SUREFIRE RESOURCES NL — AGM Information 2006

Oct 26, 2006

GENESIS BIOMEDICAL LIMITED

ABN 48 083 274 024

NOTICE OF ANNUAL GENERAL MEETING including EXPLANATORY STATEMENT and PROXY FORM

DATE AND TIME OF MEETING

Tuesday 28 November 2006 at 9.00am WST

The Celtic Club 48 Ord Street West Perth WA 6005

Notice of Annual General Meeting and Explanatory Memorandum

Notice is hereby given that the Annual General Meeting of the Company will be held on Tuesday 28 November 2006 commencing at 9.00am (WST) at the The Celtic Club 48 Ord Street West Perth WA 6005.

The Explanatory Memorandum which accompanies and forms part of this Notice describes the matters to be considered at the Annual General Meeting.

AGENDA

Business

Accounts and Reports

To receive the Financial Report of the Company for the financial year ended 30 June 2006 and the reports of the Directors and Auditors thereon

Resolution 1 - Adoption of Remuneration Report

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That, for the purposes of Section 250R(2) of the Corporations Act, the Remuneration Report as contained in the Directors Report for the year ended 30 June 2006 be adopted."

Note: In accordance with section 250R of the Corporations Act 2001, the vote on Resolution 1 will be advisory only and will not bind the Directors or the Company.

Resolution 2 - Re-Election of Director

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"In accordance with the Constitution of the Company, Mr Roger Smith retires by rotation and, being eligible, offers himself for re-election as a director of Genesis Biomedical Limited".

Resolution 3 - Appointment of Director (Mr Rodger Johnston)

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That Mr Rodger Johnston who retires, having been appointed in accordance with clause 12.4 of the Company's Constitution as a director of the Company to fill a casual vacancy until the next general meeting and, being eligible offers himself for election, is hereby re-appointed a director of the Company".

Resolution 4 - Appointment of Director (Mr Donald Valentino)

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That Mr Donald Valentino who retires, having been appointed in accordance with clause 12.4 of the Company's Constitution as a director of the Company to fill a casual vacancy until the next general meeting and, being eligible offers himself for election, is hereby re-appointed a director of the Company".

Resolution 5 - Issue of Options to Mr Rodger Johnston

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That pursuant to and in accordance with section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to grant 3,000,000 options to Mr Rodger Johnston to subscribe for fully paid ordinary shares in the Company in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Rodger Johnston and any of his associates.

Resolution 6 - Issue of Options to Mr Russell Black

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That pursuant to and in accordance with section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to grant 3.000.000 options to Mr Russell Black to subscribe for fully paid ordinary shares in the Company in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Russell Black and any of his associates.

Resolution 7 - Issue of Options to Mr Roger Smith

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That pursuant to and in accordance with section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to grant 3,000,000 options to Mr Roger Smith to subscribe for fully paid ordinary shares in the Company in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Roger Smith and any of his associates.

Resolution 8 - Issue of Options to Cardrona Capital Pty Ltd

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to issue up to 1,500,000 options to Cardrona Capital Pty Ltd to subscribe for fully paid ordinary shares in the Company in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting".

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Cardrona Capital Pty Ltd and any person who may obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed and any associates of those persons.

Resolution 9 - Issue of Options to Managing Director

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That pursuant to and in accordance with section 208 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to grant a total of 5.100,000 options to Mr Donald Valentino (or his nominee) to subscribe for fully paid ordinary shares in the Company on the terms and conditions described in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Donald Valentino and any of his associates.

Resolution 10 - Appointment of Auditor

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That K Westaway & Associates being qualified to act as auditor of the Company and having consented to act as auditor of the Company be appointed as the auditor of the Company, and that the Directors be authorised to agree their remuneration".

DATED THIS 23rd DAY OF OCTOBER 2006

BY ORDER OF THE BOARD

Donald Valentino MANAGING DIRECTOR

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice of Meeting convening the Annual General Meeting ("the Meeting") of shareholders of Genesis Biomedical Limited ("Genesis" or the "Company") to be held on Tuesday, November 28, 2006 at 9.00am (WST). This Memorandum is to be read in conjunction with the Notice of Meeting.

1. Resolution 1 - Adoption of Remuneration Report

Section 250R(2) of the Corporations Act requires a listed company, at its Annual General Meeting, to adopt the Remuneration Report of the Company. The Remuneration Report of Genesis is required by section 300A of the Corporations Act and is contained in the Directors' Report for the year ended 30 June 2006.

Amendments to the Corporations Act in June 2004 introduced, amongst other things, expanded director and executive remuneration disclosure requirements and a requirement for a listed company to submit a remuneration report to shareholders for a non-binding vote.

