UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB/A
                                  Amendment No. 1

(Mark One)

[X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

               For the quarterly period ended March 31, 2006

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT

               For the transition period from           to
                                             -----------  --------------
               Commission file number 000-51804


                          PEDIATRIC PROSTHETICS, INC.
                          ---------------------------
        (Exact name of small business issuer as specified in its charter)


              IDAHO                                    68-0566694
              -----                                    ----------
  (State or other jurisdiction of          (IRS Employer Identification No.)
   incorporation or organization)

                  12926 Willowchase Drive, Houston, Texas 77070
                  ---------------------------------------------
                     (Address of principal executive offices)

                                 (281) 897-1108
                                 --------------
                         (Registrant's telephone number)

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

     As  of  June  29,  2006, 98,274,889 shares of Common Stock of the issuer
were  outstanding  ("Common  Stock").

     Indicate  by  check  mark  whether  the  registrant  is a shell company (as
defined  in  Rule  12b-2  of  the  Exchange  Act).  Yes  [ ]  No  [X].


The Registrant is filing this Amended Report on Form 10-QSB, to include restated
financial  statements  for  the  three  and nine months ended March 31, 2006; to
update  its  comparison of operating results for the three and nine months ended
March  31, 2006, compared to the three and nine months ended March 31, 2005; and

<PAGE>

to  update its liquidity and capital resources discussion in connection with the
revised  financial  statements  contained  herein.  Additionally,  all  of  the
references  to  financial  numbers  relating  to March 31, 2006 included in this
amended  filing  have  been  updated  throughout  with  the  restated  financial
information  contained  herein.  Specifically,  the  Registrant's  financial
statements  were  restated  to reflect the proper accrual of receivables and the
presentation of sales through Host-Affiliates on a gross basis, to properly show
gross  revenue  and  cost  of  sales, to include allowance for doubtful accounts
related  to Host-Affiliate receivables, to properly account for the treatment of
certain  shares  of  common  stock  issued  in  connection  with various service
contracts and agreements including Global Media (as described below), to correct
the  accounting treatment of certain securities containing beneficial conversion
features  described  herein, and to provide for the correct accounting treatment
in connection with the return and cancellation of certain shares of common stock
issued  to  a consultant of the Registrant. Also, the Registrant has updated its
controls  and  procedures  language  described below as of March 31, 2006. Other
than  those  sections  described above, all portions of this Amended Form 10-QSB
remain  unchanged  from  the  Registrant's  original  Form 10-QSB filing for the
period  ending March 31, 2006, as filed with the Commission on July 5, 2006, and
investors are encouraged to review the Registrant's most recent filings with the
Commission  for  updated and current information on the operations and financial
condition  of  the  Registrant  before  making any investment in the Registrant.


<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS


PEDIATRIC PROSTHETICS, INC.
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2006 AND 2005






<PAGE>

PEDIATRIC PROSTHETICS, INC.
TABLE OF CONTENTS


                                                                        PAGE


Unaudited Balance Sheets as of March 31, 2006 (Restated) and             F-3
      June 30, 2005 (Restated)

Unaudited Statements Of Operations for the Three and Nine
      Months Ended March 31, 2006 (Restated) and 2005                    F-4

Unaudited Statement Of Stockholders' Deficit for the Nine Months Ended
      March 31, 2006 (Restated)                                          F-5

Unaudited Statements Of Cash Flows for the Nine Months Ended
      March 31, 2006 (Restated) and 2005                                 F-6


Notes To Unaudited Financial Statements                                  F-7



<PAGE>


<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED BALANCE SHEETS
MARCH 31, 2006 AND JUNE 30, 2005

                                                          MARCH 31, 2006    JUNE 30, 2005
                                                           (RESTATED)        (RESTATED)
                                                          --------------    -------------
<S>                                                           <C>               <C>
ASSETS
Current assets:
  Cash  and cash equivalents                              $        4,548   $       29,818
  Trade accounts receivable, net                                 240,652          107,851
  Prepaid expenses and other current assets                       15,848           16,492
                                                          --------------   --------------
     Total current assets                                        261,048          154,161

Furniture and equipment, net                                      63,245           81,229
                                                          --------------   --------------
        Total assets                                      $      324,293   $      235,390
                                                          ==============   ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Notes payable, net of debt discount of $23,333          $       11,667   $            -
  Trade accounts payable                                         153,949           89,280
  Accrued liabilities                                             66,280          183,791
  Convertible debt                                                     -          201,045
  Due to related party                                               500              500
                                                          --------------   --------------
    Total current liabilities                                    232,396          474,616

Deferred rent                                                     13,280           14,188
                                                          --------------   --------------
      Total liabilities                                          245,676          488,804
                                                          --------------   --------------
Commitments and contingencies:

Stockholders' equity (deficit):
  Preferred stock, par value $0.001; authorized
    10,000,000; 1,000,000 issued and outstanding                  1,000            1,000
  Common stock, par value $0.001; authorized 100,000,000
    shares; issued and outstanding 97,828,452 and
    88,878,452 at March 31, 2006 and June 30, 2005,
    respectively                                                  97,828           88,878
  Additional paid-in capital                                   8,253,544        7,742,620
  Accumulated deficit                                         (8,273,755)      (8,085,912)
                                                          --------------   --------------
      Total stockholders' equity (deficit)                        78,617         (253,414)
                                                          --------------   --------------
        Total liabilities and
           stockholders' equity (deficit)                 $      324,293   $      235,390
                                                          ==============   ==============
</TABLE>


    The accompanying notes are an integral part of these financial statements

                                     F-3
<PAGE>



<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2006 AND 2005

                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                                       MARCH 31,                   MARCH 31,
                                                  2006          2005         2006              2005
                                                ---------     ---------    ---------       -----------
                                               (RESTATED)                  (RESTATED)
<S>                                                <C>           <C>          <C>             <C>

Revenue                                        $  265,620     $  54,457     $ 535,363      $   271,057
                                               ----------     ---------     ---------      -----------
Operating expenses:
  Cost of sales, except for items stated
    separately below                               29,845        50,102       140,660           97,387
  Depreciation expense                              5,059         5,427        15,174           14,651
  Selling, general and administrative expenses    410,171       222,226       846,994        4,454,763
                                               ----------     ---------     ---------      -----------
   Total operating expenses                       445,075       277,755     1,002,828        4,566,801
                                               ----------     ---------     ---------      -----------
        Loss from operations                     (179,455)     (223,298)     (467,465)      (4,295,744)
                                               ----------     ---------     ---------      -----------
Other income and (expense):
  Interest income                                       4             -             4               83
  Interest expense                                (12,859)       (8,674)      (28,370)         (16,601)
  Loss on disposal of equipment                         -             -        (2,811)               -
  Gain on extinguishment of debt                        -             -       310,799                -
                                               ----------     ---------     ---------      -----------
        Other income (expense), net               (12,855)       (8,674)      279,622          (16,518)
                                               ----------     ---------     ---------      -----------
              Net loss                         $ (192,310)    $(231,972)    $(187,843)     $(4,312,262)
                                               ==========     =========     =========      ===========
Net loss per common share - basic
  and diluted                                  $    (0.00)    $   (0.00)    $   (0.00)     $     (0.07)
                                               ==========     =========     =========      ===========
Weighted average shares of common
  stock outstanding - basic and
   diluted                                     99,108,452    86,168,508    95,581,737       59,215,642
                                               ==========    ==========    ==========      ===========
</TABLE>



    The accompanying notes are an integral part of these financial statements

                                     F-4
<PAGE>


<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Nine Months Ended March 31, 2006


                                                                                             Additional
                                             Preferred Stock              Common Stock         Paid-In   Accumulated
                                          Shares         Amount      Shares         Amount     Capital     Deficit         Total
                                        ---------       -------   -----------      --------   ----------  ----------     ---------
<S>                                        <C>            <C>         <C>             <C>       <C>          <C>            <C>

Balance at June 30, 2005,
   as originally reported               1,000,000       $ 1,000    88,878,452      $ 88,878   $7,742,620  $(8,120,341)   $(287,843)

Adjustment to properly recognize
   revenue and cost of services
   for services by Host Affiliates              -             -             -             -            -       34,429       34,429
                                        ---------       -------    ----------      --------   ----------  -----------    ---------
Balance at June 30, 2005, as restated   1,000,000         1,000    88,878,452        88,878    7,742,620   (8,085,912)    (253,414)

Common stock issued for cash                    -             -     4,700,000         4,700      215,300            -      220,000

Common stock issued for services
     to non-employees
     employees                                  -             -     8,250,000         8,250      256,624            -      264,874

Common stock surrendered to
     treasury by major stockholder/
     officer/director                           -             -    (4,000,000)       (4,000)       4,000            -            -

Debt Discount on convertible notes              -             -             -             -       35,000            -       35,000

Net loss, as restated                           -             -             -             -            -     (187,843)    (187,843)
                                        ---------       -------   -----------      --------   ----------  -----------    ---------
Balance at March 31, 2006               1,000,000       $ 1,000    97,828,452      $ 97,828   $8,253,544  $(8,273,755)   $  78,617
                                        =========       =======   ===========      ========   ==========  ============   =========
</TABLE>


    The accompanying notes are an integral part of these financial statements

                                     F-5
<PAGE>



<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2006 AND 2005

                                                               2006
                                                            (RESTATED)      2005
                                                            ---------   -----------
<S>                                                            <C>           <C>
Cash Flows From Operating Activities
  Net income (loss)                                         $(187,843)  $(4,312,262)
  Adjustments to reconcile net loss to net cash used by
    operating activities
    Depreciation expense                                       15,174        14,651
    Loss on disposal of equipment                               2,811             -
    Deferred rent                                                (908)            -
    Share-based compensation                                  264,874     4,017,514
    Amortization of debt discount                              11,667             -
    Provision for doubtful accounts                            36,921        37,000
    Gain on extinguishment of debt                           (310,799)            -
    Changes in operating assets and liabilities:
      Accounts receivable                                    (169,723)      (30,099)
      Prepaid expenses and other current assets                   644        (3,011)
      Accounts payable                                         64,669         7,761
      Accrued liabilities                                      22,243        52,194
                                                            ---------   -----------
        Net cash used by operating activities                (250,270)     (216,252)
                                                            ---------   -----------
Cash Flows From Investing Activities
  Purchase of furniture and equipment                               -          (387)
                                                            ---------   -----------
        Net cash used by investing activities                       -          (387)
                                                            ---------   -----------
Cash Flows From Financing Activities:
  Payment in settlement of convertible debt                   (30,000)            -
  Proceeds from issuance of debt                               35,000             -
  Proceeds from common stock, net of expenses                 220,000       271,500
                                                            ---------   -----------
        Net cash provided by financing activities             225,000       271,500
                                                            ---------   -----------
Net increase (decrease) in cash and cash equivalents          (25,270)       54,861

Cash and cash equivalents, beginning of period                 29,818         9,110
                                                            ---------   -----------
Cash and cash equivalents, end of period                    $   4,548   $    63,971
                                                            =========   ===========
Supplemental disclosure of cash flow information
  Cash paid for interest expense                            $  12,107   $     3,042
  Cash paid for income taxes                                        -             -

</TABLE>




    The accompanying notes are an integral part of these financial statements

                                     F-6
<PAGE>


PEDIATRIC PROSTHETICS, INC.
NOTES TO FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     GENERAL

     Pediatric  Prosthetics,  Inc.  (the  "Company")  is involved in the design,
     fabrication  and  fitting  of  custom-made  artificial limbs. The Company's
     focus  is  infants  and  children  and  the comprehensive care and training
     needed  by  those  infants  and  children  and  their  parents.

     INTERIM FINANCIAL STATEMENTS

     The  unaudited  condensed  financial  statements  included herein have been
     prepared  by  the  Company  pursuant  to  the  rules and regulations of the
     Securities  and  Exchange  Commission. The financial statements reflect all
     adjustments  that  are,  in  the opinion of management, necessary to fairly
     present  such  information.  All such adjustments are of a normal recurring
     nature.  Although the Company believes that the disclosures are adequate to
     make  the  information  presented  not  misleading, certain information and
     footnote  disclosures,  including  a  description of significant accounting
     policies  normally  included in financial statements prepared in accordance
     with  accounting  principles  generally  accepted  in  the United States of
     America  (US  GAAP),  have been condensed or omitted pursuant to such rules
     and  regulations.

     These  financial  statements  should  be  read  in  conjunction  with  the
     financial  statements  and the notes thereto included in the Company's 2005
     Annual  Report.  The  results  of  operations  for  interim periods are not
     necessarily  indicative  of  the  results for any subsequent quarter or the
     entire  fiscal  year  ending  June  30,  2006.

     USE OF ESTIMATES

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

     RECENTLY ISSUED PRONOUNCEMENTS

     In  December  2004,  the  Financial  Accounting  Standards  Board  ("FASB")
     issued SFAS 123R, which requires companies to recognize in the statement of
     operations  all  share-based  payments  to  employees,  including grants of
     employee  stock  options,  based  on  their  fair  values.  Accounting  for
     share-based  compensation  transactions  using  the  intrinsic  method
     supplemented  by  pro  forma disclosures will no longer be permissible. The
     new  statement is effective for public entities no later than the beginning
     of the first fiscal year beginning after June 15, 2005. The Company adopted
     the  new  statement on July 1, 2005. The adoption of this new statement did
     not affect the Company's results of operations or net income per share, but
     may  have  a  significant  future effect as the Company will be required to
     expense  the  fair  value  of  all  share-based  payments.

     In  May  2005,  the  FASB  issued  SFAS  No.  154,  "Accounting Changes and
     Error  Corrections",  a  replacement of Accounting Principles Board Opinion
     No. 20, "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes
     in  Interim  Financial  Statements"  ("SFAS  154").  SFAS  154  changes the
     requirements  for  the  accounting  for,  and  reporting  of,  a  change in
     accounting  principle.  Previously,  voluntary  changes  in  accounting
     principles  were generally required to be recognized by way of a cumulative
     effect  adjustment  within net income during the period of the change. SFAS
     154  requires  retrospective  application  to  prior  periods'  financial

                                     F-7
<PAGE>

     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 Company does not
     believe  adoption  of SFAS 154 will have a material effect on its financial
     position,  cash  flows  or  results  of  operations.

