<PAGE>

                                  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 JUNE 30, 2005

   |_| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
       ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO
                              ---------------------   ---------------------

                        COMMISSION FILE NUMBER 000-51492

                          SYNOVA HEALTHCARE GROUP, INC.
        (Exact name of small business issuer as specified in its charter)

             NEVADA                                              91-1951171
----------------------------------                          --------------------
 (State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

              1400 N. Providence Road, Suite 6010, Media, PA 19063
              ----------------------------------------------------
                    (Address of principal executive offices)

                                  (610)565-7080
                                  -------------
                           (Issuer's telephone number)

                                 Not Applicable
                                 --------------
     (Former name, former address, and former fiscal year, if changed since
                                  last report)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

As of October 3, 2005, the number of shares of common stock, par value $.001,
outstanding was 12,937,952.

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>
                          SYNOVA HEALTHCARE GROUP, INC.

                                   FORM 10-QSB
                       FOR THE QUARTER ENDED JUNE 30, 2005
                                TABLE OF CONTENTS


ITEM NO.                                                                PAGE NO.
--------                                                                --------

PART 1     FINANCIAL INFORMATION

Item 1.    Financial Statements...............................................3

Item 2.    Management's Discussion and Analysis or Plan of Operation.........11

Item 3.    Controls and Procedures...........................................19

PART II    OTHER INFORMATION

Item 1.    Legal Proceedings.................................................19

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.......19

Item 3.    Defaults Upon Senior Securities...................................19

Item 4.    Submission of Matters to a Vote of Security Holders...............19

Item 5.    Other Information.................................................19

Item 6.    Exhibits..........................................................19

       Form of Stock Option Agreement
       Chief Executive Officer Certification
       Chief Financial Officer Certification
       Section 1350 Certification of the Chief Executive Officer
       Section 1350 Certification of the Chief Financial Officer


                                       2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS

                 SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                         June 30,2005     December 31, 2004
                                                                           Unaudited           Audited
<S>                                                                     <C>               <C>
ASSETS
Cash                                                                    $       825,308     $       10,554
Accounts Receivable                                                             314,809             84,423
Inventory                                                                       472,263            433,545
Prepaid Expenses                                                                127,856             56,345
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                    $     1,740,236            584,867

Property and equipment-net                                                       32,088             31,654

Deposits                                                                          6,190              6,190

----------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                            $     1,778,514     $      627,711
==========================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts Payable & Accrued Expenses                                     $       672,995     $      927,334
Due to Shareholder                                                                                   2,275
Loans Payable                                                                   397,508            475,000
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                               $     1,070,503     $    1,404,609

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $0.001 par value; 50,000,000 shares authorized,
no shares outstanding                                                                 -                  -
Common Stock, $0.001 par value; 150,000,000 shares authorized;
12,937,952 and 5,889,905 issued and outstanding at June 30, 2005 and
December 31, 2004                                                                12,938              5,890
Additional Paid In Capital                                                    4,585,797          1,410,055
Accumulated Deficit                                                          (3,890,724)        (2,197,843)
----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                    $       708,011     $     (781,898)
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)                      $     1,778,514     $      627,711
==========================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                 SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                       FOR THE THREE           FOR THE THREE
                                                        MONTHS ENDED            MONTHS ENDED
                                                       JUNE 30, 2005           JUNE 30, 2004
<S>                                                   <C>                    <C>
Net Sales                                             $      109,124         $       106,396
Cost of Goods Sold                                            35,610                  20,531
---------------------------------------------------------------------------------------------
GROSS PROFIT                                          $       73,514         $        85,865

Selling, general and administrative expenses                 797,824                 439,842

---------------------------------------------------------------------------------------------
OPERATING LOSS                                        $     (724,310)        $      (353,977)

Interest (income) expense                                      3,733                  17,592

---------------------------------------------------------------------------------------------
NET LOSS                                              $     (728,043)        $      (371,569)
=============================================================================================

Basic and diluted loss per share                      $        (0.05)        $         (0.57)

Basic and diluted weighted average number of shares       12,937,952                 648,050
</TABLE>




See accompanying notes to consolidated financial statements

                                       4
<PAGE>
                 SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                        FOR THE SIX             FOR THE SIX
                                                        MONTHS ENDED            MONTHS ENDED
                                                       JUNE 30, 2005           JUNE 30, 2004
<S>                                                   <C>                    <C>
Net Sales                                             $      112,690         $       185,853
Cost of Goods Sold                                            52,603                  98,986
---------------------------------------------------------------------------------------------
GROSS PROFIT                                          $       60,087         $        86,867

Selling, general and admininstrative expenses              1,736,056                 783,971

---------------------------------------------------------------------------------------------
OPERATING LOSS                                        $   (1,675,969)        $      (697,104)

Interest (income) expense                                     16,912                  15,684

---------------------------------------------------------------------------------------------
NET LOSS                                              $   (1,692,881)        $      (712,788)
=============================================================================================

Basic and diluted loss per share                      $        (0.14)        $        (1.16)

Basic and diluted weighted average number of shares       11,994,608                 614,390
</TABLE>







See accompanying notes to consolidated financial statements

                                       5
<PAGE>
                 SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                         SIX MONTHS ENDED JUNE 30, 2005
<TABLE>
<CAPTION>
                                                                Additional                                       Total
                                              Common             Paid-in               Accumulated           Stockholders'
                                              Stock              Capital                 Deficit            Equity (Deficit)
                                            -----------        ------------           -------------         ---------------
<S>                                        <C>               <C>                     <C>                    <C>
Balance at December 31, 2004                $        67        $  1,415,878           $  (2,197,843)         $   (781,898)

Retroactive recapitalization                      5,823              (5,823)                      -                     -
                                            -----------        ------------           -------------          ------------

Balance at January 1, 2005                        5,890           1,410,055              (2,197,843)             (781,898)

Issuance of common stock at merger                3,000              (3,000)                      -                     -

Liabilities assumed upon merger                       -              (6,710)                      -                (6,710)

Issuance of common stock                            179             146,821                       -               147,000

Issuance of common stock for services                18              14,982                       -                15,000

Issuance of common stock for offering
costs                                               351                (351)                      -                     -

Issuance of common stock, private unit
placement                                         3,500           2,782,600                       -             2,786,100

Issuance of warrants for services                     -             241,400                                       241,400

Net loss for the six months ended June
30, 2005                                              -                   -              (1,692,881)           (1,692,881)
                                            -----------        ------------           -------------          ------------
Balance at June 30, 2005                    $    12,938        $  4,585,797           $  (3,890,724)         $    708,011
                                            ===========        ============           =============          ============
</TABLE>


