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‘ 07

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ABN 35 088 221 078

1 Chairman’s Letter
2 Company Highlights
2 Project Highlights
4 Review of Operations
11 Corporate Review
14 Corporate Governance Statement
18 Directors’ Report
27 Auditor’s Independence Declaration
28 Consolidated Income Statements
29 Consolidated Balance Sheets
30 Consolidated Statements of Changes in Equity
31 Consolidated Statements of Cash Flows
32 Notes to the Financial Statements
57 Directors’ Declaration
58 Independent Auditors Report
60 Shareholder Details

bioMD Limited | Annual Report 2007

Chairman’s Letter

Dear Shareholder,

Welcome to the fourth Annual Report of bioMD Limited (bioMD), I am pleased to give you an update on the continued successful developments of the Company during the financial year ended 30 June 2007.

Our focus during this period has been on the continuation of pre-clinical trials of the ADAPT Advanced Tissue Process and preparing for commencement of our first human clinical trial. The approval from the Ethics Committee at Bloemfontein Hospital to commence a Phase II human clinical trial using cardiovascular patches treated with the ADAPT Advanced Tissue Process is an important step in the commercialisation of this technology. Full details of the human clinical trial are reported in the Review of Operations Report later in the Annual Report.

During the year bioMD acquired an additional 26.32% of the company that owns the intellectual property for the ADAPT process, increasing its shareholding to 76.32%.

Over the last 12 months a number of pre-clinical trials using the ADAPT Advanced Tissue Process have been successfully conducted. The results are also in the Review of Operations Report.

The ADAPT Advanced Tissue Process has applications in a number of different surgical disciplines and the Company is continuing to explore these opportunities, both with scientific research and in discussions with surgeons involved in the various surgical specialties.

Patents have been lodged for the ADAPT Advanced Tissue Process in a number of countries and the applications are currently pending.

the Society for Heart Valve Disease’s Biennial Meeting in New York in June 2007. This is indicative of the high level of interest that the world’s leading experts in heart valve disease have towards the major contribution our ADAPT Advanced Tissue Process and the impact it is having in the development of more durable tissue heart valves and cardiovascular repair device advancements in the cardiovascular medical discipline.

Our collaboration with CSIRO for the development of a new design and material for use in the manufacture of intravenous (IV) catheters, vascular access devices and other injection therapy products entered its third year. Whilst there have been some revisions to this project’s original charter, it continues to move forward towards lodgement of a patent, which will give bioMD the exclusive right to negotiate a worldwide licence for the use of the product in the IV catheter and vascular access device markets for a period of 15 years.

A critical economic and commercialisation assessment of our injection therapy products through the Design Review stages of our Quality Assurance system resulted in the decision to progress only the Prefilled Syringe and to place the POP Safety Injection needle on care and maintenance.

Financial Results

The operating loss after tax of the Group for the year ended 30 June 2007 amounted to $2.2 million for the consolidated entity, compared to the previous year’s loss of $1.2 million. The result for this year was impacted by an asset impairment charge amounting to $1.3 million. The write-down of intangible assets, as required by accounting standards in no way reflects the Directors’ opinion as to the future potential of the ADAPT technology.

Revenues are derived from interest income on funds on deposit and the administration costs have been closely monitored during the 2006/07 financial year.

On behalf of my fellow Directors, I would like to thank our shareholders for your continued support of the Company over the past year and your encouragement as we move forward to what promises to be an exciting period. I invite your participation at this year’s Annual General Meeting, which is to be held on Tuesday 13 November 2007 at The Terrace Room, Chifley on the Terrace Hotel, 185 St Georges Terrace, Perth commencing at 11.00 am.

Finally, the Board would like to thank our Management, staff and the advisory team for their commitment and continued support over the past twelve months.

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Robert N. Scott Non-Executive Chairman

Company Highlights

bioMD acquires additional 26.3% in the ADAPT Advanced Tissue Process, increasing its shareholding to 76.3%;
Presentation at 2007 BIO International Convention in Boston, USA;
Successful Share Purchase Plan for the issue of 6,725,000 shares at 10 cents per share, raising $672,500;
Issue of 3,775,000 fully paid ordinary shares in private placement, raising a further $377,500.

Project Highlights

Celxcel

3 Pre-clinical Trials successfully completed;
Granted Ethics Committee Approval to commence a Phase II Human Clinical Trial of cardiovascular patches treated with the ADAPT Advanced Tissue Process;
Presentation at “The Society for Heart Valve Disease” 4th Biennial Meeting in New York by Celxcel’s Chief Scientific Officer, Dr Leon Neethling;
Presentation by Dr Chris Georgiou on the application of the ADAPT Advanced Tissue Process in the production of xenograft biomaterial patches, for the repair of soft tissue structures in the pelvic floor, wins best presentation in “Best New Technology” category.

CSIRO

Completion of Stage 2 – Materials Development Stage;
Commencement of Stage 3 – Materials Robustness.

Injection Therapy Products

manufacturers.

Review of Operations

Introduction

The ADAPT Advanced Tissue Process (ADAPT) is used to process bovine, kangaroo and porcine natural tissue substrates to produce a durable bioimplant.

The bioimplant currently being used in our clinical trials is bovine pericardial tissue that provides a collagen scaffold for host cells to regenerate and provide support to weakened or damaged human tissues.

ADAPT bioimplants can be used in the following surgical specialties:

3. Cardiovascular

ADAPT treated bovine bioimplant patches will be used in a Phase II human clinical trial for the repair of internal heart deformities, such as septal heart defects (holes in the internal heart walls), outflow tract deformities of the aorta and various other structural defects of the heart.

These defects are the result of congenital heart disease that is found predominantly in children and young adults.

4. Orthopaedics

1. Abdominal

Bioimplant materials are used in the abdominal area of the body to repair or replace damaged human tissue structures.

and support the pelvic organs, particularly in women after childbirth.

They are also used in a variety of hernia repairs and in supporting structures to prevent incontinence. These are developing markets for the use of biomaterial patches and strips instead of synthetic materials that are causing increasing concern to clinicians because of their propensity to become fibrotic and non-compliant.

2. Heart Valves

Fabricated stented tissue heart valves have their valve leaflets made from some form of biomaterial – usually bovine pericardium. It is treated to produce leaflets that will last as long as possible. Tissue heart valves account for 60-70% of the total heart valve market and their use is growing by 11% per year.

The ADAPT process produces tissue heart valve leaflets that are durable, anti-calcific and regenerative. These attributes are highly sought after by heart valve manufacturers around the world.

There is also a growing move towards new, minimally invasive methods of heart valve replacement. These new methods will, over time, revolutionise heart valve replacement and with the ADAPT process technology, bioMD is well placed to take advantage of this nonsurgical replacement of heart valves.

The ADAPT process is undergoing pre-clinical trials in the processing of biomaterials that can be used for surgical repair of soft tissue structures such as the rotator cuff in the shoulder and the anterior cruciate ligament (ACL) in the knee.

With current arthroscopic techniques and instrumentation it is now possible to facilitate these repairs using minimally invasive techniques that are proving to have lasting functionality. These types of orthopaedic repairs require additional tissue to restore function and, in these instances, a quality bioimplant needs to be used to effect the repairs.

5. Plastic Surgery

During the latter part of calendar year 2007 work will begin on determining the use of our ADAPT process in the production of a dermal filler for the Plastic and Cosmetic Surgery markets. The dermal filler market represents a significant global market for our process, as all current products have limited durability and have to be replaced within relatively short time periods. A dermal filler that will last and regenerate into living host tissue will present the Company with a significant marketing opportunity.

We know that our bioimplant patch material treated with the ADAPT process will have a role to play in various plastic and reconstructive procedures as well as post mastectomy reconstructions. There is also the possibility for our bioimplants to be used in wound and burn care.

4 bioMD Limited | Annual Report 2007

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5
4
2
3
1
ADAPT treated
bioimplants can
be used in five
surgical specialties
4 (refer previous page)
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Review of Operations (continued)

Clinical Studies

Pre-clinical Trials

ADAPT Treated Bovine Pericardial Tissue Patches in the Jugular Position Purpose

Large animal trial to compare 0.05% with 0.2% glutaraldehyde crosslinking using ADAPT treated bovine tissue. The ADAPT treated patches and arterial grafts were implanted for 150 days and replaced part of the animal’s own jugular veins.

The Results

Explanted patches tested positive for Factor VIII, Vimentin and Alpha Actin. A positive test for Smooth muscle Alpha Actin indicates the remodelling of fibroblasts into myofibroblasts.

Conclusion

the periphery, with no inflammatory cells. It was noted that the infiltration of fibroblasts with 0.2% is much slower than 0.05%, and the presence of fibroblasts in the centre of the patch crosslinked with 0.05% indicates the tissue could be used in vascular surgery.

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Tissue matrix (green) with host cell infiltration of fibroblasts

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Host cells transdifferentiate into new capillaries and fat cells

ADAPT Treated Kangaroo and Bovine Pericardial Tissue Patches and Kangaroo Carotid Artery Grafts

Purpose

but not limited to the manufacture of medical devices such as heart valve leaflets and an “off-the-shelf” Coronary Artery Bypass Graft (CABG). The ADAPT treated patches and arterial grafts were implanted for 200 days and replaced part of the animal’s own carotid arteries and jugular veins.

The Results

levels of fibroblast cell infiltration and showed no signs of calcification. As with previous trials, there was significant evidence of endothelial cell and new capillary formation.

In the same trial ADAPT treated kangaroo carotid artery grafts showed similar results to those of the patches. These grafts could have the potential to produce an “off-the-shelf” CABG. The use of such grafts would replace the need for the harvesting of the patient’s own saphenous vein or mammary artery that are currently used as replacement grafts.

Conclusion

reduces calcification and increases the durability of bioimplants.

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Endothelial cells (dark brown on inside of the graft) transform into Smooth Muscle Alpha Actin

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Host tissue deposited on the inside and outside of kangaroo carotid artery graft

bioMD Limited | Annual Report 2007

Review of Operations (continued)

3. Comparative Patch Study

Purpose

A comparative study of two commercially available biomaterial patches and an ADAPT treated biomaterial patch, conducted over an extended implantation time of 24 weeks.

The Results

ADAPT Tissue Engineered Patch

Histology of the ADAPT treated pericardial patches showed advanced signs of angiogenesis inside the implant matrix (development of neocapillaries with circulating red blood cells) and adipogenesis (development of adipose – fat tissue). Host tissue fibroblasts infiltrated and migrated throughout the full thickness of the implant matrix. The edges of the implant were free from any dense layers of fibrous tissue.

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ADAPT – no encapsulation

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ADAPT – new capillaries and fat cells

Commercially Available Patch A:

Histology revealed the presence of a few multinucleated foreign body giant cells as well as the development of a dense layer of fibrous tissue on the side of the implant. Infiltration by host fibroblasts was limited mostly to the edges of the patch.

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Patch A – encapsulation on one side

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Patch A – connective tissue on one side

Commercially Available Patch B:

on the surface of the implant, as well as visible degeneration of certain areas on the edges of the implant, suggested an ongoing inflammatory response.