As stated above, this resolution is non binding on the Company. If this resolution is not approved, the directors mav:

• 1. Accept or partially accept the vote, which may mean a review of the remuneration policies and packages of the Company; or
• 1. Not accept the vote and explain why it believes the remuneration policies and packages are appropriate.

It is the director's responsibility to formulate and set the Company's remuneration policies and packages. This resolution is intended to attract active shareholder consideration of the remuneration policies and packages of the Company and encourage shareholders to ask questions should they desire.

Resolution 1 is an ordinary resolution requiring it to be passed by a simple majority of the votes cast by Shareholders entitled to vote on it.

2. Resolution 2 - Re - Election of Director

Re-election of Mr Roger Smith as Director

Mr Roger Smith was appointed a Director of the Company on 21 February 2005 and in accordance with the constitution of the Company retires by rotation and, being eligible, offers himself for re-election as a director of the Company. Mr Smith has significant experience and knowledge in the retail and financial industries and has achieved success in both fields. Mr Smith brings to the board valuable commercial and practical experience.

Resolution 1 seeks to confirm the re-election of Mr Smith as a Director of the Company.

The Board supports the re-election of Mr Smith.

3. Resolution 3 - Appointment of Director (Mr Rodger Johnston)

Re-appointment of Mr Rodger Johnston as Director

Mr Rodger Johnston who, having been appointed in accordance with clause 12.4 of the Company's Constitution as a director of the Company to fill a casual vacancy until the next general meeting offers himself for election as a director of Genesis. Mr Johnston has a great deal of experience in listed companies. He is Chairman and CEO of ASX listed IC2 Global Limited and a non-executive director of ASX listed West Australian Metals Limited. Mr Johnston brings to the board listed company experience.

4. Resolution 4 - Appointment of Director (Mr Donald Valentino)

Re-appointment of Mr Donald Valentino as Managing Director

Mr Donald Valentino who, having been appointed in accordance with clause 12.4 of the Company's Constitution as a director of the Company to fill a casual vacancy until the next general meeting offers himself for election as a director of Genesis. Mr Valentino has experience in the pharmaceutical and related medical products field with an extensive network of medical industry participants and industry peers. In his previous role he has been successful in building businesses and driving growth which will be attributes he contributes to the board.

5. Resolutions 5, 6 and 7 - Issue of Options to Non-Executive Directors

The Company proposes to issue a total of 3,000,000 Options to each of Mr Rodger Johnston (non-executive chairman), Mr Roger Smith (non-executive director) and Mr Russell Black (non-executive director) (Non-Executive Directors).

Approval is being sought to grant Options to the Non-Executive Directors to secure the ongoing commitment of the Directors to the continued growth of the Company.

The above approvals are sought for the purposes of:

• $(a)$ Chapter 2E of the Corporations Act 2001, which governs the giving of financial benefits to directors and other "related parties" of a company; and
• ASX Listing Rule 10.11 which provides that, subject to certain exceptions, a company listed on ASX $(b)$ cannot issue or grant securities to a director without shareholder approval.

The Board considers that in view of the financial, legal and other responsibilities assumed by directors of public companies, the payment of monetary fees alone is not an adequate reward and does not provide an adequate incentive to enable the Company to attract and keep board members of the requisite level of experience and qualifications. The Board considers that equity participation by way of the grant of Options to members of the Board is appropriate for these purposes. In addition, the Board considers that the issuing of Options will contribute to the preservation of the Company's cash reserves.

In determining the number of Options to be granted to the Non-Executive Directors, consideration was given to the relevant experience and role of each of the Non-Executive Directors, their respective overall remuneration terms, the current market price of Shares and the terms of options packages granted to directors of other companies within the medical device industry.

The proposed terms and conditions of the Options are set out below.

Terms and conditions of Options

Each Option will entitle the holder to subscribe for one fully paid ordinary Share in the Company at a price no less than $0.10 on the following terms:

• 1. the Options shall expire at 5p.m. (Eastern Standard Time) on 31 December 2011 (Expiry Date):

• $21$ the amount payable on the exercise of the Options will be $0.10 for each Option exercised;

• an Option does not confer the right to a change in exercise price or a change in the number of underlying 3. securities over which the Option can be exercised;

• 1. the Options may be exercised wholly, or in part, by notice in writing to the Directors of the Company given prior to or on the Expiry Date. Any notice of exercise of an Option will be deemed to be dated as at the last day of the month on which the Company receives the notice;
• 1. an Option may be transferred at any time prior to the expiry date;
• 1. there are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new shares of capital offered to shareholders during the currency of the options. However, the Company will ensure that for the purposes of the proposed issue notice of the new issue will be given to Optionholders at least seven (7) Business Days before the record date. This will give Optionholders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue:
• 1. in the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, all rights of the optionholder will be varied in accordance with the ASX Listing Rules; and
• 1. Options not exercised by the Expiry Date will automatically expire.

