SUREFIRE RESOURCES NL — Annual Report 2006

Sep 12, 2006

GENESIS BIOMEDICAL LTD $(ACN 083 274 024)$

APPENDIX 4E

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2006

• 1. Highlight of Results
• 1. Appendix 4E Financial Statements for the Year ended 30 June 2006

13 September 2006

$\mathbf{1}$ . Results for announcement to market

Set out below is the summary financial information for the Genesis Biomedical Limited ("company") for the financial year ended 30 June 2006 with further financial details attached to this announcement.

Consolidated
Summary Information	30-Jun-06	30-Jun-05S	Inc/Decs	Inc/Dec%
Revenue from Ordinary
Activities	115,621	331,607	(215,986)	$-65.13%$
Profit/(Loss) after Tax from
Ordinary Activities	(792, 580)	(386, 191)	(406,389)	105.23%
Net Profit/(Loss) after Tax
Attributable to Members	(792, 580)	(386, 191)	$-(406,389)$	105.23%
Basic Earnings - Cents Per
Share	(0.67)	(0.47)	(0.20)	42.6%
Net Tangible Assets -
Cents Per Share	$0.016	$0.013	$0.003	$-23.08%$
Dividends Paid	Nil	Nil

The Company's accounts are yet to be audited by Ernst & Young, Chartered Accountants.

Summary

The year ended 30 June 2006 has seen a high level of activity including the joint development of the fertility technology project with Manawatu Biotech Investments Limited ("MBIL"), ongoing assessment and due diligence carried out on various commercial opportunities, a capital raising and a change to the management and Board structure.

Having been appointed in December 2005 as Non-Executive Chairman the seven months to 30 June 2006 have been spent in conjunction with the Board assessing and continuing management of existing projects. completing a capital raising, developing a profile of, identifying and hiring an appropriate managing director and carrying out an in depth review of an opportunity that unfortunately did not satisfy the full due diligence process.

MBIL

The MBIL opportunity involved the Company entering into various agreements with MBIL that involved Genesis providing development funding for its fertility technology as well as securing an option to purchase the entire issued capital in MBIL within a twelve month time frame.

MBIL's 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.

Throughout the year MBIL commissioned a US based biotechnology company BioDot Inc to perform product development for two MBIL fertility hormone assays for women to a point where assays could be considered to be at the "proof of concept" stage.

For each of the two assays. BioDot were given a specification to work towards. These specifications were derived from the MBIL scientists' understanding of the requirements of the assays as indicators of the fertile status of women. The BioDot work concluded in December, with reporting occurring to MBIL late January.

In addition, BioDot manufactured and shipped to MBIL a batch of assay strips for testing. This testing work is currently underway at MBIL.

Generally, the assays developed by BioDot meet the criteria set out for them. In particular, BioDot demonstrated that paramagnetic particle assay technology provides an effective means of taking quantitative measurements of the levels of urinary metabolites of the key fertility hormones estrogen and progesterone, in the low assay time of 15 minutes. Further work was required to develop 'market-ready' assays.

Significant progress was made in respect of the development of the test strips themselves over the last twelve months and it demonstrated in the opinion of MBIL that the concept of using lateral flow assays based on paramagnetic particle technology is a valid one.

Whilst it is possible that the technology may be licensed now, further work was required to create a "marketready" product.

Under the terms of the option agreement Genesis had until early July 2006 to elect to exercise its option and purchase 100% of the issued capital of MBIL and by doing so be the ultimate owner of the MBIL technology as well as being responsible for the ongoing funding and project development.

In July 2006 the Company announced to the market that after considering several alternatives in relation to this asset, the Board of Genesis resolved to continue its involvement in MBIL on the following basis:

• 1. Sought full repayment of the monies advanced under the loan facility;
• 1. Elected not to exercise its option to purchase 100% of MBIL:
• 1. Has negotiated a position whereby Genesis have conditionally agreed to participate in an intended equity capital raising by MBIL to a level of NZD$250,000.