See accompanying notes to consolidated financial statements

                                       6
<PAGE>

                 SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED STATEMENT OF
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                    FOR THE SIX        FOR THE SIX
                                                                    MONTHS ENDED       MONTHS ENDED
                                                                   JUNE 30, 2005      JUNE 30, 2004
<S>                                                               <C>                <C>
CASH FLOW FROM OPERATING ACTIVITY:

Net Loss                                                          $   (1,692,881)    $     (712,788)

ADJUSTMENTS TO RECONCILE TO NET LOSS TO CASH USED
IN OPERATING ACTIVITIES:
Depreciation and amortization                                              4,033              2,419
Issuance of Common Stock for service                                      15,000                  -
Issuance of Warrants for service                                         241,400                  -

CHANGES IN ASSETS AND LIABILITIES, NET OF EFFECT OF  MERGER:
Accounts Receivable                                                     (230,386)           (19,747)
Inventory                                                                (38,718)           (53,280)
Prepaid expenses and other current assets                                (71,511)           (19,779)
Accounts Payable and accrued expenses                                   (261,138)           (58,827)
-----------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                             $   (2,034,201)    $     (862,002)

CASH FLOW FROM INVESTING ACTIVITY:

Cash Acquired in Merger                                           $           89
Purchases of property and equipment                                       (4,467)    $            -
-----------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                             $       (4,378)    $            -

CASH FLOW FROM FINANCING ACTIVITY

Proceeds (Payment) of Debt                                        $      (79,767)    $      460,000
Proceeds from issuance of common stock, net of costs                   2,933,100            554,921
-----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                         $    2,853,333     $    1,014,921

Net Increase (Decrease) in Cash                                   $      814,754     $      152,919

Cash at the beginning of the period                                       10,554             21,116

-----------------------------------------------------------------------------------------------------
CASH AT THE END OF THE PERIOD                                     $      825,308     $      174,035
=====================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements

                                       7
<PAGE>
                          SYNOVA HEALTHCARE GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                                   (Unaudited)

NOTE 1- FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared by Synova Healthcare Group, Inc. ("Synova") and its subsidiaries
(collectively, "Company"). These statements include all adjustments (consisting
only of its normal recurring adjustments) which management believes necessary
for a fair presentation of the statements and have been prepared on a consistent
basis using the accounting polices described in the Summary of Accounting
Policies included in the Registration Statement of Synova originally filed on
March 22, 2005, as amended and supplemented (the "Registration Statement").
Certain financial information and footnote disclosures normally indicated in
financial statements prepared in accordance with accounting principals generally
accepted in the United States have been condensed or omitted pursuant to those
rules and regulations, although the Company firmly believes that the
accompanying disclosures are adequate to make the information presented not
misleading. The Notes to Financial Statements included in the Registration
Statement should be read in conjunction with the accompanying interim financial
statements. The interim operating results for the three months and six months
ended June 30, 2005 may not be indicative of operating results expected for the
full year.

Basis of Presentation
The consolidated financial statements include the accounts of Synova and its
subsidiaries. On February 10, 2005 Synova's wholly owned subsidiary, Synova ABGL
Merger Sub, Inc., a Delaware corporation, merged with Synova Healthcare, Inc.
The stockholders of Synova Healthcare, Inc. have a controlling interest in the
Company. All material inter-company transactions have been eliminated in
consolidation. Under accounting principles generally accepted in the United
States, the share exchange is considered to be a capital transaction in
substance, rather than a business combination. That is, the share exchange is
equivalent to the issuance of stock by Synova Healthcare, Inc. for the net
monetary assets of Synova Healthcare Group, Inc., accompanied by a
recapitalization, and is accounted for as a change in capital structure.
Accordingly, the accounting for the share exchange will be identical to that
resulting from a reverse acquisition, except no goodwill will be recorded. Under
reverse takeover accounting, the post reverse acquisition comparative historical
financial statements of the legal acquiror, Synova Healthcare Group, Inc., are
those of the legal acquiree, Synova Healthcare, Inc., which are considered to be
the accounting acquiror.

Loss Per Share
The Company follows SFAS 128, "Earning per Share", resulting in the presentation
of basic and diluted loss per share. The basic loss per share calculations
include the change in capital structure for all periods presented. For the three
and six months ended June 30, 2005 and 2004, the basic and diluted loss per
share is the same, since the assumed conversion of the stock options and
warrants would be antidilutive because the Company experienced a net loss for
such periods.

NOTE 2 - REVERSE MERGER
Effective February 10, 2005, Synova Healthcare Group, Inc completed its merger.
The merger was accounted for as a reverse acquisition by Synova Healthcare
Group, Inc. The following pro forma consolidated statements of operations assume
the merger was effective January 1, 2005.

                                      FOR THE SIX
                                     MONTHS ENDING
                                     JUNE 30, 2005

Net Sales                               $112,690

Net Income                            (1,742,881)

Basic and Diluted Loss Per Share          $(0.15)

                                       8
<PAGE>
NOTE 3 - LINE OF CREDIT AND TERM LOAN
On April 28, 2005, the Company closed on a term note of $475,000 and line of
credit of $300,000 with Wachovia Bank. The term loan is for a period of one year
and bears interest at 5.25%. The line of credit is for a period of one year and
bears interest at prime, plus .50%. The term loan is secured and collateralized
with a money market account. The line of credit is secured with a personal
guaranty from each of Stephen E. King and David J. Harrison. The proceeds from
the term loan satisfied the loan payable scheduled to mature May 1, 2005. The
term loan utilization was $397,508 and no amounts were drawn from the line of
credit as of June 30, 2005.

NOTE 4 - STOCKHOLDERS' EQUITY
COMMON STOCK
In January 2005, Synova Healthcare, Inc. issued 2,000 pre-merger shares (17,500
post-merger) of its common stock in exchange for professional services. The
Company recognized consulting expenses of $15,000.

In January 2005, Synova Healthcare, Inc. sold 20,502 pre-merger shares (179,932
post-merger) of its common stock and received net proceeds of $147,000.

In January 2005, Synova Healthcare, Inc. issued 40,132 pre merger shares
(351,155 post-merger) of its common stock in exchange for commissions
associated with the private placement offering of 3,500,000 shares of Synova
Healthcare Group, Inc. common stock. The Company recognized an offering cost
of $300,900.

On February 10, 2005, the date of the merger, each stockholder of Synova
Healthcare, Inc. received 8.75 shares of common stock in Synova Healthcare
Group, Inc. for each share of Synova Healthcare, Inc. common stock. At this
time, 735,766 shares of Synova Healthcare, Inc. common stock were converted into
6,437,952 shares of Synova Healthcare Group, Inc. common stock.

