SUREFIRE RESOURCES NL — Annual Report 2005

Aug 30, 2005

GENESIS BIOMEDICAL LTD $(ACN 083 274 024)$

APPENDIX 4E

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2005

• 1. Highlight of Results
• 1. Appendix 4E Financial Statements for the Year ended 30 June 2005

31st August 2005

……ĭ

$\mathbf{I}$ . Results for announcement to market

Set out below is summary financial information for the company for the 2004/05 financial year with full financial details being attached to this announcement.

		Genesis Biomedical LtdConsolidated
Summary Information	$30 - Jun - 05$	$30 - Jun - 04$	Inc/Dec	Inc/Dec	30-Jun-05	30-Jun-04	Inc/Dec	Inc/Dec
	ъ	Ъ	$	%	s	ъ	5	%
Revenue from OrdinaryActivities	362,581	568.363	$-205,782$	$-36.21%$	362,581	568.363	$-205,782$	$-36.21%$
Profit/(Loss) after Tax fromOrdinary Activities	$-386.191$	$-336.877$	$-49.314$	14.64%	$-396.191$	$-336.877$	$-59.314$	17.61%
Net Profit/(Loss) after TaxAttributable to Members	$-386.191$	$-336.877$	$-49.314$	14.64%	$-396.191$	$-336.877$	$-59.314$	17.61%
Basic Earnings - Cents PerShare	$-0.47$	$-0.44$	$-0.030$	6.82%			$\overline{\phantom{a}}$
Net Tangible Assets - CentsPer Share	$0.012	$0.015	$-$0.003$	20.52%		$\mathbf{u}$	$\overline{\phantom{a}}$
Dividends Paid	Nil	Nil	$\bullet$		Nil	Nil	$\overline{\phantom{a}}$	$\bullet$

The Company's accounts are currently in the process of being audited by Ernst & Young, Chartered Accountants.

Summary

The 2004/05 financial year has been a year of efforts centred on a number of matters including the Company continuing to progress the Company's proprietary technology, the Board being presented with and assessing numerous commercial opportunities, as well as the Board undertaking an overall review of all aspects of the Company's activities including to reconfigure some of the existing processes and management.

This activity has resulted in the Company re-affirming its focus on its core mandate of medical device product development and ultimate commercialisation from either internally developed intellectual property or alternatively, externally developed IP that is seeking GBL specific know/how, funding, path to market or a combination of all three.

Activity occurring throughout and subsequent to the year end included:

• Entering into a Heads of Agreement with a US based orthopaedic group surrounding the potential licensing of Genesis's CellGen technology;

• Appointment of a Strategic Advisory Committee; ↘
• Re-configuration of the Board to include the appointment of Mr Adrian Knight and Mr Roger Smith; ↘
• Dr Robert Gilmour assuming a greater executive role within the Company;
• The Board commencing the process of identifying a suitable full time CEO;
• The Company looking to re-establish investor and key stakeholder relationship platforms;
• The Company entering into agreements surrounding the potential purchase of some exciting fertility technology; and
• ➣ The Company announcing its intent to complete a rights issue to raise approximately $1 million in equity.

The Board is confident that having achieved the above and upon the appointment of the appropriate CEO the Company will be well positioned to progress the existing projects the Company is currently working on, as well as potentially take advantage of other opportunities currently being presented.

Operational Review

CellGenTM

GBL's proprietary asset CellGenTM is a clinically advantageous non-invasive therapy that promotes injury recovery and tissue regeneration through the reproduction of bioelectrical signals. Modalities similar to that of CellGenTM are used extensively in the Northern Hemisphere markets as a treatment for non-uniting fractures, stress fractures and more recently in the treatment of osteoarthritis and other common musculoskeletal disorders.

The ultimate aim of the development of these devices was to fully commercialise these products through either, the manufacture and sale of the products directly or through a distribution model, or alternatively license the technology surrounding the products to existing medical device manufacturers.

GBL has undertaken various trials of the technology including a double blind clinical trial to assess the effectiveness of CellGenTM in treating patients with osteoarthritis of the knee and more recently a trial within the Pernex orthopaedic clinic in Mexico City) has trialled several prescriptions on 46 patients using Genesis's CellGen® treatments. The results have indicated that the clinical response to Cellgen in certain conditions is very positive.

The market for products such as Cellgen has changed in recent years. The bone growth market has grown considerably particularly in parallel with the growth of spinal surgery. The acceptance of this category of product has increased amongst healthcare professionals, and more particularly there is now an established market for these products in the conservative management of osteoarthritis of the knee. Significantly the regulatory environment in the major markets is more favourable.

Throughout the year Genesis agreed terms with a North American orthopedic device and rehabilitation company ("OrthoCo") setting out the basis upon which OrthoCo may license GBL's proprietary CellGen technology.

OrthoCo wishes to trial Cellgen therapy in the United States with the intention of entering into an exclusive licensing agreement with GBL for the marketing and sale of the product/s in the United States.

The entering into a licensing arrangement will be subject to a satisfactory trial of the Company's CellGen product with US orthopedic practitioners which commenced in early June. Assuming a successful completion of the trial, the Company will look to enter into a formal Licensing Agreement with OrthoCo.

Strategic Advisory Committee

As part of the Board's operational review it was agreed that it would be appropriate for the Company to establish a strategic advisory committee. The broad charter for this committee is to provide independent advice to the Board surrounding either, the Company's existing IP and technology and/or other advice in relation to other commercial opportunities as presented.

The Board will look to be provided with the Committee's opinion on matters including (but not limited to):

• $\triangleright$ The underlying science behind the IP/Product/Technology;
• The existing/potential market surrounding the commercialisation of the IP/Product/Technology; ↘
• $\triangleright$ Distribution/Licensing/Trade Sale opportunities;
• $\triangleright$ Management surrounding the IP/Product/Technology;

• Proposed commercialisation route including proposed funding levels;

• $\triangleright$ Risks associated with the IP/Product/Technology.

Board Re-structure

The Company appointed Mr Adrian Knight and Mr Roger Smith to the Board, both of whom have added greatly to the recent impetus of the increased activity of the Company. Summary biographies are included in the Directors Report.

CEO Search

Whilst Dr Robert Gilmour has more recently taken a more executive role within the Company, the Board has recognised the need for the Company to appoint a suitably experienced full time CEO to manage the medium to long term objectives of the Company.

