**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, 2006





o
      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.)





**3
      Oak Street, Teaneck, NJ 07666**


(Address
      Of Principal Executive Offices)





**(888)
      836-2424**


(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 o**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) **Yes o
      No x**





As
      of
      October 9, 2006, there were 108,567,080 shares of the registrant's common stock,
      par value $.001 per share, issued and outstanding.





Transmittal
      Small Business Disclosure Format (Check One):


**Yes o
      No x**





**Herborium
      Group, Inc.**


**Index
      To Form 10-QSB**





**Part
      I-Financial Information**





**Item
                1.**
            Condensed
                Consolidated Financial Statements (Unaudited)
            1Condensed
                Consolidated Balance Sheets as of August 31, 2006 (Unaudited) and
                November
                30, 2005
            1Condensed
                Consolidated Statements of Operations for the Three and Nine Months
                Ended
                August 31, 2006 and 2005 (Unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended August
                31,
                2006 and 2005 (Unaudited)
            3Condensed
                Consolidated Statement of Changes in Stockholders’ Deficiency for the Nine
                Months Ended August 31, 2006 (Unaudited)
            4Notes
                to Condensed Consolidated Financial Statements as of August 31, 2006
                (Unaudited)
            5**Item
                2.**
            Management’s
                Discussion and Analysis or Plan of Operation
            7**Item
                3.**
            Controls
                and Procedures
            16





**Part
      II-Other Information**





**Item
                1.**
            Legal
                Proceedings
            17**Item
                2.**
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            17**Item
                3.**
            Defaults
                Upon Senior Securities
            17**Item
                4.**
            Submission
                of Matters to a Vote of Security Holders
            17**Item
                5.**
            Other
                Information
            17**Item
                6.**
            Exhibits
            17








*In
      this report, the terms the “Company”, “we”, “our” and “us” refer to Herborium
      Group, Inc. and unless the context otherwise requires, the Company’s
      wholly-owned subsidiary, Herborium.com, Inc. (“Herborium.com”).*





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. The Act may, in certain
      circumstances, limit our liability in any lawsuit based on forward-looking
      statements that we have made. All statements, other than statements of
      historical facts, included in this 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. Further, any forward-looking statement
      speaks only as of the date on which it is made, and we undertake no obligation
      to update any forward-looking statement to reflect events or circumstances
      after
      the date on which the statement is made or to reflect the occurrence of
      unanticipated events.*








**Herborium
      Group, Inc. And Subsidiary**


**Condensed
      Consolidated Balance Sheets**




August
                31, 2006
            
            
            November
                30,2005(Unaudited)
            
            
            (Note)ASSETSCurrent
                assets:Cash
            
            $
            -
            
            $
            182Accounts
                receivable
            
            
            4,762
            
            
            23,266Inventory
            
            
            58,480
            
            
            56,740Prepaid
                expenses and other current assets
            
            
            2,177
            
            
            2,528Total
                current assets
            
            
            65,419
            
            
            82,716Property
                and equipment, net of accumulated depreciationof
                $18,271; $16,039-2005
            
            
            6,914
            
            
            8,459Other
                assets
            
            
            25,652
            
            
            20,553Total
                assets
            
            $
            97,985
            
            $
            111,728LIABILITIES
                AND STOCKHOLDERS’ DEFICIENCYCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            183,059
            
            $
            36,852Credit
                cards payable
            
            
            131,311
            
            
            121,330Lines
                of credit payable
            
            
            176,808
            
            
            181,425Current
                portion of long-term debt
            
            
            2,144
            
            
            2,640Other
                loans
            
            
            13,000
            
            
            -Due
                to stockholders
            
            
            169,157
            
            
            149,443Total
                current liabilities
            
            
            675,479
            
            
            491,690Long-term
                debt, net of current portion
            
            
            306
            
            
            3,228Total
                liabilities
            
            
            675,785
            
            
            494,918Stockholders’
                deficiency:Common
                stock, $0.001 par value; 500,000,000 sharesauthorized,
                108,567,080 shares issued and outstanding
            
            
            20,000
            
            
            20,000Common
                stock subscribed; no shares issued and outstanding
            
            
            188,500
            
            
            188,500Additional
                paid-in capital
            
            
            180,000
            
            
            180,000Accumulated
                deficit
            
            
            (966,300
            )
            
            (771,690
            )Total
                stockholders’ deficiency
            
            
            (577,800
            )
            
            (383,190
            )Total
                liabilities and stockholders’ deficiency
            
            $
            97,985
            
            $
            111,728





Note:
            The
                balance sheet at November 30, 2005 has been derived from the audited
                financial statements at that date.




See
      accompanying notes to condensed consolidated
      financial statements


1




**Herborium
        Group, Inc. And Subsidiary**
 **Condensed
        Consolidated Statements of Operation**





Three
                months ended August 31,
            
            
            Nine
                months endedAugust
                312006
            
            
            2005
            
            
            2006
            
            
            2005Net
                sales
            
            $
            181,711
            
            $
            209,531
            
            $
            568,695
            
            $
            621,335Cost
                of sales
            
            
            73,853
            
            
            79,942
            
            
            259,388
            
            
            271,707Gross
                profit
            
            
            107,858
            
            
            129,589
            
            
            309,309
            
            
            349,628Operating
                expenses
            
            
            149,770
            
            
            156,646
            
            
            468,701
            
            
            393,806Loss
                from operations
            
            
            (41,912
            )
            
            (27,057
            )
            
            (159,392
            )
            
            (44,178
            )Interest
                expense
            
            
            11,132
            
            
            10,062
            
            
            33,081
            
            
            27,319Loss
                before provision for income taxes
            
            
            (53,044
            )
            
            (37,119
            )
            
            (192,473
            )
            
            (71,497
            )Provision
                for income taxes
            
            
            624
            
            
            1,244
            
            
            2,137
            
            
            13,195Net
                loss
            
            $
            (53,668
            )
            $
            (38,363
            )
            $
            (194,610
            )
            $
            (74,692
            )Net
                loss per share, basic and diluted
            
