**United
      States Securities And Exchange Commission**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





**Annual
      Report Pursuant To Section 13 Or 15 (D)**


**Of
      The Securities Exchange Act Of 1934**





**For
      the Fiscal Year Ended November 30, 2006**





**Commission
      File No. 000-30486**





Herborium
      Group**,** Inc.


(Name
      of
      small business issuer in its charter)





**NEVADA**
            
            **88-0353141**(State
                or other jurisdiction of
            
            (I.R.S.
                employer identification number)incorporation
                or organization)





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


(Address
      of principal executive office)





**(201)
      836-2424**


(Registrant’s
      telephone number)





Securities
      registered under Section 12(b) of the Act:





None





Securities
      registered under Section 12(g) of the Act:





Common
      Stock, $0.001 Par Value, 500,000,000 shares authorized





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15((d) of the Exchange Act. o




Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 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




Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B contained in this form and no disclosure will be contained, to the best
      of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x















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




The
      issuer's revenue for fiscal year ended November 30, 2006 was
      $827,755.




The
      aggregate market value as of March 21, 2007 of the voting common equity held
      by
      non-affiliates is $3,422,012.









**Issuers
      Involved In Bankruptcy**


Proceeding
      During THE PAST 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 o No
o







**Applicable
      Only To Corporate Registrants**





As
      of
      February 12, 2007, there were 114,067,080 shares of the Company’s no par value
      common stock issued and outstanding.




**Documents
      Incorporated By Reference**




None




Transitional
      Small Business Disclosure Format (check one): Yes o No
x





















**Herborium
      Group, Inc, Inc.**


**Form
      10-KSB**





**Table
      of Contents**





**Page****Part
                    I**Item
                    1.
                Description
                    of Business
                1-5Item
                    2.
                Description
                    of Property
                5Item
                    3.
                Legal
                    Proceedings
                5-6Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                6**Part
                    II**Item
                    5.
                Market
                    for Common Equity, Related Stockholder Matters and SmallBusiness
                    Issuer Purchases of Equity Securities
                7-8Item
                    6.
                Management's
                    Discussion and Analysis or Plan of Operation
                8-15Item
                    7.
                Financial
                    Statements
                15Item
                    8.
                Changes
                    In and Disagreements with Accountants on Accounting andFinancial
                    Disclosure
                16Item
                    8A.
                Controls
                    and Procedures
                16Item
                    8B.
                Other
                    Information
                16**Part
                    III**Item
                    9.
                Directors,
                    Executive Officers, Promoters and Control Persons;Compliance
                    with Section 16(a) of the Exchange Act
                17-20Item
                    10.
                Executive
                    Compensation
                20-25Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and Managementand
                      Related Stockholder Matters...
                25-27Item
                    12.
                Certain
                    Relationships and Related Transactions
                27-28Item
                    13.
                Exhibits
                28-33Item
                    14.
                Principal
                    Accountant Fees and Services
                33-34HERBORIUM
                  GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS ASOF
                    NOVEMBER 30, 2006 and 2005
                F-1-F-21







As
      used
      herein, the terms the “Company,” “Herborium,” “we,” “us,” or “our” refer to
      Herborium Group, Inc., a Nevada corporation.









**Forward-Looking
      Statements**




*Certain
      statements in the "Description of Business" (Item 1), "Management’s Discussion
      and Analysis or Plan of Operation" (Item 6) and elsewhere in this Annual Report
      on Form 10-KSB 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 we have made. All statements,
      other than statements of historical facts, included in this Annual Report on
      Form 10-KSB 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,” "anticipation,” "intend,”
"could,” "estimate,” or "continue" or the negative or other comparable
      terminologies 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.*




*Additional
      factors that could affect future results are set forth throughout the
      "Description of Business" (Item 1) section, including the subsection entitled
      "Risks Related to Our Business," and elsewhere in this Annual Report on Form
      10-KSB. Because of the risks and uncertainties associated with forward-looking
      statements, you should not place undue 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.*













**Part
      I**




**Item
      1. Description Of Business**




Herborium,
      Inc. was incorporated in the State of Delaware in November 2000 and has one
      wholly-owned, but dormant subsidiary, Herborium.com Inc., a Delaware
      corporation. In June 2002, Herborium, Inc. merged with G.O. International,
      Inc.,
      a consulting firm specializing in business strategies for pharmaceutical
      industry and global technology transfer that was founded by Drs. Olszewski
      and
      Gilligan. Drs. Olszewski and Gilligan also own a dormant UK entity, Herborium
      UK, LLC. Herborium has engaged in research, development and marketing of
      botanical supplements since its inception, and prior to the merger, funded
      its
      operations by equity investments and loans from its founders, Drs. Olszewski
      and
      Gilligan, of approximately $354,000, funding from friends and family of
      approximately $188,500, a revolving credit facility and cash generated by gross
      profit from sales.





Herborium
      was historically a privately held company, owned primarily by Drs. Olszewski
      and
      Gilligan. In September 2006, Herborium completed a reverse merger with the
      publicly-owned Nevada corporation formerly named Pacific Magtron International
      Corp., now named Herborium Group, Inc. See “Company History” below for further
      details.





***General***





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





Our
      business model is based on:





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





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





***Product
      Strategy***





Our
      products address healthcare issues that many consumers do not believe are
      treated satisfactorily by conventional pharmaceuticals and, thus, satisfy niche
      market demands resulting from the gap between consumer’s healthcare issues and
      currently available treatment options. Our products are presently classified
      by
      the FDA as dietary supplements and are regulated by the Dietary Supplement
      Health and Education Act of 1994 ("DSHEA”).





We
      seek
      to distinguish our company from the marketers of traditional herbal supplements
      and vitamins, as well as those focused on traditional pharmaceuticals and
      "over-the-counter" drugs, by offering “bridge products,” which we define as
      botanical supplements with a record of clinical efficacy and safety established
      in the country of origin. To date our initial products have been tested in
      China. Our business model takes advantage of the newly emerging opportunities
      afforded by changing FDA perspectives with respect to botanical supplements.
      The
      present regulatory environment now encourages the performance of clinical
      studies of botanical supplements. Through clinical testing, we expect to confirm
      the positive outcomes initially demonstrated in China that will enable us to
      make claims about the efficacy of our products. Successful completion of
      clinical studies would allow advertising claims of “clinically proven” greatly
      enhancing our advertising campaigns and facilitating marketing efforts. To
      pursue clinical studies with respect to our products, we have developed
      preliminary collaborative relationships with proactive medical institutions,
      such as Johns Hopkins University, New York University Dermatological Clinic
      and
      Columbia Presbyterian Hospital in the U.S. and the Traditional Chinese Medicine
      Institute in Hong Kong. We will not be able to pursue any such clinical studies
      without adequate financing, and we presently have no commitments or
      understandings to receive such financing. We believe that if we are able to
      obtain sufficient financing to conduct such clinical studies in the U.S. we
      will
      have the opportunity to establish and maintain a differential advantage over
      our
      competitors through clinical validation and a proactive regulatory strategy.




1




We
      also
      believe that if we are able to obtain sufficient financing we can further
      enhance our differential advantage over our competitors by planning
      pharmaceutical grade quality control and quality assurance standards for our
      products.




We
      believe that if we obtain sufficient financing to pursue our objectives, our
      company should be poised to take advantage of the accelerating domestic and
      global interest in botanical and alternative therapies. The U.S. Department
      of
      Health and Human Services, National Center for Health Statistics, estimates
      that
      U.S. public spends between $36-$47 billion on “complementary and alternative”
therapies (Complementary and Alternative Medicine Use Among Adults: United
      States, 2002 by Patricia M. Bames and Eve Powel-Griner; Advance Data No. 343,
      May 27, 2004). A survey conducted by the National Center for Complimentary
      and
      Alternative Medicine as a part of NHIS studies in 2002 reported that 49.8%
      of
      U.S. adults use various forms of alternative and complementary therapies, with
      19% of adults using natural products including herbal medicines. In a recent
      national survey, 64% of doctors reported that they have recommended
      complementary therapies to their patients (New York, NY, September 7, 2005).
      Finally, during the closing weeks of the 105th Congress, Senator Tom Harkin,
      the
      ranking member of the U.S. Senate Appropriations Subcommittee, shared with
      his
      colleagues a report developed by the Institute for Alternative Futures. The
      document noted that at the present, complementary and alternative approaches
      to
      health and medicine are among the fastest growing aspects of health care, and
      that while in 1990, one-third of the U.S. population used some form of
      alternative approach to health care, by the year 2010 it is expected that at
      least two-thirds of the population will use some form of alternative health
      care
      approach.





***Products
      on the Market***





Following
      is a description of our products. Applicable regulatory requirements are
      described below under the caption *Regulation* .





*AcnEase®* ,
      which
      we license under an exclusive world-wide license, ** is
      currently the only product that we have on the market. *AcnEase®* is a
      traditional Chinese herbal remedy composed of a proprietary blend of all natural
      substances. We market *AcnEase®* for
      improving conditions typically associated with acne and rosacea. Based on
      Chinese herbal therapy, *AcnEase®* seeks to
      address the cause of skin-related problems. According to traditional Chinese
      medicine, the ingredients in *AcnEase®* decrease
      “heat” in the body which, practitioners of traditional Chinese medicine believe,
      affect bodily functions, resulting in, among other things, gastrointestinal
      discomfort and skin blemishes. In Western terms, the ingredients comprising
      AcnEase® appear to decrease sebaceous gland secretions. *AcnEase®* does not
      simply address the external symptoms, as do topical solutions and antibiotics. *AcnEase®* is taken
      in tablet form.





*AcnEase®* is
      typically used by consumers suffering from acne and rosacea. Acne is a disease
      of the sebaceous hair follicles. The rapid growth of bacteria in combination
      with the accumulated sebum cause the follicle to enlarge and can result in
      a
      mild form of non-inflammatory acne, known as comedones. Acne may progress to
      inflammatory lesions that are red in color called papules, pustules and nodules.
      Nodules or cysts are the most advanced and severe form of acne. An estimated
      50
      million people (13 million adults) in the U.S. suffer from acne. Currently,
      the
      only FDA-approved drug to treat the causes of acne is accutane (isotretinoin).
      Accutane has many serious side effects, and physicians currently require that
      patients sign a consent form before prescribing this drug. People of all races
      and ages get acne. It is most common in adolescents and young adults. An
      estimated 80 percent of all people between the ages of 11 and 30 have acne
      outbreaks at some point. For most people, acne tends to go away by the time
      they
      reach their thirties; however, some people in their forties and fifties continue
      to have this skin problem (source: National Institute of Arthritis and
      Musculoskeletal and Skin Diseases http://www.niams.nih.gov/hi/topics/
      acne/acne.htm#acne_d). Many of the over-the-counter acne products are topical,
      including benzoyl peroxide, and only address the overt clinical manifestation
      of
      acne. Side effects of topical agents may include dry and flaky skin, irritation,
      and redness. Prescription pharmaceutical products include broad-spectrum
      antibiotics, which non-specifically kill bacteria associated with acne. Systemic
      antibiotics, such as tetracycline and minocycline, are the mainstays of acne
      therapy. The use of systemic antibiotics for the treatment of acne is in
      disfavor with many physicians due to the development of resistant strains of
      bacteria. For severe, persistent cases of acne, Retin-A cream (tretinoin) and
      Accutane are often recommended. Both products are retinoid derivatives, are
      costly and have a multitude of side effects. Accutane is a known potent
      teratogen and strictly contraindicated in women not practicing a proven method
      of birth control. Recent information has also indicated that Accutane may induce
      depression. As a result, the FDA recommends that special caution be used when
      prescribing this medication to teenagers and may even consider more severe
      restrictions.




2




Rosacea
      is characterized by facial flushing due to dilatation of blood vessels that
      occurs in middle-aged men and women. According to the National Rosacea Society,
      approximately 14 million adults in the United States suffer from rosacea
      (http://www.rosacea.org/). The cause of rosacea is unknown. It affects adults
      who are typically in their 30s and 40s, especially those with fair-skin, blue
      eyes and of Celtic origin
      (http://www.niams.nih.gov/hi/topics/rosacea/rosacea.htm#ros_b). The standard
      therapy for rosacea involves the use of a systemic oral antibiotic, such as
      tetracycline, minocycline and erythromycin, in combination with a topical
      antibiotic gel. Isotretinoins, also known under the brand names Accutane or
      Roaccutane, are sometimes considered alternatives to oral antibiotics,
      especially in cases of papopustular rosacea. In 1989, Metronidazole was the
      first topical treatment approved for the treatment of rosacea and is used to
      reduce rosacea flare-ups once the disease is brought under control. If rosacea
      progresses to a severe stage, dilated blood vessels that become distended under
      the surface of the skin, known as telangiectasis, appear. Treatment options
      for
      telangiectasis are limited to corrective surgery or mixed light pulse therapy,
      known as Photoderm, which directs a series of light pulse to the dermal layer
      of
      the skin stimulating collagen synthesis and resulting in a thickening of the
      skin and decreasing the visible signs of rosacea.




