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 December 31, 2005

[ ]     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)


                                       N/A
                                 --------------
                            (Former name and address)


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

     As  of  May  9,  2006, 97,828,462 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].

     Transitional Small Business Disclosure Format (Check one):  Yes [  ] No [X]

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                           PEDIATRIC PROSTHETICS, INC.
                    TABLE OF CONTENTS TO FINANCIAL STATEMENTS



                                                                         PAGE
                                                                     -----------

Unaudited Balance Sheets as of December 31, 2005 and June 30, 2005        F-2

Unaudited Statements of Operations for the three months and six
                   months ended December 31, 2005 and 2004                F-3

Unaudited Statements of Stockholders' Equity (Deficit) for the six
                   months ended December 31, 2005                         F-4

Unaudited Statements of Cash Flows for the  six months ended
                   December 31, 2005 and 2004                             F-5

Notes To Unaudited Financial Statements                                   F-6

<PAGE>

<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND JUNE 30, 2005


                                                                               DECEMBER 31, 2005    JUNE 30, 2005
                                                                               -----------------    -------------
<S>                                                                                   <C>                  <C>
ASSETS

Current assets:
  Cash and cash equivalents                                                    $          39,322    $      29,818
  Trade accounts receivable, net                                                         114,709           73,422
  Prepaid expenses and other current assets                                               15,848           16,492
                                                                               ----------------     -------------
     Total current assets                                                                169,879          119,732

Furniture and equipment, net                                                              68,302           81,229
                                                                               -----------------    -------------
        Total assets                                                           $         238,181    $     200,961
                                                                               =================    =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
  Trade accounts payable                                                       $         120,356    $      89,280
  Accrued liabilities                                                                     53,000          183,791
  Convertible debt                                                                             -          201,045
  Due to related party                                                                       500              500
                                                                               -----------------    -------------
    Total current liabilities                                                            173,856          474,616

  Deferred rent                                                                           14,188           14,188
                                                                               -----------------    -------------
    Total liabilities                                                                    188,044          488,804
                                                                               -----------------    -------------
Commitments and contingencies:

Stockholders' equity (deficit):
  Preferred stock, par value $0.001; authorized 10,000,000
    shares; issued and outstanding 1,000,000 shares                                        1,000            1,000
  Common stock, par value $0.001;
          authorized 100,000,000 shares; issued and outstanding 99,378,452
          and 88,878,452 shares at
          December 31, 2005 and June 30, 2005                                             99,378           88,878
  Additional paid-in capital                                                           8,866,120        7,742,620
  Accumulated deficit                                                                 (8,916,361)      (8,120,341)
                                                                               -----------------    -------------
      Total stockholders' equity (deficit)                                                50,137         (287,843)
                                                                               -----------------    -------------
      Total liabilities and stockholders' equity (deficit)                     $         238,181    $     200,961
                                                                               =================    =============
</TABLE>

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

                                     F-2
<PAGE>

<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2005 AND 2004

                                        THREE MONTHS ENDED                 SIX MONTHS ENDED
                                    -----------------------------   -------------------------------
                                            DECEMBER 31,                   DECEMBER 31,
                                       2005              2004           2005               2004
                                    -----------       -----------   ------------      -------------
<S>                                    <C>                <C>           <C>                 <C>
Revenue                             $   134,018       $   124,089   $    246,233      $     216,600
                                    -----------       -----------   ------------      -------------

Operating expenses:
  Cost of sales (Except for items
  shown separately below)                45,685            27,085         82,901             47,285
  Selling, general and
  administrative expenses               505,954         3,825,925      1,241,714          4,232,537
  Depreciation expense                    5,427             4,612         10,115              9,224
                                    -----------       -----------   ------------      -------------
     Total operating expenses           557,066         3,857,622      1,334,730          4,289,046

           Loss from operations        (423,048)       (3,733,533)    (1,088,497)        (4,072,446)
                                    -----------       -----------   ------------      -------------
Other income and (expense):
  Interest income                             -                43              -                 83
  Interest expense                       (9,480)             (206)       (15,511)            (7,927)
  Loss on disposal of equipment          (2,811)                -         (2,811)                 -
  Gain on extinguishment of debt        310,799                 -        310,799                  -
                                    -----------       -----------    -----------      -------------
      Other income (expense)            298,508              (163)       292,477             (7,844)
                                    -----------       -----------    -----------      -------------
           Net loss                 $  (124,540)      $(3,733,696)   $  (796,020)     $  (4,080,290)
                                    ===========       ===========    ===========      =============
Net loss per common share - basic
and diluted                         $     (0.00)      $     (0.07)   $     (0.01)     $       (0.09)
                                    ===========       ===========    ============     =============
Weighted average shares of common
stock outstanding - basic
and diluted                          95,954,539        51,046,750     93,481,713         46,032,175

</TABLE>

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

                                     F-3
<PAGE>

<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005

                                                                                           ADDITIONAL
                                       PREFERRED STOCK                 COMMON STOCK          PAID-IN       ACCUMULATED
                                 SHARES            AMOUNT      SHARES            AMOUNT      CAPITAL          DEFICIT        TOTAL
                               ----------------------------------------------------------------------------------------------------
<S>                                <C>               <C>        <C>               <C>          <C>             <C>            <C>

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

Common stock issued for cash           -                -     4,500,000            4,500       205,500                -     210,000

Common stock issued for
     services to non-
     employees                         -                -    10,000,000           10,000       914,000                -     924,000

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

Net loss                               -                -             -                -             -         (796,020)   (796,020)
                               ----------------------------------------------------------------------------------------------------
Balance at December 31, 2005   1,000,000         $  1,000    99,378,452        $  99,378  $  8,866,120     $ (8,916,361)  $  50,137
                               ====================================================================================================
</TABLE>

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

                                     F-4
<PAGE>

<TABLE>
<CAPTION>

PEDIATRIC PROSTHETICS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 AND 2004