Listing Rule 10.11

Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party. The Non-Executive Directors are considered related parties of the Company by virtue of the fact that they are Directors of the Company.

Approval pursuant to Listing Rule 7.1 is not required in order to grant the Options to the Non-Executive Directors as approval is being obtained under ASX Listing Rule 10.11. The grant of the Options will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

The following information is provided to shareholders for the purpose of Listing Rule 10.13:

• (a) the Options will be issued to Mr Rodger Johnston, Mr Roger Smith and Mr Russell Black, who are nonexecutive directors of the Company.
• (b) the maximum number of Options to be granted under Resolutions 5, 6 and 7 is 9,000,000. The Non-Executive Directors will receive 3,000,000 Options each if Resolutions 5, 6 and 7 are passed;
• (c) the Options will be granted not more than one month after the date of the Annual General Meeting (or such later date as approved by ASX) and it is anticipated that the Options will be issued and allotted on one date:
• (d) the Options will be issued for nil consideration, have an exercise price of $0.10 and will expire five years after the date of issue, the full terms and conditions of the Options are set out above:
• (e) no funds will be raised from the grant of Options as they are being issued for the purposes of rewarding and incentivising the Non-Executive Directors. The Company acknowledges that the grant of Options to the Non-Executive Directors is contrary to recommendation 9.3 of the ASX Good Corporate Governance and Best Practice Recommendations. However, Mr Valentino, a Director who does not have an interest in the outcome of these Resolutions, considers the issue reasonable in the circumstances given the necessity to attract the highest calibre of professions to the Company whilst maintaining the Company's cash reserves.

Related Party Transactions

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:

• (a) the giving of the financial benefit falls within one of the nominated exceptions to the provision; or
• (b) prior shareholder approval is obtained to the giving of the financial benefit.

For the purposes of Chapter 2E, each of the Non-Executive Directors of the Company are considered to be

related parties of the Company.

Resolutions 5, 6 and 7 provides for the grant of Options to a Director of the Company, which is a financial benefit that requires shareholder approval. For the purpose of Chapter 2E of the Corporations Act the following information is provided.

The related parties to whom the proposed resolutions would permit the financial benefit to be given:

Mr Rodger Johnston Mr Roger Smith Mr Russell Black

The nature of the financial benefit

The proposed financial benefit to be given is the grant of Options for nil consideration.

The options have an exercise price of $0.10 and will expire five vears after the date of issue. The full terms and conditions of the Options are set out above.

Directors' recommendation

All the Directors were available to consider the proposed Resolutions 5, 6 and 7.

Section 195 of the Corporations Act provides, in essence, that a Director of a public company may not vote or be present during meetings of Directors when matters in which that Director holds a "material personal interest" are being considered.

The Non-Executive Directors have an interest in the outcome of the proposed resolution as they will be issued Options in accordance with the proposed resolution. Accordingly, the Non-Executive Directors do not make a recommendation to shareholders concerning the proposed resolutions 5, 6 and 7.

The other Director of the Company, Mr Donald Valentino does not have an interest in the outcome of the proposed resolutions and considers himself justified in making a recommendation to shareholders concerning the proposed Resolutions 5, 6 and 7. Mr Valentino considers that the proposed Resolutions 5, 6 and 7 is in the best interests of the Company and its shareholders. It is important that the remuneration of the non-executive directors is linked to the medium term and long term strategies of the Company. Proposed Resolutions 5, 6 and 7 will provide the non-executive directors with additional incentives to successfully implement the Company's strategies.

Therefore, Mr Valentino recommends that shareholders vote in favour of Resolutions 5, 6 and 7.

Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors

The proposed Resolutions 5, 6 and 7 would have the effect of giving power to the Directors to grant 9,000,000 Options on the terms and conditions as set above. As at the date of this Notice, the Company had on issue 166,650,003 ordinary shares and 79,900,000 listed options with an exercise price of $0.03 and an expiry date of 30 November 2010.

If any Options granted as proposed above are exercised the effect would be to dilute the shareholding of existing shareholders by approximately 5.1% (based on the number of Shares currently on issue and assuming no other options are exercised). The market price of the Company's shares during the period of the Options will normally determine whether or not Option holders exercise the Options. At the time any Options are exercised and shares are issued pursuant to the exercise of the Options, the Company's ordinary shares may be trading at a price which is higher than the exercise price of the Options.

