$20,600,000 and the prior year over A$2,800,000. Without the funds drawn down under the Notes, the Company does not have sufficient cash to continue technical development and thus any perceived valuation of the Intec Process is theoretical as without funds it would not be developed to its full potential.

5.3 Takeover Bid

5.3.1 The Directors of Intec are unaware of any person with an interest in taking over the Company by way of a formal takeover bid at the current time and have no reason to consider that any takeover bid is likely to be made for Intec in the immediate future.

5.4 Net Asset Backing and Wind-Up Value

5.4.1 As there is no intention to wind up the Company, we have not considered-wind up values for the purposes of this report and note the summary below of the Company's unaudited consolidated balance sheet as at 31 December 2009:

	31 December
	2009
Current assets	$'000
Cash and cash equivalents	212
Trade and other receivables	242
Inventories	38
Total current assets	492
Non-current assets
Receivables	121
Other financial assets	2,782
Plant and equipment	3,792
Environmental bonds	4,404
Intangible assets	10
Total non-current assets	11,109
Total assets	11,601
Current liabilities
Trade and other payables	294
Borrowings	54
Interest Bearing Convertible Notes	412
Provisions	4,997
Total current liabilities	5,757

Non-current liabilities

Provisions	129
Total non-current liabilities	129
Total liabilities	5,886
Net assets	5,715
Equity
Contributed equity	67,157
Reserves	2,577
Accumulated losses	(64,019)
Total equity	5,715

5.4.2 Based on the above, the net tangible asset value per Share (there were then 860,164,274 Shares on issue) was A$0.0067.

The net tangible assets of the consolidated Intec Group at 30 April 2010 was $5,598,004, as contained in the Group's unaudited management accounts. The number of Shares on issue at 30 April 2010 was 1,027,333,736, resulting in net tangible asset value per Share of $0.0054.

5.5 Market Price of Intec Shares

5.5.1 We set out below a summary of Share prices since 1 April 2009 to the date immediately prior to the announcement of the details of the Securities Purchase Agreement with La Jolla.

	LowCents	HighCents	Last SaleCents	VolumeTraded
2009
June	1.3	2.0	1.5	77,716,850
July	1.5	2.0	1.8	133,372,223
August	1.5	2.1	1.6	90,502,56
September	1.4	1.7	1.6	46,140,682
October	1.3	1.8	1.5	69,164,207
November (to 17th)	1.4	2.0	1.8	70,317,965

Table 5: Summary of Share transaction history prior to the announcement of the Securities Purchase Agreement

The following table sets out the Share prices following the announcement of the Securities Purchase Agreement with La Jolla.

Table 6: Summary of Share transaction history following the announcement of the Securities Purchase Agreement

	LowCents	HighCents	Last SaleCents	VolumeTraded
November 2009(from 18th)	1.5	1.9	1.6	98,878,242
December 2009	1.4	1.6	1.5	19,797,882
January 2010	1.3	1.6	1.5	35,497,597
February 2010	1.0	1.5	1.0	58,653,096
March 2010	0.7	1.1	0.8	69,341,639
April 2010	0.7	1.0	0.8	111,147,454
May 2010 (to 28th)	0.4	0.9	0.5	55,347,612

5.5.2 The market is one indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher.

Intec's cash position is tight and there is very little money for expansion beyond necessary monthly working capital. The proposed Second Note is key to the proposed short term funding requirements of Intec.

5.5.3 No independent valuations have been prepared on the intangible assets (such as intellectual property) and project prospects of Intec, because their values are highly uncertain.

We note that the market has been informed of all of the current projects, technology developments, joint ventures and arrangements entered into between Intec and other parties. We also note it is not the present intention of the Directors of Intec to liquidate the Company and therefore any value based upon a winding-up value or even net book values (as adjusted), is just theoretical.

Intec Shareholders, existing and future, must acquire Shares based on the market perceptions of their worth. The market capitalisation of Intec as at 16 November 2009 was approximately $12.5 million. The Company's financial position prior to issuing the First Note was poor and without this recapitalisation, Intec would only have been able to fund working capital through inflow of funds via a capital raising or debt facility.

