DIMERIX LIMITED — Annual Report 2008

Aug 28, 2008

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

1. Details of the reporting period

	Reporting period	Previous corresponding period	Previous corresponding period	Previous corresponding period	Previous corresponding period
	30 June 2008		30 June 2007
2.	Results for announcement to the market
							$
2.1	Revenues from ordinary activities		up	17%	to		798,440
2.2	Loss from ordinary activities before income tax		up	47%	to	(3,557,390)
2.3	Net loss attributable to members of the parent		up	47%	To	(3,557,390)
	entity
2.4	Dividends/Distributions
	No dividends declared in current or	prior year
2.5	Record date for determining entitlements to			N/A
	dividends
2.6	Refer point 14 below for explanation of figures		in 2.1 to 2.4 above

3. Statement of Financial Performance

Refer attached financial statements.

4. Statement of Financial Position

Refer attached financial statements.

5. Statement of Cash Flows

Refer attached financial statements.

6. Details of dividends or distributions

N/A

7. Details of dividend reinvestment plan

N/A

8. Statement of Retained Earnings

Refer attached financial statements.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

9. Net tangible assets per security

	2008	2007
Net tangible assets per ordinary share	(0.002)	(0.010)

10. Details of entities over which control has been gained or lost during the period

N/A

11. Details of associates and joint venture entities

N/A

12. Other significant information

Refer point 14 below .

13. Accounting standards used by foreign entities

N/A

14. Commentary on results and explanatory information

The consolidated loss for the 12 month period ended 30 June 2008 was $3,557,390 compared to a loss of $2,421,660 for the previous 12 months ended 30 June 2007.

The loss of $3,557,390 was split between the Australian based legal operating entity of $2,554,020 and the loss incurred in the US based drug screening segment of $1,003,370. Revenues from the drug screening segment comprised $755,562 or 95% of total revenues from continuing operations for the year.

Although the consolidated entity’s divisions are managed on a global basis they operate in two main geographical areas:

• Australia – the home country of the parent entity and the principal location of management and the financing of the operations; and

• United States – comprises operations for the manufacture and development of the company’s products.

The major component of the loss is the amortisation and impairment of the Sun Biomedical Laboratories intellectual property and patents of $1,542,292 which includes a write down of $1,000,000 in the carrying value of the patents covering the VisuaLine and OraLine products. This is discussed in further detail below.

The accounting policies, estimation methods and measurement bases used in this Appendix 4E are the same as those used in the last annual report and the last half-year report.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

Some of the key features of the year ended 30 June 2008 include:

• The appointment of Jack Kerins as chief executive of Sun Biomedical Laboratories, Inc. ( SBL );

• The rationalization of Sun Biomedical Limited’s ( SBN or the Company ) cost structure by focusing on the Company’s operations in the United States. This involved the resignation of senior management in Australia and a reduction in operating costs of approximately $500,000 per annum. This is reflected in lower level of cash operating expenses in the second half of the year of $1,222,439 compared to $1,631,194 in the first half of the year;

• The execution of a joint venture agreement with Shanghai SiYi Biotechnology Co. Limited, a China based company, for the assembly and sale of OraLine products for use by the Ministry of Public Security and future non-governmental Chinese customers;

• The signing of an agreement with BioScreens, Inc. to develop a quality, low cost urine testing cup;

• Sales to the Mexican government for the use in a pilot testing program for the proposed implementation of drug testing in schools;

• The execution of an exclusive marketing and distribution agreement with MediNat for the supply of OraLine in Russia;

• The completion of successful capital raisings in August 2007, December 2007 and January 2008 through which the Company raised a total of $3,496,418 (before issue costs of $508,098);

• In March 2008, the Company entered into a deed of settlement in relation to the claim against Avitar Technologies, Inc. Although no cash consideration was involved under the settlement, the Directors believe that the outcome of this settlement was positive for the Company as, under the terms of the settlement, Avitar acknowledged the validity of the Company’s patents;

• The restructure of the amount owing to Dr Ming and Alice Sun, the founders of SBL, in relation to the payment of US$980,000 as final consideration for the acquisition SBL in August 2006. This is discussed in further detail below; and

• On 26 June 2008 the Company advised that it had lodged a prospectus with ASIC to raise a minimum amount of $2,000,000 by way of an underwritten Renounceable Rights Issue of four New Ordinary Shares for every five Shares held at a price of $0.01 plus one free attaching Option for every two New Ordinary Shares subscribed for. The Rights Issue was completed and securities were allotted on 14 August 2008. In addition, the

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

company has raised an additional $644,748 via the placement of Shortfall Securities bringing the total raising to $2.645m.

