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

                                   FORM 10-QSB

(Mark One)

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

                For the quarterly period ended September 30, 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 of 1934 during the past 12 months (or
for  such shorter period that the registrant was required to file such reports),
and  (2)  has been subject to such filing requirements for the past 90 days.
Yes [X]  No  [ ]

     As of November 15, 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].

        Traditional Small Business Disclosure Format Yes [ ] No [X]

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PEDIATRIC PROSTHETICS, INC.
TABLE OF CONTENTS


                                                                    PAGE

Financial Statements

     Unaudited Balance Sheets as of September 30, 2006
       and June 30, 2006                                             2

     Unaudited Statements of Operations for the Three Months Ended
       September 30, 2006 and 2005                                   3

     Unaudited Statement of changes in Stockholders' Deficit for the
       Three Months Ended September 30, 2006                         4

     Unaudited Statements of Cash Flows for the Three Months Ended
       September 30, 2006 and 2005                                   5

     Notes To Financial Statements                                   6

<PAGE>

<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED BALANCE SHEETS
September 30, 2006 and June 30, 2006

                                                                          September 30,          June 30,
                                                                              2006                 2006
                                                                          -------------        -----------
<S>                                                                             <C>                 <C>
ASSETS
Current assets:
   Cash and cash equivalents                                              $      54,466        $   274,641
   Trade accounts receivable, net                                               309,379            268,642
   Prepaid expenses and other current assets                                     11,825             13,396
   Current portion of deferred financing cost, net                              119,665            109,693
                                                                          -------------        -----------
       Total current assets                                                     495,335            666,372

Furniture and equipment, net                                                     64,992             59,138
Deferred financing cost                                                         199,446            239,334
                                                                          -------------        -----------
          Total assets                                                    $     759,773        $   964,844
                                                                          =============        ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
   Trade accounts payable                                                 $     123,361        $   143,167
   Accrued liabilities                                                          284,230            257,680
   Current portion of convertible debt, net of discount of $0 and $25,000
   at September 30, 2006 and  June 30, 2006, respectively                        85,000             60,000
   Due to related party                                                             500                500
   Derivative financial instruments                                           3,916,825          5,119,365
                                                                          -------------        -----------
Total current liabilities                                                     4,409,916          5,580,712

Convertible debt, net of discount of $569,486 and $592,716 at September
   September 30, 2006 and June 30, 2006, respectively                            30,514              7,284
Deferred rent                                                                    11,871             12,575
                                                                          -------------        -----------
         Total liabilities                                                    4,452,301          5,600,571
                                                                          -------------        -----------
Commitments and contingencies

Stockholders' deficit:
   Preferred stock, par value $0.001; authorized 10,000,000
      shares; issued and outstanding 1,000,000 shares                             1,000              1,000
      at September 30, 2006 and June 30, 2006
   Common stock, par value $0.001; authorized 100,000,000
      shares; issued and outstanding  98,274,889                                 98,275             98,275
      at September 30, 2006 and June 30, 2006
   Additional paid-in capital                                                 8,025,446          7,764,327
   Accumulated deficit                                                      (11,817,249)       (12,499,329)
                                                                          -------------        -----------
          Total stockholders' deficit                                        (3,692,528)        (4,635,727)
                                                                          -------------        -----------
              Total liabilities and stockholders' deficit                 $     759,773        $   964,844
                                                                          =============        ===========
</TABLE>




The accompanying notes are an integral part of these financial statements

                                     -2-
<PAGE>


<TABLE>
<CAPTION>


PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2006 and 2005


                                                                                     2005
                                                                    2006          (Restated)
<S>                                                                 <C>              <C>
                                                                 -----------      ------------

Revenue                                                          $   195,230      $    104,048
                                                                 -----------      ------------
Operating expenses:
   Cost of sales, except for items stated separately below            76,001            37,216
   Selling, general and administrative expenses                      543,239           168,110
   Depreciation expense                                                5,959             4,688
                                                                 -----------      ------------
     Total operating expenses                                        625,199           210,014
                                                                 -----------      ------------
         Loss from operations                                       (429,969)         (105,966)

Other income and (expenses):
   Interest income                                                         1                 -
   Interest expense                                                  (90,492)           (6,031)
   Change in value of derivative financial instruments             1,202,540                 -
                                                                 -----------      ------------
       Total other income (expense)                                1,112,049            (6,031)
                                                                 -----------      ------------
             Net income (loss)                                   $   682,080      $   (111,997)
                                                                 ===========      ============
Net income (loss) per common share - basic and diluted           $      0.01      $      (0.00)
                                                                 ===========      ============
Weighted average common shares outstanding - basic and diluted    98,274,889        91,758,887

</TABLE>

The accompanying notes are an integral part of these financial statements

                                     -3-
<PAGE>

<TABLE>
<CAPTION>


PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Three Months Ended September 30, 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, 2006        1,000,000     $    1,000    98,274,889      $   98,275   7,764,327     $(12,499,329)  $(4,635,727)

Amortization of stock-based
     compensation                       -              -             -               -     261,119                -       261,119

Net income                              -              -             -               -           -          682,080       682,080
                                ---------      ---------    ----------       ---------   ---------      -----------    ----------
Balance at September 30, 2006   1,000,000      $   1,000    98,274,889       $  98,275   8,025,446     $(11,817,249)  $(3,692,528)
                                =========      =========    ==========       =========   =========      ===========    ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                     -4-
<PAGE>

<TABLE>
<CAPTION>


PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2006 and 2005


                                                                                         2005
                                                                        2006          (Restated)
                                                                  ---------------   --------------
<S>                                                                      <C>              <C>

Cash Flows From Operating Activities
  Net income (loss)                                               $       682,080   $     (111,997)
  Adjustments to reconcile net income (loss) to net cash used by
     operating activities
     Depreciation expense                                                   5,959            4,688
     Provision for doubtful accounts                                        9,784            7,933
     Stock-based compensation                                             261,116            2,350
     Amortization of debt issue costs                                      78,147                -
     Change in value of derivative financial instruments               (1,202,540)               -
     Deferred rent                                                           (704)               -
     Changes in operating assets and liabilities:
        Accounts receivable                                               (50,521)          (7,586)
        Prepaid expenses and other current assets                           1,571              924
        Accounts payable                                                  (19,804)           3,012
        Accrued liabilities and other                                      26,550           (4,164)
                                                                  ---------------   --------------
            Net cash used by operating activities                        (208,362)        (104,840)
                                                                  ---------------   --------------
Cash Flows From Investing Activities
  Purchase of furniture and equipment                                     (11,813)               -
                                                                  ---------------   --------------
            Net cash used by investing activities                         (11,813)               -
                                                                  ---------------   --------------
Cash Flows From Financing Activities:
   Proceeds from sale of common stock                                           -          175,000
                                                                  ---------------   --------------
Net cash provided by financing activities                                       -          175,000
                                                                  ---------------   --------------
Net increase in cash and cash equivalents                                (220,175)          70,160

Cash and cash equivalents, beginning of period                            274,641           29,818
                                                                  ---------------   --------------
Cash and cash equivalents, end of period                          $        54,466   $       99,978
                                                                  ===============   ==============
Supplemental Disclosure of Cash Flow Information
  Cash paid for interest expense                                  $        78,942   $        6,031
  Cash paid for income taxes                                                    -                -

</TABLE>


The accompanying notes are an integral part of these financial statements


                                     -5-
<PAGE>

PEDIATRIC PROSTHETICS, INC.
NOTES TO FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES
     ------------------------------------------------------

     GENERAL

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

     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.

     INTERIM  FINANCIAL  STATEMENTS

     The  unaudited  condensed  financial  statements  included herein have been
     prepared  by  Pediatirc  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 Pediatric  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
     Pediatirc's 2006 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,  2007.


2.   GOING CONCERN CONSIDERATIONS
     ----------------------------

     Since  its  inception,  Pediatric  has  suffered significant net losses and
     has  been  dependent  on outside investors to provide the cash resources to
     sustain  its  operations.  During  the  years ended June 30, 2006 and 2005,
     Pediatric  reported  net losses of $4,413,417 and $4,356,519, respectively,
     and  negative  cash  flows  from  operations  of $436,226  and  $298,454,
     respectively.  For  the  three  months  ended  September 30, 2006 Pediatric
     reported  net income of $682,080 and negative cash flows from operations of
     $208,362.

