**U.S.
      Securities And Exchange Commission**


**Washington,
      D.C. 20549**





**Form
      10-QSB**





(check
      one)





x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934





For
      the
      Quarterly Period Ended August 31, 2008





 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE
      EXCHANGE ACT OF 1934





Commission
      File Number 000-25277





**Herborium
      Group, Inc.**


(Exact
      Name Of Small Business Issuer As Specified In Its Charter)





**Nevada**


(State
      Or
      Other Jurisdiction Of


Incorporation
      Or Organization)





**88-0353141**


(I.R.S.
      Employer Identification No.)





**Park
      80W Plaza II, Suite 200, Saddle Brook, NJ 07663**


(Address
      Of Principal Executive Offices)





**(201)
      291-2602**


(Issuer's
      Telephone Number)





Check
      whether the registrant (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** ** ̈**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


**Yes** ** ̈** **No** **x**





As
      of
      October 14, 2008, there were 125,067,080 shares of the registrant's common
      stock, par value $.001 per share, issued and outstanding.





ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
      THE PRECEDING FIVE YEARS





Check
      whether the issuer has filed all documents and reports required to be
      filed


by
      Section 12, 13 or 15(d) of the Securities Exchange Act after the
      distribution


of
      securities under a plan confirmed by a court.





Yes **x** No  ̈





Transitional
      Small Business Disclosure Format (Check One):


**Yes** ** ̈** **No** **x**










**Herborium
      Group, Inc.**


**Index
      To Form 10-QSB**


**Part
                    I-Financial Information****Item
                    1.**
                **Financial
                    Statements**
                1Condensed
                    Consolidated Balance Sheets as of August 31, 2008 (Unaudited)
                    and November
                    30, 2007
                1Condensed
                    Consolidated Statements of Operations for the Three and Nine
                    Months Ended
                    August 31, 2008 and 2007 (Unaudited)
                2Condensed
                    Consolidated Statements of Cash Flows for the Nine Months Ended
                    August 31,
                    2008 and 2007 (Unaudited)
                3Condensed
                    Consolidated Statement of Stockholders’ Deficiency for the Nine Months
                    Ended August 31, 2008 (Unaudited)
                4Notes
                    to Condensed Consolidated Financial Statements as of August 31,
                    2008
                    (Unaudited)
                5**Item
                    2.**
                Management’s
                    Discussion and Analysis or Plan of Operation
                12**Item 3 A(T).**
                Controls
                    and Procedures
                17**Part
                    II-Other Information****Item
                    1.**
                Legal
                    Proceedings
                18**Item
                    2.**
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                18**Item
                    3.**
                Defaults
                    Upon Senior Securities
                19**Item
                    4.**
                Submission
                    of Matters to a Vote of Security Holders
                19**Item
                    5.**
                Other
                    Information
                19**Item
                    6.**
                Exhibits
                19





Signatures


*In
      this report, the terms the “Company”, “we”, “our” and “us” refer to Herborium
      Group, Inc., a Nevada corporation, and its wholly-owned subsidiaries.*


i


**Cautionary
      Statement Regarding Forward-Looking Statements**





*Certain
      statements in the "Management’s Discussion and Analysis or Plan of Operation"
      and elsewhere in this quarterly report constitute "forward-looking statements"
      (within the meaning of the Private Securities Litigation Reform Act of 1995
      (the
      "Act")) relating to us and our business, which represent our current
      expectations or beliefs including, but not limited to, statements concerning
      our
      operations, performance, financial condition and growth. All statements, other
      than statements of historical facts, included in this quarterly report that
      address activities, events or developments that we expect or anticipate will
      or
      may occur in the future, including such matters as our projections, future
      capital expenditures, business strategy, competitive strengths, goals,
      expansion, market and industry developments and the growth of our businesses
      and
      operations are forward-looking statements. Without limiting the generality
      of
      the foregoing, words such as "may,” “believes,” ”expects,” "anticipates,”
"could,” "estimates,” “grow,” “plan,” "continue," “will,” “seek,” “scheduled,”
“goal” or “future” or the negative or other comparable terminology are intended
      to identify forward-looking statements. These statements by their nature involve
      substantial risks and uncertainties, such as credit losses, dependence on
      management and key personnel, variability of quarterly results, our ability
      to
      continue our growth strategy and competition, certain of which are beyond our
      control. Any or all of our forward-looking statements may turn out to be wrong.
      They may be affected by inaccurate assumptions that we might make or by known
      or
      unknown risks or uncertainties. Should one or more of these risks or
      uncertainties materialize or should the underlying assumptions prove incorrect,
      actual outcomes and results could differ materially from those indicated in
      the
      forward-looking statements.*




*Because
      of the risks and uncertainties associated with forward-looking statements,
      you
      should not place undo reliance on them. Additional factors that could affect
      future results are discussed in* *the
      section titled "Description of Business" (Item 1) -"Risks Related to Our
      Business"* *of
      our Annual Report on Form 10-KSB for the year ended November 30, 2007 and in
      the
      section titled “Risk Factors” of this Quarterly Report on Form 10-QSB. We
      caution investors that the forward-looking statements contained in this
      Quarterly Report must be interpreted and understood in light of conditions
      and
      circumstances that exist as of the date of this Quarterly Report. We expressly
      disclaim any obligation or undertaking to update or revise forward-looking
      statements to reflect any changes in management's expectations resulting from
      future events or changes in the conditions or circumstances upon which such
      expectations are based.*


ii


**Herborium
      Group, Inc. And Subsidiaries**


**Condensed
      Consolidated Balance Sheets**




August 31,
              2008
            
            November 30,
              2007(Unaudited)
            
            (Note 1)**ASSETS**Current
                assets:Cash
            
            $
            3,850
            
            $
            2,077Accounts
                receivable
            
            
            2,876
            
            
            4,772Inventory
            
            
            38,308
            
            
            31,181Prepaid
                expenses and other current assets
            
            
            7,292
            
            
            7,292Total
                current assets
            
            
            52,326
            
            
            45,322Property
                and equipment, net of accumulated depreciation of $23,284-2008;
                $20,954–2007
            
            
            10,471
            
            
            4,231Deferred
                financing costs, net of accumulated amortization of
                $62,712-2008
            
            
            76,542
            
            
            —Other
                assets, net of accumulated amortization of $11,227-2008;
                $9,214–2007
            
            
            56,284
            
            
            28,997**TOTAL
                ASSETS**
            
            $
            195,623
            
            $
            78,550**LIABILITIES
                AND STOCKHOLDERS’ DEFICIENCY**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            800,822
            
            $
            640,403Convertible
                notes payable
            
            
            437,234
            
            
            —Credit
                cards payable
            
            
            65,866
            
            
            129,077Lines
                of credit payable
            
            
            158,353
            
            
            166,372Due
                to others
            
            
            24,276
            
            
            50,895Due
                to related parties
            
            
            20,000
            
            
            35,000Due
                to stockholders
            
            
            226,757
            
            
            201,056Total
                current liabilities
            
            
            1,733,308
            
            
            1,222,803Stockholders’
                deficiency:Preferred
                stock, $0.001 par value, 10,000 shares authorized, no shares issued
                and
                outstanding
            
            
            —
            
            
            —Common
                stock, $0.001 par value; 500,000,000 shares authorized, 125,067,080
                shares
                issued and outstanding (115,567,080 – November 30, 2007)
            
            
            36,500
            
            
            27,000Common
                stock subscribed; no shares issued and outstanding
            
            
            188,500
            
            
            188,500Additional
                paid-in capital
            
            
            801,497
            
            
            500,500Deferred
                consulting fees
            
            
            (101,250
            )
            
            (106,250
            )Accumulated
                deficit
            
            
            (2,462,932
            )
            
            (1,754,003
            )Total
                stockholders’ deficiency
            
            
            (1,537,685
            )
            
            (1,144,253
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**
            
            $
            195,623
            
            $
            78,550


1


**Herborium
      Group, Inc. And Subsidiaries**


**Condensed
      Consolidated Statements Of Operations**


**(Unaudited)**




**For The Three Months Ended**
            
            **For The Nine Months Ended****August 31,**
            
            **August 31,****2008**
            
            **2007**
            
            **2008**
            
            **2007****NET
                SALES**
            
            $
            101,142
            
            $
            158,363
            
            $
            317,146
            
            $
            571,041**COST
                OF SALES**
            
            
            48,320
            
            
            90,660
            
            
            153,339
            
            
            268,385**GROSS
                PROFIT**
            
            
            52,822
            
            
            67,703
            
            
            163,807
            
            
            302,656**OPERATING
                EXPENSES**Marketing
                and selling
            