2.   GOING  CONCERN  CONSIDERATIONS


     Since  its  inception,  the  Company  has  suffered  significant net losses
     and  has  been dependent on outside investors to provide the cash resources
     to  sustain its operations. During the nine months ended March 31, 2006 and
     2005,  the Company had net losses of $187,843 and $4,312,262, respectively,
     and  negative  cash  flows  from  operations  of  $250,270  and  $216,252,
     respectively.



     Negative  operating  results  have  resulted  in  a working capital balance
     of  $28,652 and stockholders' equity of only $78,617 at March 31, 2006. The
     Company's  negative  financial  results  and its current financial position
     raise  substantial doubt about the Company's ability to continue as a going
     concern.


     The  Company  is  currently  implementing  it  plans  to  deal  with  going
     concern issues. The first step in that plan was its recapitalization into a
     public  shell  on  October  10,  2003.  Management  believes  that  the
     recapitalization  and  its  current plan to become a fully reporting public
     company  will  allow  the Company, through private placements of its common
     stock,  to  raise  the  capital  to  expand operations to a level that will
     ultimately  produce  positive  cash  flows  from  operations.

     The  Company's  long-term  viability  as  a  going  concern is dependent on
     certain  key  factors,  as  follows:

     -    The Company's  ability  to  obtain  adequate  sources  of  outside
          financing  to support near term operations and to allow the Company to
          continue  forward  with  current  strategic  plans.

     -    The Company's  ability  to  increase  its  customer  base  and broaden
          its  service  capabilities.

     -    The Company's  ability  to  ultimately  achieve  adequate
          profitability  and  cash  flows  to  sustain  continuing  operations.

3.   RESTATEMENT

     The  accompanying  March  31,  2006,  financial  statements  have  been
     restated  to  properly  recognize revenue and cost of services for services
     provided  by  Host Affiliates and to properly amortize the cost of services
     provided  for  stock-based  payments over the service period. The effect of
     these  restatements on the accompanying financial statements is as follows:


         BALANCE SHEET
         -------------

         Current assets, as previously reported                   $    236,492
         Change in current assets related to
            receivables from host affiliates                            24,556
                                                                  ------------
         Current assets, as restated                              $    261,048
                                                                  ============

         Current liabilities, as previously reported              $    270,788

         Change in current liabilities related to
             costs incurred by host affiliates                           5,774

         Change to unamortized debt discount balance                   (23,333)

         Change in current liabilities related to
             stock-based compensation that was expensed
             based on service period of contract                       (20,833)
                                                                  ------------
         Current liabilities, as restated                         $    232,396
                                                                  ============

                                     F-8
<PAGE>

         Stockholders' equity, as previously reported             $     15,669
         Change in stockholders' equity related to

             Change in net loss                                        492,145

             Change in accumulated deficit for restatement
                  of period ended June 30, 2005                         34,429

             Change to record debt discount on notes
                  with beneficial conversion feature                   (35,000)

             Recognition of stock-based compensation
                  over contractual service period                     (428,626)
                                                                  ------------
         Stockholders' equity, as restated                        $     78,617
                                                                  ============



<TABLE>
<CAPTION>
        STATEMENT OF OPERATIONS                                         Nine     Three
                                                                       Months    Months
                                                                  ------------  ----------
<S>                                                                   <C>         <C>
         Revenue, as previously reported                          $    479,182  $  232,949

         Change in revenue related to billings by
            host affiliates                                             56,181      32,671
                                                                  ------------  ----------
         Revenue, as restated                                     $    535,363  $  265,620
                                                                  ============  ==========

         Operating expenses, as previously reported               $  1,450,459  $  105,714

         Change in operating expenses related to:

             reduction of stock-based compensation
               for amounts not yet earned by the
               service providers                                      (519,459)    295,448

            Change in provision for doubtful accounts
              to more accurately match the
              provision with related revenue                            40,396      40,396

         Change in cost of goods sold related to gross-up
             billings by host affiliates                                31,432       3,517
                                                                  ------------  ----------
         Operating expenses, as restated                          $  1,002,828  $  445,075
                                                                  ============  ==========

         Other income (expense), as previously reported           $    291,289  $   (1,188)

             Change in other income (expense) to record
               amortization of debt discount                           (11,667)    (11,667)
                                                                  ------------  -----------
         Other income (expense), as restated                      $    279,622  $  (12,855)
                                                                  ============  ===========

         Income (loss) from operations, as
           previously reported                                    $   (971,277) $   127,220
                                                                  ============  ===========
         Loss from operations, as restated                        $   (467,465) $  (179,455)
                                                                  ============  ===========
         Net income (loss), as previously reported                $   (679,988) $   126,032
                                                                  ============  ===========
         Net income, as restated                                  $   (187,843) $  (192,310)
                                                                  ============  ===========
         Net income (Loss) per common share - basic
           and diluted, as previously reported                    $      (0.01) $     (0.00)
                                                                  ============  ===========
         Net income (Loss) per common share - basic
           and diluted, as restated                               $      (0.00) $     (0.00)
                                                                  ============  ===========
</TABLE>


4.   CONVERTIBLE  DEBT

     In  November  2005,  the  Company  entered  into  a  settlement  agreement
     regarding  its convertible debt. Under the settlement agreement the Company
     paid  $30,000  for  complete  discharge of $201,045 of convertible debt and
     $139,754  of  related  accrued  interest. The Company recognized a $310,799
     gain  on  extinguishment  of  debt  in  connection  with  the  settlement.


5.   NOTES  PAYABLE


     On  March  1,  2006,  and  March  21,  2006,  we  entered into two separate
     loans for $17,500, with two shareholders to provide us with an aggregate of
     $35,000  in  funding. The loans bear interest at the rate of 12% per annum,

                                     F-9
<PAGE>

     and  are  due sixty (60) days from the date the money was loaned, renewable
     for  additional  sixty  (60)  day periods at the option of the individuals.
     Additionally,  both  loans  are  convertible  into  1,000,000 shares of our
     common  stock  at  the  rate  of  one  share  for  each  $0.035  owed.  The
     conversion price at the time the notes were issued created a beneficial
     conversion feature that discounted the notes 100%.  Amortization of the
     discount for the nine months ended March 31, 2006 was $11,667.


     On  March  28,  2006,  we  borrowed  $50,000  from  shareholders  of  the
     Company,  and issued those individuals a promissory note in connection with
     such loan. Although the promissory note was entered into on March 28, 2006,
     the  promissory  note was not funded until April 2006, and as a result, the
     $50,000  has  not  been included in the Company's March 31, 2006, financial
     statements.  The  promissory  note  bears  interest  at the rate of 12% per
     annum,  and  is  due and payable on September 29, 2006. The promissory note
     may  also be renewed for additional thirty (30 day periods at the option of
     the  holder.  This  loan is also convertible into an aggregate of 1,428,571
     shares  of  common stock at the rate of one share for each $0.035 owed. The
     shareholders  also  have  1,428,571  outstanding warrants with the Company,
     which  are  exercisable  for shares of common stock at an exercise price of
     $0.045  per  share,  and  which  expire  on  May  22,  2008.


6.   INCOME  TAXES


     At  March  31,  2006  the  Company  has  a net operating loss carry-forward
     ("NOL")  of approximately $925,000 expiring through 2025. The Company has a
     deferred  tax  asset of approximately $314,000 resulting from this NOL. The
     loss  carry-forwards  relating  to Grant Douglas Acquisition Corp. prior to
     the  re-capitalization  are  insignificant  and  are  subject  to  certain
     limitations  under  the Internal Revenue Code, including Section 382 of the
     Tax  Reform Act of 1986. Accordingly, such losses are not considered in the
     calculation  of  deferred  tax  assets.  The  ultimate  realization  of the
     Company's  deferred  tax  asset  is  dependent  upon  generating sufficient
     taxable  income  prior  to expiration of the NOL. Due to the nature of this
     NOL  and  because  realization is not assured, management has established a
     valuation  allowance  relating  to the deferred tax asset at both March 31,
     2006  and  June  30,  2005,  in  an amount equal to the deferred tax asset.


     The  difference  between  the  benefit  for  income  taxes  and  the  34%
     federal  statutory  rate for the three months ended March 31, 2006, relates
     primarily  to  non-deductible share-based compensation and increases in the
     valuation  allowance  for  deferred  tax  assets.


7.   STOCKHOLDERS' EQUITY

     COMMON STOCK ISSUED FOR CASH

     From  time  to  time,  in  order  to  fund  operating  activities  of  the
     Company,  common  stock  is issued for cash. Depending on the nature of the
     offering and restrictions imposed on the shares being sold, the sales price
     of  the  common  stock may be below the fair market value of the underlying
     common  stock  on  the date of issuance. During the nine months ended March
     31,  2006  the  Company  issued  4,700,000 shares of common stock at prices
     ranging  from  $0.035  to  $0.05,  for  net  cash  proceeds  of  $220,000.

     COMMON STOCK ISSUED FOR SERVICES


     During  the  nine  months  ended  March  31,  2006,  the  Company  issued
     8,250,000  shares  of  common  to  consultants stock at prices ranging from
     $0.07  to  $0.095  per  share  and  recognized  stock based compensation of
     $264,874.



     COMMON STOCK SURRENDERED

     On  September  29,  2005,  a  primary  stockholder/officer/director  of the
     Company  agreed  to surrender 4,000,000 shares of common stock to treasury.
     These  shares,  previously  issued  for services in 2005, were removed from
     common stock at par value with an offsetting increase to additional paid-in
     capital.

                                      F-10
<PAGE>

     GLOBAL MEDIA FUND, INC.  AGREEMENT

In  February 2006, we entered into a service agreement (the "Service Agreement")
with  Global  Media  Fund  Inc.  ("Global"), whereby Global agreed to distribute
certain  newspaper  features,  which  Global has guaranteed will be placed in at
least  100 newspapers and radio features regarding the Company, which Global has
guaranteed  will  be placed in at least 400 radio stations. In consideration for
the  Service  Agreement,  we agreed to issue Global 250,000 restricted shares of
our  common  stock,  which were issued in March 2006. The terms of the agreement
call  for  the  Company  to  issue  Global  a remaining value of shares equal to
$125,000, which will be paid by issuances of common stock on May 1, 2006, August
1,  2006,  November 1, 2006 and February 1, 2007. The Service Agreement provides
that  we  will issue shares valued at $28,125 per payment; however the agreement
contains a provision that provides Global with shares that are at a 10% discount
to the quoted market price, therefore Global will receive common stock valued at
$31,250  for  each  of  the  remaining  installment  payments.

     If  we  fail  to  issue  Global  any  consideration  owed  pursuant  to the
     Service Agreement when due, Global may terminate the Service Agreement with
     thirty  (30)  days  written notice to us at which time Global will keep all
     consideration  issued  as  of  that  date.  We have the right to cancel the
     Service  Agreement  at  anytime  with  thirty  (30)  days written notice to
     Global,  at which time Global will keep all consideration issued as of that
     date.

8.   SUBSEQUENT EVENTS

     In  May  2006,  we  entered  into  a  Securities  Purchase  Agreement  with
     certain  third  parties  to  provide  us  $1,500,000  in  convertible  debt
     financing  (the  "Term  Sheet").  Pursuant  to  the  Securities  Purchase
     Agreement,  we  agreed  to  sell  the  investors  $1,500,000 in Convertible
     Debentures,  which  are  to  be  payable  in  three tranches, $600,000 upon
     signing the definitive agreements on May 30, 2006, $400,000 upon the filing
     of  a  registration  statement to register shares of common stock which the
     Convertible Debentures are convertible into as well as the shares of common
     stock  issuable  in  connection  with  the  Warrants  (defined  below), and
     $500,000  upon  the  effectiveness  of  such  registration  statement.  The
     Convertible  Debentures  are  to  be convertible into our common stock at a
     discount  to  the  then trading value of our common stock. Additionally, in
     connection  with the  Securities Purchase Agreement, we agreed to issue the
     third parties Warrants to purchase an aggregate of 50,000,000 shares of our
     common  stock  at  an  exercise  price of $0.10 per share (the "Warrants").

     We  also  agreed  to  issue  a  finder,  Lionheart  Associates,  LLC  doing
     business  as  Fairhills Capital ("Lionheart"), a finder's fee in connection
     with the funding which included warrants to purchase up to 2,000,000 shares
     of  our common stock at an exercise price of $0.10 per share. The Lionheart
     warrants  expire if unexercised on May 30, 2013. We claim an exemption from
     registration  afforded by Section 4(2) of the Securities Act of 1933, since
     the  foregoing transaction did not involve a public offering, the recipient
     had  access  to  information  that  would  be  included  in  a registration
     statement,  took  the  shares  for  investment  and  not resale and we took
     appropriate  measures  to  restrict  transfer.

     Additionally,  in  connection  with  the  closing  of  the  sale  of  the
     Debentures,  described above, we agreed to issue Geoff Eiten, as a finder's
     fee  in  connection with the funding, 3,000,000 warrants to purchase shares
     of  our common stock. The 3,000,000 warrants are exercisable into shares of
     our  common  stock  as follows, 1,000,000 warrants are exercisable at $0.10
     per  share,  1,000,000  warrants  are  exercisable  at $0.20 per share, and
     1,000,000 warrants are exercisable at $0.30 per share. The warrants granted
     to  Mr.  Eiten  expire if unexercised on May 8, 2010. We claim an exemption
     from  registration  afforded by Section 4(2) of the Securities Act of 1933,
     since  the  foregoing  transaction  did  not involve a public offering, the
     recipient  had  access  to  information  that  would  be  included  in  a
     registration  statement,  took the shares for investment and not resale and
     we  took  appropriate  measures  to  restrict  transfer.

                                      F-11
<PAGE>
ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

     THIS  REPORT  CONTAINS  FORWARD  LOOKING  STATEMENTS  WITHIN THE MEANING OF
SECTION  27A  OF  THE  SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E OF THE
SECURITIES  EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER  MATERIALLY  FROM  THOSE SET FORTH ON THE FORWARD LOOKING STATEMENTS AS A
RESULT  OF  THE RISKS SET FORTH IN THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, GENERAL ECONOMIC CONDITIONS, AND CHANGES IN THE ASSUMPTIONS
USED  IN  MAKING  SUCH  FORWARD  LOOKING  STATEMENTS.

