SUREFIRE RESOURCES NL — Interim / Quarterly Report 2005

Feb 24, 2005

GENESIS BIOMEDICAL LTD $(ACN 083 274 024)$

HALF YEAR REPORT ENDED 31^ST DECEMBER 2004

• 1. Directors Report
• 1. Financial Statements for the half year ended 31st December 2004
• 1. Directors Declaration
• 1. Review Report
• 1. Statement of Auditor Independence

1. DIRECTORS REPORT

Your Directors submit the financial report for the economic entity for the half year ended 31^st December 2004.

$\overline{2}$

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 Gilmour B.Sc., MDChD	Non-executive Director
	Dr Gilmour brings extensive experience in medical design and in the orthopaedic, orthotic and prosthetic markets to the Genesis board. Dr Gilmour has taught anatomy at Monash Medical School and Stanford University, California, where he also worked in the Sports Medicine Clinic. Dr Gilmour began work in the area of medical 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 positions in Europe and in Australia with international accounting firms and investment banks. Mr Correia works in the areas of corporate structuring and strategy, capital raising and mergers and acquisitions.
Mr Adam S Davey	Non-executive Director
	Mr Davey has experience in merchant banking, stock broking and corporate advisory services. He is a Director of Montagu Pty Ltd, a member corporation of the Australian Stock Exchange and Chairman of Teen Challenge Foundation $(WA)$ Inc.

RESULTS

The consolidated entity's operating loss after tax for the half year ended 31^st December 2004 was \$102,264 $(2003:304,095).$

REVIEW OF OPERATIONS

The past six months has mainly been spent furthering the monitoring and review of the Company's Cell Gen trial occurring at the Pemex hospital in Mexico and continuing to review and assess various other commercial opportunities either presented to the Board and its advisers or alternatively sought out by the individual Directors.

Cell Gen

In addition to the trial being undertaken in Mexico, the Board has recently resolved to undertake an assessment of the costs, timing, likelihood of success and steps involved in furthering the development of the Cell Gen product and associated intellectual property to a point where the Board could be in a position to confidently register a Pre-Market Notification ("PMN") or 510(k) to the US Food and Drug Administration ("FDA").

Put simply, the registration of a PMN (and subsequent substantial equivalence approval) is a method available to device manufacturers to obtain FDA approval to distribute a medical device in the United States on the basis that the applicant can demonstrate a "substantially equivalent" device is already approved for sale/distribution by the FDA.

If the results of the above assessment are deemed to be positive the Board will look to implement a Cell Gen development plan including funding, appointment of distribution/marketing and manufacturing partners, intellectual property review and ultimate PMN registration.

The Board will continue to keep shareholders informed of the progression of the initial assessment.

Other Commercial Opportunities

As has been previously disclosed to the market, in addition to the further development of its Cell Gen asset, the Company continues to review other commercial opportunities either as an investment, joint venture or an outright purchase.

The Board has adopted an investment criteria setting out as a minimum what each commercial opportunity must contain prior to any time being spent assessing these potential transactions. This template includes the requirement for the transaction to contain the appropriate management, be in a proven industry or developed to a stage where an identifiable market exists for the product/IP and contains a demonstrable forecast growth pattern that may result in an appreciation of the GBL share price.

The Board has reviewed several opportunities in the six month period to $31^st$ December 2004, however has yet to be in a position to finalise the terms of a transaction that it could confidently recommend to shareholders to consider and approve.

The Board has been frustrated at not being in a position to put forward a transaction to shareholders to consider, however maintains that it would prefer to complete and propose a transaction that is likely to receive the full support and approval of the wider shareholder base.

The Board is in the process of enunciating a revised strategy going forward for the review, technical assessment and funding of potential transactions and is likely to be in a position to elaborate further to the market in the near future.

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 11^th November 2004.

The Company has incurred an operating loss of $$102,264$ for the six months to $31^st$ December 2004. This loss is as result of credit interest and revenue from sale of investments totalling \$52,522 offset by operating expenditure of \$154,786.

Auditor Independence

The Directors confirm they have received a Statement of Independence from the Company's Auditors, Ernst & Young, a copy of which can be found on page 15 of this Half Year Report dated 31^st December 2004.

