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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

|þ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007



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

For the transition period from  to

Commission File Number 0-51492

SYNOVA
HEALTHCARE GROUP, INC.

(Exact name of small business issuer as specified in its charter)



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

1400 North Providence Road, Suite 6010, Media, Pennsylvania 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  þ    No ̈

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of August 2, 2007, the number of outstanding shares of common stock, par value $.001 per
share, of Synova Healthcare Group, Inc. was 34,723,397.

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



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##### Table of Contents

SYNOVA HEALTHCARE GROUP, INC.

FORM 10-QSB

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007

TABLE OF CONTENTS



|                               |  |                                                             |  |         
|------------------------------ |  | ----------------------------------------------------------- |  | --------
|Item No.                       |  |                                                             |  | Page No.
|PART I  FINANCIAL INFORMATION
|                               |  |                                                            
|Item 1.                        |  | Financial Statements                                        |  | 1       
|Item 2.                        |  | Managements Discussion and Analysis or Plan of Operation   |  | 18      
|Item 3.                        |  | Controls and Procedures                                     |  | 37      
|                              
|PART II  OTHER INFORMATION   
|                               |  |                                                            
|Item 1.                        |  | Legal Proceedings                                           |  | 38      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 39      
|Item 6.                        |  | Exhibits                                                    |  | 39      



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

SYNOVA HEALTHCARE GROUP,
INC. AND SUBSIDIARIES

Consolidated Balance Sheet



|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                              |  | June 30, 2007 |             |   | December 31,2006 |  
|                                                                                                                                                              |  | (unaudited)   |             |   |                  |  
|Assets                                                                                                                                                        |  |               |             |   |                  |   |             |  
|Cash                                                                                                                                                          |  | $             | 903,568     |   |                  | $ |            |  
|Restricted cash                                                                                                                                               |  |               | 73,811      |   |                  |   | 72,605      |  
|Accounts receivable, net of $394,573 and $0 allowance as of June 30, 2007 and December 31, 2006                                                               |  |               | 301,814     |   |                  |   | 32,762      |  
|Inventory                                                                                                                                                     |  |               | 1,184,644   |   |                  |   | 396,768     |  
|Prepaid expenses                                                                                                                                              |  |               | 694,483     |   |                  |   | 44,006      |  
|Deferred loan costs                                                                                                                                           |  |               |            |   |                  |   | 37,181      |  
|Deposits - current                                                                                                                                            |  |               |            |   |                  |   | 500,000     |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Current Assets                                                                                                                                          |  |               | 3,158,320   |   |                  |   | 1,083,322   |  
|Property and equipment, net of accumulated depreciation of $424,405 and $35,468 at June 30, 2007 and December 31,
2006                                        |  |               | 2,701,888   |   |                  |   | 126,900     |  
|Deposits - long-term                                                                                                                                          |  |               | 500,000     |   |                  |   |            |  
|Intangible assets, net of accumulated amortization of $701,613 as of June 30, 2007                                                                            |  |               | 14,298,387  |   |                  |   |            |  
|Goodwill                                                                                                                                                      |  |               | 6,606,012   |   |                  |   |            |  
|Deferred financing costs, net of accumulated amortization of $169,751 as of June 30, 2007                                                                     |  |               | 1,705,077   |   |                  |   |            |  
|Deferred charges                                                                                                                                              |  |               |            |   |                  |   | 187,982     |  
|Investment                                                                                                                                                    |  |               | 1,886,776   |   |                  |   | 2,227,961   |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Assets                                                                                                                                                  |  | $             | 30,856,460  |   |                  | $ | 3,626,165   |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Liabilities and Stockholders Equity (Deficit)                                                                                                                |  |               |             |   |                  |   |             |  
|Liabilities                                                                                                                                                   |  |               |             |   |                  |   |             |  
|Line of credit                                                                                                                                                |  | $             |            |   |                  | $ | 282,000     |  
|Loans payable                                                                                                                                                 |  |               | 97,581      |   |                  |   | 1,500,000   |  
|Accounts payable                                                                                                                                              |  |               | 4,001,637   |   |                  |   | 2,633,996   |  
|Accrued expenses                                                                                                                                              |  |               | 1,439,614   |   |                  |   | 1,550,267   |  
|Deferred revenue                                                                                                                                              |  |               | 444,870     |   |                  |   |            |  
|Senior convertible notes payable, net of discount                                                                                                             |  |               | 1,171,080   |   |                  |   |            |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Current Liabilities                                                                                                                                     |  |               | 7,154,782   |   |                  |   | 5,966,263   |  
|Embedded derivative liability                                                                                                                                 |  |               | 7,756,650   |   |                  |   |            |  
|Warrant liability                                                                                                                                             |  |               | 7,088,684   |   |                  |   |            |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Liabilities                                                                                                                                             |  |               | 22,000,116  |   |                  |   | 5,966,263   |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|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, 34,723,297 and 17,686,780 shares issued and outstanding at June 30, 2007
and December 31, 2006 |  |               | 34,723      |   |                  |   | 17,687      |  
|Additional paid in capital                                                                                                                                    |  |               | 30,724,298  |   |                  |   | 12,688,458  |  
|Accumulated deficit                                                                                                                                           |  |               | (21,902,677 | ) |                  |   | (15,046,243 | )
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Stockholders Equity (Deficit)                                                                                                                          |  |               | 8,856,344   |   |                  |   | (2,340,098  | )
|                                                                                                                                                              |  |               |             |   |                  |   |             |  
|Total Liabilities and Stockholders Equity (Deficit)                                                                                                          |  | $             | 30,856,460  |   |                  | $ | 3,626,165   |  
|                                                                                                                                                              |  |               |             |   |                  |   |             |  

See accompanying notes to consolidated financial statements



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SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES

Consolidated Statement of Operations



|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | -------------------------------------- | - | ---------- | -
|                                                                                                                                                          |  | For theThree Months EndedJune 30, 2007 |            |   | For theThree Months EndedJune 30, 2006 |  
|                                                                                                                                                          |  | (unaudited)                            |            |   | (unaudited)                            |  
|Net sales                                                                                                                                                 |  | $                                      | 258,186    |   |                                        | $ | 69,810     |  
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Operating expenses:                                                                                                                                       |  |                                        |            |   |                                        |   |            |  
|Cost of net sales                                                                                                                                         |  |                                        | 659,985    |   |                                        |   | 38,617     |  
|Selling and marketing                                                                                                                                     |  |                                        | 904,069    |   |                                        |   | 1,084,144  |  
|Personnel expenses, including stock-based compensation expense of $91,804 and $196,612 for the three months ended June 30, 2007 and
June 30, 2006         |  |                                        | 552,854    |   |                                        |   | 494,628    |  
|General and administrative, including stock-based compensation expense of $130,000 and $16,540 for the three months ended June 30, 2007
and June 30, 2006 |  |                                        | 1,520,782  |   |                                        |   | 617,952    |  
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Total operating expenses                                                                                                                                  |  |                                        | 3,637,690  |   |                                        |   | 2,235,341  |  
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Operating loss                                                                                                                                            |  |                                        | (3,379,504 | ) |                                        |   | (2,165,531 | )
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Other Income (Expenses):                                                                                                                                  |  |                                        |            |   |                                        |   |            |  
|Interest income                                                                                                                                           |  |                                        | 25,436     |   |                                        |   | 1,072      |  
|Interest expense                                                                                                                                          |  |                                        | (393,371   | ) |                                        |   | (450       | )
|Other expenses                                                                                                                                            |  |                                        | (607,818   | ) |                                        |   |           |  
|Unrealized gain on market value of warrants                                                                                                               |  |                                        | 1,549,496  |   |                                        |   |           |  
|Equity in loss of unconsolidated affiliate                                                                                                                |  |                                        | (164,508   | ) |                                        |   | (133,855   | )
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Total other expenses                                                                                                                                      |  |                                        | 409,235    |   |                                        |   | (133,233   | )
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Loss before provision (benefit) for income taxes                                                                                                          |  |                                        | (2,970,269 | ) |                                        |   | (2,298,764 | )
|Provision (benefit) for income taxes                                                                                                                      |  |                                        |           |   |                                        |   |           |  
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Net loss                                                                                                                                                  |  | $                                      | (2,970,269 | ) |                                        | $ | (2,298,764 | )
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Basic and diluted net loss per share                                                                                                                      |  | $                                      | (0.09      | ) |                                        | $ | (0.14      | )
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  
|Basic and diluted weighted average number of shares                                                                                                       |  |                                        | 33,474,903 |   |                                        |   | 16,744,418 |  
|                                                                                                                                                          |  |                                        |            |   |                                        |   |            |  