The capital markets over recent times have been difficult and the ability to raise capital has been restricted, bearing in mind that an SPP and associated placement was undertaken by Intec as recently as May 2009. Where share placements have occurred they have been undertaken in the main at significant discounts to market and technical values. Since the 'global financial crisis' in 2008, capital raising by junior and mid-cap companies (such as Intec) listed on the ASX's Mining and Oil Board has been very difficult. This has reduced the appetite of brokers and investors to take up shareholding positions in such companies.

The Company's financial position is not strong and may be insufficient to meet existing current liabilities in full and pay ongoing corporate costs without an inflow of funds via drawdown of the Second Note. This should relieve the short term financial position of the Company while sustainable revenues are developed, although in the medium/longer term new share equity and/or corporate transactions may be required.

The Directors, when initially negotiating with La Jolla concerning the Notes, considered a fair market value of a Share to be around the then current Share price on the ASX of approximately 1.5 cents. The ability of the Company to continue trading would have been in doubt without the sourcing of further working capital via the First Note.

5.6 Preferred value of Intec Shares to arrive at fairness conclusion

5.6.1 Notwithstanding the good prospects of the Intec Process (and related projects), the Company requires cash in order to implement its nominated project strategies. If future implementation of the current Intec Process projects proves successful and expansion of the project portfolio proceeds, then arguably the fair value of a Share would be greater than at present, however this is highly uncertain. It may be fair to say that if the current Australian and Chinese Intec Process projects do proceed to production (more evaluation work is still required before a decision to commence construction on these projects), then it is likely that the share price would be higher than the share price as at the date of signing this report, but again this is uncertain.

5.6.2 It is noted that over the past 12 months there have been many capital raisings by 'small cap' Australian companies at discounts of up to 50%, including a share purchase plan and placement by Intec in May 2009. It is not unreasonable to assume that for Intec to raise funds in the current economic circumstances a significant discount would need to be offered to investors.

We also note that ASX Listing Rule 7.3.3 allows the issue of shares at a discount of up to 20% of the market value (weighted average over five days) where the issue price is not predetermined.

Furthermore, capital raising via a share purchase plan or placement (particularly if underwritten to guarantee partial to full uptake) also involve additional fees which can commonly amount to 5-8% of the capital raised.

• 5.6.3 The future ultimate value of an Intec share will depend upon, inter alia:
  • the future prospects of the Intec Process technology;
  • the implementation of current and future projects using the Intec Process, particularly in Australia and China;
  • the state of the base and precious metal markets (and prices) in Australia and overseas;
  • the state of Australian and overseas stock markets;
  • the treatment of the Notes;
  • the strength of the Board and Management; and
  • possible ventures and acquisitions entered into by Intec.

It is our view, that the most appropriate fair value of a Share for the purpose of assessing the fairness and reasonableness of the proposals under Resolution 2 is the net tangible asset backing per Share, being approximately 0.54 cents as per management accounts at 30 April 2010. This value is used to consider the proposals outlined in Resolutions 1 and 2.

6. PREMIUM FOR CONTROL

• 6.1 Premium for control for the purposes of this report, has been defined as the difference between the price per share, which a buyer would be prepared to pay to obtain or improve a controlling interest in a company and the price per share which the same person would be required to pay per share, which does not carry with it control or the ability to improve control of such company.
• 6.2 Under the Corporations Act, control may be deemed to occur when a shareholder or group of associated shareholders control more than 20% of the issued capital. In this case, La Jolla on conversion of all of the balance of the Notes to Shares may increase its Shareholding from 0% to over 20%. As noted in paragraph 3.5 the actual percentage cannot be reliably estimated as it will depend on, inter alia, the US$/A$ foreign exchange rate, the principal outstanding amount under the Notes that is converted to ordinary shares in Intec, the share price of an Intec share at the conversion dates and other potential share issues. However, it is one of the conditions to the Notes is that La Jolla cannot exceed 10% of the total issued capital in Intec. Indeed, it has historically not done so and therefore the 20% threshold is unlikely to be achieved. Accordingly, it is not considered appropriate to address whether a premium for control should be paid.

6.3 We note that currently La Jolla has no Board representatives. On completion of the Second Note issue there is no plan for La Jolla to seek the election of a La Jolla representative.

7. FAIRNESS AND REASONABLENESS OF THE PROPOSALS PURSUANT TO RESOLUTIONS 1 AND 2

We set out below, some of the advantages, disadvantages and other factors pertaining to the proposed securities issues, pursuant to Resolutions 1 and 2.