            
            58,305
            
            
            63,287
            
            
            121,908
            
            
            212,000General
                and administrative
            
            
            211,523
            
            
            155,667
            
            
            625,485
            
            
            457,453**TOTAL
                OPERATING EXPENSES**
            
            
            269,828
            
            
            218,954
            
            
            747,393
            
            
            669,453**LOSS
                FROM OPERATIONS**
            
            
            (217,006
            )
            
            (151,251
            )
            
            (583,586
            )
            
            (366,797
            )Interest
                expense
            
            
            (58,584
            )
            
            (11,753
            )
            
            (125,343
            )
            
            (33,259
            )**NET
                LOSS**
            
            $
            (275,590
            )
            $
            (163,004
            )
            $
            (708,929
            )
            $
            (400,056
            )Net
                loss per share - basic and diluted
            
            $
            0.00
            
            $
            0.00
            
            $
            (0.01
            )
            $
            0.00Weighted
                average number of shares outstanding during the period - basic and
                diluted
            
            
            124,817,080
            
            
            114,067,080
            
            
            121,066,989
            
            
            112,898,582


2


**Herborium
        Group, Inc. And Subsidiaries**
 **Condensed
        Consolidated Statements Of Cash Flows**
 **(Unaudited)**


Nine
                months endedAugust 31,
            
            August 31,2008
            
            2007**CASH
                FLOWS USED IN OPERATING ACTIVITIES:**Net
                loss
            
            $
            (708,929
            )
            $
            (400,056
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            76,744
            
            
            3,236Stock-based
                professional and consulting fees
            
            
            195,000
            
            
            150,000Changes
                in assets (increase) decrease:Accounts
                receivable
            
            
            1,896
            
            
            603Inventory
            
            
            (7,127
            )
            
            19,991Prepaid
                expenses and other current assets
            
            
            —
            
            
            442Changes
                in liabilities increase:Accounts
                payable and accrued expenses
            
            
            160,419
            
            
            178,100Net
                cash used in operating activities
            
            
            (281,997
            )
            
            (47,684
            )**CASH
                FLOWS USED IN INVESTING ACTIVITIES:**Purchase
                of equipment
            
            
            (8,570
            )
            
            —Purchase
                of other assets
            
            
            (10,050
            )
            
            (3,270
            )Net
                cash used in investing activities
            
            
            (18,620
            )
            
            (3,270
            )**CASH
                FLOWS PROVIDED BY FINANCING ACTIVITIES:**Issuance
                of convertible notes payable
            
            
            450,000
            
            
            —Deferred
                financing costs
            
            
            (60,462
            )
            
            —Repayment
                of lines of credit, net
            
            
            (8,019
            )
            
            (6,010
            )Decrease
                in credit card payable, net
            
            
            (63,211
            )
            
            (4,714
            )Increase
                (decrease) in due to others
            
            
            (26,619
            )
            
            12,841Increase
                (decrease) in due to related parties
            
            
            (15,000
            )
            
            13,000Increase
                in due to stockholders
            
            
            25,701
            
            
            33,784Net
                cash provided by financing activities
            
            
            302,390
            
            
            48,901**NET
                INCREASE (DECREASE) IN CASH**
            
            
            1,773
            
            
            (2,053
            )**CASH,
                BEGINNING OF PERIOD**
            
            
            2,077
            
            
            4,649**CASH,
                END OF PERIOD**
            
            $
            3,850
            
            $
            2,596


3


**Herborium
      Group, Inc. And Subsidiaries**


**Condensed
      Consolidated Statement Of Stockholders’ Deficiency**


**For
      The Nine Months Ended August 31, 2008**


**(Unaudited)**





**Common Stock**
            
            **Common Stock Subscribed**
            
            **Additional**
            
            **Deferred**
              **Consulting**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Paid-in Capital**
            
            **Fees**
            
            **Deficit**
            
            **Total****BALANCE,
                December 1, 2007**
            
            
            115,567,080
            
            $
            27,000
            
            
            —
            
            $
            188,500
            
            $
            500,500
            
            $
            (106,250
            )
            $
            (1,754,003
            )
            $
            (1,144,253
            )Common
                stock issued in connection with an asset acquisition
            
            
            3,500,000
            
            
            3,500
            
            
            —
            
            
            —
            
            
            15,750
            
            
            —
            
            
            —
            
            
            19,250Common
                stock issued to consultants for services
            
            
            4,250,000
            
            
            4,250
            
            
            —
            
            
            —
            
            
            185,750
            
            
            (190,000
            )
            
            —
            
            
            —Common
                stock issued to note purchasers in connection with the issuance of
                Convertible Notes
            
            
            450,000
            
            
            450
            
            
            —
            
            
            —
            
            
            22,005
            
            
            —
            
            
            —
            
            
            22,455Common
                stock issued to advisor in connection with the issuance of Convertible
                Notes
            
            
            1,300,000
            
            
            1,300
            
            
            —
            
            
            —
            
            
            19,892
            
            
            —
            
            
            —
            
            
            21,192Warrants
                issued to advisor in connection with the issuance of Convertible
                Notes
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            57,600
            
            
            —
            
            
            —
            
            
            57,600Amortization
                of deferred consulting fees
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            195,000
            
            
            —
            
            
            195,000Net
                loss for the period
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (708,929
            )
            
            (708,929
            )**BALANCE,
                August 31, 2008**
            
            
            125,067,080
            
            $
            36,500
            
            
            -
            
            $
            188,500
            
            $
            801,497
            
            $
            (101,250
            )
            $
            (2,462,932
            )
            $
            (1,537,685
            )


4


**Herborium
      Group, Inc.** **And
      Subsidiaries**


**Notes
      To Condensed Consolidated Financial Statements**


**As
      of August 31, 2008**


**(Unaudited)**


**NOTE
      1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





The
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America and reflect all adjustments which management believes necessary (which
      include only normal recurring adjustments) to present fairly the financial
      position, results of operations, and cash flows of the Company. These
      statements, however, do not include all information and footnotes necessary
      for
      a complete presentation of the Company’s consolidated financial position,
      results of operations and cash flows in conformity with accounting principles
      generally accepted in the United States. The interim financial statements should
      be read in conjunction with the consolidated financial statements and notes
      thereto, included in the Company’s audited financial statements for the fiscal
      year ended November 30, 2007 included in its Annual Report on Form 10-KSB,
      and
      are not necessarily indicative of the results to be expected for the full year
      ending November 30, 2008. The consolidated balance sheet at November 30, 2007
      has been derived from the audited financial statements for fiscal
      2007.





**NOTE
          2.** **ORGANIZATION
          AND NATURE OF BUSINESS**





The
      Company provides unique, natural and complementary healthcare related products
      to consumers and healthcare professionals seeking alternative answers to the
      management of healthcare issues not currently met by standard Western medicine.
      Its products are botanical supplements comprised of unique herbal formulations,
      referred to as botanical therapeutics, that have a record of clinical efficacy
      and safety established in China; however, these products have not been evaluated
      according to standards of clinical efficacy and safety applicable to
      pharmaceutical products sold in the United States and other countries, and
      because these products are herbal-based, they are not recognized as
      pharmaceuticals by the Food and Drug Administration (the "FDA"). The Company’s
      business model is based on (i) owning and/or marketing unique products with
      established clinical history in their country of origin, and (ii) a proactive
      approach to meeting the regulatory changes and challenges of the new healthcare
      marketplace. Historically, substantially all of the Company’s revenue has been
      derived from the sale of AcnEase through its corporate website.





