UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB
              [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2005
                                       or
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from ____________ to ________________
                        Commission file number: 000-28277


                            HERITAGE WORLDWIDE, INC.

        (Exact name of small business issuer as specified in its charter)

                    Delaware                             13-4196258
         -----------------------------------         --------------------
        (State or other jurisdiction of               (I.R.S. Employer
        incorporation or organization)                Identification No.)

             337 Avenue de Bruxelles La Seyne-Sur-Mer (France) 83507
             -------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                              (011) (33) 494-109810

                (Issuer's telephone number, including area code)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

The total  number  of shares of the  issuer's  common  stock,  $.001 par  value,
outstanding at May 5, 2005 was 17,410,299.

Transitional Small Business Disclosure Format: Yes |_| No |X|




<PAGE>

                            HERITAGE WORLDWIDE, INC.
                         QUARTERLY REPORT ON FORM 10-QSB
                                December 31, 2004

                                TABLE OF CONTENTS


                                                                       Page

Special Note Regarding Forward Looking Information.........................2


PART I - FINANCIAL INFORMATION

      Item 1 - Financial Statements

      Consolidated Balance Sheet
      As of March 31, 2005(Unaudited)......................................3
      Consolidated Statements of Operations (Unaudited)
      For the Three and Nine Months Ended March 31, 2005...................4
      Consolidated Statements of Cash Flows (Unaudited)
      For the Nine Months Ended March 31, 2005.............................5

      Notes to Consolidated Financial Statements...........................6-15

      Item 2 - Management's Discussion and Analysis or Plan of Operation..16

      Item 3 - Control and Procedures.....................................29

PART II - OTHER INFORMATION

      Item 1 - Legal proceedings..........................................30


      Item 6 - Exhibits...................................................30















<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

To the extent that the  information  presented in this Quarterly  Report on Form
10-QSB for the quarter  ended March 31, 2005  discusses  financial  projections,
information or  expectations  about our products or markets,  or otherwise makes
statements  about future events,  such  statements are  forward-looking.  We are
making  these  forward-looking   statements  in  reliance  on  the  safe  harbor
provisions of the Private Securities  Litigation Reform Act of 1995. Although we
believe that the expectations reflected in these forward-looking  statements are
based on reasonable  assumptions,  there are a number of risks and uncertainties
that could cause actual results to differ  materially from such  forward-looking
statements.  These risks and uncertainties are described,  among other places in
this  Quarterly  Report,  in  "Management's  Discussion  and Analysis or Plan of
Operation."

In  addition,   we  disclaim  any  obligations  to  update  any  forward-looking
statements to reflect events or  circumstances  after the date of this Quarterly
Report.  When considering such  forward-looking  statements,  you should keep in
mind the risks  referenced  above and the other  cautionary  statements  in this
Quarterly Report.






























                                       2

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 March 31, 2005
                                   (Unaudited)


                                     ASSETS
Current Assets:
  Cash                                                          $       330,642
  Accounts receivable, net of an allowance for
  doubtful accounts of $ 1,978,805                                    3,539,755
  Inventories                                                         4,135,013
  Prepaid expenses and other current assets                             884,642
                                                                ----------------

     Total current assets                                             8,890,052

Property and equipment, net of accumulated depreciation
of $3,588,007                                                         1,686,081
Goodwill                                                              1,077,123
Investment in SCI Lucas                                                 533,430
Other assets                                                            337,952
                                                                ----------------

     Total assets                                               $    12,524,638
                                                                ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Lines of credit                                              $       930,544
  Accounts payable and accrued expenses                               4,705,738
  Current portion of long term debt                                     130,326
  Due to related parties                                                 36,442
  Provision for products replacement                                    423,145
                                                                ----------------

     Total current liabilities                                        6,226,195

Convertible debentures and related accrued interest
payable, net of discount of $2,080,758                                2,028,724
Long term debt, net of current portion                                  356,405
                                                                ----------------
     Total liabilities                                                8,611,324
                                                                ----------------
Minority interest                                                       871,613
                                                                ----------------

Stockholders' Equity:
  Common stock; $.001 par value, 50,000,000 shares
   authorized, 40,160,299 issued and 17,410,299 outstanding              17,410
  Additional paid in capital                                          5,686,193
  Subscriptions receivable                                             (11,977)
  Accumulated other comprehensive income (foreign currency
  translation adjustment)                                             1,698,274
  Accumulated deficit                                                (4,348,199)
                                                                ----------------

     Total stockholders' equity                                       3,041,701
                                                                ----------------

     Total liabilities and stockholders' equity                 $    12,524,638
                                                                ================




            See Notes to Unaudited Consolidated Financial Statements.

                                       3

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                             For the Three-Month Periods              For the Nine-Month Periods
                                                  Ended March 31,                           Ended March 31,
                                           ------------------------------           -----------------------------
                                               2005            2004                     2005            2004
                                           -------------   --------------           --------------  -------------
<S>                                        <C>             <C>                      <C>             <C>
Revenues                                   $  3,484,834    $   1,992,002            $   9,442,575   $  8,288,318

Cost of revenues                                923,979          933,817                3,797,752      4,698,316
                                           -------------   --------------           --------------  -------------

     Gross profit                             2,560,855        1,058,185                5,644,823      3,590,002
                                           -------------   --------------           --------------  -------------

Operating expenses:
  Selling, general and administrative         1,503,344        1,531,489                3,575,966      4,482,262
  Write-down of inventories                           -          426,537                        -        426,537
  Research and development                      284,905          306,992                  813,115      1,042,479
                                           -------------   --------------           --------------  -------------

     Total operating expenses                 1,788,249        2,265,018                4,389,081      5,951,278
                                           -------------   --------------           --------------  -------------

Income (loss) before other expenses and
     income taxes                               772,606       (1,206,833)               1,255,742     (2,361,276)
                                           -------------   --------------           --------------  -------------

Other expenses:
  Other income (expense)                          8,147         (106,525)                       -       (108,478)
  Gain (loss) in equity investment               22,446                -                   53,067              -
  Interest expense                             (198,510)         (96,943)                (513,570)      (188,934)
                                           -------------   --------------           --------------  -------------

     Total other expenses                      (167,917)        (203,468)                (460,503)      (297,412)
                                           -------------   --------------           --------------  -------------

Income (loss) before (provision for)
benefit from income taxes                       604,689       (1,410,301)                 795,239     (2,658,688)

 (Provision for) benefit from income taxes            -         (945,856)                       -       (574,082)
                                           -------------   --------------           --------------  -------------

Net income (loss) before minority interest      604,689       (2,356,157)                 795,239     (3,232,770)

Minority interest                               (51,515)         (63,400)                 (61,449)       (63,400)
                                           -------------   --------------           --------------  -------------

Net income (loss)                               553,174       (2,419,557)                 733,790     (3,296,170)

Other comprehensive income, net of taxes
  Foreign currency translation adjustment      (183,376)         213,981                  279,826        119,103
                                           -------------   --------------           --------------  -------------

     Comprehensive income (loss)           $    369,798    $  (2,205,576)           $   1,013,616   $ (3,177,067)
                                           =============   ==============           ==============  =============

Basic and diluted net income (loss) per
common share                                     $ 0.03          $ (0.14)                  $ 0.04        $ (0.20)
                                           =============   ==============           ==============  =============

Basic and diluted weighted average common
shares outstanding                           17,410,299       17,358,937               17,410,299     16,835,632
                                           =============   ==============           ==============  =============
</TABLE>



       See Notes to Unaudited Consolidated Financial Statements.

                                       4

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                For the Nine-Month Periods
                                                      Ended March, 31
                                                ---------------------------
                                                   2005           2004
                                                ------------  -------------
Cash flows from operating activities:
Net income (loss)                                 $ 733,790   $ (3,296,170)
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating
activities:
   Interest expense related to debenture discount   329,368         71,650
   Depreciation and amortization                    158,796        438,929
   Stock-based compensation                               -        218,750
   Provision for doubtful accounts                 (166,940)     1,057,759
   Provision for obsolete inventories                     -        426,537
   Deferred income tax                                    -        574,082
   Loss on disposition of property and equipment        989              -
   Gain on equity investment                        (53,067)             -
   Minority interest                                 61,449         63,400
Change in operating assets and liabilities:
   Accounts receivable                              569,222     (1,763,672)
   Inventories                                   (1,090,577)      (251,769)
   Prepaid expenses and other current assets         15,817         (6,674)
   Accrued interest on convertible debentures        89,875              -
   Provision for products replacement                     -        340,619
   Accounts payable and accrued expenses           (201,948)       388,799
                                                ------------  -------------

Net cash (used in) provided by operating
activities                                          446,774     (1,737,760)
                                                ------------  -------------

Cash flows from investing activities:
   Proceeds from disposition of property
   and equipment                                     51,520              -
   Purchases of property and equipment             (368,144)      (213,057)
                                                ------------  -------------

Net cash used in investing activities              (316,624)      (213,057)
                                                ------------  -------------

Cash flows from financing activities:
   (Decrease) increase in lines of credit           (58,253)       (81,615)
   Proceeds from long term debt                      35,782              -
   Repayment of long term debt                     (194,983)      (216,808)
   Proceeds from issuance of convertible
   debentures                                             -      1,000,000
   Proceeds from subscriptions receivable             2,541              -
   Proceeds from issuance of common stock                 -      1,497,342
   Increase (decrease) in due to related parties    174,604        453,947
                                                ------------  -------------

Net cash (used in) provided by financing
activities                                          (40,309)     2,652,866
                                                ------------  -------------

Effect of exchange rate changes on cash              72,053        100,933
                                                ------------  -------------

Increase in cash                                    161,894        802,982

Cash, beginning of period                           168,748        107,064
                                                ------------  -------------

Cash, end of period                             $   330,642   $    910,046
                                                ============  =============

Supplemental disclosures of cash flow
information:
     Cash paid during the year for interest     $    73,832   $    113,534
                                                ============  =============

     Cash paid during the year for taxes        $         -   $          -
                                                ============  =============

Non-Cash Investing and Financing Activities:

Conversion of due to shareholder in investment
in subsidiary                                   $   610,886   $          -
                                                ============  =============


        See Notes to Unaudited Consolidated Financial Statements.