OVERVIEW


Pediatric  Prosthetics,  Inc.  (the "Company," "we," and "us") is engaged in the
custom  fitting  and  fabrication of custom made prosthetic limbs for both upper
and  lower  extremities to infants and children throughout the United States. We
also  provide our services to families from the international community when the
parents  can  bring  the  child  to  the  United  States  for  fitting.  We  buy
manufactured  components  from  a  number  of  manufacturers  and  combine those
components  to  fabricate  custom measured, fitted and designed prosthetic limbs
for  our  patients. We also create "anatomically form-fitted suspension sockets"
that  allow  the  prosthetic  limbs  to  fit  comfortably and securely with each
patient's unique residual limb. These suspension sockets must be hand crafted to
mirror  the  surface  contours  of  a  patient's  residual  limb,  and  must  be
dynamically  compatible  with  the underlying bone, tendon, ligament, and muscle
structures  in  the  residual  limb.



We  are  accredited  by  the  Texas  Department  of Health as a fully accredited
prosthetics  provider.  We  began  operations  as  a fully accredited prosthetic
facility  on  March  18,  2004.

We  generate  an  average of approximately $8,000 of gross profit per fitting of
the  prosthetics  devices,  however,  the  exact  amount of gross profit we will
receive  for  each  fitting,  will  depend  on the exact mix of arms versus legs
fitted  and  the  number  of re-fittings versus new fittings. From July 1, 2005,
until  December  31,  2005, we made approximately twenty-seven fittings and from
January  1,  2006,  until  the  date  of this filing, we have made approximately
thirty-five  fittings. We averaged approximately four or five fittings per month
through  December  2005  and have averaged approximately seven to eight fittings
per  month  since  January  2006.

<PAGE>

HISTORY  OF  THE  COMPANY

We  were  formed  as  an  Idaho corporation on January 29, 1954, and experienced
various restructurings and name changes, including a name change effective March
9,  2001  to  Grant  Douglas  Acquisition  Corp. ("GDAC").  On October 10, 2003,
Pediatric  Prosthetics, Inc., a Texas corporation ("Pediatric"), entered into an
acquisition  agreement with us, whereby Pediatric agreed to exchange 100% of its
outstanding  stock for 8,011,390 shares of our common stock and 1,000,000 shares
of our Series A Convertible Preferred Stock (the "Exchange"). Pediatric, emerged
as the surviving financial reporting entity under the agreement, but we remained
as  the legal entity and adopted a name change to Pediatric Prosthetics, Inc. on
October  31,  2003  in  connection  with  the  Exchange.

THE  MARKETPLACE

According  to  the  Limb  Loss  Research  and  Statistics  Program ("LLR&SP"), a
multi-year  statistical study done by the American Amputee Coalition in 2001, in
concert  with  the Johns Hopkins Medical School, and the United States Center of
Disease  Control,  approximately  1,000  children  are  born  each  year  with a
limb-loss   in   the   United   States.    The   LLR&SP   can   be   found   at
www.amputee-coalition.org.  During  their  high growth years, ages 1 through age
12, these children will be candidates for re-fitting once per year as they grow.
We  calculate that there are presently approximately up to 12,000 pre-adolescent
(younger  than  age  12)  children  in  the  United States in need of prosthetic
rehabilitation,  based  on  the fact that there are approximately 1,000 children
born  each  year  with  a  limb-loss  in  the  United  States.

COMPETITION

Although  there  are many prosthetic provider companies in the United States, to
the best of our knowledge, there is no other private sector prosthetics provider
in  the  country  specializing  in fitting infants and children. The delivery of
prosthetic care in the United States is extremely fragmented and is based upon a
local practitioner "paradigm." Generally, a local practitioner obtains referrals
for  treatment  from  orthopedic  physicians  in  their local hospitals based on
geographic  considerations.  Management believes the inherent limitation of this
model  for pediatric fittings is that the local practitioner may never encounter
more  than  a  very  few  small children with a limb loss, even during an entire
career.  The  result  is that the local practice is a "general practice", and in
prosthetics  that  is considered an "adult practice" because of the overwhelming
percentage  of  adult  patients.  In  any  given year, according to The American
Amputee  Coalition,  over  150,000 new amputations are performed, suggesting the
need  for  prosthetic  rehabilitation.  The  overwhelming  majority  of  those
amputations  are  performed  upon  adults. For children ages 1-14, there will be
approximately  1,200  limb  losses  per  year due primarily to illness, vascular
problems,  and congenital accidents. Children, especially small children, cannot
provide  practitioners  the  critical  verbal feedback they usually receive from
their  adult  patients.

Management believes the challenge to effectively treat children with a limb-loss
in  the  United  States  is  compounded   by  the   time  constraints  of  local
practitioners  working primarily with their adult patients and a limited overall
number   of  board   certified   prosthetists.  To   engage  in  the   intensive

<PAGE>

patient-family  focus  required to fit the occasional infant or small child puts
enormous  time  pressure  on  local practitioners trying to care for their adult
patients.

Though  not  competitors  in  a business sense, the Shriner's Hospital system, a
non-profit  organization  with 22 orthopedic hospitals throughout North America,
has  historically  extended  free  prosthetic  rehabilitation  in  addition  to
providing  medical  and  surgical  services to children at no charge. We believe
that  we can help organizations like Shriner's provide more efficient prosthetic
rehabilitation.

EMPLOYEES

As  of  June  27,  2006, we had five employees, three of which are in management
positions.  We  also  use  the  services  of outside consultants as necessary to
provide  therapy,  public  relations  and  business  and  financial  services.

AGREEMENTS  WITH  HOST  AFFILIATES

We  have  entered  into  consulting  contracts  with  fourteen  host  prosthetic
providers ("Host Affiliates") with facilities at various locations in 21 states.

These  consulting  agreements  allow  us  to  utilize  the  Host  Affiliate's
patient-care  facilities  and  billing  personnel  to  aid  us  in  fitting  and
fabricating  custom-made  artificial limbs and provide related care and training
in  multiple  geographic  locations.  We  receive a consulting fee from the Host
Affiliate  on  a  case-by-case  basis.  These contracts generally have automatic
renewals  every  six  months  unless  either  party gives notice of termination.

REGULATIONS

We  are  accredited by the Texas Department of Health and are subject to certain
state  and federal regulations related to the certification of our prosthetists,
patient-care facility and billing practices with insurance companies and various
state  and  federal  health  programs  including  Medicare  and  Medicaid.


                                  RECENT EVENTS

On  March  1,  2006,  and March 21, 2006, we entered into two separate loans for
$17,500,  with  two  shareholders  to provide us with an aggregate of $35,000 in
funding.  The  loans  bear  interest  at  the rate of 12% per annum, and are due
sixty  (60)  days  from  the date the money was loaned, renewable for additional
sixty  (60)  day  periods  at the option of the individuals.  Additionally, both
loans  are convertible into 500,000 shares of our common stock, with each $0.035
of  each  outstanding  loan  being  able to convert into one share of our common
stock.

On  March  28, 2006, we borrowed $50,000 from shareholders of the Company, which
amount  was not paid to us until April 2006, and has therefore not been included
in  the  attached financial statements for the quarter ended March 31, 2006, and

<PAGE>

issued  those  individuals  a promissory note in connection with such loan.  The
promissory  note  bears  interest  at  the rate of 12% per annum, and is due and
payable  on  September  29,  2006.  The  promissory note may also be renewed for
additional  thirty  (30)  day periods at the option of the holder.  This loan is
also  convertible  into  an aggregate of 1,428,571 shares of common stock at the
rate  of  one  share  for  each  $0.035 owed.  The shareholder who loaned us the
$50,000  also  has  1,428,571  outstanding  warrants with the Company, which are
exercisable for shares of common stock at an exercise price of $0.045 per share,
and  which  expire  on  May  22,  2008.

SUBSEQUENT EVENTS:

                     MAY 2006 SECURITIES PURCHASE AGREEMENT

On May 30, 2006 (the "Closing"), we entered into a Securities Purchase Agreement
("Purchase Agreement") with AJW Partners, LLC; AJW Offshore, Ltd.; AJW Qualified
Partners,  LLC;  and New Millennium Capital Partners II, LLC (each a "Purchaser"
and  collectively  the "Purchasers"), pursuant to which the Purchasers agreed to
purchase  $1,500,000  in  convertible debt financing. Pursuant to the Securities
Purchase  Agreement,  we  agreed  to  sell  the investors $1,500,000 in Callable
Secured  Convertible  Notes (the "Debentures"), which are to be payable in three
tranches,  $600,000  of  which  was received by the Company on or around May 31,
2006,  in  connection  with  the  entry  into the Securities Purchase Agreement;
$400,000  upon  the  filing  of  a  registration statement to register shares of
common  stock which the Debentures are convertible into as well as the shares of
common  stock  issuable in connection with the exercise of the Warrants (defined
below);  and $500,000 upon the effectiveness of such registration statement. The
Debentures are to be convertible into our common stock at a discount to the then
trading  value  of  our  common  stock  as  described  in  greater detail below.
Additionally, in connection with the Securities Purchase Agreement, we agreed to
issue  the  Purchasers warrants to purchase an aggregate of 50,000,000 shares of
our  common  stock  at an exercise price of $0.10 per share (the "Warrants"). We
agreed  to  register  the  shares  of  common  stock  which  the  Debentures are
convertible  into  and  the  shares  of  common  stock  which  the  Warrants are
exercisable for on a Form SB-2 registration statement. We secured the Debentures
pursuant to the Security Agreement and Intellectual Property Security Agreement,
described  below.

We also agreed in the Purchase Agreement to use our best efforts to increase our
key man life insurance on our President and Director, Linda Putback-Bean and our
Vice  President  and Director Kenneth W. Bean on or before fifteen (15) business
days  from  the  Closing.

The  $600,000 we received from the Purchasers at the Closing, in connection with
the  sales  of  the  Debentures  was  distributed  as  follows:

     o    $100,000  to  Lionheart  Associates,  LLC  doing business as Fairhills
          Capital  ("Lionheart"),  as  a  finder's  fee  in  connection with the
          funding  (we  also  have agreed to pay Lionheart an additional $50,000
          upon  the  payment  of  the  next  tranche  of  the  funding  by  the
          Purchasers);

<PAGE>

     o    $18,000  to  Geoff  Eiten,  as  a  finder's fee in connection with the
          funding  (we  also  have agreed to pay Mr. Eiten an additional $27,000
          upon the payment of additional tranches of funding by the Purchasers);

     o    $75,000  in  legal  fees  and  closing  payments  to  our counsel, the
          Purchaser's  counsel  and certain companies working on the Purchaser's
          behalf;

     o    $10,000  to  be  held  in  escrow  for  the  payment of additional key
          man  life  insurance  on  Linda  Putback-Bean  and Kenneth W. Bean, as
          described  above;  and

     o    $370,000  to  us,  which  we  anticipate  spending  on  legal  and
          accounting  fees  in  connection  with  the filing of our amended Form
          10-SB,  outstanding reports on Form 10-QSB, and Form SB-2 registration
          statement,  as  well  as  marketing and promotional fees and inventory
          costs,  as  well  as  other  general  working  capital  purposes.

                       CALLABLE SECURED CONVERTIBLE NOTES

Pursuant  to  the  Purchase  Agreement,  we  agreed  to  sell  the Purchasers an
aggregate  of  $1,500,000  in  Debentures, which Debentures bear interest at the
rate  of six percent (6%) per annum, payable quarterly in arrears, provided that
no interest shall be due and payable for any month in which the trading value of
our  common  stock  is  greater than $0.10375 for each day that our common stock
trades.  Any amounts not paid under the Debentures when due bear interest at the
rate  of fifteen percent (15%) per annum until paid. The conversion price of the
Debentures  is  equal  to  50%  of  the trading price of our common stock on any
trading day, during which we receive a notice of conversion from the Purchasers,
provided  the conversion price shall increase to 55% of the trading price of our
common stock in the event our Registration Statement to be filed to register the
shares  convertible into common stock in connection with the Debentures is filed
on  or before the sixtieth (60th) day from the date of the Closing, Friday, July
28,  2006;  and such conversion price shall increase to 60% of the trading price
of  our  common  stock  in  the  event  that such Registration Statement becomes
effective  on  or  before  the one hundred and forty-fifth (145th) day after the
Closing  (the  "Conversion  Price").

Furthermore,  the  Purchasers  have  agreed  to  limit  their conversions of the
Debentures to no more than the greater of (1) $80,000 per calendar month; or (2)
the  average  daily  volume  calculated  during the ten business days prior to a
conversion,  per  conversion.

Pursuant  to  the Debentures, the Conversion Price is automatically adjusted if,
while  the  Debentures  are  outstanding, we issue or sell, any shares of common
stock for no consideration or for a consideration per share (before deduction of
reasonable  expenses  or  commissions or underwriting discounts or allowances in
connection  therewith)  less  than the Conversion Price then in effect, with the
consideration  paid  per  share, if any being equal to the new Conversion Price;
provided  however,  that  each Purchaser has agreed to not convert any amount of
principal  or  interest  into  shares  of  common stock, if, as a result of such
conversion,  such Purchaser and affiliates of such Purchaser will hold more than
4.99%  of  our  outstanding  common  stock.

<PAGE>

"Events  of  Default"  under  the  Debentures  include:

     1.   Our  failure  to  pay  any  principal  or  interest  when  due;

     2.   Our failure  to  issue  shares  of  common  stock to the Purchasers in
          connection  with  any  conversion  as  provided  in  the  Debentures;

     3.   Our failure  to  file  a  Registration  Statement  covering the shares
          of  common stock convertible which the Debentures are convertible into
          within sixty (60) days of the Closing, or obtain effectiveness of such
          Registration Statement within one hundred and forty-five (145) days of
          the  Closing, or if such Registration Statement once effective, ceases
          to  be  effective for more than ten (10) consecutive days or more than
          twenty  (20)  days  in  any  twelve  (12)  month  period;

     4.   Our entry into bankruptcy or the appointment of a receiver or trustee;

     5.   Our breach  of  any  covenants  in  the  Debentures  or  Purchase
          Agreement,  if  such  breach  continues  for a period of ten (10) days
          after  written  notice thereof by the Purchasers, or our breach of any
          representations  or warranties included in any of the other agreements
          entered  into  in  connection  with  the  Closing;

     6.   If any  judgment  is  entered  against  us  or  our  property for more
          than  $100,000,  and  such judgment is unvacated, unbonded or unstayed
          for a period of twenty (20) days, unless otherwise consented to by the
          Purchasers,  which  consent  will  not  be  unreasonably  withheld; or

     7.   If we fail  to  maintain  the  listing  of  our  common  stock  on the
          OTCBB  or  an  equivalent  replacement  exchange,  the Nasdaq National
          Market,  the  Nasdaq  SmallCap Market, the New York Stock Exchange, or
          the  American Stock Exchange within 180 days from the date of Closing.