Our
      product, *AcnEase®* ,
      is a
      unique herbal supplement which has been shown in studies conducted in China
      to
      improve skin conditions associated with juvenile acne and adult acne and
      rosacea. *AcnEase®* has no
      known side effects unlike antibiotics or retinoid derived products.





Clinical
      trials of the efficacy of *AcnEase®* in
      patients with acne have been performed in China. In these trials, approximately
      95% of the patients aged 15 to 30 responded to *AcnEase®* .
      In
      patients aged 31 to 45, the level of effectiveness was approximately 80%. Based
      on anecdotal experience in the U.S. market, AcnEase has proven to be especially
      effective in addressing skin conditions associated with cystic acne or androgen
      induced acne in women. In addition, *AcnEase®* has
      demonstrated a high satisfaction rate among our present and past customers
      in
      the U.S. and U.K. who number approximately 25,000. Over the last four years
      of
      operations, fewer than 5% of our customers have returned *AcnEase®* ,
      which
      we back with a 100% guarantee. In clinical studies performed in China and
      according to customer surveys, users typically respond within 2-3 weeks of
      their
      first use of *AcnEase®* and
      become blemish-free within four to six weeks.





*AcnEase®* also has
      demonstrated efficacy in improving conditions associated with rosacea in studies
      conducted in China. Customers with symptoms of rosacea have been using
      AcnEase *®* since
      2001. Responses from our customers show that 85% of our customers suffering
      from
      rosacea have experienced improvements in facial flushing, itchy gritty eyes,
      acne and gastric reflux.





In
      December 2004, *AcnEase®* was
      featured in *New
      Generalist* ,
      a
      publication of the Royal College of Medicine of London. In July 2005, it was
      presented in *Dermatology* ,
      an
      English language European journal of Dermatology as the only all natural acne
      therapeutic product. [Jack - please confirm with Agnes that there was nothing
      substantially negative in these reports ]





We
      selected *AcnEase* *®*  as
      our
      business model prototype to demonstrate our ability to identify herbal-based
      products and bring them to the mainstream marketplace in the U.S. and U.K. We
      launched *AcnEase®* in 2001.
      For the last three fiscal years, *AcnEase®* contributed approximately 98% of our revenues. *AcnEase®* has
      demonstrated high brand recognition, consistently ranking in the top three
      acne
      products searched on Google and Yahoo.





Since
      2001, we have been the exclusive worldwide distributor of *AcnEase®* under an
      existing license agreement. As these agreements do not explicitly set forth
      the
      extent of our exclusive rights with *AcnEase®* ,
      our
      exclusivity rights may be subject to limitation or termination in the
      future.





Currently,
      we purchase *AcnEase®* manufactured on our behalf by our licensor, AH USA. Since 2004, *AcnEase®* tablets
      have been manufactured in the U.S.





Our
      business plan contemplates our future acquisition of the intellectual property
      rights related to AcnEase® including the formulation thereof, under an agreement
      with AH USA. In the event that we are able to purchase the formulation and
      other
      intellectual property rights relating to *AcnEase®* , *AcnEase®* would be
      manufactured in the U.S. on our behalf. In that event, all herbs for
      AcnEase *®* would be
      sourced from China using our contacts in Beijing. Such herbs would come from
      suppliers that practice cGAP (current Good Agricultural Practice) and the
      quality and identity confirmed by a herbalist/pharmacognocist. Routine quality
      control (QC) and identity tests would be performed on the raw materials. All
      extractions would initially be performed at audited facilities in China (PRC)
      or
      Hong Kong. The extracts would then be shipped to the U.S. where QC analysis
      and
      all final product manufacturing testing and release would be performed in
      contract labs. Packaging and labeling would also be performed using contract
      manufacturers.





3


***Pipeline
      Products***





We
      have a
      number of other products in varying stages of development for which we will
      need
      additional time and financing before introduction to the market. These products
      include:





*AcnEase®
      Skin Management System:* This
      series of products will include a cleanser, toner, moisturizer, mask and topical
      acne treatment product.





*Sexual
      Health Products:* Our
      sexual health series line includes all natural products that address selected
      sexual disorders resulting from cardiovascular disease, use of anti-depressants,
      surgical procedures and other problems.





*Energy
      Restoration Products:* These
      products will address overall depletion of energy due to competitive sports,
      high-level stress, extensive sexual activities, as well as other conditions
      that
      are physically demanding on a long-term or temporary basis.





*Additional
      Products:* We have
      also researched expanding our line to include additional products in the areas
      of liver disease (including liver damage due to Hepatitis and Cirrhosis),
      prostate health for benign prostate hyperplasia (BPH), women’s health for
      perimenopausal symptoms, cardiovascular concerns and diabetes. We do not expect
      to be able to develop these products and bring them to market until we have
      raised substantial financing.





***Marketing
      and Distribution***





We
      pursue
      a multi-channel marketing and distribution strategy using a strong
      brand-building approach and information-driven strategy. We maintain a visible
      Internet presence and foster partnerships with selected traditional and
      non-traditional health care providers, nutraceutical and supplement sales
      channels, as well as high quality consumer products and service providers in
      the
      U.S. and abroad.





We
      sell
      products in the U.S., the United Kingdom and Continental Europe. Our long term
      plans include expanding into the Indian, Chinese and Australian markets after
      sufficient financing is received by our company. In the U.K., we subcontract
      with a firm, State of Play LLC, which handles order fulfillment, marketing
      and
      customer services for our customers in the U.K. and European Union. We also
      maintain relationships with advisors in Beijing and Shanghai, PRC.





***Manufacturing***





We
      plan
      to become a fully-integrated company by establishing our own manufacturing
      and
      development capabilities at such time as we receive sufficient financing. If
      we
      obtain the rights to begin manufacturing our products, we intend to manufacture
      our products using contract manufacturing companies that are GMP compliant.
      Quality Control analysis will be contracted during the initial stages of
      development, though at an appropriate point in time QC may be taken in house.
      Currently, AcnEase *®* is
      manufactured for us by the licensor of the formula, and we outsource packaging
      functions for our products.





The
      state
      of the art for the processing and sourcing of many herbs still resides in Asia.
      Through our network, we have contacts that can oversee the manufacturing of
      select products in China. Samples and initial batches of one of our sexual
      health products have been made for us in China because the product is
      manufactured using proprietary process and enrichment steps, as well as raw
      materials that are sourced in China. Initial batches of certain of our sexual
      health and energy restoration products are currently manufactured in the United
      States through several contract manufacturers and we expect will continue to
      be
      made in the U.S. after we begin marketing the products. *AcnEase®* is also
      manufactured in the United States. Sourcing of the raw materials can be from
      several suppliers in either the United States or Asia.





4




***Raw
      Materials***





Raw
      materials for *AcnEase®* and one
      of our sexual health products are obtained from China. Raw materials can be
      obtained from several suppliers. We have an arrangement with Botanic Century
      in
      Beijing to work as an agent for the procurement of herbs and in some instances
      processing and testing of the raw materials. In addition, we retain CMM
      consultants (Oxford UK) to perform similar services. In the case of the sexual
      health product, it is not only the raw materials that are important but also
      the
      extraction and enrichment process that is proprietary. Final product
      manufacturing and release testing (QC) can eventually be performed in the United
      States following sourcing of the active ingredients in China. Raw materials
      for
      another of our sexual health products in the pipeline ** can
      be
      obtained from suppliers in the United States. All extractions are performed
      in
      the United States as is final production manufacturing packaging and labeling.





***Intellectual
      Property***





All
      of
      our existing and pipeline products are presently protected as trade secrets.
      Some of our products may qualify for patent protection that will involve the
      ingredients, ratios of ingredients, and specific fractions for extracts of
      ingredients and/or an extraction process.





The
      key
      method of protection for our products at the current time is through trade
      secrets relating to:





• ingredients
      (content and amount),


• part
      of
      plant used,


• ratio
      of
      ingredients,


• preparation
      and enrichment of ingredients, and


• proprietary
      extraction procedures.





Most
      of
      these trade secrets are owned by our licensor and licensed to us. Therefore,
      we
      rely on our licensor to continue to adequately protect these trade secrets.
      We
      intend to source ingredients from different companies to make certain no single
      entity has a list of all ingredients. All subsequent processing is performed
      at
      separate factories. We believe trade secrets are the best method at this time
      to
      protect herbal based products.





***Working
      Capital Items***





We
      carry
      varying amounts of inventory. We do not extend payment terms to customers or
      provide wholesale customers any rights to return merchandise. Retail customers
      in the U.S. are provided with a 100% money-back guarantee; however, the rate
      of
      returns is de minimus.





***Major
      Customers***





Due
      to
      the fragmented market, we do not have any one customer that accounts for 10%
      or
      more of consolidated revenues.





***Competition***





Our
      direct corporate competitors are primarily nutraceutical companies, including
      specialty retailers, supermarkets, large chain discount retailers, drug store
      chains and independent drug stores, health food stores, on-line merchants,
      and
      mail order companies. Indirect competition also includes healthcare-focused
      online marketers. Some of our more prominent competitors include General
      Nutrition Centers, Inc., NBTY, Inc., Invite Health, Vitamin World and Vitamin
      Shoppe. The vast majority of products distributed by nutraceutical and herbal
      supplement companies are targeted towards dieting and weight management, body
      building supplementation, dietary or vitamin supplements and personal care
      products. These products represent the commodity approach to satisfying the
      markets needs and a selected few qualify as proprietary and unique formulations
      with intellectual property value. To our knowledge, no other botanical
      supplement targeting a specific health issue currently entertains national
      brand
      recognition. In addition, the herbaceutical sector is highly fragmented. We
      believe that the rudimentary stage of development for this sector, in
      conjunction with our superior products and pipeline, provides us an opportunity
      for growth, including acquisitions, and the ability to assume a leadership
      position in the sector in a relatively short period of time.





***Regulation***




5


We
      have
      determined that all of our existing and proposed products are dietary
      supplements as defined under federal statutes and regulations of the FDA.
      Neither nutritional supplements nor dietary supplements require FDA or other
      governmental approval prior to their marketing in the United States. No
      governmental agency or other third party makes a determination as to whether
      our
      products qualify as nutritional supplements, dietary supplements, or neither.
      We
      make this determination based on the ingredients contained in the products
      and
      the claims made for the products. The processing, formulation, packaging,
      labeling and advertising of such products, however, are subject to regulation
      by
      one or more federal agencies including the FDA, the Federal Trade Commission,
      the Consumer Products Safety Commission, the Department of Agriculture and
      the
      Environmental Protection Agency. Our activities also are subject to regulation
      by various agencies of the states and localities in which its products are
      sold.
      We markets products that are covered under FDA regulations for Dietary
      Supplements.




*Federal
      Food, Drug, and Cosmetic Act*




The
      FDA,
      pursuant to the Federal Food, Drug, and Cosmetic Act (“FFDCA”), regulates the
      formulation, manufacturing, packaging, labeling, distribution and sale of
      dietary supplements. The FDA has broad authority to enforce the provisions
      of
      the FFDCA applicable to foods and dietary supplements, which by definition
      is a
      sub-category of foods. The FDA’s powers include (i) issuing a public “Warning
      Letter” notifying a company that a product is not in compliance with FDA
      regulations, (ii) publicizing information about an illegal product, (iii)
      requesting a voluntary recall of an illegal product from the market, (iv)
      requesting the Department of Justice to initiate civil seizure and/or injunction
      actions, (v) seeking and receiving consumer redress, and (vi) initiating
      criminal proceedings in the U.S. federal courts.




Under
      the
      FFDCA, all labels and labeling claims must be truthful and non-misleading.
      As a
      general rule, advertising for dietary supplements is regulated by the FTC.
      Labeling for these products is regulated by the FDA. Nevertheless, the FDA
      takes
      the position that, in addition to the FTC, the FDA also has jurisdiction to
      review Internet websites and mail order catalogs as it considers these forms
      of
      media to be labeling. Moreover, the FDA has been known to review advertising
      for
      dietary supplements to help it determine the intended use of the product being
      advertised. Non-compliance with the FDA regulation could lead to, among other
      things, injunctions, product withdrawals, recalls, and product
      seizures.





*Dietary
      Supplement Health and Education Act of 1994*





Dietary
      Supplements is a classification of products resulting from the enactment of
      the
      Dietary Supplement Health and Education Act of 1994 ("DSHEA") in October 1994.
      Our dietary supplement products are subject to DSHEA. DSHEA amended and modified
      the application of certain provisions of the FFDCA as they relate to dietary
      supplements, and required the FDA to promulgate regulations consistent with
      DSHEA. The provisions of DSHEA are generally favorable to the dietary supplement
      industry and define dietary supplements and dietary ingredients; establish
      a new
      framework for assuring safety; outline guidelines for literature displayed
      where
      dietary supplements are sold; provide for the use of claims and nutritional
      support statements; require ingredient and nutrition labeling; and grant the
      FDA
      the authority to establish regulations concerning good manufacturing practices
      (“GMPs”).





