RAIDEN RESOURCES LIMITED — Annual Report 2006

Sep 12, 2006

13 September 2006

Company Announcement Office Australian Stock exchange Sydney NSW 2000

Preliminary Final Report for the year ended 30 June 2006 (ASX:MDM)

In accordance with listing Rule4.3A, attached is the Preliminary Final Report (Appendix 4E) for the year end 30 June 2006.

Over the past twelve months the Directors have reduced company share registry and other regulatory costs, consolidated sales of monitoring products and services and sought new income producing opportunities to increase shareholder value.

Key Milestones Achieved

• Revenue from ordinary activities up by $153\%$
• Net losses for the period down by $53\%$
• Increased sales of ECG monitoring devices to the USA
• Share Capital reconstruction completed
• Small shareholder buy-back program completed
• Private Placement of Shares to raise working capital
• Progress of international business into a NASDAQ OTC listing in the USA
• Signing of Option to Purchase 'over50s health and lifestyle villages' to provide new income producing assets

Dr Allan Shell Managing Director

Medical Monitors Limited Suite 407 Westfield Eastgardens Eastgardens NSW 2036 Tel (02) 9344 8100 Fax (02) 9344 8200

MEDICAL MONITORS LIMITED

ACN 009 161 522

APPENDIX 4E

FOR THE YEAR ENDED 30 JUNE 2006

MEDICAL MONITORS LIMITED ACN 009 161 522 FINANCIAL REPORT

30 JUNE 2006

CONTENTS

Announcement to the Market
Income Statement	3
Balance Sheet	4
Statement of Changes in Equity	5
Statement of Cash Flows	6
Notes To the Financial Statements	7

CORPORATE DETAILS

Directors:	Dr Allan Shell (Chairman & Managing Director) Mr Neville Buch Mr John Genner Mr Boris Patkin Mr Harry Platt
Company Secretary:	Richard Hyman
Registered Office:	Suite 407 Office Tower Westfield Eastgardens 152 Bunnerong Road FASTGARDENS NSW 2036
Administration Office:	Suite 407 Office Tower Westfield Eastgardens 152 Bunnerong Road FASTGARDENS NSW 2036
Share Registry:	Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace PERTH WA 6000
Auditors:	Sneddon McKeown Level 2 175 Scott Street NEWCASTLE NSW 2300

APPENDIX 4E PRELIMINARY FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2006

				\$A
Revenues from ordinary activities	up	153%	to	1,319,660
Loss from ordinary activities after tax attributable to members	down	53%	to	(1,816,111)
Loss from extraordinary items after tax attributable to members				NIL
Net Loss for the period attributable to members	down	53%	to	(1,816,111)

Dividends (distributions)	Amt per Security	Franked amount per Security
Interim dividend	NIL	NIL
Previous corresponding period	NIL	NIL
Record date for determining entitlements to the dividend	N/A	N/A

Brief explanation of any of the figures reported above and short details of any bonus or cash issue or other item(s) of importance not previously released to the market:

The Company achieved a significant improvement in revenues for the year (up by 153% to \$1,319,060) due in particular to the growth of business generated in the USA, through the international distributor Primedical international.

A number of milestones highlighted in last years report have already been achieved, namely:

• the establishment of the iCardia Healthcare monitoring service in Chicago by Primedical

• the manufacture and sale of more that 20,000 new ECG monitors (the suPER) by Medical Monitors to iCardia.

Though Primedical had anticipated an AIM listing to be completed before June 2006, this was revised by the Directors to be a more beneficial NASDAQ OTC listing, which is now proceeding into its final US securities registration phase. This is expected to provide considerable upside for the company, through funding opportunities in the USA for its business going forward, as well as providing a significant equity position for Medical Monitors which will have an initial 30% shareholding in the new NASDAQ OTC listed entity.

iCardia, the wholly owned subsidiary of Primedical, is already achieving growth milestones in the USA that will provide a growing revenue stream for the new entity. Most importantly, the shareholders of Medical Monitors will enjoy asset growth in the USA, through its shareholding, once the new entity is listed. The Directors believe that the company will achieve an increasing share of the lucrative US medical monitoring market over the coming year.

