SUREFIRE RESOURCES NL — Interim / Quarterly Report 2004

Feb 26, 2004

GENESIS BIOMEDICAL LTD $(ACN 083 274 024)$

HALF YEAR REPORT ENDED 31ST DECEMBER 2003

• 1. Directors Report
• 1. Financial Statements for the half year ended 31st December 2003
• 1. Directors Declaration
• 1. Review Report

$26th$ February 2004

1. DIRECTORS REPORT

Your Directors submit the financial report for the economic entity for the half year ended 31st December 2003.

$\overline{2}$

DIRECTORS

The names and details of the company's directors in office during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Dr Robert F GilmourB.Sc., MDChD	Non-executive DirectorDr Gilmour brings extensive experience in medical design and in the orthopaedic,orthotic and prosthetic markets to the Genesis board. Dr Gilmour has taughtanatomy at Monash Medical School and Stanford University, California, where healso worked in the Sports Medicine Clinic. Dr Gilmour began work in the area ofmedical design in 1987 and gained quick success in retail markets.
Mr Emmanuel Correia Non-executive Director	Mr Correia is an Associate of the Institute of Chartered Accountants of Australia.Over the last 10 years, Mr Correia has held a number of corporate finance positionsin Europe and in Australia with international accounting firms and investmentbanks. Mr Correia works in the areas of corporate structuring and strategy, capitalraising and mergers and acquisitions.
Mr Adam S Davey	Non-executive Director (Appointed 15 th July 2003)
	Mr Davey was appointed to the Board on $15th$ July 2003 and he has experience inmerchant banking, stock broking and corporate advisory services. He is a Directorof Montagu Pty Ltd, a member corporation of the Australian Stock Exchange andChairman of Teen Challenge Foundation (WA) Inc.
	Mr Rupert J Northcott Non-executive Director (Resigned 24 th October 2003)Mr Northcott is an experienced pharmaceutical and healthcare executive withextensive Australasian and International marketing experience. During his careerhe has launched significant new products in the prescription, OTC and health foodmarkets. He has worked for large multinational pharmaceutical companies as asenior marketing executive and has more recently been the chief executive of amedical publishing company, the Managing Director of a UK based electronicinformation distributor and the Managing Director of Australia's leading medicalsoftware company.
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RESULTS

The consolidated entity's operating loss after tax for the half year ended 31st December 2003 was $304,095 (December 2002: $1,049,793).

REVIEW OF OPERATIONS

The six months to 31st December 2003 saw the Company continue the evaluation of its CellGen treatment in conjunction with the Pemex Hospital in Mexico City and the pursuit of additional commercial opportunities.

The CellGen therapy is being evaluated for both the stimulation of bone growth and healing of various fractures as well the treatment for osteoarthritis of the knee. Anecdotal evidence suggests that the trial is progressing well and the Board is hopeful that it will be able to release more conclusive results in the $f^{\text{st}}$ quarter of this year.

The Board continued to review various commercial opportunities throughout the six months and in November 2003 announced to the market that it had entered into a conditional Heads of Agreement to purchase the issued capital of Ensi-Med Manufacturing Pty Ltd, a company involved in the production of retractable safety syringes.

Whilst the Board was satisfied and encouraged by many aspects of Ensi-Med's product and operations there were certain conditions precedent associated with the proposed transaction that both parties were unable to reach agreement on and therefore in late January 2004 the Board resolved not to proceed with the transaction.

The Company continues to operate under a much reduced overhead structure which resulted in a loss after tax from ordinary activities for the six months to December 2003 of $304,095. This result included a $150,000 write down in the carrying value of the Company's investment in a Singaporean based musculoskeletal treatment clinic. The Company maintains a balance of approximately $1.4 million in cash and security deposits at the end of the six month period.

The Board is continuing to seek further commercial opportunities and will keep the market informed as and when such opportunities develop.

SIGNED in accordance with a resolution of the directors

Adam Davey Director

26th February 2004

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCEFOR THE HALF YEAR TO 31ST DECEMBER 2003

$\overline{\mathbf{A}}$

	Notes	Consolidated
		31December2003$	31December2002S
REVENUES FROM ORDINARY
ACTIVITIES	2	109,731	1,660,771
Cost of materials	$\overline{\mathbf{3}}$		(709, 638)
Cost of investments sold	3
Depreciation and amortisation	3		(406, 608)
Borrowing costs expense	3		(43,071)
Salaries and employee benefits	3	(71, 494)	(607, 898)
Rent	$\overline{\mathbf{3}}$	(97,227)	(268,944)
Professional fees	3	(86, 140)	(337, 434)
Travel	3	(2,066)
Marketing	3		(93, 831)
Research and development	$\overline{\mathbf{3}}$		(2,139)
Increment/(decrement) in the value
of investments	3	(139, 227)	(25,714)
Other expenses from ordinary
activities	3	(17,672)	(324, 683)
Foreign exchange gain /(loss)
LOSS FROM ORDINARYACTIVITIES BEFORE INCOMETAX EXPENSE		(304, 095)	(1,159,189)
INCOME TAX EXPENSERELATING TO ORDINARYACTIVITIES
LOSS FROM ORDINARYACTIVITIES AFTER INCOMETAX EXPENSE		(304,095)	(1,159,189)
NET LOSS ATTRIBUTABLE TOOUTSIDE EQUITY INTEREST			109,396
NET LOSS ATTRIBUTABLE TOMEMBERS OF GENESISBIOMEDICAL LTD		(304,095)	(1,049,793)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCE FOR THE HALF YEAR ENDED 31ST DECEMBER 2003