See accompanying notes to consolidated financial statements



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SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES

Consolidated Statement of Operations



|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------------------------ | - | ---------- | -
|                                                                                                                                                        |  | For theSix Months EndedJune 30, 2007 |            |   | For theSix Months EndedJune 30, 2006 |  
|                                                                                                                                                        |  | (unaudited)                          |            |   | (unaudited)                          |  
|Net sales                                                                                                                                               |  | $                                    | 572,900    |   |                                      | $ | 114,763    |  
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Operating expenses:                                                                                                                                     |  |                                      |            |   |                                      |   |            |  
|Cost of net sales                                                                                                                                       |  |                                      | 861,390    |   |                                      |   | 63,356     |  
|Selling and marketing                                                                                                                                   |  |                                      | 1,329,819  |   |                                      |   | 2,144,573  |  
|Personnel expenses, including stock-based compensation expense of $190,079 and $360,021 for the six months ended June 30, 2007 and
June 30, 2006        |  |                                      | 1,043,373  |   |                                      |   | 968,587    |  
|General and administrative, including stock-based compensation expense of $146,540 and $16,540 for the six months ended June 30, 2007 and
June 30, 2006 |  |                                      | 2,670,523  |   |                                      |   | 968,521    |  
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Total operating expenses                                                                                                                                |  |                                      | 5,905,105  |   |                                      |   | 4,145,037  |  
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Operating loss                                                                                                                                          |  |                                      | (5,332,205 | ) |                                      |   | (4,030,274 | )
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Other Income (Expenses):                                                                                                                                |  |                                      |            |   |                                      |   |            |  
|Interest income                                                                                                                                         |  |                                      | 86,731     |   |                                      |   | 3,121      |  
|Interest expense                                                                                                                                        |  |                                      | (756,344   | ) |                                      |   | (87,587    | )
|Other expenses                                                                                                                                          |  |                                      | (611,398   | ) |                                      |   |           |  
|Unrealized loss on market value of warrants                                                                                                             |  |                                      | (547,557   | ) |                                      |   |           |  
|Equity in loss of unconsolidated affiliate                                                                                                              |  |                                      | (295,661   | ) |                                      |   | (246,119   | )
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Total other expenses                                                                                                                                    |  |                                      | (2,124,229 | ) |                                      |   | (330,585   | )
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Loss before provision (benefit) for income taxes                                                                                                        |  |                                      | (7,456,434 | ) |                                      |   | (4,360,859 | )
|Provision (benefit) for income taxes                                                                                                                    |  |                                      | (600,000   | ) |                                      |   |           |  
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Net loss                                                                                                                                                |  | $                                    | (6,856,434 | ) |                                      | $ | (4,360,859 | )
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Basic and diluted net loss per share                                                                                                                    |  | $                                    | (0.20      | ) |                                      | $ | (0.28      | )
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  
|Basic and diluted weighted average number of shares                                                                                                     |  |                                      | 33,474,903 |   |                                      |   | 15,756,506 |  
|                                                                                                                                                        |  |                                      |            |   |                                      |   |            |  

See accompanying notes to consolidated financial statements



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SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows



|                                                                        |  |                                      |            |   |                                      |   |            |  
|----------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------------------------ | - | ---------- | -
|                                                                        |  | For theSix Months EndedJune 30, 2007 |            |   | For theSix Months EndedJune 30, 2006 |  
|                                                                        |  | (unaudited)                          |            |   | (unaudited)                          |  
|Cash flows from operating activities:                                   |  |                                      |            |   |                                      |   |            |  
|Net loss                                                                |  | $                                    | (6,856,434 | ) |                                      | $ | (4,360,859 | )
|Adjustments to reconcile net loss to cash used in operating activities: |  |                                      |            |   |                                      |   |            |  
|Accretion of interest on notes payable                                  |  |                                      | 265,477    |   |                                      |   |           |  
|Amortization of deferred loan cost                                      |  |                                      | 37,181     |   |                                      |   | 69,342     |  
|Increase (decrease) in allowance for inventory reserve                  |  |                                      | 90,829     |   |                                      |   | (59,677    | )
|Depreciation and amortization                                           |  |                                      | 1,313,034  |   |                                      |   | 4,820      |  
|Issuance of common stock for services                                   |  |                                      | 140,000    |   |                                      |   | 7,674      |  
|Stock-based compensation expense                                        |  |                                      | 336,619    |   |                                      |   | 376,561    |  
|Change in fair value of warrant liability                               |  |                                      | 547,557    |   |                                      |   |           |  
|Equity loss of unconsolidated affiliate                                 |  |                                      | 295,661    |   |                                      |   | 246,119    |  
|Deferred income taxes                                                   |  |                                      | (600,000   | ) |                                      |   |           |  
|Loss on Radiant settlement                                              |  |                                      | 430,348    |   |                                      |   |           |  
|Changes in assets and liabilities, net of effects of acquisition:       |  |                                      |            |   |                                      |   |            |  
|(Increase) decrease in assets:                                          |  |                                      |            |   |                                      |   |            |  
|Accounts receivable                                                     |  |                                      | (439,253   | ) |                                      |   | (24,891    | )
|Inventory                                                               |  |                                      | (16,389    | ) |                                      |   | (189,053   | )
|Prepaid expenses and other current assets                               |  |                                      | (543,917   | ) |                                      |   | 165,628    |  
|Increase (decrease) in liabilities:                                     |  |                                      |            |   |                                      |   |            |  
|Deferred revenue                                                        |  |                                      | 444,870    |   |                                      |   |           |  
|Accounts payable and accrued expenses                                   |  |                                      | (5,219,611 | ) |                                      |   | 1,564,552  |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Net cash used in operating activities                                   |  | $                                    | (9,774,027 | ) |                                      | $ | (2,199,784 | )
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Cash flows from investing activities:                                   |  |                                      |            |   |                                      |   |            |  
|Acquisition costs                                                       |  | $                                    | (367,642   | ) |                                      | $ | (1,880,000 | )
|Distribution from investee                                              |  |                                      | 45,524     |   |                                      |   |           |  
|Increase in restricted cash                                             |  |                                      | (1,206     | ) |                                      |   |           |  
|Purchases of property and equipment                                     |  |                                      | (128,676   | ) |                                      |   | (19,180    | )
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Net cash used in investing activities                                   |  | $                                    | (452,000   | ) |                                      | $ | (1,899,180 | )
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Cash flows from financing activities:                                   |  |                                      |            |   |                                      |   |            |  
|Net repayments on line of credit                                        |  | $                                    | (282,000   | ) |                                      | $ | (200,000   | )
|Financing costs incurred                                                |  |                                      | (1,671,448 | ) |                                      |   |           |  
|Repayment of loan payable                                               |  |                                      | (1,916,957 | ) |                                      |   | (711,085   | )
|Proceeds from issuance of convertible senior notes and common stock     |  |                                      | 15,000,000 |   |                                      |   | 4,924,211  |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Net cash provided by financing activities                               |  | $                                    | 11,129,595 |   |                                      | $ | 4,013,126  |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Net increase (decrease) in cash                                         |  |                                      | 903,568    |   |                                      |   | (85,838    | )
|Cash at beginning of period                                             |  |                                      |           |   |                                      |   | 204,576    |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Cash and cash equivalents at end of period                              |  | $                                    | 903,568    |   |                                      | $ | 118,738    |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Supplemental schedule of cash flows:                                    |  |                                      |            |   |                                      |   |            |  
|Cash paid during the year for interest                                  |  | $                                    | 69,066     |   |                                      | $ | 18,245     |  
|                                                                        |  |                                      |            |   |                                      |   |            |  
|Supplemental schedule of non-cash financing and investing activities:   |  |                                      |            |   |                                      |   |            |  
|Stock issued and to be issued for business acquisition                  |  | $                                    | 15,942,777 |   |                                      | $ |           |  
|Cash to be paid in lieu of stock for Allendale acquisition              |  | $                                    | 57,223     |   |                                      | $ |           |  
|Warrants issued for offering costs                                      |  | $                                    | 203,380    |   |                                      | $ |           |  
|Issuance of registration rights penalty shares                          |  | $                                    | 803,479    |   |                                      | $ |           |  
|                                                                        |  |                                      |            |   |                                      |   |            |  

See accompanying notes to consolidated financial statements



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SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity (Deficit)

