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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="fis_unidentified_table_2"/><a name="p06a"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      DC 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported): September 18, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">HERBORIUM
      GROUP, INC. </font>
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="100%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      Name of Registrant as Specified in Its Charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="30%" style="border-bottom: black thin solid;">
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            </td>
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            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or Other</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jurisdiction
                of</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">File
                Number)</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporation)</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Number)</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="30%">&#160;</td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">&#160;</td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="30%">&#160;</td>
            <td valign="top" width="5%">&#160;</td>
            <td valign="top" width="30%">&#160;</td>
            <td valign="top" width="5%">&#160;</td>
            <td valign="top" width="30%">&#160;</td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="65%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                Oak Street, Teaneck, New Jersey</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">07666</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                of Principal Executive Offices)</font></div>
            </td>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                Code)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
      telephone number, including area code: </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>(888)
      836-2424</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pacific
      Magtron International Corp. 1600 California Circle, Milpitas, California 95035
      </font>
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="100%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>see</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      General
      Instruction A.2. below):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
        <div style="WIDTH: 100%" align="left">
        </div>
      </div>
    </div><br><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Cautionary
      Statement Concerning Forward-Looking Statements</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Current Report on Form 8-K contains forward-looking statements within the
      meaning of the Private Securities Litigation Reform Act of 1995, which are
      subject to the safe harbors created thereby. This information may involve known
      and unknown risks, uncertainties and other factors which may cause actual
      results, performance or achievements of Herborium, Inc. (&#8220;Herborium&#8221;) and
      Pacific Magtron International Corp. (&#8220;PMIC&#8221;) to be materially different from
      future results, performance or achievements expressed or implied by any
      forward-looking statements. Forward-looking statements, which involve current
      assumptions and projections about future events and describe Herborium&#8217;s and
      PMIC&#8217;s future plans, strategies and expectations, are generally identifiable by
      use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
      "believe," "intend" or "project" or the negative of these words or other
      variations on these words or comparable terminology. Forward-looking statements
      are based on assumptions that may be incorrect, and there can be no assurance
      that any projections or other expectations included in any forward-looking
      statements will come to pass. Herborium&#8217;s and PMIC&#8217;s actual results could differ
      materially from those expressed or implied by the forward-looking statements
      as
      a result of various factors, including but not limited to, adverse economic
      conditions, inability to attract prospective new customers or certain existing
      customers, intense competition including the entry of new competitors, adverse
      federal, state or local government regulation, including limitations on our
      claims relating to the benefits of our products, loss of suppliers, inadequate
      capital and/or inability to raise financing, risk of litigation, adverse
      publicity and news coverage of Herborium and/or the industry, inability to
      hire
      and/or retain key executives, inflationary factors and other specific risks
      alluded to elsewhere in this Report. Your attention is directed to the Risk
      Factors section in Item 2.01 of this Current Report on Form 8-K. The
      forward-looking statements contained herein speak only as of the date hereof
      and
      except as required by applicable laws, PMIC undertakes no obligation to update
      publicly any forward-looking statements for any reason, even if new information
      becomes available or other events occur in the future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Background</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      May
      11, 2005, Pacific Magtron International Corp., a Nevada corporation (&#8220;PMIC&#8221;),
      and its wholly-owned subsidiaries Pacific Magtron, Inc., a California
      corporation (&#8220;PMI&#8221;), Pacific Magtron (GA), Inc., a Georgia corporation
      (&#8220;PMIGA&#8221;), and LiveWarehouse, Inc., a California Corporation (&#8220;LW&#8221;), filed
      voluntary petitions for reorganization under Chapter 11 of the United States
      Bankruptcy Code (the &#8220;Bankruptcy Proceedings&#8221;) in the United States Bankruptcy
      Court for the District of Nevada (the &#8220;Bankruptcy Court&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMI
      and
      PMIGA liquidated in the Bankruptcy Proceedings pursuant to an order of the
      Bankruptcy Court entered on January 30, 2006. On August 11, 2006, the Bankruptcy
      Court entered an order confirming the amended plans of reorganization of PMIC
      and LW. The PMIC and LW plans of reorganization contemplated that LW would
      be
      reorganized and remain a wholly-owned subsidiary of PMIC. The plans also
      contemplated a merger involving Herborium, Inc. (&#8220;Herborium&#8221;) and permitted PMIC
      and LW to delay the effective date of the plans for thirty days if necessary
      to
      consummate the merger. The plans further contemplated that in connection with
      the merger with Herborium, all of the existing shares of common stock, par
      value
      $.001 per share, of PMIC, would be cancelled, and new stock would be issued.
      The
      plans of reorganization for PMIC and LW became effective on
      September&#160;18,&#160;2006, as described more fully below under Item 2.01 of
      this Current Report on Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
      into a Material Definitive Agreement. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Merger</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 18, 2006, PMIC completed the acquisition of Herborium, a Delaware
      corporation, pursuant to an Agreement and Plan of Merger (the &#8220;Merger
      Agreement&#8221;) by and among PMIC, LW, and Herborium. A copy of the Merger Agreement
      is filed as Exhibit 2.3 to this Current Report on Form 8-K. The principal terms
      of the merger are disclosed below in Item 2.01, which disclosures are
      incorporated by reference herein. Prior to entering into the Merger Agreement,
      John E. Donahue, our sole director prior to the merger, served as a financial
      consultant to Herborium without compensation. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Employment
      Agreements</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 18, 2006, PMIC entered into an employment agreement with Dr. Agnes
      P.
      Olszewski to serve as our President, Chief Executive Officer and Acting Chief
      Financial Officer and James P. Gilligan to serve as a consultant/executive
      officer. Pursuant to the terms of Dr. Olszewski&#8217;s employment agreement, she will
      not work full-time for the company until we have raised a minimum of $1,250,000.
      Pursuant to the terms of his agreement, Dr. Gilligan is not required to join
      us
      on a full time basis as our Co-President and Chief Operating Officer until
      six
      months after we have raised a minimum of $2,500,000. Additional information
      with
      respect to our new directors and officers is provided in Item 2.01 under
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Directors
      and Executive Officers</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      employment agreements of Drs. Olszewski and Gilligan are filed as Exhibits
      10.2
      and 10.3, respectively, to this Current Report on Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Completion
      of Acquisition or Disposition of Assets.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Principal
      Terms of the Reverse Merger</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Merger Agreement, on September 18, 2006, we completed the acquisition
      of
      Herborium through a reverse triangular merger in which Herborium was merged
      with
      and into LW, our wholly-owned subsidiary, with Herborium being the surviving
      corporation. Herborium is now a wholly-owned subsidiary of ours, and its
      business (which is described below) is now our only business. Pursuant to the
      plans of reorganization, on the effective date of the merger, all of our
      outstanding shares of common stock was cancelled. We have issued, or will issue,
      new shares of authorized but previously unissued shares of common stock, par
      value $.001 per share, as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former stockholders of Herborium will receive an aggregate of 92,282,018
                shares of our common stock in exchange for 100% of their equity interests
                in Herborium;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                holders of shares of common stock of PMIC into which PMIC&#8217;s Series A
                Convertible Preferred Stock, par value $.001, had been converted
                will
                receive 800,000 shares of our common stock;
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                stockholders of record of Advanced Communications Technologies, Inc.
                (&#8220;ACT&#8221;), our 61.56% majority stockholder prior to our reorganization, will
                receive an aggregate of 7,454,300 shares of our common stock in exchange
                for ACT&#8217;s equity interest in us; this amount does not include 500,000
                shares that will be placed in escrow for unexpired PMIC stock option
                and
                stock warrant grants and 1,750,000 shares that will be escrowed for
                certain of PMIC&#8217;s former executives pursuant to the terms of a settlement
                agreement; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                stockholders of record of PMIC as of August 11, 2006 will receive
                an
                aggregate of 4,030,762 shares of our common stock in exchange for
                their
                issued and outstanding 4,030,762 shares of PMIC.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      prior to the merger, PMIC had outstanding 10,485,062 shares of common stock,
      600
      shares of our Series A Convertible Preferred Stock that were converted into
      800,000 shares of common stock, and 100,000 warrants to purchase common stock
      and options to purchase 20,000 shares of common stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      shares of the capital stock of Herborium and LW issued and outstanding
      immediately prior to the effective time of the merger were converted into one
      share of common stock, which we own.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      the merger, the ownership interest on a fully-diluted basis of our issued and
      outstanding common stock will be as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                stockholders of ACT and certain of PMIC&#8217;s former executive officers will
                own 10.55%;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former holders of PMIC&#8217;s Series A Convertible Preferred stock will own
                0.74%;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former holders of PMIC&#8217;s common stock other than ACT will own 3.71%;
                and</font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former stockholders of Herborium will own
                85%.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      on the date of the merger, PMIC changed its name to Herborium Group, Inc. and
      adopted the November 30 year end of Herborium for accounting purposes as
      described in Item 5.03 of this Current Report on Form 8-K. In connection with
      the merger, we also changed our principal executive office to those of
      Herborium, which are located at 3 Oak Street, Teaneck, New Jersey
      07666.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC&#8217;s Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
      Upon the closing of the merger and in accordance with the plans of
      reorganization of PMIC and LW, Dr. Agnes P. Olszewski became our President,
      Chief Executive Officer and Acting Chief Financial Officer until a full time
      Chief Financial Officer or comptroller is appointed, and we entered into a
      consulting/employment agreement with Dr. James P. Gilligan. Pursuant to the
      terms of Dr. Olszewski&#8217;s employment agreement, she will not work full-time for
      the company until we have raised a minimum of $1,250,000. Pursuant to the terms
      of his consulting/employment agreement, Dr. Gilligan is not required to join
      us
      on a full time basis as our Co-President and Chief Operating Officer until
      six
      months after we have raised a minimum of $2,500,000. Additional information
      with
      respect to our new directors and officers is provided in below in this Item
      2.01
      under </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Directors
      and Executive Officers</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the closing of the merger, John E. Donahue and Wayne I. Danson, the
      directors of LW resigned from the Board of Directors. Concurrently with the
      closing of the merger, in accordance with the plans of reorganization of PMIC
      and LW, Mr. Ansbacher and Mr. Danson were appointed to the Board of Directors
      of
      our subsidiary Herborium where they joined Drs. Olszewski and Gilligan.
      Concurrently with the closing of the merger, Mr. Danson and Anthony Lee resigned
      from their respective positions as the Chief Executive Officer and Chief
      Financial Officer of LW. Drs. Olszewski and Gilligan are the executive officers
      of Herborium and will remain the executive officers of our subsidiary following
      the merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      accounting purposes, the merger is being accounted for as a reverse merger,
      since we were a shell company prior to the merger, the former stockholders
      of
      Herborium now own a majority of the issued and outstanding shares of our common
      stock, and the co-founders of Herborium became our directors and have or will
      become our executive officers. Accordingly, Herborium is treated as the acquiror
      in the merger, which is treated as a recapitalization of Herborium, and the
      pre-merger financial statements of Herborium will now be deemed to be our
      historical financial statements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Form
      10 Disclosure - Description of Herborium</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      closing of the merger, PMIC was a &#8220;shell company&#8221; as such term is defined in
      Rule 12b-2 under the Securities Exchange Act of 1934, as amended, (the &#8220;Exchange
      Act&#8221;). Accordingly, set forth below is the information that would be required if
      pre-merger Herborium were filing a general form for registration on Form 10
      under the Exchange Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise indicated or the context otherwise requires, all references below
      to
&#8220;we,&#8221; &#8220;us,&#8221; &#8220;Herborium&#8221; and the &#8220;Company&#8221; are to PMIC (now known as Herborium
      Group, Inc.), together with Herborium, its wholly-owned subsidiary.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Corporate
      History</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Herborium,
      Inc. was incorporated in the State of Delaware in November 2000 and has one
      wholly-owned, but dormant subsidiary, Herborium.com Inc., a Delaware
      corporation. In June 2002, Herborium, Inc. merged with G.O. International,
      Inc.,
      a consulting firm specializing in business strategies for pharmaceutical
      industry and global technology transfer that was founded by Drs. Olszewski
      and
      Gilligan. Drs. Olszewski and Gilligan also own a dormant UK entity, Herborium
      UK, LLC. Herborium has engaged in research, development and marketing of
      botanical supplements since its inception, and prior to the merger, funded
      its
      operations by equity investments and loans from its founders, Drs. Olszewski
      and
      Gilligan, of approximately $380,000, funding from friends and family of
      approximately $125,500, a revolving credit facility and cash generated by gross
      profit from sales. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
      was
      originally incorporated in the State of Nevada under the name of Wildfire
      Capital Corporation (&#8220;Wildfire&#8221;) in January 1996. Wildfire closed its marketing
      operations in the fall of 1997. In July 1998, the Board of Directors of Wildfire
      recommended the acquisition of Pacific Magtron, Inc. ("PMI") to Wildfire's
      shareholders. PMI, a California corporation incorporated on August 11, 1989,
      had
      established itself in the computer products wholesale distribution industry
      as a
      privately held company. The shareholders of Wildfire and PMI approved the
      transaction, and Wildfire issued 9,000,000 shares of its common stock in
      consideration for all of the outstanding shares of PMI. As a result, the former
      shareholders of PMI became the controlling shareholders of Wildfire. No
      securities were registered in connection with the transaction. Immediately
      prior
      to the transaction, Wildfire effected a two-for-three reverse stock split of
      its
      1,500,000 outstanding shares of common stock. Upon consummation of the
      acquisition, Wildfire changed its name to Pacific Magtron International Corp.,
      and PMI continued its business operations as a wholly-owned subsidiary of PMIC.
      In August 2000, PMIGA was incorporated in the State of Georgia to distribute
      PMI&#8217;s products in the eastern United States. In December 2001, LW was
      incorporated as a wholly-owned subsidiary of PMIC, to provide consumers a
      convenient way to purchase computer products via the internet. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      December 10, 2004, Theodore S. Li and Hui &#8220;Cynthia&#8221; Lee, the holders of a
      collective majority interest in PMIC, entered into a Stock Purchase Agreement
      (the &#8220;Stock Purchase Agreement&#8221;) with ACT, a vertically integrated technology
      services company. Pursuant to the Stock Purchase Agreement, Mr. Li and Ms.
      Lee
      sold ACT an aggregate of 6,454,300 shares of the common stock of PMIC,
      representing 61.56% of the then issued and outstanding common stock of PMIC,
      for
      the aggregate purchase price of $500,000. Upon taking control of PMIC, ACT
      discovered that PMIC and its subsidiaries did not have assets and cash flow
      sufficient to continue operations as organized, faced reduced or possible loss
      of available lines of credit from certain third party suppliers and vendors
      and
      were thus unable to continue their business operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Bankruptcy
      Proceedings</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      May
      11, 2005, PMIC and its wholly-owned subsidiaries, PMI, PMIGA and LW, filed
      voluntary petitions for reorganization under Chapter 11 of the United States
      Bankruptcy Code in the United States Bankruptcy Court for the District of
      Nevada. PMI and PMIGA liquidated in the Bankruptcy Proceedings pursuant to
      an
      order of the Bankruptcy Court entered on January 30, 2006. On August 11, 2006,
      the Bankruptcy Court entered an order confirming the amended plans of
      reorganization of PMIC and LW. The PMIC and LW plans of reorganization
      contemplated that LW would be reorganized and remain a wholly-owned subsidiary
      of PMIC and contemplated the merger with Herborium. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
      to a permissible delay of thirty days, the effective date of the LW plan of
      reorganization was to be the first business day after ten days from the
      confirmation order, and the effective date of the PMIC plan of reorganization
      was to be the seventh business day after the effective date of the LW plan.
      In
      accordance with the plans, PMIC and LW delayed the effective dates of their
      respective plans for thirty days in order to consummate the merger of Herborium
      with and into LW. On September 14, 2006, the Bankruptcy Court granted us an
      extension to delay the effective date of the plans until September 18, 2006.
      The
      plans of reorganization of PMIC and LW as confirmed by the Court and the
      confirmation order are filed as Exhibits 2.1 and 2.2, respectively, to PMIC&#8217;s
      Current Report on Form 8-K filed on August 16, 2006 and are incorporated herein
      by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      or
      about the effective date of September 18, 2006, allowed priority claims and
      allowed unsecured claims against LW were paid in full. LW distributed all of
      its
      remaining cash to PMIC. Non-insider creditors holding allowed unsecured claims
      against PMIC received a fifty percent initial distribution (on a pro-rata basis)
      on account of such claims. On the effective date, ACT contributed $50,000 on
      behalf of PMIC&#8217;s stockholders to effectuate the plan of reorganization, and
      Herborium was merged with and into LW, with Herborium as the surviving
      corporation. As of the effective date, shares of PMIC&#8217;s issued and outstanding
      common stock were cancelled and converted into the right to receive new shares
      of our common stock. Prior to the effective time of the merger, PMIC fell within
      the definition of a &#8220;shell company&#8221; under the Exchange Act.</font></div><br>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      is a summary of the classification and treatment of claims and interest under
      the plans of reorganization for PMIC and LW.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PMIC</strong></font></div>
            </td>
            <td align="left" valign="top" width="55%">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                One</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Priority
                claims were paid in full in cash (and held in escrow pending
                settlement).</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Two</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unsecured
                claims were paid in cash in an amount equal to 50% of the claim amounts.
                </font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Three</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                claim of the Internal Revenue Service was determined to be
                $0.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Four</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
                distributions were made with respect to the claims of Mr. Li and
                Ms. Lee,
                former executives of PMIC. Mr. Li and Ms. Lee received an aggregate
                of
                $325,000 in cash and will receive 1,750,000 shares of our common
                stock
                pursuant to a settlement agreement entered into by and among PMIC, LW, ACT
                on its own behalf and as the Estate Representative of the liquidating
                estates of PMI and PMIGA, Encompass Group Affiliates, Inc., Wayne
                Danson,
                Martin Nielson, Mr. Li and Ms. Lee. The terms and conditions of the
                settlement agreement are disclosed in PMIC&#8217;s Current Report on Form 8-K
                filed on August 16, 2006, which disclosures are incorporated by reference
                herein.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Five</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                claim of the Hartford Insurance Company for pre-petition workers
                compensation premiums for employees of PMI was
                disallowed.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Six</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
                claims represent the equity interests of the stockholders of PMIC
                other
                than the holders of Series A Preferred Convertible Stock. The stockholders
                of PMIC will receive shares of our common stock in exchange for their
                shares of existing PMIC common stock, which were cancelled. With
                respect
                to the claims of ACT, 7,454,300 shares of our common stock will be
                issued
                directly to the stockholders of ACT (including 500,000 shares will
                be
                placed in escrow for unexpired PMIC stock option and stock warrant
                grants).</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Seven</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
                claims represent the equity interest of the holders of PMIC&#8217;s Series A
                Convertible Preferred Stock, which was converted into 800,000 shares
                of
                PMIC common stock. The 800,000 shares of PMIC common stock were cancelled,
                and the holders of those shares will receive 800,000 shares of our
                common
                stock representing 0.74% of our issued and outstanding stock on a
                fully-diluted basis.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">&#160;</td>
            <td align="left" valign="top" width="55%">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LW</strong></font></div>
            </td>
            <td align="left" valign="top" width="55%">&#160;</td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                One</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Priority
                claims were paid in full in cash.</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                Two</font></div>
            </td>
            <td align="left" valign="top" width="55%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unsecured
                claims were paid in full in cash.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>General</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      provide unique, natural and complementary healthcare related products to
      consumers and healthcare professionals seeking alternative answers to the
      management of healthcare issues not currently met by standard Western medicine.
      Our products are botanical supplements comprised of unique herbal formulations.
      We select products that have a record of clinical efficacy and safety
      established in China; however, these products have not been evaluated according
      to standards of clinical efficacy and safety applicable to pharmaceutical
      products sold in the United States and other countries, and because these
      products are herbal-based, they are not recognized as pharmaceuticals by the
      Federal Drug Administration (the "FDA").</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      business model is based on:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">owning
                and/or marketing unique products with established clinical history
                in
                their country of origin, and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                proactive approach to meeting the regulatory changes and challenges
                of the
                new healthcare marketplace.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Product
      Strategy</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      products address healthcare issues that many consumers do not believe are
      treated satisfactorily by conventional pharmaceuticals and, thus, satisfy niche
      market demands resulting from the gap between consumer&#8217;s healthcare issues and
      currently available treatment options. Our products are presently classified
      by
      the FDA as dietary supplements and are regulated by the Dietary Supplement
      Health and Education Act of 1994 ("DSHEA&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      seek
      to distinguish our company from the marketers of traditional herbal supplements
      and vitamins, as well as those focused on traditional pharmaceuticals and
      "over-the-counter" drugs, by offering &#8220;bridge products,&#8221; which we define as
      botanical supplements with a record of clinical efficacy and safety established
      in the country of origin. To date our initial products have been tested in
      China. Our business model takes advantage of the newly emerging opportunities
      afforded by changing FDA perspectives with respect to botanical supplements.
      The
      present regulatory environment now encourages the performance of clinical
      studies of botanical supplements. Through clinical testing, we expect to confirm
      the positive outcomes initially demonstrated in China that will enable us to
      make claims about the efficacy of our products. Successful completion of
      clinical studies would allow advertising claims of &#8220;clinically proven&#8221; greatly
      enhancing our advertising campaigns and facilitating marketing efforts. To
      pursue clinical studies with respect to our products, we have developed
      preliminary collaborative relationships with proactive medical institutions,
      such as Johns Hopkins University, New York University Dermatological Clinic
      and
      Columbia Presbyterian Hospital in the U.S. and the Traditional Chinese Medicine
      Institute in Hong Kong. We will not be able to pursue any such clinical studies
      without adequate financing, and we presently have no commitments or
      understandings to receive such financing. We believe that if we are able to
      obtain sufficient financing to conduct such clinical studies in the U.S. we
      will
      have the opportunity to establish and maintain a differential advantage over
      our
      competitors through clinical validation and a proactive regulatory strategy.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      believe that if we are able to obtain sufficient financing we can further
      enhance our differential advantage over our competitors by planning
      pharmaceutical grade quality control and quality assurance standards for our
      products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that if we obtain sufficient financing to pursue our objectives, our
      company should be poised to take advantage of the accelerating domestic and
      global interest in botanical and alternative therapies. The U.S. Department
      of
      Health and Human Services, National Center for Health Statistics, estimates
      that
      U.S. public spends between $36-$47 billion on &#8220;complementary and alternative&#8221;
therapies (Complementary and Alternative Medicine Use Among Adults: United
      States, 2002 by Patricia M. Bames and Eve Powel-Griner; Advance Data No. 343,
      May 27, 2004). A survey conducted by the National Center For Complimentary
      and
      Alternative Medicine as a part of NHIS studies in 2002 reported that 49.8%
      of
      U.S. adults use various forms of alternative and complementary therapies, with
      19% of adults using natural products including herbal medicines. In a recent
      national survey, 64% of doctors reported that they have recommended
      complementary therapies to their patients (New York, NY, September 7, 2005).
      Finally, during the closing weeks of the 105th Congress, Senator Tom Harkin,
      the
      ranking member of the U.S. Senate Appropriations Subcommittee, shared with
      his
      colleagues a report developed by the Institute for Alternative Futures. The
      document noted that at the present, complementary and alternative approaches
      to
      health and medicine are among the fastest growing aspects of health care, and
      that while in 1990, one-third of the U.S. population used some form of
      alternative approach to health care, by the year 2010 it is expected that at
      least two-thirds of the population will use some form of alternative health
      care
      approach. </font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Products
      on the Market </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      is a description of our products. Applicable regulatory requirements are
      described below under the caption </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Regulation</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">is
      currently the only product that we have on the market. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is a
      traditional Chinese herbal remedy composed of a proprietary blend of all natural
      substances. We market </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      improving conditions typically associated with acne and rosacea. Based on
      Chinese herbal therapy, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      seeks to
      address the cause of skin-related problems. According to traditional Chinese
      medicine, the ingredients in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">decrease
      &#8220;heat&#8221; in the body which, practitioners of traditional Chinese medicine believe,
      affect bodily functions, resulting in, among other things, gastrointestinal
      discomfort and skin blemishes. In Western terms, the ingredients comprising
      AcnEase&#174; appear to decrease sebaceous gland secretions. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      does not
      simply address the external symptoms, as do topical solutions and antibiotics.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is taken
      in tablet form. Typically, 8-12 tablets per day are recommended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is
      typically used by consumers suffering from acne and rosacea. Acne is a disease
      of the sebaceous hair follicles. The rapid growth of bacteria in combination
      with the accumulated sebum cause the follicle to enlarge and can result in
      a
      mild form of non-inflammatory acne, known as comedones. Acne may progress to
      inflammatory lesions that are red in color called papules, pustules and nodules.
      Nodules or cysts are the most advanced and severe form of acne. An estimated
      50
      million people (13 million adults) in the U.S. suffer from acne. Currently,
      the
      only FDA-approved drug to treat the causes of acne is accutane (isotretinoin).
      Accutane has many serious side effects, and physicians currently require that
      patients sign a consent form before prescribing this drug. People of all races
      and ages get acne. It is most common in adolescents and young adults. An
      estimated 80 percent of all people between the ages of 11 and 30 have acne
      outbreaks at some point. For most people, acne tends to go away by the time
      they
      reach their thirties; however, some people in their forties and fifties continue
      to have this skin problem (source: National Institute of Arthritis and
      Musculoskeletal and Skin Diseases http://www.niams.nih.gov/hi/topics/
      acne/acne.htm#acne_d). Many of the over-the-counter acne products are topical,
      including benzoyl peroxide, and only address the overt clinical manifestation
      of
      acne. Side effects of topical agents may include dry and flaky skin, irritation,
      and redness. Prescription pharmaceutical products include broad-spectrum
      antibiotics, which non-specifically kill bacteria associated with acne. Systemic
      antibiotics, such as tetracycline and minocycline, are the mainstays of acne
      therapy. The use of systemic antibiotics for the treatment of acne is in
      disfavor with many physicians due to the development of resistant strains of
      bacteria. For severe, persistent cases of acne, Retin-A cream (tretinoin) and
      Accutane are often recommended. Both products are retinoid derivatives, are
      costly and have a multitude of side effects. Accutane is a known potent
      teratogen and strictly contraindicated in women not practicing a proven method
      of birth control. Recent information has also indicated that Accutane may induce
      depression. As a result, the FDA recommends that special caution be used when
      prescribing this medication to teenagers and may even consider more severe
      restrictions. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rosacea
      is characterized by facial flushing due to dilatation of blood vessels that
      occurs in middle-aged men and women. According to the National Rosacea Society,
      approximately 14 million adults in the United States suffer from rosacea
      (http://www.rosacea.org/). The cause of rosacea is unknown. It affects adults
      who are typically in their 30s and 40s, especially those with fair-skin, blue
      eyes and of Celtic origin
      (http://www.niams.nih.gov/hi/topics/rosacea/rosacea.htm#ros_b). The standard
      therapy for rosacea involves the use of a systemic oral antibiotic, such as
      tetracycline, minocycline and erythromycin, in combination with a topical
      antibiotic gel. Isotretinoins, also known under the brand names Accutane or
      Roaccutane, are sometimes considered alternatives to oral antibiotics,
      especially in cases of papopustular rosacea. In 1989, Metronidazole was the
      first topical treatment approved for the treatment of rosacea and is used to
      reduce rosacea flare-ups once the disease is brought under control. If rosacea
      progresses to a severe stage, dilated blood vessels that become distended under
      the surface of the skin, known as telangiectasis, appear. Treatment options
      for
      telangiectasis are limited to corrective surgery or mixed light pulse therapy,
      known as Photoderm, which directs a series of light pulse to the dermal layer
      of
      the skin stimulating collagen synthesis and resulting in a thickening of the
      skin and decreasing the visible signs of rosacea.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      product, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      is a
      unique herbal supplement which has been shown in studies conducted in China
      to
      improve skin conditions associated with juvenile acne and adult acne and
      rosacea. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has no
      known side effects unlike antibiotics or retinoid derived products.