Upon  the  occurrence  of and during the continuance of an Event of Default, the
Purchasers  can make the Debentures immediately due and payable, and can make us
pay  the greater of (a) 130% of the total remaining outstanding principal amount
of the Debentures, plus accrued and unpaid interest thereunder, or (b) the total
dollar  value of the number of shares of common stock which the funds referenced
in  section  (a)  would  be  convertible into (as calculated in the Debentures),
multiplied  by  the highest closing price for our common stock during the period
we  are in default. If we fail to pay the Purchasers such amount within five (5)
days  of  the date such amount is due, the Purchasers can require us to pay them
in shares of common stock at the greater of the amount of shares of common stock
which  (a)  or  (b)  is convertible into, at the Conversion Rate then in effect.

<PAGE>

Pursuant  to the Debentures, we have the right, assuming (a) no Event of Default
has  occurred  or  is  continuing,  (b)  that  we  have  a  sufficient number of
authorized  but  unissued  shares  of common stock, (c) that our common stock is
trading at or below $0.20 per share, and (d) that we are then able to prepay the
Debentures  as provided in the Debentures, to make an optional prepayment of the
outstanding  amount  of  the  Debentures equal to 120% of the amount outstanding
under  the  Debentures  (plus any accrued and unpaid interest thereunder) during
the  first  180  days  after  the Closing, 130% of the outstanding amount of the
Debentures (plus any accrued and unpaid interest thereunder) between 181 and 360
days  after the Closing, and 140% thereafter, after giving ten (10) days written
notice  to  the  Purchasers.

Additionally,  pursuant  to  the Debentures, we have the right, in the event the
average daily price of our common stock for each day of any month the Debentures
are outstanding is below $0.20 per share, to prepay a portion of the outstanding
principal  amount of the Debentures equal to 101% of the principal amount of the
Debentures  divided  by thirty-six (36) plus one month's interest. Additionally,
the  Purchasers  have  agreed  in the Debentures to not convert any principal or
interest  into  shares  of common stock in the event we exercise such prepayment
right.

At  the  Closing,  we  entered  into  a  Security  Agreement and an Intellectual
Property  Security Agreement (collectively, the "Security Agreements"), with the
Purchasers,  whereby  we  granted  the  Purchasers a security interest in, among
other  things,  all  of  our  goods, equipment, machinery, inventory, computers,
furniture,  contract  rights,  receivables,  software,  copyrights,  licenses,
warranties,  service contracts and intellectual property to secure the repayment
of  the  Debentures.

                             STOCK PURCHASE WARRANTS

In  connection  with the Closing, we sold an aggregate of 50,000,000 Warrants to
the Purchasers, which warrants are exercisable for shares of our common stock at
an  exercise  price  of  $0.10 per share (the "Exercise Price"). Each Purchaser,
however,  has  agreed  not to exercise any of the Warrants into shares of common
stock,  if,  as a result of such exercise, such Purchaser and affiliates of such
Purchaser  will  hold  more  than  4.9%  of  our  outstanding  common  stock.

The  Warrants  expire, if unexercised at 6:00 p.m., Eastern Standard Time on May
30, 2013. The Warrants also include reset rights, which provide for the Exercise
Price  of the Warrants to be reset to a lower price if we (a) issue any warrants
or options (other than in connection with our Stock Option Plans), which have an
exercise  price  of  less  than  the  then  market price of the common stock, as
calculated  in  the  Warrants,  at which time the Exercise Price of the Warrants
will  be  equal  to  the  exercise  price of the warrants or options granted, as
calculated  in the Warrants; or (b) issue any convertible securities, which have
a  conversion  price  of less than the then market price of the common stock, as
calculated  in  the  Warrants,  at which time the Exercise Price of the Warrants
will  be  equal  to  the  conversion  price  of  the  convertible securities, as
calculated  in  the  Warrants.

Pursuant to the Warrants, until we register the shares of common stock which the
Warrant is exercisable for, the Warrants have a cashless exercise feature, where

<PAGE>

the  Purchasers can exercise the Warrants and pay for such exercise in shares of
common  stock,  in  lieu  of paying the exercise price of such Warrants in cash.

                          REGISTRATION RIGHTS AGREEMENT

Pursuant  to  the  Registration Rights Agreement entered into at the Closing, we
agreed  to file a registration statement on Form SB-2, to register two (2) times
the shares of common stock which the Debentures are convertible into (to account
for  changes  in  the  Conversion  Rate  and  the  conversion of interest on the
Debentures)  as  well  as the shares of common stock issuable in connection with
the  exercise of the Warrants, within sixty (60) days of the Closing and use our
best  efforts  to  obtain  effectiveness  of such registration statement as soon
thereafter  as possible. However, we do not currently have enough authorized but
unissued  shares  to allow for such conversion and/or exercise by the Purchasers
and  therefore  have  filed  an  information statement with the SEC to allow for
shareholder  approval  to  affect  an  increase  in  our  authorized  shares  in
connection  with  such  registration  statement  filing.

If  we  do  not  obtain effectiveness of the registration statement with the SEC
within  one hundred and forty-five (145) days from the Closing date, or if after
the  registration  statement  has  been  declared effective by the SEC, sales of
common  stock  cannot  be  made  pursuant  to the registration statement, or our
common  stock  ceases  to  be traded on the Over-the-Counter Bulletin Board (the
"OTCBB")  or  any  equivalent replacement exchange, then we are required to make
payments  to  the  Purchasers in connection with their inability and/or delay to
sell  their  securities.  The  payments  are to be equal to the then outstanding
amount  of  the  principal  amount  of  the  Debentures,  multiplied  by  $0.02,
multiplied  by  the number of months after such one hundred and forty-five (145)
day  period  and/or  the  date  sales  are  not  able  to  be effected under the
registration  statement,  pro  rated  for  partial months. For example, for each
month  that  passes in which we fail to obtain effectiveness of our registration
statement,  after the end of the one hundred and forty-five (145) day period, we
would  owe  the Purchasers an aggregate of $20,000 in penalty payments, based on
$1,000,000 then outstanding under the Debentures ($600,000 in debentures sold to
the  Purchasers  at  the  Closing,  plus  $400,000  in  Debentures  sold  to the
Purchasers  upon  filing  the  registration  statement).

                       SERVICE AGREEMENT WITH GLOBAL MEDIA

In  February 2006, we entered into a service agreement (the "Service Agreement")
with  Global  Media  Fund  Inc.  ("Global"), whereby Global agreed to distribute
certain  newspaper  features,  which  Global has guaranteed will be placed in at
least  100  newspapers and radio features regarding the Company which Global has
guaranteed will be placed in at least 400 radio stations.   In consideration for
the  Service  Agreement,  we agreed to issue Global 250,000 restricted shares of
our  common  stock,  which shares were issued in March 2006; and agreed to issue
Global  a  total of $112,500 worth of our common stock (as calculated below), to
be  paid  by  the  issuance of $28,125 worth of our common stock on May 1, 2006,
August  1,  2006,  November  1,  2006  and February 1, 2007.  We have not issued
Global  the  May  1,  2006 payment.  The value of our common stock in connection
with the issuance of the additional shares to Global shall be equal to the value
of  the  common  stock to be issued divided by 90% of the average of the closing

<PAGE>

value  of the common stock on the five trading days prior to the date such stock
is  to  be  issued.  For example, the average of the closing price of our common
stock  for  the five trading days prior to the May 1, 2006 payment was $0.07 per
share.  Therefore,  the amount of shares we are due to issue Global for such May
1,  2006 payment was $28,125 divided by $0.063 ($0.07 x 0.90), which is equal to
approximately  446,429 shares of common stock.  We also granted Global piggyback
registration  rights  in connection with the shares issued to Global pursuant to
the  Service  Agreement.  If  we  fail  to  issue  Global any consideration owed
pursuant  to  the  Service  Agreement when due, Global may terminate the Service
Agreement  with  thirty (30) days written notice to us at which time Global will
keep  all consideration issued as of that date.  We have the right to cancel the
Service  Agreement at anytime with thirty (30) days written notice to Global, at
which  time  Global  will  keep  all  consideration  issued  as  of  that  date.

                          CRITICAL ACCOUNTING POLICIES

Our  financial statements and accompanying notes are prepared in accordance with
U.S.  GAAP.  Preparing  financial  statements  requires us to make estimates and
assumptions  that  affect  the reported amounts of assets, liabilities, revenue,
and  expenses.  These  estimates  and  assumptions  are affected by management's
application  of  accounting policies. Critical accounting policies for us relate
primarily  to  revenue  recognition.

REVENUE  RECOGNITION

We  previously  recognized  revenues  from  the  sale  of prosthetic devices and
related   services   generated   through   the   billing   departments  of  the
Host-Affiliates  only  upon  the performance of services by that Host-Affiliate.
However, subsequent to December 31, 2005, we amended our accounting to recognize
revenues  from  the sale of prosthetic devices through the billing department of
our Host-Affiliates in the same fashion as we recognize revenue when we directly
bill  customers.  Periods prior to January 2006 were not changed due to the fact
that the changes would not materially effect the financial statements.

When we directly bill customers, the revenue from the sale of prosthetic devices
and  related  services  to patients, are recorded when the device is accepted by
the  patient,  provided  that  (i) there are no uncertainties regarding customer
acceptance;  (ii)  persuasive evidence of an arrangement exists; (iii) the sales
price  is  fixed  and  determinable;  and  (iv)  collection  is deemed probable.

When  we  directly  bill customers, revenue is recorded at "usual and customary"
rates, expressed as a percentage above Medicare procedure billing codes. Billing
codes  are  frequently  updated and as soon as we receive updates we reflect the
change  in  our  billing  system. There is generally a "co-payment" component of
each billing for which the patient-family is responsible. When the final appeals
process  to  the third party payors is completed, we bill the patient family for
the  remaining  portion  of  the  "usual  and  customary"  rate.  As part of our
preauthorization  process  with  third-party  payors, we validate our ability to
bill  the  payor,  if applicable, for the service provided before we deliver the
device.  Subsequent to billing for devices and services, problems may arise with
pre-authorization  or with other insurance issues with payors. If there has been
a  lapse  in  coverage, or an outstanding "co-payment" component, the patient is

<PAGE>

financially  responsible  for  the  charges  related to the devices and services
received.  If  we  are unable to collect from the patient, a bad debt expense is
recognized.

NEW  ACCOUNTING  PRONOUNCEMENTS

In  December  2004,  the  Financial  Accounting  Standard  Board (FASB) issued a
revision  to Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based  Compensation"  (SFAS 123R). SFAS 123R eliminates our ability to use
the  intrinsic value method of accounting under APB 25, and generally requires a
us  to  reflect in our income statement, instead of pro forma disclosures in its
financial  footnotes,  the cost of employee services received in exchange for an
award  of equity instruments based on the grant-date fair value of the award. We
will estimate the grant-date fair value using option-pricing models adjusted for
the unique characteristics of those equity instruments. Among other things, SFAS
123R  requires  us to estimate the number of instruments for which the requisite
service  is expected to be rendered, and if the terms or conditions of an equity
award  are  modified after the grant date, to recognize incremental compensation
cost  for  such a modification by comparing the fair value of the modified award
with  the  fair  value  of  the  award  immediately  before the modification. In
addition,  SFAS 123R amends FASB Statement No. 95, "Statement of Cash Flows," to
require that we treat excess tax benefits as a financing cash inflow rather than
as  a  reduction  of  taxes  paid  in our statement of cash flows. SFAS 123R was
effective for us beginning July 1, 2005. The Company had no outstanding warrants
or  options at the date of adoption SFAS 123R and, accordingly, the adoption had
no  impact  on  us.

                               PLAN OF OPERATIONS

During  October  2005,  management  contracted  with  three  (3)  consultants to
commence  a  national  multi-media  publicity  campaign  based  upon the success
stories  of  the children for which we have provided services. Management's goal
is  to  provide  awareness  of  our  commitment  to  provide  superior pediatric
prosthetic  care  on  a  national level. We paid the consultants an aggregate of
7,500,000  shares  of  our  common  stock  in  connection  with  such contracts.

We  have  established  working  relationships  with  fourteen  Host  Affiliates
operating in approximately 21 states. In establishing the relationships with the
fourteen  Host  Affiliates,  we  also  provided one-on-one pediatric training to
fourteen  prosthetists  who  are employed by those Host Affiliates. We currently
plan to hire one more certified prosthetist and two additional support personnel
during  the  next  twelve  months,  funding permitting, of which there can be no
assurance.

As  of  June,  2006,  based  on  our  current monthly gross profits generated in
connection with fitting prosthetic limbs, which approximately totals our monthly
overhead  of  $54,000,  we  believe  we  will be able to continue our operations
throughout  fiscal  2007.  Due to the receipt of $600,000 on May 30, 2006, (less
closing  costs  and  structuring  fees),  from  the  sale of certain Convertible
Debentures  described  above,  we  expect  to  increase  our  fiscal  2007  cash
advertising  and  marketing  budget  five  fold over our fiscal 2006 advertising
budget.  We  believe  the  five  fold  increase in our advertising and marketing

<PAGE>

budget  will  generate  a substantial ramp-up of our monthly prosthetic fittings
rate  and  resulting  gross  profits  due to a growing national awareness of our
specialization  in personalized pediatric services, combined with the re-fitting
of  the  growing  number  of  clients  we  have  already  fitted.

We  also  anticipate  receiving approximately $900,000 in subsequent tranches in
connection with the funding agreement described above, however, investors should
keep in mind that any amounts of funding we receive pursuant to the funding will
be  reduced  by fees paid to the lending source in connection with closing costs
and  legal  and  accounting  costs  associated  with our need to file and obtain
effectiveness  of  a  Form  SB-2  Registration  Statement to register the shares
convertible  into  common  stock  in  connection  with the sale of a Convertible
Secured Term Note and the shares issuable in connection with the exercise of the
Warrants.