                                                                    2005                   2004
                                                              ----------------       ----------------
<S>                                                                 <C>                     <C>
Cash Flows From Operating Activities
   Net loss                                                   $       (796,020)      $     (4,080,290)
   Adjustments to reconcile net loss to net cash used by
     operating activities
     Depreciation expense                                               10,115                  9,224
     Loss on disposal of equipment                                       2,811                      -
     Share-based compensation                                          924,000              3,934,139
     Provision for doubtful accounts                                    22,921                 30,000
     Gain on extinguishment of debt                                   (310,799)                     -
     Changes in operating assets and liabilities:
       Accounts receivable                                             (64,208)               (67,724)
       Prepaid expenses and other current assets                           644                 (3,012)
       Accounts payable                                                 31,076                 24,520
       Accrued liabilities                                               8,964                 51,611
                                                              ----------------       ----------------
             Net cash used by operating activities                    (170,496)              (101,532)
                                                              ----------------       ----------------
Cash Flows From Investing Activities
   Purchase of furniture and equipment                                       -                   (322)
                                                              ----------------       ----------------
Cash Flows From Financing Activities:
   Payment in settlement of convertible debt                           (30,000)                     -
   Proceeds from common stock, net of expenses                         210,000                135,000
                                                              ----------------       ----------------
             Net cash provided by financing activities                 180,000                135,000

Net increase (decrease) in cash  and cash equivalents                    9,504                 33,146

Cash and cash equivalents, beginning of period                          29,818                  9,110
                                                              ----------------       ----------------
Cash and cash equivalents, end of period                      $         39,322       $         42,256
                                                              ================       ================
Supplemental disclosure of cash flow information
       Interest expense                                       $         11,731       $          3,042
       Income taxes                                           $              -       $              -

</TABLE>

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

                                     F-5
<PAGE>

PEDIATRIC PROSTHETICS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     --------------------------------------------------------------------

     GENERAL

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

     INTERIM  FINANCIAL  STATEMENTS

     The  unaudited  condensed  financial  statements  included herein have been
     prepared  by  the  Company,  without  audit,  pursuant  to  the  rules  and
     regulations  of  the  Securities  and  Exchange  Commission.  The financial
     statements  reflect all adjustments that are, in the opinion of management,
     necessary to fairly present such information. All such adjustments are of a
     normal recurring nature. Although the Company believes that the disclosures
     are  adequate  to  make  the  information presented not misleading, certain
     information  and  footnote  disclosures,  including  a  description  of
     significant  accounting  policies normally included in financial statements
     prepared in accordance with accounting principles generally accepted in the
     United States of America (US GAAP), have been condensed or omitted pursuant
     to  such  rules  and  regulations.

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

     USE  OF  ESTIMATES

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

     RECENTLY  ISSUED  PRONOUNCEMENTS

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

     In  May  2005,  the  FASB  issued  SFAS  No.  154,  "Accounting Changes and
     Error  Corrections",  a  replacement of Accounting Principles Board Opinion
     No. 20, "Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes
     in  Interim  Financial  Statements"  ("SFAS  154").  SFAS  154  changes the

                                     F-6
<PAGE>

     requirements  for  the  accounting  for,  and  reporting  of,  a  change in
     accounting  principle.  Previously,  voluntary  changes  in  accounting
     principles  were generally required to be recognized by way of a cumulative
     effect  adjustment  within net income during the period of the change. SFAS
     154  requires  retrospective  application  to  prior  periods'  financial
     statements,  unless  it  is  impracticable  to  determine  either  the
     period-specific effects or the cumulative effect of the change. SFAS 154 is
     effective  for  accounting  changes  made  in  fiscal years beginning after
     December  15,  2005;  however, the statement does not change the transition
     provisions  of any existing accounting pronouncements. The Company does not
     believe  adoption  of SFAS 154 will have a material effect on its financial
     position,  cash  flows  or  results  of  operations.


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

     Since  its  inception,  the  Company  has  suffered  significant net losses
     and  has  been dependent on outside investors to provide the cash resources
     to  sustain  its  operations. During the six months ended December 31, 2005
     and  2004,  the  Company  had  net  losses  of  $796,020  and  $4,080,290,
     respectively,  and  negative  cash  flows  from  operations of $170,496 and
     $101,532,  respectively.

     Negative  operating  results  have  produced  a  working capital deficit of
     $3,977  and  stockholders' equity of only $50,137 at December 31, 2005. The
     Company's  negative  financial  results  and its current financial position
     raise  substantial doubt about the Company's ability to continue as a going
     concern.

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

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

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

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

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


3.   CONVERTIBLE  DEBT
     -----------------

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

4.   INCOME  TAXES
     -------------

     At  December  31,  2005  the  Company  has  a  net  operating  loss
     carry-forward  ("NOL") of approximately $856,000 expiring through 2025. The
     Company  has  a deferred tax asset of approximately $291,000 resulting from
     this  NOL.  The  loss  carry-forwards  related to Grant Douglas Acquisition
     Corporation  prior  to  the  re-capitalization  are  insignificant  and are
     subject  to  certain limitations under the Internal Revenue Code, including
     Section 382 of the Tax Reform Act of 1986. Accordingly, such losses are not
     considered  in  the  calculation  of  deferred  tax  assets.  The  ultimate
     realization  of  the  Company's  deferred  tax  asset  is  dependent  upon
     generating sufficient taxable income prior to expiration of the NOL. Due to
     the  nature  of this NOL and because realization is not assured, management

                                     F-7
<PAGE>

     has established a valuation allowance relating to the deferred tax asset at
     both  December  31,  2005  and  June  30,  2005,  in an amount equal to the
     deferred  tax  asset.

     The  difference  between  the  benefit  for  income  taxes  and  the  34%
     federal  statutory  rate  for  the three months ended December 31, 2005 and
     2004  relates  primarily  to  non-deductible  share-based  compensation and
     increases  in  the  valuation  allowance  for  deferred  tax  assets.