                                       5

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 1 - NATURE OF BUSINESS

Heritage  Worldwide,  Inc.  (the  "Company")  was  incorporated  in the State of
Delaware in 2001. The Company and its  subsidiaries  develop,  manufacture,  and
market breast and other body implants and body support products  worldwide.  The
Company  maintains  its  production  facility  and  headquarters  in the  Toulon
metropolitan  area in Southern  France.  It also has a distribution  facility in
Spain.

NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions  to Form 10-QSB.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted accounting principles for complete financial statements. In the opinion
of  management,  all  adjustments  (consisting  of  normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the nine months ended March 31, 2005 are not necessarily  indicative
of the results  that may be expected  for the fiscal year ending June 30,  2005.
For further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2004.

The accompanying unaudited consolidated financial statements present the results
of  operations  of  the  Company's  French  and  Spanish  subsidiaries  for  the
nine-month  period ended March 31, 2005 and 2004,  respectively and OS MXM, Inc.
("OS") from July 1, 2004 through  March 31, 2005.  The results of  operations of
Heritage Worldwide,  Inc. are reflected in the accompanying financial statements
for the period  from  March 1, 2003,  the date of the  reverse  merger  with its
French and Spanish  subsidiaries  through  March 31,  2005.  The Stock  Purchase
Agreement  has been  accounted for as a reverse  acquisition  under the purchase
method  for  business  acquisitions.  Accordingly,  the  combination  of the two
companies is recorded as a recapitalization of Heritage,  pursuant to which Poly
Implant Protheses is treated as the continuing entity. All material intercompany
accounts and  transactions  between the Company and its  subsidiaries  have been
eliminated in consolidation.

The  accompanying  consolidated  financial  statements  include  the  results of
operations of SCI Lucas,  a real estate  holding  company,  in which the Company
holds an interest of approximately  38%. SCI Lucas owns the production  facility
and headquarters in which the Company  operates in Southern France.  The results
of  operations  of SCI  Lucas are  accounted  for  using  the  equity  method of
accounting.  All material  intercompany  accounts and  transactions  between the
Company and SCI Lucas have been eliminated.

                                       6

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

In preparing  financial  statements in  conformity  with  accounting  principals
generally  accepted in the United  States of America,  management is required to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  and revenues and  expenses  during the  reporting
period.  Actual results will differ from those estimates.  Significant estimates
during the periods  include the  allowance  for doubtful  accounts,  reserve for
obsolete inventory,  the useful life of property,  plant and equipment,  and the
accrual of product replacement and liability reserve.

Accounts receivable

Accounts  receivable  are  reported  at net  realizable  value.  The Company has
established an allowance for doubtful accounts based upon factors  pertaining to
the credit risk of specific customers, historical trends, and other information.
Delinquent  accounts are written-off  when it is determined that the amounts are
uncollectible.

Revenue recognition

The Company  recognizes  product  revenue,  net of estimated sales discounts and
returns and allowances,  in accordance with Staff  Accounting  Bulletin No. 104,
"Revenue  Recognition  in  Financial   Statements"  and  SFAS  No.  48  "Revenue
Recognition  When Right of Return  Exists." These  statements  established  that
revenue can be recognized when persuasive evidence of an arrangement exists, the
product has been shipped,  all  significant  contractual  obligations  have been
satisfied,  the fee is  fixed  or  determinable  and  collection  is  reasonably
assured.

Stock options

The Company  accounts for stock options  issued to employees in accordance  with
the  provisions  of  Accounting   Principles   Board  ("APB")  Opinion  No.  25,
"Accounting  for Stock Issued to  Employees,"  and related  interpretations.  As
such,  compensation  cost is  measured on the date of grant as the excess of the
current  market  price of the  underlying  stock over the exercise  price.  Such
compensation  amounts, if any, are amortized over the respective vesting periods
of the option grant. We adopted the disclosure provisions of SFAS No. 123,


                                       7

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2004
                                   (Unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

"Accounting  for  Stock-Based   Compensation"  and  SFAS  148,  "Accounting  for
Stock-Based Compensation -Transition and Disclosure",  which permits entities to
provide  pro forma net  income  (loss) and pro forma  earnings  (loss) per share
disclosures for employee stock option grants as if the fair-valued  based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to  non-employees  for goods or services in accordance with the
fair value method of SFAS 123.

Foreign currency translation

For  foreign  operations  with the local  currency as the  functional  currency,
assets  and  liabilities  are  translated  from the local  currencies  into U.S.
dollars at the exchange rate  prevailing  at the balance  sheet date.  Revenues,
expenses  and cash flows are  translated  at the average  exchange  rate for the
period to approximate  translation at the exchange rate  prevailing at the dates
those  elements  are  recognized  in  the  financial   statements.   Translation
adjustments  resulting  from the  process  of  translating  the  local  currency
financial statements into U.S. dollars are included in determining comprehensive
loss.  As of March 31, 2005,  the exchange  rate for the Euros (EUR) was $1.30US
for 1.00 EUR.

The  functional  currency  of the  Company's  French  subsidiaries  is the local
currency.  The financial  statements of the  subsidiary are translated to United
States dollars using  period-end  rates of exchange for assets and  liabilities,
and the  average  rate of  exchange  for the period  for  revenues,  costs,  and
expenses.  Net gains and losses resulting from foreign exchange transactions are
included in the consolidated statements of operations.

Inventories

Inventories  are stated at the lower of cost or market,  cost  determined by the
first-in,  first-out  (FIFO)  method.  The Company writes down its inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory  and the  estimated  market  value based upon  assumptions
about future demand and market conditions.

New accounting pronouncements

In November 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
151 "Inventory Costs". This Statement amends the guidance in ARB No. 43, Chapter
4, "Inventory  Pricing,  to clarify the accounting for abnormal  amounts of idle
facility expense,  freight,  handling costs, and wasted material (spoilage).  In
addition,  this Statement requires that allocation of fixed production  overhead
to the costs of  conversion  be based on the normal  capacity of the  production
facilities.  The  provisions of this Statement will be effective for the Company
beginning with its fiscal 2006.  The Company is currently  evaluating the impact
this new Standard  will have on its  operations,  but believes  that it will not
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations or cash flows.

                                       8

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In December 2004, the FASB issued SFAS 153 "Exchanges of Nonmonetary Assets - an
amendment  of APB  Opinion  No. 29.  This  Statement  amended  APB Opinion 29 to
eliminate the exception for non-monetary  exchanges of similar productive assets
and replaces it with a general  exception for exchanges of  non-monetary  assets
that do not have commercial  substance.  A non-monetary  exchange has commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.  The adoption of this Standard is not
expected  to have any  material  impact  on the  Company's  financial  position,
results of operations or cash flows.

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This  Statement   requires  that  the  cost   resulting  from  all   share-based
transactions be recorded in the financial statements.  The Statement establishes
fair value as the measurement  objective in accounting for  share-based  payment
arrangements and requires all entities to apply a  fair-value-based  measurement
in accounting for share-based payment transactions with employees. The Statement
also  establishes  fair value as the measurement  objective for  transactions in
which an entity  acquires  goods or services from  non-employees  in share-based
payment   transactions.   The  Statement   replaces  SFAS  123  "Accounting  for
Stock-Based  Compensation"  and supersedes  APB Opinion No. 25  "Accounting  for
Stock Issued to  Employees".  The provisions of this Statement will be effective
for the  Company  beginning  with its fiscal  2007.  The  Company  is  currently
evaluating  the impact this new Standard  will have on its  financial  position,
results of operations or cash flows.

Product Replacement Program

The Company provides a product replacement program on its products.  The Company
provides an accrual for the estimated  cost of product  replacement  and product
liability  claims at the time revenue is recognized.  Such accruals are based on
estimates,  which are based on relevant  factors such as historical  experience,
the replacement period,  estimated replacement costs, identified product quality
issues and are discounted to a current value. Management estimated the amount of
potential  future  product  replacement  claims based on  statistical  analysis.
Changes to actual claims and interest rates could have a material  impact on the
statistical  calculation  which could materially  impact the Company's  reported
expenses and results of operations.

NOTE 4 - CONVERTIBLE DEBENTURES

On October 9, 2003, OS entered into a convertible  debentures purchase agreement
(the "Agreement")  with HEM Mutual Assurance,  LLC ("HEM") to sell $1,000,000 of
1% convertible debentures due on October 9, 2008. Interest accrues from the date
of the  transaction and is payable in cash or common stock, at the option of the
debenture holder. In the event of default, as defined in the Agreement, interest
shall accrue at 15% per annum. The conversion price for one convertible

                                       9

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 4 - CONVERTIBLE DEBENTURES (continued)

debenture  amounting to $498,750 shall be the lesser of (a) $1.25 or (b) 100% of
the average  three lowest  closing bid prices during the last forty trading days
immediately  preceding the conversion.  The conversion price for one convertible
debenture  amounting to $500,000 shall be the lesser of (a) $1.56 or (b) 100% of
the average  three lowest  closing bid prices during the last forty trading days
immediately  preceding the conversion.  The conversion price for one convertible
debenture  amounting  to  $1,250  is  $0.001.  As part of the  Agreement,  OS is
required to maintain a common stock escrow account with 10,000,000 unrestricted,
free-trading  shares of common stock. As part of the Company's merger with OS on
October 9, 2003, the Company assumed all the obligations and responsibilities of
the Agreement. In return for issuing the debentures to HEM, the Company received
$500,000 in December 2003 and the remaining $500,000 on January 9, 2004.

The convertible  debentures  contain an imbedded  beneficial  conversion feature
since the fair market  value of the common  stock  exceeds  the most  beneficial
exercise  price on the  debenture  issuance  date.  The  value was  computed  as
$1,000,000,  which will be amortized over the respective term of the debentures.
For the nine-month  period ended March 31, 2005,  approximately  $330,000 of the
recorded debt discount has been amortized to interest expense.