We anticipate using the $900,000, which we anticipate receiving through the sale
of  additional  Convertible  Debentures  in  connection  with subsequent funding
tranches,  on  continued and sustained marketing and advertising efforts and the
anticipated  increases  in  our components inventory, which we will require as a
result  of  our  increased  marketing and advertising efforts, and the resulting
increase  in  fittings,  which  we believe such increased marketing efforts will
create.

                         COMPARISON OF OPERATING RESULTS

THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THREE MONTHS ENDED MARCH 31, 2005


We  had  $265,620 of revenue for the three months ended March 31, 2006, compared
to  revenue of $54,457 for the three months ended March 31, 2005, an increase in
revenue of $211,163 or 387.8% from the prior period. The increase in revenue for
the  three months ended March 31, 2006, compared to the three months ended March
31,  2005, was mainly due to increased fees received from our Host Affiliates in
connection  with  increased fittings due to our national awareness and marketing
program, as well as a significant number of re-fittings of existing patients due
to  such  patients  physical  growth.


<PAGE>


We  had  total  operating  expenses for the three months ended March 31, 2006 of
$445,075,  compared to total operating expenses for the three months ended March
31,  2005  of  $277,755,  an increase in total operating expenses of $167,320 or
60.2% from the prior period. The increase in total operating expenses was mainly
attributable  to  the  $187,945  or  84.6%  increase  in  selling,  general  and
administrative  expenses, to $410,171 for the three months ended March 31, 2006,
compared  to  $222,226 for the three months ended March 31, 2005, which increase
was  mainly  attributable  to  stock  based compensation during the three months
ended March 31, 2006, compared to the three months ended March 31, 2005, and the
$20,257  or  40.4%  decrease  in  cost of sales, to $29,845 for the three months
ended  March  31, 2006, compared to $50,102 for the three months ended March 31,
2005.  The  decrease in costs of sales was due to a larger number of re-fittings
of  prosthetic  limbs  during the three months ended March 31, 2006, compared to
the  three  months  ended  March  31,  2005,  which  re-fittings  require  fewer
electronic  components  than  new  fittings.  Also  included  in total operating
expenses  for  the three months ended March 31, 2006 was depreciation expense of
$5,059.



Selling,  general and administrative expenses as a percentage of revenue for the
three  months  ended  March 31, 2006 were 154%, compared to selling, general and
administrative  expenses as a percentage of revenue of 408% for the three months
ended  March  31,  2005,  which  represented  a decrease in selling, general and
administrative  expenses  as  a  percentage  of  revenue  of 254% from the prior
period.  This decrease was mainly due to the 387.8% increase in revenue from the
three  months  ended  March  31, 2005, to the three months ended March 31, 2006,
offset  by  the  84.6%  increase in selling, general and administrative expenses
over the same period. We expect our selling, general and administrative expenses
as a percentage of revenue to initially be higher than future percentages due to
early  stage  startup  costs  associated  with  building  an  administrative
infrastructure.



We  had  loss  from  operations of $179,455 for the three months ended March 31,
2006,  compared to a loss from operations of $223,298 for the three months ended
March  31, 2005, a decrease in loss from operations of $43,843 or 19.6% from the
prior  year's  period. The decrease in loss from operations was mainly caused by
the  387.8%  increase in revenue offset by the 60.2% increase in total operating
expenses for the three months ended March 31, 2006, compared to the three months
ended  March  31,  2005.



We had total other expense of $12,855 for the three months ended March 31, 2006,
compared  to  total other expense of $8,674 for the three months ended March 31,
2005,  an  increase of $4,181 or 48.2% from the prior period, which increase was
due to a $4,185 or 48.2% increase in interest expense for the three months ended
March  31,  2006,  compared  to  the  three  months  ended March 31, 2005, which
increase  was  mainly  due  to  the  amortization  of  the  debt discount on our
outstanding  loans  during  the  three months ended March 31, 2006, as described
below.



We  had  a  net  loss  of  $192,310  for  the three months ended March 31, 2006,
compared  to a net loss of $231,972 for the three months ended March 31, 2005, a
decrease  in  net  loss  of  $39,662  or  17%  from the prior year's period. The
decrease  in net loss was mainly caused by the 387.8% increase in revenue offset
by  the  60.2%  increase  in  total operating expenses and the 48.2% increase in
other  expenses for the three months ended March 31, 2006, compared to the three
months  ended  March  31,  2005.


<PAGE>

NINE MONTHS ENDED MARCH 31, 2006 COMPARED TO NINE MONTHS ENDED MARCH 31, 2005


We had revenue of $535,363 for the nine months ended March 31, 2006, compared to
revenue  of  $271,057  for  the nine months ended March 31, 2005, an increase in
revenue  of $264,306 or 97.5% from the prior period. The increase in revenue for
the  nine  months  ended March 31, 2006, compared to the nine months ended March
31,  2005, was mainly due to increased fees received from our Host Affiliates in
connection  with  increased fittings due to our national awareness and marketing
program, as well as a significant number of re-fittings of existing patients due
to  such  patients  physical  growth.



We  had  total  operating expenses of $1,002,828 for the nine months ended March
31, 2006, compared to total operating expenses of $4,566,801 for the nine months
ended  March  31,  2005, a decrease in total operating expenses of $3,563,973 or
78%  from  the  previous year's period. The decrease in total operating expenses
was  mainly  due  to  the  $3,607,769  or  81%  decrease in selling, general and
administrative  expenses,  which  amount  included  share-based compensation, to
$846,994  for the nine months ended March 31, 2006, from $4,454,763 for the nine
months  ended  March  31,  2005,  which decrease was caused by less shares being
issued for services to consultants and employees for the nine months ended March
31,  2006,  compared  to the prior year's period. Additionally included in total
operating  expenses  for  the  nine months ended March 31, 2006 was depreciation
expense  of $15,174. Also included in total operating expenses was cost of sales
of  $140,660 for the nine months ended March 31, 2006, compared to cost of sales
of  $97,387  for the nine months ended March 31, 2005, an increase of $43,273 or
44.4%  in  cost  of sales from the prior year's period. Costs of sales increased
for  the  nine  months  ended  March 31, 2006, compared to the nine months ended
March  31,  2005  due  to increased purchases of parts and components during the
nine  months  ended  March  31,  2006.



Selling,  general and administrative expenses as a percentage of revenue for the
nine  months  ended  March  31, 2006 were 158%, compared to selling, general and
administrative expenses as a percentage of revenue of 1,643% for the nine months
ended  March  31,  2005,  which  represented  a decrease in selling, general and
administrative  expenses  as  a  percentage  of revenue of 1,485% from the prior
year's period. This decrease was mainly due to the 97.5% increase in revenue for
the  nine  months  ended  March 31, 2006 and the 78% decrease in total operating
expenses  for  the nine months ended March 31, 2006, compared to the nine months
ended March 31, 2005. We expect our selling, general and administrative expenses
as a percentage of revenue to initially be higher than future percentages due to
early  stage  startup  costs  associated  with  building  an  administrative
infrastructure.



We  had a total loss from operations of $467,465 for the nine months ended March
31,  2006,  compared  to a total loss from operations of $4,295,744 for the nine
months ended March 31, 2005, a decrease in loss from operations of $3,828,279 or
89.1%  from  the  prior  year's period. The decrease in loss from operations was
mainly  caused  by  the  $3,607,769  or  81%  decrease  in  selling, general and
administrative  expenses  from  the nine months ended March 31, 2005 to the nine
months  ended  March  31,  2006.


<PAGE>


We  had total other income of $279,622 for the nine months ended March 31, 2006,
compared  to  total other expense of $16,518 for the nine months ended March 31,
2005,  which  represented  an  increase in other income of $296,140 for the nine
months  ended  March  31, 2006. The change from a net other expense to net other
income  was mainly due to a $310,799 gain on extinguishment of debt for the nine
months  ended  March  31,  2006.  In November 2005, we entered into a Settlement
Agreement  and Release with Secured Releases, LLC ("Secured" and the "Release").
Pursuant to the Release, we and Secured agreed to settle our claims against each
other  in connection with a convertible promissory note issued in February 2001.
In connection with the Release, we agreed to pay Secured $30,000, which has been
paid  to  date  and  we  and Secured agreed to release each other, our officers,
directors, shareholders, members, agents, employees, representatives and assigns
from  any  and  all  causes  of  action,  suits,  claims,  demands, obligations,
liabilities,  damages  of any nature, whatsoever, known or unknown in connection
with  the  promissory  note  or any other dealings, negotiations or transactions
between  us and Secured. Under the settlement agreement, we paid $30,000 for the
complete  discharge  of  $201,045  of  convertible  debt and $139,754 of related
accrued  interest, resulting in a gain on extinguishment of debt of $310,799 for
the  nine  months  ended  March  31,  2006.



We  had  a  total net loss of $187,843 for the nine months ended March 31, 2006,
compared  to  a total net loss of $4,312,262 for the nine months ended March 31,
2005,  a  decrease  in  net loss of $4,124,419 or 95.6% from the previous year's
period. The decrease in net loss was mainly due to the 3,607,769 or 81% decrease
in  selling,  general  and  administrative  expenses,  the  $310,799  of gain on
extinguishment  on debt, and the $296,140 increase in other income from the nine
months  ended  March 31, 2005 to the nine months ended March 31, 2006, offset by
the  $43,273  or  44.4%  increase  in  cost  of  sales  over  the  same periods.


LIQUIDITY AND CAPITAL RESOURCES


We had total assets of $324,293 as of March 31, 2006, compared with total assets
of  $235,390  as  of  the  fiscal year ended June 30, 2005, which represented an
$88,903  or  37.8%  increase  in  total  assets.



Total  assets  as  of  March  31,  2006, included current assets of $261,048 and
furniture  and  equipment,  net  of accumulated depreciation of $63,245. Current
assets  included  cash  and  cash  equivalents  of  $4,548,  trade  and accounts
receivable,  net  of  $240,652, and prepaid expenses and other current assets of
$15,848.



We  had  total  liabilities  of $245,676 as of March 31, 2006, compared to total
liabilities  of $488,804 for the fiscal year ended June 30, 2005, representing a
decrease  in  total  liabilities  from  the  fiscal  year ended June 30, 2005 of
$243,128  or  49.7%.



Total  liabilities as of March 31, 2006 included current liabilities of $232,396
and  non-current  liabilities  consisting  of  deferred  rent  of  $13,280.



Current  liabilities  as  of  March  31, 2006 included trade accounts payable of
$153,949, accrued liabilities of $66,280; which included deferred salary payable
to  our  officers; amounts due to related party of $500, which amounts were owed

<PAGE>

to  our  Chief  Executive  Officer,  Linda  Putback-Bean, in connection with the
initial  funding  of  our  corporate  bank  account, which amounts have not been
repaid  to  date; and notes payable of $11,667 ($35,000, net of debt discount of
$23,333),  which  does  not include the $50,000 loan described below, which loan
was  entered  into  in  March  2006,  but  funded  in  April  2006.



On  March  1,  2006,  and March 21, 2006, we entered into two separate loans for
$17,500,  with  two  shareholders  to provide us with an aggregate of $35,000 in
funding.  The  loans bear interest at the rate of 12% per annum until paid. Both
loans became due in May, but have since been extended. In December 2006, $10,000
was  repaid  on one of the loans, leaving $25,000 outstanding under the loans as
of the date of this report. Additionally, the remaining $25,000 owed pursuant to
the  loans  are  convertible  into  an aggregate of 714,286 shares of our common
stock,  with each $0.035 of each outstanding loan being able to convert into one
share  of  our  common  stock.



On  March  28,  2006, we borrowed $50,000 from a shareholder of the Company, and
issued  a  promissory  note  and  warrants  in  connection  with  such loan. The
promissory  note  bears  interest  at the rate of 12% per annum, and was due and
payable on September 29, 2006. The promissory note was renewed for an additional
six  months,  at the option of the holder, through March 2007. This loan is also
convertible into an aggregate of 1,428,571 shares of common stock at the rate of
one  share  for each $0.035 owed. The shareholder also received as consideration
for  the  $50,000 promissory note, 1,428,571 warrants, which are exercisable for
shares  of  common  stock  at  an  exercise price of $0.045 per share, and which
expire  on  May  22,  2008.



We  had working capital of $28,652 and a total accumulated deficit of $8,273,755
as  of  March  31,  2006.



We  had  total  net  cash  used by operating activities of $250,270 for the nine
months  ended  March  31,  2006,  which  was mainly due to $187,843 of net loss,
$310,799  of gain on extinguishment of debt and $169,723 of accounts receivable;
offset by $264,874 of share based compensation, which included 10,000,000 shares
of  common  stock  issued  to  consultants  for services in connection with such
consultants  making  families  of  limb  loss  patients  aware  of the Company's
services,  of which 2,000,000 shares were subsequently cancelled by a consultant
in  connection with such consultant's notice to the Company that he would not be
able  to  spend  as  much time on the Company's marketing campaign as previously
anticipated,  and  $36,921  of  provision  for  bad  debts.



We had net cash provided by financing activities of $225,000 for the nine months
ended  March  31,  2006,  which  included  $220,000 of proceeds from the sale of
4,700,000  shares  of  common  stock  to  certain  individuals  for  aggregate
consideration  of  $220,000 and proceeds from note payable of $35,000, offset by
$30,000  of  payment  in  settlement  of convertible debt in connection with the
Release,  described  above.



In  May 2006, we entered into a Securities Purchase Agreement with certain third
parties  to  provide  us $1,500,000 in convertible debt financing (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, we agreed to sell the investors
an aggregate of $1,500,000 in Convertible Debentures, which are to be payable in
three tranches, $600,000 upon signing the definitive agreements on May 30, 2006,

<PAGE>

$400,000  upon  the  filing  of  a  registration statement to register shares of
common  stock  which  the Convertible Debentures are convertible into as well as
the shares of common stock issuable in connection with the Warrants (defined and
described  in greater detail above), and $500,000 upon the effectiveness of such
registration  statement.  The  Convertible Debentures are to be convertible into
our  common  stock  at a discount to the then trading value of our common stock.
Additionally, in connection with the Securities Purchase Agreement, we agreed to
issue  the  third parties warrants to purchase an aggregate of 50,000,000 shares
of  our  common  stock at an exercise price of $0.10 per share (the "Warrants").