            $
            0.00
            
            $
            0.00
            
            $
            0.00
            
            $
            0.00Weighted
                average number of common shares outstanding - basic and
                diluted
            
            
            108,567,080
            
            
            108,567,080
            
            
            108,567,080
            
            
            108,567,080





See
      accompanying notes to condensed consolidated
      financial statements


2


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


Nine
                months endedAugust
                31,2006
            
            
            2005(Unaudited)Cash
                flows from operating activities:Net
                loss
            
            $
            (194,610
            )
            $
            (74,692
            )Adjustments
                to reconcile net loss to
              net
                cash used in operating activities:Depreciation
                and amortization
            
            
            3,772
            
            
            (3,940
            )Changes
                in assets (increase) decrease:Accounts
                receivable
            
            
            18,504
            
            
            (3,021
            )Inventory
            
            
            (1,740
            )
            
            16,300Prepaid
                expenses and other current assets
            
            
            351
            
            
            (517
            )Changes
                in liabilities increase (decrease):Accounts
                payable and accrued expenses
            
            
            146,207
            
            
            4,561Net
                cash used in operating activities
            
            
            (27,516
            )
            
            (53,429
            )Cash
                flows from investing activities:Purchase
                of equipment
            
            
            (686
            )
            
            (2,931
            )Purchase
                of amortizable assets
            
            
            (6,640
            )
            
            (1,762
            )Net
                cash used in investing activities
            
            
            (7,326
            )
            
            (4,693
            )Cash
                flows from financing activities:Proceeds
                (repayment) of lines of credit
            
            
            (4,617
            )
            
            8,281Repayment
                of long-term debt
            
            
            (3,418
            )
            
            (114
            )Increase
                in due to stockholders
            
            
            19,714
            
            
            37,831Increase
                in credit card payable
            
            
            9,981
            
            
            12,867Increase
                in other loans
            
            
            13,000
            
            
            -Net
                cash provided by financing activities
            
            
            34,660
            
            
            58,865Net
                increase (decrease) in cash
            
            
            (182
            )
            
            743Cash,
                beginning of period
            
            
            182
            
            
            -Cash,
                end of period
            
            $
            -
            
            $
            743Supplemental
                disclosures of cash flow information:Cash
                paid during the period for:Income
                taxes
            
            $
            1,137
            
            $
            1,766Interest
            
            
            33,081
            
            
            27,319





See
      accompanying notes to condensed consolidated
      financial statements





3





**Herborium
      Group, Inc. And Subsidiary**


**Condensed
        Consolidated Statement Of Stockholders’ Deficiency**
 **For
        The Nine Months Ended August 31,
        2006**


**(Unaudited)**


**Common
                Stock**
            
            
            **Common
                StockSubscribed**
            
            
            **Additional**
              **Paid
                in**
            
            
            **Accumulated****Shares**
            
            
            **Amount**
            
            
            **Shares**
            
            
            **Amount**
            
            
            **Capital**
            
            
            **Deficit**
            
            
            **Total**Balance,
                December 1, 2005
            
            
            108,567,080
            
            $
            20,000
            
            
            -
            
            $
            188,500
            
            $
            180,000
            
            
            ($771,690
            )
            
            ($383,190
            )Net
                loss for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (194,610
            )
            
            (194,610
            )Balance,
                August 31, 2006
            
            
            108,567,080
            
            $
            20,000
            
            
            -
            
            $
            188,500
            
            $
            180,000
            
            
            ($966,300
            )
            
            ($577,800
            )





See
      accompanying notes to condensed consolidated
      financial statements





4


**Herborium
      Group, Inc. And Subsidiary**


**Condensed
      Consolidated Statement Of Stockholders’ Deficiency**


**For
      The Nine Months Ended August 31, 2006**


**(Unaudited)**




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





Herborium,
      Inc., (the “Company”) was incorporated in the State of Delaware on June 4, 2002,
      and is the surviving entity following a merger of G.O. International, Inc.
      (“G.O.”), a New Jersey corporation, with and into the Company effective June 6,
      2002. 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 Federal 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.





On
      November 11, 2005, the Company entered into a Letter of Intent (“LOI”) to merge
      with Pacific Magtron International Corporation, Inc. (“PMIC”), a publicly traded
      Nevada Corporation, that on May 11, 2005 filed a voluntary petition to
      reorganize under Chapter 11 of the United States Bankruptcy Code. On August
      11,
      2006, the Bankruptcy Court entered an order confirming an amended plan of
      reorganization. Under the provisions of the LOI and the plan of reorganization,
      the stockholders of the Company exchanged 100% of their common stock of the
      Company for an 85% post-Merger interest in PMIC immediately following the
      Merger, with the Company being the surviving entity. The Merger was consummated
      on September 18, 2006, with existing outstanding common shares of PMIC being
      cancelled under the plan of reorganization. The distribution of shares of
      Herborium Group common stock to PMIC shareholders is expected to be completed
      by
      the end of October 2006. 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 will be issued and
      outstanding. This number of shares was used in calculations of net loss per
      share for all periods presented on a retroactive basis.





Although
      PMIC is deemed the legal acquirer, the Company is deemed the accounting acquirer
      since generally accepted accounting principles require that the entity whose
      stockholders retain a majority interest in a combination be treated as the
      acquirer under purchase accounting rules. 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.




**NOTE
        2. **SIGNIFICANT
        ACCOUNTING POLICIES****




a.  Principles
      of consolidation





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





b.  Estimates





The
      preparation of consolidated 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.




c.
Interim
      condensed consolidated financial statements


The
      accompanying consolidated financial statements have been prepared in accordance
      with generally accepted accounting principles and reflect all adjustments which
      management believes necessary (which include only normal recurring accruals)
      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, 2005, and are not
      necessarily indicative of the results to be expected for the full year.




5




**Herborium
        Group, Inc. And Subsidiary**
 **Condensed
        Consolidated Statement Of Stockholders’ Deficiency**
 **For
        The Nine Months Ended August 31, 2006**
 **(Unaudited)**
 **NOTE
          3. **DUE
          TO STOCKHOLDERS****





For
      the
      nine months ended August 31, 2006 and 2005, due to stockholders, which consists
      of unsecured demand loans to the Company with no specified terms, increased
      by
      $19,714 and $37,831, respectively.