As recently announced to the market, Medical Monitors is completing the first of a number of income related property purchases - in the niche market of health and lifestyle villages for the over 50s. This will further consolidate the tangible assets of the company, as well as increase revenues through the associated commercial rental returns.

APPENDIX 4E PRELIMINARY FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2006

Brief explanation of any of the figures reported above and short details of any bonus or cash issue or other item(s) of importance not previously released to the market (continued):

Revenues and Expenses

Overall expenses were reduced over the year as anticipated, with further reductions expected as the company consolidates its R&D effort. The ongoing technical support for the overseas entity will be further compensated through contractual arrangements which are currently under discussion. Manufacture of new devices will eventually go offshore with the resultant reduction in costs.

Medical Monitors should continue to benefit from EMDG and State and Regional Development grants due to its channel to market in the USA, as well as other export opportunities. Eligible Australian Government R&D grants will also be sort for anticipated monitoring packages to be considered for the company's new 'over 50s' villages program.

Private Placement and other Shareholder Activities

Since the 2005 AGM, the company was given shareholder approved for a share capital consolidation (of 5:1) in February 2006, and a subsequent reduction in the number of small shareholders through a small shareholders buy back scheme - subject to Article 26 of the Company's constitution. The Company has now consolidated its registry base to approximately 1200 shareholders, and 64.3 million shares on issue.

A Private Placement of 4.0 million Shares was also competed in June 2006, and provided for additional working capital funding of \$800, 000. At a recent EGM, shareholders approved a further 25 million shares be made available over the next three months to assist in the purchase of other 'over 50s' health and lifestyle villages.

Importantly, these transactions confirm shareholder and stock market support for the Company's current and anticipated activities. The Directors continue to assess the business opportunities for the Company's unique technologies, and look forward to the anticipated growth in the new property venture in Australia.

As at the date of this announcement the financial accounts of Medical Monitors Limited are in the process of being audited. The accounts will be qualified to the extent of inherent uncertainty for the entity continuing as a going concern.

CONSOLIDATION INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2006

		Consolidated
		2006	2005
	Note	\$	\$
Revenue from sale of goods		762,528	253,956
Revenue from rendering of services		135,214	157,055
Other revenues from ordinary activities		421,918	109,832
Total revenue from ordinary activities		1,319,660	520,843
Borrowing costs		140,918	132,530
Changes in inventories of finished goods		379,206	131,623
Consulting expenses		1,016,515	1,082,086
Corporate Expenses		277,212	482,652
Depreciation and amortisation		146,113	373,077
Foreign currency loss		20,173	4,364
International Marketing expenses		77,878	244,348
Other expenses from ordinary activities		296,284	325,694
Provision for write-down in prepayments			319,887
Provisions for write-down of intangibles			253,224
Provisions for write-down of Inventory		254,144	131,442
Provisions for write-down of receivables from other entities			131,119
Rent expenses		73,400	112,780
Staff expenses		453,928	648,831
Loss from ordinary activities before income tax expense		(1,816,111)	(3,852,814)
Income tax benefit relating to ordinary activities
		(1.816.111)	(3,852,814)
Non-owner transaction changes in equity
Total changes in equity		(1,816,111)	(3,852,814)
Earnings Per Share (cents per share)
Basic EPS	16	(3.0)	(7.7)
Diluted EPS - not materially different to basic EPS

The accompanying notes form part of these financial statements.