Advantages

• 7.1 If Shareholders do not approve Resolutions 1 and 2 then there is the possibility that the Company cannot continue in its present form and the Company may be forced to divest itself of some or all of its assets and may not be able to continue to survive as a listed ASX company. If forced to undertake a capital raising via issue of Shares, then the discount to market may be substantial.
• 7.2 La Jolla can potentially strengthen its ties with Intec that in the medium term can lead to advantages to Shareholders. By subscribing for the Notes (with the right to convert to Shares as outlined above) La Jolla is placing its faith in Intec and as noted above should assist Intec in continuing in business. If this is achieved all Shareholders may benefit and realise additional value in their Shares.
• 7.3 Given the poor financial results to date on the existing businesses, it may be difficult for the Company to raise capital through the medium of a rights issue. It may also prove difficult to place Shares to new investors without positive news, even at a significant discount to the current Share price.

The issue of Notes to La Jolla is considered beneficial to the Company as it has raised US$1,500,000 via the First Note and may raise a further US$1,500,000 via the Second Note over the next 6 months.

7.4 The Company will have raised up to US$3,000,000 without paying a commission that in today's market would be between 5% and 8%. This saves the Company between US$75,000 and US$120,000 per Note and between US$150,000 and US$240,000 if both Notes are issued.

Interest is payable on the Notes at a significantly lower rate (4.75%) than would normally be available commercially on unsecured debt accessed (assuming this were even possible) by the Company.

Disadvantages

7.5 Excluding the 10% cap under the terms of the Second Note, an influential Shareholding of the Company may be being given to La Jolla if all or some of the Second Note were converted into Intec Shares and not sold by La Jolla. The potential for La Jolla to obtain a potentially significant Shareholding interest in Intec may be a disincentive for other parties to make a takeover bid for the Company. The non-associated Shareholders will be diluted when and if all of the principal sums drawn down under the Notes are converted to Shares on or before the Repayment Date.

7.6 There is an interest cost in entering into the Note Facility, although the interest rate of 4.75% is considerably lower than other Notes issued to other junior companies in recent times.

It is likely that the Second Note will be successively be drawn down over a period of up 6 months and therefore the interest cost (interest is payable on a monthly basis) over the time to maturity would be significantly lower than the theoretical maximum. The total amount payable under the maximum outstanding balances under the Notes on the Repayment Date may in theory approximate up to US $1,802,000. The Company may not be in a financial position to repay the Notes (if the Notes are not converted to Shares) unless in the meantime the Company has had commercial success and is otherwise cash flow positive.

• 7.8 The conversion price (actual conversion prices cannot be calculated at the time of preparation of this report) if the Notes are converted to Shares are likely to be less than the Share price at the conversion date.
• 7.9 The conversion of debt by La Jolla and ensuing sale of Shares provides downward pressure on the Share price, which increases the number of Shares required to be issued by the Company on subsequent conversion at the election of La Jolla. This is dilutive to nonassociated Shareholders.

Other Factors

• 7.10 La Jolla is taking a risk in investing funds in Intec as the business to date has not been profitable and further losses may occur. There is an incentive for La Jolla to make Intec a successful cash flow positive company and if this eventuates the Share price may rise considerably from current levels and all Shareholders would benefit.
• 7.11 The opportunities to raise a total of up to US$3,000,000 are considered limited in the current difficult market associated with junior companies and the stock market generally. It would be expected that a discount to market would apply and it may be as high as 50%.

8. CONCLUSION AS TO FAIRNESS AND REASONABLENESS

8.1 After taking into account the factors referred to in Section 7 above and elsewhere in this Directors' Report, we are of the opinion that the proposal as outlined in Resolutions 1 and 2 in the Notice, to issue up to US$3,000,000 under the Notes, is, in view of the current financial state of the Company and the capital markets, fair and reasonable to the nonassociated shareholders of Intec.

9. SOURCES OF INFORMATION

• 9.1 In making our assessment as to whether the proposals pursuant to Resolutions 1 and 2 are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company that is relevant to the current circumstances. Statements and opinions contained in this Report are given in good faith, but in the preparation of this Report, we have relied on best available information and current known strategies.