**** **NOTE
          4. COMMITMENTS AND CONTINGENCIES**





On
      September 18, 2006 the Company entered into an employment agreement with Dr.
      Olszewski who will serve as President, Chief Executive Officer and Acting Chief
      Financial Officer until such time as the Company hires a controller or Chief
      Financial Officer. Dr. Olszewski will have the position of Chairman of the
      Board
      of Directors. The employment agreement provides for an initial four-year term
      of
      employment, with an addition twelve-month extension at Dr. Olszewski’s option.
      Under the agreement, Dr. Olszewski is not required to work full-time until
      such
      time as the Company receives debt or equity financing in an aggregate of amount
      of $1,250,000.00 or more. Until the Company obtains such amount of financing,
      Dr. Olszewski will receive 75% of her base salary. Her annual base salary is
      $200,000 with a bonus equal to (i) for the first three years, 5% of EBITDA
      (as
      defined in the agreement) and (ii) thereafter 5% of Net Income before bonus
      (as
      defined in the agreement). She will be eligible for an additional bonus ranging
      from $75,000 to $200,000 in the event that the Company’s Pre-Tax Income for a
      fiscal year exceeds that of the prior fiscal year by 150% or more.





On
      September 18, 2006 the Company entered into a consulting and employment
      agreement with Dr. Gilligan who will serve as co-President and Chief Operating
      Officer. The agreement provides for an initial term of employment expiring
      on
      September 20, 2011, with an addition twelve-month extension at Dr. Gilligan’s
      option. Under the agreement, Dr. Gilligan’s employment will not commence until
      six months after the Company receives debt or equity financing in the aggregate
      amount of $2,500,000.00, and until such date, Dr. Gilligan will serve as a
      consultant to the Company at an hourly rate of $120.00 per hour and will be
      permitted to continue his full-time employment elsewhere. Upon his full-time
      employment, his annual base salary will be $200,000 with a bonus equal to (i)
      for the first three years, 5% of EBITDA (as defined in the agreement) and (ii)
      thereafter 5% of Net Income before bonus (as defined in the agreement). He
      will
      be eligible for an additional bonus ranging from $75,000 to $200,000 in the
      event that the Company’s Pre-Tax Income for a fiscal year exceeds that of the
      prior fiscal year by 150% or more.





Under
      the
      employment agreements, Dr. Olszewski and Dr. Gilligan each will be an eligible
      participant under one or more stock option plans adopted by the Company. Dr.
      Olszewski and Dr. Gilligan will be subject to non-competition provisions during
      the term of the agreements or until September 30, 2012 in the event that either
      extends their agreement for the additional twelve-month period. Dr. Olszewski’s
      and Dr. Gilligan’s employment may be terminated in the event of extended
      disability or incapacity or a “For Cause Event” as defined in the agreement. Dr.
      Olszewski and Dr. Gilligan may terminate their employment voluntarily with
      180
      days prior written notice, upon a material breach of the agreement by the
      Company with 10 days prior written notice and upon a “Change of Control” as
      defined in the agreement upon 90 days prior written notice. In the event of
      his
      termination, Dr. Olszewski and Dr. Gilligan or their beneficiaries, as the
      case
      may be, will have the right to receive all accrued but unpaid base salary.
      In
      the event of death, termination based on a material breach by us or our
      termination of either party for any reason other than a For Cause Event, that
      party will be entitled to receive $600,000. In the event that employment is
      terminated for or after a Change of Control, that party will be entitled to
      receive an amount equal to the product of his or her base salary multiplied
      by
      2.99. After (i) the expiration of the term (including an extension of one year
      by either party) or (ii) voluntary termination of the employment agreement,
      each
      individual may, at their or the Company’s option in the case of clause (i) or at
      our option in the case of clause (ii), act as a consultant to the Company for
      one year and receive compensation equal to 50% of his or her base
      salary.




**NOTE
      5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES**


Accounts
        payable and accrued expenses at August 31, 2006 includes accrued salaries
        of
        approximately $84,000 due to the Company’s two principal stockholders.


6





**Herborium
      Group, Inc. And Subsidiary**


**Condensed
      Consolidated Statement Of Stockholders’ Deficiency**


**For
      The Nine Months Ended August 31, 2006**


**(Unaudited)**


**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.
      Certain statements under this section may constitute "forward-looking
      statements". The following discussion should be read in conjunction with the
      audited financial statements and notes thereto included in the Company's Form
      8-K dated September 22, 2006.





**FINANCIAL
      CONDITION**





We
      had
      net losses of $194,610 and $74,692 during the nine months ended August 31,
      2006
      and 2005, respectively. As of August 31, 2006, we had cash and current assets
      of
      $0 and $65,419, respectively, and current liabilities of $675,479, with
      obligations aggregating $183,059 for trade creditors and accrued expenses,
      $131,311 and $176,808 payable for credit card and lines of credit obligations,
      respectively, and $169,157 due to stockholders. We have been operating at a
      loss
      since inception and have been funding these losses in a number of ways,
      including lines of credit, credit card debt, advances from stockholders and
      entering into subscription agreements with “friends and family” for investment
      funds. While we are actively seeking a substantial amount of equity or debt
      financing, we have received no commitments for such financing. Our working
      capital at August 31, 2006, will be sufficient to meet our working capital
      needs
      for the next twelve-month period only if we receive additional financing from
      one or more of the sources described above, or an entirely new
      source.





To
      date
      we have not obtained adequate equity or debt financing to enable us to implement
      our business plan. As a result of the lack of financial resources, a condition
      unfavorably impacting us since inception, revenue and profitability have not
      increased as we believe would have otherwise been the case. Without sufficient
      financing, we have not been able to (i) acquire ownership of several products,
      particularly the intellectual property rights to and formulation of, our
      principal product, AcnEase®, (ii) market and promote our products, (iii) conduct
      certain clinical trials that would further such marketing and promotional
      activities and (iv) hire additional employees.