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2006

		Consolidated
		2006	2005
	Note	\$	\$
CURRENT ASSETS Cash and cash equivalents	3	78,399	216,432
Receivables	4	1,209,129	579,332
Inventories	5	19,246	232,886
Other current assets	6	26,376	171,323
TOTAL CURRENT ASSETS		1,333,150	1,199,973
NON-CURRENT ASSETS
Property, plant & equipment	7	375,507	219,751
Intangibles	8	5,204,587	5,204,587
Other financial assets	9	2,830	2,830
TOTAL NON-CURRENT ASSETS		5,582,924	5,427,168
TOTAL ASSETS		6,916,074	6,627,141
CURRENT LIABILITIES
Payables	11	1,272,871	1,096,458
Interest bearing liabilities	12	482,227	698,132
Provisions	13	62,598	75,571
TOTAL CURRENT LIABILITIES		1,817,696	1,870,161
NON-CURRENT LIABILITIES
Interest Bearing Liabilities	12	2,038,925	906,918
TOTAL NON-CURRENT LIABILITIES		2,038,925	906,918
TOTAL LIABILITIES		3,856,621	2,777,079
NET ASSETS		3,059,453	3,850,062
EQUITY
Contributed Equity		35,786,633	34,761,131
Reserves		493,152	493,152
Accumulated losses		(33, 220, 332)	(31, 404, 221)
TOTAL EQUITY		3,059,453	3,850,062

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2006

	Share Capital \$	Reserves \$	Accumulated Losses \$	Total \$
BALANCE AT 1 JULY 2004	32,574,548	493,152	(27, 551, 407)	5,516,293
Contributions of equity net of transaction costs	2,186,583			2,186,583
Profit attributable to members of the parent entity			(3,852,814)	(3,852,814)
BALANCE AT 30 JUNE 2005	34,761,131	493,152	(31, 404, 221)	3,850,062
Contributions of equity net of transaction costs	1,025,502			1,025,502
Profit attributable to members of the parent entity			(1,816,111)	(1,816,111)
BALANCE AT 30 JUNE 2006	35,786,633	493,152	(33, 220, 332)	3,059,453

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2006

	Consolidated
		2006	2005
	Note	\$	\$
Cash Flows from Operating Activities
Cash payments in the course of operations		(2,458,504)	(3, 144, 013)
Cash receipts in the course of operations		819,894	553,009
Interest received		1,759	29,856
Interest Paid		(140, 918)	(132, 530)
Net Cash Used in Operating Activities	15	(1,777,769)	(2,693,678)
Cash Flows from Investing Activities
Payments for plant and equipment		(301, 868)	(112,967)
Proceeds from plant and equipment sold			24,335
Research & Development Grant			267,099
Refund of security deposits			150,308
Net Cash provided by Investing Activities		(301, 868)	328,775
Cash Flows from Financing Activities
Proceeds from share issue net of transaction costs		1,025,502	2,186,583
Borrowings - secured		(109, 246)	(21, 668)
Borrowings - unsecured		1,162,290	153,832
Repayment of Borrowings		(136, 942)	(79, 212)
Net Cash Provided by Financing Activities		1,941,604	2,239,535
Net Increase (Decrease) in Cash Held		(138,033)	(125, 368)
Cash at the Beginning of the Financial Year		216,432	341,800
Cash at the End of the Financial Year	15	78,399	216,432

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board1 and the Corporations Act 2001.

The financial report covers the economic entity of Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity. Medical Monitors Limited is a listed public company, incorporated and domiciled in Australia.

The financial report of Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity comply with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

$(a)$ Basis of preparation

First-time Adoption of Australian Equivalents to International Financial Reporting Standards

Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity have prepared financial statements in accordance with the Australian equivalents to International Financial Reporting Standards (AIFRS) from 1 July 2005.

In accordance with the requirements of AASB 1: First-time Adoption of Australian Equivalents to International Financial Reporting Standards, adjustments to the parent entity and consolidated entity accounts resulting from the introduction of AIFRS have been applied retrospectively to 2005 comparative figures excluding cases where optional exemptions available under AASB 1 have been applied. These consolidated accounts are the first financial statements of Medical Monitors Limited to be prepared in accordance with Australian equivalents to IFRS.