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Patch B – encapsulation on both sides

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Patch B – connective tissue on both sides

Conclusion

This trial and others conducted over a seven year period have helped establish that the proprietary ADAPT technology produces biomaterials which are:

Highly durable and compatible with their host tissue;
Both pliable and supple and can remodel within the host.

Review of Operations (continued)

Human Clinical Trial

During the year executives of the Company traveled to South Africa to meet with Cardiothoracic Surgeons to commence discussions in relation to a human clinical trial using ADAPT treated cardiovascular patches.

Meetings with representatives of the Department of Cardiothoracic Surgery at the Universitas Hospital in Bloemfontein resulted in agreement for a fifty patient Phase II human clinical trial.

An application for ethical review to conduct a human clinical trial in South Africa was submitted to the Ethics Committee of the Universitas Hospital in Bloemfontein. Approval from the Ethics Committee has now been received for a Phase II human clinical trial of patients suffering from heart deformities that require surgical reconstruction using a biomaterial patch.

The “Assessment of the ADAPT bovine pericardial patch in cardiac repair procedures” trial will be co-ordinated by Professor Francis Smit, Head of the Department of Cardiothoracic Surgery at the University of Free State. Fifty patients (paediatric and adult) will participate. Clinical follow-up will continue with each patient for a period of twelve months post operatively. In addition, selected patients will undergo echocardiograph and MRI procedures during the follow-up period.

This is a very exciting step in the development of the ADAPT process, and will enable the Company to focus on delivering significant shareholder value through completion of a Phase II human clinical trial.

Ongoing R&D

Pre-clinical trials will continue with long-term implants in small animal models.

We have also scheduled a series of pre-clinical animal trials during 2007/08 to further evaluate the ADAPT process with tissues that will be used in the surgical disciplines of Orthopaedics and Plastic Surgery. The tissues will include bovine peritoneum and kangaroo tendons.

Regulatory

Quality Assurance

Standard ISO 9001:2000. Our Quality Manual also complies with ISO 13485-2003 for the production of Medical Devices, and we are currently working towards Quality Assurance Certification to ISO 13485-2003 for the manufacture of products.

The Company has established a management system consistent with these standards in order to meet the appropriate requirements for regulatory approvals both within Australia and overseas. Regular reviews are conducted by Certification Specialists to ensure compliance.

All products brought to commercialisation will meet the appropriate Quality Standards that apply for products to be listed by regulatory authorities such as the Therapeutic Goods Administration (TGA) in Australia, the Federal Drugs Administration (FDA) in America and CE Mark Certification in Europe.

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Universitas Hospital in Bloemfontein

8 bioMD Limited | Annual Report 2007

Review of Operations (continued)

Regulatory (continued)

Intellectual Property Report

Patents

Australia, and patent applications in various countries.

Invention /Technology	Australian	Australian	International	International
	Patent	Application	Patent	Application
POP Safety Injection Needle		1		6
Preflled Safety Syringe ADAPT Technology An Implantable Biomaterial and a Method of Producing Same (ADAPT Technology)	1 1 1	1	12	1 40

Trademark Protection

Notice of Acceptance of the Trademark for “ADAPT” was received during the year. This trademarked process will now be used in all marketing of the ADAPT Advanced Tissue Process.

During the year trademark applications were lodged for protection of product names for the bioimplant materials that the Company intends to produce using the ADAPT Advanced Tissue Process.

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– Patents granted
– Patents applied for
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A representation of the major markets covered by our patents and patent applications.

Corporate Review

Cash

The Group has consolidated cash assets of $2.15 million as at 30 June 2007.

Changes To Capital Structure

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16 August 2006 Issue of unlisted Staff ESOP Options 1,250,000 options,
expiry of 16 Aug 2010 at exercise price 10 cents
16 November 2006 Issue of unlisted Staff ESOP Options 1,800,000 options,
expiry of 16 Nov 2010 at exercise price 10 cents
7 May 2007 Issue of ordinary shares – Share Purchase Plan 6,725,000 ordinary shares issued at 10 cents
12 June 2007 Issue of ordinary shares – Placement 3,775,000 ordinary shares issued at 10 cents
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As a result, the Company has 84,308,356 fully paid ordinary shares quoted on the Australian Stock Exchange. There are no escrowed shares in bioMD Limited.

Summary

Shareholder approval was given at the Annual General Meeting held on 16 November 2006 to allot 1,800,000 unlisted Staff options. The options were issued to the three Directors of bioMD as a long-term incentive under their remuneration package.

During the period, bioMD offered a Share Purchase Plan to eligible shareholders to subscribe for either $2,500 or $5,000 worth of fully paid ordinary shares in the Company to raise an additional $1 million. The purchase price of the new shares was set at 10 cents per share, which represented a 20% discount to the weighted average market price of the ordinary shares sold during the course of trading on the Australian Stock Exchange for the 5 trading days immediately preceding the announcement by the Company of its intention to introduce the Plan.

The Plan opened on 28 March 2007 and closed on 27 April 2007. A total of $672,500 was raised for the issue of 6,725,000 ordinary shares. Allotment of the shares was effected on 7 May, 2007.

In June 2007 the Company issued 3,775,000 fully paid ordinary shares to private and sophisticated investors. The shares represented the shortfall in the Share Purchase Plan together with an additional $50,000 in over-subscriptions.

During the reporting period the Company invested $900,000 into Celxcel Pty Ltd, increasing its shareholding to 76.32%. Celxcel Pty Ltd is the subsidiary company which owns the intellectual property referred to as the ADAPT Advanced Tissue Process.

Corporate Review (continued)

Robert N. Scott – Non-Executive Chairman

Michael C. Bennett – Managing Director

Robert E.T. Towner – Caroline L. Bentley – Executive Director Company Secretary

Robert N. Scott – Non-Executive Chairman

Robert Scott is a Chartered Accountant with in excess of 35 years experience as an adviser on corporate services and taxation. He currently consults on corporate structuring and taxation planning for major accounting firm Gooding Pervan Chartered Accountants.

Mr Scott is a Director of ASX listed entities Amadeus Energy Limited (since 1996), Australian Renewable Fuels Ltd (since 2002); Homeloans Limited (since 2000) and Neptune Marine Services (since May 2007).

Michael C. Bennett – Managing Director

Michael Bennett has over 35 years sales and marketing experience working for United States and European medical device companies and has been involved in the introduction of many new medical and surgical device technologies to the Australian market.

After studies in medical science and commerce, Mr Bennett commenced work with Ramsay Surgical Ltd, an Australian medical/surgical supply and distribution company that had offices in all major capital cities. He remained with that company until 1979 during which time he managed their Canberra office and subsequently became General Manager for their NSW operation.

Since 1979, Mr Bennett has owned and operated his own private surgical supply company, Bennett Medical, and has exclusively represented some major overseas medical device manufacturing corporations such as Medicon Instrumente and Erbe Elecktromedizin from Germany and Valleylab Inc. from the United States. His company was involved in the introduction of many new surgical technologies to Australia and, in doing so, was involved in the regulatory processes that have to be followed for the sales of new products into the market. He sold the company in 2001.

From 2001 he has been consulting to overseas surgical manufacturers and to the Australian medical industry in general.

His sales and marketing background at the corporate level ensures that management’s focus is on end-user requirements, their needs and product satisfaction.

Robert E. T. Towner – Executive Director

markets providing corporate advice to listed and unlisted public companies.

He has been instrumental in the formation, management and direction of bioMD since its formation as a publicly listed company.

In his capacity as Executive Director, Mr Towner is responsible for maintaining Board awareness of financial markets, corporate governance, capital structuring and working capital requirements.

Mr Towner is a director and authorised representative of Capstone Capital Pty Ltd, an Australian-based Financial Services provider. Capstone has facilitated capital raisings and consulted to small to medium sized companies in the resources, energy and industrial sectors.

Caroline L. Bentley – Company Secretary

Caroline Bentley is a Chartered Accountant and CPA with 18 years experience and a working background in both commerce and public practice. She is currently an Executive Director and Company Secretary of ASX listed entity Amadeus Energy Limited.

Mrs Bentley’s previous experience includes Finance Manager with Ashton Mining Ltd and in the Audit and Advisory Services division of KPMG Peat Marwick.

12 bioMD Limited | Annual Report 2007

Corporate Governance Statement

The Board of Directors of bioMD Ltd strongly supports good corporate governance. The Board agrees with the “ Principles of Good Corporate Governance and Best Practice Recommendations ” developed by the Australian Stock Exchange (ASX). Given the size and nature of the Company, however, the Directors have modified the best practice standards as laid down by the ASX.

depart from the ASX recommendations.

Structure and Role of the Board of Directors

The Board is responsible to the shareholders for the performance of the Company and takes ultimate responsibility for corporate governance matters. The Board guides and monitors the business of the Company on behalf of shareholders, by whom they are elected and to whom they are accountable. The Board is responsible for setting corporate direction, defining policies and monitoring the business of the Company to ensure that it is conducted appropriately and in the best interests of shareholders.

The Board’s key objectives are to:

increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company’s shareholders; and
ensure the Company is properly managed.

The primary responsibilities of the Board are set out in a written policy and include:

supervising the Company’s framework of control and accountability systems to enable risk to be assessed and managed;
approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
financial statements;
overseeing corporate governance of the Company, including conducting regular reviews of the balance of responsibilities within the Company to ensure division of functions remain appropriate to the needs of the Company; and
nominating and monitoring the Company’s external auditors.

The Board evaluates these policies on an on-going basis.

to augment the capabilities of the Board.

As at the date of this report, the Company has three directors; one non-executive independent Chairperson, a Managing Director and one Executive Director.

Directors are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement. Mr R. N. Scott is considered to meet the independence criteria. Although the Company does not have a majority of independent directors, the Board considers that the current composition of the Board best suits the Company’s present activities and level of operations, and includes an appropriate mix of skills and expertise relevant to the Company’s business.

The Board will monitor the non-executive and independent representation on the Board within the constraints of prudent management practice.

14 bioMD Limited | Annual Report 2007

Corporate Governance Statement (continued)

Board Committees

The Company has established an Audit Committee, which meets generally twice a year. Its role is to assist the Board in fulfilling its responsibilities for the Company’s financial reporting, audit, internal control and financial risks. The Managing Director, Chief Financial Officer and the external auditors are usually in attendance at Audit Committee meetings by invitation.

Mr Scott is the sole member of the Audit Committee. Therefore, the composition of the Company’s Audit Committee is less than the minimum three member composition required under the best practice recommendations.

The Board considers that the current structure of the Audit Committee is appropriate given the current size and structure of the Company. Mr Scott possesses the requisite financial expertise necessary to effectively carry out the Audit Committee’s mandate and Mr Scott is able to seek external advice on industry-related aspects in carrying out his duties on the Audit Committee.

Currently, a separate Nomination Committee has not been formed. The Board considers that based on the Company’s stage of development, no benefits or efficiencies are to be gained by delegating this function to a separate committee. The full Board carries out the duties of a Nomination Committee.

Board.

Ethical and Responsible Decision Making

The Board has adopted a Code of Conduct which provides guidance to directors and employees on the standards of behaviour expected in the discharge of their duties on behalf of the Company. The Code is based on respect for the law and acting accordingly, dealing with conflicts of interest appropriately and requires business affairs to be conducted ethically and with integrity.

ensuring that directors are properly briefed for meetings and in all matters relevant to their roles and responsibilities.