The highest price of fully paid ordinary shares in the Company trading on ASX during the past 12 months was $0.086 which occurred on 13 February 2006 and the lowest price of shares in the Company trading on ASX during the past 12 months was $0.03 which occurred on 21 October 2005. The most recent closing price of shares in the Company trading on the ASX prior to the date of this Explanatory Memorandum was $0.033, which occurred on 10 October 2006.

The Non-Executive Directors currently receive the following remuneration and other financial benefits from the Company:

	Salary & Fees	Other	Totall
			$I
Mr R Johnston	25,000	11,495	36,495
Mr R Black	25,000	11.495	36,495
Mr R Smith	25,000	11.495	36,495

Other: Represents an allocation of the Directors and Officers Indemnity Insurance premium paid by the Company

The total remuneration received by the Non-Executive Directors in the past financial year ending on 30 June 2006 (as set out in the Company's 2006 Annual Report) was as follows:

	Salary & Fees	Other	Total$
Mr R Johnston	14,041	5,618	19,659
Mr R Black	14,658	5.864	20,522
Mr R Smith	25,000	10,003	35,003

Other: Represents an allocation of the Directors and Officers Indemnity Insurance premium paid by the Company

Other than as set out above, the Non-Executive Directors receive no other emoluments from the Company.

The shares and options currently held by the Non-Executive Directors are set out below:

	Direct		Indirect
	Ordinary Shares	Options	Ordinary Shares	Options
Mr R Johnston	$\sim$		$\mathbf{m}$	$\mathbf{m}$
Mr R Black	$\blacksquare$	$\blacksquare$	2,262,500	600,000*
Mr R Smith	$\sim$	$\blacksquare$	5,140,523	$\blacksquare$

*The options have an exercise price of $0.03 and an expiry date of 30 November 2010.

It is not considered that from an economic and commercial point of view there are any costs or detriments, including opportunity costs or taxation consequences, for the Company or benefits forgone by the Company resulting from the issue of the Options pursuant to Resolutions 5, 6 or 7.

Valuation of Options

The Company engaged Somes and Cooke Chartered Accountants to provide an independent valuation of the options to be issued as at the 10th October 2006.

The options are valued at $0.0169 per option using the Black-Scholes Option Pricing Model. This valuation is as at 10 October 2006 and the value may go up or down after that date depending on fluctuations in the share price of the Company's ordinary shares. The assumptions made in applying the Black Scholes methodology are as follows:

• a. the underlying share price is based on the last sale price of a Genesis Biomedical share as at 9th October 2006, being $0.033;

• b. in accordance with the terms and conditions of the Options, the Options will vest immediately upon issue:

• c. Time to expiry is five years from the date of issue:

• d. The strike price of the Options is $0.10;

• e. a volatility factor of 110.21% was used (in determining a volatility factor for the Company, Somes and Cooke took into account the Company's trading data for a period equal to the term of the options)

• f. the risk free rates are the implied vield on zero coupon Australian bonds, at 9 October 2006. continuously compounded to the expected life of the options:

• g. the expected dividend yield is zero:

• h. a discount of 25% has been applied to the gross value as the options are unquoted

On the basis of this calculation, the total financial benefit to be given to the Non-Executive Directors, if Resolutions 5, 6 and 7 is approved, would amount to:

Mr R Johnston	$50.700
Mr R Black	$50.700
Mr R Smith	$50.700
Total	$152,100

Apart from the information set out in this Explanatory Memorandum there is not any other information that is known to the Company or any of its directors that is reasonably required by shareholders to decide whether or not it is in the Company's interest to pass Resolutions 5, 6 or 7.

6. Resolution 8 - Issue of Options to Cardrona Capital Pty Ltd

ASX Listing Rule 7.1 restricts the Company to issuing a maximum of 15% of its issued capital in any 12 month period unless it obtains shareholder approval for the issue. This restriction applies to issues of shares and options.

The Company seeks approval for the issue of options to Cardrona Capital Pty Ltd (Cardrona) to subscribe for fully paid ordinary shares in the Company as consideration for company secretarial services provided by Cardrona to Genesis.

The following information is provided for the purposes of Australian Stock Exchange Listing Rule 7.3:

• (a) Resolution 8 proposes the issue of a maximum of 1,500,000 options (LR.7.3.1) to Cardrona;
• (b) the options will be issued and allotted no more than three (3) months after the date of the Annual General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated they will be issued and allotted on one date;
• (c) the options are exercisable at $0.10 each and have an expiry date of 31 December 2011. The full terms and conditions of the options are set out below;
• (d) no funds will be raised from the issue of options to Cardrona, as the options will be issued for free, in consideration for the performance of company secretarial services provided by Cardrona; and
• (e) if all relevant services have been completed at the time of the issue of the Options, then the Options will be fully vested at the time of issue. If all relevant services have not been completed at the time of the issue of the Options then the Options will vest upon completion of the relevant services, as determined by the Directors in their sole and absolute discretion.