</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clinical
      trials of the efficacy of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      in
      patients with acne have been performed in China. In these trials, approximately
      95% of the patients aged 15 to 30 responded to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      In
      patients aged 31 to 45, the level of effectiveness was approximately 80%. Based
      on anecdotal experience in the U.S. market, AcnEase has proven to be especially
      effective in addressing skin conditions associated with cystic acne or androgen
      induced acne in women. In addition, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      demonstrated a high satisfaction rate among our present and past customers
      in
      the U.S. and U.K. who number approximately 25,000. Over the last four years
      of
      operations, fewer than 5% of our customers have returned </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      which
      we back with a 100% guarantee. In clinical studies performed in China and
      according to customer surveys, users typically respond within 2-3 weeks of
      their
      first use of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      become blemish-free within four to six weeks. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      also has
      demonstrated efficacy in improving conditions associated with rosacea in studies
      conducted in China. Customers with symptoms of rosacea have been using
      AcnEase</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      since
      2001. Responses from our customers show that 85% of our customers suffering
      from
      rosacea have experienced improvements in facial flushing, itchy gritty eyes,
      acne and gastric reflux. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2004, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      was
      featured in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>New
      Generalist</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      a
      publication of the Royal College of Medicine of London. In July 2005, it was
      presented in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Dermatology</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      an
      English language European journal of Dermatology as the only all natural acne
      therapeutic product. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      selected </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">as
      our
      business model prototype to demonstrate our ability to identify herbal-based
      products and bring them to the mainstream marketplace in the U.S. and U.K.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      launched </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      in 2001.
      For the last three fiscal years, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      contributed approximately 98% of Herborium&#8217;s revenues. Herborium&#8217;s annual
      revenues in 2004 and 2005 were approximately $762,371 and $866,773,
      respectively. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      demonstrated high brand recognition, consistently ranking in the top three
      acne
      products searched on Google and Yahoo. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      2001, we have been the exclusive worldwide distributor of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      under an
      existing license agreement. As these agreements do not explicitly set forth
      the
      extent of our exclusive rights with </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      our
      exclusivity rights may be subject to limitation or termination in the
      future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Currently,
      we purchase </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      manufactured on our behalf by our licensor, AH USA. Since 2004, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      tablets
      have been manufactured in the U.S. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      business plan contemplates our future acquisition of the intellectual property
      rights related to AcnEase&#174; including the formulation thereof, under an agreement
      with AH USA. In the event that we are able to purchase the formulation and
      other
      intellectual property rights relating to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      would be
      manufactured in the U.S. on our behalf. In that event, all herbs for
      AcnEase</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      would be
      sourced from China using our contacts in Beijing. Such herbs would come from
      suppliers that practice cGAP (current Good Agricultural Practice) and the
      quality and identity confirmed by a herbalist/pharmacognocist. Routine quality
      control (QC) and identity tests would be performed on the raw materials. All
      extractions would initially be performed at audited facilities in China (PRC)
      or
      Hong Kong. The extracts would then be shipped to the U.S. where QC analysis
      and
      all final product manufacturing testing and release would be performed in
      contract labs. Packaging and labeling would also be performed using contract
      manufacturers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Pipeline
      Products</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have a
      number of other products in varying stages of development for which we will
      need
      additional time and financing before introduction to the market. These products
      include:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;
      Skin Management System: </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      series of products will include a cleanser, toner, moisturizer, mask and topical
      acne treatment product. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Sexual
      Health Products: </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      sexual health series line includes all natural products that address selected
      sexual disorders resulting from cardiovascular disease, use of anti-depressants,
      surgical procedures and other problems.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Energy
      Restoration Products: </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
      products will address overall depletion of energy due to competitive sports,
      high-level stress, extensive sexual activities, as well as other conditions
      that
      are physically demanding on a long-term or temporary basis. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Additional
      Products:</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We have
      also researched expanding our line to include additional products in the areas
      of liver disease (including liver damage due to Hepatitis and Cirrhosis),
      prostate health for benign prostate hyperplasia (BPH), women&#8217;s health for
      perimenopausal symptoms, cardiovascular concerns and diabetes. We do not expect
      to be able to develop these products and bring them to market until we have
      raised substantial financing. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Marketing
      and Distribution</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      pursue
      a multi-channel marketing and distribution strategy using a strong
      brand-building approach and information-driven strategy. We maintain a visible
      Internet presence and foster partnerships with selected traditional and
      non-traditional health care providers, nutraceutical and supplement sales
      channels, as well as high quality consumer products and service providers in
      the
      U.S. and abroad. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      sell
      products in the U.S., the United Kingdom and Continental Europe. Our long term
      plans include expanding into the Indian, Chinese and Australian markets after
      sufficient financing is received by our company. In the U.K., we subcontract
      with a firm, State of Play LLC, that handles order fulfillment, marketing and
      customer services for our customers in the U.K. and European Union. We also
      maintain relationships with advisors in Beijing and Shanghai, PRC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Manufacturing</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      plan
      to become a fully-integrated company by establishing our own manufacturing
      and
      development capabilities at such time as we receive sufficient financing. If
      we
      obtain the rights to begin manufacturing our products, we intend to manufacture
      our products using contract manufacturing companies that are GMP compliant.
      Quality Control analysis will be contracted during the initial stages of
      development, though at an appropriate point in time QC may be taken in house.
      Currently, we outsource our manufacturing and packaging functions to produce
      and
      package our products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      state
      of the art for the processing and sourcing of many herbs still resides in Asia.
      Through our network, we have contacts that can oversee the manufacturing of
      select products in China. Samples and initial batches of one of our sexual
      health products have been made for us in China because the product is
      manufactured using proprietary process and enrichment steps, as well as raw
      materials that are sourced in China. Initial batches of certain of our sexual
      health and energy restoration products are currently manufactured in the United
      States through several contract manufacturers and we expect will continue to
      be
      made in the U.S. after we begin marketing the products. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is also
      manufactured in the United States. Sourcing of the raw materials can be from
      several suppliers in either the United States or Asia.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Raw
      Materials</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raw
      materials for </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and one
      of our sexual health products are obtained from China. Raw materials can be
      obtained from several suppliers. We have an arrangement with Botanic Century
      in
      Beijing to work as an agent for the procurement of herbs and in some instances
      processing and testing of the raw materials. In addition, we retain CMM
      consultants (Oxford UK) to perform similar services. In the case of the sexual
      health product, it is not only the raw materials that are important but also
      the
      extraction and enrichment process that is proprietary. Final product
      manufacturing and release testing (QC) can eventually be performed in the United
      States following sourcing of the active ingredients in China. Raw materials
      for
      another of our sexual health products in the pipeline</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">can
      be
      obtained from suppliers in the United States. All extractions are performed
      in
      the United States as is final production manufacturing packaging and labeling.
      </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Intellectual
      Property</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      of
      our existing and pipeline products are presently protected by trade secrets.
      Some of our products may qualify for patent protection that will involve the
      ingredients, ratios of ingredients, and specific fractions for extracts of
      ingredients and/or an extraction process. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      key
      method of protection for our products at the current time is through trade
      secrets relating to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ingredients
                (content and amount),</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">part
                of plant used,</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ratio
                of ingredients,</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preparation
                and enrichment of ingredients, and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">proprietary
                extraction procedures.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to source ingredients from different companies to make certain no single entity
      has a list of all ingredients. All subsequent processing is performed at
      separate factories. We believe trade secrets are the best method at this time
      to
      protect herbal based products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Working
      Capital Items</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      carry
      varying amounts of inventory. We do not extend payment terms to customers or
      provide wholesale customers any rights to return merchandise. Retail customers
      in the U.S. are provided with a 100% money-back guarantee; however, the rate
      of
      returns is de minimus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Major
      Customers</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      to
      the fragmented market, we do not have any one customer that accounts for 10%
      or
      more of consolidated revenues. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Competition</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      direct corporate competitors are primarily nutraceutical companies, including
      specialty retailers, supermarkets, large chain discount retailers, drug store
      chains and independent drug stores, health food stores, on-line merchants,
      and
      mail order companies. Indirect competition also includes healthcare-focused
      online marketers. Some of our more prominent competitors include General
      Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and Vitamin
      Shoppe. The vast majority of products distributed by nutraceutical and herbal
      supplement companies are targeted towards dieting and weight management, body
      building supplementation, dietary or vitamin supplements and personal care
      products. These products represent the commodity approach to satisfying the
      markets needs and a selected few qualify as proprietary and unique formulations
      with intellectual property value. To our knowledge, no other botanical
      supplement targeting a specific health issue currently entertains national
      brand
      recognition. In addition, the herbaceutical sector is highly fragmented. We
      believe that the rudimentary stage of development for this sector, in
      conjunction with our superior products and pipeline, provides us an opportunity
      for growth, including acquisitions, and the ability to assume a leadership
      position in the sector in a relatively short period of time. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Regulation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      determined that all of our existing and proposed products are dietary
      supplements as defined under federal statutes and regulations of the FDA.
      Neither nutritional supplements nor dietary supplements require FDA or other
      governmental approval prior to their marketing in the United States. No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as nutritional supplements, dietary supplements, or neither.
      We
      make this determination based on the ingredients contained in the products
      and
      the claims made for the products. The processing, formulation, packaging,
      labeling and advertising of such products, however, are subject to regulation
      by
      one or more federal agencies including the FDA, the Federal Trade Commission,
      the Consumer Products Safety Commission, the Department of Agriculture and
      the
      Environmental Protection Agency. Our activities also are subject to regulation
      by various agencies of the states and localities in which its products are
      sold.
      We markets products that are covered under FDA regulations for Dietary
      Supplements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Federal
      Food, Drug, and Cosmetic Act</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      FDA,
      pursuant to the Federal Food, Drug, and Cosmetic Act (&#8220;FFDCA&#8221;), regulates the
      formulation, manufacturing, packaging, labeling, distribution and sale of
      dietary supplements. The FDA has broad authority to enforce the provisions
      of
      the FFDCA applicable to foods and dietary supplements, which by definition
      is a
      sub-category of foods. The FDA&#8217;s powers include (i) issuing a public &#8220;Warning
      Letter&#8221; notifying a company that a product is not in compliance with FDA
      regulations, (ii) publicizing information about an illegal product, (iii)
      requesting a voluntary recall of an illegal product from the market, (iv)
      requesting the Department of Justice to initiate civil seizure and/or injunction
      actions, (v) seeking and receiving consumer redress, and (vi) initiating
      criminal proceedings in the U.S. federal courts. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      FFDCA, all labels and labeling claims must be truthful and non-misleading.
      As a
      general rule, advertising for dietary supplements is regulated by the FTC.
      Labeling for these products is regulated by the FDA. Nevertheless, the FDA
      takes
      the position that, in addition to the FTC, the FDA also has jurisdiction to
      review Internet websites and mail order catalogs as it considers these forms
      of
      media to be labeling. Moreover, the FDA has been known to review advertising
      for
      dietary supplements to help it determine the intended use of the product being
      advertised. Non-compliance with the FDA regulation could lead to, among other
      things, injunctions, product withdrawals, recalls, and product
      seizures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Dietary
      Supplement Health and Education Act of 1994</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dietary
      Supplements is a classification of products resulting from the enactment of
      the
      Dietary Supplement Health and Education Act of 1994 ("DSHEA") in October 1994.
      Our dietary supplement products are subject to DSHEA. DSHEA amended and modified
      the application of certain provisions of the FFDCA as they relate to dietary
      supplements, and required the FDA to promulgate regulations consistent with
      DSHEA. The provisions of DSHEA are generally favorable to the dietary supplement
      industry and define dietary supplements and dietary ingredients; establish
      a new
      framework for assuring safety; outline guidelines for literature displayed
      where
      dietary supplements are sold; provide for the use of claims and nutritional
      support statements; require ingredient and nutrition labeling; and grant the
      FDA
      the authority to establish regulations concerning good manufacturing practices
      (&#8220;GMPs&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DSHEA
      defines a dietary supplement to include any product (other than
      tobacco):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">intended
                to supplement the diet that bears or contains one or more of a vitamin,
                mineral, herb or other botanical, amino acid, substance to supplement
                the
                diet by increasing the total dietary intake, or any concentrate,
                metabolite, constituent, extract, or combination of any such ingredient,
                provided that such product is either intended for ingestion in tablet,
                capsule, powder, soft gel, gelcap, or liquid droplet form, or
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">if
                not intended to be ingested in such form, is not represented for
                use as a
                conventional food or as a sole item of a meal or the diet,
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">is
                labeled as a dietary supplement.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      dietary
      supplement, which contains an ingredient not on the market before October 15,
      1994 (a &#8220;new dietary ingredient&#8221;) adulterates the product under the FFDCA unless
      there is evidence of a history of use or other evidence of safety establishing
      that it will reasonably be expected to be safe. The practical effect of such
      an
      expansive definition is to ensure that the new protections and requirements
      of
      DSHEA will apply to a wide class of products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      DSHEA, companies that manufacture and distribute dietary supplements are allowed
      to make any of the following four types of statements with regard to nutritional
      support on labeling without FDA approval: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      statement that claims a benefit related to a classical nutrient deficiency
      disease if it discloses the prevalence of such disease in the United States;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      statement that describes the role of a nutrient or dietary ingredient intended
      to affect the structure or function of the body;</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">11</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      statement that characterizes the documented mechanism by which a nutrient or
      dietary ingredient acts to maintain the structure or function; or </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iv)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      statement that "describes general well-being" from consumption of a nutrient
      or
      dietary ingredient. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to making sure that a statement meets one of these four criteria,
      a
      manufacturer of the dietary supplement must have substantiation that such
      statement is truthful and not misleading, must not claim to diagnose, mitigate,
      treat, cure, or prevent a specific disease or class of diseases, and for
      structure/function claims, must contain the following disclaimer, prominently
      displayed in boldface type: "This statement has not been evaluated by the Food
      and Drug Administration. This product is not intended to diagnose, treat, cure,
      or prevent any disease." </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      its
      authority granted by DSHEA, the FDA has proposed GMPs specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Federal Trade Commission</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      FTC
      exercises jurisdiction over the advertising of dietary supplements and foods
      and
      has the authority over both &#8220;deceptive&#8221; and &#8220;unfair&#8221; advertising and other
      marketing practices. In addition to its broad investigative powers, the FTC
      has
      the power to initiate administrative and judicial proceedings against a company
      and may also seek a temporary restraining order or preliminary injunction
      against a company pending the final determination of an action. The FTC&#8217;s
      remedies also include consumer redress, civil and criminal penalties.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      advertising and sale of our dietary supplements is subject to regulation by
      the
      FTC under the Federal Trade Commission Act (the &#8220;FTCA&#8221;). The FTCA prohibits
      unfair methods of competition and unfair or deceptive acts or practices in
      or
      affecting commerce. The FTCA provides dissemination or causing to be
      disseminated any false advertisement pertaining to drugs or foods (which would
      include dietary supplements) is an unfair or deceptive act or practice. Under
      the FTC&#8217;s &#8220;substantiation doctrine&#8221;, an advertiser is required to have a
&#8220;reasonable basis&#8221; for all objective product claims before the claims are made.
      Failure to substantiate claims adequately may be considered a deceptive or
      unfair practice. Pursuant to this FTC requirement, we are required to have
      adequate substantiation for all advertising claims made for our products at
      the
      time such claims are made.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Research
      and Development</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      limit
      the amount of expenditures relating to the development of new products through
      the use of co-licensing and co-development. We estimate that 30-35% of our
      revenues are spent annually on research and development expenditures.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Environmental
      Compliance</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      not aware of any administrative or other costs incurred which are directly
      related to compliance with environmental laws, and we have not experienced
      any
      other significant effect from the impact of environmental laws.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Employees</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      presently have one full-time employee. whose principal responsibility is product
      order fulfillment. Dr. Olszewski, our President, Chief Executive Officer and
      Acting Chief Financial Officer does not currently devote her full time to us
      and
      will not do so until such time as we raise at least $1,250,000 in financing.
      Dr.
      Gilligan will assume full-time employment with us as our Co-President and Chief
      Operating Officer within six months after the date that we raise at least
      $2,500,000 in financing. Prior to such time, he will serve as a consultant
      to
      us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Property</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Currently,
      we maintain our office at the home of our President and Chief Executive Officer,
      Dr. Olszewski, at 3 Oak Street, Teaneck, New Jersey 07666. Fulfillment and
      customer service are performed from space at 985 Carteret Ave. in Union, New
      Jersey, the home of Dr. Gilligan. We also rent warehouse space to house
      inventory in New Jersey.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Financial
      Information About Geographic Areas</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      last
      three fiscal years, we have served the U.S. and United Kingdom/European Union
      markets. The largest foreign market is the U.K., followed by the combined E.U.
      Revenues from each geographic area are described below. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="16%">&#160;</td>
            <td colspan="2" valign="top" width="38%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Approximate
                Percentage of Total Sales</em></strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Fiscal
                Year/ Interim Period Ended:</em></strong></font></div>
            </td>
            <td valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>U.S.</em></strong></font></div>
            </td>
            <td valign="top" width="18%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>U.K./E.U.</em></strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">November
                30, 2004</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">78%</font></div>
            </td>
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22%</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">November
                30, 2005</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">80%</font></div>
            </td>
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20%</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6
                Months Ended</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">May
                31, 2006</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75%</font></div>
            </td>
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OF</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-Looking
      Statements</font></div>
    <div align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Certain
      statements in the "Management&#8217;s Discussion and Analysis of Financial Condition
      and Results of Operations" and elsewhere in this Current Report on Form 8-K
      constitute "forward-looking statements" (within the meaning of the Private
      Securities Litigation Reform Act of 1995 (the "Act")) relating to us and our
      business, which represent our current expectations or beliefs including, but
      not
      limited to, statements concerning our operations, performance, financial
      condition and growth. The Act may, in certain circumstances, limit our liability
      in any lawsuit based on forward-looking statements that we have made. All
      statements, other than statements of historical facts, included in this Current
      Report on Form 8-K that address activities, events or developments that we
      expect or anticipate will or may occur in the future, including such matters
      as
      our projections, future capital expenditures, business strategy, competitive
      strengths, goals, expansion, market and industry developments and the growth
      of
      our businesses and operations are forward-looking statements. Without limiting
      the generality of the foregoing, words such as "may,&#8221; &#8220;believes,&#8221; &#8221;expects,&#8221;
"anticipates,&#8221; "could,&#8221; "estimates,&#8221; &#8220;grow,&#8221; &#8220;plan,&#8221; "continue," &#8220;will,&#8221; &#8220;seek,&#8221;
&#8220;scheduled,&#8221; &#8220;goal&#8221; or &#8220;future&#8221; or the negative or other comparable terminology
      are intended to identify forward-looking statements. These statements by their
      nature involve substantial risks and uncertainties, such as credit losses,
      dependence on management and key personnel, variability of quarterly results,
      our ability to continue our growth strategy, changes to the regulatory landscape
      and competition, certain of which are beyond our control. Any or all of our
      forward-looking statements may turn out to be wrong. They may be affected by
      inaccurate assumptions that we might make or by known or unknown risks or
      uncertainties. Should one or more of these risks or uncertainties materialize
      or
      should the underlying assumptions prove incorrect, actual outcomes and results
      could differ materially from those indicated in the forward-looking
      statements.</em></font></div><br>
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -3.6pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Because
      of the risks and uncertainties associated with forward-looking statements,
      you
      should not place undo reliance on them. Further, any forward-looking statement
      speaks only as of the date on which it is made, and we undertake no obligation
      to update any forward-looking statement to reflect events or circumstances
      after
      the date on which the statement is made or to reflect the occurrence of
      unanticipated events.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      following discussion should be read in conjunction with the audited financial
      statements and notes thereto for the fiscal years ended November 30, 2005 and
      2004 filed as Exhibit 99.1 to this Current Report on Form 8-K and the risks
      described under the caption &#8220;Risk Factors&#8221; immediately following below
      .</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FINANCIAL
      CONDITION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      had
      net losses of $105,234 and $36,329 during the six months ended May 31, 2006
      and
      2005, respectively. As of May 31, 2006, we had cash and current assets of $5,129
      and $64,763, respectively, and current liabilities of $520,031, with obligations
      aggregating $99,093 for trade creditors and accrued expenses, $125,049 and
      $179,818 payable for credit card and lines of credit obligations, respectively,
      and $167,157 due to stockholders. We believe that our available current assets
      will be sufficient for the next twelve-month period to meet our working capital
      needs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      date
      we have not obtained adequate equity and debt financing to enable us to
      implement our business plan. As a result of the lack of financial resources,
      a
      condition unfavorably impacting us since inception, revenue and profitably
      have
      not increased as we believe would have otherwise been the case. Without
      sufficient financing, we have not been able to (i) acquire ownership of several
      products, particularly the intellectual property rights to and formulation
      of,
      our principal product, AcnEase&#174;, (ii) market and promote our products, (iii)
      conduct certain clinical trials that would further such marketing and
      promotional activities and (iv) hire additional employees. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described elsewhere in this Form 8K, we have merged into PMIC and thereby became
      a publicly traded corporation; however, we have not closed, nor obtained a
      commitment for, the financing that was originally contemplated to close
      contemporaneously with the closing of the merger. During the three and six
      months ended May 31, 2006, revenue growth was adversely affected by the time
      and
      attention we devoted to the merger and related financing initiatives.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RELATED
      PARTY TRANSACTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the six months ended May 31, 2006, the Company's due to stockholders increased
      by to $17,714.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMPARISON
      OF THE SIX MONTHS ENDED MAY 31 2006 TO THE SIX MONTHS ENDED MAY 31
      2005</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overall
      Results of Operations </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      six months ended May 31 2006, we incurred a net loss of $140,942, an increase
      of
      $104,613 from the net loss of $36,329 for the comparable prior year period.
      The
      increase in net loss in the fiscal 2006 compared to fiscal 2005 period is
      attributable</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">principally
      to an increase in operating expenses, as well as a decrease in</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">gross
      profit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      sales
      for the six months ended May 31 2006 were $386,984 compared to $411,804 for
      the
      six months ended May 31 2005. The decrease of $24,820, or 6%, can be attributed
      to decrease in sales of AcnEase in the United Kingdom (&#8220;UK&#8221;) due to a temporary
      leave of absence on the part of our local sales representative. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gross
      Profit </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross
      profit decreased to $201,451 for the six months ended May 31 2006 compared
      to
      $220,039 for the six months ended May 31 2005, or $18,588 and 8.4%, with gross
      margin decreasing to 52.1% from 53.4% for the period. The decrease in gross
      profit is principally attributable to the decrease in sales, as well as a slight
      decrease in gross margin. </font></div><br>
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Operating
      Expenses </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
      operating expenses increased by $81,771, or 34.5%, to $318,931 for the six
      months ended May 31 2006, from $237,160 for the six months ended May 31 2005,
      principally attributable to an increase in payroll expenses of $57,948 due
      principally to officer salary expense accrued but not paid, audit expense of
      $35,000 and an increase in marketing and promotion expenses of $17,246, offset
      by a decrease in UK-related commission and other expenses of $20,963,
      principally the result of lower sales in the UK. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Income (Expense) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest
      expense increased to $21,949 from $17,257 for the six months ended May 31,
      2006
      as compared with the six months ended May 31, 2005, or $4,692, due principally
      to increases in interest rates payable for credit card and lines of credit
      debt
      outstanding in the current period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMPARISON
      OF THE FISCAL YEAR ENDED NOVEMBER 30, 2005 TO THE FISCAL YEAR ENDED NOVEMBER
      30,
      2004</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overall
      Results of Operations </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      fiscal year ended November 30, 2005, we incurred a net loss of $105,234, a
      decrease of $186,487 from the net loss of $291,792 for the fiscal year ended
      November 30, 2004. The net loss for the fiscal year ended November 30, 2004
      included a non-cash charge of $108,466 to set up a valuation allowance to offset
      100% of a deferred tax asset. The decrease in net loss in fiscal 2005 compared
      to fiscal 2004 is also attributable to an increase in gross profit due to
      increased net sales and a decrease in operating expenses in the fiscal year
      ended November 30, 2005 compared to the earlier period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      sales
      for the fiscal year ended November 30, 2005 were $866,773 compared to $762,371
      for the fiscal year ended November 30, 2004. The increase of $104,402, or 13.7%,
      can be attributed to an increase in the number of units sold of AcnEase.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gross
      Profit </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gross
      profit increased to $493,743 for the fiscal year ended November 30, 2005
      compared to $433,159 for the fiscal year ended November 30, 2004, or $60,584,
      with gross margin increasing slightly to 57.0% in the current period from 56.8%
      for the prior period. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Operating
      Expenses </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
      operating expenses decreased to $554,104 for the fiscal year ended November
      30,
      2005, from $591,187 for the fiscal year ended November 30, 2004, or $37,083,
      principally attributable to decreases in marketing and promotion expenses of
      $48,787 and in product development expenses of $57,776, offset by an increase
      of
      $44,905 in commission, fulfillment and office expenses related to increased
      sales and business activities in the UK. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Income (Expense) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest
      expense increased to $41,687 from $22,884 for the fiscal year ended November
      30,
      2005 as compared with the fiscal year ended November 30, 2004, or $18,794,
      due
      principally to an increase in interest rates payable and in the level of credit
      card debt outstanding. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Seasonality</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      no seasonality factors that affect the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Off-Balance
      Sheet Arrangements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company&#8217;s financial condition, changes
      in financial condition, revenue or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to investors, and
      the
      Company does not have any non-consolidated special purpose
      entities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIQUIDITY
      AND CAPITAL RESOURCES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><br><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of May
      31, 2006, we had a cash balance of $5,129 and a negative cash flow from
      operations of $18,422 for the six month period then ended. We have been
      operating at a loss since inception and have been funding these losses in a
      number of ways, including lines of credit, credit card debt, advances from
      stockholders and entering into subscription agreements with &#8220;friends and family&#8221;
for investment funds. While we are actively seeking a substantial amount of
      equity or debt financing, we have received no commitments for such financing.