The Managing Director and Company Secretary are responsible for implementing the Company’s strategies, funding and operating plans and company policies.

With the prior approval of the Chairman, Directors have the right, in connection to their duties to seek independent professional advice at the Company’s expense.

The Board has adopted a written securities trading policy that applies to all Directors and employees. Trading in the Company securities is prohibited whilst in possession of price sensitive information. The Company Secretary must be notified of any proposed transaction.

Safeguard Integrity of Financial Reporting

The Audit Committee is described in the section titled “Board Committees”.

Secretary of the Company providing certain representations to the Board as follows:

condition and operational results, and are in accordance with relevant accounting standards; and
the statement is founded on a sound system of risk management and internal compliance and control that is operating efficiently and effectively in all material respects.

Corporate Governance Statement (continued)

Timely and Balanced Disclosure

The Company has a continuous disclosure policy which aims to ensure timely compliance with the Company’s obligations under the ASX Listing Rules. Given the small size of the Board of Directors, all material announcements are approved for release by the Managing Director. The Company is committed to promoting investor confidence and ensuring that shareholders and the market have equal access to information and are provided with timely and balanced disclosure of all material matters concerning the Company.

In addition to periodic reporting, the Company ensures that all relevant information concerning the Company is available on its website.

Communications with Shareholders

The Board aims to ensure that shareholders are kept informed of all major developments affecting the Company.

Information is communicated to shareholders as follows:

regular announcements to the ASX;
copies of all announcements, reports and topical information are posted to the website;
newsletters are sent to shareholders periodically, providing an update of activities;
the Chairman of the Company also provides the opportunity for shareholders to ask questions at Annual General Meetings (“AGM”) and manages the question period to allow the maximum number of shareholders to do so;
the Company’s auditor attends the AGM and is also available to answer any questions on audit matters.

Recognise and Manage Risk

The Board is responsible for ensuring that there are adequate policies in relation to risk management, compliance and internal control systems. The Company has developed a framework for risk management, which covers financial, operational and organisational risks. Given the small number of directors on the Board, oversight of the risk management system is retained as a full Board function. There is no formal internal control function as the Company is not of a size to warrant the implementation of a separate internal control function.

Performance Enhancement

The Board annually self assesses its collective performance and reviews each Director’s attendance at and involvement in Board meetings, their performance and other matters identified by the Board or other Directors. The Board has not formalised measures of a Director’s performance.

following their last election. Where eligible, a Director may stand for re-election.

Remuneration

Remuneration Committee responsibilities are carried out by the full Board. Due to the size of the Company, a separate remuneration committee has not been established. The Board determines the level of remuneration for Directors based on the provision of services to the Company. Remuneration levels are set with reference to industry and market conditions and with regard to the size, nature and volume of operations and overall market capitalisation of the Company.

Details of the Company’s remuneration policy is set out in the Remuneration Report included in the Directors’ Report.

Interests of Stakeholders

The Board has adopted a Corporate Code of Conduct which requires a high level of ethical behaviour for all Directors and employees of the Company. The Code provides for a mechanism for employees to report breaches of the Code without fear of retribution.

16 bioMD Limited | Annual Report 2007

Directors’ Report

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of bioMD Limited (“the Company”) and its controlled entity for the year ended 30 June 2007.

Directors

Robert N. Scott Michael C. Bennett Robert E. T. Towner

Principal Activities

During the year, the principal activities of the Group consisted of:

Research and development of the ADAPT process used in the production of biomaterials derived from animal tissues for use as bioimplants for human use;
CSIRO collaboration; and
the commercialisation and development of medical therapy products.

Operating Results

The operating result for the period:

Operating Results The operating result for the period:
Loss before income tax Income tax beneft Loss for the year		CONSOLIDATED THE COMPANY 2007 2006 2007 2006 $ $ $ $ (2,797,904) (1,177,080) (2,010,261) (1,045,856)
		560,462 - 188,691 -
		(2,237,442) (1,177,080) (1,821,570) (1,045,856)

Dividends

No dividend was paid during the year and the Board has not recommended the payment of a dividend.

Review of Operations

Review of Operations contained in the Annual Report.

the financial year, not otherwise disclosed in this report or the financial statements.

Matters Subsequent To The End of The Financial Year

On 9 August 2007, the Company announced that it proposes to offer a new issue for shares and attaching options to the holders of existing listed 30 August 2007 options. The offer to be made to any optionholders registered with Australian and New Zealand addresses as at the expiry date of the options. The offer will be to subscribe to 1 new share for every 10 options held plus 4 new options for every 1 new share subscribed at a price of 25 cents per share.

Environmental Regulations

The Company is not currently subject to any environmental regulations.

18 bioMD Limited | Annual Report 2007

Directors’ Report (continued)

Likely Developments

The likely developments in each of bioMD’s research and development areas are covered in the Annual Report. Further information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group.

Information On Directors

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Particulars of Directors
Interest in Shares and Options
of the Company
Options over
unissued
Special ordinary
Director Experience Responsibilities Ordinary shares shares
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		Ordinary shares	Options over unissued ordinary shares

R. N. Scott FCA, MAICD Independent non-executive chairman since 23 June 1999. Age: 60. Mr Scott has in excess of 35 years experience in corporate structuring and taxation consulting. He is a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Taxation Institute of Australia. Other current directorships Mr Scott holds several public listed company directorships including: Deputy Chairman of Amadeus Energy Limited since October 1996, Non-Executive Director of Homeloans Limited since November 2000, Non- Executive Director of Australian Renewable Fuels Limited since December 2002, and Non-Executive Director of Neptune Marine Services Ltd since May 2007. Former directorships in last 3 years Non-Executive Director of Evans & Tate Ltd from July2005 to August 2007.	Chairman Member of Audit Committee	275,000	1,667,500
M. C. Bennett Executive Director since 16 July 2003. Age: 60. Mr Bennett has over 35 years sales and marketing experience working for US and European medical device companies and has been involved in the introduction of many new medical and surgical device technologies to the Australian market. Since 1979 he owned and operated his own private surgical supply company and has exclusively represented some major overseas medical device manufacturing companies. Other current directorships None Former directorships in last 3 years None	Managing Director	8,125,938	5,653,219

Directors’ Report (continued)

			Particulars of Directors Interest in Shares and Options of the Company	Particulars of Directors Interest in Shares and Options of the Company
Director	Experience	Special Responsibilities	Ordinary shares	Options over unissued ordinary shares
R. E. T. TownerExecutive Director since 16 July 2003. Age: 37. Mr Towner has spent over 10 years in fnancial markets as an authorised representative of Australian investment advisory frms and as a director of publicly listed and unlisted companies. Other current directorships Non-executive Director of Bioenergy Limited since February 2006. Former directorships in last 3 years Non executive Chairman of Brainytoys Ltd from August 2005 to May2006.			10,651,080	10,866,770

Company Secretary

Mrs Caroline L. Bentley has been the Company Secretary of bioMD Limited for 7 years. She has 18 years experience as a chartered accountant in public practice and commerce. She also holds the position of Company Secretary and Executive Director of Amadeus Energy Limited.

Meetings of Directors

The number of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2007, and the numbers of meetings attended by each Director were:

Directors	Full Meeting of Directors	Full Meeting of Directors	Meetings of Audit Committee	Meetings of Audit Committee
	A	B	A	B
Robert N. Scott	12	12	2	2
Michael C. Bennett	12	12	**	**
Robert E. T. Towner	12	12	**	**

A = Number of meetings attended

** = Not a member of the relevant committee

The Board meets regularly on an informal basis in addition to the above meetings.

Details of the memberships of the committee of the Board are presented in the Corporate Governance Statement.

Retirement Of Directors

Mr Robert Scott is the Director retiring by rotation, who being eligible, offers himself for re-election.

20 bioMD Limited | Annual Report 2007

Directors’ Report (continued)

Remuneration Report (Audited)

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Services agreements
D Share-based compensation

The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures . These remuneration disclosures have been transferred from the financial report and have been audited.

are made in this report. The remuneration arrangements detailed in this report are for Non-Executive and Executive Directors.

A Principles used to determine the nature and amount of remuneration

The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered and set to attract the most qualified and experienced candidates.

officers, in the context of prevailing market conditions.

The Company embodies the following principles in its remuneration framework:

the Board seeks independent advice on remuneration policies and practices including recommendations on remuneration packages and other terms of employment for Directors; and
In determining remuneration, advice is sought from external consultants on current market practices for similar roles, the level of responsibility, performance and potential of the director and performance of the Group.

In accordance with best practice corporate governance, the structure of non-executive and executive remuneration is separate and distinct. Remuneration committee responsibilities are carried out by the full Board.

Non-Executive Director

Director. Non-Executive Directors’ fees and payments are reviewed annually by the Board. The Non-Executive Chairman fees are determined based on competitive roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration.

as a director.

The Company’s Non-Executive Director’s remuneration package contains the following key elements:

equity – share options under the bioMD Share Option Incentive Plan (as approved by shareholders at the AGM on 28 October 2004).

Non-Executive Director fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $250,000 pa and was approved by shareholders at the Annual General Meeting on 15 November 2002.

The following Director’s fees have been applied to the Non-Executive Director:

Base Fees	Year ended 30 June 2007	Year ended 30 June 2006
Chairman	$38,150	$38,150

Share options under the bioMD Share Option Incentive Plan can also be offered to the Non-Executive Director as a long-term incentive.

Directors’ Report (continued)

Executive Directors

The Company’s Executive Directors’ remuneration packages contain the following key elements:

equity – share options under the bioMD Share Option Incentive Plan (as approved by shareholders at the AGM on 28 October 2004).

The combination of these components comprises the Executive Directors’ total remuneration.

remuneration information provides benchmark information to ensure the base pay is set to reflect the market for a comparable role. Base fees are reviewed annually to ensure the level is competitive with the market. There is no guaranteed base fee increases included in any Executive Director contracts. A parking bay is also provided as an additional benefit to Executive Directors.

The Company does not offer any variable remuneration incentive plans or bonus schemes to Executive Directors or any retirement benefits.

B Details of remuneration

Details of the remuneration of the directors of the consolidated entity, including their personally-related entities is set out below:

2007	Directors fees $	Consulting fees $	Salary $	Superannuation $	Non-monetary benefts $	Equity options $	Total $	% Remuneration consisting of options for the year
R. N. Scott - - - 38,150 - 30,660 68,810 45% M. C. Bennett - 230,000 - - - 30,660 260,660 12% R. E. T. Towner - 200,000 - - - 30,660 230,660 13%
Total - 430,000 - 38,150 - 91,980 560,130 2006 Directors fees $ Consulting fees $ Salary $ Superannuation $ Non-monetary benefts $ Equity options $ Total $ R. N. Scott 17,500 - - 20,650 - - 38,150 M. C. Bennett - 205,000 - - - - 205,000 R. E. T. Towner - 181,500 - - - - 181,500 Total 17,500 386,500 - 20,650 - - 424,650

(1) Remuneration is not linked to the performance of the Company.