Terms and conditions of options

Each Option will entitle the holder to subscribe for one fully paid ordinary Share in the Company at a price of $0.10 each on the following terms:

(1) the Options shall expire at 5p.m. (Eastern Standard Time) on 31 December 2011 (Expiry Date);

• (2) the amount payable on the exercise of the Options is $0.10 for each Option exercised;
• (3) an Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised:
• (4) the Options may be exercised wholly, or in part, by notice in writing to the Directors of the Company given prior to or on the Expiry Date. Any notice of exercise of an Option will be deemed to be dated as at the last day of the month on which the Company receives the notice;
• (5) an Option may be transferred at any time prior to the expiry date:
• (6) there are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new shares of capital offered to shareholders during the currency of the options. However, the Company will ensure that for the purposes of the proposed issue notice of the new issue will be given to Optionholders at least seven (7) Business Days before the record date. This will give Optionholders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue:
• (7) in the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, all rights of the optionholder will be varied in accordance with the ASX Listing Rules; and
• (8) Options not exercised by the Expiry Date will automatically expire.

Subject to the terms outlined above, and subject to shareholder approval the Directors will issue up to 1,500,000 options in consideration for company secretarial services received by the Company from Cardrona, as determined by the Directors in their sole and absolute discretion.

7. Resolution 9 - Issue of Options to Mr Donald Valentino (Managing Director)

The Company proposes to issue a total of 5,100,000 options to Mr Donald Valentino the Managing Director of Genesis.

Approval is being sought to grant Options to Mr Valentino to secure his ongoing commitment to the continued growth of the Company.

The above approval is sought for the purposes of:

• Chapter 2E of the Corporations Act 2001, which governs the giving of financial benefits to directors and $(a)$ other "related parties" of a company; and
• ASX Listing Rule 10.11 which provides that, subject to certain exceptions, a company listed on ASX $(b)$ cannot issue or grant securities to a director without shareholder approval.

The Board considers that in view of the financial, legal and other responsibilities assumed by directors of public companies, the payment of monetary fees alone is not an adequate reward and does not provide an adequate incentive to enable the Company to attract and keep board members and executive directors of the requisite level of experience and qualifications. The Board (other than Mr Valentino, who declines to comment due to his personal interest in the outcome of the Resolution) considers that equity participation by way of the grant of Options to members of the Board is appropriate for these purposes. In addition, the Board (other than Mr Valentino) considers that the issuing of Options will contribute to the preservation of the Company's cash reserves.

In determining the number of Options to be granted to Mr Valentino, consideration was given to the relevant experience and role of Mr Valentino, his overall remuneration terms, the current market price of Shares and the terms of options packages granted to directors of other companies within the medical device industry.

Listing Rule 10.11

Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party. Mr Valentino is considered a related party of the Company by virtue of the fact that he is a Director of the Company.

Approval pursuant to Listing Rule 7.1 is not required in order to grant the Options to Mr Valentino as approval is being obtained under ASX Listing Rule 10.11. The grant of the Options will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

The following information is provided to shareholders for the purpose of Listing Rule 10.13:

• the options will be issued to Mr Donald Valentino who is the Managing Director of the Company: $(a)$
• $(b)$ the maximum number of options to be granted under Resolutions 9 is 5,100,000;
• the Options will be granted not more than one month after the date of the Annual General Meeting (or $(c)$ such later date as approved by ASX) and it is anticipated that the Options will be issued and allotted on one date;
• the Options will be issued for nil consideration as the Options are being granted as consideration for $(d)$ performance of work, both previously and into the future by Mr Valentino for the Company:
• the options to be issued will be Class A Options, Class B Options and Class C Options; and $(e)$
• $(f)$ Class A Options. Class B Options and Class C Options have the following terms:

Table A: Option Terms

Option Class	Expected IssueDated	VestingCondition	Expiration Date	Number ofOptions to be	Exercise Price
				issued
Class A	Within 30 daysof 2006 AGM	30 DayWeightedAverage TradingPrice of GenesisFully PaidOrdinary Shareson ASX mustachieve a priceof $$0.05$ for aconsecutive 5day period	31 December2007	1,700,000	$0.04
Class B	Within 30 daysof 2006 AGM	30 DayWeightedAverage TradingPrice of GenesisFully PaidOrdinary Shareson ASX mustachieve a priceof $0.06 for aconsecutive 5day period	30 June 2009	1,700,000	$0.04