The accounting policies set out below have been consistently applied to all years presented.

Reconciliations of the transition from previous Australian GAAP to AIFRS have been included in Note 2 to this report.

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Going concern

The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The consolidated entity incurred an operating loss of approximately \$1.82 million during the year ended 30 June 2006, which was 53% less than for 2005, and included a depreciation and amortisation charge of \$146K.

The Directors nevertheless believe that it is appropriate to prepare the financial statements on a Going Concern basis for the following reasons:

• As recently announced, the company has signed a deed of sale for the transfer of relevant Intellectual Property to Global Immune Technologies Incorporated (to be renamed Primedical International Incorporated), which is a listed NASDAQ OTC company. This sale is subject to shareholder approval at a forthcoming General Meeting of Shareholders. The final consideration for this sale will further consolidate an equity position of an approximate 30% stake in the newly formed Primedical International Incorporated. Primedical itself proposes to raise additional capital in the form of equity and debt that will be used to fund the expansion of the international business.
• The company is also seeking to licence its Australian monitoring service and has been in discussion with an established diagnostic company, for the exclusive Australian distribution of the company's medical monitoring technology. The company anticipates it will receive a licensing fee of approximately \$500,000, and a royalty of 5% of sales, for the distribution of its technology and services to GP's and specialist's clinics.
• The Company has announced that it has taken up its first "option to purchase" a health and lifestyle village for the over 50's in Queensland. This provides a tangible asset and rental income of \$525,000 per year. The rental income increases annually by CPI, as well as market review adjustments every 3 years. Further, an exclusive option has been signed, to acquire additional villages. The Company intends to complete a minimum of 2 additional purchases by the end of 2006, thereby increasing the nett revenue by a further \$500,000 per annum and increasing its asset base.
• As previously announced, the company intends to convert approximately 80% of its debts to equity. This is subject to shareholders approval.
• The company believes that it has sufficient working capital facilities available to enable it to meet its debts as an when they fall due. A 'line of credit' facility (\$1,000,000) was established by the company with Director Dr A. Shell. As at 30 June 2006 the draw down on this facility was nil.

The consolidated entity's ability to generate positive net cash flow in the twelve months from the date of this report is dependent on a number of factors which include its ability to finalise the proposed Primedical transaction, and the continued supply of monitoring devices from the manufacturer on a timely basis.

The directors believe that the company has sufficient working capital arrangements in place to be able to achieve its objectives as contemplated in its business plan.

If the Company is unable to successfully develop the business as contemplated in the business plan, alternative strategies may be employed to secure alternate distribution arrangements, either raise additional capital or debt funding, or reduce expenditure through a scale back of the international marketing initiatives.

In the event that the Company does not meet its planned revenue and cashflow targets, or successfully adopts alternative strategies, the Company may not be able to realise its assets, including intangible assets, and extinguish its liabilities in the normal course of business at the amounts stated in the financial report. Accordingly, the going concern basis used in the preparation of the financial report would not be appropriate.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(b)$ Principles of consolidation

Controlled entities

The financial statements of controlled entities are included from the date control commences until the date control ceases. Outside interests in the equity and results of the entities that are controlled by the Company are shown as a separate item in the consolidated financial statements. Unrealised gains and losses and interentity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Associated entities

Associates are those entities, other than partnerships, over which the consolidated entity exercises significant influence and which are not intended for sale in the near future.

In the consolidated financial statements, investments in associates are accounted for using the equity accounting principles. Investments in the associates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of financial performance form the date significant influence commences until the date significant influence ceases. Other movements in reserves are recognised directly in consolidated reserves.

Revenue Recognition $(c)$

Revenues are recognised at fair value of the consideration received net of the amounts of goods and services tax

Revenue from rendering of services

Revenue from rendering of monitoring and diagnostic services is recognised in proportion to the stage of completion of the contract when the stage of the contract can be reliably measured.