C Services agreements

On appointment, the Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter outlines the Board policies and terms, including remuneration relevant to the office of director.

22 bioMD Limited | Annual Report 2007

Directors’ Report (continued)

Remuneration and other terms of employment for the Managing Director and Executive Director are formalised in service agreements. The major provisions relating to remuneration are set out below.

All contracts may be terminated early by either party with six months notice. Subject to termination payments as outlined below.

Michael Bennett, Managing Director

Term of agreement – 3 years from 1 August 2006.
Base fee of $230,000 for the year ended 30 June 2007, to be reviewed annually.
Payment of long service leave equal to 3 months of base fee upon completion of 7 years of continuous service.
No superannuation payable under the agreement.

Robert Towner, Executive Director

Term of agreement – 3 years from 1 August 2006.
Base fee of $200,000 for the year ended 30 June 2007, to be reviewed annually.
Payment of long service leave equal to 3 months of base fee upon completion of 7 years of continuous service.
No superannuation payable under the agreement.

years of service. The service agreements provide Executive Directors with three months of base fee in the event of redundancy. No other termination benefits are payable, unless the Company does not provide the required 6-month notice period of termination, then 3 months of base fee is payable.

An agreement is in place between the Company and Amadeus Energy Limited, a company in which Mr Scott is a Director, whereby Amadeus provides company secretarial and administration services to the Company. The agreement has been renewed to January 2010 at a rate of $30,000 pa, reviewed annually.

D Share-based compensation

Options

Options over shares in the Company are granted under the bioMD Employee Share Option Plan (‘ESOP’) which was approved by shareholders at the 2004 annual general meeting. The ESOP is designed to provide long-term incentives for directors and employees to deliver long-term shareholder returns. Participation in the ESOP is at the discretion of the Board and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options granted carry no dividend or voting rights.

Details of options over ordinary shares in the Company provided as remuneration to each Director is set out below. Refer to Note 26 for details of director holdings in the ordinary shares and options in the Company as at 30 June 2007.

==> picture [304 x 29] intentionally omitted <==

----- Start of picture text -----

Number of options granted during the year
Name 2007 2006
----- End of picture text -----

Directors
R. N. Scott	600,000	-
M. C. Bennett	600,000	-
R. E. T. Towner	600,000	-
	1,800,000	-
Company Secretary		-
C. L. Bentley	250,000	-

During the year 1.8 million options were issued to Directors. (2006: Nil). The options are exercisable up to the expiry date of 16 November 2010, at an exercise price of 10 cents per option.

Directors’ Report (continued)

Shares Under Option

Unissued ordinary shares of the Company under option as at the date of this report, are as follows:

Date options granted	Expirydate	Issue price of shares	Number under option	Value of option at grant date
30 Aug 2004	30 Aug 2007	20 cents	64,104,626	N/A
1 Feb 2006	1 Feb 2009	15 cents	300,000	8.03 cents
16 Aug 2006	16 Aug 2010	10 cents	1,250,000	2.36 cents
16 Nov 2006	16 Nov 2010	10 cents	1,800,000	5.11 cents
Total			67,454,626

No option holder has any right under the options to participate in any other share issue of the Company or any other entity. The options are exercisable at any time on or before the expiry date. 3,200,000 options lapsed on 16 July 2006 with an exercise price of $1.00 per option.

During the year, bioMD Limited paid a premium of $28,325 to insure the Directors and officers of the Company and its controlled entity. No liability has arisen under these indemnities as at the date of this report.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Proceedings on Behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purposes of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001 .

Non-Audit Services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditors’ expertise and experience with the Company are important.

Details of the amounts paid or payable to the auditor BDO Kendalls Audit and Assurance (WA) Pty Ltd for audit and nonaudit services provided during the year are set out below.

24 bioMD Limited | Annual Report 2007

Directors’ Report (continued)

The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee, is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services have been reviewed by the Audit Committee to ensure they do not impact on the impartiality and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.

During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit forms:

practices and non-related audit forms:
Audit services BDO Kendalls Audit and Assurance (WA) Pty Ltd (formerly Horwath Audit (WA) Pty Ltd): Audit and review of fnancial reports and other audit work under the_Corporations Act 2001_ Non-audit services Other Assurance Services Related entities of BDO Kendalls: AIFRS accounting services Other Services Related entities of BDO Kendalls: Taxation compliance services, including review of comp Research and development application preparation Total remuneration for non-audit services	any tax returns	2007 2006 $ $
		23,050 23,880
		13,600 2,678
		6,210 4,300 16,240 19,340
		36,050 26,318

Directors’ Report (continued)

Auditor

Corporations Act 2001 .

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 attached.

This report is made in accordance with a resolution of the directors.

==> picture [163 x 42] intentionally omitted <==

Robert N. Scott

Non-Executive Chairman Perth, Western Australia

Dated this 28th day of August 2007

26 bioMD Limited | Annual Report 2007

Auditor’s Independence Declaration

==> picture [152 x 31] intentionally omitted <==

28 August 2007

BDO Kendalls Audit & Assurance (WA) Pty Ltd 128 Hay St Subiaco WA 6008 PO Box 700 West Perth WA 6872 Phone 61 8 9380 8400 Fax 61 8 9380 8499 [email protected] www.bdo.com.au

ABN 79 112 284 787

The Directors bioMD Limted PO Box 7778 CLOISTERS SQUARE WA 6850

Dear Sirs

DECLARATION OF INDEPENDENCE BY BDO KENDALLS TO THE DIRECTORS OF BIOMD LIMITED

As lead auditor of bioMD Limited for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
any applicable code of professional conduct in relation to the audit.

This declaration is in respect of bioMD Limited and the entities it controlled during the period.

Yours faithfully BDO Kendalls Audit & Assurance (WA) Pty Ltd

==> picture [113 x 58] intentionally omitted <==

Peter Toll Director

Consolidated Income Statements

For the year ended 30 June 2007

Revenue from continuing operations Administrative expenses Employee benefts expenses Asset write-downs Impairment Depreciation expense Loss before income tax Income tax beneft Loss for the year Loss attributable to minority interest Loss attributable to members of the C Earnings per share (cents per share) Basic earnings per share Diluted earnings per share	Note 3 4 4 4 4 5 ompany 20	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 115,308 165,309 334,125 147,282
		(1,332,676) (987,652) (1,008,295) (839,599) (253,302) (108,383) (253,302) (108,383) (6,990) (112,646) (6,990) (112,646) (1,309,280) (122,531) (1,068,153) (122,531) (10,964) (11,177) (7,646) (9,979)
		(2,913,212) (1,342,389) (2,344,386) (1,193,138) (2,797,904) (1,177,080) (2,010,261) (1,045,856)
		560,462 - 188,691 -
		(2,237,442) (1,177,080) (1,821,570) (1,045,856)
		148,255 65,612 - -
		(2,089,187) (1,111,468) (1,821,570) (1,045,856)
		Cents Cents (2.79) (1.57) (2.68) (1.57)

The above consolidated income statements should be read in conjunction with the accompanying notes.

28 bioMD Limited | Annual Report 2007

Consolidated Balance Sheets

As at 30 June 2007

No ASSETS Current Assets Cash and cash equivalents 2 Trade and other receivables 6 Tax receivable 5 Total Current Assets Non-Current Assets Property, plant & equipment 8 Other fnancial assets 7 Intangible assets 9 Deferred tax assets 1 Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Payables 1 Borrowings 1 Total Current Liabilities Non-Current Liabilities Provisions 1 Deferred tax liabilities 1 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 1 Reserves 1 Accumulated losses 1 Parent entity interest Minority interest 1 TOTAL EQUITY	te 2 0 1 2 3 4 6 7 7 8	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 2,146,964 2,745,262 1,336,893 2,243,936 191,384 26,743 32,620 20,575 219,635 - 188,691 -
		2,557,983 2,772,005 1,558,204 2,264,511
		25,756 37,252 11,067 19,868 - - 936,628 650,000 - 1,112,854 - 116,886 - 1,582 - 1,399
		25,756 1,151,688 947,695 788,153
		2,583,739 3,923,693 2,505,899 3,052,664
		221,242 228,002 163,415 197,723 20,013 30,684 - -
		241,255 258,686 163,415 197,723
		3,800 - 3,800 - - 292,688 - 1,399
		3,800 292,688 3,800 1,399
		245,055 551,374 167,215 199,122
		2,338,684 3,372,319 2,338,684 2,853,542
		7,848,502 6,663,270 7,848,502 6,663,270 145,570 24,090 145,570 24,090 (5,988,617) (3,899,430) (5,655,388) (3,833,818)
		2,005,455 2,787,930 2,338,684 2,853,542 333,229 584,389 - -
		2,338,684 3,372,319 2,338,684 2,853,542

The above consolidated balance sheets should be read in conjunction with the accompanying notes.

Consolidated Statements of Changes in Equity

For the year ended 30 June 2007

		CONSOLIDATED
		Share Capital $ Reserves $ Retained Earnings $ Total $ Minority Interest $ Total Equity $
Balance at 1 July 2005 Loss for the year Total recognised income and expense the year Minority interest on acquisition of subsidi Balance at 1 July 2006 Loss for the year Total recognised income and expense the year Shares issued (net of transaction costs) Staff options Minority interest on additional interest in subsidiary Balance at 30 June 2007	for ary for	6,663,270 24,090 (2,787,962) 3,899,398 - 3,899,398 - - (1,111,468) (1,111,468) (65,612) (1,177,080)
		- - (1,111,468) (1,111,468) (65,612) (1,177,080) - - - - 650,000 650,000
		6,663,270 24,090 (3,899,430) 2,787,930 584,388 3,372,318 - - (2,089,187) (2,089,187) (148,255) (2,237,442)
		- - (2,089,187) (2,089,187) (148,255) (2,237,442) 1,185,232 - - 1,185,232 - 1,185,232 - 121,480 - 121,480 - 121,480 - - - - (102,904) (102,904)
		1,185,232 121,480 - 1,306,712 (102,904) 1,203,808
		7,848,502 145,570 (5,988,617) 2,005,455 333,229 2,338,684
		THE COMPANY Share Capital $ Reserves $ Retained Earnings $ Total $ 6,663,270 24,090 (2,787,962) 3,899,398 - - (1,045,856) (1,045,856) - - (1,045,856) (1,045,856) 6,663,270 24,090 (3,833,818) 2,853,542 - - (1,821,570) (1,821,570) - - (1,821,570) (1,821,570) 1,185,232 - - 1,185,232 - 121,480 - 121,480 1,185,232 121,480 - 1,360,712 7,848,502 145,570 (5,655,388) 2,338,684


Balance at 1 July 2005 Loss for the year Total recognised income and expense the year Balance at 1 July 2006 Loss for the year Total recognised income and expense the year Shares issued (net of transaction costs) Employee share options Balance at 30 June 2007	for for

The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.