GENESIS BIOMEDICAL LIMITED

A.B.N. 48 083 274 024

Class C	Within 30 daysof 2006 AGM	30 DayWeightedAverage TradingPrice of GenesisFully PaidOrdinary Shareson ASX mustachieve a priceof $$0.08$ for a	31 December2010	1,700,000	$0.04
		consecutive 5day period
Total				5,100,000

Other than set out above, the respective Class A, Class B and Class C Options have the further following terms and conditions:

• (1) the Options shall expire at 5p.m. (Eastern Standard Time) on the expiry dates specified above for each of Class A, Class B and Class C Options (Expiry Date);
• (2) the amount payable on the exercise of the Options is $0.04 for each Option exercised;
• (3) an Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised;
• (4) the Options may be exercised wholly, or in part, by notice in writing to the Directors of the Company given prior to or on the Expiry Date. Any notice of exercise of an Option will be deemed to be dated as at the last day of the month on which the Company receives the notice;
• (5) an Option may be transferred at any time prior to the expiry date;
• (6) there are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new shares of capital offered to shareholders during the currency of the options. However, the Company will ensure that for the purposes of the proposed issue notice of the new issue will be given to Optionholders at least seven (7) Business Days before the record date. This will give Optionholders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue;
• (7) in the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, all rights of the optionholder will be varied in accordance with the ASX Listing Rules; and
• (8) Options not exercised by the Expiry Date will automatically expire.

Related Party Transactions

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:

• (a) the giving of the financial benefit falls within one of the nominated exceptions to the provision; or
• (b) prior shareholder approval is obtained to the giving of the financial benefit.

For the purposes of Chapter 2E. Mr Valentino is considered to be a related party of the Company because he is the Managing Director of the Company.

Resolution 9 provides for the grant of Options to a Director of the Company, which is a financial benefit that requires shareholder approval. For the purpose of Chapter 2E of the Corporations Act the following information is provided.

The related party to whom the proposed resolutions would permit the financial benefit to be given: Mr Donald Valentino

The nature of the financial benefit

The proposed financial benefit to be given is the grant of Options for nil consideration. The Options cannot be sold, transferred, assigned or otherwise disposed of except with the approval of the Board of Directors.

The Options to be issued have the terms as set out at above.

Directors' recommendation

All the Directors were available to consider the proposed Resolution 9.

Section 195 of the Corporations Act provides, in essence, that a Director of a public company may not vote or be present during meetings of Directors when matters in which that Director holds a "material personal interest" are being considered.

The Managing Director has an interest in the outcome of the proposed resolution as he will be issued Options in accordance with the proposed resolution. Accordingly, the Managing Director is unable to make a recommendation to shareholders concerning the proposed resolution 9.

The Non Executive Director's of the Company, Mr Rodger Johnston, Mr Russell Black and Mr Roger Smith do not have an interest in the outcome of the proposed resolution and consider themselves justified in making a recommendation to shareholders concerning the proposed Resolution 9. The Non Executive Directors consider that the proposed Resolution 9 is in the best interests of the Company and its shareholders. It is important that the remuneration of the Managing Director is linked to the medium term and long term strategies of the Company. Proposed Resolution 9 will provide the Managing Director with additional incentives to successfully implement the Company's strategies.

Therefore, the Non Executive Directors recommend that shareholders vote in favour of Resolution 9.

Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors

The proposed Resolution 9 would have the effect of giving power to the Directors to grant 5,100,000 Options on the terms and conditions as set above. As at the date of this Notice, the Company had on issue 166,650,003 ordinary shares and 79,900,000 listed Options with an exercise price of $0.03 and an expiry date of 30 November 2010.

If any Options granted as proposed above are exercised the effect would be to dilute the shareholding of existing shareholders by approximately 3% (based on the number of Shares currently on issue and assuming no other Options are exercised). The market price of the Company's shares during the period of the Options will normally determine whether or not Option holders exercise the Options. At the time any Options are exercised and shares are issued pursuant to the exercise of the Options, the Company's ordinary shares may be trading at a price which is higher than the exercise price of the Options.

The highest price of fully paid ordinary shares in the Company trading on ASX during the past 12 months was $0.086 which occurred on 13 February 2006 and the lowest price of shares in the Company trading on ASX during the past 12 months was $0.03 which occurred on 21 October 2005. The most recent closing price of shares in the Company trading on the ASX prior to the date of this Explanatory Memorandum was $0.033, which occurred on 10 October 2006.

