SUREFIRE RESOURCES NL — Interim / Quarterly Report 2006

Mar 14, 2006

Genesis Biomedical Ltd

(ABN 48 083 274 024)

Half Year Financial Report 31 December 2005

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Genesis Biomedical Ltd ABN 48 083 274 024

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Contents

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Directors Report
Statement of Auditor Independence
Financial Statements
Directors Declaration
Auditors Review Report

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DIRECTORS' REPORT

Your directors submit the financial report of the economic entity for the half-year ended 31 December 2005.

Directors

The names of directors who held office during or since the end of the half-vear:

Appointed 7 December 2005 Mr Johnston has a bachelor of Economics degree from Mr Rodger Johnston -Non Executive Chairman the University of Sydney and was a member of the Australian Society of Accountants (CPA Australia) from 1976 to 1996. He commenced his career as an insolvency specialist, rising to the level of Senior Management. During the 1980's he managed a private investment company following which he was principal of a venture capital firm for a period of eight years.

Mr Johnston is Chairman and CEO of ASX listed IC2 Global Limited; a non-executive director of ASX listed mining company Rusina Mining NL: and non-executive director of Peoples Merchant Bank Limited which is listed on the Colombo Stock Exchange.

• Appointed 28 November 2005, Mr Black was a Certified Practicing Accountant for in Mr Russell Black - Non excess of 20 years and remains the managing partner of the Western Australian Executive Director based Goldfinch Black Public Accountants. The practice attends to the needs of a diverse range of small business clients from four locations in Perth and the Pilbara with extended services of financial planning, finance broking and real estate investments.
• Mr Smith has many years experience in retail trade. He has held a number of Mr Roger Smith - Non proprietary company directorships and has been successful in the operation of a Executive Director number of wholesale/retail businesses in Australia. During the past three years Mr Smith has also served (and continues to serve) as a non-executive director of Sun Capital Group Limited, an ASX listed Company.
• Mr Correia resigned 7 December 2005. Mr Correia is an Associate of the Institute of Mr Emmanuel Correia -Chartered Accountants of Australia. Over the last 10 years, Mr Correia has held a Non Executive Director number of corporate finance positions in Europe and in Australia with international accounting firms and investment banks.
• Mr Gilmour resigned 28 November 2005. Dr Gilmour has extensive experience in Dr Robert Gilmour medical design and in the orthopedic, orthotic and prosthetic markets to the Executive Director Company's 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 Adrian Knight ceased his directorship on 28 November 2005. Mr Knight's career Mr Adrian Knight - Non to date has been focused primarily in the Financial Services, Information Technology Executive Director and Sales and Marketing industries and he has held senior positions within these industries throughout the UK, Europe, South Africa, Japan, USA and Australia.

Review of Operations

The six months to 31st December 2005 saw the Company undergo many changes including undertaking of new projects, recomposition of the Board, continued review of new opportunities and the seeking of new capital from the equity markets.

The Board recently re-affirmed its commitment for the Company to continue its focus on its core mandate of medical device product development and ultimate commercialisation from either internally developed intellectual property or alternatively, externally developed intellectual property that is seeking Company specific know how, funding, path to market or a combination of all three.

DIRECTORS' REPORT

The Company's current projects includes its original CellGen Technology, its association with Manawatu Biotechnology Investments Limited in their fertility technology and as announced on 28 February 2006, the Company has entered into a Heads of Agreement to commercialise technologies and business ventures surrounding Collagen Cell Replacement Technology, and Commercial Cryogenic Cord Blood Banking.

Genesis Biomedical Limited has incurred an operating loss of $313,875 for the six months to 31 December 2005. This loss is as result of credit interest totalling $19,716 offset by operating expenditure of $333,591.

Operating expenditure incurred for the six month period to 31 December 2005 increased by $178,805 compared to the corresponding period to 31 December 2004. This increase was substantially as a result of professional fees incurred.

Projects

Manawatu Biotechnology Investments Limited ("MBIL")

During the half year, Genesis finalised negotiations in relation to the MBIL fertility testing technology and through its various working partners commenced, in conjunction with MBIL, further development of this technology.

In August 2005 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.