DSHEA
      defines a dietary supplement to include any product (other than
      tobacco):





(i)
            intended
                to supplement the diet that bears or contains one or more of a vitamin,
                mineral, herb or other botanical, amino acid, substance to supplement
                the
                diet by increasing the total dietary intake, or any concentrate,
                metabolite, constituent, extract, or combination of any such ingredient,
                provided that such product is either intended for ingestion in tablet,
                capsule, powder, soft gel, gelcap, or liquid droplet form, or





(ii)
            if
                not intended to be ingested in such form, is not represented for
                use as a
                conventional food or as a sole item of a meal or the diet,
                and





(iii)
            is
                labeled as a dietary supplement.




A
      dietary
      supplement, which contains an ingredient not on the market before October 15,
      1994 (a “new dietary ingredient”) adulterates the product under the FFDCA unless
      there is evidence of a history of use or other evidence of safety establishing
      that it will reasonably be expected to be safe. The practical effect of such
      an
      expansive definition is to ensure that the new protections and requirements
      of
      DSHEA will apply to a wide class of products.





6




Under
      DSHEA, companies that manufacture and distribute dietary supplements are allowed
      to make any of the following four types of statements with regard to nutritional
      support on labeling without FDA approval:





(i) a
      statement that claims a benefit related to a classical nutrient deficiency
      disease if it discloses the prevalence of such disease in the United States;





(ii)  a
      statement that describes the role of a nutrient or dietary ingredient intended
      to affect the structure or function of the body;





(iii)  a
      statement that characterizes the documented mechanism by which a nutrient or
      dietary ingredient acts to maintain the structure or function; or





(iv)  a
      statement that "describes general well-being" from consumption of a nutrient
      or
      dietary ingredient.





In
      addition to making sure that a statement meets one of these four criteria,
      a
      manufacturer of the dietary supplement must have substantiation that such
      statement is truthful and not misleading, must not claim to diagnose, mitigate,
      treat, cure, or prevent a specific disease or class of diseases, and for
      structure/function claims, must contain the following disclaimer, prominently
      displayed in boldface type: "This statement has not been evaluated by the Food
      and Drug Administration. This product is not intended to diagnose, treat, cure,
      or prevent any disease."





Under
      its
      authority granted by DSHEA, the FDA has proposed GMPs specifically for dietary
      supplements. These new GMPs, when finalized, will be more detailed than the
      GMPs
      that currently apply to dietary supplements and may, among other things, require
      dietary supplements to be prepared, packaged and held in compliance with certain
      rules (including quality control provisions) similar to the GMPs applicable
      to
      drugs. There can be no assurance that, if the FDA adopts GMPs for dietary
      supplements, we and/or our suppliers will be able to comply with the new rules
      without incurring substantial expenses that might have a material adverse effect
      on our consolidated financial position or results of operations.





As
      a
      formulator, distributor and marketer of dietary supplements, we are subject
      to
      the risk that one or more of the ingredients in our product may become subject
      to regulatory action in the future.





*The
      Federal Trade Commission*




The
      FTC
      exercises jurisdiction over the advertising of dietary supplements and foods
      and
      has the authority over both “deceptive” and “unfair” advertising and other
      marketing practices. In addition to its broad investigative powers, the FTC
      has
      the power to initiate administrative and judicial proceedings against a company
      and may also seek a temporary restraining order or preliminary injunction
      against a company pending the final determination of an action. The FTC’s
      remedies also include consumer redress, civil and criminal penalties.





Our
      advertising and sale of our dietary supplements is subject to regulation by
      the
      FTC under the Federal Trade Commission Act (the “FTCA”). The FTCA prohibits
      unfair methods of competition and unfair or deceptive acts or practices in
      or
      affecting commerce. The FTCA provides dissemination or causing to be
      disseminated any false advertisement pertaining to drugs or foods (which would
      include dietary supplements) is an unfair or deceptive act or practice. Under
      the FTC’s “substantiation doctrine”, an advertiser is required to have a
“reasonable basis” for all objective product claims before the claims are made.
      Failure to substantiate claims adequately may be considered a deceptive or
      unfair practice. Pursuant to this FTC requirement, we are required to have
      adequate substantiation for all advertising claims made for our products at
      the
      time such claims are made.





***Research
      and Development***




We
      limit
      the amount of expenditures relating to the development of new products through
      the use of co-licensing and co-development. We estimate that 30-35% of our
      revenues are spent annually on research and development expenditures.





***Environmental
      Compliance***




7




We
      are
      not aware of any administrative or other costs incurred which are directly
      related to compliance with environmental laws, and we have not experienced
      any
      other significant effect from the impact of environmental laws.





***Company
      History***





The
      Company was incorporated in the State of Delaware on June 4, 2002, and was
      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.





On
      September 18, 2006, Herborium 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 Herborium,
      with Herborium as the surviving corporation (the “Merger). Under the provisions
      of the Merger Agreement and the plan of reorganization, the stockholders of
      Herborium exchanged 100% of their common stock of the Company for an 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 of November 30, 2006. This number of shares was used in
      the
      calculation of net loss per share for the year ended November 30, 2005,
      presented on a retroactive basis.





Although
      PMIC is deemed the legal acquirer, we are 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.





***Employees***





We
      presently have one full-time employee whose principal responsibility is product
      order fulfillment. Dr. Olszewski, our President, Chief Executive Officer and
      Acting Chief Financial Officer does not currently devote her full time to us
      and
      will not do so until such time as we raise at least $1,250,000 in financing.
      Dr.
      Gilligan will assume full-time employment with us as our Co-President and Chief
      Operating Officer within six months after the date that we raise at least
      $2,500,000 in financing. Prior to such time, he will serve as a consultant
      to
      us.




**Item
      2. Description Of Property**




Currently,
      we maintain our office at the home of our President and Chief Executive Officer,
      Dr. Olszewski, at 3 Oak Street, Teaneck, New Jersey 07666. Fulfillment and
      customer service are performed from space at 985 Carteret Ave. in Union, New
      Jersey, the home of Dr. Gilligan. We also rent warehouse space to house
      inventory in New Jersey.




**Item
      3. Legal Proceedings**




None.




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




None.




8


**Part
      II**




**Item
      5.**  **Market
      For Common Equity, Related Stockholder Matters** **and Small Business Issuer Purchases of Equity Securities**




***Price
      Range Of Common Stock***




Our
      common stock is presently traded on the Over-the-Counter Bulletin Board under
      the symbol HBRM; PMIC was formerly traded on the Over-the-Counter Bulletin
      Board
      under the symbol PMICQ.OB. The following table shows the high and low sale
      prices for 2004, 2005 and 2006 in dollars per share as reported by the OTC
      Bulletin Board. These may not be the prices that you would sell or would pay
      to
      purchase a share of our common stock during the periods shown.






**High**
            
            **Low**Fiscal
                Year Ended November 30, 2006*Quarter
                Ended March 31, 2006
            
            $
            0.03
            
            $
            0.02Quarter
                Ended June 30, 2006
            
            
            0.05
            
            
            0.02Quarter
                Ended August 31, 2006
            
            
            0.04
            
            
            0.02Quarter
                Ended November 30, 2006
            
            
            0.06
            
            
            0.02Fiscal
                Year Ended December 31, 2005First
                Quarter
            
            $
            0.15
            
            $
            0.05Second
                Quarter
            
            
            0.07
            
            
            0.02Third
                Quarter
            
            
            0.06
            
            
            0.03Fourth
                Quarter
            
            
            0.03
            
            
            0.02Fiscal
                Year Ended December 31, 2004First
                Quarter
            
            $
            0.15
            
            $
            0.06Second
                Quarter
            
            
            0.07
            
            
            0.04Third
                Quarter
            
            
            0.10
            
            
            0.04Fourth
                Quarter
            
            
            0.15
            
            
            0.04


*
      The
      initial Form 10-QSB for Herborium Group was filed for the quarter ended August
      31, 2006. For purposes of reporting high and low sales prices in this item,
      we
      have changed from calendar quarters to our fiscal quarters.





The
      number of holders of record for our common stock immediately after giving effect
      to the merger was approximately 600 .




***Dividend
      Policy***




We
      have
      not paid and have no plan to pay dividends on our common stock **.**




***Recent
      Sales Of Unregistered Securities***




In
      accordance with the PMIC plan of reorganization and in connection with the
      merger, we issued 6,580,762 shares of our common stock to the holders of PMIC
      common stock other than Advanced Communications Technologies. Inc. (“ACT”),
      including the former holders of PMIC’s 4% Series A Convertible Preferred Stock
      in exchange for their respective claims as existing shareholders of PMIC. The
      issuance of these shares of our common stock constituted an offer of securities
      within the purview of § 1145(a) of the Bankruptcy Code and, therefore, was not
      subject to the registration requirements of the Securities Act of 1933, as
      amended (the “Securities Act”), or state or local law. None of the recipients of
      these shares will be deemed an underwriter as specified in Section 1145(a)
      of
      the Bankruptcy Code.




9




In
      addition, under the PMIC plan of reorganization and in connection with the
      merger, we issued 7,454,300 shares of our common stock directly to the
      stockholders of ACT, partly in exchange for ACT’s claims and partly in exchange
      for the payment of $50,000 in cash by ACT. Further, 2,250,000 shares of our
      common stock are being held in escrow: 1,750,000 shares for Mr. Li and Ms.
      Lee
      pursuant to terms of a settlement agreement and 500,000 shares for certain
      unexpired common stock option and warrant grants. The issuance of shares of
      our
      common stock to stockholders of ACT constituted an offer of securities within
      the purview of § 1145(a) of the Bankruptcy Code and was not be subject to the
      registration requirements of the Securities Act or state or local law. None
      of
      the recipients of these shares will be deemed an underwriter as specified in
      Section 1145(a) of the Bankruptcy Code.





In
      connection with the merger, we issued 92,282,018 shares of our common stock
      to
      the stockholders of Herborium in exchange for all of the issued and outstanding
      common stock of Herborium. The issuance of these shares was made in reliance
      upon the exemption from the registration requirements of the Securities Act
      set
      forth in Rule 506 of Regulation D, promulgated under the Securities Act, and
      corresponding provisions of state securities laws, which exempts transactions
      by
      an issuer not involving any public offering. Accordingly, such shares are
“restricted securities” and may not be offered or sold in the United States
      absent registration or an applicable exemption from registration requirements
      under the Securities Act.





***Issuer
      Purchases of Equity Securities***




We
      did
      not make any purchases of equity securities during the fiscal year ended
      November 30, 2006.




**Item
      6. Management’s Discussion And Analysis** **Or
      Plan Of Operation**




The
      following discussion should be read in conjunction with our financial statements
      and the related notes and the other financial information appearing elsewhere
      in
      this report. In addition to historical information, the following discussion
      and
      other parts of this Annual Report contain forward-looking information that
      involves risks and uncertainties including the use of words
      such as "estimates," "expects," "anticipates," "believes," "intends," "will,"
      "seek" and other similar expressions, 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, competitive market conditions in the Company's existing lines
      of
      business and technological obsolescence, as well as other risks and
      uncertainties.




**GENERAL**




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





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.





10




**SIGNIFICANT
      ACCOUNTING POLICIES**




a.  Principles
      of consolidation





The
      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.





b.  Cash
      and
      cash equivalents





The
      Company maintains its cash accounts in two commercial banks. The balance is
      insured by the Federal Deposit Insurance Corporation up to $100,000 at each
      bank.





c.  Inventory





Inventory,
      consisting of finished botanical therapeutic products, is stated the lower
      of
      cost or market and is valued on the first-in, first-out method. When net
      realizable value has fallen below cost, inventory is written down.





d.  Shipping
      and handling costs





Shipping
      and handling costs associated with outbound freight amounted to approximated
      $46,000 and $53,000 for the years ended November 30, 2006 and 2005,
      respectively, and were charged to cost of sales.





e.  Property
      and equipment





Depreciation
      and amortization are computed using the straight-line method over the estimated
      useful lives of the assets ranging from five to seven years.





Maintenance
      and repairs are charged to expense when incurred. When property and equipment
      are retired or otherwise disposed of, the applicable cost and accumulated
      depreciation are removed from the accounts and any gain or loss is credited
      or
      charged directly to income.





f.  Advertising





It
      is the
      Company’s policy to expense advertising costs as they are incurred. Advertising
      expenses for the years ended November 30, 2006 and 2005 were approximately
      $199,000 and $192,000, respectively.





g.  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.





h.  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.




i.
      Revenues




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





j.  Loss
      per
      share





Basic
      earnings (loss) per share is computed by dividing net loss available to common
      stockholders by the weighted average number of common shares outstanding for
      the
      period. Diluted earnings per share reflect the potential dilution of securities,
      using the treasury stock method, that could share in the earnings of an entity.
      During the fiscal years ended November 30, 2006 and 2005, the Company had no
      securities convertible into common stock that would, in any event, have been
      excluded from the calculation of diluted loss per share, as their effect would
      have been anti-dilutive.