Upon the date of the merger, the Company commenced a private placement offering.
On March 22, 2005, the Company closed the private placement offering by raising
net proceeds of $2,786,100 for 3,500,000 units, each unit consisting of one
share of common stock and a warrant to purchase .80 shares of common stock at a
purchase price of $1.00 per unit. The warrants are exercisable by their holders
at any time during the five-year period following their issuance at a price of
$2.00 per share (subject to adjustments) in cash at any time and through a
"cashless exercise" by net share settlement after one year from the warrants'
issuance date if there is no effective registration statement covering the
resale of the common stock underlying the warrants by such date. The Company may
call the warrants for redemption if the average trading price of its common
stock exceeds $3.00 per share and the average trading volume of its common stock
exceeds 33,333 shares per day for twenty (20) consecutive trading days. If the
holders of the warrants do not exercise the warrants within a certain period
after the Company calls the warrants for redemption, the Company has the right
to purchase the warrants for an amount equal to $0.01 per warrant. Under certain
circumstances a holder does not have the right to exercise any portion of the
holder's warrant to the extent that, after giving effect to the share issuance
upon exercise, the holder (together with the holder's affiliates) would
beneficially own in excess of 4.99% of the shares of common stock outstanding
immediately after giving effect to the issuance.

OPTIONS
On or shortly after the effective date of the merger, the Company granted two
executive officers non-qualified stock options to purchase up to 375,000
(subject to customary adjustments) shares of the Company's common stock at an
exercise price of $0.25 per share. The stock options vest upon the Company
meeting certain performance goals, as defined in the stock option agreement. The
executives are required to exercise the stock options within 75 days after they
become vested. As of June 30, 2005, none of the performance goals have been
achieved.

On April 26, 2005, the Company granted four directors non-qualified stock
options to purchase up to 25,000 (100,000 shares total) shares of the Company's
common stock at an exercise price of $1.82 per share. The stock options vest on
February 10, 2006 and expire February 10, 2016. Also on April 26, 2005, the
Company granted one employee options to purchase up to 12,500 shares of the
Company's common stock at an exercise price of $1.82 per share. The stock
options vest on March 01, 2006 and expire on March 01, 2016.

                                       9
<PAGE>
On June 3, 2005 the Company granted one employee options to purchase up to 4,000
shares of the Company's common stock at an exercise price of $2.00 per share.
The stock options vest on June 1, 2006 and expire on June 1, 2016.

WARRANTS

In January 2005, the Company issued warrants to purchase 28,648 shares. 10,710
of these shares are exercisable at $0.01 per share, and 17,938 of these shares
are exercisable at $1.00 per share. The warrants were issued pursuant to
Section 4(2) of the Securities Act in exchange for services. The warrants are
exercisable until January 2015. In accordance with the fair value method as
described in accounting requirements of SFAS No. 123, the Company recognized
professional consulting expenses of $241,400.

NOTE 5 - INCOME TAXES
There is no income tax benefit for the losses for the three and six months ended
June 30, 2005 and 2004 since management has determined that the realization of
the net deferred tax asset is not assured and has created a valuation allowance
for the entire amount of such benefits.

NOTE 6 - MAJOR CUSTOMER
The Company's largest customer accounted for $79,709 and $62,876 in gross
revenue for the six months ended June 30, 2005 and June 30, 2004, respectively,
and approximately 25.3% of accounts receivable as of June 30, 2005.

NOTE 7 - SUBSEQUENT EVENTS
On August 30, 2005, Tiger-Eye Holdings Limited ("Tiger-Eye") loaned $500,000 to
the Company pursuant to a note bearing interest at an annual rate of 9%. The
note matures six months from August 30, 2005. Additionally, on September 2,
2005, Mark Nussberger ("Nussberger") loaned $50,000 to the Company pursuant to a
note bearing interest at an annual rate of 9%. The note matures six months from
September 2, 2005. The principal balance of the note of each of Tiger-Eye and
Nussberger is convertible, if their respective loans are not repaid in full at
maturity, into common stock of the Company at a price equal to 50% of the
average closing price per share of the common stock for the twenty trading days
preceding the maturity date.

In connection with the loans, Tiger-Eye and Nussberger received a warrant to
purchase 200,000 shares and 20,000 shares, respectively, of common stock at an
exercise price of $2.50 per share. The warrants were immediately exercisable
and expire two years from the issuance date. If the Company receives at least
$1,500,000 of proceeds from the exercise of the warrants issued in connection
with the March 2005 private placement, the Tiger-Eye and Nussberger loans must
be prepaid prior to maturity. Tiger-Eye and Nussberger have the right under
certain terms and conditions to have the shares underlying the warrants
included in certain registration statements the Company files with the
Securities and Exchange Commission ("SEC").

If the closing price of the common stock for each of ten consecutive trading
days exceeds $4.00 per share, and a registration statement has been filed and
declared effective by the SEC covering the underlying warrant shares, the
Company may redeem the Tiger-Eye and Nussberger warrants at a price equal to
$.01 per warrant fifteen days after the delivery of notice of the same.

On September 9, 2005, the Company announced that its wholly owned subsidiary,
Synova Pre-Natal Healthcare, Inc. ("Synova Pre-Natal"), had executed a
distribution agreement with BioPad, Ltd. ("BioPad"), a research and development
organization based in Israel. Under the agreement, BioPad will develop an
innovative and non-invasive medical device that is expected to prove useful in
the field of fetal monitoring. Synova Pre-Natal will become the exclusive
distributor of the product in the initial territories of the United States,
Canada and Mexico.

On September 15, 2005, the Company entered into an employment agreement with
Robert Edwards, under which Mr. Edwards will serve as the Company's Chief
Financial Officer, effective on September 19, 2005. Also, Mr. Edwards received
an option to purchase 200,000 shares of the Company's common stock at a price of
$2.50 per share. Twenty-five percent of the options vest annually over each of
the first four years of his employment on the anniversary date of his hire. The
options are contingent on continued employment and expire on September 15, 2016.

                                       10
<PAGE>
On September 23, 2005, Synova Pre-Natal entered into a share purchase agreement
by and between Synova Pre-Natal and BioPad, and a shareholders' agreement by and
among Synova Pre-Natal, BioPad and the holders of ordinary shares of BioPad set
forth on the signature pages thereto, each dated as of September 23, 2005. The
agreements were entered into in connection with the distribution agreement
previously entered into between Synova Pre-Natal and BioPad relating to the
distribution of fetal monitoring products.