      We
      believe that our working capital at May 31, 2006, with additional anticipated
      financing to be again obtained from one or more of the sources described above,
      will be sufficient for the next twelve-month period to meet our working capital
      needs. </font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has total liabilities and contractual obligations of $587,764 as of
      May
      31, 2006. These contractual obligations, along with the dates on which such
      payments are due, are described below: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td valign="bottom" width="40%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 37.8pt" align="center">&#160;</div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="8" valign="bottom" width="52%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 37.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Contractual
                Obligations</strong></font>&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="40%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="8" valign="bottom" width="52%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 37.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(as
                of May 31, 2006)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="40%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Total</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1
                Year or Less</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>More
                Than 1 Year</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="16%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expenses
                </font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">134,003</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">134,003</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">--</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="40%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Credit
                Cards payable </font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">125,049
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">125,049
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">--</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lines
                of Credit Payable </font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">179,818
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">179,818
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">--</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="40%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
                to Stockholders </font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">167,157
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">167,157
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">--</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
                </font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">16,737</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">15,754</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">983</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="40%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Total
                Contractual Obligations </strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>$</strong></font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>622,764</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>$</strong></font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>621,781</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>$</strong></font></div>
            </td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><strong>983</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <hr style="COLOR: black" align="left" noshade size="2" width="25%">
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Below
      is
      a discussion of our sources and uses of funds for the six months ended May
      31,
      2006 and 2005. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      Cash Used In Operating Activities </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      cash
      used in operating activities was $18,442 and $46,591 in the six months ended
      May
      31, 2006 and 2005, respectively. The use of cash in operating activities for
      the
      six months ended May 31, 2006 was principally the result of a net loss of
      $140,942, partially offset by a decrease in accounts receivable of $18,184
      and
      an increase in accounts payable and accrued expenses of $97,151. The use of
      cash
      in operating activities for the six months ended May 31, 2005 was principally
      the result of a net loss of $36,329 and a decrease in accounts payable of
      $26,888, partially offset by a decrease in inventory of $16,100,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      Cash Used In Investing Activities </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the six months ended May 31, 2006 and 2005, we used $6,640 and $1,763,
      respectively, for the acquisition of other assets, and $686 and $3.933,
      respectively, for the acquisition of property and equipment. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      Cash Provided By Financing Activities </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      cash
      provided by financing activities for the six months ended May 31, 2006 amounted
      to $30,695, principally attributable to an increase of $17,714 in amount due
      to
      stockholders and an increase of $13,000 other loans. Net cash provided by
      financing activities for the six months ended May 31, 2005 amounted to $56,065,
      principally attributable to an increase of $28,520 in amount due to stockholders
      and an increase of $19,053 in credit card debt payable. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Our
      business and results of operations are subject to numerous risks, uncertainties
      and other factors that you should be aware of, some of which are described
      below
      and in the section entitled &#8220;Cautionary Statement Concerning Forward-Looking
      Statements.&#8221; The risks, uncertainties and other factors described below are not
      the only ones facing our company. Additional risks, uncertainties and other
      factors not presently known to us or that we currently deem immaterial may
      also
      impair our business operations. Any of the risks, uncertainties and other
      factors could have a materially adverse effect on our business, financial
      condition or results of operations and could cause the trading price of our
      common stock to decline substantially.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Risks
      Relating to Our Company</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      have a history of losses, and will incur additional
      losses.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are a
      development stage company with a limited history of operations, and do not
      expect to significantly increase ongoing revenues from operation in the
      immediately foreseeable future. To date, we have not been profitable. We had
      net
      losses of $140,942 during the six months ended May 31, 2006. Our losses have
      resulted principally from costs incurred in product development, including
      product testing, selection and from general and administrative costs associated
      with our operations. While we seek to attain profitability, we cannot be sure
      that we will ever achieve product and other revenue sufficient for us to attain
      this objective. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
      the
      exception of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase&#174;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      , our
      product candidates are in research or various stages of development. For some
      of
      these products we will want to conduct additional research, development and
      clinical trials in order to improve our ability to advertise and differentiate
      these products from others in the market place. We cannot be sure that we will
      successfully research, develop, commercialize, manufacture and market any other
      product candidates. We expect that these activities, together with future
      general and administrative activities, will result in significant expenses
      for
      the foreseeable future. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      need additional capital, which may not be available to us.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      expended and will continue to expend substantial funds in the research,
      development, marketing and clinical testing of our herbaceutical supplements.
      Following the merger we will require funds in excess of our existing cash
      resources to fund operating deficits, develop new products, purchase additional
      rights to existing products, establish and expand our manufacturing
      capabilities, and finance general and administrative and research activities.
      In
      particular, we will need additional capital to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 9pt;">&#160;</td>
              <td style="width: 27pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acquire
                  intellectual property rights relating to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase</em></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup><em>&#174;</em></sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                  and other products;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 9pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td style="width: 27pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">conduct
                  clinical trials and fund marketing and new product
                  launches;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 9pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td style="width: 27pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">establish
                  U.S. manufacturing capabilities;
                  and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">&#160;</td>
              <td style="width: 9pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td style="width: 27pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fund
                  general working capital requirements if we continue to experience
                  deficits. </font></div>
              </td>
            </tr>

        </table>
      </div>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      to
      market conditions at the time we may need additional funding, or due to our
      own
      financial condition at that time, it is possible that we will be unable to
      obtain additional funding as and when we need it. Even if we are able to obtain
      capital, it may be on unfavorable terms or terms that excessively dilute
      existing shareholders or otherwise negatively affect the interests of existing
      shareholders. If we are unable to obtain additional funding as and when needed,
      we could be forced to delay our development, marketing and expansion efforts
      and, if we continue to experience losses, potentially cease operations.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may not be able to obtain or sustain market acceptance for our services and
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Failure
      to establish a brand and presence in the marketplace on a timely basis could
      adversely affect our financial condition and operating results. Moreover, we
      cannot be sure that we will successfully complete the development and
      introduction of new products or product enhancements or that any new products
      developed will achieve acceptance in the marketplace. We may also fail to
      develop and deploy new products and product enhancements on a timely basis.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>AcnEase</em></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup><em>&#174;</em></sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is
      currently our only product providing revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Government
      regulation of the processing, formulation, packaging, labeling and advertising
      of our products can impact our ability to market products.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      Dietary Supplement Health and Education Act of 1994, companies that manufacture
      and distribute dietary supplements are limited in the statements that they
      are
      permitted to make about nutritional support on the product label without FDA
      approval. In addition, a manufacturer of a dietary supplement must have
      substantiation for any such statement made and must not claim to diagnose,
      mitigate, treat, cure or prevent a specific disease or class of disease. The
      product label must also contain a prominent disclaimer. These restrictions
      may
      restrict our flexibility in marketing our product. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      FDA
      has proposed GMPs (Good Manufacturing Practices) specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations. As a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      processing, formulizing, packaging, labeling and advertising of such products,
      however, are subject to regulation by one or more federal agencies including
      the
      FDA, the Federal Trade Commission, the Consumer Products Safety Commission,
      the
      Department of Agriculture and the Environmental Protection Agency. Our
      activities also are subject to regulation by various agencies of the states
      and
      localities in which our products are sold. Among other things, such regulation
      puts a burden on our ability to bring products to market. Any changes in the
      current regulatory environment could impose requirements that would make
      bringing new products to market more expensive or restrict the ways we can
      market our products. In addition, the adoption of new regulations or changes
      in
      the interpretation of existing regulation may result in significant compliance
      costs or discontinuation of product sales and may adversely affect our revenue.
      The FDA may implement additional regulations with which we would have to comply,
      which would increase expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as dietary supplements or not. We make this determination
      based
      on the ingredients contained in the products and the claims we make for the
      products and if our determination is denied by any regulatory authority we
      could
      face significant penalties that may require us to shut down our operations.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      face substantial competition. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      dietary supplement industry is growing rapidly and is highly competitive.
      Competition for the sale of nutritional products comes from many sources,
      including specialty retailers, supermarkets, large chain discount retailers,
      drug store chains and independent drug stores, health food stores, on-line
      merchants, mail order companies and a variety of other participants in the
      market for nutritional products. Some of our more prominent competitors include
      General Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and
      Vitamin Shoppe. We compete regularly with companies selling nationally
      advertised brand name products and with companies that may have more expanded
      product lines with much larger volume of sales. This competition could have
      a
      material adverse effect on our business, results of operations and financial
      condition since these companies have greater financial and other resources
      available to them and may possess manufacturing, distribution and marketing
      capabilities far greater than our own. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
      existing products may become more mainstream and thereby increase competition
      for those products as more participants enter the market. We may not be able
      to
      compete effectively and our attempt to do so may require us to reduce our
      prices, which may result in lower margins. Failure to compete effectively could
      adversely affect our market share, revenues and growth prospects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      competitive position will be affected by the continued acceptance of our
      products, our ability to attract and retain qualified personnel, future
      governmental regulations affecting nutritional products, and publication of
      product safety studies by the media, government and authoritative health and
      medical authorities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      currently have no manufacturing capabilities and we are dependent upon other
      companies to manufacture our products. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently have no manufacturing facilities. We are dependent upon relationships
      with independent manufacturers to fulfill our product needs. We use several
      manufacturers for various parts of the manufacturing processes for our products.
      We believe these are small privately held firms. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      the manufacturing processes, which our contract manufacturers perform, are
      fairly standard in the industry, we believe that there are a large number of
      manufacturers who could provide us with these services if our current contract
      manufacturers are unavailable for any reason or seek to impose unfavorable
      terms. Our ability to market and sell our products requires that such products
      be manufactured in commercial quantities and in compliance with applicable
      federal and state regulatory requirements. In addition, we must be able to
      manufacture our products at a cost that permits us to charge a price acceptable
      to the customer while also accommodating distribution costs and third-party
      sales compensation. Competitors who do own their own manufacturing may have
      an
      advantage over us with respect to pricing, availability of product and in other
      areas through their control of the manufacturing process. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      are dependent on key management and the loss of their services could have a
      material adverse impact on us. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      relied extensively on the services of Drs. Agnes P. Olszewski and James P.
      Gilligan, our co-founders. Drs.&#160;Olszewski and Gilligan play key roles in
      our management and the loss of their services would materially and adversely
      affect us and our prospects. Until we raise substantial financing, neither
      of
      these key individuals will spend full-time working for us. Under her employment
      agreement, Dr. Olszewski is not required to do so until we have raised
      $1,250,000, and under his consulting/employment agreement, Dr. Gilligan is
      not
      required to do so until six months after we have raised $2,500,000 in financing.
      There is no assurance that we will be able to raise such amounts and without
      such financing and the full-time employment of these key executives we will
      in
      all likelihood not be able to further develop our business and will likely
      continue to experience losses. The loss of services of any of these persons
      could delay or reduce our product development and commercialization efforts
      and
      harm our ability to compete effectively. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may be subject to product liability claims and may not have adequate insurance
      to cover such claims. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Like
      other retailers, distributors and manufacturers of products that are designed
      to
      be ingested, we face an inherent risk of exposure to product liability claims
      in
      the event that the use of our products results in injury. We intend to obtain
      general liability coverage of $3 to $5 million that will include product
      liability coverage. Because our policies will be purchased on a year-to-year
      basis, industry conditions or our own claims experience could make it difficult
      for us to secure the necessary insurance at a reasonable cost. In addition,
      we
      may not be able to secure insurance that will be adequate to cover liabilities.
      We generally do not obtain contractual indemnification from parties supplying
      raw materials or marketing our products. In any event, any such indemnification
      is limited by its terms and, as a practical matter, to the creditworthiness
      of
      the other party. In the event that we do not have adequate insurance or
      contractual indemnification, liabilities relating to defective products could
      require us to pay the injured parties&#8217; damages which are significant compared to
      our net worth or revenues. </font></div><br>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may be adversely affected by unfavorable publicity relating to our product
      or
      similar products manufactured by our competitors.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that the dietary supplement market is affected by national media
      attention regarding the consumption of these products. Future scientific
      research or publicity may be unfavorable to the dietary and nutritional
      supplement market generally or to any particular product and may be inconsistent
      with earlier favorable research or publicity. Adverse publicity associated
      with
      illness or other adverse effects resulting from the consumption of products
      distributed by other companies that are similar to our products could reduce
      consumer demand for our products and consequently our revenues. This may occur
      even if the publicity does not relate to our products. Adverse publicity
      directly concerning our products could be expected to have an immediate negative
      effect on the market for that product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      depend on trade secrets to protect our proprietary technology, which may be
      inadequate to protect our position. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      long-term success will substantially depend upon protecting our technology
      from
      infringement, misappropriation, discovery and duplication. We expect that we
      will apply for patent protection with respect to some of our products. Since
      we
      do not currently have patents on our products, a competitor could replicate
      our
      products. Any patents that we might obtain may not provide meaningful protection
      or significant competitive advantages over competing products, due to the
      complexity of the legal and scientific issues involved in patent defense and
      litigation. For these reasons we have elected to protect our current products
      through trade secrets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      of the complexity of the legal and scientific issues involved in patent
      prosecutions, we cannot be sure that any future patent applications for new
      products will be granted. Nor can we be sure that any patent rights that we
      do
      obtain will provide meaningful protection against others duplicating our
      products because of the complexity of the legal and scientific issues that
      could
      arise in litigation over these issues. Furthermore, patent applications are
      maintained in secrecy in the United States until the patents are approved,
      and
      in most foreign countries for a period of time following the date from which
      priority is claimed. A third party&#8217;s pending patent applications may cover any
      technology that we currently are developing. Additionally, if we must resort
      to
      legal proceedings to enforce our intellectual property rights, the proceedings
      could be burdensome and expensive and could involve a high degree of risk to
      our
      proprietary rights if we are unsuccessful in, or cannot afford to pursue, such
      proceedings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      rely
      at present completely on trade secrets and contract law to protect our
      proprietary technology. There can be no assurance that any such contract will
      not be breached, or that if breached, it will have adequate remedies. Currently,
      all of our products are protected by trade secrets held by third parties. We
      rely on such third parties to adequately protect such trade secrets. There
      can
      be no assurance that these third parties will protect and continue to hold
      the
      trade secrets relating to our products. Furthermore, there can be no assurance
      that any of these trade secrets will not become known or independently
      discovered by third parties.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      can
      be no assurance that others will not independently develop substantially
      equivalent proprietary information and techniques or otherwise gain access
      to
      our trade secrets and know-how. In addition, we may be required to obtain
      licenses to patents or other proprietary rights from third parties. There can
      be
      no assurance that any licenses required under any patents or proprietary rights
      would be made available on acceptable terms, if at all. If we do not obtain
      required licenses, we may encounter delays in product development or find that
      the development, manufacture or sale of products requiring such licenses could
      be foreclosed. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      have limited the liability of our directors and officers for breaches of the
      duty of care. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      articles of incorporation limit the liability of our directors for monetary
      damages for breaches of directors&#8217; fiduciary duty of care. This provision may
      reduce the likelihood of derivative litigation against directors and may
      discourage or deter shareholders or management from suing directors for breaches
      of their duty of care, even though such an action, if successful, might
      otherwise benefit our shareholders and us. In addition, our articles of
      incorporation provide for the indemnification of directors and officers in
      connection with civil, criminal, administrative or investigative proceedings
      when acting in their capacities as agents for us.</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      results of operations may be affected by changing market prices and requirements
      for dietary supplements.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      results of operations may be affected by changing resale prices or market
      requirements for dietary supplements, some of which are priced on a commodity
      basis. The sale price, and market demand for, these materials can be volatile
      due to numerous factors beyond our control, which may cause significant
      variability in its period-to-period results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      results of operations will fluctuate.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      revenues and results of operations will vary from quarter to quarter in the
      future. A number of factors, many of which are outside of our control, may
      cause
      variations in our results of operations, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">demand
                and price for our products; </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                timing and recognition of product sales;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unexpected
                delays in developing and introducing products;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unexpected
                delays in manufacturing our products;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
                expenses, whether related to marketing, product development or
                administration or otherwise;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">insufficient
                demand in the marketplace could cause our distributors to return
                product;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                mix of revenues derived from products;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                hiring, retention and utilization of personnel; and</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">general
                economic factors.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may not succeed in our acquisition of additional
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      part
      of our growth strategy, we intend to acquire and develop additional product
      candidates or approved products. The success of this strategy depends upon
      our
      ability to identify, select and acquire bioherbaceutical products that meet
      the
      criteria we have established. Any product candidate we acquire or license may
      require additional research and development efforts prior to commercial sale,
      including extensive pre-clinical and/or clinical testing. All product candidates
      are prone to the risks of failure inherent in product development, including
      the
      possibility that the product candidate will not be safe, non-toxic and
      effective. In addition, we cannot assure that any approved products that we
      develop, acquire or license will be manufactured or produced economically;
      successfully commercialized; widely accepted in the marketplace or that we
      will
      be able to recover our significant expenditures in connection with the
      development, acquisition or license of such products. In addition, proposing,
      negotiating and implementing an economically viable acquisition or license
      is a
      lengthy and complex process. Other companies, including those with substantially
      greater financial, marketing and sales resources, may compete with us for the
      acquisition or license of product candidates and approved products. We may
      not
      be able to acquire the rights to additional product candidates and approved
      products on terms that we find acceptable, or at all. In addition, if we acquire
      or license product candidates from third parties, we will be dependent on third
      parties to supply such products to us for sale. We could be materially adversely
      affected by the failure or inability of such suppliers to meet performance,
      reliability and quality standards. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Other
      companies may claim that we infringed upon their proprietary
      rights.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      do not
      believe that our products or processes violate third-party intellectual property
      rights. Nevertheless, there is no guarantee that such rights are not being,
      and
      will not be, violated. If any of the products or processes are found to violate
      third-party intellectual property rights, we may be required to re-engineer
      or
      cause to be re-engineered one or more of those products or processes or seek
      to
      obtain licenses from third parties to continue offering its products or
      processes without substantial re-engineering, and such efforts may not be
      successful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      non-U.S. sales present special risks. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      subcontractor in London handles fulfillment and coordinates market development
      for our products in the U.K. and continental Europe. We anticipate that sales
      outside the U.S. will continue to account for a significant percentage of our
      product sales and we intend to continue to expand our presence in international
      markets. Non-U.S. sales are subject to a number of special risks. For example:
      </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sales
                agreements may be difficult to enforce;
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">receivables
                may be difficult to collect through a foreign country&#8217;s legal
                system;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">foreign
                countries may impose additional withholding taxes or otherwise tax
                foreign
                income, impose tariffs or adopt other restrictions on foreign
                trade;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">intellectual
                property rights may be more difficult to enforce in foreign
                countries;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">terrorist
                activity or the outbreak of a pandemic disease may interrupt distribution
                channels or adversely impact customers or employees;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">regulations
                may change relating to dietary supplements that may negatively impact
                the
                ability to market products in those geographical
                regions.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      of
      these events could harm our operations or operating results. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and new Securities and
      Exchange Commission regulations, are creating uncertainty for public companies.
      Our management team will be required to invest significant management time
      and
      financial resources to comply with both existing and evolving standards for
      public companies, which may lead to increased general and administrative
      expenses and a diversion of management time and attention from revenue
      generating activities to compliance activities. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>It
      is possible that there are claims of which we are unaware that may come to
      light
      in the future and cost us considerable time, effort and expense to
      resolve.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      possible that a claim, whether colorable or not, may be asserted against us
      in
      the future with respect to matters arising prior to the merger. There can be
      no
      assurance given that some person will not devise a claim and attempt to assert
      it against us in the hopes of obtaining some monetary benefit. To resolve such
      a
      claim, including payment, may cost us considerable time, effort and expense.
      Any
      of these may impair management&#8217;s implementation of the business plan with the
      consequence of a loss of opportunity. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Risks
      Related to Our Common Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Because
      our common stock is traded on the OTC Bulletin Board, your ability to sell
      your
      shares in the secondary trading market may be limited.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock currently is traded on the over-the-counter market on the OTC
      Bulletin Board. Consequently, the liquidity of our common stock is limited,
      not
      only in the number of shares that are bought and sold, but also through delays
      in the timing of transactions, and coverage by security analysts and the news
      media, if any, of us. As a result, prices for shares of our common stock may
      be
      lower than might otherwise prevail if our common stock was traded on a national
      securities exchange, such as The New York Stock Exchange or The Nasdaq Stock
      Market, LLC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      common stock may be removed from the OTC Bulletin Board, which would likely
      cause the trading price of our common stock to decline and affect our ability
      to
      raise capital in the future.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      5, 2006, we received notice from the OTC Bulletin Board that unless we cured
      our
      delinquency in filing the Annual Report on Form 10-K for the year ended December
      31, 2005 prior to the expiration of the grace period (May 5, 2006), our common
      stock would be removed from the OTC Bulletin Board effective May 9, 2006. We
      have cured this delinquency with the filing of our Annual Report on Form 10-K
      filed on May 1, 2006. However, under applicable NASD Rules, if we are delinquent
      in our reporting obligations three times in a 24-month period and/or are
      actually removed from the OTC Bulletin Board for failure to file two times
      in a
      24-month period, in each case, we would be ineligible for quotation on the
      OTC
      Bulletin Board for a period of one year. To date, we have been delinquent one
      time in the past 24-month period. Should quotation of our common stock on the
      OTC Bulletin Board or a similar facility cease for any reason, the liquidity
      of
      our common stock and our ability to raise equity capital would likely
      decrease.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Because
      our shares are &#8220;penny stocks,&#8221; you may have difficulty selling them in the
      secondary trading market. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Federal
      regulations under the Exchange Act regulate the trading of so-called &#8220;penny
      stocks,&#8221; which are generally defined as any security not listed on a national
      securities exchange, priced at less than $5.00 per share and offered by an
      issuer with limited net tangible assets and revenues. Since our common stock
      currently trades on the OTC Bulletin Board at less than $5.00 per share, our
      common stock is a &#8220;penny stock&#8221; and may not be traded unless a disclosure
      schedule explaining the penny stock market and the risks associated therewith
      is
      delivered to a potential purchaser prior to any trade. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, because our common stock is not listed on any national securities
      exchange and currently trades at less than $5.00 per share, trading in our
      common stock is subject to Rule 15g-9 under the Exchange Act. Under this rule,
      broker-dealers must take certain steps prior to selling a &#8220;penny stock,&#8221; which
      steps include: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtaining
                financial and investment information from the investor;
</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtaining
                a written suitability questionnaire and purchase agreement signed
                by the
                investor; and </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">providing
                the investor a written identification of the shares being offered
                and the
                quantity of the shares. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      these
      penny stock rules are not followed by the broker-dealer, the investor has no
      obligation to purchase the shares. The application of these comprehensive rules
      will make it more difficult for broker-dealers to sell our common stock and
      our
      shareholders, therefore, may have difficulty in selling their shares in the
      secondary trading market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      stock price has been and may continue to be volatile and an investment in our
      common stock could suffer a decline in value. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trading
      of our common stock has been sporadic, and the trading volume has generally
      been
      low. Even a small trading volume on a particular day or over a few days may
      affect the market price of our common stock. The market price of our common
      stock may fluctuate significantly in response to a number of factors, some
      of
      which are beyond our control. These factors include: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">announcements
                of research activities and technology innovations or new products
                by us or
                our competitors;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in market valuation of companies in our industry
                generally;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">variations
                in operating results; </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in governmental regulations;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">results
                of research studies of our products or our competitors&#8217;
                products;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">regulatory
                action or inaction on our products or our competitors&#8217;
                products;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in our financial estimates by securities analysts; </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">general
                market conditions for companies in our industry; </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">broad
                market fluctuations; and</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#8226;</strong></font></div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">economic
                conditions in the United States or abroad.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      directors and executive officers own a significant number of shares of our
      common stock to control our company, which could discourage or prevent a
      takeover, even if an acquisition would be beneficial to our stockholders.
</em></strong></font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
      of our directors and our current executive officer own or control approximately
      80% of our outstanding voting power. Accordingly, these stockholders,
      individually and as a group, will able to influence the outcome of stockholder
      votes, involving votes concerning the election of directors, the adoption or
      amendment of provisions in our certificate of incorporation and bylaws and
      the
      approval of certain mergers or other similar transactions, such as a sale of
      substantially all of our assets. Such control by existing stockholders could
      have the effect of delaying, deferring or preventing a change in control of
      us.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      do not pay cash dividends, so any return on an investment must come from
      appreciation. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      do not
      intend to pay any cash dividends in the foreseeable future and, therefore,
      any
      return on an investment in our common stock must come from increases in the
      fair
      market value and trading price of our common stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may issue additional equity securities that will dilute our stockholders.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may
      issue additional equity securities to raise capital and through the exercise
      of
      options, warrants and convertible debt that is outstanding or may be
      outstanding. These additional issuances will have a dilutive effect on our
      existing stockholders. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      table
      on the following pages set forth information regarding the beneficial ownership
      of the common stock by:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                executive officers and directors;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                directors and executive officers as a group;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
                person known to us to beneficially own more than five percent (5%)
                of our
                outstanding shares of common stock.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      information contained in these tables is as of September 18, 2006, following
      the
      merger. At that date, we had 108,567,080 shares of common stock outstanding.
      Except as indicated, the persons named have sole voting and investment power
      with respect to all shares shown as being beneficially owned by them. The
      percentages in the table are rounded to the nearest tenth of a percent.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="46%">&#160;</td>
            <td colspan="2" valign="top" width="34%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Common
                Stock (1)</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="46%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                and Address of Stockholder</strong></font></div>
            </td>
            <td valign="top" width="19%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                and Nature</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>of
                Beneficial Ownership(2)</strong></font></div>
            </td>
            <td valign="top" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percent
                of Class (2)</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="80%">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Directors
                and Officers</em></font></div>
            </td>
            <td valign="top" width="19%">&#160;</td>
            <td valign="top" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Agnes P. Olszewski</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Herborium
                Group, Inc.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                Oak Street</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Teaneck,
                New Jersey 07666</font></div>
            </td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">44,811,063(3)</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">41.3%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                James P. Gilligan</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">985
                Carteret Ave</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Union,
                New Jersey 07083</font></div>
            </td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">42,992,563(4))</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">39.6%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Max
                G. Ansbacher </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">515
                Madison Avenue, 29th Floor</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
                York, NY 10022 </font></div>
            </td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">434,268</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
                %</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wayne
                I. Danson</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">420
                Lexington Avenue, Suite 2739</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
                York, NY 10170</font></div>
            </td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">347,373(5)</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
                %</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="46%">&#160;</td>
            <td valign="top" width="19%">&#160;</td>
            <td valign="top" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>All
                Directors and Officers as a Group</em></font></div>
            </td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">88,585,267</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">81.7%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
      Less
      than 1 percent</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                holders of common stock are entitled to one vote per share.
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                number of shares of common stock and the percent of the class in
                the table
                and these notes to the table have been calculated in accordance with
                Rule
                13d-3 under the Exchange Act, and assume, on a stockholder by stockholder
                basis, that each stockholder has converted all securities owned by
                such
                stockholder that are convertible into common stock at the option
                of the
                holder currently or within 60 days of September 18,
                2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                515,693 shares of common stock held by Dr. Olszewksi&#8217;s son who resides in
                the same household. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                434,268 shares of common stock held by Dr. Gilligan&#8217;s son who resides in
                the same household. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5)</font></div>
            </td>
            <td align="left" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
                Danson&#8217;s shares were received as a distribution on his ACT common
                stock.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DIRECTORS
      AND EXECUTIVE OFFICERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the names of our directors and executive officers,
      their ages and the positions they currently hold. Each such person became an
      officer and/or director of the company immediately after the closing of the
      merger. The positions that Drs. Olszewski and Gilligan held with Herborium
      prior
      to the merger are described in the biographical information set forth below.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="22%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td align="left" valign="top" width="7%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
            <td align="left" valign="top" width="49%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Position</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Agnes P. Olszewski</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">49
                </font></div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President,
                Chief Executive Officer, Chief Financial Officer and
                Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                James P. Gilligan</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">54</font></div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consultant
                and Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Max
                G. Ansbacher</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">70</font></div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                </font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wayne
                I. Danson</font></div>
            </td>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">53&#160;</font></div>
            </td>
            <td align="left" valign="top" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">&#160;</td>
            <td align="left" valign="top" width="7%">&#160;</td>
            <td align="left" valign="top" width="49%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -180pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Dr.
      Agnes Olszewski. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Olszewski is a</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>&#160;</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">co-founder
      of Herborium, Inc. and has served as co-Chief Executive Officer and President
      Business Development and director of Herborium, Inc. since its inception in
      2000. She was appointed as our Chief Executive Officer, Acting Chief Financial
      Officer and director concurrently with the closing of the merger. In addition,
      concurrently with the closing of the merger, she was appointed director of
      our
      subsidiary Herborium. Until such time as we receive a minimum of $1,250,000
      of
      financing, Dr. Olszewski will not devote her full time to our company, and
      will
      continue to engage in her activities as a professor. Dr. Olszewski has over
      20
      years experience in business strategy, strategic marketing management and
      international business. She holds M.A. in Consumer Psychology and Ph.D. degrees
      from Warsaw University, Poland, and an M.B.A. degree from Fordham University,
      New York City. Dr. Olszewski has been a consultant and a team leader on
      strategic management and competitive marketing strategies for leading American
      corporations, as well as foreign companies and institutions. In her capacity
      as
      an international consultant, she had lead multicultural negotiations and managed
      diverse teams of professionals. She has also been responsible for developing
      and
      implementing business and marketing strategies in the United States and foreign
      markets. After the collapse of communism in Central Europe, Dr. Olszewski formed
      A&amp;T Global Marketing Inc., one of the first consulting firms in the U.S.
      focusing on the transfer of western management and financial know-how into
      transitional economies. A&amp;T Global Marketing was also involved in advising
      American corporations on entry strategies into the emerging markets of Europe
      and Asia. Dr. Olszewski has successfully led the efforts to form Joint Ventures
      in Poland, China and France. She was President and Chief Executive Officer
      of
      G.O. International, Inc., which she co-founded with Dr. James P. Gilligan,
      a
      consulting firm specializing in business strategies for pharmaceutical industry
      and global technology transfer. G.O. International merged with Herborium, Inc.
      in June 2002.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Dr.