5.   STOCKHOLDERS' EQUITY
     --------------------

     COMMON  STOCK  ISSUED  FOR  CASH

     From  time  to  time,  in  order  to  fund  operating  activities  of  the
     Company,  common  stock  is issued for cash. Depending on the nature of the
     offering and restrictions imposed on the shares being sold, the sales price
     of  the  common  stock may be below the fair market value of the underlying
     common  stock on the date of issuance. During the six months ended December
     31,  2005  the  Company  issued  4,500,000 shares of common stock at prices
     ranging from $0.035 to $0.05, for net cash proceeds of $210,000. During the
     six  months  ended December 31, 2005 the Company issued 6,000,000 shares of
     common  stock  to  consultants  at $0.094 per share and 4,000,000 shares at
     $0.09  per  share and recognized compensation expense of $924,000, which is
     included  in  selling,  general,  and  administrative  expenses.

     COMMON  STOCK  SURRENDERED

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


6.   SUBSEQUENT EVENTS
     -----------------

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

     In  February  2006,  we  entered  into  a  service  agreement (the "Service
     Agreement")  with  Global Media Fund Inc. ("Global"), whereby Global agreed
     to  distribute certain newspaper features, which Global has guaranteed will
     be  placed  in  at  least  100  newspapers and radio features regarding the
     Company  which  Global  has guaranteed will be placed in at least 400 radio
     stations.  In  consideration  for the Service Agreement, we agreed to issue
     Global  250,000  restricted  shares  of our common stock, which shares were
     issued  in March 2006; and agreed to issue Global a total of $112,500 worth
     of  our  common  stock (as calculated below), to be paid by the issuance of
     $28,125  worth of our common stock on May 1, 2006, August 1, 2006, November
     1,  2006  and  February  1, 2007. We have not issued Global the May 1, 2006
     payment.  The  value of our common stock in connection with the issuance of
     the  additional  shares to Global shall be equal to the value of the common
     stock  to  be  issued divided by 90% of the average of the closing value of
     the  common  stock on the five trading days prior to the date such stock is
     to  be  issued. For example, the average of the closing price of our common
     stock  for the five trading days prior to the May 1, 2006 payment was $0.07
     per  share.  Therefore, the amount of shares we are due to issue Global for
     such  May  1,  2006  payment  was $28,125 divided by $0.063 ($0.07 x 0.90),
     which  is  equal  to  approximately 446,429 shares of common stock. We also
     granted  Global piggyback registration rights in connection with the shares
     issued  to  Global  pursuant  to the Service Agreement. If we fail to issue
     Global  any  consideration owed pursuant to the Service Agreement when due,
     Global  may  terminate  the Service Agreement with thirty (30) days written

                                     F-8
<PAGE>

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

     On  March  28,  2006,  we  borrowed  $50,000  from  shareholders  of  the
     Company,  and issued those individuals a promissory note in connection with
     such loan. The promissory note bears interest at the rate of 12% per annum,
     and  is due and payable on September 29, 2006. The promissory note may also
     be  renewed  for  additional  thirty  (30) day periods at the option of the
     holder. This loan is also convertible into an aggregate of 1,428,571 shares
     of  common  stock at the rate of one share for each $0.035 owed. Mr. Kertes
     also  has  1,428,571  outstanding  warrants  with  the  Company,  which are
     exercisable  for  shares of common stock at an exercise price of $0.045 per
     share,  and  which  expire  on  May  22,  2008.

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

     We  also  agreed  to  issue  a  finder,  Lionheart  Associates,  LLC  doing
     business  as  Fairhills Capital ("Lionheart"), a finder's fee in connection
     with the funding which included warrants to purchase up to 2,000,000 shares
     of  our common stock at an exercise price of $0.10 per share. The Lionheart
     warrants  expire if unexercised on May 30, 2014. We claim an exemption from
     registration  afforded by Section 4(2) of the Securities Act of 1933, since
     the  foregoing transaction did not involve a public offering, the recipient
     had  access  to  information  that  would  be  included  in  a registration
     statement,  took  the  shares  for  investment  and  not resale and we took
     appropriate  measures  to  restrict  transfer.

     Additionally,  in  connection  with  the  closing  of  the  sale  of  the
     Debentures,  described above, we agreed to issue Geoff Eiten, as a finder's
     fee  in  connection with the funding, 3,000,000 warrants to purchase shares
     of  our  common stock. The 3,000,000 warrants are exercisble into shares of
     our  common  stock  as follows, 1,000,000 warrants are exercisable at $0.10
     per  share,  1,000,000  warrants  are  exercisable  at $0.20 per share, and
     1,000,000 warrants are exercisable at $0.30 per share. The warrants granted
     to  Mr.  Eiten expire if unexercised on May 11, 2007. We claim an exemption
     from  registration  afforded by Section 4(2) of the Securities Act of 1933,
     since  the  foregoing  transaction  did  not involve a public offering, the
     recipient  had  access  to  information  that  would  be  included  in  a
     registration  statement,  took the shares for investment and not resale and
     we  took  appropriate  measures  to  restrict  transfer.

                                     F-9
<PAGE>

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

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

OVERVIEW

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

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

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

HISTORY  OF  THE  COMPANY

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

<PAGE>

THE  MARKETPLACE

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

COMPETITION

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

Management believes the challenge to effectively treat children with a limb-loss
in  the  United  States  is  compounded  by  the  time  constraints  of  local
practitioners  working primarily with their adult patients and a limited overall
number  of  board  certified  prosthetists.  To  engage  in  the  intensive
patient-family  focus  required to fit the occasional infant or small child puts
enormous  time  pressure  on  local practitioners trying to care for their adult
patients.

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

<PAGE>

EMPLOYEES

As  of December 31, 2005, we had six employees, three of which are in management
positions.  We  also  use  the  services  of outside consultants as necessary to
provide  therapy,  public  relations  and  business  and  financial  services.

AGREEMENTS  WITH  HOST  AFFILIATES

We  have entered into consulting contracts with twelve host prosthetic providers
("Host  Affiliates")  with  facilities  at  various  locations  in  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
Affiliate  on  a  case-by-case  basis.  These contracts generally have automatic
renewals  every  six  months  unless  either  party gives notice of termination.