Sale of Goods

Revenue from the sale of goods (net of returns, discounts and allowances) is recognised when the consolidated entity has passed control of the goods or other assets to the customer.

Interest Revenue

Interest revenue is recognised as it accrues.

Sale of Non-Current Assets

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(d)$ Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax ("GST"), except where the amount of GST incurred is not recoverable from the Australian Taxation Office ("ATO"). In these circumstances GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Items are included in the Statement of Cash Flows are disclosed on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Foreign Currency $(e)$

Functional and presentation currency

The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
• income and expenses are translated at average exchange rates for the period; and
• retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(f)$ Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Acquisitions of assets $(g)$

All assets acquired including property, plant and equipment and intangibles other than goodwill are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent off proceeds received, otherwise expensed

Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their preset value, discounted at the rate applicable to the company if a similar borrowing were obtained from an independent financier under comparable terms and conditions.

The costs of assets constructed or internally generated by the consolidated entity, other than goodwill, include the cost of materials and direct labour. Directly attributable overheads, and other incidental cost, are also capitalised to the asset.

Expenditure including that on internally generated assets is only recognised as an asset when the entity controls future economic benefits as a result of the costs incurred, it is probable that those future economic benefits will eventuate, and the costs can be measured reliably. Costs attributable to feasibility and alternative approach assessments are expensed as incurred.

Research and development costs

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions of assets (continued) $(q)$

Subsequent additional costs

Costs incurred on assets subsequent to initial recognition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the consolidated entity in future years. Costs that do not meet the criteria for capitalisation are expensed as incurred.

$(h)$ Receivables

Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts. The ability to recover amounts owed to the company are regularly assessed and specific provisions are made if required.

$(i)$ Inventories

Inventories are carried at the lower of cost and net realisable value. Cost includes direct materials, direct labour, other direct viable costs and allocated production overheads necessary to bring inventories to their present location and condition, based on normal operating capacity of the production facilities.

Net realisable value

Net realisable value is determined in the basis of each inventory line's normal selling pattern. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value.

$(i)$ Investments in associates

Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognised group's share of post-acquisition reserves of its associates.

$(k)$ Leased assets

Leases under which the company or its controlled entity assume substantiality all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Finance leases

Finance leases are capitalised. A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease.

Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals are expensed as incurred.

Operating leases

Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(1)$ Intangibles

Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Patents and trademarks

Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at cost less any accumulated amortisation and any impairment losses. Patents and trademarks are amortised over their useful life ranging from 15 to 20 years.

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

$(m)$ Property plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Property

Freehold land and buildings are shown at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

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 measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$(m)$ Property plant and equipment (continued)

Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation reserve in equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset's original cost is transferred from the revaluation reserve to retained earnings.

$(n)$ Depreciation and amortisation

Useful Lives

The depreciation and amortisation rates used for each class of each class of non-current asset in the current and prior year are as follows:

13-40%

Property, plant and equipment

$(o)$ Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

$(p)$ Payables

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and/or services.

$(q)$ Employee Entitlements

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of wages and salaries, annual leave, and other employee entitlements expected to be settled within 12 months, are measured at their nominal values.

Provisions made in respect of other employee entitlements which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Provisions $(r)$

A provision is recognised when a legal or constructive obligation exists as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability, except where noted below.

$(s)$ Capital Raising Costs

Costs incurred in relation to the proposed and foreseeable issue of share capital are capitalised as a current asset pending the issue of the shares to which they relate. On issue of these shares the balance of the capitalised share issue costs are recognised in contributed equity.

$(t)$ Employee share and option plans

Where shares or options are issued to employees as remuneration for past services, the difference between fair value of the shares or options issued and the consideration received, if any, from the employee is expensed. The fair value of these shares or options issued is recorded as contributed equity.

Other share or options issued to employees are recorded in contributed equity at the fair value of consideration received if any.