11




The
      number of shares used in the calculation of net loss per share for the year
      ended November 30, 2005, was presented on a retroactive basis as described
      in
      Note 1.





k.  Fair
      value of financial instruments





The
      carrying amounts of the Company’s accounts payable, accrued expenses, credit
      cards payable, lines of credit payable, amounts payable to others and
      stockholders approximate fair value due to the relatively short period to
      maturity for these instruments.




l.
      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.




m.  Recent
      accounting pronouncements





On
      June 7, 2005, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards No. 154, “Accounting Changes
      and Error Corrections, (“SFAS 154”).a replacement of APB Opinion No. 20,
      Accounting Changes,” and Statement No. 3, “Reporting Accounting Changes in
      Interim Financial Statements.” SFAS 154 changes the requirements for the
      accounting for and reporting of a change in accounting principle. Previously,
      most voluntary changes in accounting principles required recognition of a
      cumulative effect adjustment within net income of the period of the change.
      SFAS
      154 requires retrospective application to prior periods’ financial statements,
      unless it is impracticable to determine either the period-specific effects
      or
      the cumulative effect of the change. SFAS 154 is effective for accounting
      changes made in fiscal years beginning after December 15, 2005; however,
      the Statement does not change the transition provisions of any existing
      accounting pronouncements. The adoption of SFAS 154 has not had a material
      effect on the Company’s financial position, results of operations, or cash
      flows.




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      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.





Prior
      to
      SFAS 157, there were different definitions of fair value and limited guidance
      for applying those definitions in GAAP. Moreover, that guidance was dispersed
      among the many accounting pronouncements that require fair value measurements.
      SFAS 157 clarifies that the exchange price is the price in an orderly
      transaction between market participants to sell the asset or transfer the
      liability in the market in which the reporting entity would transact for the
      asset or liability, that is, the principal or most advantageous market for
      the
      asset or liability.





This
      Statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company is currently evaluating the impact, if any, that SFAS 157
      will have on its financial position, results of operations and cash
      flows.





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 January 1, 2007. The
      adoption of this interpretation did not have an impact on the Company’s
      financial statements. The Company is currently evaluating the impact this
      interpretation may have on its future financial position, results of operations,
      earnings per share, or cash flows.




12




In
      September 2006, the Securities and Exchange Commission issued SAB No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements.” SAB No. 108 was issued
      to address diversity in practice in quantifying financial statement
      misstatements. Current practice allows for the evaluation of materiality on
      the
      basis of either (1) the error quantified as the amount by which the current
      year income statement was misstated (“rollover method”) or (2) the
      cumulative error quantified as the cumulative amount by which the current year
      balance sheet was misstated (“iron curtain method”). The guidance provided in
      SAB 108 requires both methods to be used in evaluating materiality (“dual
      approach”). SAB No. 108 permits companies to initially apply its provisions
      either by (1) restating prior financial statements as if the dual approach
      had always been used or (2) recording the cumulative effect of initially
      applying the “dual approach” as adjustments to the carrying values of assets and
      liabilities as of January 1, 2006 with an offsetting adjustment recorded to
      the opening balance of retained earnings. T here
      were
      no matters warranting the Company’s consideration under the provisions of SAB
      No. 108 and, therefore, it did not have an impact on the Company’s
      financial position, results of operations, net loss per share or cash
      flows.




**FINANCIAL
      CONDITION**





We
      had
      net losses of $339,757 and $105,243 during the years ended November 30, 2006
      and
      2005, respectively. As of November 30, 2006, we had cash and current assets
      of
      $4,649 and $84,397, respectively, and current liabilities of $841,242, with
      obligations aggregating $344,655 for trade creditors and accrued expenses,
      $134,126 for credit card obligations, $172,913 payable for line of credit
      obligations, $35,866 for amounts due to others and $153,682 for amounts 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 others 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 November 30, 2006, 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 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, 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 fiscal year ended November 30, 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 fiscal years ended November 30, 2006 and 2005, the Company's due to
      stockholders obligation increased by $24,927 and $46,858 to $153,682 and
      $128,755, respectively.





**COMPARISON
      OF THE FISCAL YEAR ENDED NOVEMBER 30, 2006 TO THE FISCAL YEAR ENDED NOVEMBER
      30,
      2005**





**Overall
      Results of Operations**





For
      the
      year ended November 30, 2006, we incurred a net loss of $339,757, an increase
      of
      $234,514 from the net loss of $105,243 for the comparable prior year period.
      The
      increase in net loss in the fiscal 2006 compared to fiscal 2005 period is
      principally attributable to an increase in general and administrative expenses,
      partially offset by an increase in gross profit.





**Sales**




13




Net
      sales
      for the year ended November 30, 2006 were $827,755 compared to $866,773 for
      the
      year ended November 30, 2005. The decrease of $39,018, or 4.5%, can be
      attributed to a decrease in sales of our principal product, AcnEase, in the
      United Kingdom (“UK”) due to a temporary leave of absence on the part of our
      local sales representative during the first three quarters of the current year.
      Sales for the three month period November 30, 2006 amounted to $259,060 compared
      to $245,438 for the year ago period.




**Gross
      Profit**





Gross
      profit increased to $531,890 for the year ended November 30, 2006 compared
      to
      $493,743 for the year ended November 30, 2005, or $38,147 and 7.7%, with gross
      margin increasing to 64.3% from 57% for the prior period. The increase in gross
      profit is attributable to the increase gross margin, which was caused by an
      improvement in the average selling price received for AcnEase due a change
      in
      the mix of distribution channels into which we sell.





**Operating
      Expenses**





Total
      operating expenses increased by $271,795, or 49.1%, to $825,899 for the year
      ended November 30, 2006, from $554,104 for the year ended November 30, 2005,
      principally attributable to an increase in selling and administrative expenses
      for officer salary expense accrued but not paid, an increase in legal,
      accounting and auditing fees attributable to our being a public company,
      partially offset by lower spending for website, travel and UK commission
      expenses.





**Other
      Income (Expense)**





Interest
      expense increased to $44,748 from $41,687 for the year ended November 30, 2006
      as compared with the year ended November 30, 2005, or $3,061, due principally
      to
      an increase in credit card debt outstanding in the current year.





**COMPARISON
      OF THE FISCAL YEAR ENDED NOVEMBER 30, 2005 TO THE FISCAL YEAR ENDED NOVEMBER
      30,
      2004**





**Overall
      Results of Operations**





For
      the
      fiscal year ended November 30, 2005, we incurred a net loss of $105,243, a
      decrease of $186,469 from the net loss of $291,712 for the fiscal year ended
      November 30, 2004. The net loss for the fiscal year ended November 30, 2004
      included a non-cash charge of $108,466 to set up a valuation allowance to offset
      100% of a deferred tax asset. The decrease in net loss in fiscal 2005 compared
      to fiscal 2004 is also attributable to an increase in gross profit due to
      increased net sales and a decrease in operating expenses in the fiscal year
      ended November 30, 2005 compared to the earlier period.





**Sales**





Net
      sales
      for the fiscal year ended November 30, 2005 were $866,773 compared to $762,371
      for the fiscal year ended November 30, 2004. The increase of $104,402, or 13.7%,
      can be attributed to an increase in the number of units sold of AcnEase.





**Gross
      Profit**





Gross
      profit increased to $493,743 for the fiscal year ended November 30, 2005
      compared to $433,159 for the fiscal year ended November 30, 2004, or $60,584,
      with gross margin increasing slightly to 57.0% in the current period from 56.8%
      for the prior period.





**Operating
      Expenses**





Total
      operating expenses decreased to $554,104 for the fiscal year ended November
      30,
      2005, from $591,187 for the fiscal year ended November 30, 2004, or $37,083,
      principally attributable to decreases in marketing and promotion expenses of
      $48,787 and in product development expenses of $57,776, offset by an increase
      of
      $44,905 in commission, fulfillment and office expenses related to increased
      sales and business activities in the UK.




14




**Other
      Income (Expense)**





Interest
      expense increased to $41,687 from $22,884 for the fiscal year ended November
      30,
      2005 as compared with the fiscal year ended November 30, 2004, or $18,803,
      due
      principally to an increase in interest rates payable and in the level of credit
      card debt outstanding.





**Seasonality**





There
      are
      no seasonality factors that affect the Company.





**Off-Balance
      Sheet Arrangements**





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





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      November 30, 2006, we had a cash balance of $4,649 and a negative cash flow
      from
      operations of $24,093 for the year 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
      others 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 November 30, 2006, is not sufficient to meet our working
      capital needs for the next twelve-month period and will need to obtain
      additional financing from one or more of the sources described above, or an
      entirely new source.





The
      Company has contractual obligations of $496,587 as of November 30, 2006. These
      contractual obligations, along with the dates on which such payments are due,
      are described below:


**Contractual
                  Obligations**
                **(as
                  of November 30, 2006)****Total**
              
              **1
                  Year or Less**
              
              **More
                  Than 1 Year**Credit
                  cards payable
              
              $
              134,126
              
              $
              134,126
              
              $
              --Lines
                  of credit payable
              
              
              172,913
              
              
              172,913
              
              
              --Due
                  to others
              
              
              34,513
              
              
              34,513Due
                  to stockholders
              
              
              153,682
              
              
              153,682
              
              
              --Other
              
              
              1,353
              
              
              1,353
              
              
              --**Total
                  Contractual Obligations**
              
              **$**
              **496,587**
              
              **$**
              **496,587**
              
              **$**
              **--**








Below
      is
      a discussion of our sources and uses of funds for the years ended November
      30,
      2006 and 2005.





**Net
      Cash Used In Operating Activities**





Net
      cash
      used in operating activities was $24,093 and $119,551 in the years ended
      November 30, 2006 and 2005, respectively. The use of cash in operating
      activities for the year ended November 30, 2006 was principally the result
      of a
      net loss of $339,757, partially offset by an increase of $307,803 in accounts
      payable and accrued expenses. The use of cash in operating activities for the
      year ended November 30, 2005 was principally the result of a net loss of
      $105,243, as well as an increase in inventory of $22,302 and a decrease in
      accounts payable and accrued expenses of $19,154.





**Net
      Cash Used In Investing Activities**





During
      the year ended November 30, 2006 and 2005, net cash used in investing activities
      consisted of $687 and $5,474, respectively, for the acquisition of property
      and
      equipment and $9,274 and $1,763, respectively, for the acquisition of other
      assets, principally trademark costs.




15




**Net
      Cash Provided By Financing Activities**





Net
      cash
      provided by financing activities for the year ended November 30, 2006 amounted
      to $38,521, principally attributable to an increase of $24,927 in amount due
      to
      stockholders, an increase in credit card debt payable of $12,796 and an increase
      of $11,863 in amounts due to others. Net cash provided by financing activities
      for the year ended November 30, 2005 amounted to $126,970, principally
      attributable to an increase of $46,858 in amount due to stockholders, as well
      as
      an increase of $61,236 in credit card debt payable.





**RISK
      FACTORS**




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




**Risks
      Relating to Our Company**





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





We
      are a
      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 $339,757  during
      the year ended November 30, 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.




16




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





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





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





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





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





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





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





***We
      face substantial competition.***




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




17




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




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





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





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





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





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





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





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





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




18




***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 owned by our licensor and
      other third parties . We rely on such third parties to adequately protect such
      trade secrets. There can be no assurance that these third parties will protect
      and continue to hold the trade secrets relating to our products. Furthermore,
      there can be no assurance that any of these trade secrets will not become known
      or independently discovered by third parties.





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





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





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





***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.***




19





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





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





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





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





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





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





***Our
      non-US 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-US 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.





20




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.***





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.
      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 cured this delinquency with the filing of our Annual Report
      on
      Form 10-K filed on May 1, 2006. On March 2, 2007, 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 November 30, 2006 prior to the expiration
      of the grace period (April 2, 2007), our common stock would be removed from
      the
      OTC Bulletin Board effective April 3, 2007. We cured this delinquency with
      the
      filing of our Annual Report on Form 10-K filed on March 30, 2007. To date,
      we
      have been delinquent two times 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.





***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.




21




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.





***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.***




22




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
      7. Financial Statements**




The
      financial statements required by item 7 are included in this Annual Report
      on
      Form 10-KSB beginning on page F-1.






**Item
      8. Changes In And Disagreements With Accountants On Accounting And Financial** **Disclosure**




On
      February 28, 2006, we dismissed Weinberg & Co., P.A. ("Weinberg") as the
      auditor for Pacific Magtron International Corp. Effective February 28, 2006,
      we
      engaged Berenson LLP ("Berenson"), subject to the U.S. Bankruptcy Court's
      approval, to serve as the independent public accountants to audit our
      consolidated financial statements for the calendar year ending December 31,
      2005. Weinberg's report on our consolidated financial statements for the
      calendar year ended December 31, 2004 did not contain an adverse opinion or
      a
      disclaimer of opinion, and was not qualified or modified as to uncertainty,
      audit scope or accounting principles, except that Weinberg's report on our
      consolidated financial statements for the calendar year ended December 31,
      2004
      did contain a modification paragraph that expressed substantial doubt about
      the
      Company's ability to continue as a going concern. During our past calendar
      years
      and the interim period through February 28, 2006, we had no disagreements with
      Weinberg on any matter of accounting principles or practices, financial
      statement disclosure, or auditing scope or procedure, which disagreements,
      if
      not resolved to Weinberg's satisfaction, would have caused Weinberg to make
      reference to the subject matter of the disagreement in connection with its
      report. During our past calendar year and the interim period through February
      28, 2006, Weinberg did not advise us of any of the matters specified in Item
      304(a)(1)(B) of Regulation S-B. During our calendar year ended December 31,
      2004, and the interim period through February 28, 2006, we have had no
      consultations with Berenson concerning: (a) the application of accounting
      principles to a specific transaction or the type of opinion that might be
      rendered on our financial statements as to which we received oral advice that
      was an important factor in reaching a decision on any accounting, auditing
      or
      financial reporting issue; or (b) any disagreements, as defined in Item
      304(a)(1) of Regulation S-K. The appointment of Berenson as independent public
      accountants was recommended and unanimously approved by our Board of
      Directors.