      James P. Gilligan. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Gilligan is a co-founder of Herborium, Inc. and has served co-Chief Executive
      Officer and President Product Development and director of Herborium, Inc. since
      its inception in 2000. He was appointed as our director and as a director of
      our
      subsidiary Herborium concurrently with the closing of the merger. He is
      currently providing consulting services to us and has agreed to serve on a
      full-time basis as our President and Chief Operating Officer within six months
      after we receive a minimum of $2,500,000 of financing. He has over 25 years
      experience in the pharmaceutical and biotechnology industry. He received his
      Ph.D. in Pharmacology and Toxicology from the University of Connecticut, during
      which time he completed a special research fellowship at the Cleveland Clinic
      Atherosclerosis Research Unit. He performed his post-doctoral training at the
      Roche Institute of Molecular Biology. Dr. Gilligan is author or co-author of
      15
      U.S. patents, as well as multiple PCT patents and the author of numerous
      scientific publications. He also received a M.S. in International Business
      from
      Seton Hall University. Dr. Gilligan is Vice President of Product Development
      at
      Unigene Laboratories Inc. Fairfield, NJ, a biopharmaceutical company. He was
      a
      founding member of Unigene in 1981 and participated in the design of its R&amp;D
      facility in 1983 and the cGMP biotechnology manufacturing facility in 1993.
      His
      responsibilities have included coordination of all U.S. and international
      pre-clinical research, toxicology, and regulatory filings as well as design
      and
      management of clinical studies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Max
      G. Ansbacher</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Ansbacher was appointed as our director and as a director of our subsidiary
      Herborium concurrently with the closing of the merger. He is the principal
      of
      Ansbacher Investment Management, a management firm concentrating in
      sophisticated options strategies. The firm currently manages over $158 million.
      Prior to founding his firm, Mr. Ansbacher managed options accounts for the
      investment banking firm Bear Stearns. He is the author of three books on
      investing and his book </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      New Options Market</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is one
      of the all-time best selling books on exchange traded options. Mr. Ansbacher
      is
      a graduate of Phillips Exeter Academy, the University of Vermont and Yale law
      school. He also holds an advanced degree in tax law from New York University,
      and is a member of the bar in New York, Vermont and the District of Columbia.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Wayne
      I. Danson</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      Mr. Danson was appointed as our director and as a director of our subsidiary
      Herborium concurrently with the closing of the merger. Prior to the merger,
      Mr.
      Danson served as Chief Executive Officer and as a director of LW. Mr. Danson
      has
      served as the Chief Financial Officer of Advanced Communications Technologies,
      Inc. since December 1, 1999 and was appointed a director on January 3, 2000,
      President on April 30, 2002 and Chief Executive Officer on June 7, 2005. Mr.
      Danson is the Managing Director and Founder of Danson Partners, LLC, a financial
      advisory firm specializing in middle market companies in the real estate and
      technology industries. Prior to forming Danson Partners, LLC in May 1999, Mr.
      Danson was Managing Director of PricewaterhouseCoopers LLP's Real Estate Capital
      Markets Group. Prior to rejoining PricewaterhouseCoopers in 1996, Mr. Danson
      was
      a Managing Tax Partner with Kenneth Leventhal &amp; Company in New York and
      Washington D.C., where he was also Kenneth Leventhal's National Director of
      its
      International and Debt Restructure Tax Practices. Prior to his involvement
      with
      Kenneth Leventhal in 1988, Mr. Danson was a Managing Director with Wolper Ross
      &amp; Co., Ltd. in New York, a closely-held financial services company
      specializing in financial tax, pension consulting, designing financial
      instruments and providing venture capital and investment banking services.
      Mr.
      Danson graduated with honors from Bernard M. Baruch College with a B.B.A. in
      Accounting and an M.B.A. in Taxation. He is a certified public accountant and
      a
      member of the AICPA and the New York State Society of CPAs. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC&#8217;s Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to obtain an additional board member who is &#8220;independent&#8221; as determined in
      accordance with the applicable requirements of The Nasdaq Stock Market LLC
      and
      other applicable rules and regulations of the Securities and Exchange
      Commission. Although we are in discussions with prospective candidates, no
      candidate has been selected at this time. All directors will hold office until
      the next annual meeting of stockholders and until their successors have been
      elected and qualified. Officers serve at the discretion of the Board of
      Directors. </font></div><br>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">26</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Family
      Relationships</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      no family relationships among our directors, executive officers or persons
      nominated or chosen to become our directors or executive officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Involvement
      in Certain Legal Proceedings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      director, person nominated to become a director, executive officer, promoter
      or
      control person has been involved in any legal proceeding during the past five
      years that is required to be disclosed pursuant to Item 401(f) of Regulation
      S-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Board
      Committees</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      do not
      have an Audit Committee, and therefore we do not have an &#8220;audit committee
      financial expert,&#8221; as such term is defined in Item 401(h) of Regulation S-K. The
      Board of Directors believes that it is not necessary to have a standing audit
      committees at this time because the functions of such committee are adequately
      performed by the entire board. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXECUTIVE
      COMPENSATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the compensation paid by PMIC to its Chief Executive
      Officer, Martin Nielson, during each of PMIC&#8217;s last three fiscal years ended
      December 31, 2003, 2004 and 2005. Mr. Nielson resigned as President of PMIC
      on
      July 19, 2006 and resigned as Chief Executive Officer effective on September
      18,
      2006. At the end of PMIC&#8217;s last completed fiscal year, PMIC did not have any
      executive officer whose total annual salary and bonus exceeded
      $100,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following also table sets forth the compensation Herborium paid to Drs. Agnes
      P.
      Olszewski and James P. Gilligan, its co-Chief Executive Officers and Presidents,
      during Herborium&#8217;s last three fiscal years ended November 30, 2003, 2004 and
      2005. Dr. Olszewski became our Chief Executive Officer and Acting Chief
      Financial Officer on September 18, 2006, following the merger. On that date,
      Dr.
      Gilligan entered into a consulting agreement with us. At the end of Herborium&#8217;s
      last completed fiscal year, Herborium did not have any executive officer whose
      total annual salary and bonus exceeded $100,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Summary
      Compensation Table</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="11" valign="middle" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="10" valign="middle" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Annual
                Compensation</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="3" valign="middle" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="10" valign="middle" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Fiscal</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="7" valign="middle" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Other
                Annual</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Name
                and Principal Position</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Year</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Salary</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Bonus</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="middle" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Compensation(1)</strong></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td colspan="2" valign="middle" width="7%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td colspan="2" valign="middle" width="12%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td colspan="2" valign="middle" width="7%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td colspan="2" valign="middle" width="18%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr>
            <td valign="bottom" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Martin
                Nielson</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Former
                Chief Executive of PMIC</em></font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003</font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="right" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$41,250</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$0</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$0</font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8212;</font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="4%">&#160;</td>
            <td align="right" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8212;</font></div>
            </td>
            <td align="left" valign="middle" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Agnes P. Olszewski </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Chief
                Executive Officer</em></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>and
                Acting Chief Financial Officer;</em></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>(
                Former co-CEO/President of Herborium</em></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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            <td align="left" valign="top" width="1%">
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            <td align="left" valign="middle" width="1%">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                James P. Gilligan</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Former
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            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="right" valign="top" width="6%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="right" valign="top" width="11%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="right" valign="top" width="5%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="4%">&#160;</td>
            <td align="right" valign="top" width="14%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
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      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">27</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;(1)
      None of our executive officers received personal benefits or perquisites in
      excess of the lesser of $50,000 or 10% of his aggregate salary and bonus.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Option
      Grants in Last Fiscal Year</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      options were granted to any of the individuals named in the Summary Compensation
      Table during fiscal year 2005. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Aggregated
      Option Exercises in Fiscal 2005 and FY-End Option
      Values</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None
      of
      the individuals named in the Summary Compensation Table held any options to
      purchase our common stock or the common stock of Herborium, Inc. as of November
      30, 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Long
      Term Incentive Plans</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      no long-term incentive plans for our executive officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Equity
      Compensation Plan Information</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
      the consummation of the merger, we had no equity compensation plans under which
      equity securities are authorized for issuance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Director
      Compensation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      directors do not receive any cash compensation for their service on the Board
      of
      Directors. Our directors are reimbursed for actual out-of-pocket expenses
      incurred by them in connection with their attendance at meetings of the Board
      of
      Directors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Employment
      Agreements</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Agreement
      with Dr. Agnes P. Olszewski</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 18, 2006 we entered into an employment agreement with Dr. Olszewski
      who will serve as President, Chief Executive Officer and Acting Chief Financial
      Officer until such time as we hire a controller or Chief Financial Officer.
      Dr.
      Olszewski will have the position of Chairman of the Board of Directors. The
      employment agreement will provide for an initial four-year term of employment,
      with an addition twelve-month extension at Dr. Olszewski&#8217;s option. Under the
      agreement, Dr. Olszewski is not required to work full-time until such time
      as we
      have received debt or equity financing in an aggregate of amount of
      $1,250,000.00 or more. Until we obtain such amount of financing, Dr. Olszewski
      will receive 75% of her base salary. Her annual base salary is $200,000 with
      a
      bonus equal to (i) for the first three years, 5% of EBITDA (as defined in the
      agreement) and (ii) thereafter 5% of Net Income before bonus (as defined in
      the
      agreement). She will be eligible for an additional bonus ranging from $75,000
      to
      $200,000 in the event that our Pre-Tax Income for a fiscal year exceeds that
      of
      the prior fiscal year by 150% or more. Under the employment agreement,. Dr.
      Olszewski will be an eligible participant under one or more stock option plans
      adopted by us. Dr. Olszewski will be subject to non-competition provisions
      during the term of the agreement or until September 30, 2012 in the event that
      she extends the agreement for the additional twelve month period. Dr.
      Olszewski&#8217;s employment may be terminated in the event of extended disability or
      incapacity or a &#8220;For Cause Event&#8221; as defined in the agreement. Dr. Olszewski may
      terminate her employment voluntarily with 180 days prior written notice, upon
      our material breach of the agreement with 10 days prior written notice and
      upon
      a &#8220;Change of Control&#8221; as defined in the agreement upon 90 days prior written
      notice. In the event of her termination, Dr. Olszewski or her beneficiary,
      as
      the case may be, will have the right to receive all accrued but unpaid base
      salary. In the event of her death, her termination based on a material breach
      by
      us or our termination of her for any reason other than a For Cause Event, she
      will be entitled to receive $600,000. In the event of her termination for or
      after a Change of Control, she will be entitled to receive an amount equal
      to
      the product of her base salary multiplied by 2.99. After (i) the expiration
      of
      the term (including an extension of one year by Dr. Olszewski) or (ii) her
      voluntary termination of the employment agreement, Dr. Olszewski may, at her
      or
      our option in the case of clause (i) or at our option in the case of clause
      (ii), act as a consultant to us for one year and receive compensation equal
      to
      50% of her base salary.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">28</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Agreement
      with Dr. James P. Gilligan</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 18, 2006 we entered into a consulting and employment agreement with
      Dr. Gilligan who will serve as co-President and Chief Operating Officer. The
      agreement provides for an initial term of employment expiring on September
      20,
      2011, with an addition twelve-month extension at Dr. Gilligan&#8217;s option. Under
      the agreement, Dr. Gilligan&#8217;s employment will not commence until six months
      after we have received debt or equity financing in the aggregate amount of
      $2,500,000.00, and until such date, Dr. Gilligan will serve as a consultant
      to
      us at an hourly rate of $120.00 per hour and will be permitted to continue
      his
      full-time employment elsewhere. Upon his full-time employment, his annual base
      salary will be $200,000 with a bonus equal to (i) for the first three years,
      5%
      of EBITDA (as defined in the agreement) and (ii) thereafter 5% of Net Income
      before bonus (as defined in the agreement. He will be eligible for an additional
      bonus ranging from $75,000 to $200,000 in the event that our Pre-Tax Income
      for
      a fiscal year exceeds that of the prior fiscal year by 150% or more. Under
      the
      employment agreement, Dr. Gilligan will be an eligible participant under one
      or
      more stock option plans adopted by us. Dr. Gilligan will be subject to
      non-competition provisions during the term of the agreement or until September
      30, 2012 in the event that he extends the agreement for the additional
      twelve-month period. Dr. Gilligan&#8217;s employment may be terminated in the event of
      extended disability or incapacity or a &#8220;For Cause Event&#8221; as defined in the
      agreement. Dr. Gilligan may terminate his employment voluntarily with 180 days
      prior written notice, upon our material breach of the agreement with 10 days
      prior written notice and upon a &#8220;Change of Control&#8221; as defined in the agreement
      upon 90 days prior written notice. In the event of his termination, Dr. Gilligan
      or his beneficiary, as the case may be, will have the right to receive all
      accrued but unpaid base salary. In the event of his death, his termination
      based
      on a material breach by us or our termination of him for any reason other than
      a
      For Cause Event, he will be entitled to receive $600,000. In the event that
      his
      employment is terminated for or after a Change of Control, he will be entitled
      to receive an amount equal to the product of his base salary multiplied by
      2.99.
      After (i) the expiration of the term (including an extension of one year by
      Dr.
      Gilligan) or (ii) his voluntary termination of the employment agreement, Dr.
      Gilligan may, at his or our option in the case of clause (i) or at our option
      in
      the case of clause (ii), act as a consultant to us for one year and receive
      compensation equal to 50% of his base salary.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Compensation
      Committee Interlocks and Insider Participation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">W</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">e
      do not
      currently have a Compensation Committee. Instead the entire Board of Directors
      makes executive officer compensation decisions. Prior to the merger, Herborium,
      Inc. had no compensation committee. See </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Certain
      Relationships and Related Transactions</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      below
      for more information about related party transactions involving Drs. Olszewski
      and Gilligan. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financing
      of Herborium&#8217;s operations prior to the merger were provided by equity
      investments and loans from our founders, Drs. Olszewski and Gilligan, of
      approximately $380,000, funding from friends and family of approximately
      $125,500, a revolving credit facility and cash generated by our gross profit
      from sales.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      PROCEEDINGS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      no material pending legal proceedings, other than ordinary routine litigation
      incidental to the business, to which we are party.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF SECURITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      total
      authorized capital stock consists of 500,000,000 shares of common stock, par
      value $.001 per share and 5,000,000 shares of preferred stock, par value $.001
      per share. After the closing of the reverse merger, 108,567,080 shares of common
      stock were to be issued and outstanding. Prior to the closing of the reverse
      merger, all outstanding shares of the 4% Series A Convertible Preferred Stock
      of
      the Company were converted to 800,000 shares of our common stock. In conjunction
      with the merger, we eliminated the designation of the 4% Series A Redeemable
      Convertible Preferred Stock from our articles of incorporation as no shares
      of
      such series of preferred stock were issued and outstanding.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">29</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following description of our capital stock does not purport to be complete
      and
      is subject to and qualified by our Articles of Incorporation and By-laws, and
      by
      the provisions of applicable Nevada law. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Common
      Stock</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of our common stock are entitled to one vote for each share owned for all
      matters to be voted on by the stockholders. Holders of the common stock are
      entitled to receive dividends as may be declared from time to time by the Board
      of Directors, and in the event of any liquidation, dissolution, or winding
      up of
      the affairs of the Company, are entitled to receive a pro rata share of any
      assets of the corporation legally available for distribution after payment
      of
      liquidation preferences, if any, on any outstanding stock having prior rights
      on
      such distributions and payment of other claims of creditors. There are no
      redemption or sinking fund provisions applicable to our common stock. The rights
      of the holders of our common stock are subject to any rights that may be fixed
      for the holders of preferred stock, if and when any preferred stock is issued.
      Our common stock currently outstanding is validly issued, fully paid and
      nonassessable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Preferred
      Stock</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Articles of Incorporation authorize the issuance of shares of preferred stock
      in
      one or more series. Our Board of Directors has the authority, without any vote
      or action by the stockholders, to create one or more series of preferred stock
      up to the limit of our authorized but unissued shares of preferred stock and
      to
      fix the number of shares constituting such series and the designation of such
      series, the voting powers (if any) of the shares of such series and the relative
      participating, option or other special rights (if any), and any qualifications,
      preferences, limitations or restrictions pertaining to such series which may
      be
      fixed by the Board of Directors pursuant to a resolution or resolutions
      providing for the issuance of such series adopted by the Board of Directors.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      provisions of a particular series of authorized preferred stock, as designated
      by the Board of Directors, may include restrictions on the payment of dividends
      on common stock. Such provisions may also include restrictions on our ability
      to
      purchase shares of common stock or to purchase or redeem shares of a particular
      series of authorized preferred stock. Depending upon the voting rights granted
      to any series of authorized preferred stock, issuance thereof could result
      in a
      reduction in the voting power of the holders of common stock. In the event
      of
      our dissolution, liquidation or winding up, the holders of the preferred stock
      will receive, in priority over the holders of common stock, a liquidation
      preference established by the Board of Directors, together with accumulated
      and
      unpaid dividends. Depending upon the consideration paid for authorized preferred
      stock, the liquidation preference of authorized preferred stock and other
      matters, the issuance of authorized preferred stock could result in a reduction
      in the assets available for distribution to the holders of common stock in
      the
      event of our liquidation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MARKET
      PRICE OF AND DIVIDENDS ON THE REGISTRANT&#8217;S</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMMON
      EQUITY AND RELATED STOCKHOLDER MATTERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock is presently traded on the Over-the-Counter Bulletin Board under
      the symbol PMICQ.OB. The following table shows the high and low sale prices
      for
      2004, 2005 and the first and second quarter of 2006 in dollars per share as
      reported by the OTC Bulletin Board. These prices may not be the prices that
      you
      would sell or would pay to purchase a share of our common stock during the
      periods shown.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="bottom" width="44%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>High</strong></font></div>
            </td>
            <td valign="bottom" width="3%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Low</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" colspan="2" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" colspan="2" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fiscal
                Year Ended December 31, 2005</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;First
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.05</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Second
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.07</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Third
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.06</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.03</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Fourth
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.03</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
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            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
            <td align="left" valign="bottom" width="44%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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            <td colspan="2" valign="bottom" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>High</strong></font></div>
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            <td valign="bottom" width="3%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" colspan="2" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
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    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fiscal
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            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="12%">&#160;</td>
            <td align="left" valign="bottom" width="3%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="3" valign="bottom" width="13%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;First
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
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            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.06</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Second
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.07</font></div>
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            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.04</font></div>
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            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Third
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.10</font></div>
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            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.04</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Fourth
                Quarter</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.15</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.04</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">&#160;</td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="12%">&#160;</td>
            <td align="left" valign="bottom" width="3%">&#160;</td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="13%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="12%">&#160;</td>
            <td align="left" valign="bottom" width="3%">&#160;</td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="13%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" colspan="3" valign="bottom" width="46%">&#160;</td>
            <td align="right" valign="bottom" width="10%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="5%">&#160;</td>
            <td align="left" valign="bottom" width="4%">&#160;</td>
            <td align="right" valign="bottom" width="4%">&#160;</td>
            <td align="right" valign="bottom" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;First
                Quarter Ended March 31, 2006</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.03</font></div>
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            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second
                Quarter Ended June 30, 2006</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.05</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">&#160;</td>
            <td align="right" valign="bottom" width="2%">&#160;</td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.02</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
                of September 18, 2006</font></div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.03</font></div>
            </td>
            <td align="left" valign="bottom" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" colspan="3" valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0.03</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      number of holders of record for our common stock immediately after giving effect
      to the merger was approximately 600. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Dividend
      Policy</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      not paid and have no plan to pay dividends on our common stock.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">31</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RECENT
      SALES OF UNREGISTERED SECURITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the PMIC plan of reorganization and in connection with the
      merger, we will issue 6,580,762 shares of our common stock to the holders of
      PMIC common stock, including the former holders of PMIC&#8217;s 4% Series A
      Convertible Preferred Stock in exchange for their respective claims as existing
      shareholders of PMIC. The issuance of these shares of our common stock
      constituted an offer of securities within the purview of &#167; 1145(a) of the
      Bankruptcy Code and, therefore, was not subject to the registration requirements
      of the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), or state or
      local law. None of the recipients of these shares will be deemed an underwriter
      as specified in Section 1145(a) of the Bankruptcy Code.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, under the PMIC plan of reorganization and in connection with the
      merger, we issued 7,454,300 shares of our common stock directly to the
      stockholders of ACT, partly in exchange for ACT&#8217;s claims and partly in exchange
      for the payment of $50,000 in cash by ACT. Further, 2,250,000 shares of our
      common stock are being held in escrow: 1,750,000 shares for Mr. Li and Ms.
      Lee
      pursuant to terms of a settlement agreement and 500,000 shares for certain
      unexpired common stock option and warrant grants. The issuance of shares of
      our
      common stock to stockholders of ACT constituted an offer of securities within
      the purview of &#167; 1145(a) of the Bankruptcy Code and was not be subject to the
      registration requirements of the Securities Act or state or local law. None
      of
      the recipients of these shares will be deemed an underwriter as specified in
      Section 1145(a) of the Bankruptcy Code.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the merger, we issued 92,282,018 shares of our common stock
      to
      the stockholders of Herborium in exchange for all of the issued and outstanding
      common stock of Herborium. The issuance of these shares was made in reliance
      upon the exemption from the registration requirements of the Securities Act
      set
      forth in Rule 506 of Regulation D, promulgated under the Securities Act, and
      corresponding provisions of state securities laws, which exempts transactions
      by
      an issuer not involving any public offering. Accordingly, such shares are
&#8220;restricted securities&#8221; and may not be offered or sold in the United States
      absent registration or an applicable exemption from registration requirements
      under the Securities Act. </font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEMNIFICATION
      OF DIRECTORS AND OFFICERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      articles of incorporation eliminate the personal liability of directors and
      officers to us and our stockholders for monetary damages for breach of fiduciary
      duty as a director or officer. Under our articles of incorporation, we also
      will
      indemnify and pay the expenses of any person who is or was made, or threatened
      to be made, a party to an action or proceeding by reason of the fact that such
      person is or was a director or officer of the company or is or was serving
      at
      the request or with the prior approval of the company as a director or officer
      of another corporation, against any liability asserted against such person
      and
      incurred by such person in any capacity arising out of that person's status
      as
      such. Insofar as indemnification for liabilities arising under the Securities
      Act may be permitted to directors, officers and controlling persons of the
      company pursuant to the foregoing, or otherwise, we have been advised that
      the
      opinion of the Securities and Exchange Commission such indemnification is
      against public policy as expressed in the Securities Act and is, therefore,
      unenforceable. If a claim for indemnification against such liabilities (other
      than the payment by us of expenses incurred or paid by a director, officer
      or
      controlling person of the company in the successful defense of any action,
      suit
      or proceeding) is asserted by such director, officer or controlling person
      in
      connection with any securities being registered, we will, unless in the opinion
      of our counsel the matter has been settled by controlling precedent, submit
      to a
      court of appropriate jurisdiction the question whether such indemnification
      by
      us is against public policy as expressed in the Securities Act and will be
      governed by the final adjudication of such issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02. Unregistered Sales of Equity Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Items 1.01 and 2.01 of this Current Report
      on Form 8-K, which is incorporated herein by reference.</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.03</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Material
      Modification to Rights of Security Holders.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure made under Items 1.01 and 2.01 of this Current Report
      on Form 8-K, which is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Changes
      in Control of Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described in more detail under Item 2.01 of this Current Report on Form 8-K,
      which is incorporated herein by reference, as a result of the merger, a change
      in control of PMIC has occurred.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Departures
      of Directors or Principal Officers; </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Election
      of Directors; Appointment of Principal Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC&#8217;s Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
      Upon the closing of the merger and in accordance with the plans of
      reorganization of PMIC and LW, Dr. Agnes P. Olszewski became our President,
      Chief Executive Officer and Acting Chief Financial Officer until a full time
      Chief Financial Officer or comptroller is appointed, and we entered into a
      consulting/employment agreement with Dr. James P. Gilligan. Until such time
      as
      we obtain financing of a minimum of $1,500,000, Dr. Olszewski will not devote
      her full time to our company and will continue her activities as a professor.
      Within six months after we obtain financing of $2,500,000, Dr. Gilligan has
      agreed to join us as our Co-President and Chief Operating Officer. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      certain biographical and other information regarding the newly appointed
      officers and directors, see the disclosure under the heading </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Directors
      and Executive Officers</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      under
      Item 2.01 of this Current Report on Form 8-K, which is incorporated herein
      by
      reference</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.03</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amendments
      to Articles of Incorporation or Bylaws; Change in Fiscal
      Year.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the consummation of the merger, PMIC amended and restated its
      Articles of Incorporation. The following summary of the changes to the Articles
      of Incorporation is qualified in its entirety by reference to the Second Amended
      and Restated Articles of Incorporation that is filed as Exhibit 3(i) to this
      Current Report on Form 8-K. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;
                </font></div>
            </td>
            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                increased its authorized shares of common stock from 25,000,000 to
                500,000,000</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;
                </font></div>
            </td>
            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                changed its fiscal year end from December 31 to November
                30.</font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
      &#160; </font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;
                </font></div>
            </td>
            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                changed its name to Herborium Group,
                Inc.</font></div>
            </td>
          </tr>

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      </font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8226;
                </font></div>
            </td>
            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                effected the cancellation of its pre-merger issued and outstanding
                shares
                of common stock in exchange for the issuance of new post-merger shares
                of
                common stock.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                deleted references to its incorporator and the member of its Board
                of
                Directors initially named upon its incorporation. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="3%">&#160;</td>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#376;</font></div>
            </td>
            <td align="left" valign="top" width="1%">&#160;</td>
            <td align="left" valign="top" width="72%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PMIC
                corrected the name of its resident agent in
                Nevada.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      as of the merger, PMIC adopted Amended and Restated Bylaws that update and
      supersede in their entirety PMIC&#8217;s existing Bylaws. The Amended and Restated
      Bylaws are filed as Exhibit 3(ii) to this Current Report on Form 8-K.