We  have historically been dependent on the sale of common stock for funding for
our  operations.  In connection with such funding, we issued 4,500,000 shares of
common  stock  at  prices ranging from $0.035 to $0.05 per share during the nine
months  ended  March  31,  2006,  for  aggregate  net  proceeds  of  $220,000.
Additionally, we issued 10,000,000 shares of common stock to consultants ranging
from  $0.07 and $0.095 per share during the nine months ended March 31, 2006 and
recognized  compensation  expense  of  $264,874.



As  of June 2006, we believe we can operate for approximately twelve (12) months
due  to the $600,000 (less closing costs and finders fees), we received upon the
sale of certain Convertible Debentures on May 30, 2006, described above based on
our current approximate overhead of $54,000 per month, and monthly gross profits
of approximately $50,000 per month we receive in connection with fittings of our
prosthetic  limbs.  We  also believe that we will be able to increase our yearly
advertising  and marketing budget five fold, for the fiscal year ending June 30,
2007,  compared  to  the fiscal year ending June 30, 2005, by utilizing $250,000
from  both  the first tranche of the funding, as well as our working capital. We
also  anticipate  receiving  approximately  $900,000  in  subsequent tranches in
connection  with  such  funding,  which we believe will allow us to increase our
monthly  sales and gross profits substantially over the next fiscal year, due to
our  increased  advertising  and  marketing  of  our  services, explained above.
However,  investors  should  keep in mind that any amounts of funding we receive
pursuant  to  the  Term Sheet and a definitive agreement in connection with such
Term Sheet will be reduced by fees paid to the lending source in connection with
the  entry  into  the  definitive  agreement  and  legal  and  accounting  costs
associated  with  our  need  to  file  and  obtain  effectiveness of a Form SB-2
Registration  Statement  to register the shares convertible into common stock in
connection  with  the  sale  of  a  Convertible Secured Term Note and the shares
issuable  in  connection  with the exercise of warrants pursuant to the terms of
the  Term  Sheet.



Other  than the funding transaction described above, no additional financing has
been  secured.  The  Company  has  no  commitments  from  officers, directors or
affiliates to provide funding. However, management does not see the need for any
additional financing in the foreseeable future, other than the money the Company
will  receive  from the sale of the Debentures. We currently anticipate that our
operations  will  continue  to grow as a result of our increased advertising and
marketing  expenditures, which has allowed a greater number of potential clients
to become aware of our operations and services, as we have already seen a higher
volume  of  sales  due  to  such  advertising  over  the past one to two months.



                                  RISK FACTORS

Any investment in shares of our common stock involves a high degree of risk. You
should carefully consider the following information about these risks before you
decide  to  buy  our common stock. If any of the following risks actually occur,
our business would likely suffer. In such circumstances, the market price of our
common  stock  could decline, and you may lose all or part of the money you paid
to  buy  our  common  stock.

WE HAVE EXPERIENCED RECENT SUBSTANTIAL OPERATING LOSSES AND MAY INCUR ADDITIONAL
OPERATING  LOSSES  IN  THE  FUTURE.


During  the fiscal years ended June 30, 2005 and 2004, we incurred net losses of
$4,356,519  and  $3,729,393,  respectively,  and experienced negative cash flows
from  operations  of $298,454 and $312,148, respectively. During the nine months
ended  March  31, 2006, we continued to experience negative operating results as

<PAGE>

we  reported  a net loss of $187,843 and had negative cash flows from operations
of  $250,270.  Our losses are related to three primary factors as follows: 1) We
are  not currently generating sufficient revenue to cover our fixed costs and we
believe  that  the break-even point from a cash flow standpoint may require that
we  fit  as  many  as  100 clients, up from 28 fitted in fiscal 2005; 2) We have
issued  a  significant  number  of  our  shares  of  common  stock to compensate
employees and consultants and those stock issuances have resulted in significant
charges  to  income,  costs  that  we  believe  will  not be recurring in future
periods.  In  the  event we are unable to increase our gross margins, reduce our
costs and/or generate sufficient additional revenues, we may continue to sustain
losses  and  our  business  plan  and financial condition will be materially and
adversely  affected.


WE  WILL  NEED  ADDITIONAL  FINANCING  TO  REPAY  THE  $1,500,000 IN CONVERTIBLE
DEBENTURES  WHICH  WE  AGREED  TO  SELL  IN  MAY  2006, AND GROW OUR OPERATIONS.

We  have  limited  financial resources. In May 2006, we sold certain third party
investors  an aggregate of $600,000 in Convertible Debentures and agreed to sell
them  an  additional  $900,000  in  Convertible  Debentures.  These  Convertible
Debentures  and  interest  may be converted into shares of our common stock at a
discount  to  market.  However,  if  they are not convertible into shares of our
common  stock,  until  our operating results improve, if at all, we will need to
obtain  outside  financing  to  fund  our  business  operations and to repay the
Convertible  Debentures.  If  we  are  forced to raise additional debt or equity
financing,  such  financing  may  be  dilutive  to our shareholders. The sale of
equity  securities,  including  the  conversion of outstanding amounts under the
Convertible  Debentures,  could  dilute our existing stockholders' interest, and
borrowings  from  third  parties  could  result  in  our assets being pledged as
collateral  and  loan  terms  that  would increase our debt service requirements
and/or  restrict  our  operations.  There  is  no assurance that capital will be
available from any of these sources, or, if available, upon terms and conditions
acceptable  to  us.  If we are unable to repay the Convertible Debentures and/or
raise  additional  capital  we  may be forced to curtail or abandon our business
operations.

WE  DEPEND  SUBSTANTIALLY UPON OUR PRESIDENT TO IMPLEMENT OUR BUSINESS PLAN, AND
LOSING  HER  SERVICES  WOULD  BE  INJURIOUS  TO  OUR  BUSINESS.

Our  success is substantially dependent upon the time, talent, and experience of
Linda Putback-Bean, our President and Chief Executive Officer. Mrs. Putback-Bean
possesses  a  comprehensive  knowledge  of  our  business and has built numerous
relationships  with  industry  representatives.  We have no employment agreement
with  Ms. Bean. While Mrs. Putback-Bean has no present plans to leave or retire,
her  loss would have a negative effect on our operating, marketing and financial
performance  if  we  are  unable  to  find  an adequate replacement with similar
knowledge and experience within our industry. We maintain key-man life insurance
in  the  amount  of $1,000,000 with respect to Mrs. Putback-Bean.  If we were to

<PAGE>

lose  the services of Mrs. Putback-Bean, our operations may suffer and we may be
forced  to  curtail  or  abandon  our  business  plan.

Additionally,  in order for us to expand, we must continue to improve and expand
the  level  of  expertise of our personnel and we must attract, train and manage
qualified  managers  and  employees  to  oversee  and manage our operations.  As
demand for qualified personnel is high, there is no assurance that we will be in
a  position to offer competitive compensation packages to attract or retain such
qualified  personnel  in  the  future.  If  we  are not able to obtain qualified
personnel  in  the  future,  if  our  operations  grow, of which there can be no
assurance,  we  may be forced to curtail or abandon our plans for future growth.

OUR BUSINESS DEPENDS UPON OUR ABILITY TO MARKET OUR SERVICES TO AND SUCCESSFULLY
FIT  CHILDREN  BORN  WITH  A  LIMB-LOSS.

Our  growth  prospects  depend upon our ability to identify and subsequently fit
the  small  minority  of  children  born  with  a  limb-loss.  The LLR&SP Report
(referred  to  in  our  "Description of Business" section herein) indicates that
approximately 26 out of every 100,000 live births in the United States result in
a  possible  need for prosthetic rehabilitation. In addition, our business model
demands  that we continue to successfully fit these widely dispersed infants and
children  each  year as they outgrow their prostheses. Because of the relatively
small  number  of  these children born each year and the fact that each child is
different,  there  is  can  be no assurance that we will be able to identify and
market  our  services  to  such  children  (or  the  parents  or doctors of such
children)  and/or  that  we  will be able to successfully fit such children with
prosthetic's  devices  if retained.  If we are unable to successfully market our
services  to the small number of children born with a limb-loss each year and/or
successfully  fit  such  children  if marketed to, our results of operations and
revenues  could  be  adversely  affected  and/or  may  not  grow.

DUE  TO  IMPROVED  HEALTHCARE, THERE COULD BE FEWER AND FEWER CHILDREN EACH YEAR
WITH  PRE-NATAL  LIMB-LOSS.

Since the majority of our first-time prospective fittings are assumed to be with
children  with a pre-natal limb-loss, breakthroughs in pre-natal safety regimens
and  treatment  could  end  the need for the vast majority of future fittings of
pediatric  prosthetics.  As  such,  there can be no assurance that the number of
children requiring our services will continue to grow in the future, and in fact
the  number  of  such  children  may  decline  as  breakthroughs  occur.

CHANGES IN GOVERNMENT REIMBURSEMENT LEVELS COULD ADVERSELY AFFECT OUR NET SALES,
CASH  FLOWS  AND  PROFITABILITY.

We derived a significant percentage of our net sales for the year ended June 30,
2005  and  for  the  nine  months  ended March 31, 2006, from reimbursements for
prosthetic  services  and  products  from  programs administered by Medicare, or
Medicaid.  Each  of  these  programs  sets  maximum  reimbursement  levels  for
prosthetic  services and products. If these agencies reduce reimbursement levels
for  prosthetic  services  and  products  in  the  future,  our  net sales could
substantially  decline.  Additionally,  reduced  government reimbursement levels
could result in reduced private payor reimbursement levels because fee schedules

<PAGE>

of  certain  third-party  payors  are  indexed  to  Medicare.  Furthermore,  the
healthcare  industry  is  experiencing  a  trend  towards  cost  containment  as
government and other third-party payors seek to impose lower reimbursement rates
and  negotiate  reduced  contract rates with service providers. This trend could
adversely  affect  our  net  sales.  Medicare  provides  for  reimbursement  for
prosthetic  products and services based on prices set forth in fee schedules for
ten regional service areas. Additionally, if the U.S. Congress were to legislate
modifications  to  the  Medicare  fee schedules, our net sales from Medicare and
other  payors  could  be  adversely  and  materially affected. We cannot predict
whether  any such modifications to the fee schedules will be enacted or what the
final  form of any modifications might be.  As such, modifications to government
reimbursement  levels  could  reduce  our  revenues and/or cause individuals who
would  have  otherwise  retained  our services to look for cheaper alternatives.

OUR INDEPENDENT AUDITOR HAS EXPRESSED DOUBT REGARDING OUR ABILITY TO CONTINUE AS
A  GOING  CONCERN.


Since  our  inception,  we have suffered significant net losses. During the nine
months  ended  March  31,  2006  and  2005,  we  had  net losses of $187,843 and
$4,312,262,  respectively  and net cash used by operating activities of $250,270
and  $216,252,  respectively.  Due  to  our  negative  financial results and our
current financial position, our independent auditor has raised substantial doubt
about  our  ability  to  continue  as  a  going  concern.


IF  WE  CANNOT  COLLECT  OUR  ACCOUNTS  RECEIVABLE  AND  EFFECTIVELY  MANAGE OUR
INVENTORY, OUR BUSINESS, RESULTS OF OPERATIONS, AND FINANCIAL CONDITION COULD BE
ADVERSELY  AFFECTED.

As  of  March  31,  2006,  our accounts receivable over 120 days old represented
approximately 39% of total accounts receivable outstanding. If we cannot collect
our  accounts  receivable,  our  business,  results of operations, and financial
condition  could  be  adversely  affected.

IF  WE  ARE  UNABLE  TO MAINTAIN GOOD RELATIONS WITH OUR SUPPLIERS, OUR EXISTING
PURCHASING  COSTS  MAY  BE  JEOPARDIZED,  WHICH COULD ADVERSELY AFFECT OUR GROSS
MARGINS.

Our gross margins have been, and will continue to be, dependent, in part, on our
ability  to  continue  to obtain favorable terms from our suppliers. These terms
may  be  subject  to  changes  in suppliers' strategies from time to time, which
could  adversely  affect  our  gross margins over time. The profitability of our
business  depends,  in  part,  upon  our ability to maintain good relations with
these  suppliers,  of  which  there  can  be  no  assurance.

WE  DEPEND  ON  THE CONTINUED EMPLOYMENT OF OUR TWO PROSTHETISTS WHO WORK AT OUR
HOUSTON  PATIENT-CARE FACILITY AND THEIR RELATIONSHIPS WITH REFERRAL SOURCES AND
PATIENTS.  OUR  ABILITY  TO  PROVIDE  PEDIATRIC  PROSTHETIC  SERVICES  AT  OUR

<PAGE>

PATIENT-CARE  FACILITY  WOULD  BE  IMPAIRED AND OUR NET SALES REDUCED IF WE WERE
UNABLE  TO  MAINTAIN  THESE  EMPLOYMENT  AND  REFERRAL  RELATIONSHIPS.

Our net sales would be reduced if either of our two (2) practitioners leaves us.
In  addition, any failure of these practitioners to maintain the quality of care
provided  or  to otherwise adhere to certain general operating procedures at our
facility,  or  among our Host Affiliates, or any damage to the reputation of any
of our practitioners could damage our reputation, subject us to liability and/or
significantly  reduce  our  net  sales.

WE  FACE  PERIODIC  REVIEWS,  AUDITS AND INVESTIGATIONS UNDER OUR CONTRACTS WITH
FEDERAL  AND  STATE  GOVERNMENT  AGENCIES,  AND  THESE AUDITS COULD HAVE ADVERSE
FINDINGS  THAT  MAY  NEGATIVELY  IMPACT  OUR  BUSINESS.

We  contract  with  various  federal  and state governmental agencies to provide
prosthetic  services.  Pursuant  to  these  contracts, we are subject to various
governmental  reviews,  audits  and investigations to verify our compliance with
the  contracts and applicable laws and regulations. Any adverse review, audit or
investigation  could  result  in:

   -   refunding  of  amounts  we  have been paid pursuant to our government
       contracts;
   -   imposition  of  fines,  penalties  and  other  sanctions  on  us;
   -   loss  of  our  right  to  participate  in  various  federal programs;
   -   damage  to  our  reputation  in  various  markets;  or
   -   material  and/or adverse effects on the business, financial condition
       and results  of  operations.

WE CURRENTLY ONLY HAVE A LIMITED NUMBER OF AUTHORIZED BUT UNISSUED SHARES, WHICH
MAY  CAUSE  US TO FACE PENALTIES IN CONNECTION WITH OUR INABILITY TO CONVERT OUR
DEBENTURES  INTO  COMMON  STOCK AT THE OPTION OF THE DEBENTURE HOLDERS AND/OR TO
ISSUE  SHARES OF COMMON STOCK IN CONNECTION WITH THE EXERCISE OF OUR OUTSTANDING
WARRANTS.

