TZ LIMITED — Interim / Quarterly Report 2012

Jan 30, 2012

TZ Limited ABN 26 073 979 272

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• 31 January 2012

Lodged by ASX Online

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

Dear Sir/Madam

SHAREHOLDER UPDATE & APPENDIX 4C – DECEMBER QUARTER 2011

Please find attached the shareholder update and ASX Appendix 4C (unaudited) – Quarterly Report for entities admitted on the basis of commitments for TZ Limited for the quarter ended 31 December 2011.

Yours faithfully, TZ LIMITED

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Kenneth Ting Director

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

TZ Limited ABN 26 073 979 272

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TZ LIMITED - SHAREHOLDER UPDATE

December Quarter 2011

1. Telezygology, Inc (TZI) Update:

• The major focus this last quarter has been the successful deployment of intelligent parcel lockers in Brisbane, St Leonards and St Kilda as part of the Australia Post parcel ready trial. The deployment represents an end-to-end, fully integrated, bespoke locker solution for Australia Post which comprises a hosted, web-based customer registration, management and messaging system from Pitney Bowes (PB) Software and a modular, multi-configurable, customised, software driven parcel locker system from TZI. The high level of customisation and integration puts TZI and PB in an advantageous position to participate in any future parcel locker extension and/or expansion programs that might be undertaken by Australia Post (AP).

• Market feedback on the parcel lockers appears to be extremely positive as evidenced by several favourable public blogs on the locker systems. We believe that the trial has been successful and look forward to continuing to build our relationship with AP.

• The AP trial has initiated interest from other international postal organizations and we are currently also in discussions with large logistics and on-line retail companies who are looking to support their B2C roll-out strategies. The substantial growth in on-line retail purchases and the need for practical and convenient parcel delivery options is fuelling transformational business opportunities which the company is aggressively pursuing in the US and Australia.

• Coles refrigerated locker trials represent another customised B2C locker solution due for deployment in mid-March across NSW and Victoria at 6 trial locations. This trial phase will reinforce the successful use of lockers as a means for facilitating a convenient grocery delivery service to on-line customers and provide the validation for national roll-out.

• Our PAD business continues to develop strongly, fuelled by the need for corporates to support the agile workplace and on-line businesses to pursue last mile delivery solutions. As new trials commence, several clients have repurchased or are considering repurchasing. This not only demonstrates system acceptance but points to roll-out to the broader infrastructure. TZI’s excellent track record of transitioning trials into multi-bank deployments reinforces the potential for broad scale integration. The first PAD unit sale was secured in January 2011 and today, there are over 40 PAD units deployed or scheduled for deployment globally. If our early adopter rollouts are representative of other customers, we are anticipating that several customers currently undertaking trials will be re-ordering in the short to medium term.

• TZ Centurion has been successfully deployed and is operational at NextDC’s Brisbane Data Centre and is scheduled for installation at Melbourne this month. This is a major endorsement for TZI’s IXP systems and provides a solid reference site, particularly with the increasing interest in micro-security driven by the growth in cloud computing. Off the back of the successful NextDC deployment, we have been asked to quote on several projects in Australia.

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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• A focus around larger strategic deals in the US and APAC has prompted reprioritization and restructure of the current organization, leading to a far more focused sales team.

• Supporting this shift, Keith Schwartz has been appointed to lead North American and European sales. Keith comes with over 23 years of Sales Management experience in the commercial and public sectors with a technology background encompassing security and protection, RFID – Asset Tracking, cloud computing and connectivity and storage networking. Keith grew the North American sales of Imation to the highest revenue and gross margin in the company’s history.

• The Company has also appointed Bharath Ram to oversee and manage strategic product management and to pursue licensing opportunities in Asia and potentially other industry sectors. Bharath has an engineering and software background with over 20 years corporate experience in building and scaling world-class companies. He was one of the early employees at Verisign Japan and was instrumental in building Verisign’s international business from start-up to over $350 Million over 15 years.

2. Product Development Technologies (PDT) Update:

• Over the quarter, PDT has refocused its business to pursue multi-million dollar contracts by engaging strategically on large scale and complex multi-disciplinary projects. This focus will underpin on-going revenue growth particularly as the business climate remains uncertain with the 2012 US presidential elections looming, prospect of budget cuts and increased taxes and the on-going economic concerns in Europe.

• This initiative has led to re-alignment of the PDT organizational structure and investment in organically building a knowledge base and core competencies that are capable of meeting the specialist expertise and demands of these larger projects. For example, the investment in establishing a solid Android knowledge platform over the last 12 months, while steep in learning curve, has resulted in 14 outstanding Android project opportunities, most of which represent military contracts.