As
      described above and in the Form 8-K dated September 22, 2006, we have merged
      into PMIC and thereby became a publicly traded corporation; however, we have
      not
      closed, nor obtained a commitment for, the financing that was originally
      contemplated to close contemporaneously with the closing of the merger. During
      the three and nine months ended August 31, 2006, revenue growth was adversely
      affected by the time and attention we devoted to the merger and related
      financing initiatives.





**RELATED
      PARTY TRANSACTIONS**





During
      the nine months ended August 31, 2006, the Company's due to stockholders
      increased by to $19,714.





**COMPARISON
      OF THE THREE MONTHS ENDED AUGUST 31, 2006 TO THE THREE MONTHS ENDED AUGUST
      31,
      2005**





**Overall
      Results of Operations**





For
      the
      three months ended August 31, 2006, we incurred a net loss of $53,668, an
      increase of $15,305 from the net loss of $38,363 for the comparable prior year
      period. The increase in net loss in the fiscal 2006 compared to fiscal 2005
      period is attributable to a decrease in gross profit due to lower net sales,
      partially offset by a decrease in operating expenses.


.


**Sales**





Net
      sales
      for the three months ended August 31, 2006 were $181,711 compared to $209,531
      for the three months ended August 31, 2005. The decrease of $27,820, or 13.3%,
      can be attributed to a decrease in sales of AcnEase in the United Kingdom (“UK”)
      due to a temporary leave of absence on the part of our local sales
      representative during the first portion of the current period.




**Gross
      Profit**





Gross
      profit decreased to $107,858 for the three months ended August 31, 2006 compared
      to $129,589 for the three months ended August 31, 2005, or $21,731 and 16.8%,
      with gross margin decreasing to 59.4% from 61.8% for the period. The decrease
      in
      gross profit is principally attributable to the decrease in net sales, as well
      as the lower gross margin.




7





**Operating
      Expenses**





Total
      operating expenses decreased by $6,876, or 4.4%, to $149,770 for the three
      months ended August 31 2006, from $156,648 for the three months ended August
      31,
      2005, principally attributable to an increase in payroll expenses for officer
      salary expense accrued but not paid, partially offset by lower spending for
      marketing and promotion, website, travel and commission expenses.





**Other
      Income (Expense)**





Interest
      expense increased to $11,132 from $10,062 for the three months ended August
      31,
      2006 as compared with the three months ended August 31, 2005, or $1,070, due
      principally to increases in interest rates payable for credit card and lines
      of
      credit debt outstanding in the current period.





**COMPARISON
      OF THE NINE MONTHS ENDED AUGUST 31, 2006 TO THE NINE MONTHS ENDED AUGUST 31,
      2005**





**Overall
      Results of Operations**





For
      the
      nine months ended August 31, 2006, we incurred a net loss of $194,610, an
      increase of $119,918 from the net loss of $74,692 for the comparable prior
      year
      period. The increase in net loss in the fiscal 2006 compared to fiscal 2005
      period is attributable principally to an increase in operating expenses, as
      well
      as a decrease in gross profit due to lower net sales.





**Sales**





Net
      sales
      for the nine months ended August 31, 2006 were $568,695 compared to $621,335
      for
      the nine months ended August 31, 2005. The decrease of $52,640, or 8.5%, is
      attributed principally to a decrease in sales of AcnEase in the United Kingdom
      (“UK”) due to a temporary leave of absence on the part of our local sales
      representative during a portion of the current period.




**Gross
      Profit**





Gross
      profit decreased to $309,309 for the nine months ended August 31, 2006 compared
      to $349,628 for the nine months ended August 31, 2005, or $40,319 and 11.5%,
      with gross margin decreasing to 54.4% from 56.3%. The decrease in gross profit
      is principally attributable to the decrease in net sales, as well as the lower
      gross margin.




**Operating
      Expenses**





Total
      operating expenses increased by $74,895, or 19.0%, to $468,701 for the nine
      months ended August 31, 2006, from $393,806 for the nine months ended August
      31,
      2005, attributable to an increase in payroll expenses of $90,609 principally
      for
      officer salary expense accrued but not paid and audit expense of $35,000, offset
      by a decrease in UK-related commission and other expenses of $24,501,
      principally the result of lower sales in the UK, and a decrease in website
      related expenses.





**Other
      Income (Expense)**





Interest
      expense increased to $33,081 from $27,319 for the nine months ended August
      31,
      2006 as compared with the nine months ended August 31, 2005, or $5,762, due
      principally to increases in interest rates payable for credit card and lines
      of
      credit debt outstanding in the current period.





**Seasonality**





There
      are
      no seasonality factors that affect the Company.





**Off-Balance
      Sheet Arrangements**





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




8





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      August 31, 2006, we had a cash balance of $0 and a negative cash flow from
      operations of $27,516 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. While we are actively seeking a substantial amount of
      equity or debt financing, we have received no commitments for such financing.
      Our working capital at August 31, 2006, will be sufficient to meet our working
      capital needs for the next twelve-month period only if we receive additional
      financing from one or more of the sources described above, or an entirely new
      source.





The
      Company has contractual obligations of $492,420 as of August 31, 2006. These
      contractual obligations, along with the dates on which such payments are due,
      are described below:





**Contractual
                Obligations(as of August
                31, 2006)****Total**
            
            
            **1
                Year or
                Less**
            
            
            **More
              Than 1 Year**Credit
                Cards payable
            
            $
            131,311
            
            $
            131,311
            
            $
            --Lines
                of Credit Payable
            
            
            176,808
            
            
            176,808
            
            
            --Due
                to Stockholders
            
            
            169,157
            
            
            169,157
            
            
            --Other
            
            
            15,450
            
            
            15,144
            
            
            306**Total
                Contractual Obligations**
            
            $
            492,726
            
            $
            492,420
            
            $
            306










Below
      is
      a discussion of our sources and uses of funds for the nine months ended August
      31, 2006 and 2005.