Herborium,
      Inc., was incorporated in the State of Delaware on June 4, 2002, and was the
      surviving entity following a merger of G.O. International, Inc., a New Jersey
      corporation, with and into the Company effective June 6, 2002. On September
      18,
      2006, the Company was acquired by Pacific Magtron International Corporation,
      Inc. (“PMIC”), a publicly traded Nevada Corporation, pursuant to a Merger
      Agreement and PMIC’s plan of reorganization in bankruptcy. The transaction was
      accomplished by the merger of a PMIC subsidiary into the Company, with the
      Company as the surviving corporation (the “Merger”). Under the provisions of the
      Merger Agreement and the plan of reorganization, the stockholders of the Company
      exchanged 100% of their common stock of the Company for 85% of the post-Merger
      PMIC common stock. The previously outstanding common shares of PMIC were
      cancelled under the plan of reorganization, and one new share of the Company
      was
      issued in exchange for each cancelled shares held by all PMIC shareholders,
      other than its majority shareholder, Advanced Communications Technologies,
      Inc
      (“ACT”). A total of 11,454,300 shares were issued to the shareholders of ACT in
      exchange for the cancellation of the PMIC shares and ACT’s contribution of
      $50,000 to the bankruptcy. Shares of our common stock have been distributed
      to
      PMIC shareholders. Following this distribution, as well as certain other
      distributions that are included in the plan of reorganization, an aggregate
      of
      108,567,080 shares of common stock of Herborium Group was issued and outstanding
      as a result of the merger.





The
      Company’s merger with PMIC is treated as a recapitalization with no purchase
      price allocation. In connection with the merger, PMIC changed its name to
      Herborium Group, Inc. and adopted the fiscal year of Herborium Group, Inc.
      which
      is November 30.


5


**Herborium
        Group, Inc.** **And
        Subsidiaries**
 **Notes
        To Condensed Consolidated Financial Statements**
 **As
        of August 31, 2008**
 **(Unaudited)**


**NOTE
          3.** **BASIS
          OF ACCOUNTING AND SIGNIFICANT ACCOUNTING
          POLICIES**





a.
            Basis
                of Accounting





The
      Company's condensed consolidated financial statements have been prepared on
      a
      going concern basis, which contemplates the realization of assets and the
      settlement of liabilities in the normal course of business. The Company incurred
      a net loss of $709,000 for the nine months ended August 31, 2008 and net losses
      of $643,000 and $340,000 for the years ended November 30, 2007 and 2006,
      respectively. The Company had an excess of current liabilities over current
      assets of $1,681,000 and $1,177,000 as of August 31, 2008 and November 30,
      2007,
      respectively. Management is pursuing additional capital and debt financing
      and
      the acquisition of the AcnEase formula (See Notes 4 and 5). However, there
      is no
      assurance that these efforts will be successful.





Our
      ability to generate sufficient profits and obtain additional funding and pay
      off
      our obligations will determine our ability to continue as a going concern.
      Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





b.
            Principles
                of consolidation





The
      condensed consolidated financial statements include the accounts of the Company
      and its wholly owned subsidiaries, Herborium, Inc. and Herborium.com, Inc.
      All
      significant intercompany accounts and transactions are eliminated in
      consolidation.





c.
            Estimates





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 consolidated financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates.





d.
            Income
                taxes




Income
      tax expense includes current and deferred federal and state taxes arising from
      temporary differences between income for financial reporting and income tax
      purposes, as well as from the expected realization of net operating loss
      carryforwards. A valuation allowance is established when necessary to reduce
      deferred tax assets to the amounts expected to be realized.





e.
            Revenue




The
      Company recognizes revenue when inventory is shipped to its
      customers.





f.
            Loss
                per share




Basic
      loss per share is computed by dividing net loss by the weighted average number
      of common shares outstanding for the period. Diluted earnings per share reflect
      the potential dilution of securities which could share in the earnings of an
      entity as determined by using the treasury stock method. During the Nine month
      period ended August 31, 2008, the Company had securities convertible into common
      stock which have been excluded from the calculation of diluted loss per share
      as
      their effect, because of the net loss, would have been anti-dilutive. At August
      31, 2008 and 2007, potentially dilutive securities totaled 61,950,000 and -0-,
      respectively.





At
      August
      31, 2008, the Company had an obligation to issue common stock pursuant to
      subscription agreements, as well as an obligation to grant warrants to purchase
      shares of common stock. Such shares, had the number thereof been determinable,
      would have been excluded from the calculation of diluted loss per share as
      their
      effect would have been anti-dilutive.




6


**Herborium
        Group, Inc.** **And
        Subsidiaries**
 **Notes
        To Condensed Consolidated Financial Statements**
 **As
        of August 31, 2008**
 **(Unaudited)**


g.
            Allowance
                for doubtful accounts





The
      Company makes judgments as to its ability to collect outstanding trade
      receivables and provides allowances, if deemed necessary, for the portion of
      receivables when collection becomes doubtful. Provisions are made based upon
      a
      specific review of all significant outstanding invoices.





h.
            Deferred
                Financing Costs




Costs
      associated with the Company’s debt obligations are capitalized and amortized
      over the life of the related debt obligation using the interest method. Interest
      expense includes $63,000 and $0 of amortization of deferred financing costs
      for
      the nine months ended August 31, 2008 and 2007, respectively.





i.
            Reclassification





Certain
      amounts in the statement of operations for the three and nine months ended
      August 31, 2007 have been reclassified to conform to the August 31, 2008
      presentation.





j.
            Recent
                accounting pronouncements




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value
      Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles (“GAAP”),
      and expands disclosures about fair value measurements. This Statement is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2008. Management does not believe that the adoption of this
      pronouncement will have a material impact on the Company’s financial position or
      results of operations.




In
      June
      2006, the FASB issued Financial Accounting Standards Board Interpretation
      (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes—an
      interpretation of SFAS 109. FIN No. 48 provides a comprehensive model
      for the recognition, measurement and disclosure in the financial statements
      of
      uncertain tax positions taken or expected to be taken on a tax return. The
      Company adopted FIN No. 48 effective beginning on December 1, 2007. The
      adoption of this interpretation did not have an impact on the Company’s
      financial statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
      for Financial Assets and Financial Liabilities—Including an Amendment of FASB
      Statement No. 115.” This Standard allows entities to voluntarily choose, at
      specified election dates, to measure many financial assets and financial
      liabilities (as well as certain non-financial instruments that are similar
      to
      financial instruments) at fair value. The election is made on an
      instrument-by-instrument basis and is irrevocable. If the fair value option
      is
      elected for an instrument, the Statement specifies that all subsequent changes
      in fair value for that instrument shall be reported in earnings. SFAS No. 159
      is
      effective beginning on December 1, 2008. We are currently evaluating the
      impact this new Standard could have on our financial position and results of
      operations.




The
      FASB
      has issued Statement No. 141 (R), “Business Combinations”. This statement
      retains the fundamental requirements in Statement No. 141 that the acquisition
      method of accounting (which Statement No. 141 called the “purchase method”) be
      used, and applies to all business entities, including mutual entities that
      previously used the pooling of interest method of accounting for some business
      combinations. The statement is effective for transactions within the annual
      reporting period beginning on or after December 15, 2008. We are currently
      evaluating the impact this new Standard could have on our financial position
      and
      results of operations.




The
      FASB
      has issued Statement No. 160, “Non-controlling Interests in Consolidated
      Financial Statements”. This statement changes the way the consolidated income
      statement is presented when non-controlling interests are present. It requires
      consolidated net income to be reported at amounts that include the amounts
      attributable to both the parent and the non-controlling interest, and is
      effective for periods beginning on or after December 15, 2008. We are currently
      evaluating the impact this new Standard could have on our financial position
      and
      results of operations.


7


**Herborium
        Group, Inc.** **And
        Subsidiaries**
 **Notes
        To Condensed Consolidated Financial Statements**
 **As
        of August 31, 2008**
 **(Unaudited)**




In
      April
      2008, the FASB issued Final FASB
      Staff Position (FSP)
      No.
      FAS 142-3,“Determination
      of the Useful Life of Intangible Assets”. The guidance is intended to improve
      the consistency between the useful life of a recognized intangible asset under
      Statement of Financial Accounting Standards (SFAS)
      No. 142,“Goodwill
      and Other Intangible Assets”, and the period of expected cash flows used to
      measure the fair value of the asset under SFAS
      No.
      141(R),Business
      Combinations, and other guidance under accounting principles generally accepted
      in the United States of America. FSP No. FAS 142-3 is effective for financial
      statements issued for fiscal years beginning after December 15, 2008, and
      interim periods within those years. Early adoption is prohibited. Paragraph
      11(d)of
      SFAS
      No. 142 requires entities to base assumptions for determining the useful life
      of
      a recognized intangible asset on the legal, regulatory, or contractual
      provisions that permit extending the asset’s useful life without appreciably
      adding to its cost. FSP No. FAS 142-3, requires that an entity must consider
      its
      own experience with similar arrangements in developing its assumptions. If
      an
      entity has had no similar arrangements, then it should consider the assumptions
      other market participants use. We are currently evaluating the impact this
      new
      Standard could have on our financial position and results of
      operations.