REGULATIONS

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

                                  RECENT EVENTS

In  November  2005,  we  entered  into  a  Settlement Agreement and Release with
Secured  Releases,  LLC ("Secured" and the "Release").  Pursuant to the Release,
we and Secured agreed to settle our claims against each other in connection with
a  convertible  promissory note issued in February 2001.  In connection with the
Release,  we  agreed  to pay Secured $30,000, which has been paid to date and we
and Secured agreed to release each other, our officers, directors, shareholders,
members,  agents, employees, representatives and assigns from any and all causes
of  action,  suits,  claims,  demands,  obligations, liabilities, damages of any
nature,  whatsoever,  known or unknown in connection with the promissory note or
any  other  dealings,  negotiations  or  transactions  between  us  and Secured.

                                SUBSEQUENT EVENTS

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

<PAGE>

On  March  28,  2006,  we borrowed $50,000 from shareholders of the Company, and
issued  those  individuals  a promissory note in connection with such loan.  The
promissory  note  bears  interest  at  the rate of 12% per annum, and is due and
payable  on  September  29,  2006.  The  promissory note may also be renewed for
additional  thirty  (30)  day periods at the option of the holder.  This loan is
also  convertible  into  an aggregate of 1,428,571 shares of common stock at the
rate of one share for each $0.035 owed.  The shareholders also have 1,428,571 in
outstanding  warrants  with  the  Company,  which  are exercisable for shares of
common  stock  at an exercise price of $0.045 per share, and which expire on May
22,  2008.

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 "Securities
Purchase  Agreement").  Pursuant to the Securities Purchase Agreement, we agreed
to  sell  the  investors  $1,500,000  in Convertible Debentures, which are to be
payable  in  three  tranches, $600,000 upon signing the definitive agreements on
May  30,  2006, $400,000 upon the filing of a registration statement to register
shares  of common stock which the Convertible Debentures are convertible into as
well  as  the  shares  of  common stock issuable in connection with the Warrants
(defined  below),  and  $500,000  upon  the  effectiveness  of such registration
statement.   The  Convertible  Debentures  are to be convertible into our common
stock  at  a  discount  to  the  then  trading  value  of  our  common  stock.
Additionally, in connection with the Securities Purchase Agreement, we agreed to
issue  the  third parties Warrants to purchase an aggregate of 50,000,000 shares
of  our  common  stock at an exercise price of $0.10 per share (the "Warrants").
The  Securities  Purchase  Agreement,  Convertible  Debentures  and Warrants are
described  in  greater detail in our report on Form 8-K which was filed with the
Commission  on  June  2,  2006.

In  February 2006, we entered into a service agreement (the "Service Agreement")
with  Global  Media  Fund  Inc.  ("Global"), whereby Global agreed to distribute
certain  newspaper  features,  which  Global has guaranteed will be placed in at
least  100  newspapers and radio features regarding the Company which Global has
guaranteed will be placed in at least 400 radio stations.   In consideration for
the  Service  Agreement,  we agreed to issue Global 250,000 restricted shares of
our  common  stock,  which shares were issued in March 2006; and agreed to issue
Global  a  total of $112,500 worth of our common stock (as calculated below), to
be  paid  by  the  issuance of $28,125 worth of our common stock on May 1, 2006,
August  1,  2006,  November  1,  2006  and February 1, 2007.  We have not issued
Global  the  May  1,  2006 payment.  The value of our common stock in connection
with the issuance of the additional shares to Global shall be equal to the value
of  the  common  stock to be issued divided by 90% of the average of the closing
value  of the common stock on the five trading days prior to the date such stock
is  to  be  issued.  For example, the average of the closing price of our common
stock  for  the five trading days prior to the May 1, 2006 payment was $0.07 per
share.  Therefore,  the amount of shares we are due to issue Global for such May
1,  2006 payment was $28,125 divided by $0.063 ($0.07 x 0.90), which is equal to
approximately  446,429 shares of common stock.  We also granted Global piggyback
registration  rights  in connection with the shares issued to Global pursuant to
the  Service  Agreement.  If  we  fail  to  issue  Global any consideration owed
pursuant  to  the  Service  Agreement when due, Global may terminate the Service
Agreement  with  thirty (30) days written notice to us at which time Global will
keep  all consideration issued as of that date.  We have the right to cancel the
Service  Agreement at anytime with thirty (30) days written notice to Global, at
which  time  Global  will  keep  all  consideration  issued  as  of  that  date.

<PAGE>

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  department  of  the  Host-Affiliates only upon
performance of services by that Host-Affiliate. We consider such revenues, which
are  net  of  any  costs  of  goods,  a  "fee  for  services".

Subsequent to December 31, 2005, we amended our accounting to recognize revenues
from  the  sale  of  prothetic  devices  through  the  billing department of our
Host-Affiliates  in  the  same  fashion as we recgonize revenue when we directly
bill  customers.

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

When  we  directly  bill customers, revenue is recorded at "usual and customary"
rates, expressed as a percentage above Medicare procedure billing codes. Billing
codes  are  frequently  updated and as soon as we receive updates we reflect the
change  in  our  billing  system. There is generally a "co-payment" component of
each billing for which the patient-family is responsible. When the final appeals
process  to  the third party payors is completed, we bill the patient family for
the  remaining  portion  of  the  "usual  and  customary"  rate.  As part of our
preauthorization  process  with  third-party  payors, we validate our ability to
bill  the  payor,  if applicable, for the service provided before we deliver the
device.  Subsequent to billing for devices and services, problems may arise with
pre-authorization  or with other insurance issues with payors. If there has been
a  lapse  in  coverage, or an outstanding "co-payment" component, the patient is
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
Share-Based  Compensation"  (SFAS 123R). SFAS 123R eliminates our ability to use
the  intrinsic value method of accounting under APB 25, and generally requires a
us  to  reflect in our income statement, instead of pro forma disclosures in its
financial  footnotes,  the cost of employee services received in exchange for an
award  of equity instruments based on the grant-date fair value of the award. We
will estimate the grant-date fair value using option-pricing models adjusted for
the unique characteristics of those equity instruments. Among other things, SFAS
123R  requires  us to estimate the number of instruments for which the requisite

<PAGE>

service  is expected to be rendered, and if the terms or conditions of an equity
award  are  modified after the grant date, to recognize incremental compensation
cost  for  such a modification by comparing the fair value of the modified award
with  the  fair  value  of  the  award  immediately  before the modification. In
addition,  SFAS 123R amends FASB Statement No. 95, "Statement of Cash Flows," to
require that we treat excess tax benefits as a financing cash inflow rather than
as  a  reduction  of  taxes  paid  in our statement of cash flows. SFAS 123R was
effective for us beginning July 1, 2005. The Company had no outstanding warrants
or  options at the date of adoption SFAS 123R and, accordingly, the adoption had
no  impact  on  us.