The Board has appointed a leading executive search consultant, as at the date of this report the Company is in the process of redefining the actual need and potential role description and an accompanying candidate profile.

Investor Relations

Having recognised the importance of communicating with its key stakeholders, the Company appointed an Investor Relations consultant to assist the Company in re-establishing its key relationships and improve overall communication with the market.

Signs Fertility Technology Agreement

Subsequent to the year end the Company entered into agreements setting out the terms upon which GBL may purchase the issued capital of a New Zealand based bio-technology company, involved in the development of fertility testing devices for use in both human healthcare and veterinary markets.

The company is known as Manawatu Biotech Investments Limited ("MBIL") and its focus is the development of commercial products based on its proprietary science concerning the measurement of the urinary glucuronides E1G and PDG which are metabolites of oestrogen and progesterone, respectively, found in the urine of female humans and various other mammals.

MBIL's proprietary science has been developed over the past 25 years and has involved during that period collaborations with Massey University, University of Melbourne and the World Health Organisation;

GBL has been working with MBIL in the further development of its proprietary science as well as working with two US-based companies specializing in lateral flow technology. The ultimate objective is to combine technologies in order to produce a medical device which in the first instance can be used to define the fertile period within the human menstrual cycle.

Potential Path to Market

To achieve its aim of having a commercial product to sell based on the application of the technologies summarised above, the Company has devised a path to market briefly outlined below.

• Phase 1 Implement Intellectual Property Platform
• Phase 2 Complete Biochemical Assay Development
• Phase 3 Complete Test Strip development
• Phase 4 Product pre-market testing and specification refinement

Fig 1: Path to Market Flow Diagram including approximated development costs

Risk Analysis

The major risks lie in successfully completing the biochemical assay development required for the diagnostic test strips and formulating an algorithm to determine the fertility status from hormonal excretion rates (Phase 2). As at the date of this Report, the Company is in the process of undertaking the Biochemical Assay Development outlined in Phase 2 above.

The risk associated with the development of the PMP strip and reader (Phase 3) is considered to be minimal as the process is considered to be "proven". However, the affordability of the device by its target market remains a risk.

GBL believes the structure of the transaction provides the Company with significant flexibility to work with MBIL and the US based technology partners to progress the development of the proposed product. Further, the structure assists in mitigating the overall product development risk to Genesis by the incorporation of "go forward"/"stop" milestone points along the proposed 12 to 18 month development timeline.

Transaction Terms

The commercial terms of the transaction are the provision by Genesis to MBIL of a Loan Facility of up to AUD$250,000 to be applied against an agreed development budget, along with Genesis having the right to purchase ("the Option") within a twelve month period the entire issued capital of MBIL for a consideration of AUD$450,000 comprising a cash component of $200,000 and $250,000 in Genesis equity.

As at the date of this Report, Genesis had provided $149,391 under the terms of the Loan Facility Agreement.

The Board is excited about the potential of this opportunity and awaits the completion of Phase 2 as outlined above to determine the next steps.

Capital Raising

On the 4th August 2005, the Company announced its intention of completing a non-renounceable rights issue to raise approximately $1,000,000.

The funds raised from the Rights Issue are to be used to assist to fund the Company's activities including:

• The recently announced MBIL transaction; $(i)$
• $(ii)$ Continuing development in relation to CellGen;
• Appointment and ongoing costs associated with GBL's proposed new management and $(iii)$ advisory committee including the appointment of a Chief Executive Officer; and
• Other commercial opportunities and general working capital. $(iv)$

The commercial terms of the proposed Rights Issue offer are One (1) Rights Issue Share offered for every Three (3) Genesis shares held at record date, plus a free attaching Rights Issue Option for every Rights Issue Share subscribed for.

The Rights Issue Option will have an exercise date of three years from the date of issue and an exercise price of $0.06.

As at the date of this Report the Company was in the process of finalising the appropriate Rights Issue documentation for lodging with ASX.

Further detail on both the MBIL transaction and the Rights Issue is set out in Note 21 of the Financial Statements attached to this Report.

Corporate

The Company raised $300,000 (excluding costs of the issue) through the issue of 10,000,000 fully paid ordinary shares in the Company at an issue price of $0.03 per share. These shares were issued and allotted on the 11th November 2004.

The consolidated entity's operating loss after tax for the year ended 30 June 2005 was $386,191. This result included interest income and proceeds of sale of shares totalling $99,216 and a write back to the "provision" for surplus lease space" as a result of assigning a head lease arrangement to the sitting sub-lessee offset by operating expenditure as detailed fully in the financial statements.

$2.$ Appendix 4E Financial Statements for the Year ended 30 June 2005

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCE YEAR ENDED 30 JUNE 2005

	Notes	Consolidated20052004		Genesis Biomedical Ltd20052004
		$	$	$	$
REVENUES FROM ORDINARY
ACTIVITIES	2	362,581	568,363	362,581	568,363
Cost of materials	3(a)		11,118		11,118
Salaries and Directors fees		(83,021)	(101, 534)	(83,021)	(101, 534)
Lease Rental Payments	3(d)	(259, 624)	(277, 823)	(259, 624)	(277, 823)
Professional fees	3(b)	(303, 927)	(148, 676)	(303, 927)	(148, 676)
Insurance		(22, 503)	(45,065)	(22, 503)	(45,065)
Travel		(35, 836)		(35, 836)
Decrement in the value of
investments	3(c)		(139, 599)	(10,000)	(139, 599)
Other expenses from ordinary
activities		(26, 443)	(28,319)	(26, 443)	(28,319)
Cost of investment in listed
investment disposed	3(e)	(17, 418)	(175, 342)	(17, 418)	(175, 342)
LOSS FROM ORDINARYACTIVITIES BEFORE INCOMETAX EXPENSE		(386, 191)	(336, 877)	(396, 191)	(336, 877)
INCOME TAX EXPENSERELATING TO ORDINARYACTIVITIES	4
LOSS FROM ORDINARYACTIVITIES AFTER INCOMETAX EXPENSE		(386, 191)	(336,877)	(396, 191)	(336, 877)
NET LOSS ATTRIBUTABLE TOOUTSIDE EQUITY INTEREST	15
NET LOSS ATTRIBUTABLE TOMEMBERS OF GENESISBIOMEDICAL LTD		(386, 191)	(336,877)	(396, 191)	(336, 877)
Share Issue Costs	13(b)	(15,000)		(15,000)