</font></div><br>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      concurrently with the close of the merger, our fiscal year was changed from
      December 31 to November&#160;30. We will account for the transaction
      contemplated in the Merger Agreement as a &#8220;reverse merger.&#8221; Because reverse
      merger accounting dictates that the historical financial statements of Herborium
      are now our financial statements, we will not file a transition report. Exhibit
      99.1 to this Current Report on Form 8-K includes Herborium&#8217;s annual financial
      statements for the years ended November 30, 2004 and 2005. Our next Annual
      Report on Form 10-K will cover the complete 12-month period ended November
      30,
      2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Change
      in Shell Company Status.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item&#160;2.01 of this Current Report
      on Form&#160;8-K, which disclosure is incorporated herein by
      reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      Financial Statements of Businesses Acquired.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
      as
      Exhibit 99.1 to this Current Report on Form 8-K are the audited financial
      statements of Herborium, Inc. for the fiscal years ended November 30, 2004
      and
      2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
      as
      Exhibit 99.2 to this Current Report on Form 8-K are the unaudited financial
      statements of Herborium, Inc. for the six months ended May 31, 2006.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
      Pro
      Form Financial Information.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
      applicable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
      Press
      Release</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
        copy of
        the press release issued by PMIC announcing the merger is furnished with
        this
        Current Report as Exhibit 99.3.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
      Exhibits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                Number</strong></font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.&#8217;s Current Report on Form 8-K filed on
                August 16, 2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.2</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.&#8217;s Current Report on Form 8-K filed on August 16,
                2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.3</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium,
                Inc.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(i)</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp.</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(ii)</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amended
                and Restated Bylaws of Pacific Magtron International
                Corp.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.&#8217;s Current Report on Form 8-K filed on August
                16,2006).</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">34</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2*</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3*</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 2005</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.2</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 2006</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.3</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>SIGNATURE</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="40%">&#160;</td>
            <td align="left" valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PACIFIC
                MAGTRON INTERNATIONAL CORP.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="40%">&#160;</td>
            <td align="left" valign="top" width="40%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
                September 22, 2006</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                Agnes P. Olszewski</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="40%">&#160;</td>
            <td align="left" valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Agnes P. Olszewski</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="40%">&#160;</td>
            <td align="left" valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">35</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="16%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                Number</strong></font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.&#8217;s Current Report on Form 8-K filed on
                August 16, 2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.2</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.&#8217;s Current Report on Form 8-K filed on August 16,
                2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.3</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium,
                Inc.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(i)</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp.</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(ii)</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amended
                and Restated Bylaws of Pacific Magtron International
                Corp.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.&#8217;s Current Report on Form 8-K filed on August
                16,2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2*</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3*</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 2005</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.2</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 2006</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.3</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release </font></div>
            </td>
          </tr>

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{"company-data": {"conformed-name": "PACIFIC MAGTRON INTERNATIONAL CORP", "cik": "0001077050", "assigned-sic": "5045", "irs-number": "880353141", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-25277", "film-number": "061104299"}, "business-address": {"street1": "1600 CALIFORNIA CIRCLE", "city": "MILPITAS", "state": "CA", "zip": "95035", "phone": "4089568888"}, "mail-address": {"street1": "1600 CALIFORNIA CIRCLE", "city": "MILPITAS", "state": "CA", "zip": "95035"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      DC 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934
Date
      of
      Report (Date of earliest event reported): September 18, 2006
HERBORIUM
      GROUP, INC.
(Exact
      Name of Registrant as Specified in Its Charter)
Nevada
000-25277
88-0353141
(State
                or Other
(Commission
(IRS
                Employer
Jurisdiction
                of
File
                Number)
Identification
Incorporation)
Number)
3
                Oak Street, Teaneck, New Jersey
07666
(Address
                of Principal Executive Offices)
(Zip
                Code)
Registrant's
      telephone number, including area code:
(888)
      836-2424
Pacific
      Magtron International Corp. 1600 California Circle, Milpitas, California 95035
(Former
      name or former address, if changed since last report.)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (
see
General
      Instruction A.2. below):
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Cautionary
      Statement Concerning Forward-Looking Statements
This
      Current Report on Form 8-K contains forward-looking statements within the
      meaning of the Private Securities Litigation Reform Act of 1995, which are
      subject to the safe harbors created thereby. This information may involve known
      and unknown risks, uncertainties and other factors which may cause actual
      results, performance or achievements of Herborium, Inc. ("Herborium") and
      Pacific Magtron International Corp. ("PMIC") to be materially different from
      future results, performance or achievements expressed or implied by any
      forward-looking statements. Forward-looking statements, which involve current
      assumptions and projections about future events and describe Herborium's and
      PMIC's future plans, strategies and expectations, are generally identifiable by
      use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
      "believe," "intend" or "project" or the negative of these words or other
      variations on these words or comparable terminology. Forward-looking statements
      are based on assumptions that may be incorrect, and there can be no assurance
      that any projections or other expectations included in any forward-looking
      statements will come to pass. Herborium's and PMIC's actual results could differ
      materially from those expressed or implied by the forward-looking statements
      as
      a result of various factors, including but not limited to, adverse economic
      conditions, inability to attract prospective new customers or certain existing
      customers, intense competition including the entry of new competitors, adverse
      federal, state or local government regulation, including limitations on our
      claims relating to the benefits of our products, loss of suppliers, inadequate
      capital and/or inability to raise financing, risk of litigation, adverse
      publicity and news coverage of Herborium and/or the industry, inability to
      hire
      and/or retain key executives, inflationary factors and other specific risks
      alluded to elsewhere in this Report. Your attention is directed to the Risk
      Factors section in Item 2.01 of this Current Report on Form 8-K. The
      forward-looking statements contained herein speak only as of the date hereof
      and
      except as required by applicable laws, PMIC undertakes no obligation to update
      publicly any forward-looking statements for any reason, even if new information
      becomes available or other events occur in the future.
Background
On
      May
      11, 2005, Pacific Magtron International Corp., a Nevada corporation ("PMIC"),
      and its wholly-owned subsidiaries Pacific Magtron, Inc., a California
      corporation ("PMI"), Pacific Magtron (GA), Inc., a Georgia corporation
      ("PMIGA"), and LiveWarehouse, Inc., a California Corporation ("LW"), filed
      voluntary petitions for reorganization under Chapter 11 of the United States
      Bankruptcy Code (the "Bankruptcy Proceedings") in the United States Bankruptcy
      Court for the District of Nevada (the "Bankruptcy Court").
PMI
      and
      PMIGA liquidated in the Bankruptcy Proceedings pursuant to an order of the
      Bankruptcy Court entered on January 30, 2006. On August 11, 2006, the Bankruptcy
      Court entered an order confirming the amended plans of reorganization of PMIC
      and LW. The PMIC and LW plans of reorganization contemplated that LW would
      be
      reorganized and remain a wholly-owned subsidiary of PMIC. The plans also
      contemplated a merger involving Herborium, Inc. ("Herborium") and permitted PMIC
      and LW to delay the effective date of the plans for thirty days if necessary
      to
      consummate the merger. The plans further contemplated that in connection with
      the merger with Herborium, all of the existing shares of common stock, par
      value
      $.001 per share, of PMIC, would be cancelled, and new stock would be issued.
      The
      plans of reorganization for PMIC and LW became effective on
      September 18, 2006, as described more fully below under Item 2.01 of
      this Current Report on Form 8-K.
Item
      1.01.
Entry
      into a Material Definitive Agreement.
Merger
On
      September 18, 2006, PMIC completed the acquisition of Herborium, a Delaware
      corporation, pursuant to an Agreement and Plan of Merger (the "Merger
      Agreement") by and among PMIC, LW, and Herborium. A copy of the Merger Agreement
      is filed as Exhibit 2.3 to this Current Report on Form 8-K. The principal terms
      of the merger are disclosed below in Item 2.01, which disclosures are
      incorporated by reference herein. Prior to entering into the Merger Agreement,
      John E. Donahue, our sole director prior to the merger, served as a financial
      consultant to Herborium without compensation.
1
Employment
      Agreements
On
      September 18, 2006, PMIC entered into an employment agreement with Dr. Agnes
      P.
      Olszewski to serve as our President, Chief Executive Officer and Acting Chief
      Financial Officer and James P. Gilligan to serve as a consultant/executive
      officer. Pursuant to the terms of Dr. Olszewski's employment agreement, she will
      not work full-time for the company until we have raised a minimum of $1,250,000.
      Pursuant to the terms of his agreement, Dr. Gilligan is not required to join
      us
      on a full time basis as our Co-President and Chief Operating Officer until
      six
      months after we have raised a minimum of $2,500,000. Additional information
      with
      respect to our new directors and officers is provided in Item 2.01 under
Directors
      and Executive Officers
.
      The
      employment agreements of Drs. Olszewski and Gilligan are filed as Exhibits
      10.2
      and 10.3, respectively, to this Current Report on Form 8-K.
Item
      2.01.
Completion
      of Acquisition or Disposition of Assets.
Principal
      Terms of the Reverse Merger
Pursuant
      to the Merger Agreement, on September 18, 2006, we completed the acquisition
      of
      Herborium through a reverse triangular merger in which Herborium was merged
      with
      and into LW, our wholly-owned subsidiary, with Herborium being the surviving
      corporation. Herborium is now a wholly-owned subsidiary of ours, and its
      business (which is described below) is now our only business. Pursuant to the
      plans of reorganization, on the effective date of the merger, all of our
      outstanding shares of common stock was cancelled. We have issued, or will issue,
      new shares of authorized but previously unissued shares of common stock, par
      value $.001 per share, as follows:
Ÿ
the
                former stockholders of Herborium will receive an aggregate of 92,282,018
                shares of our common stock in exchange for 100% of their equity interests
                in Herborium;
Ÿ
the
                holders of shares of common stock of PMIC into which PMIC's Series A
                Convertible Preferred Stock, par value $.001, had been converted
                will
                receive 800,000 shares of our common stock;
Ÿ
the
                stockholders of record of Advanced Communications Technologies, Inc.
                ("ACT"), our 61.56% majority stockholder prior to our reorganization, will
                receive an aggregate of 7,454,300 shares of our common stock in exchange
                for ACT's equity interest in us; this amount does not include 500,000
                shares that will be placed in escrow for unexpired PMIC stock option
                and
                stock warrant grants and 1,750,000 shares that will be escrowed for
                certain of PMIC's former executives pursuant to the terms of a settlement
                agreement; and
Ÿ
the
                stockholders of record of PMIC as of August 11, 2006 will receive
                an
                aggregate of 4,030,762 shares of our common stock in exchange for
                their
                issued and outstanding 4,030,762 shares of PMIC.
Immediately
      prior to the merger, PMIC had outstanding 10,485,062 shares of common stock,
      600
      shares of our Series A Convertible Preferred Stock that were converted into
      800,000 shares of common stock, and 100,000 warrants to purchase common stock
      and options to purchase 20,000 shares of common stock.
All
      shares of the capital stock of Herborium and LW issued and outstanding
      immediately prior to the effective time of the merger were converted into one
      share of common stock, which we own.
Following
      the merger, the ownership interest on a fully-diluted basis of our issued and
      outstanding common stock will be as follows:
Ÿ
the
                stockholders of ACT and certain of PMIC's former executive officers will
                own 10.55%;
Ÿ
the
                former holders of PMIC's Series A Convertible Preferred stock will own
                0.74%;
Ÿ
the
                former holders of PMIC's common stock other than ACT will own 3.71%;
                and
2
Ÿ
the
                former stockholders of Herborium will own
                85%.
Effective
      on the date of the merger, PMIC changed its name to Herborium Group, Inc. and
      adopted the November 30 year end of Herborium for accounting purposes as
      described in Item 5.03 of this Current Report on Form 8-K. In connection with
      the merger, we also changed our principal executive office to those of
      Herborium, which are located at 3 Oak Street, Teaneck, New Jersey
      07666.
Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC's Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
      Upon the closing of the merger and in accordance with the plans of
      reorganization of PMIC and LW, Dr. Agnes P. Olszewski became our President,
      Chief Executive Officer and Acting Chief Financial Officer until a full time
      Chief Financial Officer or comptroller is appointed, and we entered into a
      consulting/employment agreement with Dr. James P. Gilligan. Pursuant to the
      terms of Dr. Olszewski's employment agreement, she will not work full-time for
      the company until we have raised a minimum of $1,250,000. Pursuant to the terms
      of his consulting/employment agreement, Dr. Gilligan is not required to join
      us
      on a full time basis as our Co-President and Chief Operating Officer until
      six
      months after we have raised a minimum of $2,500,000. Additional information
      with
      respect to our new directors and officers is provided in below in this Item
      2.01
      under
Directors
      and Executive Officers
.
Concurrently
      with the closing of the merger, John E. Donahue and Wayne I. Danson, the
      directors of LW resigned from the Board of Directors. Concurrently with the
      closing of the merger, in accordance with the plans of reorganization of PMIC
      and LW, Mr. Ansbacher and Mr. Danson were appointed to the Board of Directors
      of
      our subsidiary Herborium where they joined Drs. Olszewski and Gilligan.
      Concurrently with the closing of the merger, Mr. Danson and Anthony Lee resigned
      from their respective positions as the Chief Executive Officer and Chief
      Financial Officer of LW. Drs. Olszewski and Gilligan are the executive officers
      of Herborium and will remain the executive officers of our subsidiary following
      the merger.
For
      accounting purposes, the merger is being accounted for as a reverse merger,
      since we were a shell company prior to the merger, the former stockholders
      of
      Herborium now own a majority of the issued and outstanding shares of our common
      stock, and the co-founders of Herborium became our directors and have or will
      become our executive officers. Accordingly, Herborium is treated as the acquiror
      in the merger, which is treated as a recapitalization of Herborium, and the
      pre-merger financial statements of Herborium will now be deemed to be our
      historical financial statements.
Form
      10 Disclosure - Description of Herborium
Prior
      to
      closing of the merger, PMIC was a "shell company" as such term is defined in
      Rule 12b-2 under the Securities Exchange Act of 1934, as amended, (the "Exchange
      Act"). Accordingly, set forth below is the information that would be required if
      pre-merger Herborium were filing a general form for registration on Form 10
      under the Exchange Act.
Unless
      otherwise indicated or the context otherwise requires, all references below
      to
"we," "us," "Herborium" and the "Company" are to PMIC (now known as Herborium
      Group, Inc.), together with Herborium, its wholly-owned subsidiary.
Corporate
      History
Herborium,
      Inc. was incorporated in the State of Delaware in November 2000 and has one
      wholly-owned, but dormant subsidiary, Herborium.com Inc., a Delaware
      corporation. In June 2002, Herborium, Inc. merged with G.O. International,
      Inc.,
      a consulting firm specializing in business strategies for pharmaceutical
      industry and global technology transfer that was founded by Drs. Olszewski
      and
      Gilligan. Drs. Olszewski and Gilligan also own a dormant UK entity, Herborium
      UK, LLC. Herborium has engaged in research, development and marketing of
      botanical supplements since its inception, and prior to the merger, funded
      its
      operations by equity investments and loans from its founders, Drs. Olszewski
      and
      Gilligan, of approximately $380,000, funding from friends and family of
      approximately $125,500, a revolving credit facility and cash generated by gross
      profit from sales.
3
PMIC
      was
      originally incorporated in the State of Nevada under the name of Wildfire
      Capital Corporation ("Wildfire") in January 1996. Wildfire closed its marketing
      operations in the fall of 1997. In July 1998, the Board of Directors of Wildfire
      recommended the acquisition of Pacific Magtron, Inc. ("PMI") to Wildfire's
      shareholders. PMI, a California corporation incorporated on August 11, 1989,
      had
      established itself in the computer products wholesale distribution industry
      as a
      privately held company. The shareholders of Wildfire and PMI approved the
      transaction, and Wildfire issued 9,000,000 shares of its common stock in
      consideration for all of the outstanding shares of PMI. As a result, the former
      shareholders of PMI became the controlling shareholders of Wildfire. No
      securities were registered in connection with the transaction. Immediately
      prior
      to the transaction, Wildfire effected a two-for-three reverse stock split of
      its
      1,500,000 outstanding shares of common stock. Upon consummation of the
      acquisition, Wildfire changed its name to Pacific Magtron International Corp.,
      and PMI continued its business operations as a wholly-owned subsidiary of PMIC.
      In August 2000, PMIGA was incorporated in the State of Georgia to distribute
      PMI's products in the eastern United States. In December 2001, LW was
      incorporated as a wholly-owned subsidiary of PMIC, to provide consumers a
      convenient way to purchase computer products via the internet.
On
      December 10, 2004, Theodore S. Li and Hui "Cynthia" Lee, the holders of a
      collective majority interest in PMIC, entered into a Stock Purchase Agreement
      (the "Stock Purchase Agreement") with ACT, a vertically integrated technology
      services company. Pursuant to the Stock Purchase Agreement, Mr. Li and Ms.
      Lee
      sold ACT an aggregate of 6,454,300 shares of the common stock of PMIC,
      representing 61.56% of the then issued and outstanding common stock of PMIC,
      for
      the aggregate purchase price of $500,000. Upon taking control of PMIC, ACT
      discovered that PMIC and its subsidiaries did not have assets and cash flow
      sufficient to continue operations as organized, faced reduced or possible loss
      of available lines of credit from certain third party suppliers and vendors
      and
      were thus unable to continue their business operations.
Bankruptcy
      Proceedings
On
      May
      11, 2005, PMIC and its wholly-owned subsidiaries, PMI, PMIGA and LW, filed
      voluntary petitions for reorganization under Chapter 11 of the United States
      Bankruptcy Code in the United States Bankruptcy Court for the District of
      Nevada. PMI and PMIGA liquidated in the Bankruptcy Proceedings pursuant to
      an
      order of the Bankruptcy Court entered on January 30, 2006. On August 11, 2006,
      the Bankruptcy Court entered an order confirming the amended plans of
      reorganization of PMIC and LW. The PMIC and LW plans of reorganization
      contemplated that LW would be reorganized and remain a wholly-owned subsidiary
      of PMIC and contemplated the merger with Herborium.
Subject
      to a permissible delay of thirty days, the effective date of the LW plan of
      reorganization was to be the first business day after ten days from the
      confirmation order, and the effective date of the PMIC plan of reorganization
      was to be the seventh business day after the effective date of the LW plan.
      In
      accordance with the plans, PMIC and LW delayed the effective dates of their
      respective plans for thirty days in order to consummate the merger of Herborium
      with and into LW. On September 14, 2006, the Bankruptcy Court granted us an
      extension to delay the effective date of the plans until September 18, 2006.
      The
      plans of reorganization of PMIC and LW as confirmed by the Court and the
      confirmation order are filed as Exhibits 2.1 and 2.2, respectively, to PMIC's
      Current Report on Form 8-K filed on August 16, 2006 and are incorporated herein
      by reference.
On
      or
      about the effective date of September 18, 2006, allowed priority claims and
      allowed unsecured claims against LW were paid in full. LW distributed all of
      its
      remaining cash to PMIC. Non-insider creditors holding allowed unsecured claims
      against PMIC received a fifty percent initial distribution (on a pro-rata basis)
      on account of such claims. On the effective date, ACT contributed $50,000 on
      behalf of PMIC's stockholders to effectuate the plan of reorganization, and
      Herborium was merged with and into LW, with Herborium as the surviving
      corporation. As of the effective date, shares of PMIC's issued and outstanding
      common stock were cancelled and converted into the right to receive new shares
      of our common stock. Prior to the effective time of the merger, PMIC fell within
      the definition of a "shell company" under the Exchange Act.
4
Following
      is a summary of the classification and treatment of claims and interest under
      the plans of reorganization for PMIC and LW.
PMIC
Class
                One
Priority
                claims were paid in full in cash (and held in escrow pending
                settlement).
Class
                Two
Unsecured
                claims were paid in cash in an amount equal to 50% of the claim amounts.
Class
                Three
The
                claim of the Internal Revenue Service was determined to be
                $0.
Class
                Four
No
                distributions were made with respect to the claims of Mr. Li and
                Ms. Lee,
                former executives of PMIC. Mr. Li and Ms. Lee received an aggregate
                of
                $325,000 in cash and will receive 1,750,000 shares of our common
                stock
                pursuant to a settlement agreement entered into by and among PMIC, LW, ACT
                on its own behalf and as the Estate Representative of the liquidating
                estates of PMI and PMIGA, Encompass Group Affiliates, Inc., Wayne
                Danson,
                Martin Nielson, Mr. Li and Ms. Lee. The terms and conditions of the
                settlement agreement are disclosed in PMIC's Current Report on Form 8-K
                filed on August 16, 2006, which disclosures are incorporated by reference
                herein.
Class
                Five
The
                claim of the Hartford Insurance Company for pre-petition workers
                compensation premiums for employees of PMI was
                disallowed.
Class
                Six
These
                claims represent the equity interests of the stockholders of PMIC
                other
                than the holders of Series A Preferred Convertible Stock. The stockholders
                of PMIC will receive shares of our common stock in exchange for their
                shares of existing PMIC common stock, which were cancelled. With
                respect
                to the claims of ACT, 7,454,300 shares of our common stock will be
                issued
                directly to the stockholders of ACT (including 500,000 shares will
                be
                placed in escrow for unexpired PMIC stock option and stock warrant
                grants).
Class
                Seven
These
                claims represent the equity interest of the holders of PMIC's Series A
                Convertible Preferred Stock, which was converted into 800,000 shares
                of
                PMIC common stock. The 800,000 shares of PMIC common stock were cancelled,
                and the holders of those shares will receive 800,000 shares of our
                common
                stock representing 0.74% of our issued and outstanding stock on a
                fully-diluted basis.
LW
Class
                One
Priority
                claims were paid in full in cash.
Class
                Two
Unsecured
                claims were paid in full in cash.
General
We
      provide unique, natural and complementary healthcare related products to
      consumers and healthcare professionals seeking alternative answers to the
      management of healthcare issues not currently met by standard Western medicine.
      Our products are botanical supplements comprised of unique herbal formulations.
      We select products that have a record of clinical efficacy and safety
      established in China; however, these products have not been evaluated according
      to standards of clinical efficacy and safety applicable to pharmaceutical
      products sold in the United States and other countries, and because these
      products are herbal-based, they are not recognized as pharmaceuticals by the
      Federal Drug Administration (the "FDA").
5
Our
      business model is based on:
Ÿ
owning
                and/or marketing unique products with established clinical history
                in
                their country of origin, and
Ÿ
a
                proactive approach to meeting the regulatory changes and challenges
                of the
                new healthcare marketplace.
Product
      Strategy
Our
      products address healthcare issues that many consumers do not believe are
      treated satisfactorily by conventional pharmaceuticals and, thus, satisfy niche
      market demands resulting from the gap between consumer's healthcare issues and
      currently available treatment options. Our products are presently classified
      by
      the FDA as dietary supplements and are regulated by the Dietary Supplement
      Health and Education Act of 1994 ("DSHEA").
We
      seek
      to distinguish our company from the marketers of traditional herbal supplements
      and vitamins, as well as those focused on traditional pharmaceuticals and
      "over-the-counter" drugs, by offering "bridge products," which we define as
      botanical supplements with a record of clinical efficacy and safety established
      in the country of origin. To date our initial products have been tested in
      China. Our business model takes advantage of the newly emerging opportunities
      afforded by changing FDA perspectives with respect to botanical supplements.
      The
      present regulatory environment now encourages the performance of clinical
      studies of botanical supplements. Through clinical testing, we expect to confirm
      the positive outcomes initially demonstrated in China that will enable us to
      make claims about the efficacy of our products. Successful completion of
      clinical studies would allow advertising claims of "clinically proven" greatly
      enhancing our advertising campaigns and facilitating marketing efforts. To
      pursue clinical studies with respect to our products, we have developed
      preliminary collaborative relationships with proactive medical institutions,
      such as Johns Hopkins University, New York University Dermatological Clinic
      and
      Columbia Presbyterian Hospital in the U.S. and the Traditional Chinese Medicine
      Institute in Hong Kong. We will not be able to pursue any such clinical studies
      without adequate financing, and we presently have no commitments or
      understandings to receive such financing. We believe that if we are able to
      obtain sufficient financing to conduct such clinical studies in the U.S. we
      will
      have the opportunity to establish and maintain a differential advantage over
      our
      competitors through clinical validation and a proactive regulatory strategy.
We
      also
      believe that if we are able to obtain sufficient financing we can further
      enhance our differential advantage over our competitors by planning
      pharmaceutical grade quality control and quality assurance standards for our
      products.
We
      believe that if we obtain sufficient financing to pursue our objectives, our
      company should be poised to take advantage of the accelerating domestic and
      global interest in botanical and alternative therapies. The U.S. Department
      of
      Health and Human Services, National Center for Health Statistics, estimates
      that
      U.S. public spends between $36-$47 billion on "complementary and alternative"
therapies (Complementary and Alternative Medicine Use Among Adults: United
      States, 2002 by Patricia M. Bames and Eve Powel-Griner; Advance Data No. 343,
      May 27, 2004). A survey conducted by the National Center For Complimentary
      and
      Alternative Medicine as a part of NHIS studies in 2002 reported that 49.8%
      of
      U.S. adults use various forms of alternative and complementary therapies, with
      19% of adults using natural products including herbal medicines. In a recent
      national survey, 64% of doctors reported that they have recommended
      complementary therapies to their patients (New York, NY, September 7, 2005).
      Finally, during the closing weeks of the 105th Congress, Senator Tom Harkin,
      the
      ranking member of the U.S. Senate Appropriations Subcommittee, shared with
      his
      colleagues a report developed by the Institute for Alternative Futures. The
      document noted that at the present, complementary and alternative approaches
      to
      health and medicine are among the fastest growing aspects of health care, and
      that while in 1990, one-third of the U.S. population used some form of
      alternative approach to health care, by the year 2010 it is expected that at
      least two-thirds of the population will use some form of alternative health
      care
      approach.
6
Products
      on the Market
Following
      is a description of our products. Applicable regulatory requirements are
      described below under the caption
Regulation
.
AcnEase®
is
      currently the only product that we have on the market.
AcnEase®
is a
      traditional Chinese herbal remedy composed of a proprietary blend of all natural
      substances. We market
AcnEase®
for
      improving conditions typically associated with acne and rosacea. Based on
      Chinese herbal therapy,
AcnEase®
seeks to
      address the cause of skin-related problems. According to traditional Chinese
      medicine, the ingredients in
AcnEase®
decrease
      "heat" in the body which, practitioners of traditional Chinese medicine believe,
      affect bodily functions, resulting in, among other things, gastrointestinal
      discomfort and skin blemishes. In Western terms, the ingredients comprising
      AcnEase® appear to decrease sebaceous gland secretions.
AcnEase®
does not
      simply address the external symptoms, as do topical solutions and antibiotics.
AcnEase®
is taken
      in tablet form. Typically, 8-12 tablets per day are recommended.
AcnEase®
is
      typically used by consumers suffering from acne and rosacea. Acne is a disease
      of the sebaceous hair follicles. The rapid growth of bacteria in combination
      with the accumulated sebum cause the follicle to enlarge and can result in
      a
      mild form of non-inflammatory acne, known as comedones. Acne may progress to
      inflammatory lesions that are red in color called papules, pustules and nodules.
      Nodules or cysts are the most advanced and severe form of acne. An estimated
      50
      million people (13 million adults) in the U.S. suffer from acne. Currently,
      the
      only FDA-approved drug to treat the causes of acne is accutane (isotretinoin).
      Accutane has many serious side effects, and physicians currently require that
      patients sign a consent form before prescribing this drug. People of all races
      and ages get acne. It is most common in adolescents and young adults. An
      estimated 80 percent of all people between the ages of 11 and 30 have acne
      outbreaks at some point. For most people, acne tends to go away by the time
      they
      reach their thirties; however, some people in their forties and fifties continue
      to have this skin problem (source: National Institute of Arthritis and
      Musculoskeletal and Skin Diseases http://www.niams.nih.gov/hi/topics/
      acne/acne.htm#acne_d). Many of the over-the-counter acne products are topical,
      including benzoyl peroxide, and only address the overt clinical manifestation
      of
      acne. Side effects of topical agents may include dry and flaky skin, irritation,
      and redness. Prescription pharmaceutical products include broad-spectrum
      antibiotics, which non-specifically kill bacteria associated with acne. Systemic
      antibiotics, such as tetracycline and minocycline, are the mainstays of acne
      therapy. The use of systemic antibiotics for the treatment of acne is in
      disfavor with many physicians due to the development of resistant strains of
      bacteria. For severe, persistent cases of acne, Retin-A cream (tretinoin) and
      Accutane are often recommended. Both products are retinoid derivatives, are
      costly and have a multitude of side effects. Accutane is a known potent
      teratogen and strictly contraindicated in women not practicing a proven method
      of birth control. Recent information has also indicated that Accutane may induce
      depression. As a result, the FDA recommends that special caution be used when
      prescribing this medication to teenagers and may even consider more severe
      restrictions.