                               PLAN OF OPERATIONS

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

We  have established working relationships with twelve Host Affiliates operating
in  approximately  19  states. In establishing the relationships with the twelve
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 prosthetist and two additional support personnel during
the  next twelve months, funding permitting, of which there can be no assurance.

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

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

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

<PAGE>

                         COMPARISON OF OPERATING RESULTS

THREE MONTHS ENDED DECEMBER 31, 2005 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
2004

We  had  $134,018  of  revenue  for  the  three  months ended December 31, 2005,
compared to revenue of $124,089 for the three months ended December 31, 2004, an
increase  in  revenue  of  $9,929  or 8.0% from the prior year.  The increase in
revenue  for  the  three  months  ended December 31, 2005, compared to the three
months  ended  December 31, 2004, was mainly due to increased fees received from
our  Host  Affiliates.

We  had total operating expenses for the three months ended December 31, 2005 of
$557,066,  compared  to  total  operating  expenses  for  the three months ended
December  31,  2004  of  $3,857,622,  a  decrease in total operating expenses of
$3,300,556  or  85.6%  from  the  prior period.  The decrease in total operating
expenses  was  mainly  attributable  to  the  $3,308,386  or  90.3%  decrease in
share-based  compensation,  to  $354,000 for the three months ended December 31,
2005, compared to $3,662,386 for the three months ended December 31, 2004.  Also
included  in  total  operating  expenses for the three months ended December 31,
2005  were  selling,  general  and  administrative  expenses  of $505,954, which
includes  share-based  compensation,  and  depreciation  expense  of  $5,427.

Additionally included in operating expenses was $45,685 of cost of sales for the
three  months  ended  December 31, 2005, compared to cost of sales for the three
months  ended  December  31,  2004  of $27,085, an increase in costs of sales of
$18,600  or  68.7%  from the prior year.  Costs of sales increased for the three
months  ended December 31, 2005, compared to the three months ended December 31,
2004  due  to increased purchases of parts and components in connection with new
fittings  during  the  three  months  ended  December  31,  2005.

Selling,  general and administrative expenses as a percentage of revenue for the
three  months  ended December 31, 2005 were 113.4%, compared to selling, general
and  administrative  expenses as a percentage of revenue of 131.8% for the three
months  ended  December  31,  2004,  which,  excluding share-based compensation,
represented  a  decrease  in  selling,  general and administrative expenses as a
percentage  of revenue of 12.5% from the prior period.  This decrease was mainly
due  to  the  8.0%  increase  in revenue for the three months ended December 31,
2005.  We  expect  our  selling,  general  and  administrative  expenses  as  a
percentage  of  revenue  to  initially  be higher than future percentages due to
costs  associated  with  building  an  administrative  infrastructure.

We  had  a  loss from operations of $423,048 for the three months ended December
31,  2005, compared to a loss from operations of $3,733,533 for the three months
ended  December  31,  2004,  a decrease in loss from operations of $3,310,485 or
88.6%  from  the  prior  year.  The  decrease in loss from operations was mainly
caused  by  the $3,308,386 or 90.3% decrease in share-based compensation for the
three  months  ended  December  31,  2005,  compared  to  the three months ended
December  31,  2004.

<PAGE>

We  had  total  other income of $298,508 for the three months ended December 31,
2005,  compared  to  total  other  expense  of  $163  for the three months ended
December 31, 2004.  The change from other expense to other income was due to the
$310,799  of gain on extinguishment of debt in connection with our November 2005
settlement  agreement  regarding  our  convertible  debt.  Under  the settlement
agreement,  we paid $30,000 for the compete discharge of $201,045 of convertible
debt  and  $139,754  of  related  accrued  interest,  resulting  in  a  gain  on
extinguishment of debt of $310,799 for the three months ended December 31, 2005.

We  had  a  net  loss  of $124,540 for the three months ended December 31, 2005,
compared  to  a  net  loss of $3,733,696 for the three months ended December 31,
2004,  a  decrease  in net loss of $3,609,156 or 96.6% from the prior year.  The
decrease  in  net  loss  was  mainly  due to the $3,308,386 or 90.3% decrease in
share-based  compensation  for the three months ended December 31, 2005 compared
to  the  three  months  ended  December  31,  2004  and  the $310,799 of gain on
extinguishment  of  debt,  offset  by  the  $18,600 or 68.7% increase in cost of
sales.

SIX  MONTHS  ENDED  DECEMBER  31, 2005 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2004

We  had revenue of $246,233 for the six months ended December 31, 2005, compared
to  revenue  of $216,600 for the six months ended December 31, 2004, an increase
in revenue of $29,633 or 13.7% from the prior year.  The increase in revenue for
the  six  months  ended  December  31,  2005,  compared  to the six months ended
December  31,  2004,  was  mainly  due  to increased fees received from our Host
Affiliates.

We  had total operating expenses of $1,334,730 for the six months ended December
31,  2005, compared to total operating expenses of $4,289,046 for the six months
ended December 31, 2004, a decrease in total operating expenses of $2,954,316 or
68.8%  from  the  previous  year.  The  decrease in total operating expenses was
mainly  due to the $3,010,139 or 76.3% decrease in share-based compensation from
the  six  months  ended  December  31, 2004 to the six months ended December 31,
2005.  Also  included  in  total  operating  expenses  for  the six months ended
December 31, 2005 were selling, general and administrative expenses of $307,599,
excluding  share-based  compensation  of  $924,000,  and depreciation expense of
$10,115.