Pursuant to the terms and conditions of the share purchase agreement, Synova
Pre-Natal agreed to purchase ordinary shares constituting twenty-five percent
(25%) of the issued and outstanding ordinary shares of BioPad on a filly diluted
basis (excluding options that may be granted to employees of BioPad in an amount
equal to up to ten percent (10%) of the issued and outstanding ordinary shares
of BioPad) for an aggregate purchase price of $2,630,000 in several closings
commencing on November 15, 2005 and conditioned upon BioPad's satisfaction of
certain operational milestones. Pursuant to the terms of the shareholders
agreement, Synova Pre-Natal will be granted certain rights with respect to the
ordinary shares, including a pre-emptive right on future issuances of equity
securities by BioPad, a right of first refusal on transfers of ordinary shares
by shareholders of BioPad and a co-sale right to sell the ordinary shares of
BioPad in the event that the shareholders holding a majority of the outstanding
ordinary shares of BioPad elect to sell their shares. Synova Pre-Natal will be
required to sell its ordinary shares in the event that the shareholders holding
sixty-six and two-thirds percent (66.7%) of the outstanding ordinary shares of
BioPad elect to sell their shares. The ordinary shares acquired by Synova
Pre-Natal will have piggyback registration rights. Under the terms of the
shareholders agreement, Synova Pre-Natal is entitled to appoint twenty-five
percent (25%) of the directors serving on BioPad's board of directors and to
receive certain financial and operational information relating to BioPad
periodically. If Synova is unable to purchase the full amount of ordinary shares
of BioPad, then BioPad has certain rights which may allow BioPad to terminate
the distribution agreement between BioPad and Synova Pre-Natal. To date, Synova
has paid $250,000 to BioPad against the purchase price of $2,630,000.

The shareholders agreement also allows any successor in interest of BioPad to
terminate the distribution agreement if the successor in interest of BioPad
acquires all or substantially all of the assets of BioPad or at least fifty
percent (50%) of the voting control of BioPad, or succeeds to BioPad as the
result of a merger or consolidation of BioPad. Any such successor electing to
terminate the distribution agreement is required to pay to Synova Pre-Natal a
termination fee designed to reimburse Synova Pre-Natal a multiple of the costs
incurred by Synova Pre-Natal to commercialize the products licensed under the
distribution agreement.

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

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATION

         The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
Company's consolidated financial statements and the notes thereto and other
financial information appearing elsewhere in this quarterly report. This
discussion and analysis contains forward-looking statements relating to the
Company's future events or its future financial performance. These
forward-looking statements involve certain risks, uncertainties and assumptions.
In light of these risks and uncertainties, the forward-looking events discussed
in this report might not occur. The Company's actual financial results and
performance may differ materially from those anticipated. Factors that may cause
actual results or events to differ materially from those contemplated by the
forward-looking statements include, among other things, the matters set forth
under the caption "Risk Factors" contained in the Company's Registration
Statement.

         You are cautioned not to place undue reliance on forward-looking
statements contained in this quarterly report as they speak only as of the date
of the quarterly report. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

                                       11
<PAGE>
         HISTORY AND BACKGROUND

         The Company was incorporated in the state of Nevada on September 1,
1998 under the name Centaur Capital Group, Inc. The Company changed its name to
Advanced Global Industries Corporation on June 13, 2002. From the time of its
formation until its acquisition of Synova Healthcare, Inc., the Company was a
development stage company with no active business. Its business operations
during the period were limited to raising capital for its business, which was
abandoned in 2001.

         On January 13, 2005, the Company entered into a merger agreement with
Synova Healthcare, Inc. In connection with the merger, on January 10, 2005, the
Company changed its name to Synova Healthcare Group, Inc. On February 10, 2005,
the Company's wholly owned subsidiary, Synova AGBL Merger Sub, Inc., a Delaware
corporation, merged with Synova Healthcare, Inc., with Synova Healthcare, Inc.
surviving the merger. The merger has been accounted for as a reverse purchase
acquisition because former stockholders of Synova Healthcare, Inc. obtained a
majority of the outstanding shares of the Company's common stock in connection
with the merger. The accompanying consolidated financial statements of the
Company reflect the historical results of Synova Healthcare, Inc. The
description of the Company's business in this Management's Discussion and
Analysis of Financial Condition and Results of Operations is the business
previously conducted and to be conducted by Synova Healthcare, Inc.

         BUSINESS OVERVIEW

         The Company is an early stage company dedicated to the development and
marketing of both OTC and POC, non-invasive medical diagnostic tests. The
Company intends to focus its development efforts on products that offer
consumers and healthcare professionals non-invasive diagnostics that rapidly and
accurately diagnose and/or monitor the onset of health conditions. The Company's
goal, where possible, is to supplant traditional invasive diagnostic testing,
like blood tests, with less invasive, OTC or POC, diagnostic tests. The Company
is committed to building a portfolio of such products.

         The Company's existing products, Menocheck(R) and MenocheckPro(TM) are
in-home and in-office, respectively, non-invasive urine FSH tests for use in
detecting and diagnosing the onset of menopause. Menocheck(R) is an OTC product
that enables women to easily and accurately determine whether they have entered
the menopause stage of their lives. Menocheck(R) is an easy to use product and
functions in a manner similar to the OTC pregnancy tests that are commonly used
today. MenocheckPro(TM) is an FDA approved diagnostic for POC testing that
enables physicians to quickly and accurately determine whether their patients
have entered menopause.

         The Company intends to distribute and market Menocheck(R) through
mainstream, chain, drug stores, food stores, mass merchandise retailers and
leading wholesalers. In November 2003, the Company initiated the first shipments
of Menocheck(R) to Walgreens. Retail distribution of Menocheck(R) increased
through 2004, and Menocheck(R) is presently available at several food, drug and
discount stores, including Walgreens, Albertsons, Eckerd, Peyton Southeast,
Longs Drug, and Happy Harry's. Menocheck(R) is also available through leading
wholesalers, including Amerisource Bergen, Cardinal Health, and D&K Healthcare.
The Company believes it will continue to secure additional points of retail
distribution in the future.

         The Company intends to distribute and market MenocheckPro(TM) through
physician supply organizations, which routinely serve as sales distribution
partners for products like MenocheckPro(TM). These relationships, when secured,
will provide broad national and regional presence to support the selling of
MenocheckPro(TM) into healthcare providers' offices. The Company has finalized
relationships with certain physician supply organizations during the first
quarter of 2005. The Company anticipates that additional distribution partners
will be added in the coming months in order to increase its sales presence at
the professional level.

