Introduction

Good morning ladies and gentlemen,

I extend a warm welcome to you at this our 3rd Annual General Meeting.

As well as enabling your Board and Management an opportunity to report to shareholders on the results of the year to end June 2005, it also presents an opportunity to raise and discuss issues with you.

At the outset I want to emphasise that your Directors and Management have one overriding objective - to serve as best we can the interests of our shareholders by maximizing the value of the company and providing satisfactory financial returns to its shareholders.

Iatia has experienced a positive turnaround in its performance during 2004-05. It has achieved this by building on our new business model and implementing a strategic plan around it.

Our new business model has enabled us to streamline operations and increase operational revenue. 2004-05 saw a 91 percent increase in operational revenue, due to a major extent by larger than expected payments in that financial year from the Capability Technology Demonstrator (CTD) project with the Federal Department of Defence. Coupled with stringent expenditure controls, this resulted in a 54% reduction in our after tax loss - from $1.018 million in 2003-04 to $ 0.464 million in 2004-05.

It also enabled us to record our first positive quarterly operating cash flow, in the final quarter of the financial year. As a result, we ended 2004-05 with cash reserves of $610,000.

Our financial position has improved considerably. Our balance sheet has been strengthened and our capital structure simplified through the cancellation of deferred shares this year and the write-downs we made last year.

Operational overview

Our new business model and accompanying strategic plan identified four key target markets - bio-pharmaceutical; medical; nanotechnology; and defence and homeland security. I am pleased to report that sales and/or licence arrangements have been made in all these areas. Our CEO Charles Laycock will provide a more in-depth look into these developments after my remarks.

As I intimated earlier, Iatia signed a contract with the Defence Department's Defence Science and Technology Organisation for a Capability Technology Demonstrator (CTD) project in June 2005. The contract is valued at up to $2.7 million, to be paid over the three years to 2008 as performance indicators are met. To date two payments have been received totalling $627,000. The project is running, if anything, a little ahead of schedule.

During the year we also entered into an OEM arrangement with US giant General Electric Healthcare. In the first quarter we received an order for, and payment of $140,000. GE is looking to increasingly incorporate Iatia's platform technology, Quantitative Phase Imaging (QPI), into its product line. We are hopeful that orders will increase as GE markets its new product internationally.

We also continue our alliances with renowned research organisations both in Australia and overseas. We see this as integral to our company's future enhancement, market awareness and therefore profitability.

We have made considerable progress with evaluations of and negotiations on a range of licence arrangements with a number of local and international organisations. Last month our Chief Scientific Officer, Brendan Allman, and Chief Technical Officer, Gavin Gregson, made what we believe will prove to be a very successful marketing tour to the United Sates. These activities, among others, ensure that we will advance our movement towards becoming a profitable, high-growth company.

Management changes

Brian Powell retired as CEO, in September 2004 and Charles Laycock was appointed Chief Operating Officer. I wish to thank Brian, who took over as temporary CEO in 2002 and helped Iatia significantly reduce costs and refocus its commercialisation strategies. Mr Powell reverts to being a non-executive director and company adviser on defence-related matters.

In January 2005, the Board appointed the then CFO, Mr Charles Laycock, as CEO following the retirement several months earlier of Mr Brian Powell. As CFO Mr Laycock had been instrumental in developing the new business model and strategy plan. Both before and since becoming CEO Charles has been actively involved in communicating with the investment community and creating a better understanding of Iatia's objectives and opportunities.

Board

We hope you will agree that the current Board has served Iatia well. We recognise however that the company would benefit from the addition of particular skills. Several months ago the Board agreed to seek two additional Directors: one with financial and commercialisation experience, the other with marketing expertise. We are actively seeking potential candidates.

To further support the company we are also investigating the desirability of establishing a business advisory board that will assist in broadening our market reach in the United States and Europe.

Remuneration

Since 1 July 2003, Iatia's cash flow position has been very tight. To conserve cash resources, all executive staff, including Mr Laycock, agreed to cap the cash component of their gross salaries at $85,000, with the balance paid in Iatia share options. The Board recognised that this was not a desirable state of affairs. It agreed that this situation should be rectified as soon as appropriate. As a result of Iatia's improved cash flow position in the course of 2005 the Board resolved that from 1 September 2005 the cash component cap on executive staff salaries would increase to $100,000.

I would also note during this period, Directors had decided to impose a significant reduction in their fees. Again as a result of the recent improvement in the company's cash position, the Board resolved to restore from 1 September 2005 some of the earlier fee reduction as from 1 September 2005 the Board also benefited from a slight increase.

The Board is committed to reducing the salary share option scheme completely as circumstances permit.

Outlook

Along with income from the CTD contract and GE Healthcare and other sales and licensing income, the Board is confident Iatia can look forward to generating additional income from new commercial applications.

Iatia can also expect the conversion of at least part, if not all, of approximately 22 million 5 cent options to expire if not exercised before 31 March 2006. If some or all are exercised they will generate up to $1.1 million in new equity.

Iatia is currently working hard to increase its commercial attractiveness and opportunities by meeting specific product requirements for specific industries. Additional equity will support these initiatives and assist in pursuing and securing further commercial arrangements including licensing agreements - important steps as we move to become a profitable company.

Closing

In closing, I would like to thank my Board colleagues for their ongoing direction and support; CEO Charles Laycock; our Chief Scientific Officer, Dr Brendan Allman; and Chief Technical Officer, Gavin Gregson, for the critical role they have played in laying the foundations for the company's success in future years.

I would also like to congratulate Iatia's chief scientist and non-executive director, Professor Keith Nugent, for being awarded an Australian Research Council grant of $9 million last July. The award will enable a team headed by Professor Nugent to establish a Centre of Excellence for coherent x-ray science. The Centre will use Iatia's QPI technology in its research. We believe this research will directly benefit larger range research and applications for QPI technology by strengthening its x-ray capabilities and expanding biological applications.

With a more robust financial position, a business model delivering results, targeted marketing and a committed Board and executive, your Board is confident that Iatia will increasingly meet its basic objective of developing into a highly regarded and profitable company providing above market returns to its shareholders.

I now invite Charles Laycock to present his report for the 2004-05 year. On the conclusion of his report both he and I will be pleased to discuss any issues you care to raise.