Rosacea
      is characterized by facial flushing due to dilatation of blood vessels that
      occurs in middle-aged men and women. According to the National Rosacea Society,
      approximately 14 million adults in the United States suffer from rosacea
      (http://www.rosacea.org/). The cause of rosacea is unknown. It affects adults
      who are typically in their 30s and 40s, especially those with fair-skin, blue
      eyes and of Celtic origin
      (http://www.niams.nih.gov/hi/topics/rosacea/rosacea.htm#ros_b). The standard
      therapy for rosacea involves the use of a systemic oral antibiotic, such as
      tetracycline, minocycline and erythromycin, in combination with a topical
      antibiotic gel. Isotretinoins, also known under the brand names Accutane or
      Roaccutane, are sometimes considered alternatives to oral antibiotics,
      especially in cases of papopustular rosacea. In 1989, Metronidazole was the
      first topical treatment approved for the treatment of rosacea and is used to
      reduce rosacea flare-ups once the disease is brought under control. If rosacea
      progresses to a severe stage, dilated blood vessels that become distended under
      the surface of the skin, known as telangiectasis, appear. Treatment options
      for
      telangiectasis are limited to corrective surgery or mixed light pulse therapy,
      known as Photoderm, which directs a series of light pulse to the dermal layer
      of
      the skin stimulating collagen synthesis and resulting in a thickening of the
      skin and decreasing the visible signs of rosacea.
Our
      product,
AcnEase®
,
      is a
      unique herbal supplement which has been shown in studies conducted in China
      to
      improve skin conditions associated with juvenile acne and adult acne and
      rosacea.
AcnEase®
has no
      known side effects unlike antibiotics or retinoid derived products.
7
Clinical
      trials of the efficacy of
AcnEase®
in
      patients with acne have been performed in China. In these trials, approximately
      95% of the patients aged 15 to 30 responded to
AcnEase®
.
      In
      patients aged 31 to 45, the level of effectiveness was approximately 80%. Based
      on anecdotal experience in the U.S. market, AcnEase has proven to be especially
      effective in addressing skin conditions associated with cystic acne or androgen
      induced acne in women. In addition,
AcnEase®
has
      demonstrated a high satisfaction rate among our present and past customers
      in
      the U.S. and U.K. who number approximately 25,000. Over the last four years
      of
      operations, fewer than 5% of our customers have returned
AcnEase®
,
      which
      we back with a 100% guarantee. In clinical studies performed in China and
      according to customer surveys, users typically respond within 2-3 weeks of
      their
      first use of
AcnEase®
and
      become blemish-free within four to six weeks.
AcnEase®
also has
      demonstrated efficacy in improving conditions associated with rosacea in studies
      conducted in China. Customers with symptoms of rosacea have been using
      AcnEase
®
since
      2001. Responses from our customers show that 85% of our customers suffering
      from
      rosacea have experienced improvements in facial flushing, itchy gritty eyes,
      acne and gastric reflux.
In
      December 2004,
AcnEase®
was
      featured in
New
      Generalist
,
      a
      publication of the Royal College of Medicine of London. In July 2005, it was
      presented in
Dermatology
,
      an
      English language European journal of Dermatology as the only all natural acne
      therapeutic product.
We
      selected
AcnEase
®
as
      our
      business model prototype to demonstrate our ability to identify herbal-based
      products and bring them to the mainstream marketplace in the U.S. and U.K.
We
      launched
AcnEase®
in 2001.
      For the last three fiscal years,
AcnEase®
contributed approximately 98% of Herborium's revenues. Herborium's annual
      revenues in 2004 and 2005 were approximately $762,371 and $866,773,
      respectively.
AcnEase®
has
      demonstrated high brand recognition, consistently ranking in the top three
      acne
      products searched on Google and Yahoo.
Since
      2001, we have been the exclusive worldwide distributor of
AcnEase®
under an
      existing license agreement. As these agreements do not explicitly set forth
      the
      extent of our exclusive rights with
AcnEase®
,
      our
      exclusivity rights may be subject to limitation or termination in the
      future.
Currently,
      we purchase
AcnEase®
manufactured on our behalf by our licensor, AH USA. Since 2004,
AcnEase®
tablets
      have been manufactured in the U.S.
Our
      business plan contemplates our future acquisition of the intellectual property
      rights related to AcnEase® including the formulation thereof, under an agreement
      with AH USA. In the event that we are able to purchase the formulation and
      other
      intellectual property rights relating to
AcnEase®
,
AcnEase®
would be
      manufactured in the U.S. on our behalf. In that event, all herbs for
      AcnEase
®
would be
      sourced from China using our contacts in Beijing. Such herbs would come from
      suppliers that practice cGAP (current Good Agricultural Practice) and the
      quality and identity confirmed by a herbalist/pharmacognocist. Routine quality
      control (QC) and identity tests would be performed on the raw materials. All
      extractions would initially be performed at audited facilities in China (PRC)
      or
      Hong Kong. The extracts would then be shipped to the U.S. where QC analysis
      and
      all final product manufacturing testing and release would be performed in
      contract labs. Packaging and labeling would also be performed using contract
      manufacturers.
Pipeline
      Products
We
      have a
      number of other products in varying stages of development for which we will
      need
      additional time and financing before introduction to the market. These products
      include:
AcnEase®
      Skin Management System:
This
      series of products will include a cleanser, toner, moisturizer, mask and topical
      acne treatment product.
Sexual
      Health Products:
Our
      sexual health series line includes all natural products that address selected
      sexual disorders resulting from cardiovascular disease, use of anti-depressants,
      surgical procedures and other problems.
8
Energy
      Restoration Products:
These
      products will address overall depletion of energy due to competitive sports,
      high-level stress, extensive sexual activities, as well as other conditions
      that
      are physically demanding on a long-term or temporary basis.
Additional
      Products:
We have
      also researched expanding our line to include additional products in the areas
      of liver disease (including liver damage due to Hepatitis and Cirrhosis),
      prostate health for benign prostate hyperplasia (BPH), women's health for
      perimenopausal symptoms, cardiovascular concerns and diabetes. We do not expect
      to be able to develop these products and bring them to market until we have
      raised substantial financing.
Marketing
      and Distribution
We
      pursue
      a multi-channel marketing and distribution strategy using a strong
      brand-building approach and information-driven strategy. We maintain a visible
      Internet presence and foster partnerships with selected traditional and
      non-traditional health care providers, nutraceutical and supplement sales
      channels, as well as high quality consumer products and service providers in
      the
      U.S. and abroad.
We
      sell
      products in the U.S., the United Kingdom and Continental Europe. Our long term
      plans include expanding into the Indian, Chinese and Australian markets after
      sufficient financing is received by our company. In the U.K., we subcontract
      with a firm, State of Play LLC, that handles order fulfillment, marketing and
      customer services for our customers in the U.K. and European Union. We also
      maintain relationships with advisors in Beijing and Shanghai, PRC.
Manufacturing
We
      plan
      to become a fully-integrated company by establishing our own manufacturing
      and
      development capabilities at such time as we receive sufficient financing. If
      we
      obtain the rights to begin manufacturing our products, we intend to manufacture
      our products using contract manufacturing companies that are GMP compliant.
      Quality Control analysis will be contracted during the initial stages of
      development, though at an appropriate point in time QC may be taken in house.
      Currently, we outsource our manufacturing and packaging functions to produce
      and
      package our products.
The
      state
      of the art for the processing and sourcing of many herbs still resides in Asia.
      Through our network, we have contacts that can oversee the manufacturing of
      select products in China. Samples and initial batches of one of our sexual
      health products have been made for us in China because the product is
      manufactured using proprietary process and enrichment steps, as well as raw
      materials that are sourced in China. Initial batches of certain of our sexual
      health and energy restoration products are currently manufactured in the United
      States through several contract manufacturers and we expect will continue to
      be
      made in the U.S. after we begin marketing the products.
AcnEase®
is also
      manufactured in the United States. Sourcing of the raw materials can be from
      several suppliers in either the United States or Asia.
Raw
      Materials
Raw
      materials for
AcnEase®
and one
      of our sexual health products are obtained from China. Raw materials can be
      obtained from several suppliers. We have an arrangement with Botanic Century
      in
      Beijing to work as an agent for the procurement of herbs and in some instances
      processing and testing of the raw materials. In addition, we retain CMM
      consultants (Oxford UK) to perform similar services. In the case of the sexual
      health product, it is not only the raw materials that are important but also
      the
      extraction and enrichment process that is proprietary. Final product
      manufacturing and release testing (QC) can eventually be performed in the United
      States following sourcing of the active ingredients in China. Raw materials
      for
      another of our sexual health products in the pipeline
can
      be
      obtained from suppliers in the United States. All extractions are performed
      in
      the United States as is final production manufacturing packaging and labeling.
9
Intellectual
      Property
All
      of
      our existing and pipeline products are presently protected by trade secrets.
      Some of our products may qualify for patent protection that will involve the
      ingredients, ratios of ingredients, and specific fractions for extracts of
      ingredients and/or an extraction process.
The
      key
      method of protection for our products at the current time is through trade
      secrets relating to:
•
ingredients
                (content and amount),
•
part
                of plant used,
•
ratio
                of ingredients,
•
preparation
                and enrichment of ingredients, and
•
proprietary
                extraction procedures.
We
      intend
      to source ingredients from different companies to make certain no single entity
      has a list of all ingredients. All subsequent processing is performed at
      separate factories. We believe trade secrets are the best method at this time
      to
      protect herbal based products.
Working
      Capital Items
We
      carry
      varying amounts of inventory. We do not extend payment terms to customers or
      provide wholesale customers any rights to return merchandise. Retail customers
      in the U.S. are provided with a 100% money-back guarantee; however, the rate
      of
      returns is de minimus.
Major
      Customers
Due
      to
      the fragmented market, we do not have any one customer that accounts for 10%
      or
      more of consolidated revenues.
Competition
Our
      direct corporate competitors are primarily nutraceutical companies, including
      specialty retailers, supermarkets, large chain discount retailers, drug store
      chains and independent drug stores, health food stores, on-line merchants,
      and
      mail order companies. Indirect competition also includes healthcare-focused
      online marketers. Some of our more prominent competitors include General
      Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and Vitamin
      Shoppe. The vast majority of products distributed by nutraceutical and herbal
      supplement companies are targeted towards dieting and weight management, body
      building supplementation, dietary or vitamin supplements and personal care
      products. These products represent the commodity approach to satisfying the
      markets needs and a selected few qualify as proprietary and unique formulations
      with intellectual property value. To our knowledge, no other botanical
      supplement targeting a specific health issue currently entertains national
      brand
      recognition. In addition, the herbaceutical sector is highly fragmented. We
      believe that the rudimentary stage of development for this sector, in
      conjunction with our superior products and pipeline, provides us an opportunity
      for growth, including acquisitions, and the ability to assume a leadership
      position in the sector in a relatively short period of time.
Regulation
We
      have
      determined that all of our existing and proposed products are dietary
      supplements as defined under federal statutes and regulations of the FDA.
      Neither nutritional supplements nor dietary supplements require FDA or other
      governmental approval prior to their marketing in the United States. No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as nutritional supplements, dietary supplements, or neither.
      We
      make this determination based on the ingredients contained in the products
      and
      the claims made for the products. The processing, formulation, packaging,
      labeling and advertising of such products, however, are subject to regulation
      by
      one or more federal agencies including the FDA, the Federal Trade Commission,
      the Consumer Products Safety Commission, the Department of Agriculture and
      the
      Environmental Protection Agency. Our activities also are subject to regulation
      by various agencies of the states and localities in which its products are
      sold.
      We markets products that are covered under FDA regulations for Dietary
      Supplements.
10
Federal
      Food, Drug, and Cosmetic Act
The
      FDA,
      pursuant to the Federal Food, Drug, and Cosmetic Act ("FFDCA"), regulates the
      formulation, manufacturing, packaging, labeling, distribution and sale of
      dietary supplements. The FDA has broad authority to enforce the provisions
      of
      the FFDCA applicable to foods and dietary supplements, which by definition
      is a
      sub-category of foods. The FDA's powers include (i) issuing a public "Warning
      Letter" notifying a company that a product is not in compliance with FDA
      regulations, (ii) publicizing information about an illegal product, (iii)
      requesting a voluntary recall of an illegal product from the market, (iv)
      requesting the Department of Justice to initiate civil seizure and/or injunction
      actions, (v) seeking and receiving consumer redress, and (vi) initiating
      criminal proceedings in the U.S. federal courts.
Under
      the
      FFDCA, all labels and labeling claims must be truthful and non-misleading.
      As a
      general rule, advertising for dietary supplements is regulated by the FTC.
      Labeling for these products is regulated by the FDA. Nevertheless, the FDA
      takes
      the position that, in addition to the FTC, the FDA also has jurisdiction to
      review Internet websites and mail order catalogs as it considers these forms
      of
      media to be labeling. Moreover, the FDA has been known to review advertising
      for
      dietary supplements to help it determine the intended use of the product being
      advertised. Non-compliance with the FDA regulation could lead to, among other
      things, injunctions, product withdrawals, recalls, and product
      seizures.
Dietary
      Supplement Health and Education Act of 1994
Dietary
      Supplements is a classification of products resulting from the enactment of
      the
      Dietary Supplement Health and Education Act of 1994 ("DSHEA") in October 1994.
      Our dietary supplement products are subject to DSHEA. DSHEA amended and modified
      the application of certain provisions of the FFDCA as they relate to dietary
      supplements, and required the FDA to promulgate regulations consistent with
      DSHEA. The provisions of DSHEA are generally favorable to the dietary supplement
      industry and define dietary supplements and dietary ingredients; establish
      a new
      framework for assuring safety; outline guidelines for literature displayed
      where
      dietary supplements are sold; provide for the use of claims and nutritional
      support statements; require ingredient and nutrition labeling; and grant the
      FDA
      the authority to establish regulations concerning good manufacturing practices
      ("GMPs").
DSHEA
      defines a dietary supplement to include any product (other than
      tobacco):
(i)
intended
                to supplement the diet that bears or contains one or more of a vitamin,
                mineral, herb or other botanical, amino acid, substance to supplement
                the
                diet by increasing the total dietary intake, or any concentrate,
                metabolite, constituent, extract, or combination of any such ingredient,
                provided that such product is either intended for ingestion in tablet,
                capsule, powder, soft gel, gelcap, or liquid droplet form, or
(ii)
if
                not intended to be ingested in such form, is not represented for
                use as a
                conventional food or as a sole item of a meal or the diet,
                and
(iii)
is
                labeled as a dietary supplement.
A
      dietary
      supplement, which contains an ingredient not on the market before October 15,
      1994 (a "new dietary ingredient") adulterates the product under the FFDCA unless
      there is evidence of a history of use or other evidence of safety establishing
      that it will reasonably be expected to be safe. The practical effect of such
      an
      expansive definition is to ensure that the new protections and requirements
      of
      DSHEA will apply to a wide class of products.
Under
      DSHEA, companies that manufacture and distribute dietary supplements are allowed
      to make any of the following four types of statements with regard to nutritional
      support on labeling without FDA approval:
(i)
a
      statement that claims a benefit related to a classical nutrient deficiency
      disease if it discloses the prevalence of such disease in the United States;
(ii)
a
      statement that describes the role of a nutrient or dietary ingredient intended
      to affect the structure or function of the body;
11
(iii)
a
      statement that characterizes the documented mechanism by which a nutrient or
      dietary ingredient acts to maintain the structure or function; or
(iv)
a
      statement that "describes general well-being" from consumption of a nutrient
      or
      dietary ingredient.
In
      addition to making sure that a statement meets one of these four criteria,
      a
      manufacturer of the dietary supplement must have substantiation that such
      statement is truthful and not misleading, must not claim to diagnose, mitigate,
      treat, cure, or prevent a specific disease or class of diseases, and for
      structure/function claims, must contain the following disclaimer, prominently
      displayed in boldface type: "This statement has not been evaluated by the Food
      and Drug Administration. This product is not intended to diagnose, treat, cure,
      or prevent any disease."
Under
      its
      authority granted by DSHEA, the FDA has proposed GMPs specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations.
As
      a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future.
The
      Federal Trade Commission
The
      FTC
      exercises jurisdiction over the advertising of dietary supplements and foods
      and
      has the authority over both "deceptive" and "unfair" advertising and other
      marketing practices. In addition to its broad investigative powers, the FTC
      has
      the power to initiate administrative and judicial proceedings against a company
      and may also seek a temporary restraining order or preliminary injunction
      against a company pending the final determination of an action. The FTC's
      remedies also include consumer redress, civil and criminal penalties.
Our
      advertising and sale of our dietary supplements is subject to regulation by
      the
      FTC under the Federal Trade Commission Act (the "FTCA"). The FTCA prohibits
      unfair methods of competition and unfair or deceptive acts or practices in
      or
      affecting commerce. The FTCA provides dissemination or causing to be
      disseminated any false advertisement pertaining to drugs or foods (which would
      include dietary supplements) is an unfair or deceptive act or practice. Under
      the FTC's "substantiation doctrine", an advertiser is required to have a
"reasonable basis" for all objective product claims before the claims are made.
      Failure to substantiate claims adequately may be considered a deceptive or
      unfair practice. Pursuant to this FTC requirement, we are required to have
      adequate substantiation for all advertising claims made for our products at
      the
      time such claims are made.
Research
      and Development
We
      limit
      the amount of expenditures relating to the development of new products through
      the use of co-licensing and co-development. We estimate that 30-35% of our
      revenues are spent annually on research and development expenditures.
Environmental
      Compliance
We
      are
      not aware of any administrative or other costs incurred which are directly
      related to compliance with environmental laws, and we have not experienced
      any
      other significant effect from the impact of environmental laws.
12
Employees
We
      presently have one full-time employee. whose principal responsibility is product
      order fulfillment. Dr. Olszewski, our President, Chief Executive Officer and
      Acting Chief Financial Officer does not currently devote her full time to us
      and
      will not do so until such time as we raise at least $1,250,000 in financing.
      Dr.
      Gilligan will assume full-time employment with us as our Co-President and Chief
      Operating Officer within six months after the date that we raise at least
      $2,500,000 in financing. Prior to such time, he will serve as a consultant
      to
      us.
Property
Currently,
      we maintain our office at the home of our President and Chief Executive Officer,
      Dr. Olszewski, at 3 Oak Street, Teaneck, New Jersey 07666. Fulfillment and
      customer service are performed from space at 985 Carteret Ave. in Union, New
      Jersey, the home of Dr. Gilligan. We also rent warehouse space to house
      inventory in New Jersey.
Financial
      Information About Geographic Areas
For
      last
      three fiscal years, we have served the U.S. and United Kingdom/European Union
      markets. The largest foreign market is the U.K., followed by the combined E.U.
      Revenues from each geographic area are described below.
Approximate
                Percentage of Total Sales
Fiscal
                Year/ Interim Period Ended:
U.S.
U.K./E.U.
November
                30, 2004
78%
22%
November
                30, 2005
80%
20%
6
                Months Ended
May
                31, 2006
75%
25%
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF
FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
      Statements
Certain
      statements in the "Management's Discussion and Analysis of Financial Condition
      and Results of Operations" and elsewhere in this Current Report on Form 8-K
      constitute "forward-looking statements" (within the meaning of the Private
      Securities Litigation Reform Act of 1995 (the "Act")) relating to us and our
      business, which represent our current expectations or beliefs including, but
      not
      limited to, statements concerning our operations, performance, financial
      condition and growth. The Act may, in certain circumstances, limit our liability
      in any lawsuit based on forward-looking statements that we have made. All
      statements, other than statements of historical facts, included in this Current
      Report on Form 8-K that address activities, events or developments that we
      expect or anticipate will or may occur in the future, including such matters
      as
      our projections, future capital expenditures, business strategy, competitive
      strengths, goals, expansion, market and industry developments and the growth
      of
      our businesses and operations are forward-looking statements. Without limiting
      the generality of the foregoing, words such as "may," "believes," "expects,"
"anticipates," "could," "estimates," "grow," "plan," "continue," "will," "seek,"
"scheduled," "goal" or "future" or the negative or other comparable terminology
      are intended to identify forward-looking statements. These statements by their
      nature involve substantial risks and uncertainties, such as credit losses,
      dependence on management and key personnel, variability of quarterly results,
      our ability to continue our growth strategy, changes to the regulatory landscape
      and competition, certain of which are beyond our control. Any or all of our
      forward-looking statements may turn out to be wrong. They may be affected by
      inaccurate assumptions that we might make or by known or unknown risks or
      uncertainties. Should one or more of these risks or uncertainties materialize
      or
      should the underlying assumptions prove incorrect, actual outcomes and results
      could differ materially from those indicated in the forward-looking
      statements.
13
Because
      of the risks and uncertainties associated with forward-looking statements,
      you
      should not place undo reliance on them. Further, any forward-looking statement
      speaks only as of the date on which it is made, and we undertake no obligation
      to update any forward-looking statement to reflect events or circumstances
      after
      the date on which the statement is made or to reflect the occurrence of
      unanticipated events.
The
      following discussion should be read in conjunction with the audited financial
      statements and notes thereto for the fiscal years ended November 30, 2005 and
      2004 filed as Exhibit 99.1 to this Current Report on Form 8-K and the risks
      described under the caption "Risk Factors" immediately following below
      .
FINANCIAL
      CONDITION
We
      had
      net losses of $105,234 and $36,329 during the six months ended May 31, 2006
      and
      2005, respectively. As of May 31, 2006, we had cash and current assets of $5,129
      and $64,763, respectively, and current liabilities of $520,031, with obligations
      aggregating $99,093 for trade creditors and accrued expenses, $125,049 and
      $179,818 payable for credit card and lines of credit obligations, respectively,
      and $167,157 due to stockholders. We believe that our available current assets
      will be sufficient for the next twelve-month period to meet our working capital
      needs.
To
      date
      we have not obtained adequate equity and debt financing to enable us to
      implement our business plan. As a result of the lack of financial resources,
      a
      condition unfavorably impacting us since inception, revenue and profitably
      have
      not increased as we believe would have otherwise been the case. Without
      sufficient financing, we have not been able to (i) acquire ownership of several
      products, particularly the intellectual property rights to and formulation
      of,
      our principal product, AcnEase®, (ii) market and promote our products, (iii)
      conduct certain clinical trials that would further such marketing and
      promotional activities and (iv) hire additional employees.
As
      described elsewhere in this Form 8K, we have merged into PMIC and thereby became
      a publicly traded corporation; however, we have not closed, nor obtained a
      commitment for, the financing that was originally contemplated to close
      contemporaneously with the closing of the merger. During the three and six
      months ended May 31, 2006, revenue growth was adversely affected by the time
      and
      attention we devoted to the merger and related financing initiatives.
RELATED
      PARTY TRANSACTIONS
During
      the six months ended May 31, 2006, the Company's due to stockholders increased
      by to $17,714.
COMPARISON
      OF THE SIX MONTHS ENDED MAY 31 2006 TO THE SIX MONTHS ENDED MAY 31
      2005
Overall
      Results of Operations
For
      the
      six months ended May 31 2006, we incurred a net loss of $140,942, an increase
      of
      $104,613 from the net loss of $36,329 for the comparable prior year period.
      The
      increase in net loss in the fiscal 2006 compared to fiscal 2005 period is
      attributable
principally
      to an increase in operating expenses, as well as a decrease in
gross
      profit.
Sales
Net
      sales
      for the six months ended May 31 2006 were $386,984 compared to $411,804 for
      the
      six months ended May 31 2005. The decrease of $24,820, or 6%, can be attributed
      to decrease in sales of AcnEase in the United Kingdom ("UK") due to a temporary
      leave of absence on the part of our local sales representative.
Gross
      Profit
Gross
      profit decreased to $201,451 for the six months ended May 31 2006 compared
      to
      $220,039 for the six months ended May 31 2005, or $18,588 and 8.4%, with gross
      margin decreasing to 52.1% from 53.4% for the period. The decrease in gross
      profit is principally attributable to the decrease in sales, as well as a slight
      decrease in gross margin.
14
Operating
      Expenses
Total
      operating expenses increased by $81,771, or 34.5%, to $318,931 for the six
      months ended May 31 2006, from $237,160 for the six months ended May 31 2005,
      principally attributable to an increase in payroll expenses of $57,948 due
      principally to officer salary expense accrued but not paid, audit expense of
      $35,000 and an increase in marketing and promotion expenses of $17,246, offset
      by a decrease in UK-related commission and other expenses of $20,963,
      principally the result of lower sales in the UK.
Other
      Income (Expense)
Interest
      expense increased to $21,949 from $17,257 for the six months ended May 31,
      2006
      as compared with the six months ended May 31, 2005, or $4,692, due principally
      to increases in interest rates payable for credit card and lines of credit
      debt
      outstanding in the current period.
COMPARISON
      OF THE FISCAL YEAR ENDED NOVEMBER 30, 2005 TO THE FISCAL YEAR ENDED NOVEMBER
      30,
      2004
Overall
      Results of Operations
For
      the
      fiscal year ended November 30, 2005, we incurred a net loss of $105,234, a
      decrease of $186,487 from the net loss of $291,792 for the fiscal year ended
      November 30, 2004. The net loss for the fiscal year ended November 30, 2004
      included a non-cash charge of $108,466 to set up a valuation allowance to offset
      100% of a deferred tax asset. The decrease in net loss in fiscal 2005 compared
      to fiscal 2004 is also attributable to an increase in gross profit due to
      increased net sales and a decrease in operating expenses in the fiscal year
      ended November 30, 2005 compared to the earlier period.
Sales
Net
      sales
      for the fiscal year ended November 30, 2005 were $866,773 compared to $762,371
      for the fiscal year ended November 30, 2004. The increase of $104,402, or 13.7%,
      can be attributed to an increase in the number of units sold of AcnEase.
Gross
      Profit
Gross
      profit increased to $493,743 for the fiscal year ended November 30, 2005
      compared to $433,159 for the fiscal year ended November 30, 2004, or $60,584,
      with gross margin increasing slightly to 57.0% in the current period from 56.8%
      for the prior period.
Operating
      Expenses
Total
      operating expenses decreased to $554,104 for the fiscal year ended November
      30,
      2005, from $591,187 for the fiscal year ended November 30, 2004, or $37,083,
      principally attributable to decreases in marketing and promotion expenses of
      $48,787 and in product development expenses of $57,776, offset by an increase
      of
      $44,905 in commission, fulfillment and office expenses related to increased
      sales and business activities in the UK.
Other
      Income (Expense)
Interest
      expense increased to $41,687 from $22,884 for the fiscal year ended November
      30,
      2005 as compared with the fiscal year ended November 30, 2004, or $18,794,
      due
      principally to an increase in interest rates payable and in the level of credit
      card debt outstanding.
15
Seasonality
There
      are
      no seasonality factors that affect the Company.
Off-Balance
      Sheet Arrangements
The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company's financial condition, changes
      in financial condition, revenue or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to investors, and
      the
      Company does not have any non-consolidated special purpose
      entities.
LIQUIDITY
      AND CAPITAL RESOURCES
As
      of May
      31, 2006, we had a cash balance of $5,129 and a negative cash flow from
      operations of $18,422 for the six month period then ended. We have been
      operating at a loss since inception and have been funding these losses in a
      number of ways, including lines of credit, credit card debt, advances from
      stockholders and entering into subscription agreements with "friends and family"
for investment funds. While we are actively seeking a substantial amount of
      equity or debt financing, we have received no commitments for such financing.
      We
      believe that our working capital at May 31, 2006, with additional anticipated
      financing to be again obtained from one or more of the sources described above,
      will be sufficient for the next twelve-month period to meet our working capital
      needs.