Also  included in total operating expenses were cost of sales of $82,901 for the
six months ended December 31, 2005, compared to cost of sales of $47,285 for the
six  months  ended December 31, 2004, an increase of $35,616 or 75.3% in cost of
sales  from  the  prior year.  Costs of sales increased for the six months ended
December  31,  2005,  compared  to the six months ended December 31, 2004 due to
increased  purchases  of  parts  and  components in connection with new fittings
during  the  six  months  ended  December  31,  2005.

Selling,  general  and  administrative  expenses,  excluding  share-based
compensation,  as  a percentage of revenue for the six months ended December 31,
2005  were  129.0%,  compared  to  selling, general and administrative expenses,
excluding share-based compensation, as a percentage of revenue of 137.8% for the
six  months  ended  December  31, 2004, which represented a decrease in selling,
general  and administrative expenses as a percentage of revenue of 5.6% from the
prior  period. This decrease was mainly due to the 13.7% increase in revenue for

<PAGE>

the  six  months  ended  December  31,  2005. We expect our selling, general and
administrative  expenses  as a percentage of revenue to initially be higher than
future  percentages due to early stage startup costs associated with building an
administrative  infrastructure.

We  had  a  total  loss  from  operations of $1,088,497 for the six months ended
December  31,  2005,  compared to a total loss from operations of $4,072,446 for
the  six  months  ended December 31, 2004.  The decrease in loss from operations
was  mainly  caused  by  the  $3,010,139  or  76.3%  decrease  in  share-based
compensation from the six months ended December 31, 2004 to the six months ended
December  31,  2005.

We  had  total  other  income  of $292,477 for the six months ended December 31,
2005,  compared  to  total  other  expense  of  $7,844  for the six months ended
December 31, 2004, which represented an increase in other income of $300,321 for
the  six months ended December 31, 2005.  The change from a net other expense to
net  other  income was due to $310,799 of gain on extinguishment of debt for the
six  months  ended  December  31,  2005.  In  November  2005,  we entered into a
Settlement  Agreement  and Release with Secured Releases, LLC ("Secured" and the
"Release").  Pursuant to the Release, we and Secured agreed to settle our claims
against  each  other  in connection with a convertible promissory note issued in
February  2001.  In  connection  with  the  Release,  we  agreed  to pay Secured
$30,000,  which  has been paid to date and we and Secured agreed to release each
other,  our  officers,  directors,  shareholders,  members,  agents,  employees,
representatives  and  assigns  from any and all causes of action, suits, claims,
demands,  obligations,  liabilities, damages of any nature, whatsoever, known or
unknown  in  connection  with  the  promissory  note  or  any  other  dealings,
negotiations  or  transactions  between  us  and  Secured.  Under the settlement
agreement,  we paid $30,000 for the compete discharge of $201,045 of convertible
debt  and  $139,754  of  related  accrued  interest,  resulting  in  a  gain  on
extinguishment of debt of $310,799 for the three months ended December 31, 2005.

We  had a total net loss of $796,020 for the six months ended December 31, 2005,
compared to a total net loss of $4,080,290 for the six months ended December 31,
2004, a decrease in net loss of $3,284,270 or 80.4% from the pervious year.  The
decrease  in  net  loss  was  mainly  due  to the 3,010,139 or 76.3% decrease in
share-based  compensation from the six months ended December 31, 2004 to the six
months  ended  December  31,  2005 and the $310,799 of gain on extinguishment on
debt,  offset  by  the  $35,616  or  75.3%  increase  in  cost  of  sales.

LIQUIDITY AND CAPITAL RESOURCES

We  had  total  assets  of $238,181 as of December 31, 2005, compared with total
assets  of $200,961 as of the fiscal year ended June 30, 2005, which represented
a  $37,220  or  18.5%  increase  in  total  assets.

Total  assets  as  of December 31, 2005, included current assets of $169,879 and
non-current  assets  of  $68,302.

We  had  negative  working  capital of $3,977 and a total accumulated deficit of
$8,916,361  as  of  December  31,  2005.

<PAGE>

We  had total liabilities of $188,044 as of December 31, 2005, compared to total
liabilities  of $488,804 for the fiscal year ended June 30, 2005, representing a
decrease  in  total  liabilities  from  the  fiscal  year ended June 30, 2005 of
$300,760  or  61.5%.

Total  liabilities  as  of  December  31,  2005  included current liabilities of
$173,856  and  non-current  liabilities  consisting of deferred rent of $14,188.

Current  liabilities  as of December 31, 2005 included trade accounts payable of
$120,356, accrued liabilities of $53,000, which included deferred salary payable
to  our officers and amounts to 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.

We  had  total  net  cash  used  by operating activities of $170,496 for the six
months  ended  December  31, 2005, which was mainly due to $769,020 of net loss;
$310,799  of  gain  on  extinguishment  on  debt;  and an increase of $64,208 in
accounts  receivable offset by $924,000 of share-based compensation, relating to
10,000,000  shares  of common stock issued to consultants for marketing services
in  connection with such consultants making families of limb loss patients aware
of the Company's services, of which 2,000,000 shares were subsequently cancelled
in  March  2006,  by  a consultant in connection with such consultants notice to
the  Company  that  he  would not be able to spend as much time on the Company's
marketing  campaign  as  previously  anticipated.

We  had net cash provided by financing activities of $180,000 for the six months
ended  December  31,  2005, which included $210,000 of proceeds from the sale of
4,500,000 shares of common stock to four individuals for aggregate consideration
of  $210,000  offset  by $30,000 of payment in settlement of convertible debt in
connection  with  the  Release,  described  above  under  "Recent  Events."

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 the money was loaned, renewable for
additional  sixty  (60)  day  periods  at  the  option  of  the  individuals.

On  March  28,  2006,  we borrowed $50,000 from shareholders of the Company, and
issued  those  individuals  a promissory note in connection with such loan.  The
promissory  note  bears  interest  at  the rate of 12% per annum, and is due and
payable  on  September  29,  2006.  The  promissory note may also be renewed for
additional  thirty  (30)  day  periods  at  the  option  of  the  holder.