**Item
      8A. Controls And Procedures**






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




As
      of
      November 30, 2006, we carried out an evaluation, under the supervision and
      with
      the participation of our Chief
      Executive Officer and Chief Financial Officer, of the effectiveness of the
      design and operation of our disclosure controls and procedures (as
      defined in §240.13a-15(e) or 240.15d-15(e) under the Exchange Act) .
      Based
      on this evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that, as of the
      end
      of the November
      30, 2006
      fiscal year, our
      disclosure controls and procedures are effective in timely alerting him to
      material information required to be included in our periodic reports that are
      filed with the SEC .
      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*** ***Control
      Over Financial Reporting***




There
      were no changes
      in the Company's internal control over
      financial reporting (as
      defined in Section 240.13a-15(f) or 240.15d-15(f)
      of the Exchange Act) during our
      fourth fiscal quarter
      ended November 30, 2006 that has materially affected, or is
      reasonably likely to materially affect, our internal control over
      financial reporting .




**I** **tem** **8B. O** **ther** **I** **nformation**




Not
      applicable.




23


**Part
      III**




**Item
      9. Directors** **,
      Executive Officers** **,
      Promoters and Control Persons; Compliance With Section 16(a) of the Exchange
      Act**




The
      following table sets forth the names of our directors and executive officers,
      their ages and the positions they currently hold. Each such person became an
      officer and/or director of the company immediately after the closing of the
      merger. The positions that Drs. Olszewski and Gilligan held with Herborium
      prior
      to the merger are described in the biographical information set forth below.




**Name**
            **Age**
            **Position**Dr.
                Agnes P. Olszewski
            50
            President,
                Chief Executive Officer, Chief Financial Officer and
                DirectorDr.
                James P. Gilligan
            55
            Consultant
                and DirectorMax
                G. Ansbacher
            70
            DirectorWayne
                I. Danson
            53
            Director




***Dr.
      Agnes Olszewski.*** Dr.
      Olszewski is a ****** co-founder
      of Herborium, Inc. and has served as co-Chief Executive Officer and President
      Business Development and director of Herborium, Inc. since its inception in
      2000. She was appointed as our Chief Executive Officer, Acting Chief Financial
      Officer and director concurrently with the closing of the merger. In addition,
      concurrently with the closing of the merger, she was appointed director of
      our
      subsidiary Herborium. Until such time as we receive a minimum of $1,250,000
      of
      financing, Dr. Olszewski will not devote her full time to our company, and
      will
      continue to engage in her activities as a professor. Dr. Olszewski has over
      20
      years experience in business strategy, strategic marketing management and
      international business. She holds M.A. in Consumer Psychology and Ph.D. degrees
      from Warsaw University, Poland, and an M.B.A. degree from Fordham University,
      New York City. Dr. Olszewski has been a consultant and a team leader on
      strategic management and competitive marketing strategies for leading American
      corporations, as well as foreign companies and institutions. In her capacity
      as
      an international consultant, she had lead multicultural negotiations and managed
      diverse teams of professionals. She has also been responsible for developing
      and
      implementing business and marketing strategies in the United States and foreign
      markets. After the collapse of communism in Central Europe, Dr. Olszewski formed
      A&T Global Marketing Inc., one of the first consulting firms in the U.S.
      focusing on the transfer of western management and financial know-how into
      transitional economies. A&T Global Marketing was also involved in advising
      American corporations on entry strategies into the emerging markets of Europe
      and Asia. Dr. Olszewski has successfully led the efforts to form Joint Ventures
      in Poland, China and France. She was President and Chief Executive Officer
      of
      G.O. International, Inc., which she co-founded with Dr. James P. Gilligan,
      a
      consulting firm specializing in business strategies for pharmaceutical industry
      and global technology transfer. G.O. International merged with Herborium, Inc.
      in June 2002.




***Dr.
      James P. Gilligan.*** Dr.
      Gilligan is a co-founder of Herborium, Inc. and has served co-Chief Executive
      Officer and President Product Development and director of Herborium, Inc. since
      its inception in 2000. He was appointed as our director and as a director of
      our
      subsidiary Herborium concurrently with the closing of the merger. He is
      currently providing consulting services to us and has agreed to serve on a
      full-time basis as our President and Chief Operating Officer within six months
      after we receive a minimum of $2,500,000 of financing. He has over 25 years
      experience in the pharmaceutical and biotechnology industry. He received his
      Ph.D. in Pharmacology and Toxicology from the University of Connecticut, during
      which time he completed a special research fellowship at the Cleveland Clinic
      Atherosclerosis Research Unit. He performed his post-doctoral training at the
      Roche Institute of Molecular Biology. Dr. Gilligan is author or co-author of
      15
      U.S. patents, as well as multiple PCT patents and the author of numerous
      scientific publications. He also received a M.S. in International Business
      from
      Seton Hall University. Dr. Gilligan is Vice President of Product Development
      at
      Unigene Laboratories Inc. Fairfield, NJ, a biopharmaceutical company. He was
      a
      founding member of Unigene in 1981 and participated in the design of its R&D
      facility in 1983 and the cGMP biotechnology manufacturing facility in 1993.
      His
      responsibilities have included coordination of all U.S. and international
      pre-clinical research, toxicology, and regulatory filings as well as design
      and
      management of clinical studies.




24




***Max
      G. Ansbacher*** **.** Mr.
      Ansbacher was appointed as our director and as a director of our subsidiary
      Herborium concurrently with the closing of the merger. He is the principal
      of
      Ansbacher Investment Management, a management firm concentrating in
      sophisticated options strategies. The firm currently manages over $158 million.
      Prior to founding his firm, Mr. Ansbacher managed options accounts for the
      investment banking firm Bear Stearns. He is the author of three books on
      investing and his book *The
      New Options Market* is one
      of the all-time best selling books on exchange traded options. Mr. Ansbacher
      is
      a graduate of Phillips Exeter Academy, the University of Vermont and Yale law
      school. He also holds an advanced degree in tax law from New York University,
      and is a member of the bar in New York, Vermont and the District of Columbia.




***Wayne
      I. Danson*** **.** Mr. Danson was appointed as our director and as a director of our subsidiary
      Herborium.com concurrently with the closing of the merger. Prior to the merger,
      Mr. Danson served as Chief Executive Officer and as a director of LW. Mr. Danson
      has served as the Chief Financial Officer of Advanced Communications
      Technologies, Inc. since December 1, 1999 and was appointed a director on
      January 3, 2000, President on April 30, 2002 and Chief Executive Officer on
      June
      7, 2005. Mr. Danson is the Managing Director and Founder of Danson Partners,
      LLC, a financial advisory firm specializing in middle market companies in the
      real estate and technology industries. Prior to forming Danson Partners, LLC
      in
      May 1999, Mr. Danson was Managing Director of PricewaterhouseCoopers LLP's
      Real
      Estate Capital Markets Group. Prior to rejoining PricewaterhouseCoopers in
      1996,
      Mr. Danson was a Managing Tax Partner with Kenneth Leventhal & Company in
      New York and Washington D.C., where he was also Kenneth Leventhal's National
      Director of its International and Debt Restructure Tax Practices. Prior to
      his
      involvement with Kenneth Leventhal in 1988, Mr. Danson was a Managing Director
      with Wolper Ross & Co., Ltd. in New York, a closely-held financial services
      company specializing in financial tax, pension consulting, designing financial
      instruments and providing venture capital and investment banking services.
      Mr.
      Danson graduated with honors from Bernard M. Baruch College with a B.B.A. in
      Accounting and an M.B.A. in Taxation. He is a certified public accountant and
      a
      member of the AICPA and the New York State Society of CPAs.




Concurrently
      with the closing of the merger, the sole director of PMIC, John E. Donahue,
      resigned from the Board of Directors, and Martin Nielson and Anthony Lee
      resigned their respective positions as PMIC’s Chief Executive Officer and Chief
      Financial Officer. Upon the closing of the merger, in accordance with the plans
      of reorganization of PMIC and LW, Dr. Agnes P. Olszewski, Dr. James P. Gilligan,
      Wayne I. Danson and Max G. Ansbacher became members of our Board of Directors.




We
      intend
      to obtain an additional board member who is “independent” as determined in
      accordance with the applicable requirements of The Nasdaq Stock Market LLC
      and
      other applicable rules and regulations of the Securities and Exchange
      Commission. While we have had discussions with potential candidates, we had
      no
      active candidates at the time of filing of this report. All directors will
      hold
      office until the next annual meeting of stockholders and until their successors
      have been elected and qualified. Officers serve at the discretion of the Board
      of Directors.




**Family
      Relationships**




There
      are
      no family relationships among our directors, executive officers or persons
      nominated or chosen to become our directors or executive officers.




**Involvement
      in Certain Legal Proceedings**




No
      director, person nominated to become a director, executive officer, promoter
      or
      control person has been involved in any legal proceeding during the past five
      years that is required to be disclosed pursuant to Item 401(f) of Regulation
      S-K.





**Board
      Committees**





We
      do not
      have an Audit Committee, and therefore have not determined whether we have
      an
“audit committee financial expert,” as such term is defined in Item 401(h) of
      Regulation S-K. We also do not have a nominating committee. The functions of
      such committees are performed by the entire board. The Company’s difficulty in
      obtaining independent directors has prevented it from forming an audit
      committee. The Company believes that due to the small size of the Board, no
      separate nominating committee is necessary




25




***Other
      Significant Employees***




***Corporate
      Governance***




In
      March
      2007, we established a Code of Business Conduct and Ethics (the "Code"),
      applicable to all of our employees, including our principal executive,
      accounting and financial officers, which states that we are committed to the
      highest standards of legal and ethical conduct. This Code sets forth our
      policies with respect to the way we conduct ourselves individually and operate
      our business. The provisions of this Code are designed to deter wrongdoing
      and
      to promote honest and ethical conduct among our employees, officers and
      directors. The Code is attached as an exhibit to this report. We will satisfy
      our disclosure requirement under Item 5.05 of Form 8-K regarding certain
      amendments to, or waivers of, any provision of our Code by posting such
      information on our corporate website. We will provide a copy of the Code,
      without charge, upon request. You may request a copy of the Code by writing
      to
      the Company’s corporate office located at 3 Oak Street, Teaneck, NJ 07666.




***Section
      16(a) Beneficial Ownership Reporting Compliance***




Section
      16(a) of the Exchange requires that our directors and executive officers and
      any
      persons who own more than ten percent of our common stock file with the SEC
      initial reports of ownership and reports of changes in ownership of our common
      stock and other equity securities. Such persons are required by SEC regulations
      to furnish us with copies of all such reports that they file. As of the fiscal
      year ending November 30, 2006, Form 3 reports were not timely filed by James
      P.
      Gilligan and Max G. Ansbacher, directors of the Company.




**Item
      10. Executive Compensation**




***Summary
      Compensation Table***




The
      following table sets forth the compensation paid by PMIC to its Chief Executive
      Officer, Martin Nielson, during each of PMIC’s last two fiscal years ended
      December 31, 2004 and 2005. Mr. Nielson resigned as President of PMIC on July
      19, 2006 and resigned as Chief Executive Officer effective on September 18,
      2006. At the end of PMIC’s last completed fiscal year, PMIC did not have any
      executive officer whose total annual salary and bonus exceeded
      $100,000.




The
      following also table sets forth the compensation Herborium paid to Drs. Agnes
      P.
      Olszewski and James P. Gilligan, its co-Chief Executive Officers and Presidents,
      during Herborium’s last three fiscal years ended November 30, 2004, 2005 and
      2006. Dr. Olszewski became our Chief Executive Officer and Acting Chief
      Financial Officer on September 18, 2006, following the merger. On that date,
      Dr.
      Gilligan entered into a consulting agreement with us. At the end of Herborium’s
      last completed fiscal year, Herborium did not have any executive officer whose
      total annual salary and bonus exceeded $100,000.