     Although,  Pediatric  has  net  income  of  $682,080  for  the three months
     ended  September 30, 2006, such net income was the result of changes in the
     value  of  derivative  financial  instruments  and  not  the result of core
     operations.  Negative  operating  results  have  produced a working capital
     deficit  of  $3,914,581  and  a  stockholders'  deficit  of  $3,692,528 at
     September  30, 2006. Pediatric's negative financial results and its current
     financial  position  raise  substantial  doubt about Pediatric's ability to
     continue  as  a  going concern. The financial statements do not reflect any
     adjustments  relating  to the recoverability and classification of recorded
     asset amounts or liability amounts that might be necessary should Pediatric
     be  unable  to  continue  in  existence.

                                     -6-
<PAGE>

PEDIATRIC PROSTHETICS, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS


2.   GOING  CONCERN  CONSIDERATIONS,  CONTINUED
     ------------------------------------------

     Pediatric  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  Pediatric,  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.

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

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

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

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


3.   RESTATEMENT
     -----------

     The  accompanying  September  30,  2005  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          $    196,788
     Change in current assets related to
        Receivables from host affiliates                   71,146
        Increase in allowance for doubtful
              accounts                                    (44,885)
                                                     ------------
     Current assets, as restated                     $    223,049
                                                     ============
     Stockholders' deficit, as previously reported   $   (784,326)
     Change in stockholders' deficit related to
        change in net loss                                596,261
                                                     ------------
     Stockholders' deficit, as restated              $   (188,065)
                                                     ============

                                      -9-
<PAGE>

PEDIATRIC PROSTHETICS, INC.
NOTES TO FINANCIAL STATEMENTS


3.     RESTATEMENT, CONTINUED
       ----------------------

     STATEMENT OF OPERATIONS


     Revenue, as previously reported                 $    112,215
     Change in revenue related to billings by
          Host affiliates                                  (8,167)
                                                     ------------

     Revenue, as restated                            $    104,048
                                                     ============
     Operating expenses, as previously reported      $    777,667
     Change in operating expenses related to
          reduction of stock-based
          compensation for amounts not yet
          earned by the service providers                (567,653)
                                                     ------------
     Operating expenses, as restated                 $    210,014
                                                     ============
     Loss from operations, as previously reported    $   (665,452)
                                                     ============
     Loss from operations, as restated                   (105,966)
                                                     ============
     Net loss, as previously reported                $   (671,483)
                                                     ============
     Net loss, as restated                           $   (111,997)
                                                     ============

The restatement's impact on the reported net loss per share for the three months
ended September 30, 2005 was $0.01.

                                      -10-
<PAGE>

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

ALL  STATEMENTS  IN  THIS DISCUSSION THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING
STATEMENTS  WITHIN  THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934,  AS AMENDED. STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT OTHERWISE INCLUDE
THE  WORDS  "BELIEVES",  "EXPECTS",  "ANTICIPATES",  "INTENDS",  "PROJECTS",
"ESTIMATES", "PLANS", "MAY INCREASE", "MAY FLUCTUATE" AND SIMILAR EXPRESSIONS OR
FUTURE  OR  CONDITIONAL  VERBS  SUCH AS "SHOULD", "WOULD", "MAY" AND "COULD" ARE
GENERALLY  FORWARD-LOOKING  IN  NATURE  AND  NOT  HISTORICAL  FACTS.  THESE
FORWARD-LOOKING  STATEMENTS  WERE  BASED  ON  VARIOUS  FACTORS  AND WERE DERIVED
UTILIZING  NUMEROUS IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD
CAUSE  ACTUAL  RESULTS  TO  DIFFER  MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS.  FORWARD-LOOKING  STATEMENTS  INCLUDE THE INFORMATION CONCERNING OUR
FUTURE FINANCIAL PERFORMANCE, BUSINESS STRATEGY, PROJECTED PLANS AND OBJECTIVES.
THESE  FACTORS  INCLUDE,  AMONG  OTHERS,  THE  FACTORS SET FORTH BELOW UNDER THE
HEADING  "RISK  FACTORS." ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN
THE  FORWARD-LOOKING  STATEMENTS  ARE  REASONABLE,  WE  CANNOT  GUARANTEE FUTURE
RESULTS,  LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. MOST OF THESE FACTORS
ARE DIFFICULT TO PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. WE ARE
UNDER  NO OBLIGATION TO PUBLICLY UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS TO
REFLECT  EVENTS  OR  CIRCUMSTANCES  AFTER  THE  DATE  HEREOF  OR  TO REFLECT THE
OCCURRENCE  OF  UNANTICIPATED  EVENTS.  READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE  ON  THESE  FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-KSB,
UNLESS  ANOTHER  DATE  IS STATED, ARE TO SEPTEMBER 30, 2006. AS USED HEREIN, THE
"COMPANY,"  "WE,"  "US,"  "OUR"  AND WORDS OF SIMILAR MEANING REFER TO PEDIATRIC
PROSTHETICS,  INC.,  AN  IDAHO  CORPORATION.

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.

                                      -12-
<PAGE>

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 have a website at www.kidscanplay.com, which contains information which we do
not  desire  to  be  incorporated  by  reference  into  this  filing.

We  generate  an average of approximately $8,000 of gross profit per fitting for
each prosthetic device we fit, however, the exact amount of gross profit we will
receive  for  each  fitting  will  depend  on  the exact mix of arms versus legs
fitted,  the  number  of  re-fittings versus new fittings, the total cost of the
components  used as well as the amount we are reimbursed by Medicare or Medicaid
if  such  fittings are not paid for directly by the patients. From July 1, 2005,
until  December 31, 2005, we made approximately twenty-seven (27) fittings, from
January  1,  2006,  until  June  30, 2006, we made approximately thirty-six (36)
fittings,  and  from July 1, 2006 until November 10, 2006, we made approximately
sixteen (16) fittings. We averaged approximately four to five fittings per month
through  December  2005 and have averaged approximately five to six fittings per
month  since  January  2006.

HISTORY  OF  THE  COMPANY

We  were  formed  as  an  Idaho  corporation on January 29, 1954, under the name
Uranium  Mines,  Inc.  From  January  1954  onward,  we  experienced  various
restructurings  and  name  changes,  including  a name change effective March 9,
2001,  to Grant Douglas Acquisition Corp.  On October 10, 2003, a separate Texas
corporation,  Pediatric  Prosthetics,  Inc. ("Pediatric Texas"), entered into an
acquisition  agreement  with us, whereby Pediatric Texas 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
Texas  remained as the surviving accounting entity following the Exchange and we
were  the  surviving  legal entity and affected a name change from Grant Douglas
Acquisition  Corp.  to  Pediatric  Prosthetics,  Inc.  on  October  31,  2003 in
connection  with  the  Exchange.  In  connection  with the Exchange, we retained
$443,632  in  liabilities  related to a $350,000 convertible note and $93,632 of
accrued  interest  on  such note that was held by us prior to the Exchange. From
November  2003 through June of 2005 we repaid $148,955 of note principal through
the  issuance  of  common stock with a fair value of $2,688,734 and recognized a
$2,539,779  loss on extinguishment of debt. During the year ended June 30, 2006,
we  negotiated  the extinguishment of the remaining convertible note of $201,045
and  accrued  interest  of  $139,754  for a one time cash payment of $30,000 and
recognized  a  gain  on  extinguishment  of  debt  of  $310,799.

Prior  to  the  Exchange,  we had been a non-operating, non-reporting, corporate
shell,  without  assets  or operations since approximately the second quarter of
2001  (when our prior operations as a publisher of various print media including
magazines  and  newsletters  had ceased), but had traded our common stock on the

                                      -13-
<PAGE>

Pinksheets  under  the  symbol  "GDRG," prior to the Exchange. We had not been a
reporting  company  prior to the share exchange. We entered into the Exchange to
acquire  an  operating  business,  Pediatric  Texas,  and  the  shareholders  of
Pediatric  Texas entered into the Exchange to trade Pediatric Texas common stock
on  the  Pinksheets.