The Company  received  several  conversion  notices  from HEM in  September  and
October 2004 totaling  approximately  $16,000 of the  outstanding  principal and
accrued interest under two of the debentures for 1,019,404  unrestricted,  free-
trading shares of common stock held in escrow by Gottbetter & Partners, LLP, the
escrow  agent for the  transaction.  The Company has  objected to the release of
unrestricted,  free-trading  shares from escrow on the grounds  that  several of
HEM's  conversion  notices did not comply with the terms of the  debentures  and
that the  transactions  whereby OS issued the  debentures to HEM and the Company
merged with OS on the same day did not comply with the  requirements of Rule 504
of Regulation D promulgated  under the Securities Act of 1933 ( the  "Securities
Act").  Consequently,  the  Company  advised  HEM and the  escrow  agent that it
believes that the issuance of unrestricted,  free-trading shares to HEM would be
a  violation  of,  among  other  things,  the  registration  provisions  of  the
Securities Act.

Notwithstanding  the Company's  objections to the conversion notices of HEM, the
Company was advised on  November  4, 2004 by legal  counsel to the escrow  agent
that the escrow agent will release  50,526 shares held in escrow to HEM pursuant
to HEM's  conversion  notice  dated  October  27,  2004  relating  to $15,000 of
principal  and  accrued  interest  of one of the  debentures.  The  Company  has
requested  legal counsel for the escrow agent to notify the Company  whether the
escrow agent has released any shares from escrow to HEM. However,  legal counsel
for the escrow  agent has not  provided  the Company  with any  response to such
request.  In addition to acting as escrow agent,  Gottbetter  and Partners,  LLP
represented  HEM in the acquisition of the debentures from OS and the Company in
its merger with OS.

                                       10

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 4 - CONVERTIBLE DEBENTURES (continued)

In January 2005, the Company and Eurofortune  S.A.("Eurofortune"),  an affiliate
of the Company's chief executive  officer,  reached a verbal  understanding with
HEM,  whereby  Eurofortune  would purchase for $1,048,897,  the three debentures
issued to HEM on October 9, 2003.  Contemporaneously with Eurofortunes' purchase
of the three  debentures  from HEM, the  debentures  would be exchanged with the
Company  for two  debentures  each  having  an  aggregate  principal  amount  of
$500,000.  The conversion  prices of the debentures  would be fixed at $1.25 and
$1.56.  The shares of the Company's common stock issuable upon conversion of the
debentures  would be  restricted  shares  and  could  only be sold  publicly  in
accordance with Rule 144 under the Securities Act of 1933, unless the shares are
registered with the Securities and Exchange Commission. All other material terms
of  the  new  debentures  will  be the  same  as the  original  debentures.  The
completion of these  transactions  is subject to the  negotiation  of definitive
agreements. Accordingly, there can be no assurance that the transactions will be
completed.

NOTE 5 - PROMISSORY NOTE

Effective March 31, 2004, concurrent with an amended distribution agreement, the
Company issued to a distributor a revolving  promissory note for certain sums to
come due to Medicor based on Medicor's and the manufacturer's  administration of
product  replacement  claims.  The note bears  interest at the rate of 6.75% per
annum.  The  principal  amount  under the note as of March 31,  2005 was $0. The
distributor  claims  that the  Company  owes  approximately  $460,000  under the
promissory  note as well as  approximately  $70,000 in legal costs and interest.
The Company denies that such amounts are due under the promissory  note since it
has not approved yet the sums due for product replacement claims.  However,  the
Company has  provided a provision of  approximately  $520,000 for the payment of
such claims in its accounts payable and accrued expenses as of March 31, 2005.

NOTE 6- STOCK OPTION PLAN

In July 2004, the Board of Directors adopted the Heritage  Worldwide,  Inc. 2004
Stock Option Plan (the "2004 Plan").  The Company  intends to attract and retain
employees and valuable  contractors by allowing them an additional  incentive to
promote the financial success of the Company.

The  2004  Plan  allows  for the  grant  of both  incentive  stock  options  and
nonstatutory stock options.  The 2004 Plan may be administered,  interpreted and
constructed by the Board of Directors or a compensation  committee.  The maximum
number of shares of common stock which may be issued pursuant to options granted
under the 2004 Plan may not exceed  2,000,000  shares.  During  July  2004,  the
Company issued  1,150,000  options with an exercise price of $2.20 per share. No
value was attributed to such shares. Accordingly, there are no reconciling items
between the net income(loss) and the pro forma net income(loss) pursuant to SFAS
123.

                                       11

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 6- STOCK OPTION PLAN (continued)

If any options  granted under the 2004 Plan expire or terminate  without  having
been exercised or ceased to be exercisable, such options will be available again
under the 2004 Plan.  All  employees  of the  Company and its  subsidiaries  are
eligible to receive  incentive  stock options and  nonstatutory  stock  options.
Non-employee  directors and outside  consultants who provided bona-fide services
not in  connection  with the offer or sale of  securities  in a capital  raising
transaction are eligible to receive nonstatutory stock options.  Incentive stock
options may not be granted  below  their fair market  value at the time of grant
or,  if to an  individual  who  beneficially  owns  more  than 10% of the  total
combined  voting power of all stock classes of the Company or a subsidiary,  the
option  price may not be less than 110% of the fair value of the common stock at
the time of grant.  The expiration  date of an incentive stock option may not be
longer  than  ten  years  from  the  date of  grant.  Option  holders,  or their
representatives,  may  exercise  their  vested  options up to three months after
their  employment  termination  or one year after their death or  permanent  and
total  disability.  The 2004 Plan  provides  for  adjustments  upon  changes  in
capitalization.

NOTE 7 - LEGAL CONTINGENCIES

In October 1999, June 2000 and July 2003,  separate but related  complaints were
filed by Saul Kwartin, Ruth Kwartin,  Steven M. Kwartin, Robert Kwartin and Nina
Kwartin  against our  subsidiary  Poly  Implant  Protheses,  S.A.  ("PIP"),  III
Acquisition Corp. d/b/a PIP America,  PIP/USA, Inc., Jean Claude Mas, our former
CEO, personally, and others, in the Circuit Court of Miami-Dade County, Florida.

Initially, two cases were filed: one in October of 1999 by Saul and Ruth Kwartin
and assigned Case No.  99-25227-CA-01  and one in June of 2000 by Steven Kwartin
and  assigned  Case  No.  00-14665-CA-01.  Case  No.  99-25227  was  voluntarily
dismissed by the  Plaintiffs,  who then  unsuccessfully  tried to withdraw their
dismissal.  The Plaintiffs  then appealed.  In May of 2004, the appellate  court
affirmed  the trial  court.  A motion by PIP/USA  and Mr.  Mas to recover  their
attorneys'  fees is pending in the trial court, as is a motion to disqualify the
Plaintiffs' counsel in that lawsuit.  Case No.  00-14665-CA-01 by Steven Kwartin
remains pending.  In June of 2003,  Robert and Nina Kwartin  commenced a lawsuit
assigned Case No. 03-15006.  That lawsuit remains pending. In September of 2003,
Saul and Ruth Kwartin filed  another  lawsuit  assigned Case No.  0322537-CA-27,
alleging similar claims to those included in the dismissed case. Within a day or
two of that lawsuit,  Steven Kwartin filed his second lawsuit  assigned Case No.
03-15006-CA-09,  against  Mr. Mas and Donald  McGhan  only.  Plaintiffs  are all
members  of one family  who  purport to be  shareholders  of  PIP/USA,  Inc.,  a
distributor of PIP, suing  derivatively  on its behalf,  and  individually,  and
seeking to rescind various  transactions between PIPAmerica and PIP, and seeking
to impose liability against PIP and its  co-defendants for unspecified  monetary
damages  arising  out of alleged  tortious  and other  purported  wrongful  acts
concerning  alleged  relationships   between  plaintiffs,   PIP  and  the  other
defendants.

                                       12

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 7 - LEGAL CONTINGENCIES (continued)

In November of 2003,  Jessica  Fischer  Schnebel and fifteen other women filed a
Second Amended  Consolidated  Class Action Complaint against PIP, PIP/USA,  Inc.
and III Acquisition Corp. d/b/a PIP America in the Circuit Court of Cook County,
Illinois. The Second Amended Consolidated Class Action Complaint contains counts
alleging product liability,  breach of the implied warranties of merchantability
and fitness for a particular  purpose,  violation of the Illinois Consumer Fraud
Act and a contract claim alleging  third-party  beneficiary status.  Unspecified
monetary  damages,  exemplary damages and attorneys fees and costs are sought. A
motion  seeking to  dismiss  filed by PIP  .America  remains  pending.  Our U.S.
distributor has tendered this case to PIP, for defense and indemnity pursuant to
the distributor agreement.

Salinas I. Landers, et al. v. Poly Implants Protheses, S.A., et al., Case No. CV
030377 was filed in June 2003 in the Superior  Court of San Luis Obispo  County,
California.  Plaintiffs  purport to sue on behalf of  themselves  and an alleged
class of persons allegedly  similarly situated for unspecific  monetary damages,
exemplary  damages,  attorneys' fees and costs and injunctive relief for alleged
breach of express warranty and alleged  violations of California's  Song-Beverly
Consumer Warranty Act and Unfair  Competition Law. This action was settled and a
dismissal of the action by the court is expected shortly.

Marsha Dicken, et al. v. PIP/USA,  Inc., et al., Case No. 2003-05588,  was filed
in  January  2003 in the  District  Court of Harris  County,  Texas.  Plaintiffs
purported  to sue on  behalf  of  themselves  and an  alleged  class of  persons
allegedly  similarly  situated for alleged strict  liability,  breach of express
warranty,  breach  of  implied  warranties,  violation  of  Section  402B of the
Restatement (Second) of Torts, negligence,  misrepresentations, and violation of
Texas'  Deceptive  Trade  Practices  Act  with  respect  to  implant   products.
Plaintiffs  seek  an  unspecified  amount  in  alleged   compensatory   damages,
additional  statutory  damages,   interest,   attorneys'  fees  and  costs.  The
Plaintiffs have since given up the class action allegations of the petition. The
lawsuit is in the discovery phase. Our distributor, PIP America, has settled the
lawsuit againt it.  PIP.America  had,  prior to settling,  tendered this case to
Poly Implant Prostheses, S.A., for defense and indemnity.

