TZ LIMITED — Interim / Quarterly Report 2012

Nov 6, 2011

TZ Limited ABN 26 073 979 272

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TZ LIMITED - SHAREHOLDER UPDATE

September Quarter 2011

The quarter ended 30 September 2011 (the "September Quarter" ) represented an exciting start to the new financial year for TZ Limited's (the "Company" ) wholly owned subsidiary Telezygology, Inc. ( "TZI" ), with a solid sales performance and highly visible IXP and PAD deployments on our home turf in Australia and also abroad. The success of the Australia Post Smart Locker deployment has been an important milestone in TZI’s history providing a very visible and high profile demonstration of our technology capability. Through Pitney Bowes’ international operations, we are already engaging with postal organisations in North and South America and the Middle East who are seeking to explore similar delivery solutions.

As part of its on-going growth strategy, the Company's other major wholly owned operating subsidiary, Product Development Technologies, Inc. ( "PDT" ), has evolved its business to focus on bidding for larger multi-million dollar projects. These larger projects typically have a longer approval process and in this quarter, this has had a slightly negative impact on PDT’s achievement of planned revenue and contribution targets. PDT's management is confident that this impact is purely a timing issue and expects that PDT will be awarded several large projects in the quarter ending 31 December 2011 (the "December Quarter" ). Management therefore remains confident that PDT will achieve its planned full year forecast by the end of the fiscal year.

TZ Limited's consolidated cash flow in the September Quarter was heavily impacted by two transactions, one relating to a significant withholding tax payment of approximately AUD$660,000 to the Australian Tax Office in connection with the interest payments made to the Company's creditor in previous financial years and a further AUD$200,000 shareholder advance to Intanova Pty Limited, in which the company has a 50% share. Excluding these two payments, the Company’s operational cash flow during the September Quarter was in line with expectations. It is expected that, with the rapidly increasing sales in TZI, the anticipated cash receipts from the Australia Post and NEXTDC projects and other sales made during the September Quarter as well as the anticipated improved contribution from PDT, that there will be a cash flow improvement for the consolidated entity in the December Quarter.

TELEZYGOLOGY, INC.

TZI Highlights

• TZI's quarter-to-quarter sales growth continues with TZI achieving over USD$1 million in purchase orders in the September Quarter of which approximately 60% has shipped by the end of the quarter. Total sales for TZI for the previous year ended 30 June 2011 equaled USD$1.28 million so the first quarter result demonstrates that there will be a significant increase in the Company’s total sales during the current financial year, compared with last financial year’s performance.

TZ Limited Level 11, 1 Chifley Square, Sydney, NSW 2000 Australia Phone: +612 9222 8890 Fax: +612 8208 9937

ASX Announcement

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• Revenue was consistent with TZI’s expectations, with the achievement of healthy onplan sales margins whilst expenditure was kept in check to give an overall above plan EBITDA performance.

• The September Quarter saw the first sales in the Australian market which in itself was a significant milestone, further accentuated by the credibility and market profile of the company’s customers, NEXTDC and Australia Post.

• A solid performance was also achieved in the US with TZI’s first PAD sales to the US Government and to a global financial services company, both of which represent significant on-going sales opportunities.

• Positive feedback from early adopter trials has resulted in repeat PAD orders from the US government and established corporate clients.

• As a consequence of the publicity from the successful Australia Post implementation, TZI has received a number of sales enquiries from large overseas postal organisations.

In summary, the September Quarter was an extremely busy quarter for TZI with implementation of two very visible applications of the company’s technology in Australia, NEXTDC and Australia Post, both of which were successfully deployed in early October. Both customers represent significant landmark sales for the company and demonstrate an acceptance of the company’s technology as the preferred solution for data centre infrastructure micro-protection and the management of packaged asset deliveries.

Despite Europe and the USA being in summer vacation mode over the period which usually impacts sales momentum, it has been a very positive start to the new financial year, with a significant contribution to total sales coming late in the quarter.

Update on Infrastructure Protection Inc. (IXP)

This quarter’s progress was clearly underpinned by the supply agreement with NEXTDC for the TZ Centurion™ System as their preferred infrastructure protection and remote monitoring solution.

NEXTDC is a significant player in the Australian IT scene with a planned national data centre portfolio that will deliver approximately 33.25 MW of capacity to Australian organisations and over 18,000m[2] of technical data centre space.

The TZ Centurion™ System has been successfully deployed at NEXTDC's Brisbane facility with deployment at NEXTDC’s Melbourne facilities scheduled for delivery in the December Quarter. NEXTDC represents a very visible acceptance of TZ technology and the setting of a new standard for data centre security in this country. The NEXTDC opportunity has the potential for the deployment of thousands of TZ devices under TZ Centurion™ Server control, if the TZ Centurion™ System is deployed in all of NEXTDC's planned data centres in Australia.