**Net
      Cash Used In Operating Activities**





Net
      cash
      used in operating activities was $27,516 and $53,429 in the nine months ended
      August 31, 2006 and 2005, respectively. The use of cash in operating activities
      for the nine months ended August 31, 2006 was principally the result of a net
      loss of $194,610, partially offset by a decrease in accounts receivable of
      $18,504 and an increase in accounts payable and accrued expenses of $146,207.
      The use of cash in operating activities for the nine months ended August 31,
      2005 was principally the result of a net loss of $74,692, partially offset
      by a
      decrease in inventory of $16,300,





**Net
      Cash Used In Investing Activities**





During
      the nine months ended August 31, 2006 and 2005, net cash used in investing
      activities consisted of $686 and $2,931, respectively, for the acquisition
      of
      property and equipment and $6,640 and $1,762, respectively, for the acquisition
      of other assets.





**Net
      Cash Provided By Financing Activities**





Net
      cash
      provided by financing activities for the nine months ended August 31, 2006
      amounted to $34,660, principally attributable to an increase of $19,714 in
      amount due to stockholders and an increase of $13,000 other loans. Net cash
      provided by financing activities for the nine months ended August 31, 2005
      amounted to $58,865, principally attributable to an increase of $37,831 in
      amount due to stockholders, as well as an increase of $8,281 in lines of credit
      obligations and $12,867 in credit card debt payable.





**RISK
      FACTORS**




*Our
      business and results of operations are subject to numerous risks, uncertainties
      and other factors that you should be aware of, some of which are described
      below
      and in the section entitled “Cautionary Statement Concerning Forward-Looking
      Statements.” The risks, uncertainties and other factors described below are not
      the only ones facing our company. Additional risks, uncertainties and other
      factors not presently known to us or that we currently deem immaterial may
      also
      impair our business operations. Any of the risks, uncertainties and other
      factors could have a materially adverse effect on our business, financial
      condition or results of operations and could cause the trading price of our
      common stock to decline substantially.*




9




**Risks
      Relating to Our Company**





***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 $194,610 during
      the
      nine months ended August 31, 2006. 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.





***We
      need additional capital, which may not be available to us.***




We
      have
      expended and will continue to expend substantial funds in the research,
      development, marketing and clinical testing of our herbaceutical supplements.
      Following the merger we will require funds in excess of our existing cash
      resources to fund operating deficits, develop new products, purchase additional
      rights to existing products, establish and expand our manufacturing
      capabilities, and finance general and administrative and research activities.
      In
      particular, we will need additional capital to:




·acquire
                intellectual property rights relating to*AcnEase**®*and other products;





·conduct
                clinical trials and fund marketing and new product
                launches;





·establish
                U.S. manufacturing capabilities;
                and





·fund
                general working capital requirements if we continue to experience
                deficits.





Due
      to
      market conditions at the time we may need additional funding, or due to our
      own
      financial condition at that time, it is possible that we will be unable to
      obtain additional funding as and when we need it. Even if we are able to obtain
      capital, it may be on unfavorable terms or terms that excessively dilute
      existing shareholders or otherwise negatively affect the interests of existing
      shareholders. If we are unable to obtain additional funding as and when needed,
      we could be forced to delay our development, marketing and expansion efforts
      and, if we continue to experience losses, potentially cease operations.





***We
      may not be able to obtain or sustain market acceptance for our services and
      products.***





Failure
      to establish a brand and presence in the marketplace on a timely basis could
      adversely affect our financial condition and operating results. Moreover, we
      cannot be sure that we will successfully complete the development and
      introduction of new products or product enhancements or that any new products
      developed will achieve acceptance in the marketplace. We may also fail to
      develop and deploy new products and product enhancements on a timely basis. *AcnEase* *®* is
      currently our only product providing revenues.





***Government
      regulation of the processing, formulation, packaging, labeling and advertising
      of our products can impact our ability to market products.***





Under
      the
      Dietary Supplement Health and Education Act of 1994, companies that manufacture
      and distribute dietary supplements are limited in the statements that they
      are
      permitted to make about nutritional support on the product label without FDA
      approval. In addition, a manufacturer of a dietary supplement must have
      substantiation for any such statement made and must not claim to diagnose,
      mitigate, treat, cure or prevent a specific disease or class of disease. The
      product label must also contain a prominent disclaimer. These restrictions
      may
      restrict our flexibility in marketing our product.





The
      FDA
      has proposed GMPs (Good Manufacturing Practices) specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations. As a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future.




10





The
      processing, formulizing, packaging, labeling and advertising of such products,
      however, are subject to regulation by one or more federal agencies including
      the
      FDA, the Federal Trade Commission, the Consumer Products Safety Commission,
      the
      Department of Agriculture and the Environmental Protection Agency. Our
      activities also are subject to regulation by various agencies of the states
      and
      localities in which our products are sold. Among other things, such regulation
      puts a burden on our ability to bring products to market. Any changes in the
      current regulatory environment could impose requirements that would make
      bringing new products to market more expensive or restrict the ways we can
      market our products. In addition, the adoption of new regulations or changes
      in
      the interpretation of existing regulation may result in significant compliance
      costs or discontinuation of product sales and may adversely affect our revenue.
      The FDA may implement additional regulations with which we would have to comply,
      which would increase expenses.





No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as dietary supplements or not. We make this determination
      based
      on the ingredients contained in the products and the claims we make for the
      products and if our determination is denied by any regulatory authority we
      could
      face significant penalties that may require us to shut down our operations.





***We
      face substantial competition.***




The
      dietary supplement industry is growing rapidly and is highly competitive.
      Competition for the sale of nutritional products comes from many sources,
      including specialty retailers, supermarkets, large chain discount retailers,
      drug store chains and independent drug stores, health food stores, on-line
      merchants, mail order companies and a variety of other participants in the
      market for nutritional products. Some of our more prominent competitors include
      General Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and
      Vitamin Shoppe. We compete regularly with companies selling nationally
      advertised brand name products and with companies that may have more expanded
      product lines with much larger volume of sales. This competition could have
      a
      material adverse effect on our business, results of operations and financial
      condition since these companies have greater financial and other resources
      available to them and may possess manufacturing, distribution and marketing
      capabilities far greater than our own.