PIP and PIP America were sued by Alice Holt in the Circuit Court of Lake County,
Illinois in May of 2003 for alleged product  liability and other related claims.
PIP denied any  liability  to the  Plaintiff  and  answered  the  Complaint  and
asserted affirmative defenses.  This lawsuit has been settled and a dismissal by
the  Court is  expected  shortly.  Heritage  Worldwide,  Inc.  and PIP and other
defendants  were sued by Madeline  Sanchez in New York Supreme  Court in July of
2004 for alleged  product  liability  and other  related  claims.  Both Heritage
Worldwide,  Inc. and PIP deny any  liability to the  Plaintiff and have answered
the Complaint and asserted affirmative defenses. Discovery is ongoing.

PIP and PIP America were sued by a Susan Largent in the United  States  District
Court for the  District  of New  Mexico in  August of 2004 for  alleged  product
liability and other related claims. PIP denies any liability to the Plaintiff

                                       13

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

NOTE 7 - LEGAL CONTINGENCIES (continued)

and has answered the Complaint and asserted affirmative defenses.

Though  it is not yet  possible  to  predict  the  outcome  of any of the  cases
described above, the Company and its  subsidiaries,  as applicable,  have denied
plaintiffs'  allegations and are vigorously defending themselves upon the merits
of each  lawsuit and against  certification  of any class.  All three  purported
class action cases above include two distinctly  different types of claims.  The
first of these arise from  products  sold by PIP/USA,  Inc.  This  company  sold
implants  manufactured  by Poly Implants  Protheses,  S.A. prior to PIPAmerica's
entry into the U.S.  market,  which occurred in late 1999. The next claims arise
from products sold by and distributed by PIPAmerica  with a product  replacement
program  in  place.  With  respect  to  claims  arising  from  products  sold by
PIPAmerica,  PIPAmerica is  administering  and fulfilling its obligations to its
customers  in the  ordinary  course  of  business,  and for  which it has  taken
appropriate reserves.

Other  than  certain  of  its  own  product   replacement   claims  that  it  is
administering,  PIP.America  is  indemnified  by PIP/USA,  Inc.,  Poly  Implants
Protheses,  S.A., and Jean Claude Mas,  personally,  from all claims,  including
those asserted above.  As a result,  the Company  believes the costs  associated
with these  matters  will not have a material  adverse  impact on the  Company's
business,  results of operations or financial position. The Company has recorded
a provision of approximately $520,000 at March 31, 2005 in connection with these
matters.

The Company and its subsidiaries  have been and will continue to be periodically
named as a  defendant  in other  lawsuits  in the  normal  course  of  business,
including  product  liability  and  product  replacement   claims.   Litigation,
particularly  product liability  litigation,  can be expensive and disruptive to
normal business  operations and the results of complex legal  proceedings can be
very difficult to predict.  Claims against the Company or its subsidiaries  have
been and are  periodically  reviewed  with  counsel  in the  ordinary  course of
business. The Company presently believes it or its subsidiaries have meritorious
defenses in all  lawsuits in which the  Company or any of its  subsidiaries  are
defendants,   subject  to  the  subsidiaries'   continuing  product  replacement
obligations,  which the subsidiaries intend to continue to satisfy.  While it is
not possible to predict the outcome of these matters,  we believe that the costs
associated  with them will not have a material  adverse  impact on the Company's
business, results of operations or financial position.

NOTE 8 - GOING CONCERN CONSIDERATIONS

As reflected in the accompanying consolidated financial statements,  the Company
has an  accumulated  deficit of  approximately  $4.3million.  The ability of the
Company to continue as a going  concern is  dependent  on  achieving  profitable
operations, its ability to generate positive cash flows from operations, and the
obtaining of additional equity and/or debt financing to pay off outstanding debt
obligations.  There  can be no  assurance  that the  Company's  efforts  will be
successful. The consolidated financial statements do not include any adjustments

                                       14

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2004
                                   (Unaudited)

NOTE 8 - GOING CONCERN CONSIDERATIONS (continued)

that might be necessary if the Company is unable to continue as a going concern.
No estimate has been made should management's plan be unsuccessful.

NOTE 9 - LINES OF CREDIT

The  Company  entered  into  lines  of  credit  agreements  with  two  financial
institutions up to the aggregate amount of approximately $1,400,000. The Company
has used  approximately  $930,000  under such lines of credit at March 31, 2005.
The lines of credit  bear  interest  at the  EURIBOR  rate plus  0.50% per annum
(2.859% at March 31, 2005). The outstanding  principal balance plus any interest
is payable on demand and is secured by  accounts  receivables  of  approximately
$650,000, inventories of approximately $1.2 million, and a personal guarantee of
the Company's Chief Executive Officer of approximately $250,000.

NOTE 10- DUE TO SHAREHOLDERS

One of the Company's shareholder advanced  approximately $160,000 to the Company
during  the  nine-month  period  ended  March 31,  2005.  This  shareholder  had
previously advanced to the Company approximately $610,000 prior to July 1, 2004.
The  shareholder  contributed  these  advances of  approximately  $770,000 as an
infusion of capital in one of the Company's  subsidiaries  during the nine-month
period ended March 31, 2005. This capital  infusion is accounted for as minority
interest in the accompanying  balance sheet. The remaining  amounts due at March
31, 2005  consists of  operating  expenses  paid on behalf of the Company by the
shareholders.

NOTE 11- SEGMENT AND GEOGRAPHIC INFORMATION

The Company  operates in one single  market,  breast  implants  and analyzes its
revenues  derived  from two  geographic  locations:  France  and the rest of the
world.  The Company did not have  revenues from the U.S.  during the  nine-month
period ended March 31, 2005 and 2004.  Information  about the Company's sales in
different  geographic  locations for the nine-month  period ended March 31, 2005
and 2004 is shown below pursuant to the provisions of SFAS No. 131, "Disclosures
about segments of an Enterprise and Related Information."

                                        Nine-month periods ended March 31,
                                             2005               2004
                                             ----               ----
France                                  $  2,033,821        $ 2,547,085
Outside of France                          7,408,754          5,741,233
                                        -------------       ------------
                                        $  9,442,575        $ 8,288,318
                                        =============       ============

Substantially  all of the  identifiable  operating assets and liabilities of the
Company are within France.

                                       15

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION OVERVIEW

We ceased making sales in the U.S. market in May 2000, as a result of changes in
FDA  regulations.  At that time, the U.S. market  represented  approximately  $4
million,  or 40% of our revenues.  We are continuing our efforts to re-enter the
U.S.  by  conducting  extensive  clinical  trials,  which is a  prerequisite  to
securing FDA approval.

We are also in the process of developing new products.  We have introduced a new
product  line of breast  implants  which is based on titanium  coating.  We will
continue to invest in research and  development to enhance and introduce new and
existing  products.  To meet these  operational  costs,  we depend  upon  equity
financings, collaborations, and proceeds from short and long term debt.

This  discussion  and  analysis  of our  financial  condition  should be read in
connection with our consolidated  financial  statements and  accompanying  notes
thereto in the Company's  Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2004,  including without limitation the information set forth under the
heading "Critical Accounting Policies and Estimates".

RESULTS OF OPERATIONS

                      CONSOLIDATED STATEMENTS OF OPERATIONS

[Insert table]

Nine Months Ended March 31, 2005 Compared with Nine Months Ended March 31, 2004

                                    Revenues

Revenues consist primarily of the sale of breast implants and other body support
products.  The increase in revenues during the nine-month period ended March 31,
2005  when  compared  to the prior  year  period is  primarily  attributable  to
increased  volume of breast implants sold to customers  outside of France.  This
increase  is  due to  succesful  marketing  efforts  lead  in  2005  by  certain
distributors  in Latin America and the United Kingdom when compared to the prior
year period.

                                Cost of Revenues

Cost of revenues  consists  primarily  of materials  and direct  labor  expenses
associated  with the  production  of breast  implants.  Costs of revenues,  as a
percentage of revenues,  decreased during the nine-month  period ended March 31,
2005 by 16% to 40%, when compared to the prior year period. The decrease of cost
of  revenues  as  a  percentage   of  revenues  is  primarily  due  to  improved
productivity from direct labor.

                                       16

<PAGE>

                                  Gross Profit

Gross  profit  increased  during the  nine-month  period ended March 31, 2005 by
approximately  $2.1 million when compared to the prior year period. The increase
is primarily  attributable to higher revenues resulting from succesful marketing
efforts lead by certain  distributors in Latin America and the United Kingdom as
well as lower cost of revenues  resulting from higher  productivity  from direct
labor.

                   Selling and General Administrative Expenses

Selling,  general and administrative  expenses consist primarily of compensation
and related benefits of sales  representatives which market our products as well
as general and administrative  staff used to support our operations,  as well as
facilities-related  expenses and  professional  fees.  The selling,  general and
administrative  expenses  during the  nine-month  period  ended  March 31,  2005
decreased when compared to the prior year period.  The decrease is primarily due
to higher provisions for doubtful accounts recorded during the nine-month period
ended March 31, 2004 of approximately  $1.1 related to increased exposure by the
Company,  at the time, to  distributors  located  outside of France with riskier
financial conditions.

                            Write-down of inventories

Write-down  of  inventories  consist of periodic  write-downs  we provide for an
allowance for obsolete inventories items during interim periods. The decrease in
write-down of inventories during the nine-month period ended March 31, 2005 when
compared to the prior period is primarily  due to a  significant  write-down  of
inventories  during the  nine-month  period  ended March 31,  2004 for  obsolete
items.  No such  write-downs  were recorded  during the nine-month  period ended
March 31, 2005.