Pediatric Texas, the Texas corporation had limited operations prior to the share
exchange  with  us,  which operations were affected through a partnership solely
controlled  by the owners of Pediatric Texas. Upon our initial funding following
the  share exchange, in November of 2003 we began start-up activities associated
with  establishing  a  prosthetics  "patient-care  facility"  according  to  the
regulations  set  forth  by  the  Texas  Department  of  Health.  We  also began
recruiting  our  core  team of employees, equipping our prosthesis manufacturing
laboratory,  and  building  out and furnishing our facility at 12926 Willowchase
Drive  in Houston, Texas, in compliance with the Texas Board of Health and local
occupancy  permit  requirements.  Our  "patient-care  facility" was approved and
accredited  by  the Texas Board of Health on March 18, 2004. We were approved at
that  time for the clinical fitting of and fabrication of prosthetic devices for
the  general  public,  and for the billing of third party payors, such as health
insurance  companies  for  those  services.

WARRANTIES

We  provide  an  unlimited  one-year  warranty  on each of our prostheses, which
covers  both materials and workmanship. Our sub-component suppliers also provide
us  a one-year warranty on all components, whether electrical or structural, and
as  a  result,  we  are  in  effect  only  responsible  for  the  cost  of  the
re-installation  of  failed sub-components. To date, warranty repair costs borne
by  us have been insignificant, and totaled approximately $500 and approximately
30  hours  of  time  during  the  fiscal  year  ended  June  30,  2006.

PRINCIPAL  SUPPLIERS

We  obtain  the materials which we use to fabricate and fit our prosthetic limbs
from  various  suppliers  including,  ARTech  Laboratory  in  Midlothian, Texas;
Liberating Technologies, Inc. in Holliston, Massachusetts; Otto Bock Health Care
in  Minneapolis,  Minnesota;  Ross  Prosthetics in Hartsdale, New York; Southern
Prosthetic  Supply  in  Alpharetta,  Georgia;  Hosmer  Dorrance  in  Campbell,
California;  P.V.A.  Sleeves  Co.  in Houston, Texas; Daw Industries in Atlanta,
Georgia;  and  American  Plastics  in  Arlington,  Texas.

             SIGNIFICANT EVENTS DURING THE YEAR ENDED JUNE 30, 2006:

SERVICE  AGREEMENT  WITH  GLOBAL  MEDIA

In  February  2006,  the  Company 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  executing  the  Service Agreement, the Company issued Global
250,000  restricted  shares  of  common  stock  in  March 2006. The terms of the
agreement call for the Company to issue Global a remaining value of shares equal

                                      -14-
<PAGE>

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  the  Company will issue shares based on the contract payments of
$28,125  per payment; however the agreement contains a stock valuation provision
that  will provide Global with shares that are discounted by 10% of the five day
average  quoted market prices prior to the issuance dates, therefore Global will
receive  common  stock valued at $31,250 per installment. 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.

On or about June 2, 2006, we issued Global 446,427 shares of common stock valued
at  $31,250,  in  connection  with  the  May  1, 2006, payment of $28,125 on the
Service Agreement. 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 value of the
common  stock  on  the  five  trading days prior to the date such stock is to be
issued  on  the  Pinksheets  trading market, or Over-The-Counter Bulletin Board,
wherever  our  common  stock  is  then  traded.  For example, the average of the
closing  price of our common stock for the five trading days prior to the May 1,
2006  payment  on  the  Pinksheets was $0.07 per share. Therefore, the amount of
shares  we  issued  Global  for  such May 1, 2006 payment was $28,125 divided by
$0.063 ($0.07 x 0.90), which was equal to approximately 446,427 shares of common
stock  which  had  a  fair  market  value  of  $31,250.

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 were extended through November 2006. Additionally,
both  loans  are  convertible  into 500,000 shares of our common stock, which is
equivalent  to  each  loan  being convertible into shares of common stock at the
rate  of  one  share  of  common  stock  for  each  $0.035 owed under the loans.

In  April 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; however this note was subsequently renewed for an additional

                                      -15-
<PAGE>

six  months,  at  the  option of the holder, and is now due and payable in 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.

In  May  2006,  we  entered  into a services agreement with Stock Enterprises, a
privately held financial and investor relations services firm ("Stock"), whereby
Stock  agreed to provide us investor relations services on a non-exclusive basis
for  the  period  of  one  (1)  year,  and  we  agreed  to issue Stock 2,000,000
restricted  shares  of  our  common  stock, which shares have not been issued to
Stock  to  date.

                     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  from us. 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. In June 2006, we submitted applications and had physical
exams  to  increase  our key man life insurance through the agent the Purchasers
recommended  to  us,  but  so  far  have  not  received the policies or paid any
premiums  in  connection  with  the  increased  key  man life insurance to date.

The  $600,000 we received from the Purchasers at the Closing, in connection with
the  sales  of  the  Debentures,  which are due May 30, 2009, 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);

                                      -16-
<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; 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.

We  plan  to  use  the  $900,000  in  proceeds  from  the sale of the additional
Convertible  Debentures  (assuming all $900,000 of the additional debentures are
sold)  as  follows:

     o    $67,000  -  Accounting,  auditing  and  attorney's  fees in connection
          with  our periodic reports, this Form 10-SB registration statement and
          a  to be filed Form SB-2 registration statement to register the shares
          underlying  the  Convertible  Debentures;

     o    $266,000  -  Inventory  for  our  prosthetics  operations;

     o    $67,000  -  Equipment  and  building  improvements;

     o    $333,000  -  Promotional,  marketing  and  travel  costs  associated
          with  our  increased  marketing  campaign;

     o    $100,000  -  Closing  costs  and  finders  fees in connection with the
          funding;  and

     o    $67,000  -  General  working  capital,  including  certain amounts for
          officers  and  directors  salaries,  rent  and  office  expenses.

                       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 have a three (3) year
term  and  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

                                      -17-
<PAGE>

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  (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.

"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 which the Debentures are convertible into within sixty
          (60)  days  of the Closing (July 31, 2006), or obtain effectiveness of
          such  Registration  Statement  within one hundred and forty-five (145)
          days  of the Closing (October 22, 2006), which dates have been amended
          to  January  15,  2007  and April 16, 2007, respectively in connection
          with  the  Waiver  of  Rights  Agreement,  described in greater detail
          below,  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

                                      -18-
<PAGE>

          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.

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.

                                      -19-
<PAGE>

                             STOCK PURCHASE WARRANTS

In connection with the Closing, we issued 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
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, which we
were  not  able  to  accomplish, but which date was amended from sixty (60) days
from the Closing until January 15, 2007, in connection with the Waiver of Rights
Agreement (described below), 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 by
April  16,  2007,  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,  and  such  default has not been waived by the Purchasers, then we are

                                      -20-
<PAGE>

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 April 16, 2007 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 April 27, 2007, 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).

RECENT  EVENTS

On  October 25, 2006, with an effective date of July 31, 2006, we entered into a
Waiver of Rights Agreement with the Purchasers, whereby the Purchasers agreed to
waiver  our  prior  defaults  under  the  Securities  Purchase  Agreement  and
Registration  Rights  Agreement.  In  connection  with  the  Waiver  of  Rights
Agreement,  the  Purchasers agreed to amend the Securities Purchase Agreement to
state  that  we are required to use our best efforts to timely file our periodic
reports  with the Commission, which amendment waived the previous default caused
by  our  failure  to  timely  file  this  annual  Report on Form 10-KSB with the
Commission.  The Waiver of Rights Agreement also amended the Securities Purchase
Agreement  to  provide  for  us  to  use  our best efforts to obtain shareholder
approval  to  increase  our authorized shares of common stock as was required by
the  Securities Purchase Agreement, which amendment waived our failure to obtain
shareholder approval to increase our authorized shares of common stock by August
15,  2006.  Finally,  the  Waiver  of Rights Agreement amended the dates we were
required  to  file  a registration statement covering the shares of common stock
which  the  Purchasers  Notes  are convertible into and which their Warrants are
exercisable  into  from  July  31,  2006  to January 15, 2007, and the date such
registration  statement  is  required  to  be effective with the Commission from
October  22,  2006  to  April  16,  2007.  As  a  result of the Waiver of Rights
Agreement,  we  are  not currently in default of any provision of the Securities
Purchase  Agreement,  Registration  Rights  Agreement  and/or  any  of the other
agreements  entered  into  with  the  Purchasers  at  the  Closing.

THE MARKET PLACE

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.