Transaction costs associated with issuing shares and options are recognised in equity subject to the extent of the proceeds received, otherwise expensed. Other administrative costs are expensed.

$(u)$ Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets at fair value through profit and loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the reguirements of AASB 139: Recognition and Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Held-to-maturity investments

These investments have fixed maturities, and it is the group's intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial instruments (continued) $(u)$

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Availablefor-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

$(v)$ Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Critical Accounting Estimates and Judgements

Estimates 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.

(a) Critical accounting estimates and assumptions

The entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, 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 discussed below.

(i) Estimated impairment of intangible assets

The Group tests annually whether intangible assets have suffered any impairment, in accordance with the accounting policy stated in Note 1 (o). No impairment has been recognised in respect of intangible assets for the year ended 30 June 2006.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006

		Previous GAAP \$	Economic Entity Adjustments on introduction of AIFRS \$	AIFRS \$
2	FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (AIFRS)
	Reconciliation of Equity at 1 July 2004
	CURRENT ASSETS
	Cash assets	341,800		341,800
	Receivables	187,407		187,407
	Inventories	390,557		390,557
	Other current assets	434,240		434,240
	TOTAL CURRENT ASSETS	1,354,004	$\overline{\phantom{a}}$	1,354,004
	NON-CURRENT ASSETS
	Property, plant & equipment	328,181		328,181
	Intangibles	5,204,591		5,204,591
	Capitalised research and development	696,334		696,334
	Other financial assets	153,138		153,138
	TOTAL NON-CURRENT ASSETS	6,382,244		6,382,244
	TOTAL ASSETS	7,736,248		7,736,248
	CURRENT LIABILITIES
	Payables	1,010,156		1,010,156
	Interest bearing liabilities	448,425		448,425
	Provisions	49,005		49,005
	TOTAL CURRENT LIABILITIES	1,507,586	$\overline{\phantom{a}}$	1,507,586
	NON-CURRENT LIABILITIES Interest bearing liabilities	712,369		712,369
	TOTAL NON-CURRENT LIABILITIES	712,369		712,369
	TOTAL LIABILITIES	2,219,955		2,219,955
	NET ASSETS	5,516,293		5,516,293
	EQUITY
	Contributed Equity	32,574,548		32,574,548
	Reserves	493,152		493,152
	Accumulated losses	(27, 551, 407)		(27, 551, 407)
	TOTAL EQUITY	5,516,293		5,516,293

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006

	Previous GAAP	Economic Entity Adjustments on introduction of AIFRS	AIFRS
2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (AIFRS) (CONTINUED)	\$	\$	\$
Reconciliation of Equity at 30 June 2005
CURRENT ASSETS
Cash assets	216,432		216,432
Receivables	579,332		579,332
Inventories Other current assets	232,886 171,323		232,886 171,323
TOTAL CURRENT ASSETS	1,199,973		1,199,973
NON-CURRENT ASSETS
Property, plant & equipment	219,751		219,751
Intangibles	4,084,695	1,119,892	5,204,587
Other financial assets	2,830		2,830
TOTAL NON-CURRENT ASSETS	4,307,276	1,119,892	5,427,168
TOTAL ASSETS	5,507,249	1,119,892	6,627,141
CURRENT LIABILITIES
Payables	1,096,458		1,096,458
Interest bearing liabilities	698,132		698,132
Provisions	75,571		75,571
TOTAL CURRENT LIABILITIES	1,870,161		1,870,161
NON-CURRENT LIABILITIES
Interest bearing liabilities	906,918	$\overline{\phantom{a}}$	906,918
TOTAL NON-CURRENT LIABILITIES	906,918		906,918
TOTAL LIABILITIES	2,777,079		2,777,079
NET ASSETS	2,730,170		3,850,062
EQUITY
Contributed Equity	34,761,131		34,761,131
Reserves	493,152		493,152
Accumulated losses	(32,524,113)	1,119,892	(31, 404, 221)
TOTAL EQUITY	2,730,170	1,119,892	3,850,062