The
      Company has total liabilities and contractual obligations of $587,764 as of
      May
      31, 2006. These contractual obligations, along with the dates on which such
      payments are due, are described below:
Contractual
                Obligations
(as
                of May 31, 2006)
Total
1
                Year or Less
More
                Than 1 Year
Accounts
                Payable and Accrued
Expenses
$
134,003
$
134,003
$
--
Credit
                Cards payable
125,049
125,049
--
Lines
                of Credit Payable
179,818
179,818
--
Due
                to Stockholders
167,157
167,157
--
Other
16,737
15,754
983
Total
                Contractual Obligations
$
622,764
$
621,781
$
983
Below
      is
      a discussion of our sources and uses of funds for the six months ended May
      31,
      2006 and 2005.
Net
      Cash Used In Operating Activities
Net
      cash
      used in operating activities was $18,442 and $46,591 in the six months ended
      May
      31, 2006 and 2005, respectively. The use of cash in operating activities for
      the
      six months ended May 31, 2006 was principally the result of a net loss of
      $140,942, partially offset by a decrease in accounts receivable of $18,184
      and
      an increase in accounts payable and accrued expenses of $97,151. The use of
      cash
      in operating activities for the six months ended May 31, 2005 was principally
      the result of a net loss of $36,329 and a decrease in accounts payable of
      $26,888, partially offset by a decrease in inventory of $16,100,
Net
      Cash Used In Investing Activities
During
      the six months ended May 31, 2006 and 2005, we used $6,640 and $1,763,
      respectively, for the acquisition of other assets, and $686 and $3.933,
      respectively, for the acquisition of property and equipment.
16
Net
      Cash Provided By Financing Activities
Net
      cash
      provided by financing activities for the six months ended May 31, 2006 amounted
      to $30,695, principally attributable to an increase of $17,714 in amount due
      to
      stockholders and an increase of $13,000 other loans. Net cash provided by
      financing activities for the six months ended May 31, 2005 amounted to $56,065,
      principally attributable to an increase of $28,520 in amount due to stockholders
      and an increase of $19,053 in credit card debt payable.
RISK
      FACTORS
Our
      business and results of operations are subject to numerous risks, uncertainties
      and other factors that you should be aware of, some of which are described
      below
      and in the section entitled "Cautionary Statement Concerning Forward-Looking
      Statements." The risks, uncertainties and other factors described below are not
      the only ones facing our company. Additional risks, uncertainties and other
      factors not presently known to us or that we currently deem immaterial may
      also
      impair our business operations. Any of the risks, uncertainties and other
      factors could have a materially adverse effect on our business, financial
      condition or results of operations and could cause the trading price of our
      common stock to decline substantially.
Risks
      Relating to Our Company
We
      have a history of losses, and will incur additional
      losses.
We
      are a
      development stage company with a limited history of operations, and do not
      expect to significantly increase ongoing revenues from operation in the
      immediately foreseeable future. To date, we have not been profitable. We had
      net
      losses of $140,942 during the six months ended May 31, 2006. Our losses have
      resulted principally from costs incurred in product development, including
      product testing, selection and from general and administrative costs associated
      with our operations. While we seek to attain profitability, we cannot be sure
      that we will ever achieve product and other revenue sufficient for us to attain
      this objective.
With
      the
      exception of
AcnEase®
, our
      product candidates are in research or various stages of development. For some
      of
      these products we will want to conduct additional research, development and
      clinical trials in order to improve our ability to advertise and differentiate
      these products from others in the market place. We cannot be sure that we will
      successfully research, develop, commercialize, manufacture and market any other
      product candidates. We expect that these activities, together with future
      general and administrative activities, will result in significant expenses
      for
      the foreseeable future.
We
      need additional capital, which may not be available to us.
We
      have
      expended and will continue to expend substantial funds in the research,
      development, marketing and clinical testing of our herbaceutical supplements.
      Following the merger we will require funds in excess of our existing cash
      resources to fund operating deficits, develop new products, purchase additional
      rights to existing products, establish and expand our manufacturing
      capabilities, and finance general and administrative and research activities.
      In
      particular, we will need additional capital to:
•
acquire
                  intellectual property rights relating to
AcnEase
®
and other products;
•
conduct
                  clinical trials and fund marketing and new product
                  launches;
•
establish
                  U.S. manufacturing capabilities;
                  and
•
fund
                  general working capital requirements if we continue to experience
                  deficits.
17
Due
      to
      market conditions at the time we may need additional funding, or due to our
      own
      financial condition at that time, it is possible that we will be unable to
      obtain additional funding as and when we need it. Even if we are able to obtain
      capital, it may be on unfavorable terms or terms that excessively dilute
      existing shareholders or otherwise negatively affect the interests of existing
      shareholders. If we are unable to obtain additional funding as and when needed,
      we could be forced to delay our development, marketing and expansion efforts
      and, if we continue to experience losses, potentially cease operations.
We
      may not be able to obtain or sustain market acceptance for our services and
      products.
Failure
      to establish a brand and presence in the marketplace on a timely basis could
      adversely affect our financial condition and operating results. Moreover, we
      cannot be sure that we will successfully complete the development and
      introduction of new products or product enhancements or that any new products
      developed will achieve acceptance in the marketplace. We may also fail to
      develop and deploy new products and product enhancements on a timely basis.
AcnEase
®
is
      currently our only product providing revenues.
Government
      regulation of the processing, formulation, packaging, labeling and advertising
      of our products can impact our ability to market products.
Under
      the
      Dietary Supplement Health and Education Act of 1994, companies that manufacture
      and distribute dietary supplements are limited in the statements that they
      are
      permitted to make about nutritional support on the product label without FDA
      approval. In addition, a manufacturer of a dietary supplement must have
      substantiation for any such statement made and must not claim to diagnose,
      mitigate, treat, cure or prevent a specific disease or class of disease. The
      product label must also contain a prominent disclaimer. These restrictions
      may
      restrict our flexibility in marketing our product.
The
      FDA
      has proposed GMPs (Good Manufacturing Practices) specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations. As a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future.
The
      processing, formulizing, packaging, labeling and advertising of such products,
      however, are subject to regulation by one or more federal agencies including
      the
      FDA, the Federal Trade Commission, the Consumer Products Safety Commission,
      the
      Department of Agriculture and the Environmental Protection Agency. Our
      activities also are subject to regulation by various agencies of the states
      and
      localities in which our products are sold. Among other things, such regulation
      puts a burden on our ability to bring products to market. Any changes in the
      current regulatory environment could impose requirements that would make
      bringing new products to market more expensive or restrict the ways we can
      market our products. In addition, the adoption of new regulations or changes
      in
      the interpretation of existing regulation may result in significant compliance
      costs or discontinuation of product sales and may adversely affect our revenue.
      The FDA may implement additional regulations with which we would have to comply,
      which would increase expenses.
No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as dietary supplements or not. We make this determination
      based
      on the ingredients contained in the products and the claims we make for the
      products and if our determination is denied by any regulatory authority we
      could
      face significant penalties that may require us to shut down our operations.
We
      face substantial competition.
The
      dietary supplement industry is growing rapidly and is highly competitive.
      Competition for the sale of nutritional products comes from many sources,
      including specialty retailers, supermarkets, large chain discount retailers,
      drug store chains and independent drug stores, health food stores, on-line
      merchants, mail order companies and a variety of other participants in the
      market for nutritional products. Some of our more prominent competitors include
      General Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and
      Vitamin Shoppe. We compete regularly with companies selling nationally
      advertised brand name products and with companies that may have more expanded
      product lines with much larger volume of sales. This competition could have
      a
      material adverse effect on our business, results of operations and financial
      condition since these companies have greater financial and other resources
      available to them and may possess manufacturing, distribution and marketing
      capabilities far greater than our own.
18
Certain
      existing products may become more mainstream and thereby increase competition
      for those products as more participants enter the market. We may not be able
      to
      compete effectively and our attempt to do so may require us to reduce our
      prices, which may result in lower margins. Failure to compete effectively could
      adversely affect our market share, revenues and growth prospects.
Our
      competitive position will be affected by the continued acceptance of our
      products, our ability to attract and retain qualified personnel, future
      governmental regulations affecting nutritional products, and publication of
      product safety studies by the media, government and authoritative health and
      medical authorities.
We
      currently have no manufacturing capabilities and we are dependent upon other
      companies to manufacture our products.
We
      currently have no manufacturing facilities. We are dependent upon relationships
      with independent manufacturers to fulfill our product needs. We use several
      manufacturers for various parts of the manufacturing processes for our products.
      We believe these are small privately held firms.
Because
      the manufacturing processes, which our contract manufacturers perform, are
      fairly standard in the industry, we believe that there are a large number of
      manufacturers who could provide us with these services if our current contract
      manufacturers are unavailable for any reason or seek to impose unfavorable
      terms. Our ability to market and sell our products requires that such products
      be manufactured in commercial quantities and in compliance with applicable
      federal and state regulatory requirements. In addition, we must be able to
      manufacture our products at a cost that permits us to charge a price acceptable
      to the customer while also accommodating distribution costs and third-party
      sales compensation. Competitors who do own their own manufacturing may have
      an
      advantage over us with respect to pricing, availability of product and in other
      areas through their control of the manufacturing process.
We
      are dependent on key management and the loss of their services could have a
      material adverse impact on us.
We
      have
      relied extensively on the services of Drs. Agnes P. Olszewski and James P.
      Gilligan, our co-founders. Drs. Olszewski and Gilligan play key roles in
      our management and the loss of their services would materially and adversely
      affect us and our prospects. Until we raise substantial financing, neither
      of
      these key individuals will spend full-time working for us. Under her employment
      agreement, Dr. Olszewski is not required to do so until we have raised
      $1,250,000, and under his consulting/employment agreement, Dr. Gilligan is
      not
      required to do so until six months after we have raised $2,500,000 in financing.
      There is no assurance that we will be able to raise such amounts and without
      such financing and the full-time employment of these key executives we will
      in
      all likelihood not be able to further develop our business and will likely
      continue to experience losses. The loss of services of any of these persons
      could delay or reduce our product development and commercialization efforts
      and
      harm our ability to compete effectively.
We
      may be subject to product liability claims and may not have adequate insurance
      to cover such claims.
Like
      other retailers, distributors and manufacturers of products that are designed
      to
      be ingested, we face an inherent risk of exposure to product liability claims
      in
      the event that the use of our products results in injury. We intend to obtain
      general liability coverage of $3 to $5 million that will include product
      liability coverage. Because our policies will be purchased on a year-to-year
      basis, industry conditions or our own claims experience could make it difficult
      for us to secure the necessary insurance at a reasonable cost. In addition,
      we
      may not be able to secure insurance that will be adequate to cover liabilities.
      We generally do not obtain contractual indemnification from parties supplying
      raw materials or marketing our products. In any event, any such indemnification
      is limited by its terms and, as a practical matter, to the creditworthiness
      of
      the other party. In the event that we do not have adequate insurance or
      contractual indemnification, liabilities relating to defective products could
      require us to pay the injured parties' damages which are significant compared to
      our net worth or revenues.
19
We
      may be adversely affected by unfavorable publicity relating to our product
      or
      similar products manufactured by our competitors.
We
      believe that the dietary supplement market is affected by national media
      attention regarding the consumption of these products. Future scientific
      research or publicity may be unfavorable to the dietary and nutritional
      supplement market generally or to any particular product and may be inconsistent
      with earlier favorable research or publicity. Adverse publicity associated
      with
      illness or other adverse effects resulting from the consumption of products
      distributed by other companies that are similar to our products could reduce
      consumer demand for our products and consequently our revenues. This may occur
      even if the publicity does not relate to our products. Adverse publicity
      directly concerning our products could be expected to have an immediate negative
      effect on the market for that product.
We
      depend on trade secrets to protect our proprietary technology, which may be
      inadequate to protect our position.
Our
      long-term success will substantially depend upon protecting our technology
      from
      infringement, misappropriation, discovery and duplication. We expect that we
      will apply for patent protection with respect to some of our products. Since
      we
      do not currently have patents on our products, a competitor could replicate
      our
      products. Any patents that we might obtain may not provide meaningful protection
      or significant competitive advantages over competing products, due to the
      complexity of the legal and scientific issues involved in patent defense and
      litigation. For these reasons we have elected to protect our current products
      through trade secrets.
Because
      of the complexity of the legal and scientific issues involved in patent
      prosecutions, we cannot be sure that any future patent applications for new
      products will be granted. Nor can we be sure that any patent rights that we
      do
      obtain will provide meaningful protection against others duplicating our
      products because of the complexity of the legal and scientific issues that
      could
      arise in litigation over these issues. Furthermore, patent applications are
      maintained in secrecy in the United States until the patents are approved,
      and
      in most foreign countries for a period of time following the date from which
      priority is claimed. A third party's pending patent applications may cover any
      technology that we currently are developing. Additionally, if we must resort
      to
      legal proceedings to enforce our intellectual property rights, the proceedings
      could be burdensome and expensive and could involve a high degree of risk to
      our
      proprietary rights if we are unsuccessful in, or cannot afford to pursue, such
      proceedings.
We
      rely
      at present completely on trade secrets and contract law to protect our
      proprietary technology. There can be no assurance that any such contract will
      not be breached, or that if breached, it will have adequate remedies. Currently,
      all of our products are protected by trade secrets held by third parties. We
      rely on such third parties to adequately protect such trade secrets. There
      can
      be no assurance that these third parties will protect and continue to hold
      the
      trade secrets relating to our products. Furthermore, there can be no assurance
      that any of these trade secrets will not become known or independently
      discovered by third parties.
There
      can
      be no assurance that others will not independently develop substantially
      equivalent proprietary information and techniques or otherwise gain access
      to
      our trade secrets and know-how. In addition, we may be required to obtain
      licenses to patents or other proprietary rights from third parties. There can
      be
      no assurance that any licenses required under any patents or proprietary rights
      would be made available on acceptable terms, if at all. If we do not obtain
      required licenses, we may encounter delays in product development or find that
      the development, manufacture or sale of products requiring such licenses could
      be foreclosed.
We
      have limited the liability of our directors and officers for breaches of the
      duty of care.
Our
      articles of incorporation limit the liability of our directors for monetary
      damages for breaches of directors' fiduciary duty of care. This provision may
      reduce the likelihood of derivative litigation against directors and may
      discourage or deter shareholders or management from suing directors for breaches
      of their duty of care, even though such an action, if successful, might
      otherwise benefit our shareholders and us. In addition, our articles of
      incorporation provide for the indemnification of directors and officers in
      connection with civil, criminal, administrative or investigative proceedings
      when acting in their capacities as agents for us.
20
Our
      results of operations may be affected by changing market prices and requirements
      for dietary supplements.
Our
      results of operations may be affected by changing resale prices or market
      requirements for dietary supplements, some of which are priced on a commodity
      basis. The sale price, and market demand for, these materials can be volatile
      due to numerous factors beyond our control, which may cause significant
      variability in its period-to-period results of operations.
Our
      results of operations will fluctuate.
Our
      revenues and results of operations will vary from quarter to quarter in the
      future. A number of factors, many of which are outside of our control, may
      cause
      variations in our results of operations, including:
·
demand
                and price for our products;
·
the
                timing and recognition of product sales;
·
unexpected
                delays in developing and introducing products;
·
unexpected
                delays in manufacturing our products;
·
increased
                expenses, whether related to marketing, product development or
                administration or otherwise;
·
insufficient
                demand in the marketplace could cause our distributors to return
                product;
·
the
                mix of revenues derived from products;
·
the
                hiring, retention and utilization of personnel; and
·
general
                economic factors.
We
      may not succeed in our acquisition of additional
      products.
As
      part
      of our growth strategy, we intend to acquire and develop additional product
      candidates or approved products. The success of this strategy depends upon
      our
      ability to identify, select and acquire bioherbaceutical products that meet
      the
      criteria we have established. Any product candidate we acquire or license may
      require additional research and development efforts prior to commercial sale,
      including extensive pre-clinical and/or clinical testing. All product candidates
      are prone to the risks of failure inherent in product development, including
      the
      possibility that the product candidate will not be safe, non-toxic and
      effective. In addition, we cannot assure that any approved products that we
      develop, acquire or license will be manufactured or produced economically;
      successfully commercialized; widely accepted in the marketplace or that we
      will
      be able to recover our significant expenditures in connection with the
      development, acquisition or license of such products. In addition, proposing,
      negotiating and implementing an economically viable acquisition or license
      is a
      lengthy and complex process. Other companies, including those with substantially
      greater financial, marketing and sales resources, may compete with us for the
      acquisition or license of product candidates and approved products. We may
      not
      be able to acquire the rights to additional product candidates and approved
      products on terms that we find acceptable, or at all. In addition, if we acquire
      or license product candidates from third parties, we will be dependent on third
      parties to supply such products to us for sale. We could be materially adversely
      affected by the failure or inability of such suppliers to meet performance,
      reliability and quality standards.
Other
      companies may claim that we infringed upon their proprietary
      rights.
We
      do not
      believe that our products or processes violate third-party intellectual property
      rights. Nevertheless, there is no guarantee that such rights are not being,
      and
      will not be, violated. If any of the products or processes are found to violate
      third-party intellectual property rights, we may be required to re-engineer
      or
      cause to be re-engineered one or more of those products or processes or seek
      to
      obtain licenses from third parties to continue offering its products or
      processes without substantial re-engineering, and such efforts may not be
      successful.
Our
      non-U.S. sales present special risks.
A
      subcontractor in London handles fulfillment and coordinates market development
      for our products in the U.K. and continental Europe. We anticipate that sales
      outside the U.S. will continue to account for a significant percentage of our
      product sales and we intend to continue to expand our presence in international
      markets. Non-U.S. sales are subject to a number of special risks. For example:
21
·
sales
                agreements may be difficult to enforce;
·
receivables
                may be difficult to collect through a foreign country's legal
                system;
·
foreign
                countries may impose additional withholding taxes or otherwise tax
                foreign
                income, impose tariffs or adopt other restrictions on foreign
                trade;
·
intellectual
                property rights may be more difficult to enforce in foreign
                countries;
·
terrorist
                activity or the outbreak of a pandemic disease may interrupt distribution
                channels or adversely impact customers or employees;
                and
·
regulations
                may change relating to dietary supplements that may negatively impact
                the
                ability to market products in those geographical
                regions.
Any
      of
      these events could harm our operations or operating results.
Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses.
Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and new Securities and
      Exchange Commission regulations, are creating uncertainty for public companies.
      Our management team will be required to invest significant management time
      and
      financial resources to comply with both existing and evolving standards for
      public companies, which may lead to increased general and administrative
      expenses and a diversion of management time and attention from revenue
      generating activities to compliance activities.
It
      is possible that there are claims of which we are unaware that may come to
      light
      in the future and cost us considerable time, effort and expense to
      resolve.
It
      is
      possible that a claim, whether colorable or not, may be asserted against us
      in
      the future with respect to matters arising prior to the merger. There can be
      no
      assurance given that some person will not devise a claim and attempt to assert
      it against us in the hopes of obtaining some monetary benefit. To resolve such
      a
      claim, including payment, may cost us considerable time, effort and expense.
      Any
      of these may impair management's implementation of the business plan with the
      consequence of a loss of opportunity.
Risks
      Related to Our Common Stock
Because
      our common stock is traded on the OTC Bulletin Board, your ability to sell
      your
      shares in the secondary trading market may be limited.
Our
      common stock currently is traded on the over-the-counter market on the OTC
      Bulletin Board. Consequently, the liquidity of our common stock is limited,
      not
      only in the number of shares that are bought and sold, but also through delays
      in the timing of transactions, and coverage by security analysts and the news
      media, if any, of us. As a result, prices for shares of our common stock may
      be
      lower than might otherwise prevail if our common stock was traded on a national
      securities exchange, such as The New York Stock Exchange or The Nasdaq Stock
      Market, LLC.
Our
      common stock may be removed from the OTC Bulletin Board, which would likely
      cause the trading price of our common stock to decline and affect our ability
      to
      raise capital in the future.
On
      April
      5, 2006, we received notice from the OTC Bulletin Board that unless we cured
      our
      delinquency in filing the Annual Report on Form 10-K for the year ended December
      31, 2005 prior to the expiration of the grace period (May 5, 2006), our common
      stock would be removed from the OTC Bulletin Board effective May 9, 2006. We
      have cured this delinquency with the filing of our Annual Report on Form 10-K
      filed on May 1, 2006. However, under applicable NASD Rules, if we are delinquent
      in our reporting obligations three times in a 24-month period and/or are
      actually removed from the OTC Bulletin Board for failure to file two times
      in a
      24-month period, in each case, we would be ineligible for quotation on the
      OTC
      Bulletin Board for a period of one year. To date, we have been delinquent one
      time in the past 24-month period. Should quotation of our common stock on the
      OTC Bulletin Board or a similar facility cease for any reason, the liquidity
      of
      our common stock and our ability to raise equity capital would likely
      decrease.
22
Because
      our shares are "penny stocks," you may have difficulty selling them in the
      secondary trading market.
Federal
      regulations under the Exchange Act regulate the trading of so-called "penny
      stocks," which are generally defined as any security not listed on a national
      securities exchange, priced at less than $5.00 per share and offered by an
      issuer with limited net tangible assets and revenues. Since our common stock
      currently trades on the OTC Bulletin Board at less than $5.00 per share, our
      common stock is a "penny stock" and may not be traded unless a disclosure
      schedule explaining the penny stock market and the risks associated therewith
      is
      delivered to a potential purchaser prior to any trade.
In
      addition, because our common stock is not listed on any national securities
      exchange and currently trades at less than $5.00 per share, trading in our
      common stock is subject to Rule 15g-9 under the Exchange Act. Under this rule,
      broker-dealers must take certain steps prior to selling a "penny stock," which
      steps include:
•
obtaining
                financial and investment information from the investor;
•
obtaining
                a written suitability questionnaire and purchase agreement signed
                by the
                investor; and
•
providing
                the investor a written identification of the shares being offered
                and the
                quantity of the shares.
If
      these
      penny stock rules are not followed by the broker-dealer, the investor has no
      obligation to purchase the shares. The application of these comprehensive rules
      will make it more difficult for broker-dealers to sell our common stock and
      our
      shareholders, therefore, may have difficulty in selling their shares in the
      secondary trading market.
Our
      stock price has been and may continue to be volatile and an investment in our
      common stock could suffer a decline in value.
Trading
      of our common stock has been sporadic, and the trading volume has generally
      been
      low. Even a small trading volume on a particular day or over a few days may
      affect the market price of our common stock. The market price of our common
      stock may fluctuate significantly in response to a number of factors, some
      of
      which are beyond our control. These factors include:
•
announcements
                of research activities and technology innovations or new products
                by us or
                our competitors;
•
changes
                in market valuation of companies in our industry
                generally;
•
variations
                in operating results;
•
changes
                in governmental regulations;
•
results
                of research studies of our products or our competitors'
                products;
•
regulatory
                action or inaction on our products or our competitors'
                products;
•
changes
                in our financial estimates by securities analysts;
•
general
                market conditions for companies in our industry;
•
broad
                market fluctuations; and
•
economic
                conditions in the United States or abroad.
Our
      directors and executive officers own a significant number of shares of our
      common stock to control our company, which could discourage or prevent a
      takeover, even if an acquisition would be beneficial to our stockholders.
23
Certain
      of our directors and our current executive officer own or control approximately
      80% of our outstanding voting power. Accordingly, these stockholders,
      individually and as a group, will able to influence the outcome of stockholder
      votes, involving votes concerning the election of directors, the adoption or
      amendment of provisions in our certificate of incorporation and bylaws and
      the
      approval of certain mergers or other similar transactions, such as a sale of
      substantially all of our assets. Such control by existing stockholders could
      have the effect of delaying, deferring or preventing a change in control of
      us.
We
      do not pay cash dividends, so any return on an investment must come from
      appreciation.
We
      do not
      intend to pay any cash dividends in the foreseeable future and, therefore,
      any
      return on an investment in our common stock must come from increases in the
      fair
      market value and trading price of our common stock.
We
      may issue additional equity securities that will dilute our stockholders.
We
      may
      issue additional equity securities to raise capital and through the exercise
      of
      options, warrants and convertible debt that is outstanding or may be
      outstanding. These additional issuances will have a dilutive effect on our
      existing stockholders.
SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
      table
      on the following pages set forth information regarding the beneficial ownership
      of the common stock by:
•
Our
                executive officers and directors;
•
All
                directors and executive officers as a group;
                and
•
Each
                person known to us to beneficially own more than five percent (5%)
                of our
                outstanding shares of common stock.
The
      information contained in these tables is as of September 18, 2006, following
      the
      merger. At that date, we had 108,567,080 shares of common stock outstanding.
      Except as indicated, the persons named have sole voting and investment power
      with respect to all shares shown as being beneficially owned by them. The
      percentages in the table are rounded to the nearest tenth of a percent.
Common
                Stock (1)
Name
                and Address of Stockholder
Amount
                and Nature
of
                Beneficial Ownership(2)
Percent
                of Class (2)
Directors
                and Officers
Dr.
                Agnes P. Olszewski
Herborium
                Group, Inc.
3
                Oak Street
Teaneck,
                New Jersey 07666
44,811,063(3)
41.3%
Dr.
                James P. Gilligan
985
                Carteret Ave
Union,
                New Jersey 07083
42,992,563(4))
39.6%
Max
                G. Ansbacher
515
                Madison Avenue, 29th Floor
New
                York, NY 10022
434,268
*
                %
24
Wayne
                I. Danson
420
                Lexington Avenue, Suite 2739
New
                York, NY 10170
347,373(5)
*
                %
All
                Directors and Officers as a Group
88,585,267
81.7%
*
      Less
      than 1 percent
(1)
The
                holders of common stock are entitled to one vote per share.
(2)
The
                number of shares of common stock and the percent of the class in
                the table
                and these notes to the table have been calculated in accordance with
                Rule
                13d-3 under the Exchange Act, and assume, on a stockholder by stockholder
                basis, that each stockholder has converted all securities owned by
                such
                stockholder that are convertible into common stock at the option
                of the
                holder currently or within 60 days of September 18,
                2006.
(3)
Includes
                515,693 shares of common stock held by Dr. Olszewksi's son who resides in
                the same household.
(4)
Includes
                434,268 shares of common stock held by Dr. Gilligan's son who resides in
                the same household.
(5)
Mr.
                Danson's shares were received as a distribution on his ACT common
                stock.
DIRECTORS
      AND EXECUTIVE OFFICERS
The
      following table sets forth the names of our directors and executive officers,
      their ages and the positions they currently hold. Each such person became an
      officer and/or director of the company immediately after the closing of the
      merger. The positions that Drs. Olszewski and Gilligan held with Herborium
      prior
      to the merger are described in the biographical information set forth below.
Name
Age
Position
Dr.
                Agnes P. Olszewski
49
President,
                Chief Executive Officer, Chief Financial Officer and
                Director
Dr.
                James P. Gilligan
54
Consultant
                and Director
Max
                G. Ansbacher
70
Director
Wayne
                I. Danson
53
Director
Dr.
      Agnes Olszewski.
Dr.