	Notes	Consolidated
		31December2003S	31December2002$
TOTAL REVENUES, EXPENSESAND VALUATIONADJUSTMENTSATTRIBUTABLE TO MEMBERSOF GENESIS BIOMEDICAL LTDAND RECOGNISED DIRECTLYIN EQUITY
TOTAL CHANGES IN EQUITYOTHER THAN THOSERESULTING FROMTRANSACTIONS WITHOWNERS AS OWNERSATTRIBUTABLE TO MEMBERSOF GENESIS BIOMEDICAL LTD		(304, 095)	(1,049,793)
Basic earnings per share (cents)Diluted earnings per share (cents)		(0.4)(0.4)	(1.38)(1.38)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER 2003

6

313031
DecemberDecemberJune200320032002
$$$
CURRENT ASSETSCash assets1,395,3756(b)1,250,2531,441,316Receivables22,8205,0448,714
248,411InventoriesOther financial assets14,85917,1439,429Other259,614235,211249,164
TOTAL CURRENT ASSETS1,523,1431,659,0121,975,198
NON-CURRENT ASSETSPlant and equipment62,500Receivables1,511,729150,000Other financial assets150,000
150,000TOTAL NON-CURRENT ASSETS1,724,229
1,523,1431,809,0123,699,427TOTAL ASSETS
CURRENT LIABILITIESPayables10,59125,89840,336Provisions163,026134,053166,874
173,617159,951207,210TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES147,001Provisions142,440259,960
TOTAL NON-CURRENT147,001142,440259,960LIABILITIES
320,618467,170302,391TOTAL LIABILITIES
1,202,5251,506,6213,232,257NET ASSETS
EQUITYParent entity interest
Contributed equity12,987,98512,987,98512,987,9854Reserves
(11, 459, 975)Accumulated losses5(11,764,071)(9,946,394)
Total parent entity interest in equity1,223,9141,528,0103,041,591Total outside equity interest(21,389)(21,389)190,666
TOTAL EQUITY1,202,5253,232,2571,506,621

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWSFOR THE HALF YEAR ENDED 31ST DECEMBER 2003

	Notes	Consolidated
		Dec2003$	Dec2002$
CASH FLOWS FROMOPERATING ACTIVITIESReceipts from customersPayments to suppliers and employeesInterest receivedInterest and other costs of finance paid		(17,778)(242, 419)54,557	1,328,406(2,368,003)41,133(43,071)
NET CASH FLOWS USED INOPERATING ACTIVITIES	6	(205, 640)	(1,041,535)
CASH FLOWS FROM INVESTINGACTIVITIESLoan repaid by associatesCash acquired/(disposed)Proceeds from sale of investmentsProceeds from sale of Bodyworks		60,518	1,179,730(38,228)2,293,505
NET CASH FLOWS FROM /(USED IN) INVESTINGACTIVITIES		60,518	3,435,007
CASH FLOWS FROMFINANCING ACTIVITIESProceeds from issue of ordinary sharesRepayment of borrowings			175,000(1,187,455)
NET CASH FLOWS FROMFINANCING ACTIVITIES			(1,012,455)
NET INCREASE/(DECREASE) INCASH HELD		(145, 122)	1,381,017
Opening cash brought forward		1,395,375	60,299
CLOSING CASH CARRIEDFORWARD AT THE END OF THEHALF YEAR	6	1,250,253	1,441,316

NOTES TO THE FINANCIAL STATEMENTS 31st DECEMBER 2003

NOTE1 BASIS OF PREPARATION

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standard AASB 1029: Interim Financial Reporting, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2003 and any public announcements made by Genesis Biomedical Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The accounting policies have been consistently applied by the entities in the economic entity and are consistent with those applied in the 30 June 2003 annual report. The half-year report does not include full disclosures of the type normally included in an annual financial report.