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GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCE YEAR ENDED 30 JUNE 2005

	Notes	Consolidated		Genesis Biomedical Ltd
		2005	2004	2005	2004
		$	$	$	$
TOTAL REVENUES,
EXPENSES AND VALUATIONADJUSTMENTS
ATTRIBIUTABLE TO
MEMBERS OF GENESIS
BIOMEDICAL LIMITED AND
RECOGNISED DIRECTLY IN
EQUITY		(15,000)		(15,000)
TOTAL CHANGES IN EQUITY
OTHER THAN THOSE
RESULTING FROM
TRANSACTIONS WITH
OWNERS AS OWNERS
ATTRIBUTABLE TO
MEMBERS OF GENESIS
BIOMEDICAL LTD		(401, 191)	(336, 877)	(411, 191)	(336,877)
Basic earnings per share (cents)	19	(0.47)	(0.44)
Diluted earnings per share (cents)	19	(0.47)	(0.44)

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GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2005

	Notes	2005${\mathbb S}$	Consolidated2004$	2005$\mathbf S$	Genesis Biomedical Ltd2004$\mathbf S$
CURRENT ASSETSCash assets	16(b)	1,063,492	1,088,288	1,063,492	1,088,288
ReceivablesOther financial assetsOther	56$\overline{\overline{1}}$	13,148134,782	9,02914,488226,954	13,148134,782	9,02914,488226,954
TOTAL CURRENT ASSETS		1,211,422	1,338,759	1,211,422	1,338,759
NON-CURRENT ASSETSOther financial assets	8			3	10,003
TOTAL NON-CURRENT ASSETS				3	10,003
TOTAL ASSETS		1,211,422	1,338,759	1,211,425	1,348,762
CURRENT LIABILITIESPayablesProvisions	1011	70,53272,338	18,41074,357	70,53272,338	18,41074,357
TOTAL CURRENT LIABILITIES		142,870	92,767	142,870	92,767
NON-CURRENT LIABILITIESProvisions	12		76,250		76,250
TOTAL NON-CURRENTLIABILITIES			76,250		76,250
TOTAL LIABILITIES		142,870	169,017	142,870	169,017
NET ASSETS		1,068,552	1,169,742	1,068,555	1,179,745
EQUITYParent entity interest
Contributed equityAccumulated losses	1314	13,272,985(12, 183, 044)	12,987,985(11,796,854)	13,272,985(12,204,430)	12,987,985(11,808,240)
Total parent entity interest in equityTotal outside equity interest	15	1,089,941(21, 389)	1,191,131(21, 389)	1,068,555	1,179,745
TOTAL EQUITY		1,068,552	1,169,742	1,068,555	1,179,745

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWS YEAR ENDED 30 JUNE 2005

	Notes	Consolidated		Genesis Biomedical Ltd
		2005	2004	2005	2004
		S	$	$	$
CASH FLOWS FROM
OPERATING ACTIVITIES
Receipts from customers		255,168	265,994	255,168	265,994
Payments to suppliers and employees		(664, 180)	(717, 653)	(664, 180)	(717, 653)
Interest received		68,243	84,055	68,243	84,055
Borrowing costs
NET CASH FLOWS USED INOPERATING ACTIVITIES	16(a)	(340,769)	(367, 604)	(340,769)	(367, 604)
CASH FLOWS FROM INVESTING
ACTIVITIESPurchase of investments			(170,000)		(170,000)
Proceeds from sale of investments		30,973	230,517	30,973	230,517
NET CASH FLOWS FROM
INVESTING ACTIVITIES		30,973	60,517	30,973	60,517
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issue of ordinary shares		285,000		285,000
NET CASH FLOWS FROM
FINANCING ACTIVITIES		285,000		285,000
NET INCREASE/(DECREASE) IN
CASH HELD		(24,796)	(307,087)	(24,796)	(307,087)
Opening cash brought forward		1,088,288	1,395,375	1,088,288	1,395,375
CLOSING CASH CARRIED
FORWARD	16(b)	1,063,492	1,088,288	1,063,492	1,088,288

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2005

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

Basis of accounting

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, including applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

The financial report has been prepared in accordance with the historical cost convention.

The financial statements have been prepared on a going concern basis.

Change in accounting policies

The accounting policies adopted are consistent with those of the previous year.

Principles of consolidation

The consolidated financial statements are those of the consolidated entity, comprising Genesis Biomedical Ltd (the parent company) and all entities that Genesis Biomedical Ltd controlled from time to time during the year and at reporting date.

Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control.

Subsidiary acquisitions are accounted for using the purchase method of accounting.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Foreign currencies

Translation of foreign currency transactions

Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction.

Amounts payable to and by the entities within the consolidated entity that are outstanding at the reporting date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial year. All resulting exchange differences arising on settlement or restatement are brought to account in determining the profit or loss for the financial year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) $1.$

Cash

For the purpose of the statement of cash flows, cash includes cash on hand and in banks, net of bank overdrafts. Cash on hand and in banks and short term deposits are stated at nominal value.

Income tax

The consolidated entity adopts the liability method of tax effect accounting. Income tax expense is calculated on operating profit adjusted for permanent differences between taxable income and accounting profit. Income tax on timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, are carried forward in the balance sheet as a future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain.

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST except:

• i. where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• ii. receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Recoverable amount

Non-current assets measured using the cost basis are not carried at an amount above their recoverable amount, and where a carrying value exceeds this recoverable amount, the asset is written down where applicable. In determining recoverable amount, the expected net cash flows have been discounted to their present value using a market determined risk adjusted discount rate.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) 1.

Investments

Listed shares held for trading are carried at net market value. Changes in net market value are recognised as a revenue or expense in determining the net profit for the period.

Investments in listed securities are carried at the lower of cost and recoverable amount. Recoverable amount is determined by reference to the market price of the security at balance date.

Investments in associates are carried at the lower of the equity accounted amount and recoverable amount in the consolidated financial report.

All other non-current investments are carried at the lower of cost and recoverable amount.

Receivables

Trade receivables and other receivables are carried at nominal amounts due. The collectability of debts is assessed continuously and specific provision is made for any doubtful accounts.

Research and development

Research and development costs are expensed as incurred

Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating lease payments, where the lessors effectively retain substantially all of the risks and benefits of ownership of the leased items, will be included in the determination of the operating profit on a straight line basis over the lease term.