30 bioMD Limited | Annual Report 2007

Consolidated Statements of Cash Flows

As at 30 June 2007

Not CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers / ATO refunds Payment to suppliers Interest received NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2 CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant & equipment Payments for intangible assets Purchase of investments Payments for purchase of subsidiary, net of cash acquired NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issues Share issue transaction costs Repayment of borrowings NET CASH INFLOW FROM FINANCING ACTIVITIES NET DECREASE IN CASH HELD CASH AT BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR 2	e 2 2	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 12,000 324,571 286,420 324,571 (1,617,802) (1,024,558) (1,208,430) (892,991)
		(1,605,802) (699,987) (922,010) (568,420) 99,898 165,507 73,465 139,804
		(1,505,904) (534,480) (848,545) (428,616)
		(6,458) (18,582) (5,835) - (98,682) (65,071) (28,975) (39,455) - - (1,047,105) (650,000) - 1,388 - -
		(105,140) (82,265) (1,081,915) (689,455)
		1,050,000 - 1,050,000 - (26,583) - (26,583) - (10,671) - - -
		1,012,746 - 1,023,417 -
		(598,298) (616,745) (907,043) (1,118,071)
		2,745,262 3,362,007 2,243,936 3,362,007
		2,146,964 2,745,262 1,336,893 2,243,936

The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

For the year ended 30 June 2007

have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financials statements for bioMD Limited (the ‘Company’) and the consolidated entity consisting of bioMD Limited and its subsidiary (‘Group’).

(a) Basis of preparation

the Australian Accounting Standards (‘AASB’), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group interpretations and the Corporations Act 2001 .

Compliance with AIFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the consolidated financial statements and notes of bioMD Limited comply with the International Financial Reporting Standards (‘IFRS’).

provided to parent entities in respect of certain disclosure requirements contained in AASB 132: Financial Instruments – Disclosure and Presentation.

Historical cost convention

(b) Principles of consolidation

Subsidiaries

30 June 2007 and the results of its subsidiary for the year then ended. bioMD Limited and its subsidiaries together are referred to in this financial report as the Group or the Consolidated Entity.

accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

A subsidiary is fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of a subsidiary by the Group.

Inter-company balances, transactions and unrealised gains of transactions between Group companies are eliminated in full.

Transactions eliminated on consolidation

All intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the consolidated entity’s interest in the entity with adjustments made to the ‘Investment in associates’ and ‘Share of associates net profit’ accounts.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Gains and losses are recognised as the contributed assets are consumed or sold by the associate or, if not consumed or sold by the associate, when the consolidated entity’s interest in such entity is disposed of.

32 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

(c) Business combinations

The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or assumed at the date of exchange plus costs directly attributable to the acquisition. Transaction costs arising on the issue of equity instruments are recognized directly in equity.

initially at their fair value at the acquisition date, irrespective of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

(d) Revenue recognition

Interest income

Interest income is recognised on a time proportion basis using the effective interest method.

Lease income

Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

(e) Property, plant and equipment

Owned Assets

Items of property, plant and equipment are stated at historical cost less accumulated depreciation. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred at the date of acquisition plus costs directly attributable to the acquisition. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.

Depreciation / Amortisation

Depreciation is calculated using the straight-line method to allocate cost over the estimated useful life of an item of property, plant and equipment.

The estimated useful lives for each class of assets in the current and comparative periods are as follows:

Plant and equipment 3 years

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount, these are included in the income statement.

(f) Intangible assets

Intellectual property

cost less any accumulated amortisation and any impairment losses.

Notes to the Financial Statements

For the year ended 30 June 2007

(f) Intangible assets (Continued)

Patents

expected benefit. Currently the patents have an indefinite life.

Research and development

understanding, is recognised in the income statement as expenditure when it is incurred.

for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete the development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overhead. Other development expenditure is recognised in the income statement as an expense as incurred. To date no development costs have been capitalised.

(g) Impairment of assets

more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill are reviewed for possible reversal of the impairment at each reporting date.

(h) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply then the deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

bioMD Limited and its Australian controlled entity has not implemented the tax consolidation legislation.

34 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

(i) Cash and cash equivalents

with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and bank overdrafts.

parent company investment in a subsidiary. The parent entity investment in subsidiary is carried at cost.

(k) Payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Trade accounts payable are unsecured and are normally paid within thirty days of recognition.

(l) Borrowings

Borrowings are initially measured at the principal amount. Interest is charged as an expense as it accrues. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

(m) Segment reporting

subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

The Group operates in two primary business segments, located in Australia:

the development of tissue engineering technology; and
the development and commercialisation of medical therapy products.

(n) Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share

amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year.

(o) Employee benefits

Wages, salaries, annual leave and sick leave

Liabilities for salaries and annual leave expected to be settled within twelve months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave

expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Notes to the Financial Statements

For the year ended 30 June 2007

The Group makes statutory superannuation guarantee contributions in respect of each employee to their nominated complying superannuation plan. In certain circumstances, pursuant to an employee’s employment contract the Group may also make salary sacrifice superannuation contributions in addition to the statutory guarantee contribution.

Contributions to the employees’ superannuation plans are recognised as an expense as they become payable.

Share based payments

The fair value of options granted under the ESOP is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and recognised on that date.

The fair value is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the non-tradeable nature of the option, the share price and expected price volatility of the underlying shares, the expected yield and the risk-free interest rate for the term of the option.

(p) Operating leases

operating leases. Payments made under operating leases are charged to the income statement in a straight-line basis over the period of the lease.

Lease income from operating leases, where the Group is lessor is recognised in income on a straight line basis over the lease term.

(q) Contributed equity

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(r) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(s) Accounting estimates and judgements

Estimated and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

Share-based payment transactions

The cost of share based payments to employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined with assistance of an external valuer, using the Black-Scholes formula, taking into accounts the terms and conditions upon which the instruments were granted.

36 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

Impairment Testing

best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data. Critical estimates relating to impairment testing of the assets of the group and parent entity are as follows:

Carrying Value of investment in Celxcel Pty Ltd and related intellectual property
The Directors have conducted an impairment testing review of the carrying value of the investment in its subsidiary, Celxcel Pty Ltd and the carrying value of intellectual property.

(t) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Group’s assessment of the impact of these new standards is set out below:

==> picture [469 x 245] intentionally omitted <==

----- Start of picture text -----

Nature of Change to
Affected Standard Accounting Policy Application
AASB 7: Financial Instruments: Disclosures No impact on accounting policy, but will require 1 January 2007
significant additional disclosures in relation to
financial instruments.
AASB 2005-10 : Amendments to Australian Accounting Standards No impact on accounting policy, affects some 1 January 2007
disclosures for the year ending 30 June 2008.
[AASB132, AASB101, AASB114, AASB 117, AASB133, AASB139,
AASB4, AASB1023 and AASB1038]
AASB 8: Operating Segments No impact on accounting policy, affects 1 January 2009
disclosures in relation to operating segments
instead of business and geographical
segments for the financial report ending 30
June 2010.
AASB 2007- 3 : Amendments to Australian Accounting Standards No impact on accounting policy, affects 1 January 2009
arising from AASB 8 [AASB5, AASB6, AASB102, AASB 107, AASB119, disclosures only
AASB127, AASB134, AASB136, AASB 1023 and AASB1038]
AASB 2007-7 : Amendments to Australian Accounting Standards No impact on accounting policy, affects 1 July 2007
[AASB1, AASB2, AASB4, AASB5, AASB107 and AASB128] disclosures only
AASB 101: Presentation of Financial Statements No impact on accounting policy or disclosures 1 January 2007
AASB 2007- 1 : Amendments to Australian Accounting Standards No impact on the consolidated financial report 1 March 2007
arising from AASB 11 or the parent entity financial statements
AASB 2007- 4 : Amendments to Australian Accounting Standards No impact on accounting policy or disclosures 1 July 2007
arising from ED 151 and other amendments
AASB Interpretation 11: Group and Treasury Share transactions No impact on accounting policy or disclosures 1 March 2007
----- End of picture text -----*

Applicable to reporting periods commencing on or after the given date.

2. Financial Risk Management

borrowings, other than loans from external shareholders of Celxcel Pty Ltd, which are payable at call and interest-free.

assets and liabilities, such as trade receivables and trade payables, which arise directly from its operations.

undertaken. The main risks arising from the Group are cash flow (interest rate risk, liquidity risk, credit risk and foreign currency risk). The Board reviews and agrees policies for managing each of these risks and they are summarised below.

measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

Notes to the Financial Statements

For the year ended 30 June 2007

2. Financial Risk Management (continued)

Credit risk

Liquidity risk

The Group currently does not have any major funding in place. The Directors monitor the cash-burn rate of the group on an on-going basis against budget and the maturity profiles of financial assets and liabilities to manage its liquidity risk.

Interest rate risk

rates. The Group does not have significant interest-bearing assets and is not materially exposed to changes in market interest rates.

3. Revenue From Continui Operations Revenue from continuing operations Interest from other parties Administration services income Sub-lease rental income Total revenue	Note ng	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 103,308 162,309 78,125 144,282 - - 244,000 - 12,000 3,000 12,000 3,000
		115,308 165,309 334,125 147,282

4. Expenses Loss before income tax includes the following specifc expenses: Consultancy costs Rental expense relating to operating leas Depreciation Plant & equipment Research and development Write-down of plant & equipment Impairment of assets: Intangibles - patents Intangibles – intellectual property Investment in subsidiary Employee benefts expense Wages and salaries Leave provisions Other benefts Share bases payments – equity sett	Note es 8 7 led 28	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 675,598 511,060 516,140 396,930 26,010 28,378 26,010 28,378 10,964 11,177 7,646 9,979 233,222 240,644 210,610 232,750 6,990 112,646 6,990 112,646 173,190 122,531 145,861 122,531 1,136,090 - - - - - 922,292 -
		1,309,280 122,531 1,068,153 122,531 48,828 48,256 48,828 48,256 18,214 2,681 18,214 2,681 64,780 57,446 64,780 57,446 121,480 - 121,480 -
		253,302 108,383 253,302 108,383

38 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

No 5. Income Tax Expense / (Beneft) (a) Income tax expense / (beneft) Current tax Deferred tax Adjustments for current tax of prior periods Deferred income tax (revenue)/expense included in income tax expense comprises: Decrease/ (increase) in deferred tax assets (Decrease)/Increase in deferred tax liabilities (b) Numerical reconciliation of income tax beneft to prima facie tax payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 30% (2006:30%) Tax effect of amounts that are not deductible/ (taxable) in calculating taxable income: Share based employee payments Sundry non-assessable/deductible items Sundry non-deductible items Under / (over) provision in prior years Income tax beneft not recognised R and D tax rebate Income tax expense / (beneft) (c) Tax losses Unused tax losses for which no deferred tax assets has been recognised Potential tax beneft at 30%	te	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ - - - - (340,827) - - - (219,635) - (188,691) -
		(560,462) - (188,691) -
		1,582 (31,115) 1,399 31,298 (342,409) 31,115 (1,399) (31,298)
		(340,827) - - -
		(2,797,904) (1,177,080) (2,010,261) (1,045,856)
		(839,371) (353,124) (603,078) (313,757) 36,444 - 36,444 - - (73,098) - (67,893) 636 1,906 596 1,869
		(802,291) (424,316) (566,038) (379,781) - - - - 461,464 424,316 566,038 379,781 (219,635) - (188,691) -
		(560,462) - (188,691) -
		4,024,443 3,101,335 3,301,698 2,963,562
		1,207,333 930,400 990,509 889,069

All unused tax losses were incurred by Australian entities.