In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles” (”SFAS No. 162”). SFAS No. 162 identifies the sources of
      accounting principles and provides entities with a framework for selecting
      the
      principles used in preparation of financial statements that are presented in
      conformity with GAAP. The Board believes the GAAP hierarchy should be directed
      to entities because it is the entity (not its auditors) that is responsible
      for
      selecting accounting principles for financial statements that are presented
      in
      conformity with GAAP. The adoption of FASB 162 is not expected to have a
      material impact on the Company’s financial position.




On
      June
      16, 2008, the FASB issued final Staff Position ("FSP") No. EITF 03-6-1,
      "Determining Whether Instruments Granted in Share-Based Payment Transactions
      Are
      Participating Securities", to address the question of whether instruments
      granted in share-based payment transactions are participating securities prior
      to vesting. The FSP determined that unvested share-based payment awards that
      contain rights to dividend payments should be included in earnings per share
      calculations. The guidance will be effective for fiscal years beginning after
      December 15, 2008. Management is currently evaluating the impact this new
      standard could have on the Company’s financial position and results of
      operations.





**NOTE
          4.** **MAJOR
          SUPPLIER**





For
      the
      three and nine month periods ended August 31, 2008, the Company purchased all
      of
      its inventory from AH USA, a China-based business entity owned by the individual
      who is the inventor and sole owner of AcnEase, an acne product. The Company
      is
      party to a licensing agreement with AH USA under which the Company, as licensee,
      is the exclusive worldwide distributor of AcnEase.





On
      January 10, 2008, the Company and the individual owning the intellectual
      property rights related to AcnEase (the “Seller”) entered into a Purchase
      Agreement (“Agreement”) for the acquisition of all rights related to AcnEase,
      including the formulation thereof, all sourcing information, extraction
      procedures, manufacturing and packaging information as well as all related
      clinical and testing information and trade secrets. Consideration will consist
      of aggregate cash payments of $500,000 and issuances of 5,428,354 shares of
      common stock. In accordance with the Agreement, 3,500,000 shares of the
      Company’s common stock having a value of $19,250 were issued to Seller following
      the Agreement’s signing. Upon obtaining sufficient financing to complete the
      purchase of the rights related to AcnEase, and provide sufficient working
      capital to expand the business following such purchase, the Company will make
      an
      initial payment of $450,000 to the Seller in return for all the aforementioned
      information regarding the acne product. There is no date by which time the
      Company is required to obtain financing; however, the Agreement expires January
      10, 2009. The remaining portions of the purchase price, $50,000 cash and
      1,928,354 shares of common stock, will be held in escrow and released when
      certain conditions are met, principally the successful manufacturing of the
      acne
      product on a commercial scale. The aforementioned shares of common stock to
      be
      held in escrow have not been issued as of October 20, 2008, nor has the cash
      been escrowed.





The
      Agreement also requires the Company to purchase on an as-needed basis at a
      negotiated price any inventory of the acne product in the possession of the
      Seller at the time that the Company has the ability to manufacture the product.
      The value of the common stock issued in connection with this potential
      acquisition, or $19,250, is included in other assets as of August 31, 2008.


8




**Herborium
        Group, Inc.** **And
        Subsidiaries**
 **Notes
        To Condensed Consolidated Financial Statements**
 **As
        of August 31, 2008**
 **(Unaudited)**


**NOTE
      5. CONVERTIBLE NOTES PAYABLE**





Pursuant
      to a private offering (the “Offering”), through August 31, 2008, the Company
      sold Units of its securities consisting of an aggregate $450,000 in principal
      amount of its Convertible Notes (the “Notes”), 450,000 shares of its common
      stock and warrants (the “Warrants”) exercisable for 900,000 shares of common
      stock. In accordance with ETIF
      00-27: Application of Issue No. 98-5, “Accounting for Convertible Securities
      with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios
      to Certain Convertible Instruments”, the
      Company allocated certain amounts to the fair value of the shares of common
      stock and warrants to purchase common stock included in each Unit, as well
      as
      the 20% conversion discount applicable in certain circumstances. Based on this
      allocation, the indicated fair value of each Note (face value - $50,000) amounts
      to $47,505. The resulting discount of $2,495 is attributable to a warrant value
      of $1,662 and a common stock value of $833.




The
      Warrants are exercisable for a period of five years from issuance. 50% of the
      Warrants are exercisable at $.025 per share and 50% are exercisable at $.05
      per
      share, subject to certain adjustments, including, but not limited to,
      adjustments for stock splits, stock dividends, mergers and
      consolidations.




The
      Notes
      are convertible, beginning six months after issuance or, if earlier, the closing
      of a qualified financing or an acquisition of the Company, into shares of common
      stock in whole or in part from time to time at the option of the investors
      at a
      Conversion Price equal to $.025 or 80% of the issuance price in a qualified
      financing or in connection with an acquisition of the Company. The Notes define
      a qualified financing as the date upon which the Company completes the sale
      of
      common stock (or like security) for aggregate gross proceeds of at least $1.5
      million. The Conversion Price is subject to certain customary adjustments,
      including, but not limited to, adjustments for stock splits, stock dividends,
      mergers and consolidation.




The
      Notes
      bear interest at the rate of 10% per annum, payable semi-annually in shares
      of
      the Company’s common stock valued at $.025 per share (currently trading at $.01
      per share).




Unless
      converted to Common Stock, the principal balance of each Note is payable upon
      demand made any time after the first anniversary of the issuance of the Note,
      or
      upon a qualified financing or acquisition of the Company. In addition, the
      Company is required to escrow in a separate bank account 5% of its gross
      revenues for redemption of the principal amount of the Notes. The escrowed
      revenues are to be distributed to the Note holders semi-annually, pro rata
      in
      accordance with the outstanding principal balance of each Note. As of October
      20, 2008, none of the gross revenues have been escrowed as required.




Pursuant
      to a Registration Rights Agreement, the Company has agreed to include the shares
      of common stock issuable upon conversion of the Notes and exercise of the
      Warrants, as well as the shares of common stock issued to the investors, in
      any
      registration statement filed by the Company under the Securities Act of 1933
      with respect to the Company’s equity securities to be sold by the Company or any
      other stockholder.




The
      Company’s Board of Directors authorized the sale of up to an additional $125,000
      principal amount of the Notes as part of the Offering, in Units together with
      125,000 shares of common stock and Warrants exercisable for 250,000 shares
      of
      common stock. The Company’s Board of Directors has authorized two extensions for
      the closing date of the Offering, which is currently October 31, 2008. In the
      quarter ended August 31, 2008, the Company sold additional Units of its
      securities consisting of an aggregate $75,000 in principal amount of its
      Convertible Notes, 75,000 shares of its common stock and warrants exercisable
      for 150,000 shares of the common stock.





Southridge
      Investment Group LLC (“Southridge”) is serving as the Company’s placement agent
      in connection with the offer and sale of the Notes, common stock and Warrants.
      In its capacity as placement agent, Southridge is paid a cash fee equal to
      10%
      of the gross proceeds received by the Company, as well as an expense allowance
      equal to 2% of the gross proceeds. In addition, Southridge was issued Warrants
      exercisable for a number of shares of common stock equal to 10% of the aggregate
      shares issued by the Company in the private placement, assuming conversion
      and
      exercise of all of the Notes and Warrants. This amounts to Warrants exercisable
      for approximately 5.8 million shares of common stock valued at $58,000 based
      on
      the Black-Scholes Option Pricing Model and has been classified as a deferred
      financing cost and is being amortized over the life of the related debt. The
      placement agent warrants will be exercisable for 5 years at a price of $.03
      per
      share.