Employee benefits

Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries and annual leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.

Employee benefit expenses arising in respect of the following categories:

• wages and salaries, non-monetary benefits, annual leave, and other leave benefits; and
• other types of employee benefits

are charged against profits on a net basis in their respective categories.

$1.$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the company or consolidated entity.

Earnings per share

Basic earnings per share is calculated as net profit/ (loss) attributable to members, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit/(loss) attributable to members, adjusted for:

• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential shares, adjusted for any bonus element.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured.

Research and development revenue is recognised when received.

Rental Income is recognised when invoices for monthly amounts are raised.

The following specific recognition criteria must also be met before revenue is recognised:

Sale of goods

Control of the goods has passed to the buyer.

Interest

Control of the right to receive the interest payment.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) $1.$

Surplus lease space

A provision for surplus leased office accommodation is recognised for the expected lease cost to be paid by the consolidated entity less any amounts to be recovered from sub-leasing. The provision is based on the best estimate of the expenditure to be incurred and sub-leasing income to be received, and is reviewed each reporting date to determine whether the provision is adequate.

Provisions

Provisions are recognised when the entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.

Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

$2.$ REVENUE FROM ORDINARY ACTIVITIES

	Consolidated		Genesis Biomedical Ltd
	2005	2004	2005	2004
	$	$	$	$
Revenues from operating activities
Revenue from sale of goods
Total revenue from operatingactivities
Revenues from non-operating
activities
Interest – other corporationsProceeds from sale of investments	68,24330,974	84,054230,517	68,24330,974	84,054230,517
Rental income – sub leased premises	263,364	253,792	263,364	253,792
Total revenue from non - operating
activities	362,581	568,363	362,581	568,363
Total revenues from ordinary
activities	362,581	568,363	362,581	568,363
EXPENSES AND3.LOSSES/(GAINS)
(a) Cost of sales
Cost of materials		(11,118)		(11, 118)
(b) Professional Fees
Audit Fees	24,000	24,000	24,000	24,000
Company Secretarial Fees	72,000	72,000	72,000	72,000
Legal Fees	16,873	4,669	16,873	4,669
Accounting Fees	10,878	18,906	10,878	18,906
ASX/Share Registry Fees	21,908	18,918	21,908	18,918
Other Consulting Fees	158,268	10,183	158,268	10,183
Total	303,927	148,676	303,927	148,676
(c) Other expenses and losses/(gains)		(139, 599)	(10,000)	(139, 599)
(d) Minimum Lease Rental paymentsassociated with sub-leased excess
office premises	259,624	277,823	259,624	277,823
(e) Cost of Investments in listed
investments sold	17,418	175,342	17,418	175,342
Proceeds from sale of listedinvestments	(30,974)	(230,517)	(30,974)	(230,517)
Net (gain)/loss on listed
investments sold	(13,556)	(55,175)	(13,556)	(55,175)

	Notes	Consolidated2005.2004		Genesis Biomedical Ltd20052004
4. INCOME TAX		$	$	$	S.
The prima facie tax on the operatingloss is reconciled to the income taxprovided in the financial statements asfollows:
Prima facie tax payable on theoperating loss from ordinary activities		(115, 857)	(101,063)	(124,080)	(101,063)
Tax effect of permanent differences:Research & development refundAmortisation of non-deductibleexpenditures
Current period tax benefit not broughtto account		(115, 857)	(101,063)	(121,080)	(101,063)
Income tax expense attributable toordinary activities

As at 30 June 2005 future income tax benefits were available to the consolidated entity in respect of operating losses. The Directors estimate the potential income tax benefit at 30 June 2005 in respect of tax losses not brought to account is approximately $4,108,612 (2004: $3,992,755). The benefit of these losses has not been brought to account as realisation is not virtually certain.

The future income tax benefit will only be obtained if:

• the consolidated entity derives future assessable income of a nature and of an amount sufficient to $(a)$ enable the benefit to be realised;
• $(b)$ the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and
• no changes in tax legislation adversely affect the consolidated entity in realising the benefit. $(c)$

Since the substantive enactment of the Tax Consolidation legislation the Genesis consolidated group has elected not to enter the tax consolidation regime.

	Consolidated		Genesis Biomedical Ltd
	2005	2004	2005	2004
	$	S	$	S
5. RECEIVABLES (CURRENT)
Trade Debtors	13,148	9,029	13,148	9,029
	13,148	9,029	13,148	9,029
6. OTHER FINANCIAL ASSETS(CURRENT)
Investments at cost comprise:
Listed shares at cost		490,572		490,572
Provision for diminution		(476, 084)		(476,084)
Market value of shares at 30 June	$\blacksquare$	14,488	w.	14,488
The investments at market value are listed on theAustralian Stock Exchange Ltd relate to minorityholdings in Earth Essence International Limited.
7. OTHER CURRENT ASSETSPrepaymentsSecurity deposits in respect of operating leases	12,969121,813	29,344197,610	12,969121,813	29,344197,610
	134,782	226,954	134,782	226,954
8. OTHER FINANCIAL ASSETS(NON-CURRENT)
Investments at cost comprise:
Shares - unlisted	547,862	547,862	547,862	547,862
Provision for diminution in value	(547, 862)	(547, 862)	(547, 862)	(547, 862)
Investment in controlled entities(Refer to note 9)			3	10,003
			$\overline{3}$	10,003

The unlisted investment is the 15% shareholding the Company has in the Singapore based Back to Health Pte Ltd, a 50% shareholder in DBCI Asia Pacific Pte Ltd. This company holds the Master Licence for the DBC operations in Asia. The directors resolved to write down the value of this holding to Nil as at 31 December 2003.

9. INTERESTS IN SUBSIDIARIES

Name	Country ofIncorporation		Percentage of equityinterest held by theconsolidated entity
		2005	2004	2005	2004
Direct				S	$
Genovations Pty Ltd	Australia	100	100
NewMed Systems Ltd	Australia	100	100
Smart Chair Systems Pty Ltd	Australia	50	50.		10,000
Indirect
Back to Health Australasia Ltd	Australia	100	100
West Perth Clinic 1 Pty Ltd	Australia	100	100
DBC Australia Pty Ltd	Australia	75	75
					10,003

(a) Entities subject to class order relief

Pursuant to Class Order 94/1418, relief has been granted to the wholly owned subsidiaries from the Corporations Act 2001 requirements for preparation, audit and lodgement of their financial reports.