SIGNED in accordance with a resolution of the directors

Emmanuel Correia Director

18th February 2005

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCE
FOR THE HALF YEAR TO 31^ST DECEMBER 2004

-5

	Notes	Consolidated
		31 December 2004	31 December 2003
		S	\$
REVENUES FROM ORDINARY
ACTIVITIES	2	52,522	109,731
Cost of investments sold	3	(11,700)
Corporate Expenses	3	(29, 047)
Salaries and employee benefits	3	(36,932)	(71, 494)
Occupancy Costs	3	(2,076)	(97, 227)
Professional fees	3	(62,160)	(86,140)
Travel	3	(1,783)	(2,066)
Increment/(decrement) in the value
of investments	3	2,930	(139,227)
Other expenses from ordinary activities	3	(14,018)	(17,672)
LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE		(102, 264)	(304,095)
INCOME TAX EXPENSE RELATING TO ORDINARY ACTIVITIES
LOSS FROM ORDINARY
ACTIVITIES AFTER INCOME TAX EXPENSE		(102, 264)	(304, 095)
NET LOSS ATTRIBUTABLE TO OUTSIDE EQUITY INTEREST
NET LOSS ATTRIBUTABLE TO MEMBERS OF GENESIS BIOMEDICAL LTD		(102, 264)	(304,095)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL PERFORMANCE
FOR THE HALF YEAR ENDED 31^ST DECEMBER 2004

	Notes	Consolidated
		31 December 2004 \$	31 December 2003 \$
TOTAL REVENUES, EXPENSES AND VALUATION ADJUSTMENTS ATTRIBUTABLE TO MEMBERS OF GENESIS BIOMEDICAL LTD AND RECOGNISED DIRECTLY IN EQUITY
TOTAL CHANGES IN EQUITY OTHER THAN THOSE RESULTING FROM TRANSACTIONS WITH OWNERS AS OWNERS ATTRIBUTABLE TO MEMBERS OF GENESIS BIOMEDICAL LTD		(102, 264)	(304,095)
Basic earnings per share (cents) Diluted earnings per share (cents)		(0.13) (0.13)	(0.40) (0.40)

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL POSITION AS AT 31^ST DECEMBER 2004

	Notes		Consolidated
		31 December 2004	30 June 2004	31 December 2003
		\$	\$	\$
CURRENT ASSETS Cash assets Receivables Inventories	6(b)	1,239,636 15,052	1,088,288	1,250,253 22,820
Other financial assets Other		5,718 225,275	14,488 226,955	14,859 235,211
TOTAL CURRENT ASSETS		1,485,681	1,329,731	1,523,143
NON-CURRENT ASSETS Plant and equipment Receivables Other financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS		1,485,681	1,329,731	1,523,143
CURRENT LIABILITIES Payables Provisions		25,336 99,807	9,381 74,357	10,591 163,026
TOTAL CURRENT LIABILITIES		125,143	83,738	173,617
NON-CURRENT LIABILITIES Provisions		8,059	76,250	147,001
TOTAL NON-CURRENT LIABILITIES		8,059	76,250	147,001
TOTAL LIABILITIES		133,202	159,988	320,618
NET ASSETS		1,352,479	1,169,743	1,202,525
EQUITY
Parent entity interest Contributed equity Reserves	4	13,272,985	12,987,985	12,987,985
Accumulated losses	5	(11, 899, 117)	(11, 796, 853)	(11,764,071)
Total parent entity interest in equity Total outside equity interest		1,373,868 (21,389)	1,191,132 (21,389)	1,223,914 (21, 389)
TOTAL EQUITY		1,352,479	1,169,743	1,202,525

×.

GENESIS BIOMEDICAL LTD AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31^ST DECEMBER 2004

	Notes		Consolidated
		Dec 2004 \$	Dec 2003 \$
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid NET CASH FLOWS USED IN OPERATING ACTIVITIES	6	(15,051) (171, 123) 27,051 (159, 123)	(17,778) (242, 419) 54,557 (205, 640)
CASH FLOWS FROM INVESTING ACTIVITIES Loan repaid by associates Cash acquired/(disposed) Proceeds from sale of investments Proceeds from sale of Bodyworks		25,471	60,518
NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES		25,471	60,518
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of ordinary shares Repayment of borrowings		285,000
NET CASH FLOWS FROM FINANCING ACTIVITIES		285,000
NET INCREASE/(DECREASE) IN CASH HELD		151,348	(145, 122)
Opening cash brought forward		1,088,288	1,395,375
CLOSING CASH CARRIED FORWARD AT THE END OF THE HALF YEAR	6	1,239,636	1,250,253

NOTES TO THE FINANCIAL STATEMENTS 31^st DECEMBER 2004

NOTE_1. 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 2004 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 2004 annual report. The half-year report does not include full disclosures of the type normally included in an annual financial report.

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

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

	Consolidated
	2003	2002
	\$	S
Revenues from operating activities Revenue from sale of goods
Total revenue from operating activities
Revenues from non-operating activities
Interest	27,051	54,557
Proceeds from sale of investments	25,471	55,174
Total revenue from non - operating activities	52,522	109,731
Total revenues from ordinary activities	52,522	109,731
NOTE 3. EXPENSES AND LOSSES/(GAINS)
Cost of investments sold	11,700
Corporate expenses	29,047
Employee expenses	36,932	71,494
(Increase) /decrease in value of
investments	(2,930)	139,227
Property expenses	2,076	97,227
Professional fees	62,160	86,140
Travel	1,783	2,066
Other expenses from ordinary activities	14,018	17,672
Total expenses from ordinary activities	154,786	413,826

REVENUE FROM ORDINARY ACTIVITIES NOTE 2.