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 "Securities
Purchase  Agreement").  Pursuant to the Securities 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, $400,000 upon the filing of a registration statement
to  register  shares  of  common  stock  which  the  Convertible  Debentures are
convertible  into  as  well as the shares of common stock issuable in connection
with  the  Warrants (defined below), and $500,000 upon the effectiveness of such
registration  statement.   The Convertible Debentures are to be convertible into
our  common  stock  at a discount to the then trading value of our common stock.

<PAGE>

Additionally, in connection with the Securities Purchase Agreement, we agreed to
issue  the  third parties warrants to purchase an aggregate of 50,000,000 shares
of  our  common  stock at an exercise price of $0.10 per share (the "Warrants").

We  have historically been dependent on the sale of common stock for funding for
our  operations.  In connection with such funding, we issued 4,500,000 shares of
common  stock  at  prices  ranging from $0.035 to $0.05 per share during the six
months  ended  December  31,  2005,  for  aggregate  net  proceeds  of $210,000.
Additionally,  we  issued 10,000,000 shares of common stock to consultants at an
average price of $0.0934 per share during the six months ended December 31, 2005
and  recognized  compensation expense of $924,000, which is included in selling,
general,  and  administrative  expenses.

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

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

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

During  the fiscal years ended June 30, 2005 and 2004, we incurred net losses of
$4,390,948  and  $3,729,393,  respectively,  and experienced negative cash flows
from  operations  of  $298,454 and $312,148, respectively. During the six months
ended  December  31, 2005, we continued to experience negative operating results
as  we  reported  a  net  loss  of  $796,020  and  had  negative cash flows from
operations  of  $170,496.  Our  losses  are  related to three primary factors as
follows:  1)  We  are  not  currently generating sufficient revenue to cover our
fixed costs and we believe that the break-even point from a cash flow standpoint
may  require  that  we  fit  as many as 100 clients, up from 28 fitted in fiscal
2005;  2)  We  have issued a significant number of our shares of common stock to
compensate  employees and consultants and those stock issuances have resulted in
charges  to  income  of  $4,020,264 and $377,000 during the years ended June 30,
2005 and 2004, respectively and charges to income of $924,000 for the six months
ended  December  31, 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 and agreed to sell
them  an  additional  $900,000  in  Convertible  Debentures.  These  Convertible
Debentures  and  interest  may be converted into shares of our common stock at a
discount  to  market.  However,  if  they are not convertible into shares of our
common  stock,  until  our operating results improve, if at all, we will need to
obtain  outside  financing  to  fund  our  business  operations and to repay the
Convertible  Debentures.  If  we  are  forced to raise additional debt or equity
financing,  such  financing  may  be  dilutive  to our shareholders. The sale of
equity  securities,  including  the  conversion of outstanding amounts under the
Convertible  Debentures,  could  dilute our existing stockholders' interest, and
borrowings  from  third  parties  could  result  in  our assets being pledged as
collateral  and  loan  terms  that  would increase our debt service requirements
and/or  restrict  our  operations.  There  is  no assurance that capital will be
available from any of these sources, or, if available, upon terms and conditions
acceptable  to  us.  If we are unable to repay the Convertible Debentures and/or
raise  additional  capital  we  may be forced to curtail or abandon our business
operations.

<PAGE>

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 Mrs. 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.

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

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

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

Since the majority of our first-time prospective fittings are assumed to be with
children  with a pre-natal limb-loss, breakthroughs in pre-natal safety regimens
and  treatment  could  end  the need for the vast majority of future fittings of

<PAGE>

pediatric  prosthetics.  As  such,  there can be no assurance that the number of
children requiring our services will continue to grow in the future, and in fact
the  number  of  such  children  may  decline  as  breakthroughs  occur.

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

We derived a significant percentage of our net sales for the year ended June 30,
2005  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 six
months  ended  December  31,  2005  and  2004, we had net losses of $796,020 and
$4,080,290, respectively and negative cash flows from operations of $170,496 and
$101,532,  respectively.  Additionally, negative operating results have produced
a  working capital deficit of $3,977 and stockholders' equity of only $50,137 at
December  31,  2005.  Due  to  our  negative  financial  results and our current
financial  position,  our independent auditor has raised substantial doubt about
our  ability  to  continue  as  a  going  concern.

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

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

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

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

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

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

We  have  never  paid  cash  dividends  on  any  of our securities. Our Board of
Directors  does  not anticipate paying cash dividends in the foreseeable future.

<PAGE>

We  currently  intend  to  retain  future  earnings  to finance our growth. As a
result,  your  return  on  an investment in our stock will likely depend on your
ability  to  sell  our  stock  at  a profit, of which there can be no assurance.

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

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

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

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

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

As of May 9, 2006, our President and Chief Executive Officer, Linda Putback-Bean
beneficially  owned  30,210,251 shares of common stock or approximately 30.9% of
our  outstanding  common  stock.  Additionally,  Mrs.  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 Mrs. 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 50.4% of our total voting
power  based  on 117,828,462 voting shares, which includes the 97,828,462 shares
of  common  stock  outstanding  and  the  20,000,000  shares  which our Series A

<PAGE>

Convertible  Preferred  Stock  are  able  to  vote.  This  concentration  of  a
significant  percentage  of  voting  power  gives  our  management  substantial
influence  over  any matters that require a shareholder vote, including, without
limitation, the election of Directors and/or approving or preventing a merger or
acquisition,  even  if  their  interests  may  conflict  with  those  of  other
shareholders.  Such control could also have the effect of delaying or preventing
a  change  in  control  or  otherwise  discouraging  a  potential  acquirer from
attempting  to obtain control of the Company. Such control could have a material
adverse  effect  on  the  market  price  of  our  common  stock  or  prevent our
shareholders from realizing a premium over the then prevailing market prices for
their  shares  of  common  stock.