                                      -21-
<PAGE>

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
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  approximately 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.
The  free  care  offered by Shriner's may put downward pressure on the prices we
charge  for  our  services  and/or  lower the number of potential clients in the
marketplace,  which  may  in  turn  lower  our  revenues.

EMPLOYEES

As of November 10, 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. Our
employees  include  the  following  individuals:

     o    Linda Putback-Bean,  our  President  and  upper  extremity fabricating
          specialist,  who  works  for us full time. Her Texas certification and
          licensure  is  that  of  a  "Prosthetist's  Assistant",  (PA).

                                      -22-
<PAGE>

     o    Dan Morgan  is  Our  Vice  President/Chief  Prosthetist,  he is an ABC
          and  Texas  certified  Prosthetist  licensed to perform "critical care
          events"  in  all  of our prosthetic fittings. He is on call full-time.

     o    Jean Gonzalez  is  an  ABC  and  Texas  certified  Prosthetist,  also
          licensed  to  perform  "critical care events" in all of our prosthetic
          fittings,  full  time.

     o    Kenneth  W.  Bean  is  our  Vice  President  of  Operations, and works
          for  us full time. He is in charge of the non-patient care side of the
          business.

     o    Kim Hardberger  is  our  office  manager/  bookkeeper, and third party
          payer liaison in charge of coding and billing and accounts receivable,
          who  works  for  us  full  time.

                                   CONSULTANTS
                                   -----------

Occupational  Therapists:
-------------------------

     1.   Nancy  Conte-Fisher
     2.   JoAnne  Liberatore

Physical  Therapist:
--------------------

     Kim  Ramey

Other  Consultants:
-------------------

     1.   James  Stock,  Investor  Relations  Consultant
     2.   Joe  Gordon,  Business  Consultant
     3.   Mark  Santos,  Marketing  Consultant
     4.   George  Boomer,  Marketing  Consultant
     5.   John  Beagan,  Marketing  Consultant
     6.   Global  Media  Funding,  Feature  article  Placement  Consultants.
     7.   OTC  Financial  Network,  Geoffery  Eiten

                         AGREEMENTS WITH HOST AFFILIATES

We  have  entered  into  consulting contracts with fourteen (14) host prosthetic
providers  ("Host  Affiliates") with facilities at various locations in nineteen
(19)  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

                                      -23-
<PAGE>

Affiliate  on  a case-by-case basis but generally we receive 70% of the net cash
after  components  costs  for the fitting and fabrication, and the Host receives
30%  of the net cash for billing services and use of their lab-facilities. These
contracts generally have automatic renewals every six months unless either party
gives  notice  of  termination.

We  have  incorporated  by  reference  a  sample  of  one of our Host Affiliates
contracts  to  this  filing  as  Exhibit  10.2.

As  of  November  10,  2006,  our  Host  Affiliate  companies  were:

     1.   Restorative  Health  Services,  Nashville,  TN
     2.   Mandelbaum  O&P,  Port  Jefferson,  NY  (covers  New  England as well)
     3.   Douglass  Orthotics  &  Prosthetics,  Seattle,  WA
     4.   Union  Prosthetics,  Pittsburgh,  PA
     5.   Advanced  O&P,  Springfield,  MO  (operates  in  MO,  AR,  KS, and OK)
     6.   AZ  Prosthetics,  Scottsdale,  AZ  (also  operates  in  CA,  and  NC)
     7.   Orthotic  Solutions,  Fairfax,  VA  (also  operates  in  MD)
     8.   Temecula  Valley  O&P,  Temecula,  CA
     9.   Hemet  O&P  Los  Angeles,  CA
     10.  Michigan  Orthotics  &  Prosthetics,  Saganaw  MI
     11.  American  Orthopedics,  Columbus  OH
     12.  Harlingen  O&P,  Harlingen  TX
     13.  Land  of  Lakes  O&P  Minneapolis,  MN,  and  St.  Paul  WI
     14.  O&P  Clinical  Technologies,  Gainesville,  FL

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.

PLAN OF OPERATIONS

During  October  2005,  our  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
7,000,000  shares  of  our  common  stock  in  connection  with  such contracts.

We  have  established  working  relationships  with  fourteen  Host  Affiliates
operating in approximately 19 states. In establishing the relationships with the
fourteen  Host  Affiliates,  we  also  provided one-on-one pediatric training to
twelve prosthetists who are employed by those Host Affiliates. We currently plan
to  hire  one  more  certified prosthetists and two additional support personnel
during  the  next  twelve  months,  funding permitting, of which there can be no
assurance.

                                      -24-
<PAGE>

As  of  December  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, assuming we sell an additional $900,000 in Convertible
Debentures  to  the  Purchasers  pursuant  to  the Securities Purchase Agreement
subsequent  to  the filing of this report.  However, if we are unable to file or
gain  effectiveness of a Registration Statement to register the shares of common
stock underlying the Convertible Debentures and are therefore unable to sell the
additional  tranches of Convertible Debentures, we anticipate only being able to
continue  our  business  operations  for  three  to four months, without raising
additional financing.  If we are required to raise additional funding other than
through  the  sale  of  the  additional  tranches of Convertible Debentures,  we
anticipate  such  funds  to  be  raised  through  the sale of debt and/or equity
securities.  We  received  $600,000  on  May  30,  2006  (less closing costs and
structuring  fees),  from  the  sale of certain Convertible Debentures described
above.  Assuming  we  receive  and  are  able to sell the additional tranches of
Convertible  Debentures,  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 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.

Increases  in  our  advertising  and  marketing  budget  which  we  were able to
implement  due  to  the  $600,000  we  raised  through  the  sale of Convertible
Debentures  in  May 2006, have allowed us to undertake the following advertising
and  marketing  activities:

     o    The composition  of  and  distribution  of  certain  feature newspaper
          articles  through  our  agreement  with  Global,  pursuant to which we
          agreed  to  pay  Global  an  aggregate of $160,000 worth of our common
          stock,  based  on  the  trading  value  of our common stock on certain
          payment  dates,  as  described  in  greater detail above under "Recent
          Events,"  of  which  approximately  $48,750  in  common stock has been
          issued  to  date;  and

     o    Publicity  and  marketing  campaign,  pursuant  to which we previously
          issued  7,000,000  shares  of  common  stock  to  certain consultants.

Additionally,  we  believe the increases in our advertising and marketing budget
will  allow us to undertake the following activities during the next twelve (12)
months,  funding  permitting:

     o    The production,  filming,  editing  and  narration  of  informational
          videos  on  the value of modern prosthetic options for children, which
          videos  describe  the  success stories we have had in helping children
          overcome  limb loss by fitting such children with artificial limbs, as

                                      -25-
<PAGE>

          well  as  the  distribution  of  such  videos  to  fellow  pediatric
          professionals  such  as  nurses,  physical  therapists,  doctors  and
          hospital-based  family  counselors  nationally,  at  a  cost  of
          approximately  $300,000;

     o    Costs associated  with  publicizing  and  scholarships  for  our  four
          day  "whole  family summer get-together" for children with a limb-loss
          and  their  families,  at  a  cost  of  approximately  $50,000;

     o    Travel  and  associated  costs  involved  with  appearances  on
          television shows, medical conventions and nursing schools at a cost of
          approximately  $20,000;  and

     o    Sponsorship  costs  of  non-profit  organizations  such  as  the
          "Amputee  Coalition  of  American" and the Para-Olympics, at a cost of
          approximately  $50,000.

As  stated  above,  we 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  Debentures  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.

Moving  forward, we plan to work towards becoming traded on the Over-The-Counter
Bulletin  Board  ("OTCBB") by filing a revised Form 10-SB registration statement
filing  with  the  Commission to respond to the Commission's comments, obtaining
shareholder  approval to increase our authorized shares of common stock to allow
for sufficient authorized but unissued shares of common stock for the holders of
the  Convertible Debentures and Warrants to convert such Debentures and exercise
such  Warrants  into  and  to  file  a Form SB-2 registration statement with the
Commission  to  register  the  shares of common stock underlying the Convertible
Debentures  and issuable upon exercise of the Warrants.  Furthermore, we hope to
gain  approval  to trade our common stock on the OTCBB during fiscal 2007, which
we  believe  will increase the liquidity of our common stock, of which there can
be  no  assurance.