Rationale for not Exercising Option

Whilst the Board was satisfied with the continued development work carried out over the last twelve months by MBIL, and after discussions with the Company and its advisers is encouraged by MBIL's ongoing commercialisation strategy, the Board resolved not to exercise its option to purchase 100% of the Company.

The end rationale for not proceeding with the exercise of the option was carefully considered including site visits made by the newly appointed Managing Director to assess and review the project and was based largely on the following:

• 1. Assessed difficulty of running and administering the ongoing project in regional New Zealand from Genesis's head office in Perth;
• 1. Given the underlying status of the Company and its project, the effective value prescribed to MBIL through the exercise of the option was considered too high;
• 1. Upon exercise, Genesis would have been responsible for providing 100% of the required funding for MBIL, which for its next stage is considered to be approximately AUD $1 million:
• 1. Prior to the option exercise date, Genesis negotiating an in principle agreement (subject to obtaining certain MBIL approvals) whereby Genesis has conditionally agreed to subscribe for shares in MBIL at an agreed lower entry value point.

The Board considers that it has achieved a very positive outcome for Genesis by seeking repayment of its original loan monies, but maintaining a meaningful interest in the Company via its proposed shareholding and thereby gaining an exposure to the upside of any commercialisation success MBIL may have through implementation of its next stage commercialisation path.

The Board notes that the repayment of the loan by MBIL to Genesis and any subsequent investment by Genesis is conditional upon, amongst other things, MBIL being successful in raising sufficient equity capital.

As at the date of this report the Company was awaiting the completion of the MBIL 1st phase capital raising which if successful will be used in part to repay the loan amount outstanding to Genesis.

Commercial Opportunities

The Company reviewed several opportunities in the medical device sector throughout the year. Genesis completed an in-depth review of a project surrounding the establishment of a facility for the receiving, processing, culturing and storage of cells for use in the cord blood storage industry as well as the development of a collagen cell replacement therapy.

After having reviewed and considered all available due diligence material, the Board resolved not to proceed with the proposed transaction as it considered given the early stage nature of the projects and the existing connectitor landscape, the Board felt there was insufficient commercial upside to proceed.

Capital Raising

The Company completed an underwritten share and option offer in January 2006. The Company offered 80 million shares at an offer price of $0.03 plus 80 million attaching options to raise a total of $2.4 million (before costs of the offer). The options have an exercise price of $\bar{\mathbf{S}}0.03$ and are able to be exercised on or before 30 November 2010.

Management

With the change of Board structure in late November 2005, the new Board resolved that a full time Managing Director was required to drive the business forward. The Board composed a profile and identified Mr Don Valentino as the ideal candidate.

In his previous roles he has been successful in building businesses and driving growth through increased sales and strict operating cost management. Over the years Mr Valentino has developed an extensive network of medical industry participants and industry peers.

Mr Valentino joined the Company in May and has already commenced accessing his extensive network to assess existing projects and put in place strategies for the identification, review and negotiation on new projects as they come to light.

The Board is comfortable that the Company is now well positioned to deal with existing assets and identify new projects under the stewardship of an experienced business builder.

Financials

The consolidated entity's operating loss after tax for the year ended 30 June 2006 was $792,580 (2005: loss of $386,191). This result included interest income totalling $82,257 offset by operating expenditure which has increased this financial year due mainly to costs incurred in regard to due diligence undertaken on the projects included in this report.

