TZ LIMITED — Capital/Financing Update 2010

Jul 13, 2010

TZ Limited ABN 26 073 979 272

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14 July 2010

Lodged by ASX Online

The Manager Company Announcements Office ASX Ltd Level 4, 20 Bridge Street Sydney, NSW 2000

Dear Sir/Madam

TZ Limited - YE 30 June 2011 Performance Targets

The board of directors of TZ Limited (the “Company” ) would like to provide shareholders with an update regarding the internal operational performance objectives for its wholly owned US subsidiaries, Telezygology Inc. (“ TZI ”) and Product Development Technologies Inc. (“ PDT ”) for the financial year ending 30 June 2011 ( “FY 2011” ).

Although the business plans and budgets for FY 2011 have been finalized since the end of May, the board has unfortunately needed to delay updating shareholders in respect of the group’s operational performance targets for FY 2011 due to the financial position of the Company at the end of June, and the need to ensure the on-going viability of the Company in the first instance. As a result of the recent agreement with Sydcomp Pty Limited for conversion of its convertible notes and the arrangement with QVT Fund LP and Quintessence Funds L.P. to provide US$4.1 Million to support on-going working capital expenses and to fund proposed business initiatives, the Company has sufficient financial resources to commence the implementation of its plans.

Operating budgets and performance targets have been prepared by the senior management of TZI and PDT and are based on the current expectations of management and the successful execution of business unit plans and objectives. Performance targets are internal revenue targets which management is aiming to achieve during FY 2011 for the purposes of business planning and should not be considered to equate to forecasts of the expected revenue or financial performance of the Company, PDT or TZI.

Chicago (Operational Headquarters) ASX: TZL 520 West Erie Street, Suite 100 Web: www.tz.net Chicago, IL 60654 United States Email: info@tz.net

Sydney (Registered Office) Level 11, 1 Chifley Square Sydney, NSW 2000 Australia

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Actual revenue received by PDT and TZI will be subject to numerous unverifiable assumptions which, in the board’s view, would make the giving of forecasts for the Company, PDT and TZI misleading at this time and therefore the Company makes no such forecasts.

Telezygology, Inc.

The TZI business has been through significant distress and disruption over the past 18 to 24 months stemming from a lack of funding, lack of organizational resources and lack of strategic direction. This significant inertia presents a major challenge to management and the board, and the recent restructure is the first step to getting the business back on the path of market focused product offerings, value based management, revenue generation, sensible expenditure and structured investment in people and resources.

TZI’s revenue for the financial year ending 30 June 2010 was significantly lower than originally estimated due to the following reasons:

1. Due to the slow economic conditions through 2009, sales of the Company's TZ Praetorian System have been slower than anticipated. While the sales pipeline has been developing, budget constraints with targeted US corporate and institutional customers have delayed procurement and increased the time frame for conversion from quotation to order.

2. The Company had anticipated completion of the development of its TZ Centurion System and market launch of the product in early March 2010. Due to engineering difficulties with the core gateway product, the product was not completed until midMay 2010 and was not formally launched to the market until last month. This has delayed procurement of sales opportunities through the latter quarter of the last fiscal year.

The board had anticipated that collective cash-flow from the operations of PDT and TZI would be positive by January 2011 (as previously announced to the market) however, as a result of the slower revenue ramp of TZI over the financial year ending 30 June 2010 for the reasons outlined above, the board has had to revise that expectation. The board is now targeting for cash contributions from the combined operations of PDT and TZI to be positive by mid-2011. That revised target has been set based on the individual business unit targets set out below.

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Despite the abovementioned set-backs, the board believes that the restructure, renewed focus and many of the new initiatives recently introduced by the new TZI management team will help to significantly improve performance.

Accordingly, the Company is targeting TZI to achieve profitability over the 2011 calendar year. The Company’s board of directors can give no assurance that this profitability target will be able to be achieved as the target is subject to a number of market forces and other unverifiable assumptions, including (without limitation) sales demand and the rate of penetration in the USA and other markets. Furthermore, this is a profitability target for the Company’s subsidiary, TZI, and if the profitability target for TZI is met the directors can give no assurance that the Company on a consolidated basis will be profitable.

Infrastructure Protection Inc. (IXP)

Research undertaken by Frost and Sullivan in May 2009 (the “Frost and Sullivan Research” ) indicates that the world server rack and rack options market was approximately US$2.5 Billion in revenues in 2008, which was down 5.7 percent from the previous year. The Frost and Sullivan Research indicates that the market is expected to recover in growth in 2010 resulting from reignited activity in both the IT and telecom segments. In addition, the Frost and Sullivan Research indicates that increasing demand from developing regions such as Asia and Latin America and the solid customer base in the traditional North American and European markets should see the world server rack and rack options market grow to around US$3.4 Billion by 2015.

TZI management believe that due to the highly competitive and commoditized nature of the market, there will be an increasing focus by rack and cabinet manufacturers to seek higher value offerings through rack added accessories such as power management, cabling, cooling devices and integrated security and environmental monitoring. This general industry trend for more sophisticated performance and compliance requirements will drive sales opportunities for IXP.

Based on the Frost and Sullivan Research, TZI management estimate that the total 2010 installed base of server racks worldwide is in excess of 20 Million units. Given the current trend and needs in the marketplace, IXP solutions present a readily retrofittable option to major manufactured rack systems providing IXP with a significant re-fit market opportunity across the installed base of predominant keyed cabinet enclosures.