                         COMPARISON OF OPERATING RESULTS

RESULTS  OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO
THE  THREE  MONTHS  ENDED  SEPTEMBER  30,  2005

We  had  revenue  of  $195,230  for  the  three months ended September 30, 2006,
compared  to  revenue of $104,048 for the three months ended September 30, 2005,
an  increase  in revenue of $91,182 or 87.6% from the prior period. The increase
in  revenue for the three months ended September 30, 2006, compared to the three

                                      -26-
<PAGE>

months  ended September 30, 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,  which we began during the fiscal year ended
2006  (described  above),  as  well  as  a  significant number of re-fittings of
existing  patients  due  to  such  patient's  physical  growth.

We had total operating expenses of $625,199 for the three months ended September
30,  2006, compared to total operating expenses of $210,014 for the three months
ended September 30, 2005, an increase in total operating expenses of $415,185 or
198%  from  the  previous years period. The increase in total operating expenses
was  mainly  due  to  a  $375,129  or  223%  increase  in  selling,  general and
administrative  expenses for the three months ended September 30, 2006, compared
to  the  three  months  ended  September  30,  2005,  which  increase was due to
increased  marketing  expenses  in connection with our advertising and marketing
campaign  (described  above), and increases in our legal and accounting expenses
in connection with our amended Form 10-SB registration statement filings and the
preparation  of  our  public filings, which expenses were not present during the
three months ended September 30, 2005, as we were not a public reporting company
at  that  time,  as  well  as  an increase of $1,271 in depreciation expense, to
$5,959 for the three months ended September 30, 2006, compared to $4,688 for the
three  months  ended  September  30, 2005, in connection with an increase in our
depreciable  asset  base  during  the year ended June 30, 2006, and a $38,785 or
104%  increase in cost of sales, to $76,001 for the three months ended September
30,  2006,  compared  to  $37,216 for the three months ended September 30, 2005,
which increase in cost of sales was directly attributable to increased purchases
of  parts  and  components  in connection with our increased sales for the three
months  ended  September  30,  2006,  compared  to  the  prior  period.

Selling,  general and administrative expenses as a percentage of revenue for the
three  months  ended  September 30, 2006 were 278%, compared to selling, general
and  administrative  expenses  as  a percentage of revenue of 162% for the three
months  ended  September  30,  2005,  which  represented an increase in selling,
general  and administrative expenses as a percentage of revenue of 116% from the
prior  period.  This  increase  was  mainly due to the 223% increase in selling,
general  and  administrative  expenses  for the three months ended September 30,
2006,  which  was  not  sufficiently offset by the 87.6% increase in revenue for
September  30,  2006. 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 $429,969 for the three months ended
September 30, 2006, compared to a total loss from operations of $105,966 for the
three  months ended September 30, 2005, an increase of $324,003 or 306% from the
prior  period.  The  increase  in  loss from operations was mainly caused by the
$415,185  or  198% increase in total operating expenses (which was mainly due to
the 223% increase in selling, general and administrative expenses) for the three
months  ended  September  30, 2006, compared to the three months ended September
30, 2005, which was not sufficiently offset by the 87.6% increase in revenue for
the  three  months  ended  September  30,  2006,  compared  to the prior period.

                                      -27-
<PAGE>

We had total other income of $1,112,049 for the three months ended September 30,
2006,  compared  to  total  other  expense  of $6,031 for the three months ended
September  30, 2005, which represented an increase in other income of $1,118,080
or  18,338%  from  the prior period. The increase in net other income was mainly
due  to  the  $1,202,540  increase  in  change  in value of derivative financial
instruments,  which  accounting  income  totaled $1,202,540 for the three months
ended  September  30,  2006,  and was not represented for the three months ended
September  30, 2005, in connection with the change in value  of  our outstanding
Convertible Debentures,  which was offset by an  increase of $84,461 of interest
expense also in  connection  with our outstanding  Convertible  Debentures,  to
interest expense of $90,492  for  the  three  months  ended  September 30, 2006,
compared to interest expense of $6,031 for the three months ended September 30,
2005.

We  had  total  net  income of $682,080 for the three months ended September 30,
2006,  compared  to  a  total  net  loss  of $111,997 for the three months ended
September  30,  2005,  an  increase  in  net income of $794,077 or 682% from the
previous  period.  The  increase  in net income was mainly due to the $1,118,080
increase in total other income, which was mainly due to the $1,202,540 of change
in  the  value  of  derivative financial instruments in connection with the fair
value  of  our  Convertible  Debentures  and  our  $91,182  or 87.6% increase in
revenues,  which  was  offset  by  our  $375,129 or 223% increase in general and
administrative  expenses for the three months ended September 30, 2006, compared
to the three months ended September 30, 2005. Investors should keep in mind that
our  net income for the three months ended September 30, 2006, was the result of
changes  in the value of our derivative financial instruments and not the result
of  our  core  operations.

LIQUIDITY AND CAPITAL RESOURCES

We  had  total  assets of $759,773 as of September 30, 2006, compared with total
assets  of  $964,844  as of June 30, 2006, which represented a $205,071 or 21.3%
decrease  in  total  assets  from  the  prior  period.

Total  assets  as  of  September  30, 2006, included current assets of $495,335,
furniture  and  equipment,  net  of  accumulated  depreciation,  of $64,992, and
deferred  financing  cost  of  $199,446.  Current  assets included cash and cash
equivalents  of  $54,466,  trade  and  accounts receivable, net of $309,379, and
prepaid  expenses  and  other  current assets of $11,825, and current portion of
deferred  financing  cost,  net  of  $119,665.

We  had  total  liabilities  of $4,452,301 as of September 30, 2006, compared to
total  liabilities  of  $5,600,571  at June 30, 2006, representing a decrease in
total  liabilities  of  $1,148,270  or 20.5%.

Total  liabilities  as  of  September  30,  2006 included current liabilities of
$4,409,916,  consisting  of  trade  accounts  payable  of  $123,361;  accrued
liabilities of $284,230, which included deferred salary payable to our officers;
current  portion of convertible debt of $85,000 which includes the loans entered
into in March 2006 and April 2006, as described in greater detail below; amounts

                                      -28-
<PAGE>

due  to  related  party  of $500, which amounts were owed 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
derivative  financial  instruments  of  $3,916,825,  in  connection  with  our
Convertible  Debentures  and  Warrants  (explained in greater detail above); and
non-current  liabilities  consisting  of  deferred rent of $11,871 and long term
portion  of  convertible  debt  of  $30,514.

We  had  a  working  capital deficit of $3,914,581 and an accumulated deficit of
$11,817,249  as  of  September  30,  2006.

In April 2006, we borrowed $50,000 from a shareholder of the Company, and issued
that individual a promissory note and warrants 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 was renewed for an additional
six months, at the option of the holder, through March 2007. The shareholder has
the option to convert this loan into 1,428,571 shares of our common stock at the
rate  of one share for each $0.035 then owed. The shareholder also has 1,428,571
outstanding warrants to purchase shares of our common stock at an exercise price
of  $0.045  per  share,  which  warrants  expire if unexercised on May 22, 2008.

On  March  1,  2006,  and March 21, 2006, we entered into two separate loans for
$17,500,  with  two  separate  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 of issuance. Both loans have been extended
through  November  of  2006.  The  loans  are  convertible  into an aggregate of
1,000,000  shares  of  our common stock at the rate of one share for each $0.035
owed.

We  had  total  net  cash used by operating activities of $208,362 for the three
months ended September 30, 2006, which was mainly due to $1,202,540 of change in
value  of derivative liability, offset by $682,080 of net income and $261,116 of
stock-based  compensation,  which  included amounts amortized in connection with
shares  of  common  stock  issued  in  connection with our agreement with Global
Media,  described  above,  as  well  as approximately 7,000,000 shares of common
stock  issued in connection with twelve month consulting agreements entered into
in  October  2005  for  investor  relations  and  consulting  services.

We  had  net  cash  used in investing activities of $11,813 for the three months
ended  September 30, 2006, which was used solely in connection with the purchase
of  furniture  and  equipment.

We  did  not have net cash provided by financing activities for the three months
ended  September  30,  2006.

In April 2006, we borrowed $50,000 from a shareholder of the Company, and issued
that individual a promissory note and warrants in connection with such loan. The

                                      -29-
<PAGE>

promissory  note  bears  interest  at  the rate of 12% per annum, and is 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.