Appendix 4E Financial Statements for the Year ended 30 June 2006 $2.$

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES INCOME STATEMENT YEAR ENDED 30 JUNE 2006

	Notes	Consolidated
		2006	2005
CONTINUING OPERATIONS		$	$
REVENUES FROM ORDINARY
ACTIVITIES	4	115,261	331,607
Salaries and Directors fees		(124, 656)	(83,021)
Lease Rental Payments	5(c)	(49,005)	(259, 624)
Professional fees	5(a)	(548, 253)	(303, 927)
Insurance		(51, 173)	(22, 503)
Due Diligence travel and
accommodation		(82, 238)	(35, 836)
Decrement in the value of
investments	5(b)
Other expenses from ordinary
activities		(52, 516)	(26, 443)
Net gain in listed investment
disposed	5(d)		13,556
LOSS FROM ORDINARYACTIVITIES BEFORE INCOMETAX EXPENSE		(792, 580)	(386, 191)
INCOME TAX EXPENSERELATING TO ORDINARYACTIVITIES	6
LOSS FROM ORDINARYACTIVITIES AFTER INCOMETAX EXPENSE		(792, 580)	(386, 191)
NET LOSS ATTRIBUTABLE TOOUTSIDE EQUITY INTEREST
NET LOSS ATTRIBUTABLE TOMEMBERS OF GENESISBIOMEDICAL LTD		(792, 580)	(386, 191)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES INCOME STATEMENT YEAR ENDED 30 JUNE 2006

	Notes	Consolidated2006
			2005
		$	$
Basic earnings per share (cents)Diluted earnings per share (cents)	1717	(0.67)(0.52)	(0.47)(0.47)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES BALANCE SHEET AT 30 JUNE 2006

	Notes	Consolidate d
		2006$	2005$\mathbf S$
CURRENT ASSETS
Cash and cash equivalents	15(b)	2,196,313	1,063,492
ReceivablesOther	78	376,20641,480	13,148134,782
TOTAL CURRENT ASSETS		2,613,999	1,211,422
NON-CURRENT ASSETS
Property Plant and Equipment	9	37,288
Other financial assets	10
TOTAL NON-CURRENT ASSETS		37,288
TOTAL ASSETS		2,651,287	1,211,422
CURRENT LIABILITIES
Payables	12	116,315	70,532
Provisions	12		72,338
TOTAL CURRENT LIABILITIES		116,315	142,870
NON-CURRENT LIABILITIES
TOTAL LIABILITIES		116,315	142,870
NET ASSETS		2,534,972	1,068,552
EQUITYEquity attributable to equity holders ofthe parent
Contributed equity	13	15,531,985	13,272,985
Accumulated losses	14	(12,997,013)	(12, 204, 433)
Parent Interests		2,534,972	1,068,552
Minority Interests
TOTAL EQUITY		2,534,972	1,068,552

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES CASHFLOW STATEMENT YEAR ENDED 30 JUNE 2006

	Notes		Consolidated
		2006	2005
		$	$
CASH FLOWS FROM
OPERATING ACTIVITIES
Receipts from customers		9,318	255,168
Payments to suppliers and employeesNET CASH FLOWS USED IN		(827, 945)	(664, 180)
OPERATING ACTIVITIES	15(a)	(818, 627)	(409, 012)
CASH FLOWS FROM INVESTINGACTIVITIES
Purchase of fixed assets		(37,288)
Interest received		82,257	68,243
Proceeds from sale of investments			30,973
NET CASH FLOWS FROM
INVESTING ACTIVITIES		44,969	99,216
CASH FLOWS FROMFINANCING ACTIVITIES
Loans made to third party		(352, 521)
Proceeds from issue of ordinary shares		2,259,000	285,000
NET CASH FLOWS FROM
FINANCING ACTIVITIES		1,906,479	285,000
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS		1,132,821	(24,796)
Opening cash brought forward		1,063,492	1,088,288
CASH AND CASH EQUIVALENTS
AT END OF PERIOD	15(b)	2,196,313	1,063,492

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 30 JUNE 2006

	S	$	${\mathbb S}$	$
	Parent Entity Interest		Minority
	ShareCapital	RetainedProfits	Interests	Total
Balance at 1.7.2004		12,987,985 (11,818,242)		1,169,743
Shares issued during the year	300,000			300,000
Loss for the period		(386, 191)		(386, 191)
Share issue costs	(15,000)			(15,000)
Total income and expense for theperiod	(15,000)	(386, 191)		(401, 191)
Balance at 30.6.2005	13,272,985	(12, 204, 433)	÷,	1,068,552
Balance at 1.7.2005		13,272,985 (12,204,433)		1,068,552
Shares issued during the year	2,403,000			2,403,000
Loss for the period		(792, 580)		(792, 580)
Share issue costs	(144,000)			(144,000)
Total income and expense for theperiod	(144,000)	(792, 580)	÷	(936, 580)
Balance at 30.06.2006		15,531,985 (12,997,013)		2,534,972

$\mathbf{I}$ . CORPORATE INFORMATION

Genesis Biomedical Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian stock exchange.