For the Six Months Ended June 30, 2007

(unaudited)



|                                                                                                         |  |                 |  |             |        |                          |   |            |                    |  |   |                                    |   |  |   |            |  
|-------------------------------------------------------------------------------------------------------- |  | --------------- |  | ----------- | ------ | ------------------------ | - | ---------- | ------------------ |  | - | ---------------------------------- | - |  | - | ---------- | -
|                                                                                                         |  | Number ofShares |  | CommonStock |        | AdditionalPaid-inCapital |   |            | AccumulatedDeficit |  |   | TotalStockholdersEquity (Deficit) |  
|BALANCE AT DECEMBER 31, 2006                                                                             |  | 17,686,780      |  | $           | 17,687 |                          | $ | 12,688,458 |                    |  | $ | (15,046,243                        | ) |  | $ | (2,340,098 | )
|Issuance of common stock for services                                                                    |  | 200,000         |  |             | 220    |                          |   | 139,800    |                    |  |   |                                   |   |  |   | 140,000    |  
|Stock-based compensation for restricted stock awards                                                     |  | 138,296         |  |             | 138    |                          |   | 129,862    |                    |  |   |                                   |   |  |   | 130,000    |  
|Stock-based compensation for options                                                                     |  |                |  |             |       |                          |   | 206,619    |                    |  |   |                                   |   |  |   | 206,619    |  
|Issuance of common stock in connection with acquisition of Allendale Pharmaceuticals, Inc.               |  | 15,541,638      |  |             | 15,541 |                          |   | 15,526,097 |                    |  |   |                                   |   |  |   | 15,541,638 |  
|Shares of common stock to be issued in connection with acquisition of Allendale Pharmaceuticals, Inc.    |  |                |  |             |       |                          |   | 394,227    |                    |  |   |                                   |   |  |   | 394,227    |  
|Issuance of registration rights penalty shares                                                           |  | 1,004,349       |  |             | 1,004  |                          |   | 802,475    |                    |  |   |                                   |   |  |   | 803,479    |  
|Issuance of previously unissued shares in connection with acquisition of Allendale Pharmaceuticals, Inc. |  | 145,422         |  |             | 145    |                          |   | (145       | )                  |  |   |                                   |   |  |   |           |  
|Stock issued to settle accrued liability                                                                 |  | 6,912           |  |             | 7      |                          |   | 6,905      |                    |  |   |                                   |   |  |   | 6,912      |  
|Settlement paid by stockholders with company stock                                                       |  |                |  |             |       |                          |   | 830,000    |                    |  |   |                                   |   |  |   | 830,000    |  
|Net loss for six months ended June 30, 2007                                                              |  |                |  |             |       |                          |   |           |                    |  |   | (6,856,434                         | ) |  |   | (6,856,434 | )
|                                                                                                         |  |                 |  |             |        |                          |   |            |                    |  |   |                                    |   |  |   |            |  
|BALANCE AT JUNE 30, 2007                                                                                 |  | 34,723,397      |  | $           | 34,723 |                          | $ | 30,724,298 |                    |  | $ | (21,902,677                        | ) |  | $ | 8,856,344  |  
|                                                                                                         |  |                 |  |             |        |                          |   |            |                    |  |   |                                    |   |  |   |            |  

See accompanying notes to consolidated financial statements



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SYNOVA HEALTHCARE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2007

(Unaudited)

NOTE 1  ORGANIZATION AND NATURE OF BUSINESS

ORGANIZATION

Synova Healthcare Group, Inc., a Nevada corporation, and its subsidiaries (collectively, the Company) are focused on the development, distribution, marketing and sales of womens healthcare products
relating to contraception, vaginal health, menopause management, fertility planning, obstetrics and personal care. The Companys principal executive offices are located in Media, Pennsylvania. The Company is a holding company and conducts
its operations through its six subsidiaries: Synova Healthcare, Inc., a Delaware corporation (Synova Healthcare), Synova Pre-Natal Healthcare, Inc., a Delaware corporation, Allendale Pharmaceuticals, Inc., a Delaware corporation
(Allendale), Todays Womencare Company, a Delaware corporation, Todays Womencare (Canada) Inc., a Canadian corporation and Todays Womencare (UK) Ltd., a United Kingdom corporation. The consolidated financial statements include the
accounts of the Company and its subsidiaries, and all intercompany transactions have been eliminated in consolidation.

The Company was incorporated in the
State of Nevada on September 1, 1998 under the name Centaur Capital Group, Inc. The original business strategy of the Company was to engage in the discovery of pharmaceuticals based upon human genetics, but this business was never developed and
was abandoned in 2001. The Companys name has been changed numerous times since its formation. From December 10, 2004 to January 12, 2005, it operated under the name Advanced Global Industries Corporation. From formation until the
Companys acquisition of Synova Healthcare, the Company was a development stage company with no active business.

In December 2004, the Company
entered into a letter of intent to merge with Synova Healthcare, Inc. In connection with this merger, on January 12, 2005, the Company changed its name to Synova Healthcare Group, Inc. On February 10, 2005, a wholly owned subsidiary of the
Company merged with Synova Healthcare, Inc., with Synova Healthcare, Inc. surviving the merger.

BASIS OF PRESENTATION

These unaudited financial statements have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and
Exchange Commission (the Commission) for presenting interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of
operations.

These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair
presentation of the financial statements. The interim operating results for the three and six months ended June 30, 2007 are not necessarily indicative of operating results expected for the full year.

SIGNIFICANT ACCOUNTING POLICIES

Except as may otherwise be provided herein,
these unaudited financial statements have been prepared consistently with the accounting polices described in Note 3 to the Companys Consolidated Financial Statements for the year ended December 31, 2006, which financial statements have
been included in the Companys Form 10-KSB for the year ended December 31, 2006, as filed with the Commission on February 26, 2007.

BUSINESS COMBINATION ACCOUNTING

Acquisitions entered into by the Company are accounted for using the purchase method of accounting. The purchase
method requires management to make significant estimates. Management must determine the cost of the acquired entity based on the fair value of the consideration paid or the fair value of the net assets acquired, whichever is more clearly evident.
This cost is then allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. In addition, management, with the assistance of valuation



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professionals, must identify and estimate the fair values of intangible assets that should be recognized as assets apart from goodwill. Where appropriate or
required, management utilizes third-party appraisals to assist in estimating the fair value of tangible property, plant and equipment and intangible assets acquired.

GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for
impairment at least annually. The Company is required to review its goodwill for impairment at least annually. Any future impairment will be recorded in the consolidated statement of operations as goodwill impairment and will reduce
income from operations.

SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. The Companys compliance certificates and deferred financing
costs are amortized on a straight-line basis over five years. The Company will assess the value of these intangible assets and record an impairment adjustment to their carrying value at December 31, 2007, if necessary.

DERIVATIVE FINANCIAL INSTRUMENTS

In accordance with Emerging Issues Task
Force (EITF) Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock(EITF 00-19), warrants with a cash-out feature and embedded conversion
features with a reset option were recognized as liabilities on the Companys balance sheet. See Notes 7 and 8. These warrants will be adjusted to fair value at each reporting date. The embedded derivative relating to the conversion feature was
valued at its intrinsic value on the date issued, and will be adjusted to its fair value if a reset event occurs.

In accordance with EITF Issue
No. 06-7, Issuers Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133, the embedded conversion
option previously accounted for as a liability will be reclassified to equity upon expiration or conversion of the convertible debt. See Note 7. Any unamortized discount related to the bifurcated financial instruments will be recognized as interest
expense.

INVENTORY

Inventory consists of diagnostic medical
devices, lubricants, vitamins, and contraceptive sponges and is stated at the lower of cost (determined by the first-in, first-out method) or market. An allowance has been provided for expired product and product which will expire by November 2007.

USE OF ESTIMATES

In preparing financial statements in
conformity with generally accepted accounting principles, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

BASIC AND DILUTED NET LOSS
PER SHARE

In accordance with SFAS No. 128, Earnings per Share, basic and diluted net loss per share is computed using net loss divided by the
weighted average number of shares of common stock outstanding for the period presented. Because the Company reported a net loss for each of the three and six months ended June 30, 2007 and 2006, common stock equivalents consisting of options
and warrants were anti-dilutive; therefore, the basic and diluted net loss per share for each of these periods were the same.

INCOME TAXES

The Company accounts for income taxes using the liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary



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differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or
expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax
asset will not be realized.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (the FASB) issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 prescribes detailed guidance for the financial
statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprises financial statements in accordance with SFAS No. 109, Accounting for Income Taxes (SFAS No. 109). Tax
positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. FIN 48 has been adopted by the Company as of January 1, 2007, and the provisions of
FIN 48 were applied to all tax positions under SFAS No. 109 after initial adoption. The cumulative effect of applying the provisions of this interpretation will be reported as an adjustment to the opening balance of retained earnings for that
fiscal year. The adoption of FIN 48 did not require an adjustment to our consolidated financial statements.