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,
which are due May 30, 2009, $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 shares of 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 upon the sale of common stock for funding
our  operations.  In connection with such funding, we issued 4,700,000 shares of
common  stock  at  prices ranging from $0.035 to $0.05 per share during the year
ended  June  30,  2006, for aggregate net proceeds of $220,000. Additionally, we
issued  8,696,437  shares  of common stock to consultants ranging from $0.08 and
$0.11  per share during the year ended June 30, 2006 and recognized compensation
expense  of  $482,360.

As of December 2006, we believe we can operate for approximately the next twelve
(12)  months  assuming  we sell an additional $900,000 in Convertible Debentures
subsequent  to  the  filing  of  this  report,  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.  However,  we believe that will need to raise additional financing in the
next three to four months if we are unable to file and obtain effectiveness of a
registration  statement  with  the  Commission,  which  filing and effectiveness
trigger  the  additional  sales  of  the  $900,000  in  additional  Convertible
Debentures.  If  we  are required to raise additional funding, we will likely do
so  through  the  sale  of  debt  or  equity  securities.

We  also  plan  to  increase  our  yearly  advertising  and  marketing  budget
approximately  five  fold, for the fiscal year ending June 30, 2007, compared to
the  fiscal  year  ending  June  30,  2006,  by utilizing a large portion of the
$900,000  which  we plan to receive pursuant to the subsequent funding tranches,
assuming such funds are received, 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.

                                      -30-
<PAGE>

However,  investors  should  keep in mind that any amounts of funding we receive
pursuant  to  the  Convertible  Debentures  will  be reduced by fees paid to the
lending  source  and legal and accounting costs associated with our need to file
and  obtain  effectiveness of a Form SB-2 Registration Statement to register the
Debentures  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.

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  several  months.

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  recognize  revenues from the sale of prosthetic devices and related services
generated  through  the  billing  departments  of  the  Host-Affiliates upon the
performance  of  services  by  that  Host-Affiliate.

When  we  directly bill customers or bill customers through our Host-Affiliates,
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. We require each patient to
sign  a  standard  acknowledgement of delivery of device form in connection with
each  sale  at the time of sale, which provides that the patient has 1) received
the device and 2) is satisfied with the device. Our patients normally accept our
products  upon  delivery.

When  we  directly bill customers or bill customers through our Host-Affiliates,
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,

                                      -31-
<PAGE>

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 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 us
to  reflect  in  our  income  statement, instead of pro forma disclosures in our
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 of SFAS 123R and, accordingly, the adoption
had  no  impact  on  us.

In  May  2005,  the  Financial  Accounting  Standards Board ("FASB") issued SFAS
Statement  No.  154 ("SFAS 154"), Accounting Changes and Error Corrections. SFAS
154  requires  that,  when a company changes its accounting policies, the change
must  be  applied  retrospectively  to  all prior periods presented instead of a
cumulative  effect  adjustment  in  the  period of the change. SFAS 154 may also
apply when the FASB issues new rules requiring changes in accounting. If the new
rule  allows cumulative effect treatment, it will take precedence over SFAS 154.
This  statement is effective for fiscal years beginning after December 15, 2005.
The  adoption  of  SFAS  154 is not expected to have a significant impact on the
Company's  financial  position  or  its  results  of  operations.

In  June  2006,  the  Financial  Accounting Standards Board ("FASB") issued FASB
Interpretation  No.  48,  Accounting for Uncertainty in Income taxes ("FIN 48").
FIN  48,  which  is  an  interpretation  of SFAS No. 109, "Accounting for Income
Taxes,"  provides  guidance  on the manner in which tax positions taken or to be
taken  on  tax  returns  should be reflected in an entity's financial statements
prior  to  their  resolution with taxing authorities. The Company is required to
adopt  FIN  48 during the first quarter of fiscal 2008. The Company is currently
evaluating  the requirements of FIN 48 and has not yet determined the impact, if
any;  this  interpretation  may  have  on its consolidated financial statements.

                                      -32-
<PAGE>

                                  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  SUBSTANTIAL  OPERATING  LOSSES  AND  MAY INCUR ADDITIONAL
OPERATING  LOSSES  IN  THE  FUTURE.

During  the fiscal years ended June 30, 2006 and 2005, we incurred net losses of
$4,413,417  and  $4,356,519,  respectively,  and experienced negative cash flows
from  operations of $436,226 and $298,454, respectively. During the three months
ended  September  30,  2006, we had net income of $682,080, which net income was
the  result  of changes in the value of our derivative financial instruments and
not  the  result of our core operations, and negative cash flows from operations
of  $208,362.  Additionally, we had negative working capital of $3,914,581 as of
September  30,  2006.  Our  historical losses have been 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 79 fitted in
fiscal  2006;  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 charges to income of $482,360 and $4,020,264 during the years ended
June  30,  2006  and 2005, 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 with three (3) year
terms, and agreed to sell them an additional $900,000 in Convertible Debentures,
upon the occurrence of us filing a registration statement to register the shares
underlying  the  Convertible  Debentures  and  the  effectiveness  date  of such
registration  statement.  These  Convertible  Debentures  and  interest  may  be
converted  into  shares of our common stock at a discount to market. However, if
such  Convertible  Debentures are not converted into shares of our common stock,
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

                                      -33-
<PAGE>

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. Putback-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 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.

WE  MAY NOT BE ELIGIBLE TO REGISTER ALL OF THE SHARES OF COMMON STOCK UNDERLYING
THE DEBENTURES AND THE WARRANTS, WHICH COULD HAVE A MATERIALLY ADVERSE EFFECT ON
OUR  OPERATIONS.

In  connection  with  numerous  recently filed private offering of public equity
registration  statements (such as our planned registration statement to file the
shares  of  common  stock underlying the Debentures and Warrant), the Commission
has  taken  the view that in the case where such registration statements attempt
to  register  a  large  number  of  shares  of common stock representing a large
percentage  of  an  issuer's  public  float,  that  such  resellers  are  deemed
affiliates  and  the  relating offerings are therefore deemed primary offerings.
When  such  registration  statements  are  deemed  primary  offerings,  and  the
resellers  are  deemed  affiliates,  such  registration statements are no longer
eligible  to  be filed under Rule 415(a)(1) of the Securities Act of 1933, which
may  result  in  delays  in  the  effectiveness  of such filings and/or required
modifications  in  the  number  of  securities being registered pursuant to such
registration  statements.   As  we  have  agreed  to  register a large number of
shares  pursuant to the Registration Rights Agreement with the Purchasers, which

                                      -34-
<PAGE>

shares  represent  a  large  portion  of  our  public  float,  pursuant  to Rule
415(a)(1),  this  recent  stance  by  the  Commission  may severely limit and/or
prevent us from registering the shares which the Debentures are convertible into
and/or  that  the  Warrants  are  exercisable  for  with  the  Commission  (the
"Registrable  Securities").  If  we  are  delayed  in  our  ability  to  file  a
registration statement with the Commission and/or are prevented from registering
all  of  the  Registrable  Securities  with the Commission as we have previously
agreed  to  do  pursuant  to  the  Registration  Rights Agreement, we could face
penalties  in connection with the Registration Rights Agreement (as described in
greater detail herein) and/or could be forced to repay the Debentures in cash as
opposed  to  shares of common stock.  These penalties may decrease the amount of
cash  we  have  on  hand  and  may  cause  us  to  curtail  our  business  plan.
Additionally,  if  we  are  unable  to  effectively  register  the  Registrable
Securities,  we  could be forced to repay the Purchasers in cash, which funds we
do  not currently have.  If we are forced to raise additional funds to repay the
Purchasers, it could cause substantial dilution to our existing shareholders and
if  such  funds  are not available, we could be forced to curtail or abandon our
business  operations,  which  could  cause the value of our securities to become
worthless.

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

As  of September 30, 2006, our accounts receivable over 120 days old represented
over  50%  of  total  accounts  receivable outstanding. If we cannot collect our
accounts  receivable,  our  business,  results  of  operations,  and  financial
condition  could  be  adversely  affected.

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 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.