*Summary
      Compensation Table*





**Annual
                Compensation****Fiscal**
            
            
            
            **Other
                Annual****Name
                and Principal Position**
            
            **Year**
            
            **Salary**
            
            **Bonus**
            
            **Compensation(1)**Martin
                Nielson
              *Former
                Chief Executive of PMIC*
            
            
            2006
              2005
              2004
            
            $
              $
              $
            41,833
              41,250
              0
            
            
            —
            
            
            
            
            
            —Dr.
                Agnes P. Olszewski
              *Chief
                Executive Officer*
              *and
                Acting Chief Financial Officer;*
              *Former
                co-CEO/President of Herborium*
            
            
            2006*
              2005
              2004
            
            $
              $
              $
            81,250
              0
              0
            
            
            —
            
            
            
            
            
            —Dr.
                James P. Gilligan
              *Consultant*
              *Former
                co-CEO/President of Herborium*
            
            
            2006*
              2005
              2004
            
            $
              $
              $
            63,889
              0
              0
            
            
            —
            
            
            
            
            
            —


*
      Such
      compensation has been accrued but not paid.




(1)
        None
        of our executive officers received personal benefits or perquisites in excess
        of
        the lesser of $50,000 or 10% of his aggregate salary and bonus.


26


***Option
      Grants in Last Fiscal Year***




No
      options were granted to any of the individuals named in the Summary Compensation
      Table during fiscal year 2006.




***Aggregated
      Option Exercises in Fiscal 20065 and FY-End Option
      Values***





None
      of
      the individuals named in the Summary Compensation Table held any options to
      purchase our common stock or the common stock of Herborium, Inc. as of November
      30, 2006.




***Long
      Term Incentive Plans***




On
      January 19, 2007, the Board of Directors approved the 2007 Stock Plan to provide
      (i) designated employees of the Company and its subsidiaries, (ii) certain
      consultants and advisors who perform services for the Company or its
      subsidiaries and (iii) non-employee members of the Board of Directors of the
      Company with the opportunity to receive grants of incentive stock options,
      nonqualified stock options and restricted stock..





***Equity
      Compensation Plan Information***




The
      following table sets forth information regarding our existing compensation
      plans
      and individual compensation arrangements pursuant to which our equity securities
      are authorized for issuance to employees or non-employees (such as directors,
      consultants and advisors) in exchange for consideration in the form of
      services:




**Plan
                Category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))****(a)**
            
            **(b)**
            
            **(c)**Equity
                compensation plans approved by security holders
            
            
            None
            
            $
            N/A
            
            
            NoneEquity
                compensation plans not approved by security holders (1)
            
            
            None
            
            $
            N/A
            
            
            20,000,000Total
            
            
            None
            
            $
            N/A
            
            
            20,000,000




(1)
            
            Securities
                are issuable pursuant to the Company’s 2007 Stock
                Plan.





***Director
      Compensation***




Our
      directors do not receive any cash compensation for their service on the Board
      of
      Directors. Our directors are reimbursed for actual out-of-pocket expenses
      incurred by them in connection with their attendance at meetings of the Board
      of
      Directors.




***Employment
      Agreements***




27




Agreement
      with Dr. Agnes P. Olszewski





On
      September 18, 2006 we entered into an employment agreement with Dr. Olszewski
      who will serve as President, Chief Executive Officer and Acting Chief Financial
      Officer until such time as we hire a controller or Chief Financial Officer.
      Dr.
      Olszewski has 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 we have received
      debt or equity financing in an aggregate of amount of $1,250,000 or more. Until
      we obtain such amount of financing, Dr. Olszewski will receive 75% of her base
      salary. Her annual base salary is $200,000 with a bonus equal to (i) for the
      first three years, 5% of EBITDA (as defined in the agreement) and (ii)
      thereafter 5% of Net Income before bonus (as defined in the agreement). She
      will
      be eligible for an additional bonus ranging from $75,000 to $200,000 in the
      event that our Pre-Tax Income for a fiscal year exceeds that of the prior fiscal
      year by 150% or more. Under the employment agreement,. Dr. Olszewski will be
      an
      eligible participant under one or more stock option plans adopted by us. Dr.
      Olszewski will be subject to non-competition provisions during the term of
      the
      agreement or until September 30, 2012 in the event that she extends the
      agreement for the additional twelve month period. Dr. Olszewski’s employment may
      be terminated in the event of extended disability or incapacity or a “For Cause
      Event” as defined in the agreement. Dr. Olszewski may terminate her employment
      voluntarily with 180 days prior written notice, upon our material breach of
      the
      agreement with 10 days prior written notice and upon a “Change of Control” as
      defined in the agreement upon 90 days prior written notice. In the event of
      her
      termination, Dr. Olszewski or her beneficiary, as the case may be, will have
      the
      right to receive all accrued but unpaid base salary. In the event of her death,
      her termination based on a material breach by us or our termination of her
      for
      any reason other than a For Cause Event, she will be entitled to receive
      $600,000. In the event of her termination for or after a Change of Control,
      she
      will be entitled to receive an amount equal to the product of her base salary
      multiplied by 2.99. After (i) the expiration of the term (including an extension
      of one year by Dr. Olszewski) or (ii) her voluntary termination of the
      employment agreement, Dr. Olszewski may, at her or our option in the case of
      clause (i) or at our option in the case of clause (ii), act as a consultant
      to
      us for one year and receive compensation equal to 50% of her base
      salary.





Agreement
      with Dr. James P. Gilligan




On
      September 18, 2006 we entered into a consulting and employment agreement with
      Dr. Gilligan who will serve as co-President and Chief Operating Officer. The
      agreement provides for an initial term of employment expiring on September
      20,
      2011, with an addition twelve-month extension at Dr. Gilligan’s option. Under
      the agreement, Dr. Gilligan’s employment will not commence until six months
      after we have received debt or equity financing in the aggregate amount of
      $2,500,000, and until such date, Dr. Gilligan will serve as a consultant to
      us
      at an hourly rate of $120.00 per hour and will be permitted to continue his
      full-time employment elsewhere. Upon his full-time employment, his annual base
      salary will be $200,000 with a bonus equal to (i) for the first three years,
      5%
      of EBITDA (as defined in the agreement) and (ii) thereafter 5% of Net Income
      before bonus (as defined in the agreement. He will be eligible for an additional
      bonus ranging from $75,000 to $200,000 in the event that our Pre-Tax Income
      for
      a fiscal year exceeds that of the prior fiscal year by 150% or more. Under
      the
      employment agreement, Dr. Gilligan will be an eligible participant under one
      or
      more stock option plans adopted by us. Dr. Gilligan will be subject to
      non-competition provisions during the term of the agreement or until September
      30, 2012 in the event that he extends the agreement for the additional
      twelve-month period. Dr. Gilligan’s employment may be terminated in the event of
      extended disability or incapacity or a “For Cause Event” as defined in the
      agreement. Dr. Gilligan may terminate his employment voluntarily with 180 days
      prior written notice, upon our material breach of the agreement with 10 days
      prior written notice and upon a “Change of Control” as defined in the agreement
      upon 90 days prior written notice. In the event of his termination, Dr. Gilligan
      or his beneficiary, as the case may be, will have the right to receive all
      accrued but unpaid base salary. In the event of his death, his termination
      based
      on a material breach by us or our termination of him for any reason other than
      a
      For Cause Event, he will be entitled to receive $600,000. In the event that
      his
      employment is terminated for or after a Change of Control, he will be entitled
      to receive an amount equal to the product of his base salary multiplied by
      2.99.
      After (i) the expiration of the term (including an extension of one year by
      Dr.
      Gilligan) or (ii) his voluntary termination of the employment agreement, Dr.
      Gilligan may, at his or our option in the case of clause (i) or at our option
      in
      the case of clause (ii), act as a consultant to us for one year and receive
      compensation equal to 50% of his base salary.





** ***Compensation
      Committee Interlocks and Insider Participation***




28




W e
      do not
      currently have a Compensation Committee. Instead the entire Board of Directors
      makes executive officer compensation decisions. Prior to the merger, Herborium,
      Inc. had no compensation committee. See *Certain
      Relationships and Related Transactions* below
      for more information about related party transactions involving Drs. Olszewski
      and Gilligan.




***Compensation
      Of Directors***




Our
      directors did not receive any cash or stock compensation for their services
      as a
      director in fiscal 2006, but were reimbursed for all of their out-of-pocket
      expenses incurred in connection with the rendering of services as a
      director.






**Item
      11. Security Ownership Of Certain Beneficial Owners And
      Management** **and Related Stockholder Matters**




The
      following table contains information about the beneficial ownership of our
      common stock as of March 21, 2007 for:




·
            any
                person, who at November 30, 2006 owned more than five percent (5%)
                of our
                common stock;




·
            each
                of our directors;




·
            each
                of our executive officers named in theSummary
                Compensation Table in*Part
                III - Item 10. Executive Compensation*of
                this Annual Report on Form 10-KSB;
                and




·
            all
                directors and executive officers as a
                group.





Beneficial
      ownership is determined in accordance with the rules of the SEC and generally
      includes voting or investment power with respect to securities. Except as
      indicated by footnote, and subject to community property laws where applicable,
      the persons named in the table below have sole voting and investment power
      with
      respect to all shares of common stock shown as beneficially owned by them.
      The
      percentage of beneficial ownership is based on 114,067,080 shares of common
      stock outstanding as of March 21, 2007.




29





**Common
                Stock (1)****Name
                and Address of Stockholder**
            **Amount
                and Nature**
              **of
                Beneficial Ownership(2)**
            **Percent
                of Class (2)***Directors
                and Officers*Dr.
                Agnes P. Olszewski
              Herborium
                Group, Inc.
              3
                Oak Street
              Teaneck,
                New Jersey 07666
            44,811,063(3)
            39.3%Dr.
                James P. Gilligan
              985
                Carteret Ave
              Union,
                New Jersey 07083
            42,992,563(4))
            37.7%Max
                G. Ansbacher
              515
                Madison Avenue, 29th Floor
              New
                York, NY 10022
            434,268
            *
                %Wayne
                I. Danson
              420
                Lexington Avenue, Suite 2739
              New
                York, NY 10170
            347,373(5)
            *
                %*All
                Directors and Officers as a Group*
            88,585,267
            77.7%





*
      Less
      than 1 percent


(1)
            The
                holders of common stock are entitled to one vote per share.(2)
            The
                number of shares of common stock and the percent of the class in
                the table
                and these notes to the table have been calculated in accordance with
                Rule
                13d-3 under the Exchange Act, and assume, on a stockholder by stockholder
                basis, that each stockholder has converted all securities owned by
                such
                stockholder that are convertible into common stock at the option
                of the
                holder currently or within 60 days of November 30,
                2006.(3)
            Includes
                515,693 shares of common stock held by Dr. Olszewksi’s son who resides in
                the same household.(4)
            Includes
                434,268 shares of common stock held by Dr. Gilligan’s son who resides in
                the same household.(5)
            Mr.
                Danson’s shares were received as a distribution as a shareholder of
                Advanced Communications Technologies, Inc - See “Description of Business -
                Company History.”




**Item
      12. Certain Relationships and Related Transaction** **s**




Financing
      of Herborium’s operations has been provided by equity investments amounting
      $200,000 and loans amounting to $153,682 as of November 30, 2006 from our
      founders, Drs. Olszewski and Gilligan, and funding from friends and family
      of
      approximately $188,500 as of November 30, 2006. The loans from founders are
      unsecured demand loans that do not bear interest. The funding from friends
      and
      family was received pursuant to subscription agreements entered into in fiscal
      2001 through 2005 in connection with a contemplated private placement of equity
      securities. Under the terms of the subscription agreements, the type of equity
      security to be issued to the investors will be determined through negotiation
      with the principal investors in the private placement, and the price to be
      paid
      by the investors will be the same as the principal investors in the financing.
      The number of shares to be received by each investor will be a function of
      the
      amount of capital raised from, and the price per share paid by, the principal
      investors. The subscription agreements do not have an expiration date; no
      provisions for interest payments; nor the manner of the form of the warrants
      in
      the event the private placement is to be in the form of debt.





30






**Item
      13. Exhibits**




Exhibit
                No.
            Description2.1
            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)10.1
            Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.’s Current Report on Form 8-K filed on August 16,
                2006).10.2
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski (incorporated by reference
                to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on
                September 22, 2006)10.3
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan (incorporated by reference
                to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on
                September 22, 2006)14
            Code
                of Ethics21
            Subsidiaries
                of the Registrant31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 200299.1
            Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 200599.2
            Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 200699.3
            Consolidated
                Financial Statements of Herborium Group. Inc. as of November 30,
                2006




31




**Item
      14. Principal Accountant Fees and Services**




***Audit
      Fees***




Our
      independent auditor, Berenson LLP, has billed us (a) $44,789 and $0 in the
      fiscal years ended November 30, 2006 and 2005 for the audit of the Company’s
      annual consolidated financial statements and for the review of the Company’s
      Form 10-KSB, (b) a total of $10,069 and $0 in the fiscal years ended
      November 30, 2006 and 2005 for the review of our consolidated financial
      statements included in the Company’s Forms 10-QSB for the quarter ended
      August 31, 2006 and of our consolidated financial statements for the six months
      ended May 31, 2006 included in the Company’s Form 8-K.