         The Company markets both Menocheck(R) and MenocheckPro(TM) through
traditional brand advertising mediums. The marketing effort has included full
page advertisements in several national magazines, as well as regional and
national radio advertisements. Promotion via the internet and trade show
exhibits directed toward both consumers and healthcare professionals are also
important components of the marketing mix. Public relations activities and
newspaper advertorial campaigns have resulted in strong media coverage. Other
promotional sponsorship activities planned for the future are also expected to
play an important role in continuing to drive customer awareness of both
products.

         The Company's business strategy is based primarily upon developing
and/or distributing non-invasive medical diagnostics that offer rapid results
with substantial accuracy. The main factors the Company views as critical to its
current business strategy relative to Menocheck(R) and MenocheckPro(TM) are:

                                       12
<PAGE>
                 (i)     increase customer awareness and adoption for its
                         products;

                 (ii)    increase retail distribution for Menocheck(R);

                 (iii)   expand sales distribution partners who represent
                         MenocheckPro(TM);

                 (iv)    ensure the comprehensive training of all sales
                         representatives; and

                 (v)     successfully launch new marketing initiatives to
                         support both its products.

         The concentration of the Company's current OTC business into a few
customers in the retail market brings a certain amount of risk to its business.
The potential loss of one of these customers could dramatically affect its
business. The Company expects, however, to be successful in expanding its OTC
business in the retail market, and in mitigating the risk associated with this
present concentration of business. The Company views increased retail
distribution and market share in the OTC market as critical to its future
success.

         The Company believes the expansion of its sales distribution partners
for MenocheckPro(TM) will facilitate a more rapid product adoption by healthcare
professionals. These sales distribution partners will be more effective if their
sales people are well trained with the Company's products. Accordingly, the
Company intends to focus on the identification of additional sales distribution
partners, and the efficient training of their respective sales people.

         Increased marketing and promotion of the Company's products are also
critical to its success. Capital raised in its recent unit offering has been
allocated primarily to support sales and marketing initiatives in both the OTC
and POC market segments. These expenditures are aimed at increasing customer
awareness and product adoption for its products. However, these expenditures may
not result in a sufficient increase in revenues to cover such advertising and
promotional expenses. Even if brand recognition increases, the number of
consumers and/or healthcare providers purchasing the Company's products may not
increase.

         The Company had no operating business until February 10, 2005, when its
wholly owned subsidiary, Synova AGBL Merger Sub, Inc. merged with Synova
Healthcare, Inc. As of the effective date of the merger, the business of Synova
Healthcare Inc. became the Company's business.

         Factors affecting the Company's results of operations for the second
quarter of 2005 were related to its continued focus on driving revenue growth
of Menocheck(R) and MenocheckPro(TM), and the accompanying promotional expenses
associated with efforts directed toward increasing product awareness and
adoption. During the second quarter of 2005, the Company also allocated
resources toward the conclusion of efforts associated with the attainment of an
effective registration statement with the SEC. These expenses included legal
and accounting fees which aggregated approximately $103,482 for the second
quarter. The Company also incurred expenses related to new business development
over this period.

         Gross sales for the second quarter of 2005 were $183,093, and
represented a 93% increase over the $94,474 of recorded gross sales in the
immediate prior quarter (first quarter of 2005). Net sales in the second quarter
of 2005 totaled $109,124 representing a $105,560 increase over net sales
recorded in the first quarter of 2005, which was $3,564. See below for further
details affecting first quarter 2005 net sales.

         Through the second quarter of 2005, the Company continued to deploy
co-operative advertising initiatives with its retailers in an effort to drive
product sales throughout the second quarter and into 2005. The expense
associated with this initiative totaled $53,010 and $126,678 for the three and
six months ended June 30,2005 and was recorded as an offset against gross
revenues June 30,2005 for the quarter and year to date, which was $183,092 and
$277,567 respectively. The co-operative advertising initiatives consisted
primarily of store or retailer specific advertising and coupon promotion. The
Company also supported its products over the second quarter with other marketing
and advertising initiatives, including a national radio advertising campaign
which was supported by print advertising and direct mail initiatives. The
Company is continuing to grow its brands, as well as this new product category.
The Company believes its marketing related expenses which totaled $446,537 in
the second quarter of 2005 and $916,355 through June 30, 2005, combined with the
co-operative advertising have directly contributed to the increased gross sales
for the quarter. In addition, the Company has initiated a sampling program
called "free to check", which will start in conjunction with a national
menopause awareness programs.

                                       13
<PAGE>
 New Business Development: Non-invasive Fetal Monitoring

         On September 9, 2005, the Company announced that its wholly owned
subsidiary, Synova Pre-Natal, had executed a distribution agreement with BioPad,
a research and development organization based in Israel. Under the agreement,
BioPad will develop an innovative and non-invasive medical device that is
expected to prove useful in the field of fetal monitoring. Synova Pre-Natal will
become the exclusive distributor of the product in the initial territories of
the United States, Canada and Mexico.

         On September 23, 2005, Synova Pre-Natal entered into a share purchase
agreement by and between Synova Pre-Natal and BioPad, and a shareholders'
agreement by and among Synova Pre-Natal, BioPad and the holders of ordinary
shares of BioPad set forth on the signature pages thereto, each dated as of
September 23, 2005. The agreements were entered into in connection with the
distribution agreement previously entered into between Synova Pre-Natal and
BioPad relating to the distribution of fetal monitoring products.

         Pursuant to the terms and conditions of the share purchase agreement,
Synova Pre-Natal agreed to purchase ordinary shares constituting twenty-five
percent (25%) of the issued and outstanding ordinary shares of BioPad on a filly
diluted basis (excluding options that may be granted to employees of BioPad in
an amount equal to up to ten percent (10%) of the issued and outstanding
ordinary shares of BioPad) for an aggregate purchase price of $2,630,000 in
several closings commencing on November 15, 2005 and conditioned upon BioPad's
satisfaction of certain operational milestones. Pursuant to the terms of the
shareholders agreement, Synova Pre-Natal will be granted certain rights with
respect to the ordinary shares, including a pre-emptive right on future
issuances of equity securities by BioPad, a right of first refusal on transfers
of ordinary shares by shareholders of BioPad and a co-sale right to sell the
ordinary shares of BioPad in the event that the shareholders holding a majority
of the outstanding ordinary shares of BioPad elect to sell their shares. Synova
Pre-Natal will be required to sell its ordinary shares in the event that the
shareholders holding sixty-six and two-thirds percent (66.7%) of the outstanding
ordinary shares of BioPad elect to sell their shares. The ordinary shares
acquired by Synova Pre-Natal will have piggyback registration rights. Under the
terms of the shareholders agreement, Synova Pre-Natal is entitled to appoint
twenty-five percent (25%) of the directors serving on BioPad's board of
directors and to receive certain financial and operational information relating
to BioPad periodically. If Synova is unable to purchase the full amount of
ordinary shares of BioPad, then BioPad has certain rights which may allow BioPad
to terminate the distribution agreement between BioPad and Synova Pre-Natal. To
date, Synova has paid $250,000 to BioPad against the purchase price of
$2,630,000.