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  May  9,  2006,  we  had  97,828,462  shares  of  common stock issued and
outstanding  out  of  a  total of 100,000,000 shares of common stock authorized,
leaving  us  the  ability  to  issue  only approximately 2,171,538 shares of our
common  stock. As a result, we do not have a sufficient number of authorized but
unissued shares to allow for the conversion of our outstanding Debentures by the
Debenture  holders  and/or the exercise of the Warrant. As a result, we may face
penalties  in connection with such conversions and/or exercises and/or be forced
to  repay  such Debentures in cash, which cash may not be available on favorable
terms,  if  at  all.  We  currently have plans to obtain shareholder approval to
increase  our  authorized  common stock in the future. If we do not increase our
authorized  shares in the future, we could face penalties in connection with our
inability to allow the Debenture holders to convert their Debentures into shares
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.

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 $5.00 per
share.  We  anticipate the trading price of our common stock will continue to be
below  $5.00  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

<PAGE>

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

<PAGE>

weaknesses, the market price of our stock could decline, and we could be subject
to sanctions or investigations by the SEC or other regulatory authorities, which
would  require  additional  financial  and  management  resources.

GOVERNMENT  REGULATION

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

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

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

With  respect  to compensation arrangements, there are exceptions under Stark II
that  permit  physicians  to  maintain  certain  business  arrangements, such as

<PAGE>

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,  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.

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

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

<PAGE>

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 are 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 Principal
     Financial  Officer,  as  appropriate,  to  allow timely decisions regarding
     required  disclosure.

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

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

ITEM 2.  CHANGES IN SECURITIES

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

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

In  September  2005,  we  issued an aggregate of 10,000,000 restricted shares of
common  stock  to  four  consultants (which included 2,000,000 shares which were
later  cancelled  in  March  2006) in connection with their entry into marketing

<PAGE>

agreements, whereby they agreed to market our prosthetics services.  We claim an
exemption  from  registration afforded by Section 4(2) of  the Securities Act of
1933  for  the  above issuances, since the foregoing issuances did not involve a
public  offering,  the recipients  took the shares for investment and not resale
and  we  took  appropriate  measures  to  restrict  transfer. No underwriters or
agents  were  involved  in  the  foregoing  issuances  and  we  paid  no
underwriting  discounts  or  commissions.

In  September 2005, our Chief Executive Officer and Director, Linda Putback-Bean
cancelled  4,000,000  of  shares  that  were  previously issued to Mrs. Bean for
services  in  2005. These shares were cancelled by Mrs. Bean to provide a larger
number  of  authorized  and unissued shares, which allowed the Company to retain
and  pay  consultants  in  shares  for  services.  It  is  anticipated  that the
4,000,000  shares will be reissued to Mrs. Bean upon such time as the Company is
able  to  increase  its  authorized  and  unissued  shares.

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













<PAGE>

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

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

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

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

In connection with the sale of the Debentures, we issued the various third party
Purchasers Stock Purchase Warrants to purchase an aggregate of 50,000,000 shares
of  our  common  stock  at  an exercise price of $0.10 per share, which warrants
expire  if  unexercised on May 30, 2013. We claim an exemption from registration
provided  by  Rule  506  of  Regulation  D  for  the  issuance  of the warrants.

We  also  agreed  to issue a finder, Lionheart Associates, LLC doing business as
Fairhills  Capital  ("Lionheart"), a finder's fee in connection with the funding
which  included  warrants to purchase up to 2,000,000 shares of our common stock
at  an  exercise  price  of  $0.10  per  share. The Lionheart warrants expire if
unexercised on May 30, 2014. We claim an exemption from registration afforded by
Section  4(2) of the Securities Act of 1933, since the foregoing transaction did
not  involve  a  public  offering,  the recipient had access to information that
would  be  included  in a registration statement, took the shares for investment
and  not  resale  and  we  took  appropriate  measures  to  restrict  transfer.

Additionally,  in  connection  with  the  closing of the sale of the Debentures,
described above, we agreed to issue Geoff Eiten, as a finder's fee in connection
with  the  funding,  3,000,000  warrants to purchase shares of our common stock.
The  3,000,000  warrants  are  exercisble  into  shares  of  our common stock as
follows,  1,000,000  warrants  are  exercisable  at  $0.10  per share, 1,000,000

<PAGE>

warrants  are  exercisable  at  $0.20  per  share,  and  1,000,000  warrants are
exercisable  at  $0.30  per  share.  The warrants granted to Mr. Eiten expire if
unexercised on May 11, 2007. We claim an exemption from registration afforded by
Section  4(2) of the Securities Act of 1933, since the foregoing transaction did
not  involve  a  public  offering,  the recipient had access to information that
would  be  included  in a registration statement, took the shares for investment
and  not  resale  and  we  took  appropriate  measures  to  restrict  transfer.

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

     None.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     a)     Exhibits

     Exhibit No.          Description

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

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

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

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

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

    10.2*                 Settlement Agreement with Secured Releases, LLC

    10.1(2)               Securities Purchase Agreement

    10.2(2)               Callable Secured Convertible Note with AJW
                          Offshore, Ltd.

    10.3(2)               Callable Secured Convertible Note with AJW
                          Partners, LLC

    10.4(2)               Callable Secured Convertible Note with AJW Qualified
                          Partners, LLC

<PAGE>

    10.5(2)               Callable Secured Convertible Note with New Millennium
                          Capital Partners II, LLC

    10.6(2)               Stock Purchase Warrant with AJW Offshore, Ltd.

    10.7(2)               Stock Purchase Warrant with AJW Partners, LLC

    10.8(2)               Stock Purchase Warrant with AJW Qualified
                          Partners, LLC

    10.9(2)               Stock Purchase Warrant with New Millennium Capital
                          Partners II, LLC

   10.10(2)               Security  Agreement

   10.11(2)               Intellectual  Property  Security  Agreement

   10.12(2)               Registration Rights Agreement


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

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

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

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

* Filed Herein.

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

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


b)     REPORTS ON FORM 8-K

     The Company filed no reports on Form 8-K during the quarter for which this
report is filed.

<PAGE>

                                   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: June 28, 2006               By: /s/ Linda Putback-Bean
                                      ------------------------
                                      Linda Putback-Bean
                                      Chief Executive Officer

<PAGE>