                            Research and Development

Research and development  expenses primarily consist of compensation and related
benefits of  personnel  associated  with the  development  and  introduction  of
existing and future  product  lines.  The  decrease in research and  development
expenses during the nine-month  period ended March 31, 2005 when compared to the
prior year period is primarily due to research and developments costs associated
with the  Company's  efforts in entering the  Australian  market which  occurred
during  the  nine-month  period  ended  March  31,  2004 and were  substantially
completed during fiscal 2004.

                                Interest Expense

Interest expense consists primarily of amortization of debt discount  associated
with the issuance of convertible debentures and interest expense associated with
our lines of credit and other long-term  debt. The increase in interest  expense
during the  nine-month  period  ended March 31, 2005 when  compared to the prior
year period is primarily due to the  amortization  of debt  discount  associated
with the  issuance of  convertible  debentures  issued in October 2003 and April
2004.

                                       17

<PAGE>

                            Provision for Income Tax

The provision for income tax consists of a valuation  allowance for deferred tax
assets.  We have not recognized income tax benefits during the nine-month period
ended March 31, 2005 and will continue to provide for valuation  allowances  for
our deferred tax assets until we believe that it is more likely than not that we
will realize such benefits.

Liquidity and Capital Resources

During the nine-month  period ended March 31, 2005, we have generated cash flows
from operating activities of approximately $520,000, most of which resulted from
our net income adjusted for  amortization of debt discount of $1.1 million.  Our
accounts  receivables and accounts payable  decreased by approximately  $570,000
and $130,000,  respectively,  while our  inventories  and provision for doubtful
accounts  increased by  approximately  $1.1 million and $170,000,  respectively.
Additionally,  we have incurred  approximately $370,000 in capital expenditures.
We have also increased our working capital by receiving  approximately  $170,000
from Milo Finance SA, one of our  shareholders,  and have received proceeds from
the  issuance of  long-term  debt of  approximately  $35,000.  We have also made
repayments  on the  principal  of our  long-term  debt  and line of  credits  of
approximately $255,000.

During  the  nine-month  period  ended  March 31,  2004,  we used  approximately
$1.7million  in our  operating  activities,  mostly  from  incurring  a loss  of
approximately  $3.3  million.  Our accounts  receivable,  provision for doubtful
accounts, inventories,  provision for obsolete inventories, and accounts payable
increased by approximately $1.7 million, $1.1 million,  $250,000,  $425,000, and
$390,000,  respectively.  We had incurred capital  expenditures of approximately
$210,000.  Our operating and investing activities were funded by the issuance of
shares of  common  stock  and  convertible  debentures  generating  proceeds  of
approximately  $1.5 million and $1.0  million,  respectively.  We have used such
proceeds  to make  repayments  on our  long-term  debt and  lines of  credit  of
approximately $210,000 and $80,000, respectively.

Going Concern

As reflected in the accompanying  consolidated  financial statements as of March
31, 2005, we had an  accumulated  deficit of  approximately  $4.3  million.  Our
ability to continue as a going  concern is  dependent  on our ability to achieve
profitable  operations,  positive  cash flows from  operations,  and  additional
equity and/or debt financing to pay off outstanding  debt obligations and unpaid
payroll taxes.  We have reduced the number of employees in our French  operation
during fiscal 2004. We have  significantly  increased our revenues during fiscal
2005.  Additionally,  the  Company is  considering  completing  other  financing
transactions  in the  future,  depending  on its  needs and  market  conditions.
Furthermore,  the Company intends to resume its U.S.  marketing  operations upon
approval from the FDA.

New Accounting Pronouncements

In November 2004, the Financial  Accounting  Standards  Board (FASB) issued SFAS
151 "Inventory Costs". This Statement amends the guidance in ARB No. 43, Chapter
4, "Inventory  Pricing,  to clarify the accounting for abnormal  amounts of idle
facility expense,  freight,  handling costs, and wasted material (spoilage).  In
addition,  this Statement requires that allocation of fixed production  overhead
to the costs of  conversion  be based on the normal  capacity of the  production

                                       18

<PAGE>

facilities.  The  provisions of this Statement will be effective for the Company
beginning with its fiscal 2006.  The Company is currently  evaluating the impact
this new Standard  will have on its  operations,  but believes  that it will not
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations or cash flows.

In December 2004, the FASB issued SFAS 153 "Exchanges of Nonmonetary Assets - an
amendment  of APB  Opinion  No. 29.  This  Statement  amended  APB Opinion 29 to
eliminate the exception for non-monetary  exchanges of similar productive assets
and replaces it with a general  exception for exchanges of  non-monetary  assets
that do not have commercial  substance.  A non-monetary  exchange has commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.  The adoption of this Standard is not
expected  to have any  material  impact  on the  Company's  financial  position,
results of operations or cash flows.

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This  Statement   requires  that  the  cost   resulting  from  all   share-based
transactions be recorded in the financial statements.  The Statement establishes
fair value as the measurement  objective in accounting for  share-based  payment
arrangements and requires all entities to apply a  fair-value-based  measurement
in accounting for share-based payment transactions with employees. The Statement
also  establishes  fair value as the measurement  objective for  transactions in
which an entity  acquires  goods or services from  non-employees  in share-based
payment   transactions.   The  Statement   replaces  SFAS  123  "Accounting  for
Stock-Based  Compensation"  and supersedes  APB Opinion No. 25  "Accounting  for
Stock Issued to  Employees".  The provisions of this Statement will be effective
for the  Company  beginning  with its fiscal  2007.  The  Company  is  currently
evaluating  the impact this new Standard  will have on its  financial  position,
results of operations or cash flows.

Certain Risk Factors  Which May Impact Our Business,  Results of Operations  and
Financial Condition

IF WE ARE  UNABLE TO AVOID  SIGNIFICANT  PRODUCT  LIABILITY  CLAIMS  OR  PRODUCT
RECALLS,  WE MAY BE FORCED TO PAY  SUBSTANTIAL  DAMAGE AWARDS AND OTHER EXPENSES
THAT COULD EXCEED OUR ACCRUALS AND INSURANCE COVERAGE.

We conduct  our  product  development,  manufacturing,  marketing,  service  and
support activities with careful regard for the consequences to patients. As with
any  body  support  manufacturer,  however,  we are  often  exposed  to  product
liability claims and product  recalls,  some of which may have a negative impact
on our business. To incur the substantial costs and expenses as a result of such
claims and  recalls,  we maintain  product  liability  insurance  policies  that
collectively  carry a policy limit of $1 million  worldwide except in the United
States and Canada and reserves  that  amounted to $540,000 at December 31, 2004.
At present,  we have no third-party  liability  insurance in the U.S. and Canada
and no risk-shifting  liability insurance to protect us from the costs of claims
for damages due to the use or recall of our products under certain circumstances
and for specific  amounts.  If a product liability claim or class action suit is
brought against us for uninsured liabilities in excess of our insurance coverage
and  reserves,   our  business  will  likely   suffer.   Other  breast   implant

                                       19

<PAGE>

manufacturers  that  suffered  such claims in the past have been forced to cease
operations  or even to declare  bankruptcy.  In  addition  to product  liability
claims, we may in the future need to recall or issue field  corrections  related
to our products due to manufacturing or design deficiencies, labeling errors, or
other  safety or  regulatory  reasons.  This recall of products may expose us to
additional product liability claims.

THE SUCCESS OF OUR  BUSINESS IS  SUBSTANTIALLY  DEPENDENT ON THE SALES OF BREAST
IMPLANTS

We anticipate  that sales of breast implants will continue to play a significant
role in our  revenues  for the  foreseeable  future.  Declines  in demand of our
breast  implants  could occur as a result of changes in government  regulations;
new competitive  product release and  enhancements to existing  products;  price
competition;  technological changes and the inability to maintain our technology
relationships; and negative publicity that our products are unsafe. In addition,
because the  majority of breast  augmentation  and  reconstruction  are elective
procedures,  they are not typically covered by insurance.  As a result,  adverse
changes in the economy may cause  consumers to reassess their  spending  choices
and reduce the demand for cosmetic surgery.  If our customers do not continue to
purchase  our  breast  implants  as a result  of these and  other  factors,  our
revenues,  results  of  operations,  and cash  flows  from  operations  would be
adversely affected.

IF  WE  ARE  UNABLE  TO  CONTINUE  TO  DEVELOP  AND  MARKET  NEW   PRODUCTS  AND
TECHNOLOGIES,  WE MAY  EXPERIENCE  A DECREASE IN DEMAND FOR OUR  PRODUCTS OR OUR
PRODUCTS COULD BECOME OBSOLETE.

The body support  industry is highly  competitive  and is subject to significant
and rapid  technological  change. We believe that our ability to respond quickly
to  consumer  needs or advances in medical  technologies,  without  compromising
product  quality,  is  crucial to our  success.  We are  continually  engaged in
product  development  and  improvement  programs  to  maintain  and  improve our
competitive position. We cannot,  however,  guarantee that we will be successful
in enhancing  existing  products or developing new products or technologies that
will timely achieve regulatory approval.

There is also a risk that our  products  may not gain  market  acceptance  among
physicians,  patients and the medical community generally.  The degree of market
acceptance of any medical device or other product that we develop will depend on
a number of  factors,  including  demonstrated  clinical  efficacy  and  safety,
cost-effectiveness,  potential  advantages over  alternative  products,  and our
marketing  and  distribution  capabilities.  Physicians  will not  recommend our
products  until  clinical  data or other  factors  demonstrate  their safety and
efficacy compared to other competing  products.  Even if the clinical safety and
efficacy  of using our  products  is  established,  physicians  may elect not to
recommend  using them for any number of other  reasons,  including  whether  our
products best meet the perceived particular needs of the individual patient.

Our  products  compete  with a number of other  products  manufactured  by major
medical device companies, and may also compete with new products currently under
development  by others.  If our new products do not achieve  significant  market
acceptance,  or if our  current  products  are not  able to  continue  competing
successfully in the changing  market,  our revenues,  income from operations and
cash flows from operations may not grow as much as expected or may even decline.