The table below summarizes the application of the monies raised:

Sources of funds	$m
Rights Issue Shortfall Placement	2.000 0.645
Conversion of Ming Sun promissory note in ordinary shares1 Cash on hand at 31 July 2008	2.645 0.550 0.070
Total sources	3.265
Applications of funds
Fees payable to underwriters including amounts payable to sub underwriters and broker placements Capital raising costs (including legal, accounting, ASX, registry) Repayment of Ming Sun promissory note (including equity conversion)1	0.226 0.144 1.114
Total applications	1.484
Net cash available to fund business initiatives & working capital	1.781

Note 1: Assumes AUD/USD exchange rate of 0.88

Agreement with Ming and Alice Sun

In June 2008, the Company reached an agreement with Dr Ming and Alice Sun, the founders of SBL, in relation to payment of US$980,000 as final consideration for the acquisition of SBL. The Suns agreed to:

• (a) convert US$490,000 into Shares at $0.01 per Share, the same issue price as under the Rights Issue ;

• (b) be issued with Options on the basis of one Option for every two Shares issued to the Suns under paragraph (a) above, the same ratio as offered under the Rights Issue; and

• (c) receive a US$490,000 payment following the Rights Issue,

as settlement for the payment of US$980,000.

The conversion under paragraph (a) and the issue of options under paragraph (b) occurred on 25 August 2008. The payment of USD $490,000 will be made shortly.

An update on the current status of the Company’s key sales initiatives is attached as Attachment 1 to this report. We note that many of the discussions that the Company is having with its current and potential customers are commercial in confidence and hence details cannot be disclosed until a firm agreement or outcome has been achieved.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

Impairment of Intangibles

The loss for the year includes a write down of $1,000,000 in the carrying value of the patents covering the VisuaLine and OraLine products following a value in use valuation. This has arisen as a result of the following:

• The value in use model incorporates cash flows for a period of five years as per the accounting standards. In a growth business such as SBN, forecast cash flows anticipated in the years 6 and 7 have a significant impact on the value of the business but are excluded from the calculations. We note that the patents are registered for a period of 20 years from the filing date as shown in the table below:

Patent no.	Description	Filing date
6,046,058	Colour Coded Test Strip	November 1998
5,962,336	Multi-Test Panels	October 1997
6,372,516	Lateral Flow Devices	September 2000
7,041,253	Sample Collection and Test Device	July 2003
7,300,627	Test Sample Collection System	July 2002

• The lack of price competitiveness of the VisuaLine product and the reduction in product sales that have arisen from this. The original cost of the patents included the VisuaLine and OraLine patents. This year, SBN has focused almost exclusively on promoting OraLine sales as this is where it believes the greatest growth potential exists; and

• The Accounting Standards require that future cash flows from business initiatives which are still to be finalised, should not be included in forecasts for the purposes of impairment testing. In order to comply with these Standards, the Company has excluded a number of key sales initiatives from its forecasts, such as China and Mexico, as the realisation of these opportunities is still dependent upon the attainment of certain governmental approvals. The status of these approvals is outlined in Attachment 1. Consequently, SBN does not believe that the write down in the value of the patents is either an accurate reflection of the future profitability of the business nor does it represent a valuation of the Company.

Top 20 Shareholders

A list of the top 20 shareholders in the Company as at 27 August 2008 is also announced with this report. The Company will publish this list on a monthly basis in order to provide shareholders with the opportunity to see movements in major shareholders’ accounts.

15. Audit

The report is based on accounts which are currently being audited.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