As reported to the market in February 2006, generally, the assays developed by BioDot met the criteria set out for them. In particular, BioDot demonstrated that paramagnetic particle assay technology provided 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 is required to develop 'market-ready' assays as they are currently too sensitive, whereby the sample requires dilution by a known amount for the assay to work.

MBIL believes significant progress has been made in respect of the development of the test strips themselves over the last six months. It has been demonstrated 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 is required to create a "market-ready" product. The Company will keep the market informed as to the progress of this development work.

CellGen

As part of the ongoing trial previously reported to the market it was ascertained that the Company will need to upgrade certain engineering specifications of the Cellgen units currently being used. The Company has now made an assessment of these costs and is evaluating the likely benefits of completing the re-engineering and in particular the likelihood of this process adding to the potential commercial end value of the product either from a potential licensing or trade sale perspective.

Capital Raising

The Company lodged on 20 December 2005 an Underwritten Offer Prospectus for an offer of up to 80,000,000. Shares to be issued at a price of $0.03 each together with up to 80,000,000 free attaching Options on a 1 for 1 basis to raise up to $2.4 million (excluding costs of the offer).

The Company announced on 6 February 2006 that it had closed the offer early and oversubscribed, raising the full $2.4 million.

Adoption of Australian Equivalents to IFRS

This interim financial report has been prepared under Australian equivalents to IFRS. A reconciliation of differences between previous GAAP and Australian equivalents to IFRS has been included in Note 2 of this report.

DIRECTORS' REPORT

Auditor's Declaration

The lead auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 6 for the half year ended 31 December 2005.

This report is signed in accordance with a resolution of the Board of Directors.

Director

Mr Rodger Johnston Non Executive Chairman

Dated this

14th day March 2006

EU ERNST & YOUNG

B Ernst & Young Centre 680 George Street Sydney NSW 2000 Áustralia

a Tel 61 2 9248 5555Fax 61 2 9248 5959 DX Sydney Stock Exchange 10172

GPO Box 2646 Sydney NSW 2001

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 2005, 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.

• lou

Ernst & Young

der George Christ Partner

/5 March 2006

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		Economic Entity
	31.12.2005	31.12.2004
Revenue	19,716	52,522
Cost of Investments Sold		(11,700)
Corporate Expenses	(61, 977)	(29, 047)
Director Fees	(57, 825)	(36, 932)
Occupancy Costs	(1,936)	(2,076)
Professional Fees	(187, 238)	(62, 160)
Travel	(6, 435)	(1,783)
Increment in the value of investments		2,930
Other expenses from ordinary activities	(18, 180)	(14,018)
Profit before income tax	(313, 875)	(102, 264)
income tax expense
Loss from continuing operations	(313, 875)	(102, 264)
Loss from discontinued operations
Loss for the period	(313, 875)	(102, 264)
Loss attributable to minority equity interest
Loss attributable to members of the parent entity	(313, 875)	(102, 264)
Overall Operations:
Basic earnings per share (cents per share)	(0.36)	(0.13)
Diluted earnings per share (cents per share)	(0.36)	(0.13)

CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005

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	Economic Entity
	31.12.2005$	30.06.2005$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	586,398	1,063,492
Trade and other receivables	305,834	13,148
Other current assets	26,863	134,782
TOTAL CURRENT ASSETS	919,095	1,211,422
NON-CURRENT ASSETS
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS	919,095	1,211,422
CURRENT LIABILITIES
Trade and other payables	133,436	70,532
Short-term provisions	30,982	72,338
TOTAL CURRENT LIABILITIES	164,418	142,870
NON-CURRENT LIABILITIES
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES	164,418	142,870
NET ASSETS	754,677	1,068,552
EQUITY
Issued capital	13,272,985	13,272,985
Retained Earnings	(12,518,308)	(12, 204, 433)
Parent entity interest	754,677	1,068,552
Minority equity interest
TOTAL EQUITY	754,677	1,068,552