• With the current backlog of work growing PDT remains confident in meeting its FY2012 business targets.

3. TZ Limited:

• The Company continues to position itself for growth by taking the necessary steps to ensure its products and services are at the intersection of fast growing market segments, new or emerging needs, gaps in current integrated technology solutions and/or competitor offerings.

• For example PAD, as a total integrated end-to-end system offering, addresses the latent needs for practical last-mile delivery solutions to consumers and the provision of convenient 24/7 choices for the pick-up and drop-off of parcels. This emerging hot spot, driven by substantial growth in on-line retail purchases, offers unprecedented transformational business opportunities for TZ and its partner, PB. The flexibility, responsiveness and technology position of TZ coupled with the wherewithal, scale and offerings of PB, ensure these opportunities are accessible and can be fully realised to deliver substantial value for our shareholders.

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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• Net cash outflows were greater than anticipated with some delayed deployments impacting sales and cash receipts. Restructuring undertaken at TZI and PDT have yet to impact bottom line monthly expenditure although the initiatives should show demonstrable impact in the first quarter of 2012.

• The Company has established a stand-by loan facility with QVT for US$3 Million, subject to a number of pre-drawdown conditions.

• More detailed commentary will be provided when the audited half yearly report due for release at the end of February 2012.

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

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005

Name of entity
TZ Limited
ABN 26 073 979 272	Quarter ended(“currentquarter”)
26 073 979 272	31 December 2011

Consolidated statement of cash flows

Receipts from customers Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes refund/(paid) 1.7 Other (proceeds from settlement of litigation announced to ASX on 17 August 2011) Net operating cash flows Cash flows related to operating activities 1.2 1.1	Current quarter $A’000	Year to date (6 months) $A’000
	5,181 (3,401) (105) (242) (218) (3,570) - 33 (12) - -	10,835 (6,712) (221) (511) (411) (7,792) - 90 (693) (14) 251
	(2,334)	(5,178)

• See chapter 19 for defined terms.

Appendix 4C Page 1

24/10/2005

Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $A’000	Year to date (6 months) $A’000
1.8 Net operating cash flows (carried forward)	(2,334)	(5,178)
Payment for acquisition of: (a) businesses (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other (provide details if material) Net investing cash flows 1.14 1.9 Cash flows related to investing activities Total operating and investing cash flows	- - (23) (66) - - - - - - - - -	(200) - (35) (149) - - - - - - - - -
	(89)	(384)
	(2,423)	(5,562)
1.15 1.16 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other - Share issue Cost Net financing cash flows Cash flows related to financing activities Proceeds from issues of shares, notes, etc. Proceeds from sale of forfeited shares	210 (210) - -	423 (423) - -
	-	-
1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.21 1.23 Cash at end of quarter/year to date Net increase (decrease) in cash held	(2,423) 3,483 (52)	(5,562) 6,627 (57)
	1,008	1,008

• See chapter 19 for defined terms.

Appendix 4C Page 2

24/10/2005

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors

Payments to related entities and associates of the related entities

• Current quarter $A'000

• 1.24 Aggregate amount of payments to the parties included in item 1.2 389 1.25 Aggregate amount of loans to the parties included in item 1.11 -

• 1.26 Explanation necessary for an understanding of the transactions

Being directors' fees & allowances, expense reimbursments, accounting fees, marketing, insurance and rent paid to the directors and their related entities during the period.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

• N/A

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standbyarrangements	Amount available $A’000	Amount used $A’000
	1,179	759
	-	-

• See chapter 19 for defined terms.

Appendix 4C Page 3

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other – Foregin currencies held overseas	431 500 - 77	1,674 1,500 - 309
Total: cash at end of quarter(item 1.23)	1,008	3,483

Acquisitions and disposals of business entities

5.1 Name of entity/business 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions	Disposals
	(Item 1.9(a))	(Item 1.10(a))
	N/A	N/A
	N/A	N/A
	N/A	N/A
	N/A	N/A
	N/A	N/A

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does ~~/does not*~~ (delete one) give a true and fair view of the matters disclosed.

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Sign here: ................................................................ (Director/Company secretary)

Date: 31 January 2012

Print name: Kenneth Ting

• See chapter 19 for defined terms.

Appendix 4C Page 4

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

• 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

• 9.2 532

• 9.4 - itemised disclosure relating to disposals

• 12.1(a) - policy for classification of cash items 12.3 - disclosure of restrictions on use of cash 13.1 - comparative information

• 3 Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

Appendix 4C Page 5

24/10/2005