Certain
      existing products may become more mainstream and thereby increase competition
      for those products as more participants enter the market. We may not be able
      to
      compete effectively and our attempt to do so may require us to reduce our
      prices, which may result in lower margins. Failure to compete effectively could
      adversely affect our market share, revenues and growth prospects.




Our
      competitive position will be affected by the continued acceptance of our
      products, our ability to attract and retain qualified personnel, future
      governmental regulations affecting nutritional products, and publication of
      product safety studies by the media, government and authoritative health and
      medical authorities.





***We
      currently have no manufacturing capabilities and we are dependent upon other
      companies to manufacture our products.***





We
      currently have no manufacturing facilities. We are dependent upon relationships
      with independent manufacturers to fulfill our product needs. We use several
      manufacturers for various parts of the manufacturing processes for our products.
      We believe these are small privately held firms.





Because
      the manufacturing processes, which our contract manufacturers perform, are
      fairly standard in the industry, we believe that there are a large number of
      manufacturers who could provide us with these services if our current contract
      manufacturers are unavailable for any reason or seek to impose unfavorable
      terms. Our ability to market and sell our products requires that such products
      be manufactured in commercial quantities and in compliance with applicable
      federal and state regulatory requirements. In addition, we must be able to
      manufacture our products at a cost that permits us to charge a price acceptable
      to the customer while also accommodating distribution costs and third-party
      sales compensation. Competitors who do own their own manufacturing may have
      an
      advantage over us with respect to pricing, availability of product and in other
      areas through their control of the manufacturing process.





***We
      are dependent on key management and the loss of their services could have a
      material adverse impact on us.***





We
      have
      relied extensively on the services of Drs. Agnes P. Olszewski and James P.
      Gilligan, our co-founders. Drs. Olszewski and Gilligan play key roles in
      our management and the loss of their services would materially and adversely
      affect us and our prospects. Until we raise substantial financing, neither
      of
      these key individuals will spend full-time working for us. Under her employment
      agreement, Dr. Olszewski is not required to do so until we have raised
      $1,250,000, and under his consulting/employment agreement, Dr. Gilligan is
      not
      required to do so until six months after we have raised $2,500,000 in financing.
      There is no assurance that we will be able to raise such amounts and without
      such financing and the full-time employment of these key executives we will
      in
      all likelihood not be able to further develop our business and will likely
      continue to experience losses. The loss of services of any of these persons
      could delay or reduce our product development and commercialization efforts
      and
      harm our ability to compete effectively.




11





***We
      may be subject to product liability claims and may not have adequate insurance
      to cover such claims.***





Like
      other retailers, distributors and manufacturers of products that are designed
      to
      be ingested, we face an inherent risk of exposure to product liability claims
      in
      the event that the use of our products results in injury. We intend to obtain
      general liability coverage of $3 to $5 million that will include product
      liability coverage. Because our policies will be purchased on a year-to-year
      basis, industry conditions or our own claims experience could make it difficult
      for us to secure the necessary insurance at a reasonable cost. In addition,
      we
      may not be able to secure insurance that will be adequate to cover liabilities.
      We generally do not obtain contractual indemnification from parties supplying
      raw materials or marketing our products. In any event, any such indemnification
      is limited by its terms and, as a practical matter, by the creditworthiness
      of
      the other party. In the event that we do not have adequate insurance or
      contractual indemnification, liabilities relating to defective products could
      require us to pay the injured parties’ damages which may be significant compared
      to our net worth or revenues.





***We
      may be adversely affected by unfavorable publicity relating to our product
      or
      similar products manufactured by our competitors.***





We
      believe that the dietary supplement market is affected by national media
      attention regarding the consumption of these products. Future scientific
      research or publicity may be unfavorable to the dietary and nutritional
      supplement market generally or to any particular product and may be inconsistent
      with earlier favorable research or publicity. Adverse publicity associated
      with
      illness or other adverse effects resulting from the consumption of products
      distributed by other companies that are similar to our products could reduce
      consumer demand for our products and consequently our revenues. This may occur
      even if the publicity does not relate to our products. Adverse publicity
      directly concerning our products could be expected to have an immediate negative
      effect on the market for that product.





***We
      depend on trade secrets to protect our proprietary technology, which may be
      inadequate to protect our position.***





Our
      long-term success will substantially depend upon protecting our technology
      from
      infringement, misappropriation, discovery and duplication. We expect that we
      will apply for patent protection with respect to some of our products. Since
      we
      do not currently have patents on our products, a competitor could replicate
      our
      products. Any patents that we might obtain may not provide meaningful protection
      or significant competitive advantages over competing products, due to the
      complexity of the legal and scientific issues involved in patent defense and
      litigation. For these reasons we have elected to protect our current products
      through trade secrets.





Because
      of the complexity of the legal and scientific issues involved in patent
      prosecutions, we cannot be sure that any future patent applications for new
      products will be granted. Nor can we be sure that any patent rights that we
      do
      obtain will provide meaningful protection against others duplicating our
      products because of the complexity of the legal and scientific issues that
      could
      arise in litigation over these issues. Furthermore, patent applications are
      maintained in secrecy in the United States until the patents are approved,
      and
      in most foreign countries for a period of time following the date from which
      priority is claimed. A third party’s pending patent applications may cover any
      technology that we currently are developing. Additionally, if we must resort
      to
      legal proceedings to enforce our intellectual property rights, the proceedings
      could be burdensome and expensive and could involve a high degree of risk to
      our
      proprietary rights if we are unsuccessful in, or cannot afford to pursue, such
      proceedings.





We
      rely
      at present completely on trade secrets and contract law to protect our
      proprietary technology. There can be no assurance that any such contract will
      not be breached, or that if breached, it will have adequate remedies. Currently,
      all of our products are protected by trade secrets held by third parties. We
      rely on such third parties to adequately protect such trade secrets. There
      can
      be no assurance that these third parties will protect and continue to hold
      the
      trade secrets relating to our products. Furthermore, there can be no assurance
      that any of these trade secrets will not become known or independently
      discovered by third parties.