         The shareholders agreement also allows any successor in interest of
BioPad to terminate the distribution agreement if the successor in interest of
BioPad acquires all or substantially all of the assets of BioPad or at least
fifty percent (50%) of the voting control of BioPad, or succeeds to BioPad as
the result of a merger or consolidation of BioPad. Any such successor electing
to terminate the distribution agreement is required to pay to Synova Pre-Natal a
termination fee designed to reimburse Synova Pre-Natal a multiple of the costs
incurred by Synova Pre-Natal to commercialize the products licensed under the
distribution agreement.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED JUNE 30, 2005 COMPARED TO THREE MONTHS ENDED JUNE
         30, 2004

         Net Sales. Net sales consists of product sales, net of product returns
and cooperative advertising. Net sales increased $2,728, or 2.5%, to $109,124
for the three months ended June 30, 2005, from $106,396 for the three months
ended June 30, 2004.

The following details the changes in net sales during such periods by type of
customer.

         Over-the-Counter (OTC). Net sales decreased $31,828 to $73,575 for the
three months ended June 30, 2005 from $105,403 for the three months ended June
30, 2004. The decrease in net sales was mainly the result of the establishment
of a reserve for returns and allowances of $15,000 being recorded and lower
gross sales.

         Point-of-Care (POC). Net sales increased $34,556 to $35,549 for the
three months ended June 30, 2005 from $993 for the three months ended June 30,
2004. The increase in net sales was a result of increased distribution of
MenocheckPro(TM) into the professional healthcare market place.

         Gross Profit. Gross profit decreased $12,351 to $73,514 for the three
months ended June 30, 2005, from $85,865 for the three months ended June 30,
2004. Gross profit as a percentage of revenue (gross margin) decreased to 67.4%
for the three months ended June 30, 2005 from 80.7% for the three months ended
June 30, 2004. The decrease in gross profits follows the decrease in net
revenue. However, as a percentage of net sales, it is lower as a result of the
establishment of a reserve for returns and allowances of $15,000 being recorded
in the quarter ended June 30, 2005.

                                       14
<PAGE>
         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $357,982 to $797,824 for the three months
ended June 30, 2005 from $439,842 for the three months ended June 30, 2004.
Included in selling, general and administrative expenses are three sub
categories: selling and marketing expenses, personnel expenses and general and
administrative expenses.

         Selling and marketing expenses increased $257,164 to $470,486 for the
three months ended June 30, 2005 from $213,322 for the three months ended June
30, 2004. The increase in selling and marketing expenses was primarily driven by
a radio advertising campaign directed at the OTC segment.

         Personnel expenses increased $42,766 to $174,084 for the three months
ended June 30, 2005 from $131,318 for the three months ended June 30, 2004. The
increase in personnel expenses was primarily the result of increased working
personnel to six full-time employees for the three months ended June 30, 2005 as
compared to three full-time employees for the three months ended June 30, 2004.

         General and administrative expenses increased $58,052 to $153,254 for
the three months ended June 30, 2005 from $95,202 for the three months ended
June 30, 2004. The increase in general and administrative expenses was driven by
professional consulting expenses associated with the reverse merger acquisition
and filing of the Company's Registration Statement.

         Operating Loss. As a result of the foregoing, the operating loss was
$724,310 for the three months ended June 30, 2005 as compared with the operating
loss of $353,977 for the three months ended June 30, 2004. The majority of the
increase in the operating loss was attributable to the increase in selling,
general and administrative expenses.

         Net Loss. As a result of the foregoing, the Company reported a net loss
of $728,043 for the three months ended June 30, 2005 as compared to a net loss
of $371,569 for the three months ended June 30, 2004.

         SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO SIX MONTHS ENDED JUNE 30,
         2004

         Net Revenue. Net Revenue for the six months ended June 30, 2005 was
$112,690 compared to $185,853 for the six months ended June 30, 2004, a decrease
of 39%. For the six months ended June 30, 2004 sales were stronger than the same
period in 2005 as a result of a number of successful marketing initiatives and
co-operative programs with major retailers. As the Company continues to
implement its marketing plans with Menocheck(R) in the retail market and
introduces MenocheckPro(TM) into the POC physician market, it anticipates that
revenue will increase over 2005. There can be no assurance, however, that its
revenue will increase to the extent it expects, or at all.

         The following details the changes in net sales during such periods by
type of customer.

         Over-the-Counter. Net sales decreased $115,145 to $69,670 for the six
months ended June 30, 2005 from $184,815 for the period ended June 30, 2004. The
decrease in sales is due to a number of successful marketing initiatives and
co-operative programs with major retailers during the first six months of 2004
when comparing the six months ended June 30, 2005.

         Point-of-Care. Net Sales increased $41,982 to $43,020 for the six
months ended June 30, 2005 from $1,038 for the three months ended June 30, 2004.
The increase in net sales was a result of increased distribution of
MenocheckPro(TM) into the professional healthcare market place.

          Gross Profit. Gross profit decreased to $60,087 for the six months
ended June 30, 2005, from $86,867 for the year ended June 30, 2004, a decrease
of 30.8%. The decrease in gross profits follows a decrease in gross sales and
the establishment of a new reserve for returns and damaged products. Gross
profit as a percentage of revenue (gross margin) increased to 53.3% for the six
months ended June 30, 2005 from 46.7% for the six months ended June 30, 2004.
The increase in gross margin percentage follows a decrease in co-operative
advertising as a percentage of total gross sales and an improved product mix
and higher value add distribution channel with the MenocheckPro(TM) product
offering.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $951,769 to $1,736,056 for the six months
ended June 30, 2005 from $783,971 for the period ended June 30, 2004. Included
in selling, general and administrative expenses are three sub categories:
selling and marketing expenses, personnel expenses and general and
administrative expenses.

         Selling and marketing expenses increased $544,809 to $959,913 for the
six months ended June 30, 2005 from $415,104 for the period ended June 30, 2004.
The increase can be attributed to advertising and brokerage fees related to
product sales.

                                       15
<PAGE>
         Personnel expenses increased $73,674 to $296,838 for the six months
ended June 30, 2005 from $223,164 for the period ended June 30, 2004. The
increase in personnel expenses was the result of full year of operations for the
twelve months ended June 30, 2004.