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006

		Previous GAAP \$	Economic Entity Adjustments on introduction of AIFRS \$	AIFRS \$
2	FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (AIFRS) (CONTINUED)
	Reconciliation of Profit or Loss for 2005
	Revenue from ordinary activities	520,843		520,843
	Changes in inventories of finished goods	(263,065)		(263,065)
	Corporate Expenses	(482, 652)		(482, 652)
	Staff expenses	(648, 831)		(648, 831)
	Consulting expenses	(1,082,086)		(1,082,086)
	Rent expenses	(112,780)		(112,780)
	Borrowing costs	(132, 530)		(132, 530)
	Depreciation and amortisation	(1,492,969)	1,119,892	(373, 077)
	Foreign currency loss	(4,364)		(4, 364)
	Other expenses from ordinary activities	(325, 694)		(325, 694)
	Provisions for write-down of intangibles	(253, 224)		(253, 224)
	Provisions for write-down of receivables from other entities	(131, 119)		(131, 119)
	Provision for write-down in prepayments	(319, 887)		(319, 887)
	International Marketing expenses	(244, 348)		(244, 348)
	Loss from ordinary activities before income tax expense	(4,972,706)	1,119,892	(3,852,814)
	Income tax expense
	Net loss attributable to members of the parent entity	(4,972,706)	1,119,892	(3,852,814)

Notes to the reconciliations of equity and profit and loss at 1 July 2004, 30 June 2005

(a) Under AASB 3, intangibles are no longer amortised but subject to annual impairment testing. Goodwill amounting to \$526,932 previously amortised in the 2005 full financial year has been reversed in the income statement for the year ended 30 June 2005. Amortisation on Intellectual Property amounting to \$592,960
previously amortised in the 2005 full financial year has been reversed in the income statement for the year ended 30 June 2005. Total amortisation for the year ended 30 June 2005 is \$1,119,892.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

2006	2005
	\$
78,399	216,432
481,754	245,570
34,177	60,033
693,198	404,848
	(131, 119)
1,209,129	579,332
	210,359
158,783	115,777
(347, 394)	(93, 250)
19,246	232,886
26,376	171,323
26,376	171,323
299,134
283,630	286,249
(275, 349)	(237, 780)
	48,469
56,318	73,705
(25, 778)	(16, 433)
	57,272
470,394	470,394
	(356, 384)
	114,010
375,507	219,751
	\$ 207,857 8,281 30,540 (432, 842) 37,552

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

			Consolidated
			2006	2005
			\$	\$
	8 INTANGIBLES
	Intellectual property		5,929,600	5,929,600
	Less: provision for amortisation		(1,778,880)	(1,778,880)
			4,150,720	4,150,720
	Goodwill on consolidation		2,634,662	2,634,662
	Less: provision for amortisation		(1,580,795)	(1,580,795)
			1,053,867	1,053,867
			5,204,587	5,204,587
	OTHER FINANCIAL ASSETS
9
	Security deposits		2,830	2,830
			2,830	2,830
	10 CONTROLLED ENTITIES
		Country of Origin Incorporation	% Owned 2006	% Owned 2005
	Parent Entity:
	Medical Monitors Limited	Aust
	Subsidiaries of Medical Monitors Limited:
	Snowy Plains Pty Ltd	Aust	100	100
	Kalgoorlie Tailings Project Pty Ltd	Aust	100	100
	Heart Monitors Pty Ltd	Aust	100	100
	Wellness Monitoring Inc.	USA	100	100
	Medical Monitors (UK) Limited	UK	100	100
	E-Medicine Services Limited	UK	100	100
	Associates of Medical Monitors Limited:
	Medprì Limited	UK	29	42
	Care Medical Limited	UK	50	50