The total remuneration being received by Mr Valentino is as follows:

Mr Valentino is employed under an ongoing employment contract and his current remuneration package comprises the following:

• a base salary package (inclusive of directors fees) of $225,000 per annum plus statutory r. superannuation:
• annual leave of 4 weeks: ٦ŵ.
• ジ the provision of a company vehicle;
• cover under a Directors and Officers Indemnity Insurance policy. $\mathbf{p}$

The total remuneration received by Mr Valentino in the past financial vear ending on 30 June 2006 (as set out in the Company's 2006 Annual Report) was as follows (Mr Valentino was appointed 22 May 2006):

	Salary & Fees
	(Incl Super)	Other	Total
			$I
Mr Valentino	24.874	1,096	25,970

Other than as set out above. Mr Valentino receives no other emoluments from the Company.

The shares and options currently held by Mr Valentino are set out below:

	Direct		Indirect
	Ordinary Shares	Options	Ordinary Shares	Options
Mr Donald Valentino	600.000	600.000*	4.298.267	3,898,267*
$*$ Thaca ontione hava an avarcica prica of $A A3 and avoira on 3A Novambar 2010.

These options have an exercise price of $0.03 and expire on 30 November 2010.

It is not considered that from an economic and commercial point of view there are any costs or detriments, including opportunity costs or taxation consequences, for the Company or benefits forgone by the Company resulting from the issue of the Options pursuant to Resolution 9.

Valuation of Options

The Company engaged Somes and Cooke Chartered Accountants to provide an independent valuation of the options to be issued as at the $10^{\text{th}}$ October 2006.

The values determined and set out below are as at 10 October 2006 and the value may go up or down after that date depending on fluctuations in the share price of the Company's ordinary shares.

Options	UnderlyingGenesis SharePrice	Exercise Priceof Options	Number ofOptions to beissued	Value of eachOption	Total Value
Class A	$0.039	$0.04	1,700,000	$0.0036	$8,330
Class B	$0.039	$0.04	1,700,000	$0.0024	$5,270
Class C	$0.039	$0.04	1,700,000	$0.0008	$1,700

The assumptions made in applying the Black Scholes methodology are as follows:

$(i)$ the underlying share price is based on the last sale price of a Genesis Biomedical share as at $9th$ October 2006, being $0.039;

• the issue date of the Options will be within 30 days of the Company's 2006 Annual General $(ii)$ Meeting:
• in accordance with the terms and conditions of the Options, the Options will vest as follows: $(iii)$
  • Class A 30 Day Weighted Average Trading Price of Genesis Fully Paid Ordinary Shares on ASX must achieve a price of $0.05 for a consecutive 5 day period
    • Class B 30 Day Weighted Average Trading Price of Genesis Fully Paid Ordinary Shares on ASX must achieve a price of $0.06 for a consecutive 5 day period
    • Class C 30 Day Weighted Average Trading Price of Genesis Fully Paid Ordinary Shares on ASX must achieve a price of $0.08 for a consecutive 5 day period
• $(iv)$ Time to expiry is as follows:

Class A $-31$ December 2007 Class $B - 30$ June 2009 Class $C - 31$ December 2010

• The strike price of the Options is $0.04; $(v)$
• $(v_i)$ a volatility factor of 110% was used (in determining a volatility factor for the Company, Somes and Cooke took into account the Company's trading data for a period equal to the term of the options)
• $(vii)$ the risk free rates are the implied yield on zero coupon Australian bonds, at 9 October 2006, continuously compounded to the expected life of the options:
• the expected dividend vield is zero; (viii)
• discounts have been applied to the gross value of the options to take into account that the $(ix)$ options will only be issued upon the underlying shares in Genesis Biomedical reaching predetermined levels. The discounts applied are based on estimates of the probability of the Genesis Biomedical share price meeting these pre-determined levels. This probability was based upon the previous twelve month trading history of Genesis Biomedical. The discounts applied are as follows:

Class A $-72.27%$ Class B $-87.50%$ Class C $-96.48%$

On the basis of this calculation, the total financial benefit to be given to the Managing Director, if Resolution 9 is approved, would amount to$15,300.

Apart from the information set out in this Explanatory Memorandum there is not any other information that is known to the Company or any of its directors that is reasonably required by shareholders to decide whether or not it is in the Company's interest to pass Resolution 5.

7. Resolution 10 - Appointment of Auditor

Under section 327B of the Corporations Act, the Company in annual general meeting may appoint an auditor to fill a vacancy. The Directors propose that K Westaway & Associates be appointed as the Company's auditor. The notice of nomination of K Westaway & Associates as auditor of the Company is provided to shareholders with this Notice of Annual General Meeting.