12,987,985

76,550,003 13,272,985

	NOTE 4.	CONTRIBUTED EQUITY	Shares 2004	Shares 2003	S 2004	\$ 2003
(a)		Issued and paid up capital Fully 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 financial
	year	- Shares issued on $12^{th}$ November 2004 pursuant to a placement by Directors at 3	76,550,003	76,550,003	12,987,985	12,987,985
		cents per share - Expenses of the issue	10,000,000		300,000 (15,000)

86,550,003

Issued capital at the end of the half year

Share Options $(c)$

As at $31^{st}$ December 2004, there are nil $(2003: 2,000,000)$ unissued ordinary shares in respect of which options are outstanding. The following options expired during the half year ended $31^st$ December 2004:

Number	Exercise	Expired
	Price
2,000,000	0.40	23 November 2004

$(a)$ 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
	$31^{st}$ December 2004 S	30 th June 2004 \$
NOTE 5. RESERVES AND ACCUMULATED LOSSES
(a) Accumulated losses
Balance at beginning of year Net Loss attributable to members of Genesis		$(11,796,853)$ $(11,459,976)$
Biomedical Ltd	(102, 264)	(336, 877)
Balance at end of half vear/vear	.899.117)	(11,796,853)

NOTES TO THE FINANCIAL STATEMENTS $31^ST$ DECEMBER 2004 (cont'd)

NOTE 6. STATEMENT OF CASH FLOWS		Consolidated
		2004 \$	2003 S
(a)	Reconciliation of cash flows from operations with operating loss after income tax
	Operating loss after income tax	(102, 264)	(304,095)
	Provision for (increment)/diminution in
	value of investments	(2,930)	139,227
	Profit on sale of investments	(13,771)	(55,175)
	Changes in assets and liabilities
	(Increase)/decrease in receivables (Increase)/decrease in prepayments $\&$	(15,051)	(17,777)
	deposits	1,679	13,953
	(Decrease)/increase in creditors and accruals	15,955	(15,307)
	(Decrease)/increase in provisions	(42,741)	33,534
	Net cash flows used in operating activities	(159, 123)	(205, 640)
(b)	Reconciliation of cash
	Cash balances comprise - cash at bank
		1,239,636	1,250,253

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.

SIGNIFICANT CHANGE IN STATE OF AFFAIRS NOTE 8.

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.

NOTE 9. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS

The Company noted in its 30 June 2004 Annual Financial Report that it had 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 continues to believe that the impact of the introduction of IFRS will be minimal to the financial statements in their present form.

$-13$

DIRECTORS DECLARATION $3.$

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 $\mathbf b$ . December 2004 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
Emmanuel Correia	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Dated this 18th day of February	2005

4. INDEPENDENT REVIEW REPORT TO MEMBERS OF GENESIS BIOMEDICAL

Ell FRANCT & VEY INFO

® Smst & Young Centre OBO George Street Sedney NSW 2000 Ameratia
(1989年) 斜みの ふかすい Sydney NSW 3003

$\begin{array}{ll} 128 & 64.2 & 9243.55575 \ 198 & 64.2 & 9243.5959 \ 108 & 5ydivay block & \ & Exchange & 10173 \end{array}$

Independent review report to members of Genesis Biomedical Limited

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 and the other information set out in Appendix 4D to the Australian Stock Exchange (ASX) Listing Rules for the consolidated entity comprising both Genesis Biomedical Limited (the company) and the entities it controlled during the half-year, and the directors' declaration for the company, for the half-year ended 31 December 2004.

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, and the ASX Listing Rules as they relate to Appendix 4D. 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 ASX 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 professional reporting requirements in Australia, and the ASX Listing Rules as they relate to Appendix 4D, 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. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included at page 16.

$15$

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 Genesis Biomedical Limited and the entities it controlled during the half-year is not in accordance with:

• the Corporations Act 2001, including: $(a)$
• $(i)$ giving a true and fair view of the financial position of the consolidated entity at 31 December 2004 and of its performance for the half-year 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 and the ASX Listing Rules as $(b)$ they relate to Appendix 4D.

$E4+704$

Ernst & Young

Christopher George Partner

Sydney 18 February 2005

-16

5. STATEMENT OF AUDITOR INDEPENDENCE

Ell FRNST & YOU INC.

Ernst & Young Centre 680 George Street
Sydney - NSW - 2000
Australia CPO Box 2646
Sydney - NSW - 2003

# Tel = 61-2-9248-5555
- Eas = 61-2-9248-5969
- DX = Sydney-Stock
- Exchange-101-72

Auditor's Independence Declaration to the Directors of Genesis Biomedical Limited

In relation to our review of the financial report of Genesis Biomedical Limited for the half-year ended 31 December 2004, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Christopher George Partner 18 February 2005