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from
the application of SFAS No. 157 relate to the definition of fair value, the methods used to measure fair value and the expanded disclosures about fair value measurement. SFAS No. 157 is effective for fiscal years after November 15,
2007 and interim periods within those fiscal years. The Company does not believe that the adoption of the provisions of SFAS No. 157 will materially impact its financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities(SFAS No. 159). SFAS
No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and will become effective for the Company beginning with the first quarter of 2008. The Company has not yet determined the impact of the adoption of SFAS No. 159 on its financial statements and footnote
disclosures.

NOTE 2  MANAGEMENT STATEMENT

The
Company has not generated sufficient revenues from operations to meet its operating expenses. For this reason, the Company has historically financed its operations primarily through issuances of equity and the proceeds of debt instruments. In the
past, the Company has also provided for its cash needs by relying on the issuance of stock, debt instruments, options and warrants to fund certain operating costs, including consulting and professional fees. As a result of the closing on
January 12, 2007 of the sale of $15.0 million of the Companys 6.5% Senior Convertible Promissory Notes due January 12, 2012 (the Senior Notes), the Company believes that it presently has sufficient available capital to
fund its anticipated operations through August 2007, although there can be no assurance that the net proceeds from this offering will be sufficient to operate and grow the Companys business as intended during such time period without the need
to obtain additional sources of capital.

The Company believes that in the future it will be able to raise additional capital as needed to support
operations. In support of this view, since January 1, 2006, Company management has raised approximately $20.7 million in proceeds from sales of the Companys securities, after deducting cash placement agent fees incurred but excluding
other applicable offering expenses and costs.

While the Company believes that it will be able to obtain, if necessary, future financing on acceptable
terms, if it is not successful in obtaining debt or equity financing, or if the Company is not permitted to obtain such financing by the terms of its existing agreements and financial instruments, the Company would need to expend significant efforts
to find other short- and long-term sources of capital to meet its ongoing operating and business expenses. The terms



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of the Companys Senior Notes, and the terms of other prior debt and equity financing instruments and agreements, also significantly limit the
Companys ability to sell equity or incur debt without the consent of the holders of the Senior Notes, and the Company may not be able to repay, refinance or terminate these obligations or obtain the consent of the debt or equity holders, if
necessary, to obtain additional capital should the Company need or desire to do so. The Company is also focusing on opportunities to increase net sales while seeking to manage operating expenses in an attempt to preserve as much as practical its
available cash resources. If the Company is unable to raise sufficient long-term or short-term capital resources when needed on acceptable terms, the Companys business, results of operations, liquidity and financial condition would be
materially and adversely harmed.

The Company believes that the successful growth and operation of its business is dependent upon its ability to do any or
all of the following:



| |  |  | obtain as needed adequate sources of debt or equity financing to pay operating expenses and fund long-term business operations;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | identify new product offerings to complement and expand the Companys current and projected future business;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | manage or control working capital requirements by reducing advertising, selling, marketing, and general and administrative expenses;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | optimize the marketing and development of the Companys existing product offerings through less capital intensive channels;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | rationalize existing product lines concerning capital allocation based on contribution and return on capital;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | develop new and enhance existing relationships with product retailers and other points of distribution for the Companys products; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | seek potential acquisitions of mature product lines that could be expected to generate positive cash flow for the Company upon acquisition, assuming appropriate
financing structures are available on acceptable terms in order to effect such acquisitions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There can be no assurance that the Company
will be successful in achieving its long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern.

NOTE 3  STOCK-BASED COMPENSATION

On January 1, 2006, the
Company adopted SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123R), using the modified prospective method as permitted under SFAS No. 123R. Under this transition method, compensation cost recognized in
2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of, December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. In accordance with
the modified prospective method of adoption, the Companys results of operations and financial position for prior periods have not been restated.

During the six months ended June 30, 2007 and 2006, the Companys net income was approximately $336,619 and $376,561, respectively, lower as a result of stock-based compensation expense as a result of the adoption of SFAS
No. 123R.

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions:
no dividend yield, expected volatility of 64% (for options with a ten-year expected time to expiration) and 62% (for options with less than a ten-year expected time to expiration), and a risk-free interest rate between 4.5% and 5.2%. In determining
volatility of the Companys options, the Company used a combination



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of (1) the average volatility over a 10-year period of the common stock of eight other public companies operating in the Companys areas of
operations; and (2) the contractual or expected life of the specific option, allowing for a reduction in volatility for those options with a contractual or expected life of less than ten years in consideration of the shorter contractual or
expected life of the option.

NOTE 4  INVESTMENT

Pursuant to a share purchase agreement, on January 31, 2006, the Company acquired 25% of the issued and outstanding ordinary shares of Bio Pad Ltd., an Israeli research and development company, on a fully-diluted basis (excluding
options to purchase up to 10% of Bio Pads ordinary shares that may be granted to employees of Bio Pad) for $2,630,000 in cash. The total investment of $2,687,944 includes $57,944 of closing costs incurred during 2005. This share purchase was
effected in connection with the Companys September 2005 distribution agreement with Bio Pad pursuant to which the Company and Bio Pad agreed to jointly develop certain fetal monitoring products. The Company accounts for its 25% interest in Bio
Pad under the equity method of accounting, as the Company is deemed to have significant influence over the operations of Bio Pad.

As of June 30,
2007, the Companys pro rata equity portion of losses of Bio Pad amounted to $902,365, which was comprised of (1) $202,235, which represents 25% of Bio Pads reported net loss for the six months ended June 30, 2007 of $808,939,
plus (2) amortization expense of $93,426, representing the amortization of the value of certain patentable technology and patent applications, which are estimated to have an economic life of 10 years. As of June 30, 2007, the equity-basis
investment of $1,886,776 in Bio Pad includes $1,588,238, representing the unamortized value of this technology and these patent applications, as well as legal and closing costs associated with the acquisition of $57,944. During the six months ended
June 30, 2007, Bio Pad released to the Company $45,524 of the original purchase price that had been held in escrow in connection with the share purchase agreement.

Bio Pad was formed in March 2005. Summarized unaudited financial information for Bio Pad as of and for six months ended June 30, 2007 and 2006 was as follows:



|                                     |  |                                       |          |   |                                       |   |          |  
|------------------------------------ |  | ------------------------------------- | -------- | - | ------------------------------------- | - | -------- | -
|                                     |  | For the six monthsended June 30, 2007 |          |   | For the six monthsended June 30, 2006 |  
|                                     |  | (unaudited)                           |          |   | (unaudited)                           |  
|Statement of operations information: |  |                                       |          |   |                                       |   |          |  
|Revenues                             |  | $                                     |         |   |                                       | $ |         |  
|Operating loss                       |  | $                                     | (809,818 | ) |                                       | $ | (635,693 | )
|Net loss                             |  | $                                     | (808,939 | ) |                                       | $ | (610,771 | )
|                                     |  |                                      
|                                     |  | June 30, 2007                         |          |   | June 30, 2006                         |  
|                                     |  | (unaudited)                           |          |   | (unaudited)                           |  
|Balance sheet information:           |  |                                       |          |   |                                       |   |          |  
|Current assets                       |  | $                                     | 471,970  |   |                                       | $ | 467,654  |  
|Fixed assets                         |  | $                                     | 48,896   |   |                                       | $ | 42,579   |  
|Current liabilities                  |  | $                                     | 308,493  |   |                                       | $ | 205,067  |  
|Shareholders equity                 |  | $                                     | 212,373  |   |                                       | $ | 305,166  |  

The foregoing financial information does not reflect any valuation of patentable technology, patent applications
or rights, or other intangibles of Bio Pad. The issuance by Bio Pad of 10% of its ordinary shares to its employees pursuant to the exercise of options that may be granted in the future would potentially dilute the Companys 25% interest in Bio
Pad to approximately 22.7%. If this dilution had occurred as of June 30, 2007, the effect would have been to reduce the Companys equity share of Bio Pads net loss for the period ended June 30, 2007 from $202,235 to $183,629.

NOTE 5  OUTSTANDING DEBT

On April 28,
2006, the Company renewed a previously existing line of credit of $300,000 with Wachovia Bank. The line of credit was to terminate on April 28, 2007 and bore interest at prime, plus 0.50%. As of January 31, 2007, the



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line of credit was terminated and $287,000 in principal and $1,791 in accrued interest under this line of credit was repaid in full with a portion of the net
proceeds of the January 12, 2007 Senior Note offering.