As a condition of the Class Order, Genesis Biomedical Ltd and the controlled entities subject to the Class Order (the "Closed Group") entered into a Deed of Cross Guarantee on 29 May 2000. The effect of the deed is that Genesis Biomedical Ltd has guaranteed to pay any deficiency in the event of winding up of a controlled entity to which the class order applies. The controlled entities have also given a similar guarantee in the event that Genesis Biomedical Ltd is wound up.

9. INTERESTS IN CONTROLLED ENTITIES (cont'd)

The consolidated statement of financial performance and statement of financial position of the entities which are members of the "Closed Group" are as follows:

(i) Consolidated statement of financial	2005	2004
performance	$	$
Operating loss before income tax	(396, 191)	(336, 877)
Income tax attributable to operating loss
Operating loss after income tax attributable toMembers	(396, 191)	(336, 877)
Accumulated losses at the beginning of the
financial year	(10, 559, 784)	(10, 222, 907)
Accumulated losses at the end of the financial
year	(10,955,975)	(10, 559, 784)
(ii) Consolidated statement of financial position
Current assets
Cash	1,063,492	1,088,288
Receivables and other	147,930	226,954
Total current assets	1,211,422	1,315,242
Non-current assets
Investments	1,122,900	1,147,388
Intercompany loans	125,558	125,558
Total non-current assets	1,248,458	1,272,946
Total assets	2,459,880	2,588,188
Current liabilities
Payables	70,532	9,380
Provisions	72,338	74,357
Total current liabilities	142,870	83,737
Non Current liabilitiesProvisions		76,250
Total non current liabilities		76,250
Total liabilities	142,870	159,987
Net assets	2,317,010	2,428,201
Equity
Contributed EquityAccumulated losses	13,272,985(10,955,976)	12,987,985(10, 559, 784)
Total shareholders' equity	2,317,010	2,428,201

	Consolidated2005$	2004$	Genesis Biomedical Ltd2005$	2004$
10. PAYABLES (CURRENT)
Trade creditorsOther creditors	20,53250,000	8,7449,666	20,53250,000	8,7449,666
	70,532	18,410	70,532	18,410
Aggregate amounts payable to related parties:Directors and director-related entities- director related entities	50,000		50,000
PROVISIONS (CURRENT)11a.
Surplus lease space	16,671	60,357	16,671	60,357
Other provisions	55,667	14,000	55,667	14,000
Total	72,338	74,357	72,338	74,357
11b. MOVEMENTS IN PROVISIONS (CURRENT)		Consolidated2005	Genesis Biomedical Ltd	2005
(i) Surplus Lease Space ProvisionCarrying amount at the beginning of the financial yearAdditional Provision		60,357	60,357
Amounts utilised during the year		(43,686)	(43,686)
Carrying amount at the end of the financial year		16,671	16,671
(ii) Other ProvisionsCarrying amount at the beginning of the financial yearAdditional ProvisionAmounts utilised during the year	14,00055,667(14,000)		14,00055,667(14,000)
Carrying amount at the end of the financial year		55,667	55,667
	Consolidated2005$	2004$	Genesis Biomedical Ltd2005$	2004$
12a. PROVISIONS (NON CURRENT)Surplus lease space		76,250		76,250
12b. MOVEMENTS IN PROVISIONS (NON CURRENT)

	Consolidated2005	Genesis Biomedical Ltd2005
(i) Surplus Lease Space Provision
Carrying amount at the beginning of the financial year	76,250	76,250
Additional Provision
Amounts written back due to assignment of sublease	(76,250)	(76,250)
and reduction in future liability of operating lease.
Carrying amount at the end of the financial year

Cenesis Biomedical Ltd - Preliminary Final Report 2005

13. CONTRIBUTED EQUITY		Shares2005	Shares2004	$2005	$2004
(a)	Issued and paid up capitalFully paid ordinary shares	86,550,003	76,550,003	13,272,985	12,987,985
(b)	Movement in shares on issue- Issued capital at beginning of financialyear- Shares issued on $11^{th}$ November 2004	76,550,003	76,550,003	12,987,985	12,987,985
	pursuant to a placement by Directors at 3cents per fully paid share- Less expenses of the issue	10,000,000		300,000(15,000)
	Issued capital at the end of the financial year	86,550,003	76,550,003	13,272,985	12,987,985

$(c)$ Share Options

As at 30 June 2005, there are Nil (2004: 2,000,000) unissued ordinary shares in respect of which options were outstanding.

Terms and conditions of contributed equity $(d)$

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

Balance at end of year

	Consolidated2005	2004	Genesis Biomedical Ltd20052004
ACCUMULATED LOSSES14.	$	$	$	$
Balance at beginning of yearNet Loss attributable to members of	(11,796,853)	(11, 459, 977)	(11,808,239)	(11, 471, 363)
Genesis Biomedical Ltd	(386, 191)	(336, 877)	(396, 191)	(336, 877)
Balance at end of year	(12, 183, 044)	(11, 796, 854)	(12,204,430)	(11,808,240)
OUTSIDE EQUITY INTEREST15.
Reconciliation of outside equityinterest in controlled entities:
Balance at beginning of year	(21,389)	(21,389)
Deduct share of operating lossAdd share of equity acquired
during the year
Less disposed during the year

The Company is the parent company of the entity in which there is an outside equity interest ("OEI Entity"). This OEI Entity is dormant and is not required to contribute to losses over and above existing equity contribution.

$(21,389)$

$(21,389)$

16.	STATEMENT OF CASH FLOWS	Consolidated		Genesis Biomedical Ltd
		2005$	2004$	2005٩	2004S
(a)	Reconciliation of cash flows fromoperations with operating loss afterincome tax
	Operating (loss) after income tax	(386,191)	(336, 877)	(386, 191)	(336,877)
	Profit on sale of investments	(13,556)	(55,175)	(13, 556)	(55,175)
	Provision for diminution / (increment) in
	value of investments	(2,930)	139,599	(2,930)	139,599
	Changes in assets and liabilities
	(Increase)/decrease in receivables	(8,196)	5,044	(8,196)	5,044
	(Increase)/decrease in inventories
	(Increase)/decrease in prepayments $&$
	deposits	92,172	22,210	92,172	22,210
	(Decrease)/increase in creditors and
	accruals	56,200	(16,517)	56,200	(16, 517)
	(Decrease)/increase in provisions	(78,268)	(125, 888)	(78, 268)	(125, 888)
	Net cash flows used in operating
	activities	(340,769)	(367, 604)	(340,769)	(367, 604)
(b)	Reconciliation of cash
	Cash balances comprise
	- cash at bank	1,063,492	1,088,288	1,063,492	1,088,288

At balance date the company and the consolidated entity had no financing facilities available.

