Level 11, Tower B

821 Pacific Highway

Chatswood NSW
2067 Australia

PO Box 5335
Chatswood NSW
1515 Australia

Ph: +61 2 8448 8195

Fax: +61 2 8448 8196

www.ritract.com
ABN 28 106 353 253
22 February 2008

ASX Announcement - Company Update and Recapitalisation Proposal

Company Update

Further to the ASX announcement dated 25 January 2008, the Directors wish to advise
the market of certain material events that have allegedly resulted in the Company
incurring substantial debts that the Directors were not previously aware of. As a result of
these debts being brought to the attention of the Company, the Directors have limited
options available to them to ensure that the Company remains a going concern. For this
reason, we now set out below a summary of the terms of proposed recapitalisation of the
Company that the Directors have agreed to.

ATO Notification of R&D Tax Offset claim overpayment

In late January 2008, the Company’s wholly owned subsidiary, Glenord Pty Ltd
(Glenord) received a letter from the ATO notifying Glenord that the ATO had disallowed
Glenord’s previous R&D Tax Offset claims in full. The ATO alleges that Glenord now
owes the ATO $337,333.94 (before penalties and costs) in payments that had previously
been made to the company.

Following the receipt of the Glenord letter, Ritract Limited the parent company, has also
received a similar letter relating to R&D Offset claims that the Company has made in its
own right for the development of new intellectual property associated with the pre-filled
retractable device. The amount that the ATO is seeking to disallow is $219,666.82
before penalties and taxes.

Both Glenord and Ritrack intend to dispute the disallowances of the R*D Offset claims.

The Directors intend to lodge appeals against both letters in the near term based on
legal advice received by the company, however at this point in time, the amounts are
due and payable by 25 February 2008.

Given the quantum of the above amounts, the short due date and the existing unsecured
creditor amounts of approximately $450,000 that have been funded by the Directors to
date, the Company is now left with limited options other than to cease the employment of
its CEO, Mr Tom Davenport effective 31 March 2008 and reduce all non-essential costs.
It is also proposed that the office of the Company will be relocated to Melbourne to
further eliminate ongoing costs.
As a result of the ATO claims, the sole Director of Glenord, Mr Bruce Ingram, has also
resolved to appoint Mr Ian Purchase of Star Dean Wilcox as voluntary administrator of
Glenord to deal with matters specific to that subsidiary.

No voluntary administrator has however been appointed to the parent company and it is
intended that all creditors will be paid in full by the proposed recapitalisation outlined
below on its successful completion.

Recapitalisation

The Board has received and accepted a conditional offer by a consortium of investors to
recapitalise the Company that will result in all of the outstanding debts of the parent
Company being converted to equity or repaid and sufficient cash being injected into the
Company to support the future operations.

The proposal from the Consortium can be summarised as follows:

(a) the Company will seek to consolidate the issued capital of the Company on the
basis that every two (2) Shares be consolidated into one (1) Share.

(b) the Company will undertake the following capital raisings:

(i) the issue of up to 35,000,000 shares at an issue price of 0.1 cent each
to raise $35,000;

(ii) the issue of up to 175,000,000 shares at an issue price of 1 cent each

to raise a further $1,750,000; and

(iii) subject to the completion of the raisings listed above at (i) and (ii), the
issue of up to 30,000,000 shares at a deemed issue price of 0.5 cent
each and 20,000,000 free Options to acquire shares (with an exercise
price of 1 cent each and an expiry date of 31 March 2010) in
conversion of outstanding existing debts of the Company totalling
$150,000.

(c) the proposed new board of Directors will seek to take the Company forward with
sufficient funds to pursue its business objectives.

The Board believes the consortium can introduce a number of potential acquisitions and
strategic relationships that will assist in expanding the Company’s existing core
business.

The Board is pleased that this group of investors will inject new life into the Company.
The recapitalisation is subject to shareholder approval, relevant documents for which will
be mailed to shareholders in due course. The Company expects the shareholder
meeting to take place on or about 16 April 2008.

Yours faithfully

Michael Boyd
Chairman