Today, we can point clearly at a major deployment of our technology, both hardware and software, at a significant reference site for other data centre players.

TZ Limited Level 11, 1 Chifley Square, Sydney, NSW 2000 Australia Phone: +612 9222 8890 Fax: +612 8208 9937

ASX Announcement

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As a consequence, we have received a number of enquiries not only here in Australia but also from overseas with a number of major data centre operators expressing interest in our solutions. We look forward to capitalising on this potential.

Traction continues to build in the market as customers who have been trialing our systems are now considering further deployments as new annual budgets are being allocated. We are confident that we will continue to see consistent demand for our solutions as our awareness, reputation and credibility grows particularly as companies like Visa and IBM adopt our solutions.

Our focus is now to further develop our channels to market and to continue to broaden our offerings through OEM and System Integrator customers. Our recently established Certified Integrator Partner program should yield our first integrator partners this month and represents yet another milestone in terms of establishing this business.

Update on Packaged Asset Delivery Inc. (PAD)

This quarter has been dominated by the successful locker deployments in Australia Post facilities at sites in Sydney (St Leonards), Melbourne (St Kilda) and Brisbane (Brisbane GPO). These deployments clearly demonstrate the strong value proposition of the TZ Packaged Asset Delivery offerings and the strong potential that this business has. Outside of our participation in the corporate managed mail market and high density residential sector, the Australia Post solution represents a new segment of the market for our PAD product line with a truly Business-to-Customer offering that addresses the serious issue of managing last mile delivery and opens up our horizons to new and very exciting opportunities.

With the on-line shopping boom, Australia Post has recognised that they have a real challenge to not only provide a superior delivery service to their customers but to also cost effectively manage the handling of hundreds or thousands of parcels of DVDs, books, apparel and other popular online-shopping products shipped to Australia by overseas internet retailers.

As demonstrated by Australia Post, Intelligent Lockers will be an important part of Postal Services, Retailers and Logistics Providers’ parcel delivery strategies across the world in order to provide consumers with what many seek today, parcel security and 24 hour convenience. New enquiries from North and South America and the Middle East are testimony to this.

Having demonstrated what TZI can do with Australia Post, management believes that TZI has the technology and wherewithal to deliver the end-to-end solutions that the world needs.

In the US, the September Quarter also saw PAD orders from corporate clients such as Deutsche Bank and repeat orders from Microsoft and the US Government, rounding out a positive sales result. We also submitted the first of what we believe will be several multimillion dollar bids for intelligent locker deployments in the US market.

TZ Limited Level 11, 1 Chifley Square, Sydney, NSW 2000 Australia Phone: +612 9222 8890 Fax: +612 8208 9937

ASX Announcement

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Last week, we launched our next generation PAD systems to the market at the IFMA’s World Workplace 2011 event in Phoenix, Arizona. The display showcased our latest metal and millwork locker designs and incorporated fully integrated state-of-the-art authentication technologies, such as barcode scanning, QR code readers, optical character recognition (OCR) and Smart Card readers.

Product Development Technologies, Inc.

PDT Highlights

• Unaudited management accounts show revenues for the September Quarter of USD$4.7 million which was 88% of plan.

• PDT has implemented a restructuring program to improve operational efficiencies that resulted out of the significant growth of last year. Amongst operational gains, the restructure should also reduce some of the PDT’s overheads improving overall bottom line performance and contribution to TZ group performance.

As part of its go forward strategy, PDT is continuing to evolve its business by changing its project mix from many small scale projects to bidding for much larger opportunities. PDT’s size and expertise ensures a distinct advantage over its competitors when bidding for these multi-million dollar large and complex projects. However, these projects do have a longer approval process and this led to a slightly negative impact on PDT’s planned revenue and contribution targets during the September Quarter. Management remains confident however that PDT will achieve its planned forecast by the end of the fiscal year as we anticipate the awarding of several large development contracts to PDT during the next quarter.

PDT has recently commenced a restructuring program with a goal to right-size the company for the coming 12 months without impacting on customer service and satisfaction. The high growth of the previous year has led to some operational efficiencies including the high use of contracted resources and higher than anticipated operational expenses. The restructure will provide for better utilisation of infrastructure and resources and deliver expected cost savings of nearly USD$900,000.

Shareholders should be cognisant that the Company continues to engage with major players to progress exciting and potentially large business opportunities. Our confidentiality obligations typically prevent us from naming our clients and may limit the extent of our market communication.

Best Regards,

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John Wilson CEO, Telezygology, Inc.

Mark Schwartz CEO, PDT Inc.

TZ Limited Level 11, 1 Chifley Square, Sydney, NSW 2000 Australia Phone: +612 9222 8890 Fax: +612 8208 9937