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

	Consolidated
	2006	2005
	\$	\$
11 PAYABLES
Trade creditors and accruals	1,272,871	1,012,138
Unearned Income		84,320
	1,272,871	1,096,458
12 INTEREST BEARING LIABILITIES
CURRENT Lease liability	47,231	121,552
Loans - secured		27,838
Government R&D start loan - unsecured	434,996	548,742
	482,227	698,132
NON-CURRENT
Lease liability Unsecured borrowing	14,276 2,024,649	44,059 862,859
	2,038,925	906,918
	2,521,152	1,605,050
13 PROVISIONS
CURRENT
Employee entitlements	62,598	75,571

14 RELATED PARTY TRANSACTIONS

1.During the financial year the company received invoices of \$165,660 for consultancy services in the normal course of business by Morgan Tomas Maxwell Pty Ltd, a company associated with Mr. H. Platt

1. During the financial year the company received invoices of \$171,400 for consultancy services in the normal course of business by Kaitek International Pty Ltd, a company associated with Dr. A. M. Shell.

2. Dr.A.M.Shell has established a \$1,000,000 line of credit facility for the company.

3. During the financial year the company received invoices of \$104,940 for consultancy services in the normal course of business by Patkin Investments Pty Ltd, a company associated with Mr. B. Patkin.

4. Mr. H.Platt & Dr. A.M.Shell have a direct interest in Healthcare Link Pty Ltd that is occasionally contracted to provide R & D tasks for the company.

6.During the financial year \$776,500 was loaned to the company by Dr.A.M.Shell.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

	Consolidated
	2006	2005
	\$	\$
15 CASH FLOW INFORMATION
(a) Reconciliation of Cash
Cash at bank and on hand	78,399	216,432
	78,399	216,432
(b) Reconciliation of loss from Operations after income tax to net cash used by ordinary activities.
Loss from ordinary activities
after income tax	(1,816,111)	(3,852,814)
Non-cash flows in profit from
ordinary activities
Amortisation/Depreciation of fixed assets	146,112	373,077
Provision for obsolescence	254,144
Amounts set aside to provisions Provision for write-off of research & development	(131, 119)	131,119
		253,224
Changes in assets and liabilities during
the financial year:
(Increase)/decrease in trade and other receivables	(498, 678)	(523, 044)
(Increase)/decrease in prepayments	144,947	262,917
(Increase)/decrease in inventories	(40, 504)	157,671
Increase/(decrease) in unearned income	(84, 320)	57,516
Increase/(decrease) in trade creditors	260,733	420,090
Increase/(decrease) in provision for employee benefits	(12, 973)	26,566
Net cash flows from operating activities	(1,777,769)	(2,693,678)
16 EARNINGS PER SHARE (EPS)
Basic earnings per share (cents per share)	(3.0)	(7.7)
Weighted average number of ordinary shares outstanding during the
used in the calculation of basic EPS	60,077,182	49,751,086

During February 2006, the entity consolidated it share capital on a 5 for 1 basis. To enable comparability, the comparitive information for weighted average number of shares has been restated on this basis.

17 NET TANGIBLE ASSET BACKING

Net tangible asset backing per ordinary security (cents per share)	(3.36)	(2.30)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006

Consolidated
2006	2005
S	S

18 CONTINGENT LIABILITIES

There were no contingent liabilities or contingent assets at the balance date.

19 SUBSEQUENT EVENTS

Private Placement

The Company received a further \$120,000 to complete the Private Placement, as announced to the ASX in May 2006. This resulted in a further allotment of shares, post 30 June, bringing the total of fully paid ordinary shares on issue to 64,358,956.

Brisbane Rivers Terrace

As previously announced, the Company is currently in the process of purchasing an over 50's retirement village, Brisbane Rivers Terrace. On 22 August 2006, contracts for a \$4 million loan facility was signed to fund the purchase of the investment property. The Directors do not intent on using the full facility, with a mixture of capital and loan finance being used to fund the purchase.