ATTACHMENT 1- UPDATE ON STATUS OF CURRENT KEY SALES INITIATIVES

Opportunity	Distribution Partner	Distribution Agreement Signed?	Sales Commenced?	Current Status
1. Sales of Oraline to Chinese Ministry of Public Security (MPS)	Shanghai Si Yi Biotechnology Co. Ltd	Yes	No	MPS and SBL are in the process of finalising the results of the MPS product evaluation. A final decision is still expected in October 2008 prior to commencing field trials. .
2. Development of new urine testing cup	BioScreens, Inc.	Yes	No	Cup and mould production is proceeding on schedule and cup delivery is still expected in December.
3. VisuaLine relaunch	N/A	N/A	No	Project is progressing in conjunction with the BioScreens initiative. No change to status.
4. Development of OraLine VIII	Sales to be made through existing Oraline distribution network	N/A	No	Specifications for OraLine VIII housing have been finalised and drawings for use by the plastic mould manufacturers are being prepared. The product launch is now expected to occur at the Medica Show in November 2008 rather than October 2008.
5. Drug testing in Mexican schools	Express Diagnostics	No	Small number of units for test program	Discussions are continuing with Mexican authorities regarding import approval certification. Mexican authorities have approved extended testing within schools but have not as yet appointed a preferred provider.
6. Sales of OraLine in Russia	MediNat	Yes	No	Russian registration for point of care and over the counter sales has been obtained.
7. Australian workplace drug testing	CMM	Yes	Yes	SBL is working with CMM on determining the required changes to OraLine in order to comply with Australian Standardsto broaden therange ofpotentialcustomers.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

Opportunity	Distribution Partner	Distribution Agreement Signed?	Sales Commenced?	Current Status
8. Expansion of US distribution network	Various	Yes	Yes	A sales manager has been recruited and work continues on growing the US distributor network.
9. Marketing and distribution of drug residue testing product (ProbeLine)	Paradigm Visions Inc.	No	No	SBL is working on the assembly of 2,000 test kits for market testing in September 2008. A final determination on the potential of the product will be made at the conclusion of this campaign.

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

CONSOLIDATED INCOME STATEMENT

Revenue from continuing operations -refer Note 1 below Other income -refer Note 2 Expenses -refer Note 3 Finance costs -refer Note 4 below Profit(Loss) before income tax Income tax expense Profit(Loss) for the period from continuing operations Profit(Loss) for the year Profit(loss) for the period attributable to members Basic Earnings Per Share Diluted Earnings Per Share	2008 A$'000	2007 A$'000
	798,440 147,176 (4,503,006) -	679,832 115,051 (3,160,489) (56,054)
	(3,557,390) -	(2,421,660) -
	(3,557,390)	(2,421,660)
	(3,557,390)	(2,421,660)
	(3,557,390)	(2,421,660)

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

NOTES TO THE CONSOLIDATED INCOME STATEMENT

Note 1

Revenue from continuing operations

Revenue from Sales Interest Revenue Other Revenue Note 2 Other income Unrealised foreign exchange gain Note 3 Expenses Operating expenses Employee expenses Raw materials and consumables used Consulting fees Legal fees Administration expenses Travel and accommodation Insurance Advertising and marketing expense Loss on disposal of investment Development expense - ShockRounds Development expense - Sun Biomedical Other Total operating expenses Non cash items Equity based payments Impairment write down Depreciation and amortisation expense (including intangibles)	2008 A$'000	2007 A$'000
	755,562 41,483 1,395	655,992 23,839 1
	798,440	679,832
	2008 A$'000	2007 A$'000
	995,777 314,815 189,360 237,182 883,723 121,881 44,770 60,229 5,896 - - -	1,202,834 109,773 65,283 - 460,870 98,313 19,342 334,117 3,765 115,287 17,471 3,056
	2,853,633 102,783 1,000,000 546,590	2,430,111 248,926 - 481,452
	4,503,006	3,160,489

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

Note 4

Individually Significant Items

Finance costs	2008 A$'000	2007 A$'000
	-	56,054
	-	56,054

Note 5 Amortisation and Impairment Expenses

Amortisation of intangibles Total amortisation of intangibles Impairment of other intangibles Total impairment write-downs	Consolidated - Current period	Consolidated - Current period	Consolidated - Current period	Consolidated - Current period
	Before tax A$'000	Related tax A$'000	Related outside equity interests A$'000	Amount (after tax) attributable to members A$'000
	542,292	-	-	542,292
	542,292	-	-	542,292
	1,000,000 1,000,000	- -	- -	1,000,000 1,000,000

Note 6 Comparison of Half-Year Profits

Note 6 Comparison of Half-Year Profits
Consolidated profit(loss) after tax attributable to members reported for the 1st half yearly report Consolidated profit(loss) after tax attributable to members for the 2nd half year	2008 A$'000	2007 A$'000
	(1,543,017)	(1,349,873)
	(2,014,373)	(1,071,787)