• 9.2 Information we have utilised includes, but is not limited to:

  • May 2010 Notice of General Meeting of Shareholders and Explanatory Memorandum of Intec;

• Top 20 0 shareholdi ing list as at t 17 Novem mber 2009;

• Market t prices rela ating to Intec c Shares fro om 1 Januar ry 2009 to 2 28 May 201 0;

• Annual accoun l report of I nts as at 31 D Intec for the December 2 e year ende 2009 and ma ed 30 June 2 anagement 2009. The u accounts as unaudited co s at 30 April onsolidated l 2010;

• Annou 2010; uncements m made by In ntec to its sh hareholders from 1 Jan nuary 2009 to 28 May

• The A Conver Agreements rtible Note) (including between In g the Sec ntec and La curities Pu Jolla of 16 urchase Ag November greement a 2009; and 4.75% 3dy%

• The bu udget and ca ash flow for recasts to 31 1 December r 2010.

Yours faith hfully

For and on The Direct n behalf of tors of Intec c Ltd

Philip R. W Managing Wood Director & Chief Exec cutive Offic cer

Shareholder Name and Address

FOR ALL ENQUIRIES CALL: (within Australia) 1300 737 760 (outside Australia) +61 2 9290 9600

FACSIMILE +61 2 9290 9655

ALL CORRESPONDENCE TO:

Registries Limited GPO Box 3993 Sydney NSW 2001 Australia

Your Address This is your address as it appears on the company's share register. If this is incorrect, please mark the box with an "X" and make the correction on the form. Securityholders sponsored by a broker should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

<SRN/HIN>

YOUR VOTE IS IMPORTANT

FOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE 10:00AM 28th JUNE 2010

TO VOTE ONLINE

STEP 1 : VISIT www.registries.com.au/vote/intecegm2010 STEP 2: Enter your holding/Investment type

STEP 3: Enter your SRN/HIN and VAC:

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 Appointment of Proxy

Indicate here who you want to appoint as your Proxy If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a security holder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

Proxy which is a Body Corporate

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an "Appointment of Corporate Representative" prior to admission. An Appointment of Corporate Representative form can be obtained from the company's securities registry.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's securities registry or you may copy this form.

To appoint a second proxy you must:

• (a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
• (b) return both forms together in the same envelope.

STEP 2 Voting Directions to your Proxy

You can tell your Proxy how to vote

To direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

STEP 3 Sign the Form

The form must be signed

In the spaces provided you must sign this form as follows:

Individual: This form is to be signed by the securityholder. Joint Holding: where the holding is in more than one name, all the securityholders must sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 10:00am on Wednesday 30 June 2010. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxies may be lodged using the reply paid envelope or:

• BY MAIL Share Registry Registries Limited, GPO Box 3993, Sydney NSW 2001 Australia
• BY FAX + 61 2 9290 9655
• IN PERSON Share Registry Registries Limited, Level 7, 207 Kent Street, Sydney NSW 2000 Australia

Vote online at: www.registries.com.au /vote/intecegm2010 or turnover to complete the Form Î

STEP 1 - Appointment of Proxy

I/We being a member/s of Intec Ltd and entitled to attend and vote hereby appoint

If you are not appointing the Chairman of the Meeting as your proxy please write here the full name of the individual or body corporate (excluding the registered Securityholder) you are appointing as your proxy.

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy at the Extraordinary General Meeting of Intec Ltd to be held at Intec's Registered Office, Level 3, 2 Elizabeth Plaza, North Sydney NSW 2060 on Wednesday 30 June 2010 at 10:00am and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit.

STEP 2 - Voting directions to your Proxy – please mark : to indicate your directions

Ordinary Business			For	Against	Abstain*
Resolution	1	Ratification of Convertible Notes Issues and Resultant Share Issues to LaJolla Cove Investors Inc.
Resolution	2	Approval of Issue of Securities to La Jolla Cove Investors Inc.
Resolution	3	Consolidation of Shares

In addition to the intentions advised above. The Chairman of the Meeting intends to vote undirected proxies in favour of each of the items of business.

*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3 - PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Securityholder 1	Securityholder 2		Securityholder 3
Sole Director and Sole Company Secretary	Director			Director/Company Secretary
Contact Name ……………………………….……	Contact Daytime Telephone ………………………………… Date		/	/2010