         General and administrative expenses increased $333,602 to $479,305 for
the six months ended June 30, 2005 from $145,703 for the period ended June 30,
2004. The increase in general and administrative expenses was driven by
professional consulting expenses associated with the reverse merger acquisition
and filing of the Company's Registration Statement.

         Operating Loss. As a result of the foregoing, the operating loss was
$1,675,969 for the six months ended June 30, 2005, compared with the operating
loss of $697,104 for the period ended June 30, 2004. The majority of the
increased loss was attributable to the increase in selling, general and
administrative expenses for a full year for the twelve months ended June 30,
2005.

         Net Loss. As a result of the foregoing, the Company reported a net loss
of $1,692,881 for the six months ended June 30, 2005, compared to a net loss of
$712,788 for the period ended June 30, 2004.

         LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 2005, the Company had $825,308 in cash on hand compared
to $174,035 in cash on hand as of June 30, 2004, an increase of $814,754 from
December 31, 2004. The increase resulted from proceeds received from the
Company's 2005 private unit offering. As of December 31, 2004, the Company had a
cash balance of $10,554.

         Based on its current operations, the Company believes that its
available cash and its available borrowings under a new senior secured credit
facility will be adequate to meet its liquidity needs for at least the next
twelve months. The Company cannot assure you, however, that its business will
generate sufficient cash flows from operations or that future borrowings will be
available to it in an amount sufficient to enable it to fund its liquidity
needs.

         Operating Activity. The Company's operating activities used $2,034,201
for the six months ended June 30, 2005 compared to $862,002 used for the six
months ended June 30, 2004. The $2,034,201 use of cash was primarily
attributable to the operating loss of $1,692,565 for the six months ended June
30, 2005, a decrease in accounts payable by $291,930 and an increase in accounts
receivable by $289,701 offset by the issuance of stock and warrants for services
by $256,400.

         Investing Activities. The Company's capital expenditures for the six
months ended June 30, 2005 were $4,467 compared to capital expenditures for the
six months ended June 30, 2004 of $0. The increase in capital expenditures is
related to investing in computer and office equipment for working personnel
increases for the six months ended June 30, 2005.

         Financing Activities. Financing activities provided $2,853,333 for the
six months ended June 30, 2005, compared to cash provided of $1,014,921 for the
six months ended June 30, 2004. The increase in financing activity is related to
the issuance of 20,502 shares (179,392 post-merger shares of Synova Healthcare
Group, Inc.) of Synova Healthcare, Inc. stock for proceeds of $147,000 and
$2,786,100, for a total of $2,933,100 in net proceeds from the private
placement of 3,500,000 shares of the Company's common stock and warrants to
purchase 2,800,000 shares of the Company's common stock.

         Capital Resources. As of June 30, 2005, working capital was $669,733,
an increase of $1,489,792 from December 31, 2004. This increase is a result of
the Company's 2005 private unit offering.

         On August 30, 2005, Tiger-Eye Holdings Limited ("Tiger-Eye") loaned
$500,000 to the Company pursuant to a note bearing interest at an annual rate of
9%. The note matures six months from August 30, 2005. Additionally, on September
2, 2005, Mark Nussberger ("Nussberger") loaned $50,000 to the Company pursuant
to a note bearing interest at an annual rate of 9%. The note matures six months
from September 2, 2005. The principal balance of the note of each of Tiger-Eye
and Nussberger is convertible, if their respective loans are not repaid in full
at maturity, into common stock of the Company at a price equal to 50% of the
average closing price per share of the common stock for the twenty trading days
preceding the maturity date.

                                       16
<PAGE>
         In connection with the loans, Tiger-Eye and Nussberger received a
warrant to purchase 200,000 shares and 20,000 shares, respectively, of common
stock at an exercise price of $2.50 per share. The warrants were immediately
exercisable and expire two years from the issuance date. If the Company
receives at least $1,500,000 of proceeds from the exercise of the warrants
issued in connection with the March 2005 private placement, the Tiger-Eye and
Nussberger loans must be prepaid prior to maturity. Tiger-Eye and Nussberger
have the right under certain terms and conditions to have the shares underlying
the warrants included in certain registration statements the Company files with
the Securities and Exchange Commission ("SEC").

         If the closing price of the common stock for each of ten consecutive
trading days exceeds $4.00 per share, and a registration statement has been
filed and declared effective by the SEC covering the underlying warrant shares,
the Company may redeem the Tiger-Eye and Nussberger warrants at a price equal
to $.01 per warrant fifteen days after the delivery of notice of the same.

         The Company has secured a line of credit and term loan with Wachovia
Bank, N.A. for $300,000 and $475,000, respectively. The term loan is for a
one-year term and bears interest at a rate of 5.25% per annum. The line of
credit is also for a one-year term and bears interest at Wachovia Bank's prime
rate, plus .50%. The interest rate under the line of credit was 6.50% as of June
20, 2005. There are no financial covenants associated with the term loan or line
of credit. The term loan is secured and collateralized with a money market
account. The line of credit is secured with a personal guaranty from each of
Stephen E. King and David J. Harrison. Both the line of credit and the term loan
expire on April 28, 2006. The Company believes it can renegotiate a new line of
credit at that time. The Company believes the line of credit along with the
proceeds from the private unit offering and cash flow from operating activities
will be sufficient to finance operations for a period of at least the next 12
months.

         Contractual Obligations. The Company leases office space with the lease
expiring on November 30, 2005. As of June 30, 2005, the Company had no other
material commitments or obligations.

         Off-Balance Sheet Items. The Company had no off-balance sheet items as
of June 30, 2005.

         Related Party Transactions. In January 2005, Synova Healthcare, Inc.
issued 1,000 shares of stock to Mr. Jeffrey Pelesh, an independent contractor,
for accounting services. Mr. Pelesh has since become a member of the Company's
board of directors.

         CRITICAL ACCOUNTING POLICES AND ESTIMATES

         The Company prepared its consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America. As such, the Company is required to make certain estimates, judgments
and assumptions that it believes are reasonable based upon the information
available. These estimates and assumptions that the Company believes are
reasonable are based upon the information available at the time the estimates or
assumptions are made. These estimates and assumptions affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the periods presented. The
significant accounting polices which the Company believes are the most critical
to aid in fully understanding and evaluating its reported financial results
include the following:

         Revenue Recognition. The Company sells its products to a number of
leading national and regional retailers and wholesalers, both directly and
through the services of external sales brokers.