Notes to the Financial Statements

For the year ended 30 June 2007

5. Income Tax Expense / (continued) (d) Unrecognised temporary differen Deferred tax assets and liabilities not rec to the following: Deferred tax assets Tax losses Other temporary differences Deferred tax liabilities Other temporary differences Net deferred tax assets	Note (Beneft) ces ognised relate	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 1,207,333 930,401 990,509 889,069 1,045,474 480,712 531,189 477,326 (419,515) (1,582) (416,911) (1,399)
		1,833,292 1,409,531 1,140,787 1,364,997

No franking account credits are available.

(e) Tax consolidation legislation

bioMD Limited and its Australian controlled entity have not implemented the tax consolidation legislation.

6. Trade and Other Recei Trade receivables Accrued Interest Prepayments Other receivables Other receivables arise from GST refunds 7. Other Financial Assets Shares in subsidiary – at cost Provision for impairment	CONSOLIDATED THE COMPANY 2007 2006 2007 2006 Note $ $ $ $ vables 27,009 - 27,009 - 8,680 5,270 - 4,660 136,000 - - - 19,695 21,473 5,611 15,915 191,384 26,743 32,620 20,575 expected from the ATO for June 2007. CONSOLIDATED THE COMPANY 2007 2006 2007 2006 Note $ $ $ $ 15 - - 1,858,920 650,000 - - (922,292) - - - 936,628 650,000	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 27,009 - 27,009 - 8,680 5,270 - 4,660 136,000 - - - 19,695 21,473 5,611 15,915
		191,384 26,743 32,620 20,575
		2007 2006 2007 2006 $ $ $ $ - - 1,858,920 650,000 - - (922,292) -
		- - 936,628 650,000

The shares in subsidiary are carried at cost.

For further information in relation to the subsidiary – refer to Note 15.

40 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

No 8. Property, Plant & Equipment Plant & equipment At cost Accumulated depreciation Net book amount Reconciliation Opening net book amount Additions Disposals Asset write-down Depreciation charge Closing net book amount	te	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 61,870 62,402 42,665 43,820 (36,114) (25,150) (31,598) (23,952)
		25,756 37,252 11,067 19,868 37,252 142,493 19,868 142,493 6,458 18,582 5,835 - - - - - (6,990) (112,646) (6,990) (112,646) (10,964) (11,177) (7,646) (9,979)
		25,756 37,252 11,067 19,868

The asset write-down relates to items of equipment no longer used in the usual operating activities of the Group.

No 9. Intangible Assets Intellectual Property Patents Intellectual Property Opening net book value Additions - acquisition Impairment charge Closing net book value Patent costs Opening net book value Additions - acquisitions Impairment charge Closing net book value	te	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ - 970,353 - - - 142,501 - 116,886
		- 1,112,854 - 116,886
		970,353 - - - 165,737 970,353 - - (1,136,090) - - -
		- 970,353 - -
		142,501 199,961 116,886 199,961 30,689 65,071 28,975 39,456 (173,190) (122,531) (145,861) (122,531)
		- 142,501 - 116,886

Notes to the Financial Statements

For the year ended 30 June 2007

9. Intangible Assets (continued)

the length of their useful life reliably. The recovery of patents remains dependent upon future successful commercial application of the entity’s intellectual property. The recoverable amount of each cash-generating unit is determined based on fair value less costs to sell.

As at 30 June 2007, the carrying value of IP and patents have been reviewed against the entity’s business plan. The fair value of the intangible assets cannot be determined, as the Group is at a point too soon to determine the future sales to be generated by the technology. No third party contracts have been signed to date.

10. Deferred Tax Assets The balance comprises temporary differen attributable to: Amounts recognised in proft and loss Employee benefts Accrued expenses Tax losses * Plant and equipment Intangibles Derecognition to the extent of the deferre Amounts recognised in equity Share issue costs Movements: Opening balance at 1 July Credited/ (charged) to income statement Credited/ (charged) to equity Closing balance 30 June	Note ces d tax liability	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ - 1,004 - 1,004 - 1,759 - 709 - 319,975 - 278,643 - 68,535 - 68,535 - 32,487 - 30,151 - (424,316) - (379,781) - (30,559) - (30,559)
		- (31,115) - (31,298)
		1,582 32,697 1,399 32,697 (1,582) (31,115) (1,399) (31,298) - - - -
		- 1,582 - 1,399

The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal of existing assessable temporary differences.

42 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

11. Current Liabilities – Trade and Other Payables Trade payables Accruals Employee benefts 12. Current Liabilities - Borrowings Loans payable (unsecured) The loans are interest-free and repayable at call to third-party shareholders in Celxcel Pty Ltd. 13. Non Current Liabilities - Provisions Long service leave provision 14. Non-Current Liabilities Deferred Tax Liabilities The balance comprises temporary differences attributable to Accrued interest receivable Depreciable assets Acquisition of subsidiary Movements: Opening balance at 1 July Charged/ (credited) to income statement Credited/ (charged) to equity Purchase of subsidiary Prior period adjustment - intangible assets Closing balance 30 June	:	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 86,917 208,461 31,090 181,680 112,000 11,630 110,000 8,132 22,325 7,911 22,325 7,911
		221,242 228,002 163,415 197,723
		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 20,013 30,684 - -
		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 3,800 - 3,800 -
		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ - 1,582 - 1,399 - - - - - 291,106 - -
		- 292,688 - 1,399
		292,688 32,697 1,399 32,697 (342,409) (31,115) (1,399) (31,298) - - - - 49,721 291,106 - - - - - -
		- 292,688 - 1,399

Notes to the Financial Statements

For the year ended 30 June 2007

15. Subsidiaries

accordance with the accounting policy described at Note 1 (a).

Celxcel Pty Ltd		Country of Class of Equity Holding Incorporation Shares % %
		2007 2006 Australia Ordinary 76.32 50

The proportion of ownership interest is equal to the proportion of voting power held.

During the current year, additional holdings were acquired in Celxcel Pty Ltd as follows:

Date % 10 July 2006 21.5% 308, 3 May 2007 4.82% 900,	$ 920 000

16. Contributed Equity

16. Contributed Equity
(a) Share capital Issued and paid-up ordinary shares (b) Movements in ordinary share cap Opening balance 10 July 2006 - issue of shares for 21.5% additional interest in Celxcel Pty Ltd 7 May 2007 - Share Purchase Plan 12 June 2007 - Share Placement Less transaction costs arising from share Closing Balance	ital: purchase of issues	SHARES $
		2007 2006 2007 2006 84,308,356 70,866,251 7,848,502 6,663,270 70,866,251 70,866,251 6,663,270 6,663,270 2,942,105 - 161,815 - 6,725,000 - 672,500 - 3,775,000 - 377,500 - - - (26,583) -
		84,308,356 70,866,251 7,848,502 6,663,270

On 28 March 2007 the Company invited its shareholders to subscribe to its Share Purchase Plan (“SPP”), whereby eligible shareholders could subscribe for either $2,500 or $5,000 worth of bioMD shares, representing either 25,000 or 50,000 ordinary shares. The SPP sought to raise $1 million. Shareholders subscribed for 6.725 million shares.

On 12 June 2007 a private placement was made which raised a further $377,500.

The purpose of the Share Purchase Plan and the placement were used for funding the development of the ADAPT Advanced Tissue Process and for general working capital purposes.

44 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

16. Contributed Equity (continued)

(c) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Shares Under Options

Information in relation to the bioMD Employee Share Option Plan, including details of options issued, exercised or lapsed during the financial year is set out in Note 28.

17. Reserves and Accumulated Losses (a) Reserves Share-based payments reserve Movements: Share based payments reserve: Balance 1 July Option expense Balance 30 June (b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net loss attributable to members of the Company Balance 30 June		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 145,570 24,090 145,570 24,090
		24,090 24,090 24,090 24,090 121,480 - 121,480 -
		145,570 24,090 145,570 24,090
		3,899,430 2,787,962 3,833,818 2,787,962 2,089,187 1,111,468 1,821,570 1,045,856
		5,988,617 3,899,430 5,655,388 3,833,818

(c) Nature and purpose of reserves

The share-based payments reserve is used to recognise the fair value of options issued to employees.

Notes to the Financial Statements

For the year ended 30 June 2007

18. Minority Interest Interest in: Share Capital Accumulated losses		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 584,389 650,000 - - (251,160) (65,611) - -
		333,229 584,389 - -

19. Remuneration of Auditors

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

practices and non-related audit frms:
Audit services BDO Kendalls Audit and Assurance (WA) (formerly Horwath Audit (WA) Pty Ltd) Audit and review of fnancial reports audit work under the Corporations Non-audit services Taxation services Related entities to BDO Kendalls Tax compliance services, including r income tax returns Audit-related services AIFRS accounting services Total remuneration for non-audit services	Pty Ltd and other Act 2001 eview of company	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 23,050 23,880 15,547 20,380
		22,450 23,640 13,850 23,300 13,600 2,678 13,600 2,678
		36,050 26,318 27,450 25,978

It is the Group’s policy to employ BDO Kendalls on assignments additional to their statutory audit duties where BDO’s expertise and experience with the Group are important. These assignments are principally tax advice and accounting services under AIFRS.

20. Earnings Per Share

(a) Basic earning per share

The calculation of basic earnings per share at 30 June 2007 was based on the consolidated loss attributable to ordinary shareholders of $2,089,187 (2006:$1,111,468).

(b) Diluted earning per share

The calculation of diluted earnings per share at 30 June 2007 was based on the consolidated loss attributable to ordinary shareholders of $2,089,187 (2006:$1,111,468).

46 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

20. Earnings Per Share (continued)

Weighted average number of ordinary shares used in the calculation of basic earnings per share Basic earnings per share Adjustment for calculation of diluted earnings per share: Options Weighted average number of ordinary shares used in the calculation of diluted earnings per share		2007 2006 Number Number
		74,960,559 70,866,215 3,050,000
		78,010,559 70,866,215

(d) Information concerning classification of securities

Options:

Options granted under the bioMD ESOP are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been used in the determination of basic earnings per share. Details relating to options are set out in Note 28.

21. Commitments Total expenditure commitments at balance date not provided for in the fnancial statements Lease commitments Within one year Later than one year but no later than fve years		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 26,985 12,805 26,985 12,805 42,297 - 42,297 -
		69,282 12,805 69,282 12,805

Operating Lease:

The lease has escalation clauses and renewal rights.

On renewal, the terms of the lease were renegotiated.

Other commitments - CSIRO Within one year Later than one year but no later than fve years		117,000 105,000 117,000 105,000 - 105,000 - 105,000
		117,000 210,000 117,000 210,000

The Company is party to a research agreement with CSIRO.

Notes to the Financial Statements

For the year ended 30 June 2007

22. Reconciliation of Loss After Income Tax To Net Cash Inflow From Operating Activities

Infow From Operating	Activities
(a) Reconciliation to cash at the end Cash at bank and in hand Deposits at call Total cash at the end of the year	of the year	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 1,446,964 1,029,577 1,336,893 978,251 700,000 1,715,685 - 1,265,685
		2,146,964 2,745,262 1,336,893 2,243,936

(b) Cash at bank and on hand

These are interest bearing accounts held at bank with average interest rates in the range of 3.30% to 5.25% (2006: nil).