                                      -35-
<PAGE>

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 years ended June
30,  2005  and  2006,  and  for  the three months ended September 30, 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  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 years
ended  June  30,  2006  and 2005 we had net losses of $4,413,417 and $4,356,519,
respectively  and  net  cash  flows used in operating activities of $436,226 and
$298,454,  respectively.  During  the  three months ended September 30, 2006, we
had  net  income  of $682,080, which net income was the result of changes in the
value  of  our  derivative  financial instruments and not the result of our core
operations,  and  we had a working capital deficit of $3,914,581 as of September
30,  2006.  Furthermore,  we  had  an  accumulated  deficit  of  $11,817,249  at
September  30,  2006.  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.

                                      -36-
<PAGE>

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
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 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,  including reviews from
Medicare  and  Texas  Medicaid,  in connection with rules and regulations we are
required to follow and comply with as a result of our position as a Medicare and
Texas  Medicaid  approved  provider.  Any adverse review, audit or investigation
could  result  in:

     o    refunding  of  amounts  we  have  been paid pursuant to our government
          contracts;

     o    imposition  of  fines,  penalties  and  other  sanctions  on  us;

     o    loss  of  our  right  to  participate  in  various  federal  programs;

     o    damage  to  our  reputation  in  various  markets;  or

                                      -37-
<PAGE>

     o    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  November  10,  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 1,725,111 shares of our
common  stock. As a result, we do not have a sufficient number of authorized and
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
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 OUR
SHAREHOLDERS  WILL  REALIZE  A  RETURN  ON  THEIR INVESTMENT IS BY SELLING THEIR
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,  the ability of our investors to generate a profit our common stock will
likely depend on their 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.

                                      -38-
<PAGE>

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  November  10,  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.

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

As  of  November  10,  2006,  our  President  and Chief Executive Officer, Linda
Putback-Bean  beneficially  owned  30,210,251  shares  of  common  stock  or
approximately  31%  of  our  outstanding  common  stock.  Additionally,  Ms.
Putback-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. Putback-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
50.2%  of  our  total  voting  power  based  on 118,274,889 voting shares, which
includes  the  98,274,889  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

                                      -39-
<PAGE>

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.

WE  MAY  BE REQUIRED TO IMMEDIATELY PAY THE $1,500,000 IN DEBENTURES, OF WHICH
$600,000 IS CURRENTLY OUTSTANDING AND/OR  BE FORCED TO PAY SUBSTANTIAL PENALTIES
TO THE DEBENTURE HOLDERS UPON THE OCCURRENCE OF AND DURING THE CONTINUANCE OF AN
EVENT  OF  DEFAULT.

Upon  the occurrence of and during the continuance of any Event of Default under
the  Debentures,  which  includes  the  following  events:

     o    Our  failure  to  pay any principal or interest on the Debentures when
          due;

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

     o    Our failure  to  file  a  Registration  Statement  covering the shares
          of  common stock convertible which the Debentures are convertible into
          prior  to  January  15,  2007,  or  obtain  effectiveness  of  such
          Registration  Statement  by  April  16,  2007, 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;

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

     o    Our breach  of  any  covenants  in  the  Debentures  or  Purchase
          Agreement, or our breach of any representations or warranties included
          in  any  of  the  other agreements entered into in connection with the
          Closing;

     o    If any  judgment  is  entered  against  us  or  our  property for more
          than  $100,000;  or

     o    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;

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

                                      -40-
<PAGE>

Debentures), multiplied by the highest closing price for our common stock during
the  period  we  are  in default. As we do not currently have sufficient cash on
hand  to  repay  the  debentures,  if  an  Event  of  Default  occurs  under the
Debentures,  we could be forced to curtail or abandon our operations and/or sell
substantially  all  of  our  assets  in  order  to  repay  all  or a part of the
Debentures.

THE  DEBENTURES ARE CONVERTIBLE INTO SHARES OF OUR COMMON STOCK AT A DISCOUNT TO
MARKET,  WHICH  DISCOUNT  TO  MARKET  MAY  DECREASE  ONLY IF WE ARE ABLE TO MEET
CERTAIN  DEADLINES.

The  conversion price of the Debentures is currently equal to 50% of the trading
price  of  our  common  stock,  which  will likely cause the value of our common
stock,  if  any,  to  decline  in  value  as subsequent conversions are made, as
described  in  greater  detail  under  the  Risk  Factors  below.

THE  ISSUANCE  AND SALE OF COMMON STOCK UNDERLYING THE CONVERTIBLE NOTES AND THE
WARRANTS  MAY  DEPRESS  THE  MARKET  PRICE  OF  OUR  COMMON  STOCK.

As  sequential  conversions of the Debentures and sales of such converted shares
take  place,  the  price  of  our common stock may decline, and as a result, the
holders  of  the  Debentures will be entitled to receive an increasing number of
shares  in connection with their conversions, which shares could then be sold in
the  market,  triggering  further price declines and conversions for even larger
numbers  of  shares,  to  the  detriment  of  our investors. Upon the successful
registration  of the shares of common stock which the Debentures are convertible
into  and  the  Warrants  are  exercisable  for, all of the shares issuable upon
conversion  of  the  Debentures  and  upon exercise of the Warrants, may be sold
without  restriction.  The  sale of these shares may adversely affect the market
price,  if  any,  of  our  common  stock.

In  addition,  the  common  stock issuable upon conversion of the Debentures and
exercise  of  the Warrants may represent overhang that may also adversely affect
the  market  price  of our common stock. Overhang occurs when there is a greater
supply  of  a company's stock in the market than there is demand for that stock.
When  this  happens  the  price  of  the  company's stock will decrease, and any
additional  shares  which  shareholders  attempt to sell in the market will only
further  decrease  the  share price. The Debentures may be converted into common
stock  at  a discount to the market price of our common stock at 50% of the then
trading  value  of  our  common stock, and such discount to market, provides the
holders with the ability to sell their common stock at or below market and still
make  a profit. In the event of such overhang, holders will have an incentive to
sell  their  common  stock  as  quickly  as possible. If the share volume of our
common  stock cannot absorb the discounted shares, the value of our common stock
will  likely  decrease.

                                      -41-
<PAGE>

THE  ISSUANCE  OF  COMMON  STOCK UNDERLYING THE DEBENTURES AND THE WARRANTS WILL
CAUSE  IMMEDIATE  AND  SUBSTANTIAL  DILUTION.

The  issuance  of common stock upon conversion of the Debentures and exercise of
the  Warrants will result in immediate and substantial dilution to the interests
of  other  stockholders  since  the Debenture holders may ultimately receive and
sell  the full amount issuable on conversion or exercise. Although the Debenture
holders  may  not  convert the Debentures and/or exercise their Warrants if such
conversion  or  exercise  would  cause  them  to  own  more  than  4.99%  of our
outstanding  common  stock,  this  restriction  does  not  prevent the Debenture
holders  from converting and/or exercising some of their holdings, selling those
shares,  and  then  converting  the  rest of their holdings, while still staying
below  the  4.99% limit. In this way, the Debenture holders could sell more than
this  limit  while never actually holding more shares than this limit allows. If
the  Debenture  holders  choose to do this it will cause substantial dilution to
the  then  holders  of  our  common  stock.

THE  CONTINUOUSLY  ADJUSTABLE  CONVERSION  PRICE FEATURE OF OUR DEBENTURES COULD
REQUIRE  US  TO  ISSUE  A  SUBSTANTIALLY  GREATER  NUMBER  OF  SHARES, WHICH MAY
ADVERSELY  AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND CAUSE DILUTION TO OUR
EXISTING  STOCKHOLDERS.

Our  existing  stockholders  will  experience  substantial  dilution  of  their
investment  upon  conversion of the Debentures and exercise of the Warrants. The
Debentures  will be convertible into shares of our common stock at a discount to
market  of 50% of the trading value of our common stock. As a result, the number
of  shares  issuable  could  prove to be significantly greater in the event of a
decrease  in  the  trading price of our common stock, which decrease would cause
substantial dilution to our existing stockholders. As sequential conversions and
sales  take  place,  the  price  of  our common stock may decline and if so, the
holders  of  the Debentures would be entitled to receive an increasing number of
shares,  which  could  then  be  sold,  triggering  further  price  declines and
conversions  for  even  larger  numbers  of shares, which would cause additional
dilution  to  our  existing stockholders and would likely cause the value of our
common  stock  to  decline.