As part of the acquisition of Allendale on January 12, 2007, the Company assumed a
$350,000 loan payable due to Radiant Technologies, Inc., along with accrued interest on the loan in the amount of $40,200. The amount of principal and accrued interest has been reduced to zero as a part of the settlement with Radiant. See Note 13.

As part of the acquisition of Allendale, the Company also acquired a loan payable due to xpedx, a
division of International Paper Company (xpedx). xpedx is a third-party warehouse provider for the Companys Today® Sponge inventory, and pays the Company an agreed-upon
amount for every case of inventory shipped from the Companys third-party manufacturer to xpedxs warehouse. xpedx then bills the Company an agreed-upon amount for every case shipped from xpedxs warehouse to one of the Companys
customers. The balance on the loan as of the acquisition date of January 12, 2007 was $414,538, and is based on an inventory financing agreement between Allendale and xpedx. The balance of $414,538 as of the acquisition date represented the net
balance due to xpedx from Allendale for funding previously advanced under this financing agreement. As of June 30, 2007, the loan payable due to xpedx was $97,581.

As of December 31, 2006, the Company had received $1,455,000 in net proceeds from the sale of $1,500,000 in aggregate principal amount of convertible bridge notes and related bridge warrants, net of offering
expenses of $45,000. In connection with this offering, the Company paid the placement agent a cash commission equal to 3% of the gross purchase price of the convertible bridge notes purchased by investors introduced to the Company by the placement
agent. The Company has also agreed to reimburse the placement agent for all reasonable out-of-pocket expenses incurred by the placement agent issued in the convertible bridge note offering. The principal and interest outstanding under the
convertible bridge notes were repaid with a portion of the net proceeds from the January 12, 2007 Senior Note offering. In connection therewith, the Company paid to the holders of the convertible bridge notes $1.5 million in principal and
$65,688 in accrued but unpaid interest thereupon through January 19, 2007, the date of repayment.

NOTE 6  ALLENDALE ACQUISITION

On January 12, 2007, the Company entered into an agreement and plan of merger with, among other parties, Allendale, pursuant to which Allendale
became a wholly-owned subsidiary of the Company. Pursuant to the merger, each share of Allendale common stock owned by accredited investors (as defined in Rule 501 of Regulation D of the Securities Act of 1933, as amended (the Securities
Act)) was converted into approximately 2.275 shares of the Companys common stock. Each share of common stock owned by the Allendale stockholders who did not deliver a certification to the Company that they were accredited investors was
converted into the right to receive cash in an amount equal to $1.00 per Allendale share. Holders of outstanding warrants, options and similar rights to acquire stock of Allendale are entitled to acquire shares of common stock upon the payment of
the exercise price provided for in such warrants, options or similar rights. The Company issued to the former Allendale stockholders who were accredited investors in the aggregate approximately 15.6 million shares of common stock in this
merger, including approximately 145,000 shares of common stock that were issued to one former stockholder of Allendale on June 4, 2007, after the settlement of certain litigation and other disputes between the Company and the stockholder. In
connection with the acquisition of Allendale, each option, warrant or similar right to acquire stock of Allendale immediately prior to the effective time of the merger remains outstanding in accordance with its terms, and entitles the holders
thereof to acquire in the aggregate approximately 248,805 shares of the Companys common stock upon the payment of the exercise price provided in the option, warrant or similar right, adjusted for the merger. The other terms of the options,
warrants and other rights remain the same.

Allendale develops and markets the Today® Sponge, an over-the-counter female contraceptive sponge, in the United States and Canada. We paid a premium, which is classified as goodwill, over the fair value of the net tangible and
identified intangible assets acquired. Goodwill is recognized based upon a number of factors, including the brand awareness of the Today® Sponge and the ability to cross-sell other products
of the Company together with the Today® Sponge, such as the Companys Fem-V non-invasive diagnostic pantiliner.

The following table summarizes the fair value of the Allendale assets acquired and liabilities assumed as of January 12, 2007:



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|                                                        |  |             |           
|------------------------------------------------------- |  | ----------- | ----------
|                                                        |  | (Unaudited)
|Assets acquired:                                        |  |             |           
|Current assets                                          |  | $           | 1,837,811 
|Property, plant and equipment                           |  |             | 2,700,000 
|Intangible assets not subject to amortization:          |  |             |           
|Trademarks                                              |  |             | 7,500,000 
|Intangible assets subject to amortization over 5 years: |  |             |           
|GMP compliance certificate                              |  |             | 2,000,000 
|NDA certification                                       |  |             | 5,500,000 
|Goodwill                                                |  |             | 6,606,012 
|                                                        |  |             |           
|Total assets acquired                                   |  | $           | 26,143,823
|                                                        |  |             |           
|Liabilities assumed:                                    |  |             |           
|Accounts payable and accrued expenses                   |  | $           | 4,176,179 
|Notes and loans payable                                 |  |             | 5,000,000 
|Deferred tax liability                                  |  |             | 600,000   
|                                                        |  |             |           
|Total liabilities                                       |  |             | 9,776,179 
|                                                        |  |             |           
|Net assets acquired                                     |  | $           | 16,367,644
|                                                        |  |             |           

NOTE 7  SENIOR CONVERTIBLE DEBT

As a condition to the acquisition of Allendale described in Note 6, on January 12, 2007, the Company completed the private placement of its Senior Notes in the original aggregate principal amount of $15.0
million, and common stock purchase warrants to purchase, in the aggregate, 16.5 million shares of the Companys common stock to accredited investors (as defined in Rule 501 of Regulation D of the Securities Act). The Senior Notes bear
interest at a rate of 6.5% per year and are convertible, including any accrued and unpaid interest, if any, into shares of common stock, commencing on January 12, 2007, at an initial conversion rate of $1.00, subject to
full-ratchet anti-dilution adjustments.

If the Company issues common stock at a price of less than $1.00, the conversion price of the Senior
Notes will be reduced to the lower price. Accordingly, the conversion option is an embedded derivative which is classified as a liability under EITF 00-19. A holder of a Senior Note can demand repayment of 115% of principal balance and unpaid
interest 30 days following the Companys release of earnings for 2007 and 2008 unless (i) the Companys common stock is trading above 175% of the conversion price for 20 out of the 30 consecutive trading days before the earnings
release; (ii) the Companys common stock has a dollar trading volume in excess of $500,000 for 20 trading days during such 30-day trading period; and (iii) certain other conditions are satisfied. The terms of the Senior Notes provide
the holders of the Senior Notes with additional redemption and repurchase rights.

The gross proceeds of the Senior Notes and related warrants were
allocated $8,662,253 to the Senior Notes and $6,337,747 to the warrants. The warrant liability was immediately adjusted to its $9,380,250 fair value on the date issued and reduced to its $6,938,250 fair value on June 30, 2007. The fair value of
the warrant issued to the placement agent was $150,434 as of June 30, 2007. Changes in the fair value are to be reflected in earnings.

The $8,662,253
allocated to the Senior Notes was reduced by the $7,756,650 intrinsic value of the embedded conversion option, resulting in an initial carrying value of $905,306 for the Senior Notes. The Senior Notes are being accreted to their maturity value using
the interest method and an effective rate of 55%. As of June 30, 2007, the accreted value of the Senior Notes was $1,171,080. The carrying amount of the embedded derivative was not adjusted at June 30, 2007 since a reset event had not
occurred.

The Companys obligations under the Senior Notes have been guaranteed by certain of the Companys subsidiaries. The Senior Notes also
require the Company to comply with certain affirmative, negative and financial covenants. As of June 30, 2007, the Company was not in default under any of its covenants and other obligations under the Senior Notes, and as of that date, no event
of default existed.



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NOTE 8  STOCKHOLDERS EQUITY

COMMON STOCK

As discussed in Note 6, on January 12, 2007, the Company entered into an agreement and plan of merger
with, among other parties, Allendale, pursuant to which Allendale became a wholly-owned subsidiary of the Company. Pursuant to the merger, each share of Allendale common stock owned by accredited investors (as defined in Rule 501 of Regulation D of
the Securities Act) was converted into the right to receive approximately 2.275 shares of the Companys common stock. In the merger, the Company issued to the former Allendale stockholders who were accredited investors as of the closing of the
merger in the aggregate 15,541,638 shares of common stock plus approximately 145,000 shares of common stock that were issued to one former stockholder of Allendale as a result of a litigation settlement in June 2007. See Note 13.

On April 3, 2007, the Company issued 34,574 shares in the form of a grant of restricted stock under the Companys 2005 Equity Incentive Plan (the
Incentive Plan) to each of four of its non-employee directors. The restricted stock vests on April 3, 2008, assuming that the director remains a director as of the date of the Companys 2007 Annual Meeting of Stockholders. The
Company recorded an aggregate expense of $130,000 in stock-based compensation under SFAS No. 123R as general and administrative expenses in connection with these restricted stock awards.