$\overline{2}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The report has been prepared in accordance with the requirements of the Corporations Act 2001, and Australian Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

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

(b) Statement of Compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards(IFRS).

This is the first financial report based on AIFRS and comparatives for the year ended 30 June 2005 have been restated accordingly except for the adoption of AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement. The Company has adopted the exemption under AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards from having to apply to AASB 132 and AASB 139 to the comparative period. Reconciliations of AIFRS equity and profit for 30 June 2005 to the balance reported in the 30 June 2005 financial report and at transition to AIFRS are detailed in Note 3.

Certain Australian Accounting Standards and UIG interpretations have recently been issued or amended but are not yet effective and have not been adopted by the group for the annual reporting period ended 30 June 2006. The directors have assessed the impact of these new or amended standards (to the extent relevant to the group) and do not expect any impact to the amounts recognised in the financial statements.

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006

$21$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTD...

(c) Principles of Consolidation

A controlled entity is any entity controlled by Genesis Biomedical Limited whereby it has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report. Losses that exceed the minority interest have been allocated against the majority interest.

(d) Income Tax

The economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any non-assessable or disallowed items.

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

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

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

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

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

$21$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTD

(e) Financial Instruments

Recognition

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

Loans and receivables

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

Impairment

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

(f) Foreign Currency Transactions and Balances

Functional and presentation currency

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

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Exchange differences arising on the translation of monetary items are recognised in the income statement.

(g) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured.

(h) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-borrowings in current liabilities on the balance sheet.

(i) Revenue

Interest revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts though the expected life of the financial instrument) to the net carrying amount of the financial asset.

All revenue is stated net of the amount of goods and services tax (GST).

$\overline{2}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTD

(i) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(k) 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.

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.

(1) Other Current Receivables

Other current receivables are carried at the nominal amounts due. The collectability of debts is assessed continually and specific provision is made for any doubtful debts.

(m)Trade and Other Payables

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

(n) Contributed Equity

Issued and paid up capital is recognized 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.

(o) 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.

$\overline{2}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTD

(p) 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.

Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.

Depreciation is calculated on a straight line basis over the estimated useful life of the assets as follows:

Plant and Equipment – over 5 to 15 years.

NOTE 3: FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

As stated in Genesis Biomedical Limited 2005 Annual Report notes to the accounts, the Company at that stage was of the opinion that any impact from transitioning its accounting policies and financial reporting from Australian Standards to Australian equivalents of International Financial Reporting Standards (AIFRS) would be minimal. As a result of adopting AASB 127 "Consolidated and Separate Financial Statements" the minority interest loss of $21,389 has been reclassified into retained earnings. No other transitional adjustments have been included.

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006

NOTE 4. REVENUE FROM ORDINARY ACTIVITIES

	Consolidated
	2006	2005
	$	$
Revenues from operating activitiesRevenue from sale of goods
Total revenue from operating
activities
Revenues from non-operating
activities
Interest – other corporations	82,257	68,243
Rental income - sub leased premises	33,003	263,364
Total revenue from non - operatingactivities	115,261	331,607
Total revenues from ordinary
activities	115,261	331,607
NOTE 5.EXPENSES AND
LOSSES/(GAINS)
(a) Professional Fees
Audit Fees	30,791	24,000
Company Secretarial Fees	89,500	72,000
Corporate Advisory Services	146,120
Legal Fees	40,321	16,873
Accounting Fees	4,312	10,878
Due Diligence related Consultants	51,844
ASX/Share Registry Fees	47,685	21,908
Other Consulting Fees	137,680	158,268
Total	548,253	303,927
(b) Other expenses and losses/(gains)
(c) Minimum Lease Rental payments
associated with sub-leased excess
office premises	49,009	259,624
(d) Cost of Investments in listedinvestments sold		17,418
Proceeds from sale of listed
investments		(30,974)
Net (gain)/loss on listed
investments sold		(13, 556)