***Audit-Related
      Fees***




Our
      independent auditor, Berenson LLP, has billed us $5,984 and $0 in the fiscal
      years ended November 30, 2006 and 2005 for the audit-related
      services.




***Tax
      Fees***




No
      fees
      were billed in each of the last two fiscal years for professional services
      rendered by our independent auditors, Berenson LLP, for tax compliance, tax
      advice and tax planning services.




***All
      Other Fees***




Other
      than the services described above, no other fees were billed by our independent
      auditors for the fiscal; years ended November 30, 2006 and 2005.




***Policy
      For Pre-Approval Of Audit And Non-Audit Services***





Our
      Company has not adopted an Audit Committee; therefore, there is no Audit
      Committee policy in this regard. However, our Company does not require approval
      in advance of the performance of professional services to be provided to our
      Company by its principal accountant. Additionally, all services rendered by
      our
      principal accountant are performed pursuant to a written engagement letter
      between us and the principal accountant.





32




**Signatures**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this amended report to be signed on its behalf by the undersigned, thereunto
      duly authorized.




**Herborium
                Group, Inc.**By:/s/
                Agnes P.
                OlszewskiName:
                Agnes P. OlszewskiTitle:
                President, Chief Executive Officer, and Chief Financial
                OfficerDate:
                March 29, 2007


In
      accordance with the Exchange Act, this amended report has been signed below
      by
      the following persons on behalf of the registrant and in the capacities and
      on
      the dates indicated.




**Signature**
            **Title**
            **Date**/s/
                Agnes P.
                OlszewskiAgnes
                P. Olszewski
            President,
                Chief Executive Officer (Principal Executive
              Officer),
                Chief Financial Officer (Principal Accounting Officer)
                and
                  Director
            March
                29, 2007/s/
                James P.
                Gilligan
            Consultant
                and Director
            March
                29, 2007James
                P. Gilligan*/s/
                Max G.
                Ansbacher*Max
                G. Ansbacher
            Director
            March
                29, 2007*/s/
                Wayne I.
                Danson*Wayne
                I. Danson
            Director
            March
                29, 2007




33


**EXHIBIT
      INDEX**


**Exhibit
                No.**
            **Description**2.1
            Fourth
                Amended Plans of Reorganization for Pacific Magtron International
                Corp.
                and LiveWarehouse, Inc. (incorporated by reference to Exhibit 2.1
                to
                Pacific Magtron International Corp.’s Current Report on Form 8-K filed on
                August 16, 2006).2.2
            Order
                Approving Fourth Amended Plans of Reorganization for Pacific Magtron
                International Corp. and LiveWarehouse, Inc. entered August 11, 2006
                (incorporated by reference to Exhibit 2.2 to Pacific Magtron International
                Corp.’s Current Report on Form 8-K filed on August 16,
                2006).2.3
            Agreement
                and Plan of Merger, dated as of September 18, 2006, by and among
                Pacific
                Magtron International Corp., LiveWarehouse, Inc. and Herborium, Inc.
                (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)10.1
            Order
                Approving Settlement Agreement and Mutual Settlement Agreement and
                Release
                (incorporated by reference to Exhibit 10.1 to Pacific Magtron
                International Corp.’s Current Report on Form 8-K filed on August 16,
                2006).10.2
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. Agnes P. Olszewski (incorporated by reference
                to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on
                September 22, 2006)10.3
            Employment
                Agreement dated as of September 18, 2006 between Pacific Magtron
                International Corp. and Dr. James P. Gilligan (incorporated by reference
                to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on
                September 22, 2006)14
            Code
                of Ethics21
            Subsidiaries
                of the Registrant31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 200299.1
            Audited
                Financial Statements of Herborium, Inc. for the fiscal years ended
                November 30, 2004 and 200599.2
            Unaudited
                Financial Statements of Herborium, Inc. for the six-month interim
                period
                ended May 31, 200699.3
            Consolidated
                Financial Statements of Herborium Group. Inc. as of November 30,
                2006










**Herborium
      Group, Inc.**


**Consolidated
      Financial Statements**


**As
      Of November 30, 2006**



















**HERBORIUM
      GROUP, INC.**





**Contents**





REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              F-1-F1aCONSOLIDATED
                  BALANCE SHEETS AS OFNOVEMBER30, 2006 AND 2005
              F-2CONSOLIDATED
                  STATEMENTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 30, 2006
                  AND
                  2005
              F-3CONSOLIDATED
                  STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY FOR THE YEARS ENDED
                  NOVEMBER 30, 2006 AND 2005
              F-4CONSOLIDATED
                  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED NOVEMBER 30, 2006
                  AND
                  2005
              F-5NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS
              F6
                  - F-21








REPORT
        OF
        INDEPENDENT REGISTERED
 PUBLIC
        ACCOUNTING FIRM
 
 To
        the
        Board of Directors and Stockholders
 of
        Herborium Group, Inc.
 
 We
        have
        audited the accompanying consolidated balance sheets of Herborium Group,
        Inc.
        (the “Company”) as of November 30, 2006 and 2005, and the related consolidated
        statements of operations and accumulated deficit and cash flows for the years
        then ended. These consolidated financial statements are the responsibility
        of
        the Company’s management. Our responsibility is to express an opinion on these
        consolidated financial statements based on our audits.
 
 We
        conducted our audits of these statements in accordance with the standards
        of the
        Public Company Accounting Oversight Board (United States). Those standards
        require that we plan and perform the audits to obtain reasonable assurance
        about
        whether the financial statements are free of material misstatements. An audit
        also includes examining, on a test basis, evidence supporting the amounts
        and
        disclosures in the financial statements, assessing the accounting principles
        used and significant estimates made by management, as well as evaluating
        the
        overall financial statement presentation. We believe that our audits provide
        a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Herborium Group, Inc.
        as of
        November 30, 2006 and 2005, and the results of its operations and its cash
        flows
        for the years then ended in conformity with accounting principles generally
        accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        consolidated financial statements, the Company incurred net losses of $339,757
        and $105,243 for the years ended November 30, 2006 and 2005, respectively,
        and
        had working capital deficiencies of $756,845 and $408,974 as of November
        30,
        2006 and 2005, respectively. These matters raise substantial doubt about
        its
        ability to continue as a going concern. Management's plans in regards to
        these
        matters are also described in Note 1. The accompanying consolidated financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 /s/
        Berenson, LLP
 
 January
        30, 2007
 
 F-1
  
 HERBORIUM
        GROUP, INC.
 
 CONSOLIDATED
        BALANCE SHEETS
 
 
 **November
                  30,****2006**
              
              **2005****ASSETS**Current
                  assets:Cash
              
              $
              4,649
              
              $
              182Accounts
                  receivable
              
              
              5,416
              
              
              23,266Inventory
              
              
              73,890
              
              
              56,740Prepaid
                  expenses and other current assets
              
              
              442
              
              
              2,528Total
                  Current Assets
              
              
              84,397
              
              
              82,716Property
                  and equipment, net of accumulated depreciation
              
              
              6,170
              
              
              8,459Other
                  assets, net of accumulated amortization
              
              
              27,728
              
              
              20,553Total
                  Other Assets
              
              
              33,898
              
              
              29,012**TOTAL
                  ASSETS**
              
              $
              118,295
              
              $
              111,728**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              344,655
              
              $
              36,852Credit
                  cards payable
              
              
              134,126
              
              
              121,330Lines
                  of credit payable
              
              
              172,913
              
              
              179,463Due
                  to others
              
              
              34,513
              
              
              22,650Current
                  portion of long-term debt
              
              
              1,353
              
              
              2,640Due
                  to stockholders
              
              
              153,682
              
              
              128,755Total
                  Current Liabilities
              
              
              841,242
              
              
              491,690Long-term
                  debt, net of current portion
              
              
              -
              
              
              3,228**TOTAL
                  LIABILITIES**
              
              
              841,242
              
              
              494,918Commitments
                  and contingencies**STOCKHOLDERS’
                  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,
                  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
              
              
              (1,111,447
              )
              
              (771,690
              )Total
                  Stockholders’ Deficiency
              
              
              (722,947
              )
              
              (383,190
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS’**
                **DEFICIENCY**
              
              $
              118,295
              
              $
              111,728
 
 
 The
        accompanying notes are an integral part of the consolidated financial
        statements.
  F-2
 
 HERBORIUM
        GROUP, INC.
 
 CONSOLIDATED
        STATEMENTS OF OPERATIONS
 
 **Years
                  ended November 30,****2006**
              
              **2005****NET
                  SALES**
              
              $
              827,755
              
              $
              866,773**COST
                  OF SALES**
              
              
              295,865
              
              
              373,030**GROSS
                  PROFIT**
              
              
              531,890
              
              
              493,743**OPERATING
                  EXPENSES**Marketing
                  and selling
              
              
              332,883
              
              
              315,217General
                  and administrative
              
              
              493,016
              
              
              238,887**TOTAL
                  OPERATING EXPENSES**
              
              
              825,899
              
              
              554,104Loss
                  from operations
              
              
              (294,009
              )
              
              (60,361
              )**OTHER
                  EXPENSE**Interest
                  expense
              
              
              (44,748
              )
              
              (41,687
              )**TOTAL
                  OTHER EXPENSE**
              
              
              (44,748
              )
              
              (41,687
              )**LOSS
                  BEFORE PROVISION FOR INCOME TAXES**
              
              
              (338,757
              )
              
              (102,048
              )Provision
                  for income taxes
              
              
              1,000
              
              
              3,195**NET
                  LOSS**
              
              $
              (339,757
              )
              $
              (105,243
              )Basic
                  and diluted loss per share
              
              $
              -
              
              $
              -Weighted
                  average number of shares outstanding during the
                year
                  - basic and dilutive
              
              
              108,567,080
              
              
              108,567,080
 
 The
        accompanying notes are an integral part of the consolidated financial
        statements.
  F-3
  HERBORIUM
        GROUP, INC.
 
 CONSOLIDATED
        STATEMENTS OF CHANGES IN
 
 STOCKHOLDERS’
        DEFICIENCY
  **Common
                    Stock**
                
                **Common
                    Stock Subscribed**
                
                **Additional**
                
                **Accumulated****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Paid
                    in Capital**
                
                **Deficit**
                
                **Total****BALANCE,
                    DECEMBER 1, 2004**
                
                
                108,567,080
                
                $
                20,000
                
                
                -
                
                $
                166,000
                
                $
                180,000
                
                $
                (666,447
                )
                $
                (300,447
                )Common
                    stock subscribed
                
                
                -
                
                
                -
                
                
                -
                
                
                22,500
                
                
                -
                
                
                -
                
                
                22,500Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (105,243
                )
                
                (105,243
                )**BALANCE,
                    NOVEMBER 30, 2005**
                
                
                108,567,080
                
                
                20,000
                
                
                -
                
                
                188,500
                
                
                180,000
                
                
                (771,690
                )
                
                (383,190
                )Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (339,757
                )
                
                (339,757
                )**BALANCE,
                    NOVEMBER 30, 2006**
                
                
                108,567,080
                
                $
                20,000
                
                
                -
                
                $
                188,500
                
                $
                180,000
                
                $
                (1,111,447
                )
                $
                (722,947
                )
 The
        accompanying notes are an integral part of the consolidated financial
        statements.
  F-4
  HERBORIUM
        GROUP, INC.
 
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 
 
 **Years
                  ended November 30,****2006**
              
              **2005**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (339,757
              )
              $
              (105,243
              )Adjustments
                  to reconcile net loss to
                net
                  cash used by operating activities:Stock
                  subscribed in exchange for services
              
              
              -
              
              
              7,500Depreciation
                  and amortization
              
              
              5,075
              
              
              5,485Loss
                  on disposal of equipment
              
              
              -
              
              
              2,576Changes
                  in assets (increase) decrease:Accounts
                  receivable
              
              
              17,850
              
              
              (22,302
              )Inventory
              
              
              (17,150
              )
              
              11,810Prepaid
                  expenses and other assets
              
              
              2,086
              
              
              (223
              )Changes
                  in liabilities increase (decrease):Accounts
                  payable and accrued expenses
              
              
              307,803
              
              
              (19,154
              )Net
                  cash used by operating activities
              
              
              (24,093
              )
              
              (119,551
              )Cash
                  flows used by investing activities:Purchase
                  of equipment
              
              
              (687
              )
              
              (5,474
              )Purchase
                  of amortizable assets
              
              
              (9,274
              )
              
              (1,763
              )Net
                  cash used by investing activities
              
              
              (9,961
              )
              
              (7,237
              )Cash
                  flows from financing activities:Proceeds
                  from common stock subscribed
              
              
              -
              
              
              15,000Proceeds
                  from (repayments of) lines of credit
              
              
              (6,550
              )
              
              6,277Repayments
                  of long-term debt
              
              
              (4,515
              )
              
              (2,401
              )Increase
                  in due to others
              
              
              11,863
              
              
              -Increase
                  in due to stockholders
              
              
              24,927
              
              
              46,858Increase
                  in credit card payable
              
              
              12,796
              
              
              61,236Net
                  cash provided by financing activities
              
              
              38,521
              
              
              126,970Net
                  increase in cash
              
              
              4,467
              
              
              182Cash,
                  beginning of year
              
              
              182
              
              
              -Cash,
                  end of year
              
              $
              4,649
              
              $
              182Supplemental
                  disclosures of cash flow information:Cash
                  paid during the year for:Income
                  taxes
              
              $
              1,637
              
              $
              1,766Interest
              
              
              43,824
              
              
              41,944Supplemental
                  disclosure on noncash financing activities:Stock
                  subscriptions issued in exchange for services rendered
              
              $
              -
              
              $
              7,500
 
 The
        accompanying notes are an integral part of the consolidated financial
        statements.
 