OPTIONS

On February 21, 2007, the Company granted to an employee of
the Company options under the Incentive Plan to purchase 225,000 shares of the Companys common stock at an exercise price of $1.15 per share. This option shall vest in four equal installments annually over each of the first four anniversary
dates of the employees employment with the Company. The option is contingent on continued employment and expires February 21, 2017. In accordance with SFAS No. 123R, the Company has recorded stock-based compensation expense during
the six months ended June 30, 2007 of $30,830 in connection with the issuance of these options.

On February 21, 2007, the Company granted to two
of its employees an option under the Incentive Plan to purchase in the aggregate 35,000 shares of the Companys common stock at an exercise price of $1.15 per share. These options vest in full on February 21, 2008. The options are
contingent on continued employment and expire February 16, 2017. In accordance with SFAS No. 123R, the Company has recorded stock-based compensation expense during the six months ended June 30, 2007 of $12,404 in connection with the
issuance of these options.

On April 2, 2007, the Company granted to two of its employees an option under the Incentive Plan to purchase in the
aggregate 16,000 shares of the Companys common stock at an exercise price of $0.91 per share. These options vest in full on April 2, 2008. The options are contingent on continued employment and expire April 2, 2017. In accordance
with SFAS No. 123R, the Company has recorded stock-based compensation expense during the six months ended June 30, 2007 of $3,040 in connection with the issuance of these options.

In accordance with SFAS No. 123R, the Company recorded $160,345 in stock-based compensation expense for options that were granted to employees and directors in 2006
and 2005 but vested in the first six months of 2007.

In connection with the acquisition of Allendale, each option to acquire stock of Allendale
immediately prior to the effective time of the merger remains outstanding and entitles each option holder to acquire the holders pro rata share of the common stock consideration in the merger upon the payment of the exercise price as provided
in the option, subject to adjustment for the merger. The other terms of these options remain the same. In accordance with the merger agreement, the Company has issued options to purchase in the aggregate up to 68,817 shares of common stock at
exercise prices ranging from $5.14 to $12.10.

The following table summarizes all Company stock option transactions between January 1, 2007 and
June 30, 2007:



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|                                                            |  |               |   |  |               |   |  |                                     
|----------------------------------------------------------- |  | ------------- | - |  | ------------- | - |  | ------------------------------------
|                                                            |  | Option Shares |   |  | Vested Shares |   |  | Exercise Price perCommon Share Range
|Balance, December 31, 2006                                  |  | 1,667,842     |   |  | 1,098,842     |   |  | $0.0011 to $2.78                    
|Granted or vested during the six months ended June 30, 2007 |  | 334,817       |   |  | 232,817       |   |  | $1.15 to $12.10                     
|Expired during the six months ended June 30, 2007           |  | (125,000      | ) |  | (50,000       | ) |  |                                    
|                                                            |  |               |   |  |               |   |  |                                     
|Balance, June 30, 2007                                      |  | 1,887,659     |   |  | 1,281,659     |   |  | $0.0011 to $12.10                   
|                                                            |  |               |   |  |               |   |  |                                     

Information with respect to Company stock options that are outstanding at June 30, 2007 is as follows:

Stock Options Outstanding



|                         |  |                                                        |  |                                          |  |                                                                |     
|------------------------ |  | ------------------------------------------------------ |  | ---------------------------------------- |  | -------------------------------------------------------------- | ----
|Range of Exercise Prices |  | Number of OptionsCurrently Exercisableat June 30, 2007 |  | WeightedAverageRemainingContractual Life |  | Weighted AverageExercise Price of OptionsCurrently Exercisable
|$0.0011 to $12.10        |  | 1,281,659                                              |  | 5.3 years                                |  | $                                                              | 1.60

WARRANTS

Pursuant to
the terms of the Senior Notes, the Company issued warrants to purchase in the aggregate up to 16.5 million shares of common stock at an exercise price of $1.00 per share, subject to full ratchet anti-dilution adjustments. The
warrants are immediately exercisable and expire on or prior to the close of business on January 12, 2012. Upon a fundamental transaction or change in control of the Company, the warrant holder has the right to receive cash equal to the value of
the warrant determined in accordance with the Black-Scholes option pricing formula using the assumptions described in Note 3 above. Accordingly, the warrants are classified as a liability which is to be adjusted to fair value at each reporting
period.

The placement agent for the Senior Notes and warrants was issued a warrant to purchase up to 357,750 shares of common stock at an exercise price
of $1.00 per share, subject to weighted average anti-dilution adjustments. This warrant is immediately exercisable, expires on or prior to the close of business on January 12, 2012 and has substantially similar terms to the warrants
issued to the purchasers of the Senior Notes. Upon a fundamental transaction involving the Company, the warrant holder has the right to receive cash equal to the value of the warrant determined in accordance with the Black-Scholes option pricing
formula using the assumptions described in Note 3 above. Accordingly, in accordance with EITF 00-19, the warrants are classified as a liability which are to be adjusted to fair value at each reporting period. The warrants were adjusted to their fair
value of $150,434 on June 30, 2007.

In connection with the acquisition of Allendale, each warrant to acquire stock of Allendale immediately prior to
the effective time of the merger remains outstanding, and entitles each warrant holder to acquire the holders pro rata share of the common stock consideration in the merger upon the payment of the exercise price as provided in the warrant,
subject to adjustment for the merger. The other terms of these warrants remain the same. In connection with the merger agreement, the Company has issued warrants to purchase in the aggregate up to 179,988 shares of common stock at exercise prices
ranging from $0.64 to $23.15.

The following table summarizes all Company warrant transactions between January 1, 2007 and June 30, 2007:



|                                                            |  |               |   |  |               |   |  |                                     
|----------------------------------------------------------- |  | ------------- | - |  | ------------- | - |  | ------------------------------------
|                                                            |  | WarrantShares |   |  | Vested Shares |   |  | Exercise Price perCommon Share Range
|Balance, December 31, 2006                                  |  | 5,303,584     |   |  | 5,303,584     |   |  | $0.00044 to $3.00                   
|Granted or vested during the six months ended June 30, 2007 |  | 17,037,738    |   |  | 17,037,738    |   |  | $0.64 to $23.15                     
|Expired during the six months ended June 30, 2007           |  | (8,564        | ) |  | (8,564        | ) |  |                                    
|                                                            |  |               |   |  |               |   |  |                                     
|Balance, June 30, 2007                                      |  | 22,332,758    |   |  | 22,332,758    |   |  | $0.00044 to $23.15                  
|                                                            |  |               |   |  |               |   |  |                                     

Information with respect to Company warrants that are outstanding at June 30, 2007 is as follows:



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Warrants Outstanding



|                         |  |                                                         |  |                                           |  |                                                                 |     
|------------------------ |  | ------------------------------------------------------- |  | ----------------------------------------- |  | --------------------------------------------------------------- | ----
|Range of Exercise Prices |  | Number of WarrantsCurrently Exercisable atJune 30, 2007 |  | Weighted AverageRemainingContractual Life |  | Weighted AverageExercise Price of WarrantsCurrently Exercisable
|$0.00044 to $23.15       |  | 22,332,758                                              |  | 4.3 years                                 |  | $                                                               | 1.30

NOTE 9  INCOME TAXES

The provision (benefit) for income taxes as of June 30, 2007 and 2006 consisted of the following:



|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -- | ------------- | - | ---------- | --
|                                                                                                                                                                                                                                                                                                                                                |  | June 30, 2007 |            |    | June 30, 2006 |  
|                                                                                                                                                                                                                                                                                                                                                |  | (unaudited)   |            |    | (unaudited)   |  
|Current:                                                                                                                                                                                                                                                                                                                                        |  |               |            |    |               |   |            |   
|Federal                                                                                                                                                                                                                                                                                                                                         |  | $             |           |    |               | $ |           |   
|State                                                                                                                                                                                                                                                                                                                                           |  |               |           |    |               |   |           |   
|Deferred:                                                                                                                                                                                                                                                                                                                                       |  |               |            |    |               |   |            |   
|Federal                                                                                                                                                                                                                                                                                                                                         |  |               | (2,067,000 | )  |               |   | (700,000   | ) 
|State                                                                                                                                                                                                                                                                                                                                           |  |               | (364,000   | )  |               |   | (120,000   | ) 
|Increase in valuation allowance                                                                                                                                                                                                                                                                                                                 |  |               | 1,831,000  |    |               |   | 820,000    |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Income tax benefit                                                                                                                                                                                                                                                                                                                              |  | $             | (600,000   | )  |               | $ |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|                                                                                                                                                                                                                                                                                                                                               
|A reconciliation of the statutory federal income tax rate to the Companys effective tax rate is as follows:                                                                                                                                                                                                                                    | 
|                                                                                                                                                                                                                                                                                                                                                |  |              
|                                                                                                                                                                                                                                                                                                                                                |  | June 30, 2007 |            |    | June 30, 2006 |  
|Statutory federal income tax rate                                                                                                                                                                                                                                                                                                               |  |               | (34        | %) |               |   | (35        | %)
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Non-deductible expenses                                                                                                                                                                                                                                                                                                                         |  |               | 7          | %  |               |   |           |   
|State income tax rate, net of federal benefit                                                                                                                                                                                                                                                                                                   |  |               | (6         | %) |               |   | (5         | %)
|Increase in valuation allowance                                                                                                                                                                                                                                                                                                                 |  |               | 25         | %  |               |   | 40         | % 
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Effective tax rate                                                                                                                                                                                                                                                                                                                              |  |               | (8         | %) |               |   |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|                                                                                                                                                                                                                                                                                                                                               
|Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax reporting. Significant components of the Companys deferred tax assets and liabilities as of June 30, 2007 and June 30, 2006 are as follows: | 
|                                                                                                                                                                                                                                                                                                                                                |  |              
|                                                                                                                                                                                                                                                                                                                                                |  | June 30, 2007 |            |    | June 30, 2006 |  
|                                                                                                                                                                                                                                                                                                                                                |  | (unaudited)   |            |    | (unaudited)   |  
|Deferred tax liabilities:                                                                                                                                                                                                                                                                                                                       |  |               |            |    |               |   |            |   
|Intangible assets                                                                                                                                                                                                                                                                                                                               |  | $             | 5,700,000  |    |               | $ |           |   
|Depreciation and amortization                                                                                                                                                                                                                                                                                                                   |  |               | 950,000    |    |               |   |           |   
|Other (each less than five percent of total liabilities)                                                                                                                                                                                                                                                                                        |  |               |           |    |               |   |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Total deferred tax liabilities                                                                                                                                                                                                                                                                                                                  |  |               | 6,650,000  |    |               |   |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Deferred tax assets:                                                                                                                                                                                                                                                                                                                            |  |               |            |    |               |   |            |   
|Loss carryforwards                                                                                                                                                                                                                                                                                                                              |  |               | 12,900,000 |    |               |   | 3,400,000  |   
|Accrued expenses                                                                                                                                                                                                                                                                                                                                |  |               | 240,000    |    |               |   | 200,000    |   
|Inventory reserves                                                                                                                                                                                                                                                                                                                              |  |               | 480,000    |    |               |   |           |   
|Other (each less than five percent of total assets)                                                                                                                                                                                                                                                                                             |  |               | 280,000    |    |               |   |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Total deferred tax assets                                                                                                                                                                                                                                                                                                                       |  |               | 13,900,000 |    |               |   | 3,600,000  |   
|Valuation allowance for deferred tax assets                                                                                                                                                                                                                                                                                                     |  |               | (7,250,000 | )  |               |   | (3,600,000 | ) 
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Total deferred tax assets less allowance                                                                                                                                                                                                                                                                                                        |  |               | 6,650,000  |    |               |   |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   
|Net deferred tax asset                                                                                                                                                                                                                                                                                                                          |  | $             |           |    |               | $ |           |   
|                                                                                                                                                                                                                                                                                                                                                |  |               |            |    |               |   |            |   

A valuation allowance totaling $7,250,000 and $3,600,000 has been established at June 30, 2007 and 2006,
respectively, for deferred income taxes related to temporary differences and net operating loss carryforwards that



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may not be realized. A decrease of $600,000 was made to the opening valuation allowance due to the inclusion of Allendale in the Companys consolidated
tax filings. The valuation allowance was increased by $1,678,000 as a result of activity in the second quarter of 2007.

As of June 30, 2007, the
Company has $32,300,000 of unused federal and state net operating loss carryforwards that may be used to offset future taxable income through the year 2027. Utilization of certain of the net operating loss carryforwards may be subject to limitation
in certain tax years.

NOTE 10  MAJOR CUSTOMER

The Companys largest customer accounted for $191,749 and $0 in net sales for the six months ended June 30, 2007 and 2006, respectively, and approximately 6% of accounts receivable as of June 30, 2007.

NOTE 11  INVENTORY

Inventory as of June 30, 2007 and 2006
consists of the following:



|                |  |          |           |      |   |        
|--------------- |  | -------- | --------- | ---- | - | -------
|                |  | June 30,
|                |  | 2007     |           | 2006
|Raw materials   |  | $        | 302,961   |      | $ |       
|Work in process |  |          | 732,049   |      |   |       
|Finished goods  |  |          | 149,634   |      |   | 321,908
|                |  |          |           |      |   |        
|                |  | $        | 1,184,644 |      | $ | 321,908
|                |  |          |           |      |   |        

NOTE 12  PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2007 and 2006 consist of the following:



|                                                |  |          |           |   |      |   |         |  
|----------------------------------------------- |  | -------- | --------- | - | ---- | - | ------- | -
|                                                |  | June 30, |          
|                                                |  | 2007     |           |   | 2006 |  
|Computer equipment                              |  | $        | 94,468    |   |      | $ | 44,177  |  
|Machinery                                       |  |          | 2,607,856 |   |      |   |        |  
|Office equipment                                |  |          | 29,528    |   |      |   | 4,028   |  
|Office furniture                                |  |          | 84,748    |   |      |   | 13,762  |  
|Leasehold improvements                          |  |          | 309,694   |   |      |   | 11,553  |  
|                                                |  |          |           |   |      |   |         |  
|                                                |  |          | 3,126,294 |   |      |   | 73,520  |  
|Less: Accumulated depreciation and amortization |  |          | (424,406  | ) |      |   | (23,929 | )
|                                                |  |          |           |   |      |   |         |  
|                                                |  | $        | 2,701,888 |   |      | $ | 49,591  |  
|                                                |  |          |           |   |      |   |         |  

Related depreciation expense for the six months ended June 30, 2007 and 2006 was $253,536 and $4,820,
respectively.

NOTE 13  COMMITMENTS AND CONTINGENCIES

Except for the commitments and contingencies described elsewhere herein, the following are the Companys material commitments and contingencies as of June 30, 2007:

The Company leases office space under a lease that expires on November 30, 2011. The monthly rent obligation during 2007 under this lease is approximately $9,200.

In June 2006, the Company engaged a firm to provide the Company with investor and public relations services. The agreement is terminable by either party at any time. The
Company agreed to pay this firm a monthly fee of $17,500



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in cash, which was decreased to $12,500 in March 2007 in connection with a reduction in services provided to the Company by this firm. Additionally, upon
execution of the agreement, the Company agreed to issue 200,000 shares of common stock to the firm, of which 100,000 shares vested on the six-month anniversary of the agreement and the remaining 100,000 shares vested on the 12-month anniversary of
the agreement. This agreement was terminated as of July 31, 2007.

Under the terms of registration rights agreements that the Company has entered into
with investors purchasing units in the Companys unit offerings between October 2005 and May 2006, the Company is required to file, and obtain and maintain the effectiveness of, a resale registration statement by stated deadlines. This
registration statement is to register the shares of common stock, and shares of common stock underlying warrants, each sold as part of the units. If, among other things, the Company does not meet these deadlines, upon the occurrence of a default,
the Company is required to pay each investor a penalty of 1% of the purchase price of all registrable securities then owned by the investor, and a penalty of 1.5% of the purchase price of all registrable securities then owned by the investor for
each month thereafter that the default continues. The Company may elect to pay these penalties in cash or in shares of common stock valued at 85% of the average of the ten-day trading price of the Companys common stock ending on the date the
registration statement is declared effective by the Commission. As of June 30, 2007, the registration statement covered by these agreements had been filed and declared effective by the Commission on April 4, 2007. For the six months ended
June 30, 2007, the Company has incurred and accrued an expense of $219,954 as a result of these penalties. In May 2007, the Company issued to investors purchasing units in the Companys unit offerings from October 2005 to May 2006 an
aggregate of 1,004,349 shares of common stock representing payment of penalties accrued under certain of the Companys outstanding registration rights agreements.

On July 18, 2006, George T. Brown, Jr. commenced a proceeding against Allendale in the Superior Court of New Jersey Law Division, Bergen County, seeking damages arising from claims that Allendale breached a
written employment agreement with him. As a result of the Companys acquisition of Allendale, the Company succeeded as a party in interest to this legal proceeding. In January 2007, after the Companys acquisition of Allendale, this claim
was settled for $250,000.