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006 (cont'd)

			Consolidated
NOTE 6.INCOME TAX	Notes	2006$	2005S
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		(237,774)	(115, 857)
Tax effect of permanent differences:Research & development refundAmortisation of non-deductible
expendituresCurrent period tax benefit not broughtto account		(237,774)	(115, 857)
Income tax expense attributable toordinary activities

As at 30 June 2006 deferred tax assets were available to the consolidated entity in respect of operating losses. The Directors estimate the potential income tax benefit at 30 June 2006 in respect of tax losses not brought to account is approximately $4,346,386 (2005: $4,108,612). The benefit of these losses has not been brought to account as realisation is not probable.

The deferred tax asset 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;
• the consolidated entity continues to comply with the conditions for deductibility imposed by tax $(b)$ 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
	2006	2005
	S	$
NOTE 7. RECEIVABLES(CURRENT)
Other Debtor	23,685	13,148
Manawatu Biotech Investments Loan	352,521
	376,206	13,148
NOTE 8. OTHER CURRENT ASSETS
Prepayments		12,969
Security deposits in respect of operating leases	41,480	121,813
	41,480	134,782
NOTE 9. PROPERTY PLANT ANDEQUIPMENT	Consolidated
	Furniture andOffice Equipment	Total
Year ended 30 June 2005Additions at Cost	37,288	37,288
Accumulated Depreciation and Impairment
Year ended 30 June 2006	37,288	37,288
NOTE 10. OTHER FINANCIAL ASSETS(NON-CURRENT)	Consolidated
	2006	2005
	$\overline{\mathbb{S}}$	$\overline{\mathbb{S}}$
Investments at cost comprise:Shares - unlisted	547,862	547,862

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006 (cont'd)

Investment in controlled entities (Refer to note 11)

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.

$\overline{a}$ $\overline{\phantom{0}}$

$\frac{1}{2}$

NOTE 10. OTHER FINANCIAL ASSETS (NON-CURRENT) CONTD

The Company has entered into an agreement dated 29 May 2006 whereby Back to Health Pte Ltd and DBCI Asia Pacific Pte Ltd (together "DBC") have agreed to purchase back the equipment originally purchased by the Company in relation to the DBC operations.

The material commercial terms of this agreement are that DBC and associates have agreed to purchase back the DBC equipment from the Company through the payment of 10,000 EURO plus agree to enter into a share swap whereby the parties agree to "swap back" their respective holdings in Back to Health Pte Ltd and DBC Australia Pty Ltd.

The Company had written down the value of the equipment to zero and was incurring storage costs. This transaction has not been reflected in the financial statements to 30 June 2006 as the equipment was not dispatched and title remained with Genesis.

NOTE 11. INTERESTS IN COTROLLED ENTITIES

Name	Country ofIncorporation	Percentage of equityinterest held by theconsolidated entity
		2006	2005	2006	2005
Direct				S	$
Genovations Pty Ltd	Australia	100	100
NewMed Systems Ltd	Australia	100	100
Smart Chair Systems Pty Ltd	Australia	50	50
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	$\overline{\phantom{a}}$

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.