      Olszewski is a
co-founder
      of Herborium, Inc. and has served as co-Chief Executive Officer and President
      Business Development and director of Herborium, Inc. since its inception in
      2000. She was appointed as our Chief Executive Officer, Acting Chief Financial
      Officer and director concurrently with the closing of the merger. In addition,
      concurrently with the closing of the merger, she was appointed director of
      our
      subsidiary Herborium. Until such time as we receive a minimum of $1,250,000
      of
      financing, Dr. Olszewski will not devote her full time to our company, and
      will
      continue to engage in her activities as a professor. Dr. Olszewski has over
      20
      years experience in business strategy, strategic marketing management and
      international business. She holds M.A. in Consumer Psychology and Ph.D. degrees
      from Warsaw University, Poland, and an M.B.A. degree from Fordham University,
      New York City. Dr. Olszewski has been a consultant and a team leader on
      strategic management and competitive marketing strategies for leading American
      corporations, as well as foreign companies and institutions. In her capacity
      as
      an international consultant, she had lead multicultural negotiations and managed
      diverse teams of professionals. She has also been responsible for developing
      and
      implementing business and marketing strategies in the United States and foreign
      markets. After the collapse of communism in Central Europe, Dr. Olszewski formed
      A&T Global Marketing Inc., one of the first consulting firms in the U.S.
      focusing on the transfer of western management and financial know-how into
      transitional economies. A&T Global Marketing was also involved in advising
      American corporations on entry strategies into the emerging markets of Europe
      and Asia. Dr. Olszewski has successfully led the efforts to form Joint Ventures
      in Poland, China and France. She was President and Chief Executive Officer
      of
      G.O. International, Inc., which she co-founded with Dr. James P. Gilligan,
      a
      consulting firm specializing in business strategies for pharmaceutical industry
      and global technology transfer. G.O. International merged with Herborium, Inc.
      in June 2002.
25
Dr.
      James P. Gilligan.
Dr.
      Gilligan is a co-founder of Herborium, Inc. and has served co-Chief Executive
      Officer and President Product Development and director of Herborium, Inc. since
      its inception in 2000. He was appointed as our director and as a director of
      our
      subsidiary Herborium concurrently with the closing of the merger. He is
      currently providing consulting services to us and has agreed to serve on a
      full-time basis as our President and Chief Operating Officer within six months
      after we receive a minimum of $2,500,000 of financing. He has over 25 years
      experience in the pharmaceutical and biotechnology industry. He received his
      Ph.D. in Pharmacology and Toxicology from the University of Connecticut, during
      which time he completed a special research fellowship at the Cleveland Clinic
      Atherosclerosis Research Unit. He performed his post-doctoral training at the
      Roche Institute of Molecular Biology. Dr. Gilligan is author or co-author of
      15
      U.S. patents, as well as multiple PCT patents and the author of numerous
      scientific publications. He also received a M.S. in International Business
      from
      Seton Hall University. Dr. Gilligan is Vice President of Product Development
      at
      Unigene Laboratories Inc. Fairfield, NJ, a biopharmaceutical company. He was
      a
      founding member of Unigene in 1981 and participated in the design of its R&D
      facility in 1983 and the cGMP biotechnology manufacturing facility in 1993.
      His
      responsibilities have included coordination of all U.S. and international
      pre-clinical research, toxicology, and regulatory filings as well as design
      and
      management of clinical studies.
Max
      G. Ansbacher
.
Mr.
      Ansbacher was appointed as our director and as a director of our subsidiary
      Herborium concurrently with the closing of the merger. He is the principal
      of
      Ansbacher Investment Management, a management firm concentrating in
      sophisticated options strategies. The firm currently manages over $158 million.
      Prior to founding his firm, Mr. Ansbacher managed options accounts for the
      investment banking firm Bear Stearns. He is the author of three books on
      investing and his book
The
      New Options Market
is one
      of the all-time best selling books on exchange traded options. Mr. Ansbacher
      is
      a graduate of Phillips Exeter Academy, the University of Vermont and Yale law
      school. He also holds an advanced degree in tax law from New York University,
      and is a member of the bar in New York, Vermont and the District of Columbia.
Wayne
      I. Danson
.
Mr. Danson was appointed as our director and as a director of our subsidiary
      Herborium concurrently with the closing of the merger. Prior to the merger,
      Mr.
      Danson served as Chief Executive Officer and as a director of LW. Mr. Danson
      has
      served as the Chief Financial Officer of Advanced Communications Technologies,
      Inc. since December 1, 1999 and was appointed a director on January 3, 2000,
      President on April 30, 2002 and Chief Executive Officer on June 7, 2005. Mr.
      Danson is the Managing Director and Founder of Danson Partners, LLC, a financial
      advisory firm specializing in middle market companies in the real estate and
      technology industries. Prior to forming Danson Partners, LLC in May 1999, Mr.
      Danson was Managing Director of PricewaterhouseCoopers LLP's Real Estate Capital
      Markets Group. Prior to rejoining PricewaterhouseCoopers in 1996, Mr. Danson
      was
      a Managing Tax Partner with Kenneth Leventhal & Company in New York and
      Washington D.C., where he was also Kenneth Leventhal's National Director of
      its
      International and Debt Restructure Tax Practices. Prior to his involvement
      with
      Kenneth Leventhal in 1988, Mr. Danson was a Managing Director with Wolper Ross
      & Co., Ltd. in New York, a closely-held financial services company
      specializing in financial tax, pension consulting, designing financial
      instruments and providing venture capital and investment banking services.
      Mr.
      Danson graduated with honors from Bernard M. Baruch College with a B.B.A. in
      Accounting and an M.B.A. in Taxation. He is a certified public accountant and
      a
      member of the AICPA and the New York State Society of CPAs.
Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC's Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
We
      intend
      to obtain an additional board member who is "independent" as determined in
      accordance with the applicable requirements of The Nasdaq Stock Market LLC
      and
      other applicable rules and regulations of the Securities and Exchange
      Commission. Although we are in discussions with prospective candidates, no
      candidate has been selected at this time. All directors will hold office until
      the next annual meeting of stockholders and until their successors have been
      elected and qualified. Officers serve at the discretion of the Board of
      Directors.
26
Family
      Relationships
There
      are
      no family relationships among our directors, executive officers or persons
      nominated or chosen to become our directors or executive officers.
Involvement
      in Certain Legal Proceedings
No
      director, person nominated to become a director, executive officer, promoter
      or
      control person has been involved in any legal proceeding during the past five
      years that is required to be disclosed pursuant to Item 401(f) of Regulation
      S-K.
Board
      Committees
We
      do not
      have an Audit Committee, and therefore we do not have an "audit committee
      financial expert," as such term is defined in Item 401(h) of Regulation S-K. The
      Board of Directors believes that it is not necessary to have a standing audit
      committees at this time because the functions of such committee are adequately
      performed by the entire board.
EXECUTIVE
      COMPENSATION
The
      following table sets forth the compensation paid by PMIC to its Chief Executive
      Officer, Martin Nielson, during each of PMIC's last three fiscal years ended
      December 31, 2003, 2004 and 2005. Mr. Nielson resigned as President of PMIC
      on
      July 19, 2006 and resigned as Chief Executive Officer effective on September
      18,
      2006. At the end of PMIC's last completed fiscal year, PMIC did not have any
      executive officer whose total annual salary and bonus exceeded
      $100,000.
The
      following also table sets forth the compensation Herborium paid to Drs. Agnes
      P.
      Olszewski and James P. Gilligan, its co-Chief Executive Officers and Presidents,
      during Herborium's last three fiscal years ended November 30, 2003, 2004 and
      2005. Dr. Olszewski became our Chief Executive Officer and Acting Chief
      Financial Officer on September 18, 2006, following the merger. On that date,
      Dr.
      Gilligan entered into a consulting agreement with us. At the end of Herborium's
      last completed fiscal year, Herborium did not have any executive officer whose
      total annual salary and bonus exceeded $100,000.
Summary
      Compensation Table
Annual
                Compensation
Fiscal
Other
                Annual
Name
                and Principal Position
Year
Salary
Bonus
Compensation(1)
Martin
                Nielson
Former
                Chief Executive of PMIC
2005
2004
2003
$41,250
$0
$0
—
—
Dr.
                Agnes P. Olszewski
Chief
                Executive Officer
and
                Acting Chief Financial Officer;
(
                Former co-CEO/President of Herborium
2005
2004
2003
$0
$0
$0
—
—
Dr.
                James P. Gilligan
Consultant
Former
                co-CEO/President of Herborium
2005
2004
2003
$0
$0
$0
—
—
27
(1)
      None of our executive officers received personal benefits or perquisites in
      excess of the lesser of $50,000 or 10% of his aggregate salary and bonus.
Option
      Grants in Last Fiscal Year
No
      options were granted to any of the individuals named in the Summary Compensation
      Table during fiscal year 2005.
Aggregated
      Option Exercises in Fiscal 2005 and FY-End Option
      Values
None
      of
      the individuals named in the Summary Compensation Table held any options to
      purchase our common stock or the common stock of Herborium, Inc. as of November
      30, 2005.
Long
      Term Incentive Plans
We
      have
      no long-term incentive plans for our executive officers.
Equity
      Compensation Plan Information
Following
      the consummation of the merger, we had no equity compensation plans under which
      equity securities are authorized for issuance.
Director
      Compensation
Our
      directors do not receive any cash compensation for their service on the Board
      of
      Directors. Our directors are reimbursed for actual out-of-pocket expenses
      incurred by them in connection with their attendance at meetings of the Board
      of
      Directors.
Employment
      Agreements
Agreement
      with Dr. Agnes P. Olszewski
On
      September 18, 2006 we entered into an employment agreement with Dr. Olszewski
      who will serve as President, Chief Executive Officer and Acting Chief Financial
      Officer until such time as we hire a controller or Chief Financial Officer.
      Dr.
      Olszewski will have the position of Chairman of the Board of Directors. The
      employment agreement will provide for an initial four-year term of employment,
      with an addition twelve-month extension at Dr. Olszewski's option. Under the
      agreement, Dr. Olszewski is not required to work full-time until such time
      as we
      have received debt or equity financing in an aggregate of amount of
      $1,250,000.00 or more. Until we obtain such amount of financing, Dr. Olszewski
      will receive 75% of her base salary. Her annual base salary is $200,000 with
      a
      bonus equal to (i) for the first three years, 5% of EBITDA (as defined in the
      agreement) and (ii) thereafter 5% of Net Income before bonus (as defined in
      the
      agreement). She will be eligible for an additional bonus ranging from $75,000
      to
      $200,000 in the event that our Pre-Tax Income for a fiscal year exceeds that
      of
      the prior fiscal year by 150% or more. Under the employment agreement,. Dr.
      Olszewski will be an eligible participant under one or more stock option plans
      adopted by us. Dr. Olszewski will be subject to non-competition provisions
      during the term of the agreement or until September 30, 2012 in the event that
      she extends the agreement for the additional twelve month period. Dr.
      Olszewski's employment may be terminated in the event of extended disability or
      incapacity or a "For Cause Event" as defined in the agreement. Dr. Olszewski may
      terminate her employment voluntarily with 180 days prior written notice, upon
      our material breach of the agreement with 10 days prior written notice and
      upon
      a "Change of Control" as defined in the agreement upon 90 days prior written
      notice. In the event of her termination, Dr. Olszewski or her beneficiary,
      as
      the case may be, will have the right to receive all accrued but unpaid base
      salary. In the event of her death, her termination based on a material breach
      by
      us or our termination of her for any reason other than a For Cause Event, she
      will be entitled to receive $600,000. In the event of her termination for or
      after a Change of Control, she will be entitled to receive an amount equal
      to
      the product of her base salary multiplied by 2.99. After (i) the expiration
      of
      the term (including an extension of one year by Dr. Olszewski) or (ii) her
      voluntary termination of the employment agreement, Dr. Olszewski may, at her
      or
      our option in the case of clause (i) or at our option in the case of clause
      (ii), act as a consultant to us for one year and receive compensation equal
      to
      50% of her base salary.
28
Agreement
      with Dr. James P. Gilligan
On
      September 18, 2006 we entered into a consulting and employment agreement with
      Dr. Gilligan who will serve as co-President and Chief Operating Officer. The
      agreement provides for an initial term of employment expiring on September
      20,
      2011, with an addition twelve-month extension at Dr. Gilligan's option. Under
      the agreement, Dr. Gilligan's employment will not commence until six months
      after we have received debt or equity financing in the aggregate amount of
      $2,500,000.00, and until such date, Dr. Gilligan will serve as a consultant
      to
      us at an hourly rate of $120.00 per hour and will be permitted to continue
      his
      full-time employment elsewhere. Upon his full-time employment, his annual base
      salary will be $200,000 with a bonus equal to (i) for the first three years,
      5%
      of EBITDA (as defined in the agreement) and (ii) thereafter 5% of Net Income
      before bonus (as defined in the agreement. He will be eligible for an additional
      bonus ranging from $75,000 to $200,000 in the event that our Pre-Tax Income
      for
      a fiscal year exceeds that of the prior fiscal year by 150% or more. Under
      the
      employment agreement, Dr. Gilligan will be an eligible participant under one
      or
      more stock option plans adopted by us. Dr. Gilligan will be subject to
      non-competition provisions during the term of the agreement or until September
      30, 2012 in the event that he extends the agreement for the additional
      twelve-month period. Dr. Gilligan's employment may be terminated in the event of
      extended disability or incapacity or a "For Cause Event" as defined in the
      agreement. Dr. Gilligan may terminate his employment voluntarily with 180 days
      prior written notice, upon our material breach of the agreement with 10 days
      prior written notice and upon a "Change of Control" as defined in the agreement
      upon 90 days prior written notice. In the event of his termination, Dr. Gilligan
      or his beneficiary, as the case may be, will have the right to receive all
      accrued but unpaid base salary. In the event of his death, his termination
      based
      on a material breach by us or our termination of him for any reason other than
      a
      For Cause Event, he will be entitled to receive $600,000. In the event that
      his
      employment is terminated for or after a Change of Control, he will be entitled
      to receive an amount equal to the product of his base salary multiplied by
      2.99.
      After (i) the expiration of the term (including an extension of one year by
      Dr.
      Gilligan) or (ii) his voluntary termination of the employment agreement, Dr.
      Gilligan may, at his or our option in the case of clause (i) or at our option
      in
      the case of clause (ii), act as a consultant to us for one year and receive
      compensation equal to 50% of his base salary.
Compensation
      Committee Interlocks and Insider Participation
W
e
      do not
      currently have a Compensation Committee. Instead the entire Board of Directors
      makes executive officer compensation decisions. Prior to the merger, Herborium,
      Inc. had no compensation committee. See
Certain
      Relationships and Related Transactions
below
      for more information about related party transactions involving Drs. Olszewski
      and Gilligan.
CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
Financing
      of Herborium's operations prior to the merger were provided by equity
      investments and loans from our founders, Drs. Olszewski and Gilligan, of
      approximately $380,000, funding from friends and family of approximately
      $125,500, a revolving credit facility and cash generated by our gross profit
      from sales.
LEGAL
      PROCEEDINGS
There
      are
      no material pending legal proceedings, other than ordinary routine litigation
      incidental to the business, to which we are party.
DESCRIPTION
      OF SECURITIES
Our
      total
      authorized capital stock consists of 500,000,000 shares of common stock, par
      value $.001 per share and 5,000,000 shares of preferred stock, par value $.001
      per share. After the closing of the reverse merger, 108,567,080 shares of common
      stock were to be issued and outstanding. Prior to the closing of the reverse
      merger, all outstanding shares of the 4% Series A Convertible Preferred Stock
      of
      the Company were converted to 800,000 shares of our common stock. In conjunction
      with the merger, we eliminated the designation of the 4% Series A Redeemable
      Convertible Preferred Stock from our articles of incorporation as no shares
      of
      such series of preferred stock were issued and outstanding.
29
The
      following description of our capital stock does not purport to be complete
      and
      is subject to and qualified by our Articles of Incorporation and By-laws, and
      by
      the provisions of applicable Nevada law.
Common
      Stock
Holders
      of our common stock are entitled to one vote for each share owned for all
      matters to be voted on by the stockholders. Holders of the common stock are
      entitled to receive dividends as may be declared from time to time by the Board
      of Directors, and in the event of any liquidation, dissolution, or winding
      up of
      the affairs of the Company, are entitled to receive a pro rata share of any
      assets of the corporation legally available for distribution after payment
      of
      liquidation preferences, if any, on any outstanding stock having prior rights
      on
      such distributions and payment of other claims of creditors. There are no
      redemption or sinking fund provisions applicable to our common stock. The rights
      of the holders of our common stock are subject to any rights that may be fixed
      for the holders of preferred stock, if and when any preferred stock is issued.
      Our common stock currently outstanding is validly issued, fully paid and
      nonassessable.
Preferred
      Stock
Our
      Articles of Incorporation authorize the issuance of shares of preferred stock
      in
      one or more series. Our Board of Directors has the authority, without any vote
      or action by the stockholders, to create one or more series of preferred stock
      up to the limit of our authorized but unissued shares of preferred stock and
      to
      fix the number of shares constituting such series and the designation of such
      series, the voting powers (if any) of the shares of such series and the relative
      participating, option or other special rights (if any), and any qualifications,
      preferences, limitations or restrictions pertaining to such series which may
      be
      fixed by the Board of Directors pursuant to a resolution or resolutions
      providing for the issuance of such series adopted by the Board of Directors.
The
      provisions of a particular series of authorized preferred stock, as designated
      by the Board of Directors, may include restrictions on the payment of dividends
      on common stock. Such provisions may also include restrictions on our ability
      to
      purchase shares of common stock or to purchase or redeem shares of a particular
      series of authorized preferred stock. Depending upon the voting rights granted
      to any series of authorized preferred stock, issuance thereof could result
      in a
      reduction in the voting power of the holders of common stock. In the event
      of
      our dissolution, liquidation or winding up, the holders of the preferred stock
      will receive, in priority over the holders of common stock, a liquidation
      preference established by the Board of Directors, together with accumulated
      and
      unpaid dividends. Depending upon the consideration paid for authorized preferred
      stock, the liquidation preference of authorized preferred stock and other
      matters, the issuance of authorized preferred stock could result in a reduction
      in the assets available for distribution to the holders of common stock in
      the
      event of our liquidation.
MARKET
      PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON
      EQUITY AND RELATED STOCKHOLDER MATTERS
Our
      common stock is presently traded on the Over-the-Counter Bulletin Board under
      the symbol PMICQ.OB. The following table shows the high and low sale prices
      for
      2004, 2005 and the first and second quarter of 2006 in dollars per share as
      reported by the OTC Bulletin Board. These prices may not be the prices that
      you
      would sell or would pay to purchase a share of our common stock during the
      periods shown.
High
Low
Fiscal
                Year Ended December 31, 2005
First
                Quarter
$
0.15
$
0.05
Second
                Quarter
0.07
0.02
Third
                Quarter
0.06
0.03
Fourth
                Quarter
0.03
0.02
30
High
Low
Fiscal
                Year Ended December 31, 2004
First
                Quarter
$
0.15
$
0.06
Second
                Quarter
0.07
0.04
Third
                Quarter
0.10
0.04
Fourth
                Quarter
0.15
0.04
First
                Quarter Ended March 31, 2006
$
0.03
$
0.02
Second
                Quarter Ended June 30, 2006
0.05
0.02
As
                of September 18, 2006
$
0.03
$
0.03
The
      number of holders of record for our common stock immediately after giving effect
      to the merger was approximately 600.
Dividend
      Policy
We
      have
      not paid and have no plan to pay dividends on our common stock.
31
RECENT
      SALES OF UNREGISTERED SECURITIES
In
      accordance with the PMIC plan of reorganization and in connection with the
      merger, we will issue 6,580,762 shares of our common stock to the holders of
      PMIC common stock, including the former holders of PMIC's 4% Series A
      Convertible Preferred Stock in exchange for their respective claims as existing
      shareholders of PMIC. The issuance of these shares of our common stock
      constituted an offer of securities within the purview of § 1145(a) of the
      Bankruptcy Code and, therefore, was not subject to the registration requirements
      of the Securities Act of 1933, as amended (the "Securities Act"), or state or
      local law. None of the recipients of these shares will be deemed an underwriter
      as specified in Section 1145(a) of the Bankruptcy Code.
In
      addition, under the PMIC plan of reorganization and in connection with the
      merger, we issued 7,454,300 shares of our common stock directly to the
      stockholders of ACT, partly in exchange for ACT's claims and partly in exchange
      for the payment of $50,000 in cash by ACT. Further, 2,250,000 shares of our
      common stock are being held in escrow: 1,750,000 shares for Mr. Li and Ms.
      Lee
      pursuant to terms of a settlement agreement and 500,000 shares for certain
      unexpired common stock option and warrant grants. The issuance of shares of
      our
      common stock to stockholders of ACT constituted an offer of securities within
      the purview of § 1145(a) of the Bankruptcy Code and was not be subject to the
      registration requirements of the Securities Act or state or local law. None
      of
      the recipients of these shares will be deemed an underwriter as specified in
      Section 1145(a) of the Bankruptcy Code.
In
      connection with the merger, we issued 92,282,018 shares of our common stock
      to
      the stockholders of Herborium in exchange for all of the issued and outstanding
      common stock of Herborium. The issuance of these shares was made in reliance
      upon the exemption from the registration requirements of the Securities Act
      set
      forth in Rule 506 of Regulation D, promulgated under the Securities Act, and
      corresponding provisions of state securities laws, which exempts transactions
      by
      an issuer not involving any public offering. Accordingly, such shares are
"restricted securities" and may not be offered or sold in the United States
      absent registration or an applicable exemption from registration requirements
      under the Securities Act.
INDEMNIFICATION
      OF DIRECTORS AND OFFICERS
Our
      articles of incorporation eliminate the personal liability of directors and
      officers to us and our stockholders for monetary damages for breach of fiduciary
      duty as a director or officer. Under our articles of incorporation, we also
      will
      indemnify and pay the expenses of any person who is or was made, or threatened
      to be made, a party to an action or proceeding by reason of the fact that such
      person is or was a director or officer of the company or is or was serving
      at
      the request or with the prior approval of the company as a director or officer
      of another corporation, against any liability asserted against such person
      and
      incurred by such person in any capacity arising out of that person's status
      as
      such. Insofar as indemnification for liabilities arising under the Securities
      Act may be permitted to directors, officers and controlling persons of the
      company pursuant to the foregoing, or otherwise, we have been advised that
      the
      opinion of the Securities and Exchange Commission such indemnification is
      against public policy as expressed in the Securities Act and is, therefore,
      unenforceable. If a claim for indemnification against such liabilities (other
      than the payment by us of expenses incurred or paid by a director, officer
      or
      controlling person of the company in the successful defense of any action,
      suit
      or proceeding) is asserted by such director, officer or controlling person
      in
      connection with any securities being registered, we will, unless in the opinion
      of our counsel the matter has been settled by controlling precedent, submit
      to a
      court of appropriate jurisdiction the question whether such indemnification
      by
      us is against public policy as expressed in the Securities Act and will be
      governed by the final adjudication of such issue.
Item
      3.02. Unregistered Sales of Equity Securities.
Reference
      is made to the disclosure made under Items 1.01 and 2.01 of this Current Report
      on Form 8-K, which is incorporated herein by reference.
32
Item
      3.03
Material
      Modification to Rights of Security Holders.
Reference
      is made to the disclosure made under Items 1.01 and 2.01 of this Current Report
      on Form 8-K, which is incorporated herein by reference.
Item
      5.01
Changes
      in Control of Registrant.
As
      described in more detail under Item 2.01 of this Current Report on Form 8-K,
      which is incorporated herein by reference, as a result of the merger, a change
      in control of PMIC has occurred.
Item
      5.02
Departures
      of Directors or Principal Officers;
Election
      of Directors; Appointment of Principal Officers
Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC's Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.
      Upon the closing of the merger and in accordance with the plans of
      reorganization of PMIC and LW, Dr. Agnes P. Olszewski became our President,
      Chief Executive Officer and Acting Chief Financial Officer until a full time
      Chief Financial Officer or comptroller is appointed, and we entered into a
      consulting/employment agreement with Dr. James P. Gilligan. Until such time
      as
      we obtain financing of a minimum of $1,500,000, Dr. Olszewski will not devote
      her full time to our company and will continue her activities as a professor.
      Within six months after we obtain financing of $2,500,000, Dr. Gilligan has
      agreed to join us as our Co-President and Chief Operating Officer.
For
      certain biographical and other information regarding the newly appointed
      officers and directors, see the disclosure under the heading
Directors
      and Executive Officers
under
      Item 2.01 of this Current Report on Form 8-K, which is incorporated herein
      by
      reference
Item
      5.03
Amendments
      to Articles of Incorporation or Bylaws; Change in Fiscal
      Year.
In
      connection with the consummation of the merger, PMIC amended and restated its
      Articles of Incorporation. The following summary of the changes to the Articles
      of Incorporation is qualified in its entirety by reference to the Second Amended
      and Restated Articles of Incorporation that is filed as Exhibit 3(i) to this
      Current Report on Form 8-K.
•
PMIC
                increased its authorized shares of common stock from 25,000,000 to
                500,000,000
.
•
PMIC
                changed its fiscal year end from December 31 to November
                30.
•
PMIC
                changed its name to Herborium Group,
                Inc.
•
PMIC
                effected the cancellation of its pre-merger issued and outstanding
                shares
                of common stock in exchange for the issuance of new post-merger shares
                of
                common stock.
Ÿ
PMIC
                deleted references to its incorporator and the member of its Board
                of
                Directors initially named upon its incorporation.
Ÿ
PMIC
                corrected the name of its resident agent in
                Nevada.
Effective
      as of the merger, PMIC adopted Amended and Restated Bylaws that update and
      supersede in their entirety PMIC's existing Bylaws. The Amended and Restated
      Bylaws are filed as Exhibit 3(ii) to this Current Report on Form 8-K.
33
Effective
      concurrently with the close of the merger, our fiscal year was changed from
      December 31 to November 30. We will account for the transaction
      contemplated in the Merger Agreement as a "reverse merger." Because reverse
      merger accounting dictates that the historical financial statements of Herborium
      are now our financial statements, we will not file a transition report. Exhibit
      99.1 to this Current Report on Form 8-K includes Herborium's annual financial
      statements for the years ended November 30, 2004 and 2005. Our next Annual
      Report on Form 10-K will cover the complete 12-month period ended November
      30,
      2006.
Item
      5.06
Change
      in Shell Company Status.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on Form 8-K, which disclosure is incorporated herein by
      reference.
Item
      9.01.
Financial
      Statements and Exhibits.
(a)
      Financial Statements of Businesses Acquired.
Filed
      as
      Exhibit 99.1 to this Current Report on Form 8-K are the audited financial
      statements of Herborium, Inc. for the fiscal years ended November 30, 2004
      and
      2005.
Filed
      as
      Exhibit 99.2 to this Current Report on Form 8-K are the unaudited financial
      statements of Herborium, Inc. for the six months ended May 31, 2006.
(b)
      Pro
      Form Financial Information.
Not
      applicable.
(c)
      Press
      Release
A
        copy of
        the press release issued by PMIC announcing the merger is furnished with
        this
        Current Report as Exhibit 99.3.
(d)
      Exhibits.
Exhibit
                Number
Description
2.1
Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.'s Current Report on Form 8-K filed on
                August 16, 2006).
2.2
Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.'s Current Report on Form 8-K filed on August 16,
                2006).
2.3
Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium,
                Inc.
3(i)
Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp.
3(ii)
Amended
                and Restated Bylaws of Pacific Magtron International
                Corp.
10.1
Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.'s Current Report on Form 8-K filed on August
                16,2006).
34
10.2*
Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski
10.3*
Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan
99.1
Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 2005
99.2
Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 2006
99.3
Press
                Release
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
PACIFIC
                MAGTRON INTERNATIONAL CORP.
Dated:
                September 22, 2006
By:
/s/
                Agnes P. Olszewski
Dr.
                Agnes P. Olszewski
Chief
                Executive Officer
35
EXHIBIT
      INDEX
Exhibit
                Number
Description
2.1
Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.'s Current Report on Form 8-K filed on
                August 16, 2006).
2.2
Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.'s Current Report on Form 8-K filed on August 16,
                2006).
2.3
Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium,
                Inc.
3(i)
Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp.
3(ii)
Amended
                and Restated Bylaws of Pacific Magtron International
                Corp.
10.1
Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.'s Current Report on Form 8-K filed on August
                16,2006).
10.2*
Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski
10.3*
Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan
99.1
Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 2005
99.2
Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 2006
99.3
Press
                Release
36