     As  of  June  29, 2006, we had 98,274,889 shares of common stock issued
and outstanding out of a total of 100,000,000 shares of common stock authorized,
leaving  us  the  ability  to  issue  only approximately 2,171,538 shares of our
common  stock. As a result, we do not have a sufficient number of authorized but
unissued shares to allow for the conversion of our outstanding Debentures by the
Debenture  holders  and/or the exercise of the Warrant. As a result, we may face
penalties  in connection with such conversions and/or exercises and/or be forced
to  repay  such Debentures in cash, which cash may not be available on favorable
terms,  if  at  all.  We  currently have plans to obtain shareholder approval to
increase  our  authorized  common stock in the future. If we do not increase our
authorized  shares in the future, we could face penalties in connection with our
inability to allow the Debenture holders to convert their Debentures into shares

<PAGE>

of common stock and/or to allow them to exercise their Warrants. These penalties
and/or  the  requirement  that  we  repay  the  Debentures  in cash could have a
material  adverse  effect  on  our  results  of  operations, working capital and
ability  to  pay  our  current  liabilities.  If  we  are unable to increase our
authorized  shares  in  the future, we could be forced to curtail and/or abandon
our  business  plan.

WE  HAVE  NEVER PAID A CASH DIVIDEND AND IT IS LIKELY THAT THE ONLY WAY YOU WILL
REALIZE  A  RETURN  ON  YOUR  INVESTMENT  IS  BY  SELLING  YOUR  SHARES.

We  have  never  paid  cash  dividends  on  any  of our securities. Our Board of
Directors  does  not anticipate paying cash dividends in the foreseeable future.
We  currently  intend  to  retain  future  earnings  to finance our growth. As a
result,  your  return  on  an investment in our stock will likely depend on your
ability  to  sell  our  stock  at  a profit, of which there can be no assurance.

WE  MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK IN THE FUTURE, WHICH COULD CAUSE
DILUTION  TO  OUR  THEN  EXISTING  SHAREHOLDERS.

We  may  seek  to raise additional equity capital in the future. Any issuance of
additional  shares  of  our  common  stock  will dilute the percentage ownership
interest of all our then shareholders and may dilute the book value per share of
our  common  stock,  which  would likely cause a decrease in value of our common
stock.

WE MAY ISSUE ADDITIONAL SHARES OF PREFERRED STOCK WHICH PREFERRED STOCK MAY HAVE
RIGHTS  AND  PREFERENCES  GREATER  THAN  OUR  COMMON  STOCK.

The  Board  of  Directors  has the authority to issue up to 10,000,000 shares of
Preferred Stock. As of May 9, 2006, 1,000,000 shares of the Series A Convertible
Preferred  Shares  have  been  issued.  Additional shares of preferred stock, if
issued,  could be entitled to preferences over our outstanding common stock. The
shares of preferred stock, when and if issued, could adversely affect the rights
of  the  holders of common stock, and could prevent holders of common stock from
receiving a premium for their common stock. An issuance of preferred stock could
result  in  a  class  of securities outstanding that could have preferences with
respect to voting rights and dividends and in liquidation over the common stock,
and  could  (upon conversion or otherwise) enjoy all of the rights of holders of
common  stock.  Additionally,  we  may  issue a series of preferred stock in the
future,  which  may  convert  into  common  stock,  which conversion would cause
immediate  dilution to our then shareholders.  The Board of Director's authority
to  issue preferred stock could discourage potential takeover attempts and could
delay or prevent a change in control through merger, tender offer, proxy contest
or  otherwise  by  making such attempts more difficult to achieve or more costly
and/or  otherwise  cause  the  value  of  our common stock to decrease in value.

<PAGE>

OUR  MANAGEMENT  CONTROLS  A  SIGNIFICANT  PERCENTAGE OF OUR CURRENT OUTSTANDING
COMMON  STOCK  AND  THEIR INTERESTS MAY CONFLICT WITH THOSE OF OUR SHAREHOLDERS.

As  of  June  29,  2006,  our  President  and  Chief  Executive  Officer, Linda
Putback-Bean  beneficially  owned  30,210,251  shares  of  common  stock  or
approximately 30.7% of our outstanding common stock. Additionally, Ms. Bean owns
900,000  shares of our Series A Convertible Preferred Stock which represents 90%
of  the  issued  and outstanding shares of preferred stock. Dan Morgan, our Vice
President/Chief Prosthetist owns 9,198,861 shares of our common stock as well as
the  remaining  100,000 shares of our Series A Convertible Preferred Stock which
represents  10%  of  the  Series A Convertible Preferred Stock. Thus, management
owns  100% of our Series A Convertible Preferred Stock. The Series A Convertible
Preferred  Stock  is  convertible on a one-to-one basis for our common stock but
has voting rights of 20-to-1, giving our management the right to vote a total of
59,409,112  shares of our voting shares, representing the 30,210,251 shares held
by  Ms.  Bean,  the 900,000 shares of Series A Convertible Preferred Stock which
has the right to vote 18,000,000 shares of common stock, the 9,198,861 shares of
common  stock held by Mr. Morgan, and the 100,000 shares of Series A Convertible
Preferred  Stock  which has the right to vote 20,000,000 shares of common stock,
for a total of a total of approximately 50.4% of our total voting power based on
117,828,462  voting shares, which includes the 97,828,462 shares of common stock
outstanding  and  the 20,000,000 shares which our Series A Convertible Preferred
Stock are able to vote. This concentration of a significant percentage of voting
power gives our management substantial influence over any matters that require a
shareholder  vote,  including,  without  limitation,  the  election of Directors
and/or  approving or preventing a merger or acquisition, even if their interests
may  conflict with those of other shareholders. Such control could also have the
effect of delaying or preventing a change in control or otherwise discouraging a
potential  acquirer  from  attempting  to  obtain  control  of the Company. Such
control  could  have a material adverse effect on the market price of our common
stock  or  prevent  our  shareholders  from  realizing  a  premium over the then
prevailing  market  prices  for  their  shares  of  common  stock.

THE  TRADING  PRICE  OF  OUR  COMMON  STOCK  ENTAILS  ADDITIONAL  REGULATORY
REQUIREMENTS,  WHICH  MAY  NEGATIVELY  AFFECT  SUCH  TRADING  PRICE.

Our  common  stock  is  currently listed on the Pink Sheets, an over-the-counter
electronic  quotation  service,  which  stock  currently  trades below $4.00 per
share.  We  anticipate the trading price of our common stock will continue to be
below  $4.00  per  share. As a result of this price level, trading in our common
stock  would  be  subject to the requirements of certain rules promulgated under
the  Securities  Exchange  Act  of  1934, as amended (the "Exchange Act"). These
rules  require  additional  disclosure  by broker-dealers in connection with any
trades  generally  involving  any  non-NASDAQ  equity security that has a market
price  of  less  than $4.00 per share, subject to certain exceptions. Such rules
require  the  delivery,  before  any  penny  stock  transaction, of a disclosure
schedule  explaining  the penny stock market and the risks associated therewith,
and  impose various sales practice requirements on broker-dealers who sell penny
stocks  to  persons  other  than  established customers and accredited investors
(generally  institutions).  For  these  types of transactions, the broker-dealer

<PAGE>

must  determine the suitability of the penny stock for the purchaser and receive
the  purchaser's  written consent to the transaction before sale. The additional
burdens  imposed  upon  broker-dealers  by  such  requirements  may  discourage
broker-dealers  from  effecting  transactions  in  our  common  stock.  As  a
consequence, the market liquidity of our common stock could be severely affected
or  limited  by  these  regulatory  requirements.

IN  THE  FUTURE,  WE  WILL  INCUR  SIGNIFICANT  INCREASED  COSTS  AS A RESULT OF
OPERATING  AS  A  FULLY  REPORTING  COMPANY UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME
TO  NEW  COMPLIANCE  INITIATIVES.

Moving  forward, we anticipate incurring significant legal, accounting and other
expenses  in connection with the filing of our Form 10-SB and our current status
as  a  fully  reporting  public  company.  The  Sarbanes-Oxley  Act of 2002 (the
"Sarbanes-Oxley  Act")  and  new  rules subsequently implemented by the SEC have
imposed  various  new  requirements  on  public  companies,  including requiring
changes  in  corporate  governance  practices.  As  such, and as a result of the
filing of our Form 10-SB to become a publicly filing company, our management and
other  personnel  will  need to devote a substantial amount of time to these new
compliance  initiatives. Moreover, these rules and regulations will increase our
legal  and  financial  compliance  costs  and  will  make  some  activities more
time-consuming  and  costly.  For  example,  we  expect  these  new  rules  and
regulations  to  make  it  more  difficult  and  more expensive for us to obtain
director  and  officer  liability  insurance,  and  we  may be required to incur
substantial  costs  to  maintain  the same or similar coverage. In addition, the
Sarbanes-Oxley  Act  requires,  among  other  things, that we maintain effective
internal  controls  for  financial  reporting  and  disclosure  of  controls and
procedures. In particular, commencing in fiscal 2007, we must perform system and
process evaluation and testing of our internal controls over financial reporting
to  allow  management  and  our independent registered public accounting firm to
report  on  the effectiveness of our internal controls over financial reporting,
as  required  by  Section  404  of  the  Sarbanes-Oxley Act. Our testing, or the
subsequent  testing  by  our  independent registered public accounting firm, may
reveal  deficiencies  in our internal controls over financial reporting that are
deemed  to  be material weaknesses. Our compliance with Section 404 will require
that  we  incur substantial accounting expense and expend significant management
efforts.  We  currently do not have an internal audit group, and we will need to
hire  additional  accounting and financial staff with appropriate public company
experience  and  technical accounting knowledge. Moreover, if we are not able to
comply  with the requirements of Section 404 in a timely manner, or if we or our
independent  registered  public  accounting  firm identifies deficiencies in our
internal  controls  over  financial  reporting  that  are  deemed to be material
weaknesses, the market price of our stock could decline, and we could be subject
to sanctions or investigations by the SEC or other regulatory authorities, which
would  require  additional  financial  and  management  resources.

GOVERNMENT  REGULATION

We  are  subject  to  a  variety  of  federal,  state  and  local  governmental
regulations.  We  make  every  effort  to comply with all applicable regulations
through  compliance  programs,  manuals  and  personnel  training. Despite these

<PAGE>

efforts,  we  cannot  guarantee  that we will be in absolute compliance with all
regulations  at  all  times.  Failure  to  comply  with  applicable governmental
regulations  may  result  in significant penalties, including exclusion from the
Medicare  and  Medicaid  programs, which could have a material adverse effect on
our  business.  In  November  2003,  Congress  initiated  a three-year freeze on
reimbursement  levels  for all orthotic and prosthetic services starting January
1,  2004.  The  effect  of  this legislation has been a downward pressure on our
gross  profit;  however,  we  have  initiated  certain purchasing and efficiency
programs  which  we  believe  will  minimize  such  effects.

HIPAA  Violations.  The  Health  Insurance  Portability  and  Accountability Act
("HIPAA")  provides for criminal penalties for, among other offenses, healthcare
fraud,  theft  or  embezzlement  in connection with healthcare, false statements
related  to  healthcare  matters,  and  obstruction of criminal investigation of
healthcare  offenses.  Unlike the federal anti-kickback laws, these offenses are
not  limited  to  federal healthcare programs. In addition, HIPAA authorizes the
imposition  of  civil  monetary   penalties   where  a  person  offers  or  pays
remuneration  to any individual eligible for benefits under a federal healthcare
program  that  such  person  knows  or  should  know  is likely to influence the
individual  to  order  or  receive  covered  items or services from a particular
provider,   practitioner  or  supplier.   Excluded   from   the   definition  of
"remuneration"  are  incentives  given to individuals to promote the delivery of
preventive  care  (excluding  cash  or  cash equivalents), incentives of nominal
value  and  certain  differentials  in  or waivers of coinsurance and deductible
amounts.  These  laws  may  apply  to  certain  of  our  operations. Our billing
practices  could  be  subject  to  scrutiny  and  challenge  under  HIPAA.

Physician Self-Referral Laws. We are also subject to federal and state physician
self-referral  laws.  With  certain  exceptions,  the  federal Medicare/Medicaid
physician  self-referral  law  (the  "Stark II" law) (Section 1877 of the Social
Security  Act)  prohibits  a  physician  from  referring  Medicare  and Medicaid
beneficiaries  to  an  entity  for  "designated  health  services"  -  including
prosthetic  and  orthotic  devices  and  supplies  -  if  the  physician  or the
physician's  immediate  family  member  has  a  financial  relationship with the
entity. A financial relationship includes both ownership or investment interests
and  compensation  arrangements.  A violation occurs when any person presents or
causes  to  be presented to the Medicare or Medicaid program a claim for payment
in violation of Stark II.  With respect to ownership/investment interests, there
is an exception under Stark II for referrals made to a publicly traded entity in
which the physician has an investment interest if the entity's shares are traded
on  certain  exchanges,  including  the  New  York  Stock  Exchange,  and  had
shareholders' equity exceeding $75.0 million for its most recent fiscal year, or
as  an  average  during  the  three  previous  fiscal  years.

With  respect  to compensation arrangements, there are exceptions under Stark II
that  permit  physicians  to  maintain  certain  business  arrangements, such as
personal  service  contracts  and  equipment  or  space  leases, with healthcare
entities  to  which  they  refer.  We believe that our compensation arrangements
comply  with Stark II, either because the physician's relationship fits within a
regulatory  exception or does not generate prohibited referrals. Because we have
financial  arrangements  with  physicians  and  possibly  their immediate family
members, and because we may not be aware of all those financial arrangements, we
must  rely  on  physicians  and  their  immediate family members to avoid making

<PAGE>

referrals  to us in violation of Stark II or similar state laws. If, however, we
receive  a prohibited referral without knowing that the referral was prohibited,
our  submission  of  a  bill  for services rendered pursuant to a referral could
subject  us  to  sanctions  under  Stark  II  and  applicable  state  laws.

Certification  and  Licensure. Most states do not require separate licensure for
practitioners.  However,  several  states  currently require practitioners to be
certified  by  an  organization  such  as  the American Board for Certification.