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<PAGE>

IF CLINICAL  TRIALS FOR OUR PRODUCTS  ARE  UNSUCCESSFUL  OR DELAYED,  WE WILL BE
UNABLE TO MEET OUR ANTICIPATED DEVELOPMENT AND COMMERCIALIZATION  TIMELINES, AND
OUR BUSINESS PROSPECTS WILL SUFFER.

Before obtaining  regulatory  approvals for the commercial sale of any products,
we must demonstrate  through  pre-clinical  testing and clinical trials that our
products are safe and effective for use in humans. Conducting clinical trials is
a lengthy,  time-consuming and expensive process.  Completion of clinical trials
may take several  years or more.  Our  commencement  and rate of  completion  of
clinical trials may be delayed by many factors, including:

o lack of efficacy during the clinical trials;
o unforeseen safety issues;
o slower than expected patient recruitment for clinical trials;
o inability to follow patients after treatment in clinical trials;
o inconsistencies between early clinical trial results and results obtained in
  later clinical trials; and
o varying interpretations of data generated by clinical trials.

The results from  pre-clinical  testing and early clinical  trials are often not
predictive  of  results  obtained  in later  clinical  trials.  A number  of new
products  have shown  promising  results in clinical  trials,  but  subsequently
failed to  establish  sufficient  safety and efficacy  data to obtain  necessary
regulatory  approvals.  Data obtained from pre-clinical and clinical  activities
are susceptible to varying  interpretations,  which may delay,  limit or prevent
regulatory approval.  Any delays in, or termination of, our clinical trials will
materially and adversely affect our development and commercialization timelines,
increase our  development  costs and harm our financial  results and  commercial
prospects.

WE ARE SUBJECT TO  SUBSTANTIAL  GOVERNMENT  REGULATION,  WHICH COULD  MATERIALLY
ADVERSELY AFFECT OUR BUSINESS.

The  production  and  marketing  of our  products  and our ongoing  research and
development,  pre-clinical  testing and clinical trial activities are subject to
extensive regulation and review by numerous governmental authorities both in the
U.S.  and abroad.  Most of the  products we develop  must  undergo an  extensive
regulatory  approval process before they can be marketed.  This process makes it
longer,  harder and more costly to bring our  products to market,  and we cannot
guarantee  that any of our products  will be approved,  or, once  approved,  not
recalled.  The  pre-marketing  approval  process can be particularly  expensive,
uncertain  and lengthy,  and a number of devices for which FDA approval has been
sought by other companies have never been approved for marketing. In addition to
these  approval  procedures,   extensive   regulations  also  govern  marketing,
manufacturing,  distribution,  labeling, and record-keeping procedures. If we do
not comply with applicable regulatory requirements, such violations could result
in warning letters,  non-approval,  suspensions of regulatory  approvals,  civil
penalties  and  criminal  fines,   product   seizures  and  recalls,   operating
restrictions, injunctions, and criminal prosecution.

Delays in or rejection of any government  entity,  including the FDA, of our new
products may also adversely affect our business. Such delays or rejection may be
encountered  due to, among other  reasons,  government or regulatory  changes in
policy  during the  period of  product  development  in each  jurisdiction.  For
example,  in the U.S.,  there has been a continuing  trend of more stringent FDA
oversight in product  clearance  and  enforcement  activities,  causing  medical
device  manufacturers to experience  longer approval cycles,  more  uncertainty,
greater risk, and higher expenses. Internationally,  there is a risk that we may
not be  successful  in meeting  the  quality  standards  or other  certification

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<PAGE>

requirements. Even if regulatory approval of a product is granted, this approval
may  entail  limitations  on uses for  which  the  product  may be  labeled  and
promoted.  It is  possible,  for example,  that we may not receive  proper local
regulatory  approval to market our  current  products  for broader or  different
applications  or to market  updated  products that  represent  extensions of our
basic  technology.  In addition,  we may not receive  French export  approval to
export our products in the future,  and  countries  to which  products are to be
exported may not approve them for import.

Our manufacturing  facilities are also subject to continual  governmental review
and inspection.  French  regulations  related to manufacturing  are increasingly
complex and subject to frequent scrutiny. A governmental authority may challenge
our  compliance  with  applicable   national,   regional,   local,  and  foreign
regulations.  In addition, any discovery of previously unknown problems with one
of our products or facilities may result in  restrictions  on the product or the
facility,  including  withdrawal  of  the  product  from  the  market  or  other
enforcement actions.

From time to time,  regulatory  proposals  are  introduced  that could alter the
review and approval process relating to medical devices. It is possible that the
FDA or other governmental  authorities will issue additional regulations further
restricting  the  sale of our  present  or  proposed  products.  Any  change  in
regulations  that govern the review and approval process relating to our current
and future  products could make it more difficult and costly to obtain  approval
for new products, or to produce, market, and distribute existing products.

Our products  compete with a number of other medical  products  manufactured  by
major  companies,  and may  also  compete  with  new  products  currently  under
development  by others.  On January 8, 2004 the FDA released new Draft  Guidance
for Saline, Silicone Gel, and Alternative Breast Implants. This new guidance has
additional  requirements  from the FDA's prior  guidance dated February 2003. We
intend to complete our application to the FDA for the pre-market approval of our
saline-filled  implants  for breast  augmentation,  reconstruction  and revision
during  fiscal 2005,  using this new  guidance.  Any  additional  changes in FDA
guidance may further delay or may otherwise  adversely affect our application or
our review or approval by the FDA. A delay, denial, or "not approvable" response
by the  FDA  would  have a  material  adverse  affect  on our  commercialization
timelines and competitive position. If our competitors gain regulatory approvals
before us in the U.S.  or in any other  geographical  locations,  our  revenues,
income  from  operations  and  cash  flows  from  operations,  may  not  grow as
anticipated and may even decline.

HEALTHCARE REFORM LEGISLATION COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

If any national healthcare reform or other legislation or regulations are passed
that  imposes  limits on the  number or type of medical  procedures  that may be
performed or that has the effect of restricting a physician's  ability to select
specific  products  for use in patient  procedures,  such  changes  could have a
material adverse effect on the demand for our products.  In the U.S., there have
been,  and we expect  that there will  continue  to be, a number of federal  and
state  legislative and regulatory  proposals to implement  greater  governmental
control over the healthcare  industry.  These proposals create uncertainty as to
our ability to obtain the regulatory authority approvals required for us to sell

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<PAGE>

our products in the largest market. In a number of foreign markets,  the pricing
and profitability of healthcare  products are subject to governmental  influence
or control. In addition,  legislation or regulations that impose restrictions on
the price that may be charged for  healthcare  products  or medical  devices may
adversely  affect  our  revenues,  income  from  operations  and cash flows from
operations.

IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL  PROPERTY RIGHTS RELATED
TO OUR PRODUCTS OR TECHNOLOGIES,  OR WE INFRINGE UPON THE INTELLECTUAL  PROPERTY
RIGHTS OF OTHERS,  WE MAY NOT BE ABLE TO SUCCESSFULLY  DEVELOP AND COMMERCIALIZE
OUR PRODUCTS AND MAINTAIN PROFITABILITY.

Our  success  depends  in part on our  ability  to obtain  patents  or rights to
patents,  protect trade secrets, operate without infringing upon the proprietary
rights of others, and prevent others from infringing on our patents,  trademarks
and  other  intellectual  property  rights.  We  will be  able  to  protect  our
intellectual  property from unauthorized use by third parties only to the extent
that it is covered by valid and  enforceable  patents,  trademarks and licenses.
Patent  protection  generally  involves complex legal and factual questions and,
therefore,  enforceability  of patent rights cannot be predicted with certainty.
Patents,  if issued, may be challenged,  invalidated or circumvented.  Thus, any
patents that we own or license from others may not provide  adequate  protection
against competitors and further, our technologies may infringe on the patents of
third parties.  Moreover,  the laws of certain foreign  countries do not protect
our  intellectual  property rights to the same extent as do the laws of the U.S.
or the European Community.  In the event of an infringement or violation, we may
face  litigation,  become subject to damages,  and may be prevented from selling
existing products and pursuing product development or commercialization.

In addition to patents and trademarks,  we rely on trade secrets and proprietary
know-how.  We seek protection of these rights, in part, through  confidentiality
and  proprietary  information  agreements.  These  agreements  may  not  provide
meaningful  protection  or adequate  remedies for violation of our rights in the
event  of  unauthorized  use  or  disclosure  of  confidential  and  proprietary
information.  Failure to protect our proprietary  rights could seriously  impair
our competitive position.

IF OUR COLLABORATIVE  PARTNERS DO NOT PERFORM,  WE WILL BE UNABLE TO DEVELOP AND
MARKET PRODUCTS AS ANTICIPATED.

We have entered into collaborative  arrangements with third parties, such as GFE
to develop  certain  products and Medicor to market breast  implants.  We cannot
assure  you that  these  collaborations  will  produce  successful  products  or
marketing   efforts.   If  we  fail  to  maintain  our  existing   collaborative
arrangements or fail to enter into additional  collaborative  arrangements,  the
number of products and markets from which we could receive future revenues would
decline.

Our dependence on collaborative arrangements with third parties subjects us to a
number of risks. These collaborative  arrangements may not be on terms favorable
to  us.  Agreements  with   collaborative   partners  typically  allow  partners
significant  discretion in electing  whether or not to pursue any of the planned
activities.   We  cannot   control  the  amount  and  timing  of  resources  our
collaborative  partners may devote to products based on the  collaboration,  and
our partners  may choose to pursue  alternative  products.  Our partners may not
perform  their  obligations  as  expected.  Business  combinations,  significant
changes  in a  collaborative  partner's  business  strategy,  or its  access  to

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<PAGE>

financial  resources may adversely affect a partner's  willingness or ability to
complete  its  obligations  under the  arrangement.  Moreover,  we could  become
involved  in  disputes  with  our  partners,  which  could  lead  to  delays  or
termination of the collaborations and time-consuming and expensive litigation or
arbitration. Even if we fulfill our obligations under a collaborative agreement,
our partner can  terminate the agreement  under  certain  circumstances.  If any
collaborative  partner  were to terminate  or breach our  agreement  with it, or
otherwise fail to complete its  obligations  in a timely manner,  our chances of
successfully   commercializing   products  would  be  materially  and  adversely
affected.