There
      can
      be no assurance that others will not independently develop substantially
      equivalent proprietary information and techniques or otherwise gain access
      to
      our trade secrets and know-how. In addition, we may be required to obtain
      licenses to patents or other proprietary rights from third parties. There can
      be
      no assurance that any licenses required under any patents or proprietary rights
      would be made available on acceptable terms, if at all. If we do not obtain
      required licenses, we may encounter delays in product development or find that
      the development, manufacture or sale of products requiring such licenses could
      be foreclosed.




12





***We
      have limited the liability of our directors and officers for breaches of the
      duty of care.***





Our
      articles of incorporation limit the liability of our directors for monetary
      damages for breaches of directors’ fiduciary duty of care. This provision may
      reduce the likelihood of derivative litigation against directors and may
      discourage or deter shareholders or management from suing directors for breaches
      of their duty of care, even though such an action, if successful, might
      otherwise benefit our shareholders and us. In addition, our articles of
      incorporation provide for the indemnification of directors and officers in
      connection with civil, criminal, administrative or investigative proceedings
      when acting in their capacities as agents for us.





***Our
      results of operations may be affected by changing market prices and requirements
      for dietary supplements.***





Our
      results of operations may be affected by changing resale prices or market
      requirements for dietary supplements, some of which are priced on a commodity
      basis. The sale price, and market demand for, these materials can be volatile
      due to numerous factors beyond our control, which may cause significant
      variability in its period-to-period results of operations.





***Our
      results of operations will fluctuate.***





Our
      revenues and results of operations will vary from quarter to quarter in the
      future. A number of factors, many of which are outside of our control, may
      cause
      variations in our results of operations, including:





·
            demand
                and price for our products;·
            the
                timing and recognition of product sales;·
            unexpected
                delays in developing and introducing products;·
            unexpected
                delays in manufacturing our products;·
            increased
                expenses, whether related to marketing, product development or
                administration or otherwise;·
            insufficient
                demand in the marketplace could cause our distributors to return
                product;·
            the
                mix of revenues derived from products;·
            the
                hiring, retention and utilization of personnel; and·
            general
                economic factors.





***We
      may not succeed in our acquisition of additional
      products.***





As
      part
      of our growth strategy, we intend to acquire and develop additional product
      candidates or approved products. The success of this strategy depends upon
      our
      ability to identify, select and acquire bioherbaceutical products that meet
      the
      criteria we have established. Any product candidate we acquire or license may
      require additional research and development efforts prior to commercial sale,
      including extensive pre-clinical and/or clinical testing. All product candidates
      are prone to the risks of failure inherent in product development, including
      the
      possibility that the product candidate will not be safe, non-toxic and
      effective. In addition, we cannot assure that any approved products that we
      develop, acquire or license will be manufactured or produced economically;
      successfully commercialized; widely accepted in the marketplace or that we
      will
      be able to recover our significant expenditures in connection with the
      development, acquisition or license of such products. In addition, proposing,
      negotiating and implementing an economically viable acquisition or license
      is a
      lengthy and complex process. Other companies, including those with substantially
      greater financial, marketing and sales resources, may compete with us for the
      acquisition or license of product candidates and approved products. We may
      not
      be able to acquire the rights to additional product candidates and approved
      products on terms that we find acceptable, or at all. In addition, if we acquire
      or license product candidates from third parties, we will be dependent on third
      parties to supply such products to us for sale. We could be materially adversely
      affected by the failure or inability of such suppliers to meet performance,
      reliability and quality standards.





***Other
      companies may claim that we infringed upon their proprietary
      rights.***





We
      do not
      believe that our products or processes violate third-party intellectual property
      rights. Nevertheless, there is no guarantee that such rights are not being,
      and
      will not be, violated. If any of the products or processes are found to violate
      third-party intellectual property rights, we may be required to re-engineer
      or
      cause to be re-engineered one or more of those products or processes or seek
      to
      obtain licenses from third parties to continue offering its products or
      processes without substantial re-engineering, and such efforts may not be
      successful.




13





***Our
      non-U.S. sales present special risks.***





A
      subcontractor in London handles fulfillment and coordinates market development
      for our products in the U.K. and continental Europe. We anticipate that sales
      outside the U.S. will continue to account for a significant percentage of our
      product sales and we intend to continue to expand our presence in international
      markets. Non-U.S. sales are subject to a number of special risks. For example:





·sales
                agreements may be difficult to enforce;·receivables
                may be difficult to collect through a foreign country’s legal
                system;·foreign
                countries may impose additional withholding taxes or otherwise tax
                foreign
                income, impose tariffs or adopt other restrictions on foreign
                trade;·intellectual
                property rights may be more difficult to enforce in foreign
                countries;·terrorist
                activity or the outbreak of a pandemic disease may interrupt distribution
                channels or adversely impact customers or employees; and
              ·regulations
                may change relating to dietary supplements that may negatively impact
                the
                ability to market products in those geographical
                regions.





Any
      of
      these events could harm our operations or operating results.





***Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses.***





Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and new Securities and
      Exchange Commission regulations, are creating uncertainty for public companies.
      Our management team will be required to invest significant management time
      and
      financial resources to comply with both existing and evolving standards for
      public companies, which may lead to increased general and administrative
      expenses and a diversion of management time and attention from revenue
      generating activities to compliance activities.





***It
      is possible that there are claims of which we are unaware that may come to
      light
      in the future and cost us considerable time, effort and expense to
      resolve.***





It
      is
      possible that a claim, whether valid or not, may be asserted against us in
      the
      future with respect to matters arising prior to the merger. There can be no
      assurance given that some person will not devise a claim and attempt to assert
      it against us in the hopes of obtaining some monetary benefit. To resolve such
      a
      claim, including payment, may cost us considerable time, effort and expense.
      Any
      of these may impair management’s implementation of the business plan with the
      consequence of a loss of opportunity.





**Risks
      Related to Our Common Stock**





***Because
      our common stock is traded on the OTC Bulletin Board, your ability to sell
      your
      shares in the secondary trading market may be limited.***





Our
      common stock currently is traded on the over-the-counter market on the OTC
      Bulletin Board. Consequently, the liquidity of our common stock is limited,
      not
      only in the number of shares that are bought and sold, but also through delays
      in the timing of transactions, and coverage by security analysts and the news
      media, if any, of us. As a result, prices for shares of our common stock may
      be
      lower than might otherwise prevail if our common stock was traded on a national
      securities exchange, such as The New York Stock Exchange or The Nasdaq Stock
      Market, LLC.