		Consolidated		Genesis Biomedical Ltd
17.	EXPENDITURE COMMITMENTS	2005$	2004$	2005$	2004$
(a)	Lease expenditure commitmentsOperating leases (non-cancellable)Minimum lease payments
	- not later than one year	61,674	416,493	61,674	416,493
	- later than one year and not later thanfive years		180,262		180,262
	Aggregate lease expenditure contractedfor at balance date	61,674	596,755		596,755
	Aggregate expenditure commitments comprise:Amounts provided for:
	-Surplus lease space - current	16,671	60,357	16,671	60,357
	- non-current		76,250		76,250
		16,671	136,607	16,671	136,607
	Amounts not provided for:
	-rental commitments	45,003	460,148	45,003	460,148
	Total not provided for	45,003	460,148	45,003	460,148
	Aggregate lease expenditure contracted for atbalance date	61,674	596,755	61,674	596,755

Operating lease relates to office accommodation, expiring in September. Amounts not provided for equate to the sub-lease commitments expected to be received by the Company from sub-tenants currently occupying the premises pertaining to the operating lease.

An additional operating lease relating to office accommodation expiring in April 2006 was assigned to the sub-tenant effective April 2005. The terms of the assignment still provide for the Company to be liable for all rent and outgoings due under the operating lease should the subtenant default on their obligations under the terms of the assigned lease. The potential net liability to the Company should the sub-tenant default is approximately $45,000.

18. SEGMENT INFORMATION

The consolidated entity operated in one business segment, being medical technology. The consolidated entity operated during the year in one geographical segment being Australia.

The group accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Revenues are attributed to geographic areas based on the location of the assets producing the revenues.

Segment accounting policies are the same as the consolidated entity's policies described in Note 1. During the financial year, there were no changes in segment accounting policies that had a material effect on the segment information.

19. EARNINGS PER SHARE

The following reflects the income and share data used in the calculations of basic and diluted earnings per share:

	2005S	2004٩
Net Loss	(386, 191)	(336, 877)
Adjustments:
Net loss attributable to outside equityinterest
Losses used in calculating basic earningsper share	(386, 191)	(336, 877)
Losses used in calculating diluted earnings
per share	(386, 191)	(336, 877)
	Number of	Number of
	Shares	Shares
Weighted average number of ordinaryshares outstanding during the period used
in calculation of basic EPS	82,878,770	76,550,003
Effect of dilutive securities:Share options
Adjusted weighted average number ofordinary shares used in calculating diluted
earnings per share	82,878,770	76,550,003
Options on issue at year end not dilutive(based on the difference between thecurrent share price and the exercise price
of the options) and hence not used in thecalculation of diluted earnings per share		2,000,000

No ordinary shares have been issued since the reporting date and up to completion of this financial report.

20. DIRECTOR AND EXECUTIVE DISCLOSURES

This note outlines the remuneration arrangements for Genesis's directors and provides the disclosures required by new accounting standard AASB 1046 'Directors and Executive Disclosures by Disclosing Entities. This note also meets the remuneration reporting requirements of the Corporations Act 2001.

The disclosures in this Note cover the specified directors (including the Executive Chairman).

Remuneration Committee

Throughout the financial year, the consolidated entity did not have a remuneration committee as the directors believed the size of the consolidated entity and the size of the Board did not at that stage warrant its existence.

Subsequent to the $30th$ June 2005 the Directors have resolved to establish a remuneration committee. This committee will be made up of two directors, Mr Adrian Knight and Mr Roger Smith, who will also seek advice from independent consultants on trends in domestic executive and non-executive remuneration.

The intention of the Remuneration Committee is to establish Genesis's remuneration policies and practices and to ensure they match the group's objectives. It is intended that the Committee will make recommendations to the Genesis Board on the proposed Chief Executive Officer's total remuneration package, review the Non Executive remuneration and review any non-executive director share plan that may be proposed.

(a) Details of Specified Directors and Specified Executives

(i) Specified directors
R Gilmour	Chairman (executive)
E Correia	Director (non-executive)
R Smith	Director (non-executive): appointed 21 st February 2005
A Knight	Director (non-executive): appointed 21 st February 2005
A Davey	Director (non-executive): resigned $22nd$ February 2005

(ii) Specified executives Nil

(b) Remuneration of Specified Directors and Specified Executives

Dr Robert Gilmour, as Executive Chairman is currently the only executive of the Company and has been remunerated for this role as follows:

• $\triangleright$ Base Director Fees; and
• $\overleftrightarrow{ }$ Agreed Consultancy Fees.

Subsequent to $30th$ June 2005 the Board has agreed to include an additional fee for his role as Chairman.

The remaining Directors are all considered Non-Executive Directors.

Remuneration to the Non Executive Directors was by way of Directors Fees, with the level of such fees having been set by the Board to an amount it considers to be commensurate for a company of Genesis's size and level of activity.

20. DIRECTOR AND EXECUTIVE DISCLOSURES CONTD...

	PrimarySalaryand BaseFees	ConsultingFees	Non.Monetarybenefits	Post EmploymentSuperan-nuation	RetirementBenefits	EquityOptions	OtherDirectorsandOfficers	Total
Specified Directors							Insurance
R Gilmour
2005	$25,000	$90,244					$12,868	$128,112
2004	$25,000						$11,291	$36,291
E Correia
2005	$25,000						$12,868	$37,868
2004	$25,000						$11,291	$36,291
A Knight
2005	$8,850						$4,560	$13,410
2004
R Smith
2005	$8,850						$4,560	$13,410
2004
A Davey
2005	$16,200						$8,344	$24,544
2004	$24,024						$10,858	$34,882
		Total Remuneration: Specified Directors
2005	$83,900	$90,244					$43,200	$217,344
2004	$74,024						$36,967	$110,991

(b) Remuneration of Specified Dire ctors and Specified Executives contd...