In
      its
      capacity as the Company’s financial advisor, Southridge is entitled to a
      retainer fee of 750,000 shares of the Company’s common stock, and one share for
      each $1 received by the Company in the private placement As of August 31, 2008,
      1,300,000 shares of common stock have been issued to Southridge at a value
      of
      $21,192 and has been classified as a deferred financing cost and is being
      amortized over the term of the related debt.




9


**Herborium
      Group, Inc.** **And
      Subsidiaries**


**Notes
      To Condensed Consolidated Financial Statements**


**As
      of August 31, 2008**


**(Unaudited)**





**NOTE
          6.** **LINES
          OF CREDIT AND CREDIT CARDS PAYABLE**





The
      Company has entered into four revolving line of credit agreements with
      commercial banks. The credit agreements provide for aggregate borrowings of
      up
      to $187,500 and are payable on demand with no maturity dates set forth in the
      loan agreements. Borrowings under these facilities bear interest at rates
      ranging from prime plus 1.25% to 14%.




The
      Company also has entered into a number of standard credit card agreements that
      it uses for business expenses. Borrowings under these agreements, which have
      no
      set maturity dates, bear interest at rates ranging from approximately 11% to
      40%.





**NOTE
          7.** **DUE
          TO STOCKHOLDERS**





Due
      to
      stockholders consists of unsecured non-interest bearing demand loans to the
      Company with no specified terms, including the payment of interest, and,
      accordingly, this liability is included in current liabilities and no interest
      expense has been accrued. Substantial repayments of amounts owed are not
      expected until such time as the Company has adequate funds available.





**NOTE
          8.** **KEY
          EMPLOYEES**





The
      Company relies extensively on the services of Drs. Agnes P. Olszewski and James
      P. Gilligan, its co-founders, who play key roles in all aspects of operations
      and management and the loss of their services would materially and adversely
      affect the Company’s prospects. Until the Company raises substantial financing,
      neither of these key individuals will be able to receive cash compensation.





**NOTE
          9.** **CONSULTING
          AGREEMENTS**





On
      January 19, 2007, the Board of Directors of the Company approved the Herborium
      Group, Inc. 2007 Stock Plan (“Plan”) which provides for a maximum aggregate of
      20 million shares of common stock to be issued upon grants of restricted stock
      or upon exercise of options granted under the Plan, as compensation and
      incentive to eligible employees, directors, consultants and advisors. On January
      26, 2007, the Company filed a Registration Statement on Form S-8 with the
      Securities and Exchange Commission in connection with the consultant’s shares.




On
      January 1, 2007, the Company entered into a two-year Consulting Agreement with
      an individual and in consideration of the services to be provided pursuant
      to
      the Financial Consulting Agreement, the Company agreed to initially issue up
      to
      9 million shares of the Company’s common stock pursuant and subject to the Plan,
      and when so issued, such shares shall be validly issued, fully paid and
      non-assessable, of which 7.5 million shares vested immediately, with 5.5 million
      of such shares being issued immediately. The remaining shares will vest over
      the
      term of the Consulting Agreement, and, in the event the Company acquires the
      AcnEase formula, up to an additional 3 million shares could be issued per terms
      of the Consulting Agreement. An additional 2,750,000 shares were issued in
      April
      2008. The shares issued and yet to be issued have been valued at $.05 per share
      based on the market value on the date granted for an aggregate cost of $450,000,
      which cost is being expensed over the period of the agreement. Accordingly,
      consulting expense in the amount of approximately $168,000 and $150,000 was
      recorded in general and administrative expense during each of the nine month
      periods ended August 31, 2008 and 2007, respectively.




On
      February 14, 2007, the Company entered into a two-year consulting agreement
      with
      a consulting firm and, in consideration of the services to be provided pursuant
      to that agreement, the Company agreed to issue up to 3 million shares of the
      Company’s common stock pursuant and subject to the Plan, and when so issued,
      such shares shall be validly issued, fully paid and non-assessable, of which
      500,000 shares vested and were issuable immediately. Of the remaining shares,
      500,000 will vest upon the occurrence of one or more transactions, as defined,
      and the remaining 2,000,000 will vest ratably on the sixth, ninth, twelfth
      and
      eighteenth month anniversaries of this agreement. 1,500,000 of such shares
      were
      issued as of November 30, 2007, with the remaining 1,500,000 shares issued
      during the period ended May 31, 2008, valued at $.035 per share based on the
      market value on the date granted for an aggregate cost of $105,000, which cost
      is being expensed over the period of the agreement. Accordingly, consulting
      expense in the amount of approximately $27,000 and $0 was recorded in general
      and administrative expense during the nine months ended August 31, 2008 and
      2007, respectively.




10




**Herborium
      Group, Inc.** **And
      Subsidiaries**


**Notes
      To Condensed Consolidated Financial Statements**


**As
      of August 31, 2008**


**(Unaudited)**





In
      September 2008, the Company’s Board of Directors has authorized two additional
      consulting agreements and, in consideration of the services to be provided
      pursuant to such agreements, the Company agreed to issue an aggregate of
      approximately 1.7 million shares of the Company’s common stock pursuant and
      subject to the Plan, and when so issued, such shares shall be validly issued,
      fully paid and non-assessable, and shall vest immediately.





**NOTE
          10.** **SUPPLEMENTAL
          DISCLOSURE OF CASH FLOW INFORMATION**





The
      following are the payments made during the nine months ended August 31, 2008
      and
      2007 for income taxes and interest:




2008
            
            2007Income
                taxes
            
            $
            —
            
            $
            —Interest
            
            $
            64,518
            
            $
            31,817





Noncash
      investing and financing activities:





During
                the nine months ended August 31, 2008 the Company
                issued:(i)
                3,500,000 shares of common stock valued at $19,250 for intellectual
                property rights.(ii)
                450,000 shares of common stock and 750,000 Warrants valued at $22,455
                to
                investors in connection with the issuance of Convertible
                Notes(iii)
                1,300,000 shares of common stock valued at $21,192 to an advisor
                in
                connection with the issuance of Convertible Notes(iv)
                5,800,000 Warrants valued at $.01 per share, or $58,000, to an advisor
                in
                connection with the issuance of Convertible Notes(v)
                4,250,000 shares of common stock valued at $190,000 to consultants
                for
                professional services




During
                the nine months ended August 31, 2007 the Company issued 5,500,000
shares
                of common stock valued at $275,000 to consultants for professional
                services





11


**Item
      2.**  **Management's
      Discussion And Analysis Or Plan Of Operation**





The
      following is management's discussion and analysis of certain significant factors
      that will or have affected our financial condition and results of operations.
      The discussion should be read in conjunction with our financial statements
      and
      the related notes and the other financial information appearing elsewhere in
      this report and included in the Company’s Annual Report on Form 10-KSB for the
      year ended November 30, 2007. In addition to historical information, the
      following discussion and other parts of this quarterly report contain words
      such
      as “may,” "estimates," "expects," "anticipates," "believes," “plan,” "grow,"
      "will," “could,” "seek," “continue,” “future,” “goal,” “scheduled” and other
      similar expressions that are intended to identify forward-looking information
      that involves risks and uncertainties. In addition, any statements that refer
      to
      expectations or other characterizations of future events or circumstances are
      forward-looking statements. Actual results and outcomes could differ materially
      as a result of important factors including, among other things, general economic
      conditions, the Company's ability to renew or replace key supply and credit
      agreements, fluctuations in operating results, committed backlog, public market
      and trading issues, risks associated with dependence on key personnel, and
      competitive market conditions in the Company's existing lines of business,
      as
      well as other risks and uncertainties. See “Risk Related To Our Business” and
“Risks Related To Our Stock” below.




**GENERAL**




We
      provide unique, natural and complementary healthcare related products to
      consumers and healthcare professionals seeking alternative answers to the
      management of healthcare issues not currently met by standard Western medicine.
      Our products are botanical supplements comprised of unique herbal formulations.
      We select products that have a record of clinical efficacy and safety
      established in China; however, these products have not been evaluated according
      to standards of clinical efficacy and safety applicable to pharmaceutical
      products sold in the United States and other countries, and because these
      products are herbal-based, they are not recognized as pharmaceuticals by the
      Food and Drug Administration (the "FDA").