         In accordance with the SEC's Staff Accounting Bulletin No. 104 (SAB
104) "Revenue Recognition," the Company recognizes revenue when persuasive
evidence of a customer or distributor arrangement exists or acceptance occurs,
receipt of goods by customer has occurred, the price is fixed or determinable,
and the sales revenues are considered collectible. Subject to these criteria,
except with respect to customers that buy products on pay-on-scan terms, the
Company recognizes revenue at the time merchandise is received by the customer.

         The Company recognizes pay-on-scan sales as revenues when it is
notified of the customer's sales through weekly sales reports.

         Based on the monitoring of sales activity and the fact that all of the
Company's major customers have reordered, the Company does not believe an
allowance for product returns is necessary at this time because it does not
expect any significant returns in the normal course of business. The Company
will continue to monitor sales activity in the future to determine when and if
an allowance is necessary.

                                       17
<PAGE>
         The Company treats temporary price reduction (TPR) programs,
merchandising fees, co-op advertising and slotting expenses as a reduction of
revenues. The Company records the liability when persuasive evidence exists that
the Company and the customer or distributor have reached agreement and that an
advertising action will result in an expense to it in the near future. The
liability is maintained until the customer takes the deduction against payments
due.

         Allowance for Doubtful Accounts. The Company makes estimates of
potentially uncollectible customer accounts receivable. Its reserves are based
on an analysis of individual customer and historical write-off experience. Its
analysis includes the age of the receivable, creditworthiness and general
economic conditions. The Company believes the results could be materially
different if historical trends do not reflect actual results or if economic
conditions worsen.

         Product Return Allowance. The Company has a formal policy for returns,
solely for unsaleable product. The Company uses a return allowance procedure to
issue authorizations to retailers to destroy damaged or expired product. This
ensures that it can effectively govern and oversee the amounts and reasons for
any return of unsaleable product.

     The method the Company uses to determine return exposure for unsaleable
product in the distribution channel consists of analyzing the orders from its
customers to ensure they correlate with the product movement at the point of
sale. In order to do this effectively many different factors are considered,
including:

1. Ex-factory Sales Analysis
     a.  The Company assesses the size and frequency of the orders, by customer.
         The Company checks to make sure that the size and frequency of the
         order is in-line with its current channel estimates.

2. Point-of-Sale Analysis
         a.  This information is actual sales information provided by its
             customers either directly or indirectly. The Company is currently
             using two different data sources.

3. Metric Analysis
   Using data obtained from similar customers the Company is able to reasonably
   estimate POS levels at a retailer that does not report sales. This is done by
   creating a metric such as estimated units sold per store/retailer. This is
   often validated via reports that can be obtained by request from the
   retailer.

3. Business Planning
   Each year the Company establishes a business plan for each customer. Sales
   estimates and co-operative advertising estimates are included. When the
   Company assesses inventory levels it also considers upcoming promotional
   activities and co-operative advertising initiatives which may cause increases
   in sales. For example, if a retailer is having a promotion to drive sales, it
   can reasonably expect based on prior history that they will order more
   product during that period. Similarly, historical evidence suggests that when
   the Company launches major marketing initiatives it causes sales to rise at
   the point of sale. This would diminish existing inventory in the channel and
   would require increased order activity by its customers.

     Using the above information, along with management guidance, the Company
can readily determine exposure due to returns that may result from unsaleable
product and record an allowance for product returns, if deemed necessary.

         RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In December 2004, the FASB revised SFAS 123, "Accounting for
Stock-Based Compensation" to require all companies to expense the fair value of
employee stock options. SFAS 123(R) is effective for the first period ending
after December 15, 2005 for a small business issuer.

                                       18
<PAGE>
ITEM 3. CONTROLS AND PROCEDURES.
         As required by Rule 13a-15 under the Exchange Act, as of the end of the
period covered by this quarterly report, the Company evaluated the effectiveness
of the design and operation of its disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer and Chief
Financial Officer. Based upon that evaluation, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective. There have been no changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date it carried out its evaluation.

         Disclosure controls and procedures and other procedures are designed to
ensure that information required to be disclosed in the Company's reports filed
or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time period specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.

                          PART II -- OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS.
None.

ITEM 2 -- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES.
None.

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.

ITEM 5 -- OTHER INFORMATION.

         On August 30, 2005, Tiger-Eye Holdings Limited ("Tiger-Eye") loaned
$500,000 to the Company pursuant to a note bearing interest at an annual rate of
9%. The note matures six months from August 30, 2005. Additionally, on September
2, 2005, Mark Nussberger ("Nussberger") loaned $50,000 to the Company pursuant
to a note bearing interest at an annual rate of 9%. The note matures six months
from September 2, 2005. The principal balance of the note of each of Tiger-Eye
and Nussberger is convertible, if their respective loans are not repaid in full
at maturity, into common stock of the Company at a price equal to 50% of the
average closing price per share of the common stock for the twenty trading days
preceding the maturity date.

         In connection with the loans, Tiger-Eye and Nussberger received a
warrant to purchase 200,000 shares and 20,000 shares, respectively, of common
stock at an exercise price of $2.50 per share. The warrants were immediately
exercisable and expire two years from the issuance date. If the Company
receives at least $1,500,000 of proceeds from the exercise of the warrants
issued in connection with the March 2005 private placement, the Tiger-Eye and
Nussberger loans must be prepaid prior to maturity. Tiger-Eye and Nussberger
have the right under certain terms and conditions to have the shares underlying
the warrants included in certain registration statements the Company files with
the Securities and Exchange Commission ("SEC").

         If the closing price of the common stock for each of ten consecutive
trading days exceeds $4.00 per share, and a registration statement has been
filed and declared effective by the SEC covering the underlying warrant shares,
the Company may redeem the Tiger-Eye and Nussberger warrants at a price equal
to $.01 per warrant fifteen days after the delivery of notice of the same.


ITEM 6 -- EXHIBITS.
Exhibit 10.1-Form of Stock Option Agreement
Exhibit 31.1-Chief Executive Officer Certification pursuant to Section 302 of
the Sarbanes-Oxley Act
Exhibit 31.2-Chief Financial Officer Certification pursuant to Section 302 of
the Sarbanes-Oxley Act
Exhibit 32.1- Section 1350 Certification of the Chief Executive Officer
Exhibit 32.2- Section 1350 Certification of the Chief Financial Officer

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                                   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.

/s/ Stephen E. King
-------------------------------------

Stephen E. King                                            Date: October 3, 2005
Chief Executive Officer

/s/ Robert Edwards
-------------------------------------

Robert Edwards                                             Date: October 3, 2005
Chief Financial Officer




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