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

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	$	$	$	S
	Parent Entity Interest		Minority
	ShareCapital	RetainedProfits	Interests	Total
Balance at 1.7.2004		12,987,985 (11,818,242)	$\mathbf{m} = 0.01$	1,169,743
Shares issued during the year	300,000			300,000
Loss for the period		(102, 264)		(102, 264)
Share issue costs	(15,000)			(15,000)
Total income and expense for the period	(15,000)	(102, 264)		(117, 264)
Balance at 31.12.2004		13,272,985 (11,920,506)		1,352,479
Balance at 1.7.2005		13,272,985 (12,204,433)		1,068,552
Loss for the period		(313, 875)		(313, 875)
Total income and expense for the period		(313, 875)	÷	(313, 875)
Balance at 31.12.2005		13,272,985 (12,518,308)		754,677

CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2005

	Economic Entity
	31.12.2005$	31.12.2004$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	7,766	(15,051)
Payments to suppliers and employees	(199, 173)	(171, 123)
Interest received	19,716	27,051
Net cash used in operating activities	(171, 691)	(159, 123)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		25,471
Loans made to MBIL	(305, 403)
Net cash provided by $I$ (used in) investing activities	(305, 403)	25,471
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		285,000
Net cash provided by financing activities		285,000
Net (decrease) / increase in cash held	(477, 094)	151,348
Opening cash bought forward	1.063.492	1,088,288
Closing cash carried at the end of the half year	586,398	1,239,636

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

The half year report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the annual Financial Report of Genesis Biomedical Limited as at 30 June 2005, which was prepared based on Australian Accounting Standards applicable before 1 January 2005 ('AGAAP').

It is also recommended that the half-year financial report be considered together with any public announcements made by Genesis Biomedical Limited and its controlled entities during the half-year ended 31 December 2005 in accordance with the continuous disclosure obligations arising under the Corporation Act 2001.

Basis of accounting $(a)$

The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 "interim Financial Reporting" and other mandatory professional reporting requirements.

The half-year financial report has been prepared on a historical cost basis. For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

$(b)$ Statement of compliance

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

This is the first half-year financial report based on AIFRS and comparatives for the half-year ended 31 December 2004 and full-year ended 30 June 2005.

(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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

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.

(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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HAI F-YEAR ENDED 31 DECEMBER 2005

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

(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).

(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.

(I) 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, whether or not billed to the company or consolidated entity.

(n) 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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2005

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

(o) AASB 1 Transitional Exemptions

The group has made its election in relation to a transitional exemption allowed by AASB 1 'First-time Adoption of Australian Equivalents to International Financial Reporting Standards' as follows

Business Combinations

AASB 3 'Business Combinations' was not applied retrospectively to past business combinations (i.e. business combinations that occurred before the date of transition to AIFRS).

NOTE 2: 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. Work completed on this transition has resulted in there being no other impact identified.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2005
NOTE 3: REVENUE AND EXPENSES		Economic Entity
	31.12.2005$	31.12.2004$
The following revenue and expense items are relevant in explainingthe financial performance for the interim period:
Revenue
Interest	19,716	27,051
Proceeds from Sale of Investments		25,471
Total Revenue	19,716	52.522
Expenses
Costs of Investments Sold		11,700
Corporate Expenses	61,977	29,047
Directors Fees	57,825	36,932
Occupancy Expenses	1.936	2,076
Professional Fees	187,238	62.160
Travel	6,435	1.783
Other	18,180	11,088
Total expenses	333.591	154.786

Genesis Biomedical Ltd ABN 48 083 274 024

NOTE 4: CONTRIBUTED EQUITY		Shares	Shares	$	ŝ
		2005	2004	2005	2004
(a)	Issued and paid up capital
	Fully paid ordinary shares	86,550,003	86,550,003	13,272,985	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 12 th November 2004
	pursuant to a placement by Directors at 3 centsper share		10,000,000		300,000
	Expenses of the issue				(15,000)
	Issued capital at the end of the half year	86,550,003	86,550,003	13,272,985	13,272,985

Consolidated

Share Options $(c)$

As at 31st December 2005, there are nil (2004: Nil) unissued ordinary shares in respect of which options are outstanding.