(c) Option holdings of specified directors

	Balanceatbeginning	Net.BalanceGrantedOptionsExercisedChangeas.periodOtherRemun-of perioderation$#$2005		at end of	Total	Vested at 30 June 2005
	1 July2004				30 June	Total	Not.Exercisable	Exerciseable
Specified
Directors
R Gilmour	$\blacksquare$	مه		٠		$\rightarrow$
E Correia	$\blacksquare$			$\tilde{\phantom{a}}$		$\overline{\phantom{a}}$
A Knight	$\blacksquare$	$\blacksquare$	$\overline{r}$	$\mathcal{M}$	$\blacksquare$	$\tilde{a}$
R Smith	$\blacksquare$	$\blacksquare$		$\sim$	$\blacksquare$	$\overline{\phantom{a}}$
A Davey	$\blacksquare$
Total	$\blacksquare$

20. DIRECTOR AND EXECUTIVE DISCLOSURES CONTD....

(d) Shareholdings of Specified Directors Dolance of 1 Crantad as Our Warnaugher of

	Balance at 1July 2004/AppointmentDate	Granted asRemuneration	On Exercise ofOptions	NetChangeOther	Balance at 30June2005/ResignationDate
Specified
Directors
R Gilmour	4,000,000	٠	مد	مە	4,000,000
E Correia	125,000		٠	٠	125,000
A Knight			مد
R Smith	5,140,523		٠		5,140,523
A Davey	2,004,154		مد		2,004,154
Total	11,269,677		٠		11,269,677

All equity dealings have been entered into with terms and conditions no more favourable that those that the entity would have adopted if dealing at arm's length.

	Consolidated		Genesis Biomedical Ltd
	2005	2004	2005	2004
21. AUDITOR'S REMUNERATION
Amounts received or due and receivable
By Ernst & Young for:
- An audit and review of the financial
report of the entity and any other entity in
the consolidated entity	24,000	24,000	24,000	24,000
	24,000	24,000	24,000	24,000

22. RELATED PARTY DISCLOSURES

Other related party transactions

Transactions with director-related entities

The consolidated entity paid to Cardrona Capital Pty Ltd, a company of which Mr E Correia is a director, Company secretarial financial control and due diligence review fees totalling $86,700 (2004: $72,000).

The consolidated entity paid to Bodyworks Holdings Limited an amount of $90,244 (2004: Nil) in consulting fees. Refer to page 11 setting out the basis upon these consulting fees are paid.

23. SUBSEQUENT EVENTS

Signs Fertility Technology Agreement

On the 18th July 2005 the Company announced to the market that it entered into agreements upon which GBL may purchase the issued capital of a New Zealand based bio-technology company, involved in the development of fertility testing devices for use in both human healthcare and veterinary markets.

The company is known as Manawatu Biotech Investments Limited ("MBIL") and its focus is the development of commercial products based on its proprietary science concerning the measurement of the urinary glucuronides E1G and PDG which are metabolites of oestrogen and progesterone, respectively, found in the urine of female humans and various other mammals.

GBL has been working with MBIL in the further development of its proprietary science as well as working with two US-based companies specializing in lateral flow technology. The ultimate objective is to combine technologies in order to produce a medical device which in the first instance can be used to define the fertile period within the human menstrual cycle.

Potential Path to Market

To achieve its aim of having a commercial product to sell based on the application of the technologies summarised above, the Company has devised a path to market briefly outlined below.

Phase 1 - Intellectual Property Platform

The Company has implemented a clear and robust IP strategy and is currently in the process of prosecuting its patents across the Patent Co-operation Treaty ('PCT") territories.

Phase 2 - Complete Biochemical Assay Development

The assay feasibility studies are being completed. The development of a near market-ready product for use in humans will occur over the next 3 to 6 months and will involve cooperation between MBIL and two USbased companies specializing in reader and lateral flow strip development. The wider objective is to produce a registrable market-ready medical device.

The veterinary applications and, specifically, the bovine application are projected to be a further 12 months out in development. Further market research is required to determine the exact end specification of the product and its potential value proposition for farmers. Its commercial development will occur immediately upon successful completion of the human product.

Phase 3 - Test Strip development

The company has entered into a Memorandum of Understanding and expects to follow up with both a product development and licensing agreement with MagnaBioSciences (MBS). MBS is a US-based company with a proprietary Magnetic Assay Reader (MAR) technology capable of measuring a wide range of biochemical assays based on paramagnetic particle technology ("PMP").

The PMP technology has been commercialised for similar "body fluid" assays, and may be regarded as a proven technology.

23. SUBSEQUENT EVENTS CONTD...

Phase 4 - Product pre-market testing and specification refinement

Complete pre-market testing and refinement is expected to be completed within 3 to 6 months post the completion of Phase 3 (noting that certain aspects may be commenced within Phase 3).

Risk Analysis

The major risks lie in successfully completing the biochemical assay development required for the diagnostic test strips and formulating an algorithm to determine the fertility status from hormonal excretion rates (Phase 2). As at the date of this Report, the Company is in the process of undertaking the Biochemical Assay Development outlined in Phase 2 above.

The risk associated with the development of the PMP strip and reader (Phase 3) is considered to be minimal as the process is considered to be "proven". However, the affordability of the device by its target market remains a risk.

GBL believes the structure of the transaction provides the Company with significant flexibility to work with MBIL and the US based technology partners to progress the development of the proposed product. Further, the structure assists in mitigating the overall product development risk to Genesis by the incorporation of "go forward"/"stop" milestone points along the proposed 12 to 18 month development timeline.

Transaction Terms

The commercial terms of the transaction are the provision by Genesis to MBIL of a Loan Facility of up to AUD$250,000 to be applied against an agreed development budget, along with Genesis having the right to purchase within a twelve month period the entire issued capital of MBIL for a consideration of AUD$450,000 comprising a cash component of $200,000 and $250,000 in Genesis equity.

As at the date of this Report, Genesis had provided approximately $149,391 under the terms of the Loan Facility Agreement.

Capital Raising

On the 4th August 2005, the Company announced its intention of completing a non-renounceable rights issue to raise approximately $1,000,000.