Our
      business model is based on:





Ÿ
            owning
                and/or marketing unique products with established clinical history
                in
                their country of origin, and





Ÿ
            a
                proactive approach to meeting the regulatory changes and challenges
                of the
                new healthcare marketplace.




**FINANCIAL
      CONDITION**





We
      had
      net losses of $709,000 and $643,000 for the nine months ended August 31, 2008
      and the year ended November 30, 2007, respectively. As of August 31, 2008,
      we
      had cash and current assets of $4,000 and $52,000, respectively, and current
      liabilities of $1,733,000, with obligations aggregating $801,000 for trade
      creditors and accrued expenses, $66,000 for credit card obligations, $158,000
      payable for line of credit obligations, $24,000 for amounts due to others,
      $20,000 for amounts due to related parties, $227,000 for amounts due to
      stockholders and $437,000 of Convertible Notes. We have been operating at a
      loss
      since inception and have been funding these losses in a number of ways,
      including lines of credit, credit card debt, advances from stockholders and
      others and entering into subscription agreements with “friends and family” for
      investment funds. As described in Note 5 to the accompanying consolidated
      financial statements, we obtained $450,000 of debt financing ($390,000 net
      of
      financing costs) during the nine month period ended August 31, 2008. We continue
      to actively seek additional substantial equity or debt financing; however,
      we
      have received no commitments for such financing. Our working capital at August
      31, 2008, despite the aforementioned financing, is not sufficient to meet our
      working capital needs for the next twelve-month period and we will need to
      obtain additional financing from one or more sources.





Our
      independent registered public accounting firm added an explanatory paragraph
      to
      their audit reports issued in connection with our fiscal 2007 and 2006 financial
      statements, which states that there is substantial doubt about our ability
      to
      continue as a going concern. Our ability to generate sufficient profits and
      obtain additional funding and pay off our obligations will determine our ability
      to continue as a going concern. Our financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.





As
      described above, we merged into and with PMIC and became a publicly traded
      corporation; however, we have not closed, nor obtained a commitment for, the
      financing that was originally contemplated to close contemporaneously with
      the
      closing of the merger. As a result of this lack of funding, a condition
      unfavorably impacting us since inception, revenue and profitability have not
      increased as we believe would have otherwise been the case. Since we have not
      been able to obtain sufficient financing, we have not been able to (i) acquire
      ownership of several products, particularly the intellectual property rights
      to
      and formulation of, our principal product, AcnEase®, (ii) market and promote our
      products, (iii) conduct certain clinical trials that would further such
      marketing and promotional activities and (iv) hire additional employees.




12




**RELATED
      PARTY TRANSACTIONS**





During
      the nine months ended August 31, 2008, the Company's due to stockholders
      obligation increased by $26,000. During the nine months ended August 31, 2008,
      the Company's due to related parties obligation decreased by
      $15,000.





**COMPARISON
      OF THE THREE MONTHS ENDED AUGUST 31, 2008 TO THE THREE MONTHS ENDED AUGUST
      31,
      2007**





**Summary
      Results of Operations**





The
      following table sets forth certain selected financial data as a percentage
      of
      sales for the three months ended August 31, 2008 and 2007:





2008
            
            2007Net
                sales
            
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            47.8
            
            
            57.2Gross
                profit
            
            
            52.2
            
            
            42.8Operating
                expenses
            
            
            266.8
            
            
            138.3Loss
                from operations
            
            
            (214.6
            )
            
            (95.5
            )Interest
                expense
            
            
            (57.9
            )
            
            (7.4
            )Net
                loss
            
            
            (272.5
            )%
            
            (102.9
            )%





**Sales**





Net
      sales
      for the three months ended August 31, 2008, were $101,000 compared to $158,000
      for the three months ended August 31, 2007. The decrease of $57,000, or 36.1%,
      can be principally attributed to a decrease in internet sales in the United
      States resulting from changes in the Internet environment and the Company's
      on
      -going restructuring of its hosting and web-managing services. Together, those
      factors decreased internet visibility, traffic and conversion rate. These
      changes were undertaken to enhance the Company’s long-term ability to generate
      online sales volume, and management anticipates that the temporarily negative
      impact of the changes will begin to diminish in the quarter ending November
      30,
      2008.




**Gross
      Profit**





Gross
      profit decreased to $53,000 for the three months ended August 31, 2008 compared
      to $68,000 for the three months ended August 31, 2007, a decrease of $15,000
      or
      22.1%, with gross margin increasing to 52.2% from 42.8% for the prior period.
      The decrease in gross profit in the current period is principally attributable
      to the decrease in sales volume, partially offset by a higher realized gross
      margin. The lower gross margin in the earlier period was a result of higher
      product sales promotions in the period, as well as price incentives offered
      in
      response to certain delivery problems experienced in the period.





**Operating
      Expenses**





Total
      operating expenses increased by $51,000, or 23.2%, to $270,000 for the three
      months ended August 31, 2008, from $219,000 for the three months ended August
      31, 2007. A $56,000 increase in general and administrative expenses was
      principally attributable to increases of $10,000 in noncash consulting expense
      principally related to the amortization of grants of common stock over the
      term
      of the related consulting agreements, $16,000 in accrued professional fees,
      $24,000 on web site development and programming fees and additional travel
      expense of $12,000 incurred in part due to the Company’s business development
      efforts and meetings in connection with additional financing.





**Interest
      Expense**





Interest
      expense increased to $59,000 from $12,000 for the three months ended August
      31,
      2008 as compared with the three months ended August 31, 2007, or $47,000, due
      to
      interest on the Convertible Notes including amortization of deferred financing
      costs and debt discount.




13




**COMPARISON
      OF THE NINE MONTHS ENDED AUGUST 31, 2008 TO THE NINE MONTHS ENDED AUGUST 31,
      2007**





**Summary
      Results of Operations**





The
      following table sets forth certain selected financial data as a percentage
      of
      sales for the nine months ended August 31, 2008 and 2007:





2008
            
            2007Net
                sales
            
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            48.3
            
            
            47.0Gross
                profit
            
            
            51.7
            
            
            53.0Operating
                expenses
            
            
            235.7
            
            
            117.3Loss
                from operations
            
            
            (184.0
            )
            
            (64.3
            )Interest
                expense
            
            
            (39.5
            )
            
            (5.8
            )Net
                loss
            
            
            (223.5
            )%
            
            (70.1
            )%





**Sales**





Net
      sales
      for the nine months ended August 31, 2008, were $317,000 compared to $571,000
      for the nine months ended August 31, 2007. The decrease of $254,000, or 44.5%,
      can be principally attributed to a decrease in internet sales in the United
      States resulting from changes in the Internet environment and the Company's
      on-going restructuring of its hosting and web-managing services. Together,
      those
      factors decreased internet visibility, traffic and conversion rate. These
      changes were undertaken to enhance the Company’s long-term ability to generate
      online sales volume, and management anticipates that the temporarily negative
      impact of the changes will begin to diminish in the quarter ending November
      30,
      2008.




**Gross
      Profit**





Gross
      profit decreased to $164,000 for the nine months ended August 31, 2008 compared
      to $303,000 for the nine months ended August 31, 2007, a decrease of $139,000
      or
      45.9%, with gross margin decreasing to 51.7% from 53.0% for the prior period.
      The decrease in gross profit is principally attributable to the decrease in
      sales volume and, to a lesser extent, to the slightly lower gross margin
      realized in the current period.





**Operating
      Expenses**





Total
      operating expenses increased by $78,000, or 11.6%, to $747,000 for the nine
      months ended August 31, 2008, from $669,000 for the nine months ended August
      31,
      2007. A $90,000 decrease in marketing and selling expenses is principally due
      to
      a decrease in on-line advertising and promotion expense of $75,000 during the
      period of website design and programming described above since the effectiveness
      of such expenses would have been diminished, and a decrease of $15,000 in sales
      commissions. A $168,000 increase in general and administrative expenses was
      principally attributable to an increase of $62,000 in consulting expense
      principally related to the expense of grants of common stock over the term
      of
      the related consulting agreements, $19,000 in printing, transfer agent and
      other
      public company administrative fees, $27,000 on web site development and
      programming fees and additional travel expense of $35,000 incurred in part
      due
      to the Company’s business development efforts and meetings in connection with
      additional financing.