 F-5
  HERBORIUM
        GROUP, INC.
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 
 NOVEMBER
        30, 2006 AND 2005
 
 **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
        September 18, 2006, Herborium was acquired by with 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 Herborium,
        with Herborium as the surviving corporation (the “Merger). Under the provisions
        of the Merger Agreement and the plan of reorganization, the stockholders
        of
        Herborium exchanged 100% of their common stock of the Company for an 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 of November 30, 2006. 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.
  F-6
  The
        Company's 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 net
        losses
        of $339,757 and $105,243 for the years ended November 30, 2006 and 2005,
        respectively. The Company had a working capital deficiency of $756,244 and
        $408,974 as of November 30, 2006 and 2005, respectively. These conditions
        raise
        substantial doubt about the Company’s ability to continue as a going concern.
        The Company’s ability to continue as a going concern is dependent upon it
        achieving profitability and generating sufficient cash flows to meet its
        obligations as they come due. Management is pursuing additional capital and
        debt
        financing and acquisition of profitable businesses. However, there is no
        assurance that these efforts will be successful. The consolidated financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 
 **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES**
 
 **a.**  **Principles
        of consolidation**
 
 The
        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.
 
 **b.**  **Cash
        and cash equivalents**
 
 The
        Company maintains its cash accounts in two commercial banks. The balance
        is
        insured by the Federal Deposit Insurance Corporation up to $100,000 at each
        bank.
 
 **c.**  **Inventory**
 
 Inventory,
        consisting of finished botanical therapeutic products, is stated the lower
        of
        cost or market and is valued on the first-in, first-out method. When net
        realizable value has fallen below cost, inventory is written down.
 
 **d.**  **Shipping
        and handling costs**
 
 Shipping
        and handling costs associated with outbound freight amounted to approximated
        $46,000 and $53,000 for the years ended November 30, 2006 and 2005,
        respectively, and were charged to cost of sales.
 
 **e.**  **Property
        and equipment**
 
 Depreciation
        and amortization are computed using the straight-line method over the estimated
        useful lives of the assets ranging from five to seven years.
 
 Maintenance
        and repairs are charged to expense when incurred. When property and equipment
        are retired or otherwise disposed of, the applicable cost and accumulated
        depreciation are removed from the accounts and any gain or loss is credited
        or
        charged directly to income.
 
 **f.**  **Advertising**
 
 F-7
 It
        is the
        Company’s policy to expense advertising costs as they are incurred. Advertising
        expenses for the years ended November 30, 2006 and 2005 were approximately
        $199,000 and $192,000, respectively.
 
 **g.**  **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.
 
 **h.**  **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.
 
 **i.** **Revenues**
  The
        Company recognizes revenue when inventory is shipped to its
        customers.
 
 **j.**  **Loss
        per share**
 
 Basic
        earnings (loss) per share is computed by dividing net loss available to common
        stockholders by the weighted average number of common shares outstanding
        for the
        period. Diluted earnings per share reflect the potential dilution of securities,
        using the treasury stock method, that could share in the earnings of an entity.
        During the fiscal years ended November 30, 2006 and 2005, the Company had
        no
        securities convertible into common stock that would, in any event, have been
        excluded from the calculation of diluted loss per share, as their effect
        would
        have been anti-dilutive.
 
 The
        number of shares used in the calculation of net loss per share for the year
        ended November 30, 2005, was presented on a retroactive basis as described
        in
        Note 1.
 
 **k.**  **Fair
        value of financial instruments**
 
 The
        carrying amounts of the Company’s accounts payable, accrued expenses, credit
        cards payable, lines of credit payable, amounts payable to others and
        stockholders approximate fair value due to the relatively short period to
        maturity for these instruments.
  **l.** **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.
  F-8
  **m.**  **Recent
        accounting pronouncements**
 
 On
        June 7, 2005, the Financial
        Accounting Standards Board (“ FASB”)
        issued Statement of Financial Accounting Standards No. 154, “Accounting
        Changes and Error Corrections, (“SFAS 154”).a replacement of APB Opinion
        No. 20, Accounting Changes,” and Statement No. 3, “Reporting
        Accounting Changes in Interim Financial Statements.” SFAS 154 changes the
        requirements for the accounting for and reporting of a change in accounting
        principle. Previously, most voluntary changes in accounting principles required
        recognition of a cumulative effect adjustment within net income of the period
        of
        the change. SFAS 154 requires retrospective application to prior periods’
financial statements, unless it is impracticable to determine either the
        period-specific effects or the cumulative effect of the change. SFAS 154
        is
        effective for accounting changes made in fiscal years beginning after
        December 15, 2005; however, the Statement does not change the transition
        provisions of any existing accounting pronouncements. The adoption of SFAS
        154
        has not had a material effect on the Company’s financial position, results of
        operations, or cash flows.
  In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        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.
 
 Prior
        to
        SFAS 157, there were different definitions of fair value and limited guidance
        for applying those definitions in GAAP. Moreover, that guidance was dispersed
        among the many accounting pronouncements that require fair value measurements.
        SFAS 157 clarifies that the exchange price is the price in an orderly
        transaction between market participants to sell the asset or transfer the
        liability in the market in which the reporting entity would transact for
        the
        asset or liability, that is, the principal or most advantageous market for
        the
        asset or liability.
 
 This
        Statement is effective for financial statements issued for fiscal years
        beginning after November 15, 2007, and interim periods within those fiscal
        years. The Company is currently evaluating the impact, if any, that SFAS
        157
        will have on its financial position, results of operations and cash
        flows.
 
 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 January 1, 2007. The
        adoption of this interpretation did not have an impact on the Company’s
        financial statements. The Company is currently evaluating the impact this
        interpretation may have on its future financial position, results of operations,
        earnings per share, or cash flows.
  In
        September 2006, the Securities and Exchange Commission issued SAB No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
        Misstatements in Current Year Financial Statements.” SAB No. 108 was issued
        to address diversity in practice in quantifying financial statement
        misstatements. Current practice allows for the evaluation of materiality
        on the
        basis of either (1) the error quantified as the amount by which the current
        year income statement was misstated (“rollover method”) or (2) the
        cumulative error quantified as the cumulative amount by which the current
        year
        balance sheet was misstated (“iron curtain method”). The guidance provided in
        SAB 108 requires both methods to be used in evaluating materiality (“dual
        approach”). SAB No. 108 permits companies to initially apply its provisions
        either by (1) restating prior financial statements as if the dual approach
        had always been used or (2) recording the cumulative effect of initially
        applying the “dual approach” as adjustments to the carrying values of assets and
        liabilities as of January 1, 2006 with an offsetting adjustment recorded to
        the opening balance of retained earnings. There were no matters warranting
        the
        Company’s consideration under the provisions of SAB No. 108 and, therefore,
        it did not have an impact on the Company’s financial position, results of
        operations, net loss per share or cash flows.
 
 F-9
 
 **3.**  **PROPERTY,
        PLANT AND EQUIPMENT**
 
 Property,
        plant and equipment consist of the following:
 
 2005
              
              2004Machinery
                  and equipment
              
              $
              25,185
              
              $
              24,498Less:
                  accumulated depreciation
              
              
              (19,015
              )
              
              (16,039
              )$
              6,170
              
              $
              8,459
 
 Depreciation
        expense amounted to $2,976 and $3,613 for the years ended November 30, 2006
        and
        2005, respectively.
 
 **4.**  **OTHER
        ASSETS**
 
 Other
        assets consist of:
 
 2005
              
              2004Organization
                  costs
              
              $
              506
              
              $
              506Trademarks
              
              
              34,491
              
              
              25,217Less:
                  accumulated amortization
              
              
              (7,269
              )
              
              (5,170
              )$
              27,728
              
              $
              20,553
 
 Amortization
        expense amounted to $2,099 and $1,872 for the years ended November 30, 2006
        and
        2005, respectively.
 
 **5.**  **RELATED
        PARTIES**
 
 Due
        to
        stockholders consist of unsecured 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.
        Repayment is not expected until such time as the Company has adequate funds
        available.
 
 **6.**  **MAJOR
        SUPPLIER**
 
 The
        Company purchased approximately 90% of its inventory from AH USA, its major
        supplier for the years ended November 30, 2006 and 2005. The Company is party
        to
        into an agreement with AH USA, owner of an acne product of which the Company,
        as
        licensee, is the exclusive worldwide distributor. Negotiations between the
        Company and AH USA are ongoing to acquire the intellectual property rights
        to
        the product.
  F-10
  **7.**  **LINES
        OF CREDIT**
 
 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%.
 
 **8.**  **STOCKHOLDERS’
        DEFICIENCY**
 
 **a.**  **Stock
        issued in merger**
 
 In
        June
        2002, the Company issued 300 shares of common stock to the former stockholders
        of G.O. pursuant to the terms of the merger transaction. As part of the merger
        agreement, all the assets and liabilities of G.O. were assumed by the Company
        as
        the accounting acquirer.
 
 **b.**  **Proceeds
        from subscription agreements**
 
 As
        of
        November 30, 2006 and 2005, the Company has received $188,500 from investors
        pursuant to subscription agreements entered into in fiscal 2001 through 2005 in
        connection with a contemplated private placement of equity securities. Under
        the
        terms of the subscription agreements, the type of equity security to be issued
        to the investors will be determined through negotiation with the principal
        investors in the private placement, and the price to be paid by the investors
        will be the same as the principal investors in the financing. The number
        of
        shares to be received by each investor will be a function of the amount of
        capital raised from, and the price per share paid by, the principal
        investors.
 
 The
        subscription agreements do not have an expiration date; no provisions for
        interest payments; nor the manner of the form of the warrants in the event
        the
        private placement is to be in the form of debt.
 
 Additionally,
        given that a private placement did not occur prior to certain deadlines,
        each
        investor is entitled to be granted a warrant to purchase additional shares
        in
        the equity security issued in the private placement, generally in an amount
        equal to the number of shares purchased under the subscription agreement
        at an
        exercise price equal to the closing price per share of the private
        placement.
 
 **c.**  **Stock
        incentive awards**
 
 Commencing
        in fiscal 2002, the Company awarded to certain employees, consultants and
        advisors restricted common stock awards as incentive compensation. The Company
        has no formal plan with respect thereto. Under the terms of the individual
        stock
        award agreements, the number of shares to be received by each individual
        will be
        determined based on the terms of the aforementioned contemplated private
        placement. The awarded shares will vest immediately upon issuance within
        90 days
        following the closing of financing for a minimum of $1 million, and will
        have
        piggyback registration rights. For the years ended November 30, 2006 and
        2005,
        the expense recorded for such awards amounted to $0 and $7,500, respectively.
        The aggregate amount of all of these awards was $63,000 as of November 30,
        2006
        and 2005.
  F-11
  **9.**  **INCOME
        TAXES**
 
 The
        Company has tax net operating loss carryforwards at November 30, 2006 of
        approximately $1.1 million expiring through 2024. Due to the merger (note
        1),
        the amount of carryforwards available to offset future taxable income is
        subject
        to limitation. The recorded deferred tax asset, representing the expected
        benefit from the future realization of net operating losses, net of a 100%
        valuation allowance, was $-0-.
 
 Income
        tax expense consists of the following:
 
 2006
              
              2005Federal
                  tax expense
              
              $
              -
              
              $
              -State
                  tax expense
              
              
              1,000
              
              
              3,1951,000
              
              
              3,195Deferred
                  tax expense
              
              
              -
              
              
              -$
              1,000
              
              $
              3,195
 
 **10.**  **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.
  F-12
  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.
 
 **11.**  **SEGMENT
        INFORMATION**
 
 The
        Company applies Statement of Financial Accounting Standards No. 131 “Disclosures
        about Segments of an Enterprise and Related Information”. For the fiscal years
        ended November 30, 2006 and 2005, the Company primarily operated in one segment
        - botanical therapeutics, with sales of AcnEase representing substantially
        all
        of the Company’s revenue.
 
 **12.**  **SUBSEQUENT
        EVENTS**
 
 On
        January 19, 2007, 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 Registration Statement on Form S-8 with the
        Securities and Exchange Commission to in connection with the Plan. 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 will vest immediately, with 5.5
        million shares being issued immediately. The remaining shares will vest over
        the
        term of the Consulting Agreement, and, in the event certain transactions
        are
        consummated up to an additional 3 million shares could be issued per terms
        of
        the Consulting Agreement.
 
 F-13