WE  DEPEND ON A  LIMITED  NUMBER  OF  SUPPLIERS  FOR  CERTAIN  PRODUCTS  AND RAW
MATERIALS  AND THE LOSS OF ANY SUPPLIER  COULD  ADVERSELY  AFFECT OUR ABILITY TO
MANUFACTURE MANY OF OUR PRODUCTS.

We  currently  rely on a single  supplier  for  titanium-based  coating  for our
products,  used primarily in the  manufacturing of breast  implants.  We rely on
this  supplier to provide us with such coating on our  products.  Our  agreement
terminates in 2009. If we cannot maintain the  relationship  with this supplier,
we may have to discontinue the manufacturing of certain  products.  Furthermore,
we would have to substitute the raw materials  currently utilized by alternative
raw materials  which may be of lesser quality and provided at higher cost to us.
The  termination of this  relationship  or any disruption in the supply of these
materials  could have a material  adverse  effect on our  revenues,  income from
operations and cash flows from operations.

OUR INTERNATIONAL BUSINESS EXPOSES US TO A NUMBER OF RISKS.

We conduct  all our  marketing,  manufacturing,  and  research  and  development
outside of the U.S.  More than 78% of our sales are derived  from  international
operations  outside  of  France,   where  our  main  operations  are  conducted.
Accordingly,  any  material  decrease  in  foreign  sales  would have a material
adverse effect on our overall sales and profitability. Most of our international
sales  are  denominated  in  Euros.  Depreciation  or  devaluation  of the local
currencies  of  countries  where we sell our products may result in our products
becoming  more  expensive  in  local  currency  terms,   thus  reducing  demand.
Furthermore,  all our  operating  activities  are  located  outside  of the U.S.
Therefore,  substantially  all of our  operating  expenses  are  denominated  in
currencies  other than the U.S.  dollar.  We cannot  guarantee  that we will not
experience  unfavorable  currency  fluctuation effects in future periods,  which
could  have an adverse  effect on our  operating  results.  Our  operations  and
financial  results  also may be  significantly  affected by other  international
factors, including:

o foreign government regulation of body support products;
o product liability, intellectual property and other claims;
o new export license requirements;
o political or economic instability in our target markets;
o trade restrictions;
o changes in tax laws and tariffs;
o inadequate protection of intellectual property rights in some countries;
o managing foreign distributors and staffing;
o managing foreign subsidiaries; and
o competition.

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<PAGE>

If these risks  actually  materialize,  our revenues,  results of operations and
cash flows from operations may decrease.

WE RELY ON INDIRECT  DISTRIBUTION CHANNELS AND MAJOR DISTRIBUTORS THAT WE DO NOT
CONTROL.

We rely  significantly on independent  distributors to market and distribute our
products. We do not control our distributors. Additionally, our distributors are
not  obligated  to buy our  products  and could also  represent  other  lines of
products.  Some of our  distributors  maintain  inventories  of our products for
resale to physicians.  If  distributors  reduce their inventory of our products,
our  business  could  be  adversely   affected.   Further,   we  could  maintain
individually significant accounts receivable balances with certain distributors.
The financial  condition of our distributors  could deteriorate and distributors
could  significantly  delay  or  default  on  their  payment  obligations.   Any
significant  delays or  defaults  could  have a material  adverse  effect on our
revenues, income from operations and cash flows from operations.

IF OUR USE OF HAZARDOUS  MATERIALS  RESULTS IN CONTAMINATION OR INJURY, WE COULD
SUFFER SIGNIFICANT FINANCIAL LOSS.

Our  manufacturing  and  research  activities  involve  the  controlled  use  of
hazardous materials. We cannot eliminate the risk of accidental contamination or
injury  from  these  materials.  In the event of an  accident  or  environmental
discharge, we may be held liable for any resulting damages, which may exceed our
financial  resources.  We  currently  do not carry  insurance  specifically  for
hazardous  material  claims.  We may be required to incur  significant  costs to
comply with  environmental  laws and regulations,  which may change from time to
time. To date, we have not been the subject of any  environmental  investigation
by governmental authorities.

OUR STOCK PRICE HAS BEEN VOLATILE AND OUR TRADING VOLUME HAS  HISTORICALLY  BEEN
LOWER THAN THAT OF MANY PUBLICLY-TRADED COMPANIES.

Historically,  the  market  price of our  common  stock  has  from  time to time
experienced  price  fluctuations,  some of which are  unrelated to our operating
performance and beyond our control. These factors include:

o availability of shares offered for sale;
o quarter-to-quarter variations in our operating results;
o the results of testing, technological innovations, or new commercial products
  by us or our competitors;
o governmental actions, regulations, rules, and orders;
o general conditions in the healthcare, medical device, or plastic surgery
  industries;
o changes in earnings estimates by securities analysts;
o developments and litigation concerning patents or other intellectual property
  rights;
o litigation or public concern about the safety of our products; and
o general economic factors, such as foreign exchanges rates.

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<PAGE>

Historically,  our common  stock has also had a low trading  volume,  and likely
will continue to have a low trading  volume in the future.  We cannot  guarantee
that an active public market for our common stock will develop and be sustained.
Additionally,  we have not always timely filed our quarterly and annual reports,
which  resulted in our common stock being  temporarily  delisted from trading on
the  Over-The-Counter  Bulletin Board interruptions in the trading of our stock.
This low volume may  contribute  to the  volatility  of the market  price of our
common  stock.  It is likely  that the  market  price of our  common  stock will
continue to fluctuate significantly in the future.

OUR REPORTED  EARNINGS PER SHARE MAY BE MORE VOLATILE  BECAUSE OF THE CONTINGENT
CONVERSION PROVISION OF OUR DEBENTURES.

Holders of our 1% and 10%  convertible  debentures  are  entitled to convert the
notes into our common stock during any fiscal  quarter  prior to October 9, 2008
and March 25, 2009, respectively.  In addition,  certain holders are entitled to
anti-dilution  protection.  Until  the  debentures  are  converted,  the  shares
underlying the  debentures  are not included in the  calculation of our basic or
diluted  earnings per share.  Should a contingency be met,  diluted earnings per
share  would be  expected  to  decrease  as a  result  of the  inclusion  of the
underlying shares in the diluted earnings per share  calculation.  Additionally,
the per share conversion  price for the convertible  debentures are based on the
lesser of a fixed price  percentage of the average of our lowest  closing prices
for  certain  periods.  Thus,  volatility,  low volume of trades and lower stock
prices could cause further dilution to our existing and future shareholders.

FUTURE CHANGES IN FINANCIAL  ACCOUNTING  STANDARDS MAY CAUSE ADVERSE  UNEXPECTED
REVENUE OR EXPENSE FLUCTUATIONS AND AFFECT OUR REPORTED RESULTS OF OPERATIONS.

A change in accounting standards could have a significant effect on our reported
results and may even affect our reporting of transactions  completed  before the
change is effective.  Any changes requiring that we record compensation  expense
in the  statement of operations  for employee  stock options as an example using
the fair value method could have a significant  negative  effect on our reported
results.  New pronouncements and varying  interpretations of pronouncements have
occurred  and  may  occur  in the  future.  Changes  to  existing  rules  or the
questioning  of current  practices may adversely  affect our reported  financial
results and the manner in which we conduct our business.

IF WE DETERMINE  THAT ANY OF OUR GOODWILL OR INTANGIBLE  ASSETS IS IMPAIRED,  WE
WOULD BE REQUIRED TO A CHARGE TO EARNINGS,  WHICH COULD HAVE A MATERIAL  ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS.

We have a significant amount of goodwill and other intangible assets,  primarily
as a result of the acquisition of our Spain operations. In July 2001, we adopted
SFAS No. 141,  Business  Combinations,  and in January 2002, we adopted SFAS No.
142,  Goodwill and Other Intangible  Assets.  As a result, we no longer amortize
goodwill and  intangible  assets that are deemed to have  indefinite  lives.  We
periodically  evaluate our intangible  assets,  for impairment.  As of March 31,
2005,  we had  approximately  $1 million of goodwill.  We review for  impairment
annually,  or sooner if events or changes  in  circumstances  indicate  that the
carrying  amount  could exceed fair value.  Fair values are based on  discounted

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<PAGE>

cash flows using a discount rate  determined by our  management to be consistent
with  industry  discount  rates and the risks  inherent in our current  business
model. Due to uncertain market  conditions and potential changes in our strategy
and product  portfolio,  it is possible that the forecasts we use to support our
goodwill could change in the future, which could result in non-cash charges that
would adversely affect our results of operations and financial condition.

IF WE FAIL TO MANAGE OUR OPERATIONS OR FAIL TO CONTINUE TO  EFFECTIVELY  CONTROL
EXPENSES,  OUR  REVENUES,  RESULTS OF OPERATIONS  AND CASH FLOW FROM  OPERATIONS
COULD DECREASE.

The scope of our operations, the number of our employees and the geographic area
of our operations have varied and may grow rapidly.  In addition,  we acquired a
company  in  Spain  in  2002.  This  growth  and the  assimilation  of  acquired
operations and their employees  could continue to place a significant  strain on
our managerial,  operational and financial  resources.  To manage our growth, if
any,  effectively,  we need to continue  to  implement  and  improve  additional
management and financial systems and controls.  We may not be able to manage the
current scope of our operations or future growth  effectively  and still exploit
market  opportunities for our products in a timely and  cost-effective  way. Our
future operating results could also depend on our ability to manage an expanding
product line, marketing and sales.

WE COULD CHANGE OUR MARKETING PROGRAMS, WHICH COULD NEGATIVELY IMPACT THE TIMING
OF OUR RECOGNITION OF REVENUES.