**Interest
      Expense**





Interest
      expense increased to $125,000 from $33,000 for the nine months ended August
      31,
      2008 as compared with the nine months ended August 31, 2007, or $92,000, due
      to
      interest on the Convertible Notes including amortization of deferred financing
      costs and debt discount.





**Seasonality**





There
      are
      no seasonality factors that affect the Company.




14




**Off-Balance
      Sheet Arrangements**





The
      Company has no off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on the Company’s financial condition, changes
      in financial condition, revenue or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to investors, and
      the
      Company does not have any non-consolidated special purpose
      entities.





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      August 31, 2008, we had a cash balance of $4,000 and a negative cash flow from
      operations of $282,000 for the nine-month period then ended. We have been
      operating at a loss since inception and have been funding these losses in a
      number of ways, including lines of credit, credit card debt, advances from
      stockholders and entering into subscription agreements with “friends and family”
for investment funds. As described in Note 5 to the accompanying consolidated
      financial statements, we obtained $450,000 of debt financing ($390,000 net
      of
      financing costs) in the form of Convertible Notes during the nine month period
      ended August 31, 2008. We continue to actively seek additional substantial
      equity or debt financing; however, we have received no commitments for such
      financing. Our working capital at August 31, 2008, despite the aforementioned
      financing, is not sufficient to meet our working capital needs for the next
      twelve-month period and we will need to obtain additional financing from one
      or
      more sources.





Our
      independent registered public accounting firm added an explanatory paragraph
      to
      their audit reports issued in connection with our fiscal 2007 and 2006 financial
      statements, which states that there is substantial doubt about our ability
      to
      continue as a going concern. Our ability to generate profits and obtain
      additional funding and pay off our obligations will determine our ability to
      continue as a going concern. Our financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.




Below
      is
      a discussion of our sources and uses of funds for the nine months ended August
      31, 2008 and 2007.





**Net
      Cash Used In Operating Activities**





Net
      cash
      used in operating activities was $282,000 and $48,000 for the nine months ended
      August 31, 2008 and 2007, respectively. Cash used in operating activities for
      the nine months ended August 31, 2008 was principally the result of a net loss
      of $709,000, partially offset by noncash expenses of $272,000 and an increase
      in
      accounts payable and accrued expenses of $160,000. Net cash used in operating
      activities for the nine months ended August 31, 2007 was principally the result
      of a net loss of $400,000, offset by non-cash expenses of $153,000 and an
      increase in accounts payable and accrued expenses of $178,000.





**Net
      Cash Used In Investing Activities**





Net
      cash
      used in investing activities was $19,000 and $3,000 for the nine months ended
      August 31, 2008 and 2007, respectively. Cash used in investing activities for
      the nine months ended August 31, 2008 consisted of purchases of equipment of
      $9,000 and purchases of other assets, principally expenditures for trademarks,
      of $10,000. Cash used in investing activities for the nine months ended August
      31, 2007 consisted of purchases of other assets, principally expenditures for
      trademarks, of $3,000.





**Net
      Cash Provided By Financing Activities**





Net
      cash
      provided by financing activities for the nine months ended August 31, 2008
      and
      2007 amounted to $302,000 and $49,000, respectively. Net cash provided by
      financing activities for the nine months ended August 31, 2008 was principally
      attributable to proceeds from the issuance of convertible notes in the principal
      amount of $450,000 ($390,000 net of financing costs), offset by decreases of
      $63,000 in credit card payable, $27,000 in due to others and $15,000 in due
      to
      related parties. Net cash provided by financing activities for the nine months
      ended August 31, 2007 was principally attributable to an increase of $33,000
      in
      amount due to stockholders.





**Stock
      Issuance and Stock Plan**





On
      January 1, 2007, we entered into a two-year consulting agreement with an
      individual and, in consideration of the financial consulting services to be
      provided under the consulting agreement, we agreed to initially issue up to
      nine
      million shares of our common stock pursuant and subject to the Herborium Group,
      Inc. 2007 Stock Plan (the “Plan”). As of August 31, 2008, 8.25 million of these
      shares have vested and we have issued 7.25 million shares. The remaining
      1,000,000 unvested shares will vest over the term of the consulting agreement.
      In addition, in the event certain transactions are consummated, up to an
      additional six million shares could be issued per terms of the agreement. The
      shares issued and yet to be issued have been valued at $.05 per share based
      on
      the market value on the date granted for an aggregate cost of $450,000, which
      cost is being expensed over the period of the agreement. Accordingly, we
      recorded as expense approximately $168,000 and $150,000 during the nine months
      ended August 31, 2008 and 2007.




15




On
      February 14, 2007, the Company entered into a two-year consulting agreement
      with
      a consulting firm and, in consideration of the services to be provided pursuant
      to that agreement, the Company agreed to issue up to 3 million shares of the
      Company’s common stock pursuant and subject to the Plan, and when so issued,
      such shares shall be validly issued, fully paid and non-assessable, of which
      500,000 shares vested and were issuable immediately. Of the remaining shares,
      500,000 will vest upon the occurrence of one or more transactions, as defined,
      and the remaining 2,000,000 will vest ratably on the sixth, ninth, twelfth
      and
      eighteenth month anniversaries of this agreement. The shares, 1,500,000 of
      which
      have been issued as of August 31, 2008, have been valued at $.035 per share
      based on the market value on the date granted for an aggregate cost of $105,000,
      which cost is being expensed over the period of the agreement. Accordingly,
      consulting expense in the amount of approximately $27,000 and $0 was recorded
      in
      general and administrative expense during the nine months ended August 31,
      2008
      and 2007.




In
        September 2008, the Company’s Board of Directors has authorized two additional
        consulting agreements and, in consideration of the services to be provided
        pursuant to such agreements, the Company agreed to issue an aggregate of
        approximately 1.7 million shares of the Company’s common stock pursuant and
        subject to the Plan, and when so issued, such shares shall be validly issued,
        fully paid and non-assessable, and shall vest immediately.


Our
      Board
      of Directors approved the Plan on January 19, 2007. The Plan provides for a
      maximum aggregate of 20 million shares of common stock to be issued upon grants
      of restricted stock or upon exercise of options granted under the Plan, as
      compensation and incentive to eligible employees, directors, consultants and
      advisors. On January 26, 2007, we filed a Registration Statement on Form S-8
      with the Securities and Exchange Commission to in connection with the
      Plan.




**RISK
      FACTORS**




*Our
      business and results of operations are subject to numerous risks, uncertainties
      and other factors that you should be aware of, some of which are described
      below
      and in the section entitled “Cautionary Statement Concerning Forward-Looking
      Statements.” . In addition to the other information included in this Quarterly
      Report on Form 10-QSB, you should carefully review and consider the factors
      discussed in* *the
      section titled "Description of Business" (Item 1) -"Risks Related to Our
      Business"* *of
      our Annual Report on Form 10-KSB for the year ended November 30, 2007, certain
      of which have been updated below. These factors materially affect our business,
      financial condition or future results of operations. The risks, uncertainties
      and other factors described in our Annual Report on Form 10-KSB and below are
      not the only ones facing our company. Additional risks, uncertainties and other
      factors not presently known to us or that we currently deem immaterial may
      also
      impair our business operations, financial condition or operating results. Any
      of
      the risks, uncertainties and other factors could cause the trading price of
      our
      common stock to decline substantially.*




**Risks
      Relating to Our Business**





***We
      have a history of losses, and will incur additional
      losses.***





We
      are a
      company with a limited history of operations, and do not expect to significantly
      increase ongoing revenues from operations in the immediately foreseeable future.
      To date, we have not been profitable. We had a net loss of $709,000 during
      the
      nine months ended August 31, 2008 and $643,000 for the year ended November
      30,
      2007. Our losses have resulted principally from costs incurred in product
      development, including product testing and selection, and from general and
      administrative costs associated with our operations. While we seek to attain
      profitability, we cannot be sure that we will ever achieve product and other
      revenue sufficient for us to attain this objective.





With
      the
      exception of *AcnEase®* ,
      our
      product candidates are in research or various stages of development. For some
      of
      these products we will want to conduct additional research, development and
      clinical trials in order to improve our ability to advertise and differentiate
      these products from others in the market place. We cannot be sure that we will
      successfully research, develop, commercialize, manufacture and market any other
      product candidates. We expect that these activities, together with future
      general and administrative activities, will result in significant expenses
      for
      the foreseeable future.