NOTE 5. RESERVES AND ACCUMULATED LOSSES

		31st December2005	30 th June2005$
(a)	Accumulated losses
	Balance at beginning of year	(12, 204, 433)	(11, 818, 242)
	Net Loss attributable to members of GenesisBiomedical Ltd	(313.875)	(386, 191)
	Balance at end of half year/year	(12, 513, 308)	(12, 204, 433)

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

NOTE 6: CONTINGENT ASSETS & LIABILITIES

Since the last annual reporting date, there has been no material change of any contingent liabilities or contingent assets.

NOTE 7: SEGMENT REPORTING

The consolidated entity operated in one business segment, being medical 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 in Note 1.

NOTE 8: EVENTS SUBSEQUENT TO REPORTING DATE

Capital Raising

The Company on 20 December 2005 lodged with Australian Securities Investments Commission a Transaction Specific Prospectus for the offer of 80,000,000 Fully Paid Ordinary Shares in Genesis Biomedical Ltd at an issue price of $0.03 per Share, along with the offer of a free attaching Option for every new Share subscribed for to raise $2.4 million (excluding costs of the offer). The Options have an exercise price of $0.03 with an expiry date of 1 November 2010.

The offer was fully underwritten by SA Capital Pty Ltd. The Company announced to the market on the 6th February 2006 that it had closed the offer early and oversubscribed and had raised the $2.4 million. The effect of this raising has been to increase cash reserves and contributed equity by approximately $2.2 million (after taking into account expenses of the offer).

MBIL Fertility Project

The Company announced to the market on 22 February 2006 that positive progress has been made during the past six months by Manawatu Biotech Investments Limited (MBIL) whose prime focus is the development of technology based on its own proprietary science in relation to fertility testing technology and that of others in respect of measurement and testing technologies.

In August 2005 MBIL commissioned a US based biotechnology company - Biodot Inc ( a US based biotechnology firm) 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.

Significant progress has been made in respect of the development of the test strips themselves over the last six months. It has been demonstrated 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 is required to create a "market-ready" product. The Company will keep the market informed of its progress with this project.

Heads of Agreement

Genesis Biomedical Limited announced on 28 February 2006 that it has entered into a Heads of Agreement setting out the terms upon which it will look to establish, with its joint venture partners, a commercial cryogenic Cord Blood Banking ("CBB") and human skin cell culturing and storage facility ("the Facility").

The Company has been approached to jointly establish with Synergene Biotechnology Group (a Malta based biotechnology company providing molecular diagnostic services) and Dr Marios Kambouris, PhD, FACMG (a medical and molecular geneticist) the Facility in mainland Greece.

It is intended the Facility will be designed and commissioned to provide cord blood banking processing and storage facilities as well as having the required infrastructure and expertise to culture and store human skin cells, specifically for the use in an emerging cosmetic procedure known as Collagen Cell Replacement therapy ("CCR").

The transaction is conditional upon the satisfaction of certain conditions precedent occurring, including due diligence. The Company will keep the market fully updated as to the status of this transaction.

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DIRECTORS' DECLARATION

The directors of the company declare that:

• $11$ The financial statements and notes of the consolidated entity:
  • comply with Accounting Standard AASB 134: Interim Financial Reporting and the a. Corporations Regulations 2001; and
  • give a true and fair view of the economic entity's financial position as at 31 December 2005 $\mathbf b$ . and of its performance for the half year ended of the consolidated entity; and
• $2.$ In the directors' opinion there are reasonable grounds to believe that the company will be 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

Mr Rodger Johnston

Dated this 14th day of March

2006

EU ERNST & YOU INC.

# Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia

■ Tel 61 2 9248 5555 Fax 61 2 9248 5959 DX Sydney Stock Exchange 10172

GPO Box 2646 Sydney NSW 2001

Independent review report to members of Genesis Biomedical Limited

Scope

The financial report and directors' responsibility

The financial report comprises the balance sheet, income statement, cash flow statement, statement of changes in equity 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 2005.

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 134 "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 134 "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. We have given to the directors of the company a written Auditor's Independence Declaration, copy of which is following the Director's Report.

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 half-year 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 December 2005 $(i)$ and of its performance for the period ended on that date; and
• complying with Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations $(i)$ Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Ernst & Young

Chastopher George Partner Svdnev

$i5$ March 2006