The  American  Board  for  Certification  Orthotics  and  Prosthetics conducts a
certification  program  for  practitioners  and  an  accreditation  program  for
patient-care  centers. The minimum requirements for a certified practitioner are
a  college  degree,  completion  of  an accredited academic program, one to four
years of residency at a patient-care center under the supervision of a certified
practitioner   and  successful   completion  of  certain  examinations.  Minimum
requirements  for  an  accredited  patient-care center include the presence of a
certified  practitioner  and specific plant and equipment requirements. While we
endeavor  to comply with all state licensure requirements, we cannot assure that
we will be in compliance at all times with these requirements. Failure to comply
with  state  licensure requirements could result in civil penalties, termination
of  our Medicare agreements, and repayment of amounts received from Medicare for
services  and  supplies  furnished  by  an  unlicensed  individual  or  entity.

Confidentiality  and  Privacy Laws. The Administrative Simplification Provisions
of  HIPAA,  and  their implementing regulations, set forth privacy standards and
implementation  specifications concerning the use and disclosure of individually
identifiable  health information (referred to as "protected health information")
by  health  plans,  healthcare  clearinghouses  and  healthcare  providers  that
transmit  health  information electronically in connection with certain standard
transactions  ("Covered  Entities").  HIPAA further requires Covered Entities to
protect  the  confidentiality  of health information by meeting certain security
standards  and  implementation specifications. In addition, under HIPAA, Covered
Entities  that  electronically  transmit  certain  administrative  and financial
transactions  must  utilize  standardized  formats  and  data  elements  ("the
transactions/code  sets  standards"). HIPAA imposes civil monetary penalties for
non-compliance,  and,  with  respect  to  knowing  violations  of  the  privacy
standards,  or  violations  of such standards committed under false pretenses or
with  the  intent  to  sell,  transfer  or  use individually identifiable health
information  for commercial advantage, criminal penalties. The privacy standards
and  transactions/code  sets  standards  went  into effect on April 16, 2003 and
required  compliance  by  April  21, 2005. We believe that we are subject to the
Administrative Simplification Provisions of HIPAA and have taken steps necessary
to  meet  applicable standards and implementation specifications; however, these
requirements  have  had  a  significant  effect on the manner in which we handle
health  data  and  communicate  with  payors.

In  addition,  state  confidentiality  and  privacy laws may impose civil and/or
criminal  penalties  for  certain  unauthorized  or other uses or disclosures of
individually identifiable health information. We are also subject to these laws.
While  we  endeavor  to  assure  that our operations comply with applicable laws
governing  the  confidentiality and privacy of health information, we could face
liability in the event of a use or disclosure of health information in violation
of  one  or  more  of  these  laws.

<PAGE>

ITEM 3.   CONTROLS AND PROCEDURES

(a)  Evaluation  of  disclosure  controls  and  procedures.  Our Chief Executive
     Officer and Principal Financial Officer, after evaluating the effectiveness
     of  our  "disclosure controls and procedures" (as defined in the Securities
     Exchange  Act  of  1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the
     period  covered  by  this  amended  Quarterly  Report  on  Form 10-QSB (the
     "Evaluation  Date"),  have  concluded  that  as of the Evaluation Date, our
     disclosure controls and procedures were not effective to provide reasonable
     assurance  that  information we are required to disclose in reports that we
     file  or  submit  under the Exchange Act is recorded, processed, summarized
     and  reported  within  the  time  periods  specified  in the Securities and
     Exchange  Commission  rules  and  forms,  and  that  such  information  is
     accumulated  and  communicated  to  our  management,  including  our  Chief
     Executive  Officer  and  Chief  Financial Officer, as appropriate, to allow
     timely  decisions  regarding  required  disclosure.  Our  controls were not
     effective,  as  we  failed  to  properly  account  for  certain  consulting
     agreements  disclosed  herein,  failed  to  properly  report the accrual of
     receivables  and  the  presentation  of  sales through Host-Affiliates on a
     gross  basis, failed to properly account for certain derivative liabilities
     included herein, failed to properly account for the return and cancellation
     of  certain  shares  of  common  stock  by a consultant of the company, and
     failed  to  properly show gross revenue and cost of sales in this Report on
     Form 10-QSB as originally filed. Additionally, we failed to timely file our
     original Quarterly Report on Form 10-QSB for the quarter ended December 31,
     2005,  as well as for the quarter ended March 31, 2006. Moving forward, our
     management  believes  that  as  we  become  more  familiar  and  gain  more
     experience  in  completing  our  periodic filings and providing our outside
     auditors with the required financial information on a timely basis, we will
     be  able  to file our periodic reports within the time periods set forth by
     the  Securities  and  Exchange  Commission.

     Subsequent to the year ended June 30, 2006, our management has undertaken a
concerted  effort  to  spend  the appropriate time and resources to complete our
financial  statements  and disclosures in our periodic and annual reports within
the time periods set forth by the Commission. Our management hopes to accomplish
this  goal  by  putting  in place stricter controls and procedures and beginning
management's  dialogue  with  our  inside  and outside accountants regarding our
periodic  filings  at an earlier stage in the review and/or audit process, which
our management believes will allow us to timely file our periodic reports moving
forward.

(b)  Changes  in  internal  control  over  financial  reporting.  There  were no
     significant changes in our internal control over financial reporting during
     our most recent fiscal quarter that materially affected, or were reasonably
     likely to materially affect, our internal control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     We are not aware of any pending or threatened legal proceeding to which we
are a party.

ITEM 2.  CHANGES IN SECURITIES

In  July  2005,  we sold an aggregate of 2,500,000 free trading shares of common
stock  to three individuals for aggregate consideration of $125,000 or $0.05 per
share.  We claim an exemption from registration for the above issuances pursuant
to  Rule  504  of  the  Securities  Act  of  1933.

In  August  2005,  we  sold 1,000,000 free trading shares of common stock to one
individual  for  $50,000  or  $0.05  per  share.  We  claim  an  exemption  from
registration  for  the above issuance pursuant to Rule 504 of the Securities Act
of  1933.

In  September  2005,  we  issued an aggregate of 10,000,000 restricted shares of
common  stock  to  four  consultants (which included 2,000,000 shares which were
later  cancelled)  in  connection  with  their  entry into marketing agreements,
whereby  they  agreed to market our prosthetics services.  We claim an exemption
from  registration  afforded  by Section 4(2) of  the Securities Act of 1933 for
the  above  issuances,  since  the  foregoing issuances did not involve a public
offering,  the  recipients  took the shares for investment and not resale and we
took  appropriate  measures  to  restrict  transfer.  No  underwriters or agents
were  involved  in  the  foregoing  issuances  and  we  paid  no  underwriting
discounts  or  commissions.

<PAGE>

In  September 2005, our Chief Executive Officer and Director, Linda Putback-Bean
cancelled  4,000,000  of the shares which she held, which shares were previously
issued  to  Mrs.  Putback-Bean  for  services  in  2005, so that we would have a
sufficient  number  of  shares  of  authorized  but unissued common stock to pay
consultants  in  shares  of  our  common  stock.  It is anticipated that once we
increase  our  authorized  shares  of  common  stock,  Mrs. Putback-Bean will be
reissued  the  4,000,000  shares  of common stock which she previously agreed to
cancel.

In December 2005, we sold 1,000,000 shares of common stock to one individual for
$35,000 or $0.035 per share. We claim an exemption from registration afforded by
Section  4(2)  of  the  Securities Act of 1933 for the above issuance, since the
foregoing  issuance  did not involve a public offering, the recipients  took the
shares  for  investment  and  not  resale  and  we took appropriate measures  to
restrict  transfer.  No  underwriters  or  agents were involved in the foregoing
issuance  and  we  paid  no  underwriting  discounts  or  commissions.

In  January  2006,  we sold 200,000 shares of common stock to one individual for
$10,000 or $0.05 per share.  We claim an exemption from registration afforded by
Section  4(2)  of  the  Securities Act of 1933 for the above issuance, since the
foregoing  issuance  did not involve a public offering, the recipients  took the
shares  for  investment  and  not  resale  and  we took appropriate measures  to
restrict  transfer.  No  underwriters  or  agents were involved in the foregoing
issuance  and  we  paid  no  underwriting  discounts  or  commissions.

In  March 2006, we issued 250,000 shares of common stock to Global in connection
and  in  consideration for Global's entry into the Service Agreement and plan to
issue  Global  up  to  an  additional  1,750,000  over  the  life of the Service
Agreement, as described above.  We claim an exemption from registration afforded
by Section 4(2) of  the Securities Act of 1933 for the above issuance, since the
foregoing  issuance  did  not involve a public offering, the recipient  took the
shares  for  investment  and  not  resale  and  we took appropriate measures  to
restrict  transfer.  No  underwriters  or  agents were involved in the foregoing
issuance  and  we  paid  no  underwriting  discounts  or  commissions.

                                SUBSEQUENT EVENTS
                                -----------------

On  May  30, 2006, we entered into a Securities Purchase Agreement, with various
third  parties (the "Purchasers") to sell an aggregate of $1,500,000 in Callable
Secured  Convertible Notes, which bear interest at the rate of 6% per annum (the
"Debentures"),  of  which an aggregate of $600,000 in Debentures was sold to the
Purchasers  on  May  30,  2006,  and the remaining $900,000 is to be sold in two
separate  tranches,  $400,000  on  or  around  the  date  we file a registration
statement  to register the shares of common stock the Debentures are convertible
into,  and  $500,000  upon  the  date  such  registration  statement is declared
effective  by  the SEC. We claim an exemption from registration provided by Rule
506  of  Regulation  D  for  the  above  issuances.

In  connection  with  the  sale  of the Debentures, we granted the various third
party  Purchasers Stock Purchase Warrants to purchase an aggregate of 50,000,000


<PAGE>

shares  of  our  common  stock  at  an  exercise price of $0.10 per share, which
warrants  expire  if  unexercised  on  May  30, 2013. We claim an exemption from
registration  provided  by  Rule  506  of  Regulation  D for the issuance of the
warrants.

We  also  agreed  to grant a finder, Lionheart Associates, LLC doing business as
Fairhills  Capital  ("Lionheart"), a finder's fee in connection with the funding
which  included  warrants to purchase up to 2,000,000 shares of our common stock
at  an  exercise  price  of  $0.10 per share.   The Lionheart warrants expire if
unexercised  on  May 30, 2013.  We claim an exemption from registration afforded
by  Section  4(2) of the Securities Act of 1933, since the foregoing transaction
did  not involve a public offering, the recipient had access to information that
would  be  included  in a registration statement, took the shares for investment
and  not  resale  and  we  took  appropriate   measures  to  restrict  transfer.

Additionally,  in  connection  with  the  closing of the sale of the Debentures,
described above, we agreed to grant Geoff Eiten, as a finder's fee in connection
with  the  funding,  3,000,000  warrants to purchase shares of our common stock.
The  3,000,000  warrants  are  exercisable  into  shares  of our common stock as
follows,  1,000,000  warrants  are  exercisable  at  $0.10  per share, 1,000,000
warrants  are  exercisable  at  $0.20  per  share,  and  1,000,000  warrants are
exercisable  at  $0.30  per  share.  The warrants granted to Mr. Eiten expire if
unexercised on May 8, 2010.  We claim an exemption from registration afforded by
Section  4(2) of the Securities Act of 1933, since the foregoing transaction did
not  involve  a  public  offering,  the recipient had access to information that
would  be  included  in a registration statement, took the grant for investment
and  not  resale  and  we  took  appropriate  measures  to  restrict  transfer.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     a)     Exhibits

     Exhibit No.      Description

     3.1(1)           Articles of Incorporation
                      (Pediatric Prosthetics, Inc.-Texas) dated
                      September 15, 2003

     3.2(1)           Amendment to Articles of Incorporation
                      Grant Douglas Acquisition Corp. (October 31, 2003)

     3.3(1)           Amendment to Articles of Incorporation
                      Grant Douglas Acquisition Corp. (November 7, 2003)
                      (Series A Convertible Preferred Stock Designation of
                      Rights

<PAGE>

     4.1(1)           Shareholder  Voting  Agreement  dated  October  31,  2003
                      dated  October  10,  2003

     10.2*            Settlement Agreement with Secured Releases, LLC

     10.3(2)          Securities  Purchase  Agreement

     10.4(2)          Callable Secured Convertible Note with AJW Offshore, Ltd.

     10.5(2)          Callable Secured Convertible Note with AJW Partners,  LLC

     10.6(2)          Callable Secured Convertible Note with AJW Qualified
                      Partners, LLC

     10.7(2)          Callable Secured Convertible Note with New Millennium
                      Capital Partners  II,  LLC

     10.8(2)          Stock  Purchase  Warrant  with  AJW  Offshore,  Ltd.

     10.9(2)          Stock  Purchase  Warrant  with  AJW  Partners,  LLC

    10.10(2)          Stock  Purchase Warrant with  AJW Qualified Partners, LLC

    10.11(2)          Stock Purchase Warrant with New Millennium
                      Capital Partners II, LLC

    10.12(2)          Security  Agreement

    10.13(2)          Intellectual  Property  Security  Agreement

    10.14(2)          Registration Rights Agreement


    31.1*             Certificate of the Chief Executive
                      Officer pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002

    31.2*             Certificate of the Principal Financial
                      Officer pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002

    32.1*             Certificate of the Chief Executive
                      Officer pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002

<PAGE>

    32.2*             Certificate of the Principal Financial
                      Officer pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002

* Filed Herein.

(1) Filed as exhibits to our Form 10-SB filed with the Commission on February
13, 2006 and incorporated by reference herein.

(2) Filed as exhibits to our Report on Form 8-K, filed with the Commission on
June 2, 2006, and incorporated herein by reference.

b)     REPORTS ON FORM 8-K

     The  Company filed no reports on Form 8-K during the quarter for which this
report  is  filed.  The  Company  filed one report on Form 8-K subsequent to the
period  covered  by  this report, on June 2, 2006, to report the Company's entry
into  the  Securities  Purchase  Agreement, Debentures and Warrant, as described
above  under  "Recent  Events."


                                   SIGNATURES

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

                                   PEDIATRIC PROSTHETICS, INC.

DATED: December 22, 2006


                                   By: /s/ Kenneth W. Bean
                                      ---------------------------
                                      Kenneth W. Bean
                                      Principal Financial Officer