THE  CONTINUOUSLY  ADJUSTABLE  CONVERSION  PRICE  FEATURE  OF OUR DEBENTURES MAY
ENCOURAGE  INVESTORS  TO  SELL  SHORT  OUR  COMMON  STOCK,  WHICH  COULD  HAVE A
DEPRESSIVE  EFFECT  ON  THE  PRICE  OF  OUR  COMMON  STOCK.

The Debentures will be convertible into shares of our common stock at a discount
to  market  of 50%. The significant downward pressure on the price of our common
stock  as  the Debenture holders convert and sell material amounts of our common
stock could encourage investors to short sell our common stock. This could place
further  downward  pressure  on  the price of our common stock. In addition, not
only  the sale of shares issued upon conversion of the Debentures or exercise of
the  Warrants,  but  also  the mere perception that these sales could occur, may
adversely  affect  the  market  price  of  our  common  stock.

                                      -42-
<PAGE>

WE  MUST  SATISFY  CERTAIN  CONDITIONS  BEFORE  THE SELLING SECURITY HOLDERS ARE
OBLIGATED  TO  PURCHASE  THE  REMAINING  $900,000  OF  DEBENTURES.

We  sold  $600,000  of  Debentures in May 2006. We also received a commitment to
purchase  an additional $400,000 of Debentures upon our filing of a Registration
Statement  to  register  the  shares convertible into common stock in connection
with  the Debentures, and $500,000 of Debentures, upon the effectiveness of such
Registration  Statement.  If  we fail to file the Registration Statement, and/or
the  Registration  Statement  is  not  declared effective or an Event of Default
occurs  under the Debentures, as defined herein, the Debenture holders will have
no obligation to purchase the remaining tranches of Debentures. If the Debenture
holders  do  not  purchase  the  remaining  Debentures,  we  will  not raise the
additional  $900,000.  This  could  force  us to curtail or abandon our business
plan,  which  would  decrease  the  value  of  our  securities.

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
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 amended Form 10-SB, and Form SB-2
registration  statement  (to  register  the  shares  underlying  the Purchasers'

                                      -43-
<PAGE>

Debentures  and  Warrants)  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
reporting  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.

                                      -44-
<PAGE>

                              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
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.  The most important
efficiency  program  we have instituted to date was entering into contracts with
our  Host  affiliates. By acquiring laboratory access from such Host Affiliates,
and  acquiring  the  Host  Affiliates help in billing and collections from third
party  payers  such  as  insurance companies and their respective state-centered
Medicaid  programs,  we  have  also  cut down our travel costs, and our costs of
added  staff  to invoice and collect receivables. Additionally, in an attempt to
maximize  our  efficiency,  we  modified  our  "just  in  time"  inventorying of
components  for  prosthetic devices to allow sufficient time for us to send such
components  via less expensive ground freight instead of higher priced overnight
delivery.  Finally, we have instituted a ten day lead-time policy on our airline
reservations to achieve lower air-fares to our patients, when we are required to
travel  across  the  country,  except  in  cases  of  emergencies.

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

                                      -45-
<PAGE>

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
an  average  of  $75.0  million  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
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
("ABC").  Our  Prosthetists  are certified by the State of Texas and by the ABC.
When  we  fit children in other States which have state licensure laws, we work,
under  the  supervision  of  licensed  Prosthetists  in  those  states.

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

                                      -46-
<PAGE>

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. Our added costs of complying with the
HIPPA  requirements  relate  primarily  to  attaining  the  on-going educational
credits  needed  for  our  Prosthetists  to remain current with the professional
standards  of  practice.  These credits are achieved by attending work-shops and
seminars in various locations throughout North America. During fiscal year ended
June  30,  2006  we  spent  approximately  $5,000  complying with these on-going
educational  needs. However, since our original formation, we have been aware of
impending  HIPPA  regulations,  and  have  set  up our systems and procedures to
comply  with  HIPPA requirements in view of such regulations. As a result, added
costs  due to compliance with HIPPA guidelines have been minimal and immaterial.

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.

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 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

                                      -47-
<PAGE>

timely file our Quarterly Reports on Form 10-QSB for the quarters ended December
31,  2005,  March  31, 2006, and September 30, 2006 and we failed to timely file
our  Annual  Report  on  Form 10-KSB for the period ending June 30, 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.

(b)     Changes  in internal control over financial reporting. 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.

                           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

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.


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

     None.

ITEM 5. OTHER INFORMATION

     None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

                                      -48-
<PAGE>

EXHIBIT NO.              DESCRIPTION OF EXHIBIT
-----------------        -------------------------------------

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

Exhibit  3.2(4)          Restated  Articles  of  Incorporation  of  the  Company
                         (March  9,  2001)

Exhibit  3.3(4)          Reinstatement  (June  29,  2003)

Exhibit  3.4(1)          Amendment  to  Articles  of  Incorporation  of  the
                         Company  (October  31,  2003)

Exhibit  3.5(1)          Amendment  to  Articles  of  Incorporation  of  the
                         Company  (November  7,  2003)  (Series  A  Convertible
                         Preferred  Stock  Designation  of  Rights

Exhibit  3.6(4)          Bylaws  of  the  Company

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

Exhibit  10.1(1)         Acquisition  Agreement  between  Grant  Douglas
                         Acquisition Corp. and Pediatric Prosthetics, Inc. dated
                         October  10,  2003

Exhibit  10.2(4)         Sample  Host  Affiliate  Agreement

Exhibit  10.3(2)         Settlement  Agreement  with  Secured  Releases,  LLC

Exhibit  10.3(3)         Securities  Purchase  Agreement

Exhibit  10.4(3)         Callable  Secured  Convertible  Note  with  AJW
                         Offshore,  Ltd.

Exhibit  10.5(3)         Callable  Secured  Convertible  Note  with  AJW
                         Partners,  LLC

Exhibit  10.6(3)         Callable  Secured  Convertible  Note  with  AJW
                         Qualified  Partners,  LLC

Exhibit  10.7(3)         Callable  Secured  Convertible  Note  with  New
                         Millennium  Capital  Partners  II,  LLC

Exhibit  10.8(3)         Stock  Purchase  Warrant  with  AJW  Offshore,  Ltd.

Exhibit  10.9(3)         Stock  Purchase  Warrant  with  AJW  Partners,  LLC

Exhibit  10.10(3)        Stock  Purchase  Warrant  with  AJW  Qualified
                         Partners,  LLC

                                      -49-
<PAGE>

Exhibit 10.11(3)         Stock  Purchase  Warrant  with  New  Millennium Capital
                         Partners  II,  LLC

Exhibit  10.12(3)        Security  Agreement

Exhibit  10.13(3)        Intellectual  Property  Security  Agreement

Exhibit  10.14(3)        Registration  Rights  Agreement

Exhibit 10.15(4)         Consulting  Agreement  with  National  Financial
                         Communications  Corp.

Exhibit  10.16(4)        Warrant  Agreement  with  Lionheart  Associates,  LLC
                         doing  business  as  Fairhills  Capital

Exhibit  10.17(4)        Investor  Relations  Consulting  Agreement  with  Joe
                         Gordon

Exhibit  10.18(5)        Waiver  of  Rights  Agreement

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

Exhibit  31.2*           Chief  Financial  Officer  Certification  pursuant  to
                         Section  302  of  the  Sarbanes-Oxley  Act  of  2002

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

Exhibit  32.2*           Chief  Financial  Officer  Certification  pursuant  to
                         Section  906  of  the  Sarbanes-Oxley  Act  of  2002

* Filed herewith.

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

(2)     Filed  as  an exhibit to our quarterly report on Form 10-QSB, filed with
the  Commission  on  July  5,  2006,  and  incorporated  herein  by  reference.

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

(4)     Filed  as  exhibits to our Form 10-SB, filed with the Commission on July
14,  2006,  and  incorporated  herein  by  reference.

                                      -50-
<PAGE>

(5)     Filed  as  an  exhibit  to our Form 10-KSB, filed with the Commission on
October  27,  2006,  and  incorporated  herein  by  reference.

b)     REPORTS ON FORM 8-K:

We filed no reports on Form 8-K during the three months ended September 30,
2006.

                                   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 5, 2006
                                     By: /s/ Kenneth W. Bean
                                     ---------------------------
                                     Kenneth W. Bean
                                     Principal Financial Officer

                                      -51-
<PAGE>