NOTE 2. REVENUE FROM ORDINARY ACTIVITIES

	Consolidated
	2003	2002
	$	$
Revenues from operating activities
Revenue from sale of goods		1,617,638
Total revenue from operating
activities		1,617,638
Revenues from non-operating
activities
Interest	54,557	43,133
Profit on sale of Investments	55,174
Total revenue from non - operating
activities	109,731	43,133
Total revenues from ordinary
activities	109,731	1,660,771
NOTE 3. EXPENSES AND
LOSSES/(GAINS)
Cost of goods sold		709,638
Interest paid		43,071
Foreign exchange gain
Research and development		2,139
Employee expenses	71,494	607,898
Depreciation & amortisation		406,608
(Increase) /decrease in value of	139,227	25,714
investments
Property expenses	97,227	268,944
Marketing		93,831
Professional fees	86,140	337,434
Travel	2,066
Other expenses from ordinary activities	17,672	324,683
Total expenses from ordinary activities	413,826	2,819,960

	NOTE 4.CONTRIBUTED EQUITY	Shares2003	Shares2002	S2003	$2002
(a)	Issued and paid up capitalFully paid ordinary shares	76,550,003	76,550,003	12,987,985	12,987,985
(b)	Movement in shares on issue- Issued capital at beginning of financialyear- Shares issued $18th$ July 2002 pursuant to aplacement by Directors at 5 cents pershare	76,550,003	73,050,0033,500,000	12,987,985	12,812,985175,000
	Issued capital at the end of the half year	76,550,003	76,550,003	12,987,985	12,987,985

$(c)$ Share Options As at 31st December 2003, there are 2,000,000 (2002: 5,450,000) unissued ordinary shares in respect of which options were outstanding and the details of these are as follows:

Number	Exercise	Expiry Date
	Price
2,000,000	0.40	23 November 2004

These options are exercisable at any time up to their expiry date.

$(a)$ 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.

	Consolidated
	2003	2002
	S	S
NOTE 5. RESERVES AND ACCUMULATED
LOSSES
(a) Accumulated losses
Balance at beginning of year	(11,459,976)	(11,383,652)
Elimination due to sale of 80% of Bodyworks		2,487,051
Net Loss attributable to members of Genesis
Biomedical Ltd	(304, 095)	(1,049,793)
Balance at end of half year	(11,764,071)	(9,946,394)

NOTES TO THE FINANCIAL STATEMENTS 31ST DECEMBER 2003 (cont'd)

NOTE 6. STATEMENT OF CASH FLOWS		Consolidated
		2003$	2002S
(a)	Reconciliation of cash flows fromoperations with operating loss afterincome tax
	Operating loss after income tax	(304,095)	(1,159,189)
	Depreciation of non-current assets		406,608
	Foreign exchange (gain)/ loss		(48,750)
	Provision for diminution in value of	139,227	25,714
	investments
	Profit on sale of investments	(55,175)
	Changes in assets and liabilities
	(Increase)/decrease in receivables	(17,777)	44,844
	(Increase)/decrease in prepayments $&$
	deposits	13,953	(65,316)
	(Decrease)/increase in creditors andaccruals	(15,307)	(340, 695)
	(Decrease)/increase in provisions	33,534	95,249
	Net cash flows used in operating
	activities	(205, 640)	(1,041,535)
(b)	Reconciliation of cash
	Cash balances comprise
	- cash at bank	1,250,253	1,441,316

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

NOTE 7. CONTINGENT LIABILITIES

There has been no change in contingent liabilities since the last annual reporting date.

NOTE 8. SIGNIFICANT CHANGE IN STATE OF AFFAIRS

Other than disclosed there are no other matters or circumstances that have arisen since the end of the reporting period 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.

3. DIRECTORS DECLARATION

The directors of the company declare that:

• The financial statements and notes, as set out on pages 4 to 10: $\mathbf{1}$ .
  • comply with Accounting Standard AASB 1029: Interim Financial Reporting and a. the Corporations Regulations; and
  • give a true and fair view of the economic entity's financial position as at 31 $b$ December 2003 and of its performance for the half year ended on that date.
• In the directors' opinion there are reasonable grounds to believe that the company will be $\overline{2}$ . able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director
Adam Davey
Dated this 26th day of February	2004

4. INDEPENDENT REVIEW REPORT TO MEMBERS OF GENESIS BIOMEDICAL LIMITED

EI ERNST & YOUNG

III The Ernst & Young Building 321 Kent Street Sydney NSW 2000 Australia

GPO Box 2646 Sydney NSW 2001 ■ Tel 61 2 9248 5555 Fax: 61 2 9262 6565 DX Sydney Stock Exchange 10172

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the consolidated entity comprising both Genesis Biomedical Limited (the company) and the entities it controlled during the period, and the directors' declaration for the company, for the period ended 31 December 2003

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the consolidated entity, and that complies with Accounting Standard AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory financial reporting requirements in Australia, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the consolidated entity, comprising Genesis Biomedical Limited and the entities it controlled during the period is not in accordance with:

• the Corporations Act 2001, including: $(a)$
  • giving a true and fair view of the financial position of the consolidated entity at 31 $(i)$ December 2003 and of its performance for the period ended on that date; and
  • complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and $(ii)$ the Corporations Regulations 2001; and
• other mandatory financial reporting requirements in Australia. $(b)$

Ernst & Young

Christopher George Partner Sydney 26th February 2004