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

CONSOLIDATED BALANCE SHEET

Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Borrowings Promissory note Total Current Liabilities Non-Current Liabilities Promissory note Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Contributed equity Reserves Accumulated losses Total Equity	2008 A$'000	2007 A$'000
	118,224 119,134 210,096	446,334 200,959 83,110
	447,454	730,403
	16,988 1,832,409	17,010 3,324,116
	1,849,397	3,341,126
	2,296,851	4,071,529
	422,371 - 1,018,076	546,663 478,310 472,981
	1,440,447	1,497,954
	-	1,158,803
	-	1,158,803
	1,440,447	2,656,757
	856,404	1,414,772
	24,331,668 28,398 (23,503,662)	21,300,481 240,238 (20,125,947)
	856,404	1,414,772

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

NOTES TO THE CONSOLIDATED BALANCE SHEET

Consolidated Retained Earnings

Accumulated losses at the beginning of the financial period Tranfers to/(from) reserves Net profit (loss) attributable to members Retained Earnings at the end of the financial period	Current Period A$'000	Previous corresponding period A$'000
	(20,125,946) 179,675 (3,557,390)	(18,316,123) 611,837 (2,421,660)
	(23,503,661)	(20,125,946)

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

CONSOLIDATED CASH FLOW STATEMENT

Cash flows related to operating activities Receipts from customers Payments to suppliers and employees Interest and other items of a similar nature received Interest and other costs of finance paid Other Net operating cash flows Cash flows related to investing activities Proceeds from sale of investments Payments for purchases of property, plant and equipment Payment for acquisition of Sun Biomedical Laboratories Inc. acquisition Payment for equity investments Net investing cash flows Cash flows related to financing activities Proceeds from issues of shares Proceeds from/(Repayment) of borrowings Share issue costs Net financing cash flows Net increase (decrease) in cash held Cash at beginning of period -refer note below Exchange rate adjustments to cash at beginning of period Cash at end of period -refer note below	2008 A$'000	2007 A$'000
	822,882 (3,206,309) 41,483 - 1,395	620,341 (2,244,868) 23,838 (56,054) 1
	(2,340,549) - 30,000 (60,758) (466,813) -	(1,656,742) 41,897 - (390,853) (48,155)
	(497,571)	(397,111)
	3,496,418 (478,310) (508,098)	945,500 478,310 (46,721)
	2,510,010	1,377,089
	(328,110) 446,334 -	(676,764) 1,124,217 (1,119)
	118,224	446,334

NOTES TO THE CONDENSED CONSOLIDATED CASH FLOW STATEMENT Reconciliation of Cash 2008 A$'000 2007 A$'000 Cash on hand and at bank 118,224 446,334 Total cash at end of period 118,224 446,334	NOTES TO THE CONDENSED CONSOLIDATED CASH FLOW STATEMENT Reconciliation of Cash 2008 A$'000 2007 A$'000 Cash on hand and at bank 118,224 446,334 Total cash at end of period 118,224 446,334	NOTES TO THE CONDENSED CONSOLIDATED CASH FLOW STATEMENT Reconciliation of Cash 2008 A$'000 2007 A$'000 Cash on hand and at bank 118,224 446,334 Total cash at end of period 118,224 446,334
	2008 A$'000	2007 A$'000
	118,224	446,334
	118,224	446,334

SUN BIOMEDICAL LIMITED ABN 18 001 285 230 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2008

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 1 July 2006 Shares issued during the year Transaction costs Cost of share based payments Transfer to (from) reserves Foreign currency translation reserve differences Total income and expense for the year recognised directly in equity Loss for the year As at 1 July 2007 Shares issued during the year Transaction costs Cost of share based payments Transfer to (from) reserves Foreign currency translation reserve differences Total income and expense for the year recognised directly in equity Loss for the year As at 30 June 2008	Issued capital	Accumulated Losses	Share Based Payment Reserve	Foreign Currency Translation Reserve	TOTAL EQUITY
	20,243,702 1,103,500 (46,721)	(18,316,123) - - - 611,837 -	765,123 - - 90,927 (611,837) -	1,779 - - - - (5,753)	2,694,481 1,103,500 (46,721) 90,927 - (5,753)
		611,837	(520,910)	(5,753)	1,141,953
		(2,421,661)	-	-	(2,421,661)
	21,300,481 3,539,285 (508,098)	(20,125,947) - - 179,675 -	244,213 - - 53,854 (179,675) -	(3,974) - - - (86,019)	1,414,772 3,539,285 (508,098) 53,854 - (86,019)
		179,675	(125,821)	(86,019)	2,999,022
		(3,557,390)	-	-	(3,557,390)
	24,331,668	(23,503,662)	118,392	(89,993)	856,404