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To leverage these new opportunities the IXP business strategy is focused on establishing TZ Praetorian and TZ Centurion as the dominant brand for micro-protection at the rack and cabinet enclosure level. Three core business initiatives are being pursued:

1. Penetration within the existing market segment through geographic expansion from the predominant US centric business focus into a global business with supporting sales infrastructure in Europe, Asia and Australia.

2. Expansion into new market segments with new and existing infrastructure solutions such as into Healthcare, Retail and Manufacturing where similar customer needs have been identified.

3. Value added product extensions to better serve existing data centre customers including B2B web portal integration, development of new sensors and capabilities and integration with in-cabinet micro-surveillance cameras.

Despite the relatively short period of focused business activity, the launch of the new web-site, the broader sales and promotional focus and better management of channel conflicts, IXP have generated a strong enquiry level with over 100 enquires logged, 30% of which, have been quantified and, based on the results of that quantification as prepared by TZI management, collectively represent a US$1.5 Million enquiry pipeline.

With the successful implementation of core business initiatives and based on the current enquiry pipeline, the IXP business unit has been set a FY 2011 revenue target of approximately US$3.7 Million. To reflect the anticipated impact of growth initiatives which are currently being implemented, the revenue target for IXP for the year ending 31 December 2011 is US$7.5 Million. The Company’s board of directors can give no assurance that this revenue target will be able to be achieved as the target is subject to a number of unverifiable assumptions, including (without limitation) the rate of economic recovery in the USA and other markets.

Packaged Asset Delivery Inc. (PAD)

The PAD business unit is in its formative stages and is early in its market and product establishment. It is therefore difficult to estimate the size of the market opportunity particularly as the PAD business is effectively defining new market segments. The global market in commercial office and high-density multi-residential properties in which PAD participates is obviously substantial.

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Today, couriers deliver packages to the door or receiving dock of buildings. Large corporations and residential buildings then invest in operations, business systems, personnel, outsourced partners and facility space to successfully deliver those packages to the intended recipients of those packages. PAD eliminates some of the costs of this implementation while delivering enormous value from the high levels of comfort that comes with knowing that the parcel delivery process is completely secure and traceable and that the recipient is promptly notified of its delivery at the time of the courier drop-off point.

The positive market acceptance of the TZ Courier offering in recent months, coupled with the developing relationships with International Office Products Cooperative (IOPC) and with Pitney Bowes Management Services, Inc. (PBMS) lays a strong foundation for high sales growth particularly in the corporate mail sector.

Outside of the corporate mail sector, PAD is in the process of extending the current platform infrastructure to enable a new offering to the high density residential market, to be marketed as TZ Concierge.

Given the above, PAD management has set PAD a target of US$3 Million in revenue for FY 2011. The Company’s board of directors can give no assurance that this revenue target will be able to be achieved as the target is subject to a number of unverifiable assumptions, including (without limitation) the rate of economic recovery in the USA and other markets.

Aerospace Asset Maintainability Inc.

Due to the heavy compliance and regulatory requirements in the aerospace and defence industries, management believe that the most prospective avenue to commercialize TZI technology in these sectors is in partnership with major OEM enablers. The Aero Asset Maintainability business unit (AAM) has been specifically established to pursue this path forward.

Given the long lead times associated with product engineering, testing and compliance, management do not anticipate any significant revenue from this segment in the next 12 months, although active programs are underway to pursue relationship discussions with prospective licensees.

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Product Development Technologies, Inc.

Market indicators suggest that the long term outlook for the product design services industry is positive. Based on a research report by Berkshire Select, Inc. on the 2010 Industrial Design Services Market, the overall design services industry should grow by 4 to 5 percent over the next 12 months despite the anticipated lower economic growth. Part of this increase is a result in an upturn in outsourcing requirements.

Corporations appear to be increasingly seeking outside service companies to provide operational support in areas like product design, engineering, testing, analytical services, R&D, managing vendor relationships, and sourcing suppliers.

Looking forward, PDT management believes that the economic trends will continue to put pressure on corporations to reduce operational costs and avoid capital expenditures on non-core activities and therefore consider even more aggressive outsourcing decisions. PDT is well placed to maintain a key position in its target markets of healthcare, defence and consumer goods and benefit from the potential revenue growth opportunities.

Through 11 months of FY2010, PDT delivered solid financial performance exceeding planned revenues (112% of plan) and EBITDA (also 112% of plan) at US$13.6 Million and US$1.6 Million respectfully. Project backlogs remain high on the merits of some large medical and defence industry projects and despite the slow economic conditions of 2009, PDT achieved double digit growth and increased staffing levels.

Based on the foregoing, PDT management anticipates another solid year of double digit growth in FY2011 and accordingly management are targeting USD$14.9 Million in revenue and US$1.7 Million in EBITDA. The Company’s board of directors can give no assurance that this revenue target will be able to be achieved as the target is subject to a number of unverifiable assumptions, including (without limitation) the rate of economic recovery in the USA and other markets.

Yours faithfully, TZ LIMITED

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Mark Bouris Chairman

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For further information please contact

Kenneth Ting Executive Director and Company Secretary, TZ Limited Email: info@tz.net

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