The funds raised from the Rights Issue are to be used to assist to fund the Company's activities including:

• $(v)$ The recently announced MBIL transaction;
• $(vi)$ Continuing development in relation to CellGen;
• Appointment and ongoing costs associated with GBL's proposed new management and $(vii)$ advisory committee including the appointment of a Chief Executive Officer; and
• Other commercial opportunities and general working capital. $(viii)$

23. SUBSEQUENT EVENTS CONTD...

The commercial terms of the proposed Rights Issue offer are as follows:

Rights Issue Basis:	One $(1)$ Rights Issue Share offered for every Three $(3)$GBL shares held at record date, plus a free attachingRights Issue Option for every Rights Issue Sharesubscribed for.
Total Rights Issue Shares:	28,850,001
Rights Issue offer Price:	$0.035
Total amount to raise (excl costs):	$1,009,750
Total Rights Issue Options:	28,850,001
Rights Issue Option exercise price:	$0.06
Rights Issue Option exercise period:	3 years from date of issue
Rights Issue Options listed:	Yes
Shortfall	The Directors will have the right to place any shortfallRights Issue Shares and Options at their discretion

As at the date of this Report the Company was in the process of finalising the appropriate Rights Issue documentation for distribution to shareholders.

The following represents the pro-forma capital structure of Genesis assuming the Rights Issue (and any shortfall) is fully subscribed:

Pro-forma StructureCurrent Issued Fully Paid Ordinary Shares			No ofSecurities86,550,003		OptionExercisePrice	ExercisePeriod
Proposed Rights Issue SharesTotal Shares on Issue post Rights Issue	$1 \quad :$	-3	28,850,001115,400,004
Proposed Rights Issued Options	$1 \div 1$		28,850,001	T.	-0.06	3 years
Total Number of Securities on Issue postRights Issue			144,250,005

Other than disclosed there are no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.

24. FINANCIAL INSTRUMENTS

$(a)$ Terms, conditions and accounting policies

The consolidated entity's accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at the balance date, are as follows:

	RECOGNISEDFINANCIALINSTRUMENTS	BALANCESHEETNOTES	ACCOUNTING POLICIES	TERMS AND CONDITIONS
(i)	FINANCIALASSETS
	Cash at Bank	16(b)	Carried at nominal amount.Interest is recognised in thestatement of financialperformance when earned.	Available on call at effectiveinterest rates of 2.1% pa (2004:$4.3%$ pa).
	Receivables	5	Receivables are carried atnominal amounts due lessany provision for doubtfuldebts. A provision fordoubtful debts is recognisedwhen collection of the fullnominal amount is no longerprobable.	Credit sales are normally on30-day terms.
	Security deposits	7	Security deposits are lodgedwith the Bankers to theconsolidated entity, securingbank guarantees provided.Deposits are carried atnominal value.	Average Interest rate of 5.38%pa (2004: 5.02% pa)
	Shares and options	8	Listed shares and options arerecorded at the lower of cost.or recoverable amount	No dividends are expected tobe received.

FINANCIAL LIABILITIES $(ii)$

Payables (current)	10	Liabilities are recognised foramounts to be paid in thefuture for goods and servicesreceived, whether or notbilled to the consolidatedentity.	Trade liabilities are normallysettled on 30-day terms.

EQUITY $(iii)$

Ordinary shares $13(a)$

Ordinary share capital is recognised at the value of the amount received, less direct costs incurred in raising the funds.

The consolidated entity has issued 86,550,003 ordinary shares fully paid. Details of shares issued and the terms and conditions of options issued over ordinary shares at balance date are set out in Note 12.

Net fair values of financial assets and liabilities (b)

There is no difference between the aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, recorded at balance date and the carrying values of the financial assets and financial liabilities recorded at balance date.

The following methods and assumptions are used to determine the net fair values of financial $(c)$ assets and liabilities

Recognised Financial Instruments

Cash and cash equivalent: The carrying amount approximates fair value because of their short-term to maturity.

Security deposits are held by the consolidated entity's bank, securing bank guarantees in relation to leased office space. The carrying amount approximates fair value.

Receivables and payables: The carrying amount approximates fair value.

Inventories: The carrying amount approximates fair value.

Listed and unlisted shares: The carrying amount approximates fair value.

FINANCIAL INSTRUMENTS (Cont) 24.

$(d)$ Interest rate risk exposure

.......................................

The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows:

FIXED INTEREST RATE MATURING IN
FINANCIALINSTRUMENT	FLOATINGINTEREST RATE		1 YEARORLESS		1TQ5YEARS		NON-INTERESTBEARING		TOTAL		WEIGHTEDAVERAGEEFFECTIVEINTERESTRATE
(i) FINANCIALASSETS	2005	2004	2005	2004	2005	2004	2005	2004	2005	2004
Cash	61,926	49,204	1,001,566	1,039,084				$\mathbf{r}$	1,063,492	1,088,288	5.19%
Receivables	13,148	9,029	$\overline{a}$			$\cdot$	$\cdot$	$\tilde{\phantom{a}}$	13,148	9,029	N/A
Securitydeposits/Prepayments	134,782	226,954	$\overline{a}$			$\cdot$	$\cdot$	$\sim$	134.782	226,954	5.38%
Shares & options			$\overline{r}$			$\cdot$	$\cdot$	14,488		14,488	N/A
Total Financial Assets	209,856	285,187	1,001,566	1,039,084		$\overline{\phantom{a}}$		14,488	1,211,422	1,338,759
(ii) FINANCIALLIABILITIES
Payables (current)	70,532	18,410	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\mathbf{r}$	$\overline{\phantom{a}}$	$\cdot$		70,532	18,410	N/A
Total Financial Liabilities	70,532	18,410							70,532	18,410

(e) The consolidated entity's maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Position.

25. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS

Genesis Biomedical Limited (Genesis) has commenced transitioning its accounting policies and financial reporting from current Australian Standards to Australian equivalents of International Financial Reporting Standards (IFRS). The company has allocated internal resources to conduct impact assessments to isolate key areas that will be impacted by the transition to IFRS. As a result of these procedures the company believes that the impact of the introduction of IFRS will be minimal to the financial statements in their present form. As Genesis has a 30 June year end, priority has been given to considering the preparation of an opening balance sheet in accordance with AASB equivalents to IFRS as at 1 July 2004. This will form the basis of accounting for Australian equivalents of IFRS in the future, and is required when Genesis prepares its first fully IFRS compliant financial report for the year ended 30 June 2006.