(c) Deposits at call

(d) Reconciliation of loss after income tax to net cash

outfow from operating activities
Loss for the year Depreciation expense Asset write-down Impairment charge Accrued interest Income tax beneft Non-cash employee benefts expense - s (Increase)/decrease in receivables Increase/(decrease) in creditors Increase/(decrease) in other provisions Net cash outfow from operating activities (e) Non-cash investing and fnancing Acquisition of additional interest in subsid	(2,237,442) (1,177,080) (1,821,570) (1,045,856) 10,964 11,177 7,646 9,979 6,990 112,646 6,990 112,646 1,309,280 122,531 1,068,153 122,531 7,478 3,917 4,661 4,478 (560,462) - (188,691) - hare based payments 121,480 - 121,480 - (161,231) 188,524 (16,706) 194,082 (21,173) 201,124 (48,720) 170,843 18,212 2,681 18,212 2,681 (1,505,904) (534,480) (848,545) (428,616) activities iary 161,815 - 161,815 -
		(1,505,904) (534,480) (848,545) (428,616)
		161,815 - 161,815 -

On 10 July 2006, an additional 21.5% was acquired in Celxcel Pty Ltd for a combination of cash plus the issue of 2,942,105 ordinary shares in bioMD Limited, valued at 5.5 cents per share for a total of $161,815.

23. Segment Reporting

(a) Description of segments

Business Segments

The Group operates in two primary business segments:

the development of bioimplants; and
the development and commercialisation of medical therapy products.

Geographical Segments

The Group operates are in one geographical area - Australia.

48 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

23. Segment Reporting (continued)

(b) Primary reporting format - Business Segments

2007	Medical therapy products $	Bioimplants $	Eliminations $	Consolidated $
Segment revenue Total segment revenue Segment result Segment loss after income tax Segment assets and liabilities Segment assets Segment liabilities Other information Acquisition of non-current assets Depreciation Asset write-down Impairment of intangibles 2006	334,125 1,821,571 2,505,899 167,215 5,835 7,646 6,990 1,068,153 Medical therapy products $	25,183 542,901 1,014,469 77,840 623 3,318 - 27,328 Bioimplants $	(244,000) (127,030) (936,629) - - - - 213,799 Eliminations $	115,308 2,237,442 2,583,739 245,055 6,458 10,964 6,990 1,309,280 Consolidated $
Segment revenue
Total segment revenue	147,283	18,026	-	165,309
Segment result
Segment loss after income tax	1,045,856	139,933	(8,709)	1,177,080
Segment assets and liabilities
Segment assets	3,052,663	550,677	320,353	3,923,693
Segment liabilities	199,120	61,148	291,106	551,374
Other information
Acquisition of non-current assets	-	18,582	-	18,582
Depreciation	9,979	1,198	-	11,177
Asset write-down	112,646	-	-	112,646
Impairment of intangibles	122,531	-	-	122,531

(c) Notes to and forming part of segment information

(i) Accounting Policies

Segment information is prepared in conformity with the accounting policies as disclosed in Note 1 and Accounting Standard AASB 114 Segment Reporting.

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by the segment and consist primarily of operating cash, receivables, property, plant and equipment and other intangible assets. Segment liabilities consist primarily of creditors, employee benefits and borrowings. Segment assets and liabilities do not include income taxes.

(ii) Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an ‘armslength’ basis and are eliminated on consolidation.

Notes to the Financial Statements

For the year ended 30 June 2007

24. Business Combination

For the year ended 30 June 2006:

(a) Summary of acquisition

2006: On 1 November 2005 the parent entity acquired 50% of the issued capital of Celxcel Pty Ltd. The acquired business contributed a net loss of $131,224 to the Group for the period from 1 November 2005 to 30 June 2006. If the acquisition occurred on 1 July 2005, the consolidated loss for the year would have been $139,933. The acquired entity is involved in the development of bioimplants for human use.

Details of the fair value of the assets and liabilities acquired are as follows:

Details of the fair value of the assets and	liabilities acquired are as follows:
Purchase consideration: Fair value of net identifable assets acquir	ed	$ 650,000
		650,000

No additional payments were made in the year ended 30 June 2006. A provision of $291,106 was created for the deferred tax liability on the purchase.

(b) Assets and liabilities acquired

The assets and liabilities arising from the acquisition are as follows:

(b) Assets and liabilities acquired The assets and liabilities arising from the	acquisition are as follows:
Cash Receivables Intangible asset: Intellectual property Non current borrowings Deferred tax liability Net assets Minority interests Net identifable assets acquired Outfow of cash to acquire subsidiary, ne Cash consideration Less: Cash balance acquired Infow of cash	t of cash acquired:	Acquiree’s carrying amount Fair Value $ $
		- 651,388 - 49 - 970,353 - (30,684) - (291,106)
		- 1,300,000 - 650,000
		- 650,000
		2007 2006 $ $
		- 650,000 - 651,388
		- 1,388

50 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

25. Financial Instruments

and loans payable. The main purpose of these non-derivative financial instruments is to finance the Group’s operations.

(a) Interest rate risk

The following table details the consolidated entity’s exposure to interest rate risk at the reporting date.

2007	Average Variable Fixed Non- interest interest interest interest rate rate rate bearing TOTAL % $ $ $ $
Financial Assets Cash Deposits Receivables Financial Liabilities Payables Loans Employee beneft provisions 2006	4.18 1,446,964 - - 1,446,964 6.20 700,000 - - 700,000 - - - 182,704 182,704
	2,146,964 - 182,704 2,329,668
	- - - 198,917 198,917 - - - 20,013 20,013 - - - 26,125 26,125
	- - 245,055 245,055
	Average Variable Fixed Non- interest interest interest interest rate rate rate bearing TOTAL % $ $ $ $
Financial Assets Cash Deposits Receivables Financial Liabilities Payables Loans Employee beneft provisions	- 1,029,577 - - 1,029,577 5.43 1,715,685 - - 1,715,685 - - - 21,473 21,473
	2,745,262 - 21,473 2,766,735
	- - - 220,091 220,091 - - - 30,684 30,684 - - - 7,911 7,911
	- - - 258,686 258,686

Notes to the Financial Statements

For the year ended 30 June 2007

25. Financial Instruments (continued)

(b) Credit risk

(c) Fair value

statements approximates their respective fair values.

(d) Financial Instruments

any other financial instruments.

(e) Liquidity risk

committed credit facilities. The Directors monitor the cash-burn rate of the group on an on-going basis.

26. Key Management Personnel

(a) Directors

Chairman – non executive

Robert N. Scott

Executive directors

Michael C. Bennett Robert E. T. Towner

(b) Executives

There are no other key management personnel in the consolidated entity, apart from the three directors listed above.

(c) Directors’ remuneration

Full details of Directors’ remuneration are set out in the Remuneration Report contained in the Directors’ Report. The Company has taken advantage of the relief provided by Corporations Regulations 2M.6.04 and has transferred the detailed remuneration disclosures to the Directors’ Report.

Key management personnel compensation

Short-term employee benefts Post employment benefts Long-term benefts Share-based payments		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 430,000 404,000 430,000 404,000 38,150 20,650 38,150 20,650 - - - - 91,980 - 91,980 -
		560,130 424,650 560,130 424,650

52 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

26. Key Management Personnel (continued)

(d) Directors’ holdings of shares and share options

The interests of Directors of the Company and their Director-related entities in shares and share options of the Company at year-end are set out below:

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----- Start of picture text -----

Held at Held at
Expiry Exercise 1 July Purchased 30 June
Options date Price $ 2006 / Issued Exercised Lapsed 2007
2007
R. N. Scott 30 August 2007 0.20 157,500 910,000 - - 1,067,500
16 November 2009 0.10 - 600,000 - - 600,000
M. C. Bennett 16 July 2006 1.00 600,000 - - (600,000) -
30 August 2007 0.20 5,023,344 29,875 - - 5,053,219
16 November 2009 0.10 - 600,000 - - 600,000
R. E. T. Towner 16 July 2006 1.00 600,000 - - (600,000) -
30 August 2007 0.20 10,266,770 - - - 10,266,770
16 November 2009 0.10 - 600,000 - - 600,000
Held at Held at
1 July Sold/ 30 June
Shares 2006 Issued Purchased Transferred 2007
2007
R. N. Scott 175,000 - 100,000 - 275,000
M. C. Bennett 8,025,938 - 100,000 - 8,125,938
R. E. T. Towner 9,062,130 - 1,588,950 - 10,651,080
Held at Held at
Expiry Exercise 1 July Purchased 30 June
Options date Price $ 2005 / Issued Exercised Lapsed 2006
2006
R. N. Scott 30 August 2007 0.20 157,500 - - - 157,500
M. C. Bennett 16 July 2006 1.00 600,000 - - - 600,000
30 May 2006 2.00 75,000 - - (75,000) -
30 August 2007 0.20 5,023,344 - - - 5,023,344
R. E. T. Towner 16 July 2006 1.00 600,000 - - - 600,000
30 May 2006 2.00 75,000 - - (75,000) -
30 August 2007 0.20 7,200,000 3,066,770 - - 10,266,770
Held at Held at
1 July Sold/ 30 June
Shares 2005 Issued Purchased Transferred 2006
2006
R. N. Scott 175,000 - - - 175,000
M. C. Bennett 8,025,938 - - - 8,125,938
R. E. T. Towner 8,225,000 - 837,130 - 9,062,130
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Notes to the Financial Statements

For the year ended 30 June 2007

27. Related Party Transactions

(a) Parent Entity

The ultimate parent entity within the Group is bioMD Limited.

(b) Subsidiary

Interest in subsidiary is set out in Note 15.

(d) Transactions with related parties

The following transactions occurred with related parties:

Directors’ transactions with the Company

Management Services

Omnimed Pty Ltd, a company in which Mr M. Bennett has an interest, has an agreement with the Company to provide management consulting services for a period of three years, commencing on 1 July 2003, renewed on 1 August 2006.

Mandolin Pty Ltd, a company in which Mr R. Towner has an interest, has an agreement with the Company to provide management consulting services for a period of three years, commencing on 1 July 2003, renewed on 1 August 2006.

Amadeus Energy Ltd, a company in which Mr R. Scott is a Director, has an agreement with the Company to provide company secretarial and administration services commencing on 1 December 2003, renewed on 27 November 2006 and also a sub-lease for office space for a period of 3 years, renewed on 27 November 2006. As at 30 June 2007 bioMD owes Amadeus Energy Ltd a balance of $6,954.