We continually  re-evaluate our marketing  programs,  including specific pricing
models,  delivery methods,  and terms and conditions,  to effectively market our
current  and future  products  and  services.  We may  implement  new  marketing
programs,  including  offering  specified and  unspecified  enhancements  to our
current and future  products.  Such changes  could result in deferring  revenues
over a future  period as opposed to upon the initial  shipment  of the  product.
Changes  to our  marketing  programs,  including  the  timing of the  release of
enhancements,  discounts  and other  factors,  could  impact  the  timing of the
recognition of revenue for our products and could adversely affect our operating
results and financial condition.

IF WE LOSE KEY PERSONNEL, CANNOT INTEGRATE NEWLY HIRED PERSONNEL, OR CANNOT HIRE
ENOUGH  QUALIFIED  EMPLOYEES,  OUR  ABILITY  TO  MANAGE  OUR  BUSINESS  COULD BE
ADVERSELY AFFECTED.

Our  success  depends,  in large  part,  upon the  services  of a number  of key
employees,  such as Jean-Claude  Mas and our Chief  Executive  Officer and Chief
Financial  Officer,  Mr.  Sereyjol-Garros  and  Mr.  Couty,  respectively.   The
effective  management of our growth,  if any, depends upon our ability to retain
highly skilled technical,  managerial, finance and marketing personnel. The loss
of the  services  of key  personnel  might  significantly  delay or prevent  the
achievement of our development and strategic objectives.  We do not maintain key
person life  insurance  on any of our  employees,  and none of our  employees is
under any obligation to continue providing services to us.

We must  continue to attract key  personnel  to develop  new  products,  product
enhancements and  technologies.  Competition for highly skilled employees in our
industry  is high,  and we  cannot  be  certain  that we will be  successful  in
recruiting or retaining such personnel. We also believe that our success depends
to a  significant  extent  on  the  ability  of our  key  personnel  to  operate
effectively,  both  individually  and as a group.  If we are unable to identify,

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<PAGE>

hire and  integrate  new employees in a timely and  cost-effective  manner,  our
ability to develop  future  enhancements  and features to our existing or future
products as well as expand to new markets  could be  delayed.  Any delays  could
have a  material  adverse  effect on our  business,  results of  operations  and
financial condition.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary  of  significant  accounting  policies  is  included  in Note 4 to the
audited consolidated  financial statements included in our filing on Form 10-KSB
as filed with the Securities and Exchange Commission for the year ended June 30,
2004. Management believes that the application of these policies on a consistent
basis enables the Company to provide useful and reliable  financial  information
about the company's operating results and financial condition.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results will differ from those estimates.

Revenues.  We recognize  product  revenue,  net of estimated sales discounts and
returns and allowances,  in accordance with Staff  Accounting  Bulletin No. 104,
"Revenue  Recognition  in  Financial   Statements"  and  SFAS  No.  48  "Revenue
Recognition  When Right of Return  Exists." These  statements  established  that
revenue can be recognized when persuasive evidence of an arrangement exists, the
product has been shipped,  all  significant  contractual  obligations  have been
satisfied,  the fee is  fixed  or  determinable  and  collection  is  reasonably
assured.

Accounts  receivables  and related  allowance  for doubtful  accounts.  Accounts
receivable  are  reported  at net  realizable  value.  We  have  established  an
allowance for doubtful accounts based upon factors pertaining to the credit risk
of specific  customers,  historical trends,  and other  information.  Delinquent
accounts  are   written-off   when  it  is  determined   that  the  amounts  are
uncollectible.

Inventories.  Inventories  are  stated  at the  lower  of cost or  market,  cost
determined by the first-in, first-out (FIFO) method. The Company writes down its
inventory for estimated  obsolescence  or  unmarketable  inventory  equal to the
difference  between the cost of inventory and the  estimated  market value based
upon assumptions about future demand and market conditions

Goodwill. At March 31, 2005, we had approximately $1 million in indefinite lived
goodwill  related to our  acquisition  of our  subsidiary in Spain.  We evaluate
goodwill based on the future  contributing  margins of such  subsidiary.  We use
judgment  in  assessing  goodwill  for  impairment.  Goodwill  is  reviewed  for
impairment  annually,  or sooner if events or changes in circumstances  indicate
that the  carrying  amount  could  exceed fair  value.  Fair values are based on
discounted  cash flows using a discount rate  determined by our management to be
consistent  with industry  discount  rates and the risks inherent in our current
business  model.  In  accordance  with SFAS No. 142, we  completed  the required
impairment  tests of goodwill at the date of adoption  and annually as required.

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<PAGE>

There were no  impairment  charges  recorded as a result of the adoption of SFAS
No. 142 or annual  impairment  tests.  Due to uncertain  market  conditions  and
potential changes in our strategy and product portfolio, it is possible that the
forecasts we use to support our goodwill could change in the future, which could
result in non-cash charges that would adversely affect our results of operations
and financial condition.

Product replacements.  We provide a product replacement program on our products.
Management  estimated the amount of potential future product  replacement claims
based on statistical analysis.  Expected future obligations are determined based
on the history of product  shipments and claims and are  discounted to a current
value.  Changes to actual claims and interest rates could have a material impact
on the  statistical  calculation  which could  materially  impact the  Company's
reported expenses and results of operations.

ITEM 3. CONTROLS AND PROCEDURES

Our chief  executive  officer and our chief financial  officer (the  "Certifying
Officers") are responsible for establishing and maintaining  disclosure controls
and procedures for our Company.  Such officers have concluded  (based upon their
evaluations of these controls and procedures as of the end of the period covered
by this report) that our  disclosure  controls and  procedures  are effective to
ensure  that  information  required  to be  disclosed  by us in this  report  is
accumulated and communicated to management, including the Certifying Officers as
appropriate, to allow timely decisions regarding required disclosure.

The  Certifying  Officers  have also  indicated  that there were no  significant
changes in our internal controls over financial  reporting or other factors that
could  significantly  affect  such  controls  subsequent  to the  date of  their
evaluation, and there were no significant deficiencies and material weaknesses.

Our  management,  including the  Certifying  Officers,  does not expect that our
disclosure  controls or our  internal  controls  will  prevent all error and all
fraud. A control system, no matter how well conceived and operated,  can provide
only  reasonable,  not absolute,  assurance  that the  objectives of the control
system are met. In  addition,  the design of a control  system must  reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control  issues and instances of fraud,  if any,  within a company have been
detected.  These  inherent  limitations  include the realities that judgments in
decision-making  can be faulty,  and that breakdowns can occur because of simple
error or mistake.  Additionally,  controls can be circumvented by the individual
acts of some  persons,  by  collusion  of two or more  people  or by  management
override of the control.  The design of any systems of controls is also based in
part upon certain  assumptions about the likelihood of future events,  and there
can be no assurance  that any design will succeed in achieving  its stated goals
under all potential future conditions.  Because of these inherent limitations in
a cost-effective  control system,  misstatements due to error or fraud may occur
and not be detected.

                                       29

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

In April 1, 2005, Heritage Worldwide and Poly Implant Protheses were sued in New
York state  court by  Morrison,  Cohen LLP,  a New York law firm,  over  alleged
unpaid  fees and  expenses.  On May 6, 2005,  Heritage  removed  the  lawsuit to
federal  court  in  Manhattan.  Heritage  has  not  as of yet  responded  to the
Complaint and Poly Implant Protheses has not as of yet been served with process.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit No.            Description
2.1                    Agreement and Plan of Reorganization between
                       Heritage Productions, Inc. and Heritage
                       Worldwide, Inc. dated May 18, 2001.  Filed with
                       the SEC as Exhibit C to the Company's Definitive
                       Information Statement on Schedule 14C on June 21,
                       2001 and incorporated herein by reference.
2.2                    Acquisition Agreement between Heritage Worldwide,
                       Inc., Poly Implants Protheses, S.A. and Milo
                       Finance, S.A. dated February 28, 2003.  Filed
                       with the SEC as Exhibit 2.1 to the Company's
                       Current Report on Form 8-K on March 13, 2003 and
                       incorporated herein by reference.
2.3                    Agreement and Plan of Merger dated as of October
                       9, 2003 between Heritage Worldwide, Inc., PIP
                       Acquisition II, Inc. and OS MXM, Inc.  Filed with
                       the SEC as Exhibit 2.3 to the Company's Annual
                       Report on Form 10-KSB on November 12, 2003 and
                       incorporated herein by reference.
3.1                    Certificate of Incorporation of the Company.
                       Filed with the SEC as Exhibit A to the Company's
                       Definitive Information Statement on Schedule 14C
                       on June 21, 2001 and incorporated herein by
                       reference.
3.2                    By-Laws of the Company, as amended.  Filed with
                       the SEC as Exhibit B to the Company's Definitive
                       Information Statement on Schedule 14C on June 21,
                       2001 and incorporated herein by reference.
31.1                   Certification of Chief Executive Officer pursuant
                       to Section 302 of the Sarbanes-Oxley Act of 2002.
                       Filed herewith.
31.2                   Certification of Chief Financial Officer pursuant
                       to Section 302 of the Sarbanes-Oxley Act of 2002.
                       Filed herewith.
32.1                   Certification of Chief Executive Officer pursuant
                       to 18 U.S.C Section 1350. Filed herewith
32.2                   Certification of Chief Financial Officer pursuant
                       to 18 U.S.C Section 1350. Filed herewith.

                                       30

<PAGE>

                                   SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            HERITAGE WORLDWIDE, INC.


                                            By: /s/   Alain Sereyjol-Garros
                                                ---------------------------
                                                    Alain Sereyjol-Garros
                                                    Chief Executive Officer



Signatures                           Title                   Date
------------------------------      -----------------       ---------------

/s/   Alain Sereyjol-Garros          Chief Executive       May 12, 2005
------------------------------       Officer
      Alain Sereyjol-Garros


/s/ Claude Couty                     Chief Financial       May 12, 2005
------------------------------       Officer
    Claude Couty