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006 (cont'd)

		Consolidated
		2006	2005
		$	S
NOTE 12.	PAYABLES (CURRENT)
Trade creditors (I)		44,585	20,532
Other creditors		71,730	50,000
		116,315	70,532
	Aggregate amounts payable to related parties:Directors and director-related entities
- director related entities		6,875	50,000
14 days.	I: Trade payables are non-interest bearing and normally settled in
12a.	PROVISIONS (CURRENT)
Surplus lease space			16,671
Other provisions			55,667
			72,338
	12b. MOVEMENTS IN PROVISIONS
	(i) Surplus Lease Space ProvisionCarrying amount at the beginning of the financial year	16,671
Additional Provision
	Amounts utilised during the year	(16, 671)
	Carrying amount at the end of the financial year
(ii) Other Provisions
Additional Provision	Carrying amount at the beginning of the financial year	55,667
	Amounts utilised during the year	(55, 667)
	Carrying amount at the end of the financial year

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2006 (cont'd)

	13. CONTRIBUTED EQUITY	Shares2006	Shares2005	$2006	$2005
(a)	Issued and paid up capitalFully paid ordinary shares	166,650,003	86,550,003	15,531,985	13,272,985
(b)	Movement in shares on issue- Issued capital at beginning of financial
	year	86,550,003	76,550,003	13,272,985	12,987,985
	- Shares issued on 2 February 2006pursuant to an underwritten offer ofshares by Directors at 3 cents per fullypaid share	80,000,000		2,400,000
	- Shares issued on 3 March as a result ofthe exercise of 100,000 10 November2010 options- Shares issued on $11^{th}$ November 2004	100,000		3,000
	pursuant to a placement by Directors at 3
	cents per fully paid share		10,000,000		300,000
	- Less expenses of the issue			(144,000)	(15,000)
	Issued capital at the end of the financial year	166,650,003	86,550,003	15,531,985	13,272,985

$(c)$ Share Options

As at 30 June 2006, there are 79,900,000 (2005: Nil) unissued ordinary shares in respect of which options were outstanding.

$(d)$ Terms and conditions of contributed equity

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.

NOTES TO THE FINANCIAL STATEMENTS JUNE 2006 (cont'd)

	Consolidated
14.ACCUMULATED LOSSES	2006S	2005S
Balance at beginning of yearNet Loss attributable to members of Genesis		$(12,204,433)$ $(11,818,242)$
Biomedical Ltd	(792, 580)	(386,191)
Balance at end of year	12,997,013	(12, 204, 433)

Consolidated

15. CASH AND CASH EQUIVALENTS

		2006S	2005$
(a)	Reconciliation of cash flows fromoperations with operating loss afterincome tax
	Operating (loss) after income tax	(792, 580)	(386, 191)
	Profit on sale of investments		(13, 556)
	Provision for diminution / (increment) in
	value of investments		(2,930)
	Interest received	(82, 257)	(68,243)
	Changes in assets and liabilities(Increase)/decrease in receivables(Increase)/decrease in prepayments $&$deposits(Decrease)/increase in creditors andaccruals(Decrease)/increase in provisions	(10, 536)93,30145,783(72,338)	(8,196)92,17256,200(78, 268)
	Net cash flows used in operating
	activities	(818, 627)	(409, 012)
(b)	Reconciliation of cash
	Cash balances comprise- cash at bank	2,196,313	1,063,492

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

16. SEGMENT INFORMATION

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

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

المتمعا

سممعا

EARNINGS PER SHARE 17.

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

	2006$	2005S
Net Loss	(792, 580)	(386, 191)
Adjustments:
Net loss attributable to outside equity
interest
Net loss attributable to equity holders ofthe parent	(792, 580)	(386, 191)
Net loss attributable to ordinary
shareholders for diluted earnings per share	(792, 580)	(386, 191)
	Number of	Number of
	Shares	Shares
Weighted average number of ordinaryshares outstanding during the period used
in calculation of basic EPS	119,020,962	82,878,770
Effect of dilutive securities:
Share options	32,186,575
Weighted average number of ordinaryshares adjusted for the effect of dilution	151,207,537	82,878,770
Options on issue at year end not dilutive
(based on the difference between the
current share price and the exercise price
of the options) and hence not used in the
calculation of diluted earnings per share

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