Total paid to Director-related entities duri Omnimed Pty Ltd Mandolin Pty Ltd Amadeus Energy Ltd	ng the fnancial year are set out below:	CONSOLIDATED
		2007 2006 $ $ 230,000 205,000 200,000 181,500 27,500 24,000

54 bioMD Limited | Annual Report 2007

Notes to the Financial Statements

For the year ended 30 June 2007

28. Employee Benefts Employee benefts and related on-costs liabilities Included in current payables Included in non-current provisions Aggregate employee entitlement and related on-costs liabiliti Employee numbers	es	CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 22,325 7,911 22,325 7,911 3,800 - 3,800 -
		26,125 7,911 26,125 7,911
		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 Number Number Number Number 1 1 1 1

Employee Share Option Plan

The establishment of the bioMD Employee Share Option Plan (ESOP) was approved by the shareholders at the general meeting held on 28 October 2004. Eligible Employees (as defined in the Plan and which includes Directors, employees and consultants) are able to participate in the Plan.

The essential features of the ESOP include:

the options are to be issued to selected Eligible Employees for free;
the allotment of options to Eligible Employees is at the discretion of the Board of Driectors;
the shares allotted to Eligible Employees on the exercise of the options are to be issued at an exercise price determined by the Board in its absolute discretion, which price shall not be less than the minimum exercise price permitted by the Listing Rules;
the options expire 4 years after the date on which they are granted;
the options are unlisted and not transferable unless the Directors in their absolute discretion agree to a transfer;
the options carry no dividend rights or voting rights.

The Company has a total of 3,350,000 staff options over ordinary shares in the Company as at 30 June 2007. (2006: 300,000).

issued).

Expenses arising from share-based payment transactions

expense were as follows:

expense were as follows:
Options issued under employee option plan		CONSOLIDATED THE COMPANY
		2007 2006 2007 2006 $ $ $ $ 121,480 - 121,480 -

Notes to the Financial Statements

For the year ended 30 June 2007

Consolidated and parent entity: bioMD Limited Share Option Plan

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----- Start of picture text -----

Exercise
Expiry Price Granted Closing
Grant Date date (cents) Opening balance Exercised Expired balance
2007:
16 Aug 2006 16 Aug 2010 10 - 1,250,000 - - 1,250,000
16 Nov 2006 16 Nov 2010 10 - 1,800,000 - - 1,800,000
Weighted average
ex price - 10 c - - 10 c
2006:
1 Feb 2005 1 Feb 2009 15 300,000 - - - 300,000
Weighted average
ex price 15 c - - - 15 c
----- End of picture text -----

Fair value of options granted

The assessed fair value at grant date of options granted during the year ended 30 June 2007 was 4.64 cents per option (2006: Nil). The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the option term, the share price at grant date and expected price volatility of the underlying share and the risk-free interest rate for the term of the option.

The model inputs for options granted during the year ended 30 June 2007 included:

options granted for no consideration, have a four year life and exercisable at any time prior to expiry date
exercise price: $0.10
grant date: 16 August / 16 November 2006
expiry date: 16 August / 16 November 2009
share price at grant date: 9.45 cents
expected price volatility of the Company’s shares: 90%
expected dividend yield: 0% (based on historic volatility)
risk-free interest rate: 5.9625%

29. Subsequent Events

On 9 August 2007, the Company announced that it proposes to offer a new issue for shares and attaching options to the holders of existing listed 30 August 2007 options. The offer to be made to any option holders registered with Australian and New Zealand addresses as at the expiry date of the options. The offer will be to subscribe to 1 new share for every 10 options held plus 4 new options for every 1 new share subscribed at a price of 25 cents per share.

30. Dividends

No dividends have been declared or paid during the period.

56 bioMD Limited | Annual Report 2007

Directors’ Declaration

For the year ended 30 June 2007

In the Directors’ opinion:

designated as audited, of the Company and the consolidated entity are in accordance with the Corporations Act 2001 , including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) and of their performance, as represented by the results of their operations and cash flows, for the year ended on that date; and
(b) there are reasonable grounds to believe that bioMD Limited will be able to pay its debts as and when they become due and payable.

295A of the Corporations Act 2001 .

This declaration is made in accordance with a resolution of the Directors.

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ROBERT N. SCOTT Non-Executive Chairman

Perth, Western Australia Dated this 28th day of August 2007

Independent Auditors Report

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BDO Kendalls Audit & Assurance (WA) Pty Ltd 128 Hay St Subiaco WA 6008 PO Box 700 West Perth WA 6872 Phone 61 8 9380 8400 Fax 61 8 9380 8499 [email protected] www.bdo.com.au

ABN 79 112 284 787

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF BIOMD LIMITED

Scope

The Financial Report and Directors’ Responsibility

The financial report comprises the balance sheet, income statement, cash flow statement, statement of changes in equity, accompanying notes to the financial statements, and the directors’ declaration for both bioMD Limited (the company) and the consolidated entity, for the year ended 30 June 2007. The consolidated entity comprises both the company and the entities it controlled during that year.

As permitted by the Corporations Regulations 2001, the company has disclosed information about the compensation of key management personnel (“compensation disclosures”), as required by Accounting Standard AASB 124 Related Party Disclosures, under the heading “Remuneration Report” of the directors’ report and not in the financial report.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. The directors are also responsible for the preparation and presentation of the compensation disclosures contained in the directors’ report in accordance with the Corporations Regulations 2001.

Audit Approach

We have conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement and that the compensation disclosures in the directors’ report comply with Accounting Standard AASB 124. The nature of an audit is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated entity’s financial position, and of their performance as represented by the results of their operations and cash flows and whether the compensation disclosures in the directors’ report comply with Accounting Standard AASB 124.

58 bioMD Limited | Annual Report 2007

Independent Auditors Report

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We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report and the compensation disclosures in the directors’ report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

The independence declaration given to the directors in accordance with section 307C would be in the same terms if it had been given at the date of this report.

Auditor’s Opinion

In our opinion:

The financial reports of bioMD Limited and are in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s and the group’s financial position as at 30 June 2007 and of its performance for the year ended on that date; and
(b) complying with Accounting Standards in Australia including the Australian Accounting Interpretations and the Corporations Regulations 2001.
The remuneration disclosures that are contained in the directors’ report comply with Accounting Standard AASB 124 and the Corporations Regulations 2001.

Dated at Perth on this the 28th day of August 2007.

BDO Kendalls Audit & Assurance (WA) Pty Ltd

==> picture [113 x 58] intentionally omitted <==

Peter Toll Director

Shareholder Details

The number of shares held by substantial shareholders as at 23 August 2007:

Name	No. ordinary shares held	% of issued capital held
Mandolin Pty Ltd	10,690,000	12.68
Victoria Park Investments Pty Ltd	10,457,500	12.40
Parerg Pty Ltd	8,050,000	9.55

Voting rights

The shares carry the right to one vote for each share held.

Distribution of shareholders

Number of ordinary shareholders: 901

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Number of ordinary shares No. of shareholders
----- End of picture text -----

1 - 1,000	153
1,001 - 5,000	156
5,001 - 10,000	140
10,001 - 100,000	361
100,001 and over	91
Total	901

Twenty Largest Shareholders

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----- Start of picture text -----

No. ordinary % of issued
Name shares held capital held
----- End of picture text -----

Mandolin Pty Ltd	10,690,000	12.68
Victoria Park Investments Pty Ltd	10,457,500	12.40
Parerg Pty Ltd	8,050,000	9.55
J Towner Marybrook Investment A/c	2,821,127	3.35
Torwood Resources Limited	2,538,000	3.01
Spinifex Holdings Pty Ltd	1,535,120	1.82
F and A Popovsky	1,500,000	1.78
Idobee Superannuation Fund Pty Ltd	1,300,000	1.54
I Neethling	1,300,000	1.54
J O’Shea	1,300,000	1.54
Amadeus Energy Limited	1,149,750	1.36
T. Hooker & Associates Pty Ltd	1,121,132	1.33
Carter Capital Limited	1,100,000	1.30
Ord Western Biomedical S/F A/c	1,050,000	1.25
Jaldara Star Pty Ltd	903,873	1.07
Patria Pty Ltd	800,000	0.95
M Grove	701,453	0.83
Samyue Super Fund A/c	700,000	0.83
Pateman Super Fun d A/c	605,000	0.72
Gengos Super Fund A/c	600,597	0.71

The 20 largest shareholders hold 59.56% of the Company’s issued capital.

60 bioMD Limited | Annual Report 2007

Corporate Directory

Directors

Robert N. Scott Non-Executive Chairman

Michael C. Bennett Managing Director

Robert E. T. Towner Executive Director

Company Secretary

Share Registry

Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St Georges Terrace Perth, Western Australia 6000

Telephone: (within Australia) 1300 557 010 (outside Australia) +61 3 9415 4000 Facsimile: +61 8 9323 2033

Caroline L. Bentley

Solicitors

Company and Registered Office

Level 11, 225 St Georges Terrace Perth, Western Australia 6000

Telephone: +61 8 9262 6777 Facsimile: +61 8 9322 3433 Website: www.biomd.com.au Email: [email protected]

Auditors

BDO Kendalls Audit & Assurance (WA) Pty Ltd 128 Hay Street, Subiaco Western Australia 6008

Price Sierakowski Level 24, 44 St Georges Terrace Perth, Western Australia 6000

Bankers

National Australia Bank 1238 Hay Street, West Perth Western Australia 6005

Stock Exchange Listing

Australian Stock Exchange codes: BOD (ordinary shares) BODO (options)

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ABN 35 088 221 078

AI assistant

Anteris Technologies Global Corp. — Annual Report 2007

33869_rns_2007-09-27_1c0cccc3-db64-44cf-bc7f-b95b0ee000a6.pdf

‘ 07

Contents

Chairman’s Letter

Dear Shareholder,

Financial Results

Company Highlights

Project Highlights

Celxcel

CSIRO

Injection Therapy Products

Review of Operations

Review of Operations

Introduction

3. Cardiovascular

4. Orthopaedics

1. Abdominal

2. Heart Valves

5. Plastic Surgery

Review of Operations (continued)

Clinical Studies

Pre-clinical Trials

The Results

Conclusion

Purpose

The Results

Conclusion

Review of Operations (continued)

3. Comparative Patch Study

Purpose

The Results

ADAPT Tissue Engineered Patch

Commercially Available Patch A:

Commercially Available Patch B:

Conclusion

Review of Operations (continued)

Human Clinical Trial

Ongoing R&D

Regulatory

Quality Assurance

Review of Operations (continued)

Regulatory (continued)

Intellectual Property Report

Patents

Trademark Protection

Corporate Review

Corporate Review

Cash

Changes To Capital Structure

Summary

Corporate Review (continued)

Robert N. Scott – Non-Executive Chairman

Michael C. Bennett – Managing Director

Robert E. T. Towner – Executive Director

Caroline L. Bentley – Company Secretary

Corporate Governance Statement

Structure and Role of the Board of Directors

Corporate Governance Statement (continued)

Board Committees

Ethical and Responsible Decision Making

Safeguard Integrity of Financial Reporting

Corporate Governance Statement (continued)

Timely and Balanced Disclosure

Communications with Shareholders

Recognise and Manage Risk

Performance Enhancement

Remuneration

Interests of Stakeholders

Directors’ Report

Directors’ Report

Directors

Principal Activities

Operating Results

Dividends

Review of Operations

Matters Subsequent To The End of The Financial Year

Environmental Regulations

Directors’ Report (continued)

Anteris Technologies Global Corp. Annual Report 2007