If approval is received, K Westaway & Associates will commence as auditor of the Company from the date of this Meeting.

K Westaway & Associates has consented to act as auditor of the Company, subject to the consent of the Australian Securities and Investments Commission to the resignation of the current auditor. Ernst & Young.

Ernst & Young has been the auditor of the Company for a number of years, and the Directors would like to thank them publicly for their work over the past years.

8. Enquiries

Shareholders are invited to contact the Company Secretary on (02) 8916 6778 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

ASIC means Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited.

A$ means Australian Dollars.

Board means the board of directors of the Company.

Company and Genesis means Genesis Biomedical Limited (ABN 48 083 274 024).

Constitution means the Company's constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Memorandum means the explanatory memorandum accompanying the Notice.

General Meeting means the meeting convened by the Notice.

Listing Rule means a Listing Rule of ASX.

Notice means the Notice of Meeting accompanying this Memorandum.

Option means an option for a Share, on the terms and conditions set out in the Explanatory Memorandum.

Schedule means a schedule of this Notice and Explanatory Memorandum.

Share means a fully paid ordinary share in the capital of the Company.

"Auditor Nomination"

9 October 2006

The Directors Genesis Biomedical Limited Level 1 248 Hay Street SUBIACO WA 6008

Nomination of Auditor

Dear Sirs.

Pursuant to section 328B(1) of the Corporations Act 2001 (Cth), I Donald Valentino, being a shareholder of Genesis Biomedical Limited (Company), hereby nominate K Westaway & Associates for appointment as auditor of the Company at the next general meeting of the meeting of the Company to be held on or about 24 November 2006.

Yours faithfully

Inalested.

Donald Valentino

APPOINTMENT OF PROXY

INNA ...................................

of ....................................

being a member/members of Genesis Biomedical Limited hereby appoint:

The Chairman of The meeting (mark with an 'X")

OR

Write the name of the person you are appointing if this person is someone other than the Chairman of the Meeting

or failing the person named attending the meeting, or if no person is named, the Chairman of the meeting as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at a General Meeting of the Company to be held on Tuesday 28 November 2006 at 9.00 am WST and at any adjournment of that meeting.

IMPORTANT:

If the Chairman of the Meeting is to be your proxy and you have not directed your proxy how to vote on a Resolution, please place a mark in this box. By marking this box, you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of these items and that votes cast by him, other than as a proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on these items and your votes will not be counted in computing the required majority if a poll is called on these Items. The Chairman intends to vote undirected proxies in favour of each Item.

Voting directions to your proxy - please mark "X" to indicate your directions

Resolution			For	Against	Abstain
1.	Adoption of Remuneration Report
2.	Re-election of Mr Roger Smith
3.	Appointment of Mr Rodger Johnston
4.	Appointment of Mr Donald Valentino
5.	Issue of Options to Mr Rodger Johnston
6.	Issue of Options to Mr Russell Black
7.	Issue of Options to Mr Roger Smith
8.	Issue of Options to Cardrona Capital Pty Ltd
9.	Issue of Options to Mr Donald Valentino
10.	Appointment of Auditor
Signed thisIndividual Securityholder 1		Securityholder 2		Securityholder 3
Individual/Sole Director		Director		Director/Company Secretary
		This form must he sinned hy the securityholder. If a inint bolding, both securityholders must sinn. If signed hy the securityholder's attorney, the nower of ethnoey must

been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the security nolder's constitution and the Corporations Act 2001 (Cwith).

Notes:

• Voting Entitlements: For the purposes of the Corporations Act 2001, the Directors have set a snapshot date to $1$ determine the identity of those entitled to attend and vote at the meeting. The snapshot date is the close of business on 24th November 2006
• $\sigma$ To be effective, the proxy form must be received by the Company at its registered office, Level 1, 248 Hay Street. Subjaco WA 6000, or received by facsimile on (08) 9381 6060 not less than forty-eight (48) hours before the time for holding the meeting.
• $31$ A member entitled to attend and vote at a Meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.
• A duly appointed proxy need not be a member of the Company. In the case of joint holders, all must sign. $\overline{4}$ .
• 1. Corporate shareholders should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:
  • 2 directors of the company:
  • a director and a company secretary of the company; or
  • for a proprietary company that has a sole director who is also the sole company secretary that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

• 1. A proxy need not be a member of the Company.
• $71$ Completion of a Proxy Form will not prevent individual shareholders from attending the meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the meeting in person, then the proxy's authority to speak and vote for that shareholder is suspended while the shareholder is present at the meeting.
• 1. Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.