16




**Item
      3 A(T).**  **Controls
      And Procedures**





**(A)
      Evaluation Of Disclosure Controls And Procedures**





Prior
      to
      the filing of this Report on Form 10-QSB, an evaluation was performed under
      the
      supervision of and with the participation of the Company’s management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of
      the Company’s disclosure controls and procedures. Based on the evaluation of our
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”) as of August 31, 2008, our Chief Executive Officer and Chief Financial
      Officer has concluded that the Company’s disclosure controls and procedures were
      effective to ensure that information required to be disclosed by the Company
      in
      reports that it files or submits under the Securities Exchange Act of 1934,
      as
      amended, is recorded, processed, summarized and reported within the time periods
      specified in SEC rules and forms, and is accumulated and communicated to the
      Company’s management, as appropriate, to allow timely decisions regarding
      required disclosure. It should be noted that the design of any system of
      controls is 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, regardless
      of
      how remote.





**(B)
      Changes In Internal Controls**





During
      the quarter ended August 31, 2008, there were no significant changes in the
      Company’s internal control over financial reporting that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.




17


**Part
      II-Other Information**





**Item
      1.**  **Legal
      Proceedings**





None.





**Item
      2.**  **Unregistered
      Sales Of Equity Securities And Use Of Proceeds**





Pursuant
      to a private offering, during the period from February 2008 through August
      31,
      2008, we sold Units of our securities consisting of an aggregate $450,000 in
      principal amount of our Convertible Notes (the “Notes”), 450,000 shares of our
      Common Stock and warrants (the “Warrants”) exercisable for 900,000 shares of our
      Common Stock.





The
      Warrants are exercisable for a period of five years from issuance. Half of
      the
      Warrants are exercisable at $.025 per share and half are exercisable at $.05
      per
      share, subject to certain adjustments, including, but not limited to,
      adjustments for stock splits, stock dividends, mergers and
      consolidations.





The
      Notes
      are convertible, beginning six months after issuance or, if earlier, the closing
      of a qualified financing or an acquisition of the Company, into shares of Common
      Stock in whole or in part from time to time at the option of the investors
      at a
      Conversion Price equal to




·
            $.025
                or


·
            80%
                of the issuance price in a qualified financing or in connection with
                an
                acquisition of the Company. The Notes define a qualified financing
                as the
                date upon which the Company completes the sale of Common Stock (or
                like
                security) for aggregate gross proceeds of at least $1.5 million.





The
      Conversion Price is subject to certain customary adjustments, including, but
      not
      limited to, adjustments for stock splits, stock dividends, mergers and
      consolidation.





The
      Notes
      bear interest at the rate of 10% per annum, payable semi-annually in shares
      of
      the Company’s common stock valued at $.025 per share (currently trading at $.01
      per share).





Unless
      converted to Common Stock, the principal balance of the each Note is payable
      upon demand made any time after the first anniversary of the issuance of the
      Note, or upon a qualified financing or acquisition of the Company. In addition,
      we are required to set aside 5% of gross revenue for redemption of the principal
      amount of the Notes. None of the aforementioned cash has been set aside as
      of
      October 20, 2008. The set-aside revenue will be distributed to the Note holders
      semi-annually, pro rata in accordance with the outstanding principal balance
      of
      each Note.





Pursuant
      to a Registration Rights Agreement, we have agreed to include the shares of
      Common Stock issuable upon conversion of the Notes and exercise of the Warrants,
      as well as the shares of Common Stock issued to the investors, in any
      registration statement filed by the Company under the Securities Act of 1933
      with respect to our equity securities to be sold by us or any other
      stockholder.





Our
      Board
      of Directors has authorized the sale of up to an additional $125,000 principal
      amount of the Notes, in Units together with 125,000 shares of Common Stock
      and
      Warrants exercisable for 250,000 shares of Common Stock.





Southridge
      Investment Group is serving as the placement agent in connection with the offer
      and sale of the Notes, Common Stock and Warrants. In its capacity as placement
      agent, Southridge will be paid a cash fee equal to 10% of the gross proceeds
      received by the Company, as well as an expense allowance equal to 2% of the
      gross proceeds. In addition, Southridge will be issued Warrants exercisable
      for
      a number of shares of Common Stock equal to 10% of the aggregate shares issued
      by the Company in the private placement, assuming conversion and exercise of
      all
      of the Notes and Warrants. This amounts to Warrants exercisable for
      approximately 5.8 million shares of common stock. The placement agent warrants
      will be exercisable for 5 years at a price of $.03 per share. In its capacity
      as
      the Company’s financial advisor, Southridge is entitled to and received a
      retainer fee of 750,000 shares of our Common Stock, and one share for each
      $1
      received by the Company in the private placement. A s
      of
      August 31, 2008, 1,300,000 shares of common stock have been issued to
      Southridge.




18




The
      offer
      and sale of the Notes, Common Stock and Warrants, and the Common Stock into
      which the Notes may be converted and for which the Warrants may be exercised
      (collectively, the “Securities”) by the Company to the investors was exempt from
      registration under the Securities Act in reliance upon Section 4(2) thereof
      and
      Rule 506 of Regulation D promulgated thereunder. Each of the investors
      represented and warranted to us that it was an “accredited investor” as that
      term is defined in Rule 501(a) of Regulation D. Each of the investors further
      represented and warranted that it was purchasing the Securities for its own
      account and not with a present view towards the public sale or distribution
      thereof, except pursuant to sales registered or exempted from registration
      under
      the Securities Act. Any certificates issued representing the Notes, Common
      Stock
      or Warrants will be legended to indicate that they are restricted. No sale
      of
      the Securities involved the use of underwriters.




**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





**Item
      4.****Submission
      Of Matters To A Vote Of Security Holders******





None.





**Item
      5.**  **Other
      Information**





None.





**Item
      6.**  **Exhibits**




Exhibits
      are incorporated herein by reference or are filed with this Quarterly Report
      as
      set forth in the Exhibit Index beginning on page 22 hereof.





19




**S** **ignatures**





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.





**Herborium
      Group, Inc.**





*By:*
            */s/Agnes
                Olszewski.**Name:
                Agnes Olszewski.**Title:  President and Chief Executive Officer (Principal Executive Officer) and**Chief
                Financial Officer (Principal Accounting Officer)**Date:*October 20, 2008





20




Exhibit
      Index


Herborium
      Group, Inc.


Form
      10-QSB for Quarter Ended August 31, 2008





**Exhibit No.**
            
            **Description****(1)**2.1
            
            Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.’s Current Report on Form 8-K filed on
                August 16, 2006).2.2
            
            Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.’s Current Report on Form 8-K filed on August 16,
                2006).2.3
            
            Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium, Inc.
                (incorporated by reference to Exhibit 2.3 to the Company’s Current Report
                on Form 8-K filed on September 22, 2006)3(i)
            
            Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp. (incorporated by reference to Exhibit 3(i) to
                the
                Company’s Current Report on Form 8-K filed on September 22,
                2006)3(ii)
            
            Amended
                and Restated Bylaws of Pacific Magtron International Corp. (incorporated
                by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K
                filed on September 22, 2006)4.1
            
            Form
                of Convertible Note (incorporated by reference to Exhibit 4.1 to
                the
                Company’s Current Report on Form 8-K filed on February 25,
                2008)4.2
            
            Form
                of Warrant (incorporated by reference to Exhibit 4.2 to the Company’s
                Current Report on Form 8-K filed on February 25, 2008)4.3
            
            Form
                of Registration Rights Agreement (incorporated by reference to Exhibit
                4.3
                to the Company’s Current Report on Form 8-K filed on February 25,
                2008)10.1
            
            Form
                of Subscription Agreement (incorporated by reference to Exhibit 10.1
                to
                the Company’s Current Report on Form 8-K filed on February 25,
                2008)31
            
            Rule
                13a-14(a) Certification of Chief Executive Officer and Chief Financial
                Officer32
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002





**(1)** In the
      case of incorporation by reference to documents filed by the registrant under
      the Securities Exchange Act of 1934, as amended, the registrant’s file number
      under the Exchange Act is 000-25277.





21