***Our
      common stock may be removed from the OTC Bulletin Board, which would likely
      cause the trading price of our common stock to decline and affect our ability
      to
      raise capital in the future.***





On
      April
      5, 2006, we received notice from the OTC Bulletin Board that unless we cured
      our
      delinquency in filing the Annual Report on Form 10-K for the year ended December
      31, 2005 prior to the expiration of the grace period (May 5, 2006), our common
      stock would be removed from the OTC Bulletin Board effective May 9, 2006. We
      have cured this delinquency with the filing of our Annual Report on Form 10-K
      filed on May 1, 2006. However, under applicable NASD Rules, if we are delinquent
      in our reporting obligations three times in a 24-month period and/or are
      actually removed from the OTC Bulletin Board for failure to file two times
      in a
      24-month period, in each case, we would be ineligible for quotation on the
      OTC
      Bulletin Board for a period of one year. To date, we have been delinquent one
      time in the past 24-month period. Should quotation of our common stock on the
      OTC Bulletin Board or a similar facility cease for any reason, the liquidity
      of
      our common stock and our ability to raise equity capital would likely
      decrease.




14





***Because
      our shares are “penny stocks,” you may have difficulty selling them in the
      secondary trading market.***





Federal
      regulations under the Exchange Act regulate the trading of so-called “penny
      stocks,” which are generally defined as any security not listed on a national
      securities exchange, priced at less than $5.00 per share and offered by an
      issuer with limited net tangible assets and revenues. Since our common stock
      currently trades on the OTC Bulletin Board at less than $5.00 per share, our
      common stock is a “penny stock” and may not be traded unless a disclosure
      schedule explaining the penny stock market and the risks associated therewith
      is
      delivered to a potential purchaser prior to any trade.





In
      addition, because our common stock is not listed on any national securities
      exchange and currently trades at less than $5.00 per share, trading in our
      common stock is subject to Rule 15g-9 under the Exchange Act. Under this rule,
      broker-dealers must take certain steps prior to selling a “penny stock,” which
      steps include:





**•**
            obtaining
                financial and investment information from the investor;**•**
            obtaining
                a written suitability questionnaire and purchase agreement signed
                by the
                investor; and**•**
            providing
                the investor a written identification of the shares being offered
                and the
                quantity of the shares.





If
      these
      penny stock rules are not followed by the broker-dealer, the investor has no
      obligation to purchase the shares. The application of these comprehensive rules
      will make it more difficult for broker-dealers to sell our common stock and
      our
      shareholders, therefore, may have difficulty in selling their shares in the
      secondary trading market.





***Our
      stock price has been and may continue to be volatile and an investment in our
      common stock could suffer a decline in value.***





Trading
      of our common stock has been sporadic, and the trading volume has generally
      been
      low. Even a small trading volume on a particular day or over a few days may
      affect the market price of our common stock. The market price of our common
      stock may fluctuate significantly in response to a number of factors, some
      of
      which are beyond our control. These factors include:





**•**
            announcements
                of research activities and technology innovations or new products
                by us or
                our competitors;**•**
            changes
                in market valuation of companies in our industry
                generally;**•**
            variations
                in operating results;**•**
            changes
                in governmental regulations;**•**
            results
                of research studies of our products or our competitors’
                products;**•**
            regulatory
                action or inaction on our products or our competitors’
                products;**•**
            changes
                in our financial estimates by securities analysts;**•**
            general
                market conditions for companies in our industry;**•**
            broad
                market fluctuations; and**•**
            economic
                conditions in the United States or abroad.





***Our
      directors and executive officers own a significant number of shares of our
      common stock to control our company, which could discourage or prevent a
      takeover, even if an acquisition would be beneficial to our stockholders.***





Certain
      of our directors and our current executive officer own or control approximately
      80% of our outstanding voting power. Accordingly, these stockholders,
      individually and as a group, will be able to influence the outcome of
      stockholder votes, involving votes concerning the election of directors, the
      adoption or amendment of provisions in our certificate of incorporation and
      bylaws and the approval of certain mergers or other similar transactions, such
      as a sale of substantially all of our assets. Such control by existing
      stockholders could have the effect of delaying, deferring or preventing a change
      in control of us.




15





***We
      do not pay cash dividends, so any return on an investment must come from
      appreciation.***





We
      do not
      intend to pay any cash dividends in the foreseeable future and, therefore,
      any
      return on an investment in our common stock must come from increases in the
      fair
      market value and trading price of our common stock.





***We
      may issue additional equity securities that will dilute our stockholders.***





We
      may
      issue additional equity securities to raise capital and through the exercise
      of
      options, warrants and convertible debt that is outstanding or may be
      outstanding. These additional issuances will have a dilutive effect on our
      existing stockholders.





**Item
      3.**  **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
      the President and Chief Financial Officer, of the effectiveness of the Company’s
      disclosure controls and procedures. Based on the evaluation, the President
      and
      the Chief Financial Officer have concluded that, as of August 31, 2006, 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. 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 nine months ended August 31, 2006, 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.




16




**Part
      II-Other Information**





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





None.





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





None





**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**





**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.3(i)
            Second
                Amended and Restated Articles of Incorporation of Pacific Magtron
                International Corp.3(ii)
            Amended
                and Restated Bylaws of Pacific Magtron International
                Corp.10.1
            Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.’s Current Report on Form 8-K filed on August
                16,2006).10.2*
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski10.3*
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan31.1
            Rule
                13a-14(a) Certification of Agnes Olszewski, Chief Executive Officer
                and
                Chief Financial Officer (filed herewith).32.1
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (filed
                herewith).





**(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.





17




**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: Chief Executive Officer
              (Principal
              Executive Officer) and**Chief Financial Officer (Principal
              Accounting Officer)*


Date:
      October 13, 2006




18