As a result of the Companys acquisition of Allendale discussed in Note 6, the Company succeeded as a party in interest to
a legal proceeding filed by Allendale on May 5, 2006 in the U.S. District Court for the Southern District of New York captioned Allendale Pharmaceuticals, Inc. v. Radiant Technologies, Inc. In this lawsuit, Allendale asserted, among
other things, that Radiant Technologies, Inc. (Radiant) breached its obligations to Allendale under an exclusive distribution agreement entered into in March 2004. Radiant had sought counterclaims against Allendale seeking compensatory
and consequential damages. In February 2007, Radiant, who was also a stockholder of Allendale prior to the merger, notified the Company of Radiants intent to exercise appraisal rights with respect to the merger.

On May 31, 2007, the Company and Radiant signed a settlement agreement to resolve fully and completely all
past, present and future matters, controversies, claims and disputes between and among the parties. Under the terms of the settlement agreement, without any party admitting or conceding any responsibility, liability or wrongdoing on the part of any
party, the parties agreed to a general and mutual release of each other for all past, present and future claims between the parties. Radiant transferred to the Company all accounts receivable outstanding as of April 25, 2007 with retailers
associated with the sale of our Today® brand products, which receivables totaled approximately $779,000 as reflected on Radiants books. Radiant also agreed to promptly transfer to the
Company any monies collected by Radiant on these transferred receivables subsequent to their transfer to the Company. The Company paid Radiant $100,000 in cash and three former principal stockholders of Allendale transferred 1,000,000 shares of
common stock previously issued to them in connection with the Allendale merger, which shares had been held in escrow to satisfy their indemnification obligations to the Company. Allendale agreed to indemnify Radiant for any product liability,
product defect, recall, retailer credit, return allowances or other similar claims brought by retail customers against Radiant in connection with the accounts receivable being transferred, other than claims arising out of Radiants negligence,
reckless or willful misconduct or claims that Radiant has or should have knowledge of as of the date of the settlement agreement. Finally, the parties dismissed with prejudice all claims raised in the lawsuit. On the date of the settlement with
Radiant, the Companys common stock was valued at $0.83 per share, resulting in a valuation of $830,000 for the 1,000,000 shares distributed from escrow by the three former stockholders of Allendale to Radiant. When offset against the value of
the receivables transferred from Radiant to the Company,



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(approximately $389,000, net of reserves for bad debt) the value of the net liability forgiven by Radiant (approximately $110,000) and the $100,000 in cash
disbursed to Radiant, the net impact of the settlement on the Companys financial performance was a loss of approximately $430,000.

NOTE 14 
SUBSEQUENT EVENTS

The agreement pursuant to which the Company engaged a firm to provide the Company with investor and public relations services was
terminated as of July 31, 2007.

On August 7, 2007, the Company issued 65,000 shares in the form of a grant of restricted stock under the
Incentive Plan to each of two of its non-employee directors. On August 8, 2007, the Company issued 72,222 shares in the form of a grant of restricted stock under the Incentive Plan to two additional non-employee directors. The Company will
record an aggregate expense of $130,000 in stock-based compensation under SFAS No. 123R as general and administrative expenses in connection with these restricted stock awards.



|Item 2. | Managements Discussion and Analysis or Plan of Operation.
|------- | ----------------------------------------------------------

All references in this Quarterly Report on Form 10-QSB to we, our, us, or the Company, or words of similar import, mean Synova Healthcare Group, Inc., a Nevada
corporation, and our two consolidated Delaware subsidiaries, Synova Healthcare, Inc., which is wholly owned by Synova Healthcare Group, Inc., and Synova Pre-Natal Healthcare, Inc., which is wholly owned by Synova Healthcare, Inc. In addition, on and
after January 12, 2007, such references also include Allendale Pharmaceuticals, Inc., a Delaware corporation, and its three consolidated subsidiaries, which we acquired through our merger with Allendale on January 12, 2007.

Forward-Looking Information

Except for the
historical information presented herein, the matters discussed in this Quarterly Report contain forward-looking statements that relate to future events or future financial performance. These statements can be identified by the use of
forward-looking terminology such as believes, plans, intends, scheduled, will, future, potential, continue, estimates, hopes,
goal, objective, expects, may, should, could or anticipates or the negative thereof or other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. We caution you that no statements contained in this Quarterly Report should be construed as a guarantee or assurance of future performance or results. These forward-looking statements involve risks and
uncertainties, including those discussed in this section and elsewhere throughout this Quarterly Report, as well as the risks and uncertainties described in our Annual Report on Form 10-KSB for the year ended December 31, 2006, as filed with
the SEC on February 26, 2007 (the Annual Report), and in our Registration Statement on Form SB-2 (File No. 333-140889), as declared effective by the Securities and Exchange Commission on April 17, 2007 (the
Registration Statement). The actual results that we achieve may differ materially from any forward-looking statements due to the effect of such risks and uncertainties. These forward-looking statements are based on current expectations,
and, except as required by law, we assume no obligation to update this information whether as a result of new information, future events or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this
Quarterly Report, the Annual Report, the Registration Statement, and our other reports filed with the Securities and Exchange Commission, that attempt to advise interested parties of the risks that may affect our business, financial condition and
results of operations.

History and Background

We were formed as a Nevada corporation on September 1, 1998 under the name Centaur Capital Group, Inc. Our initial business strategy was to use human genetics in order to discover novel pharmaceuticals, but this business never
developed and was abandoned in 2001. We changed our name numerous times since our original formation, but as of December 31, 2004, our name was Advanced Global Industries Corporation. We were a development stage company with no active business
from the time of our original formation until our acquisition by Synova Healthcare, Inc., the entity that, prior to this acquisition, operated our non-invasive diagnostic healthcare products business.



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In December 2004, we entered into a letter of intent to merge with Synova Healthcare, Inc. In connection
with the merger, on January 12, 2005, we changed our name to Synova Healthcare Group, Inc. On February 10, 2005, our wholly owned subsidiary, Synova AGBL Merger Sub, Inc., a Delaware corporation, merged with Synova Healthcare, Inc., with
Synova Healthcare, Inc. surviving the merger. As a result of the merger, Synova Healthcare, Inc. became our wholly owned operating subsidiary.

Following this merger, we began to concentrate our efforts on developing and growing our business and line of womens healthcare products. Historically, however, our revenues from operations have not been sufficient to meet our capital
and cash flow needs. To date, we have obtained the necessary funds to develop, operate and grow our business primarily through the sale of our equity and debt securities. During 2005 and 2006, we raised an aggregate of approximately $9.5 million in
total proceeds from private offerings of units consisting of shares of common stock and warrants to purchase common stock. We also sold a total of $2.1 million in convertible promissory and bridge notes and related warrants in private transactions
in August and September 2005, and in July, September and October 2006.

We have also sought to grow our business and develop new products
through strategic acquisitions. On January 31, 2006, through Synova Pre-Natal, we acquired 25% of the issued and outstanding ordinary shares of Bio Pad Ltd., an Israeli research and development company, on a fully-diluted basis, excluding
options to purchase up to 10% of Bio Pads ordinary shares that may be granted to employees of Bio Pad, for approximately $2.6 million in cash. This share purchase was effected in connection with our September 2005 distribution agreement with
Bio Pad pursuant to which we and Bio Pad agreed to jointly develop certain fetal monitoring products. The cash purchase price was paid in several installments into an escrow account, with the final installment of $1.9 million paid into escrow on
January 31, 2006 in connection with the closing of the share purchase. Amounts may be released from escrow to Bio Pad upon the completion of specific milestones and otherwise as set forth in the terms of the share purchase agreement. We and Bio
Pad continue to work together to develop this fetal monitoring technology. See Business OverviewNew Business Development.

On January 12, 2007, we acquired Allendale Pharmaceuticals, Inc., a company that had the
rights to manufacture and distribute the Today® Sponge. Each former stockholder of Allendale, except for certain non-accredited investors, had the right to receive approximately 2.275
shares of our common stock for each share of Allendale common stock. Holders of outstanding warrants, options and similar rights to acquire stock of Allendale are entitled to acquire shares of our common stock upon the payment of the exercise price
provided for in such warrants, options or similar rights, as adjusted for the merger. We issued in the aggregate approximately 15.6 million shares in the merger and options and warrants to purchase in the aggregate approximately 248,805 shares
of our common stock.

As a condition to the merger, on January 12, 2007, we completed the private placement of our 6.5% senior
convertible promissory notes due January 12, 2012 in the original aggregate principal amount of $15 million and warrants to purchase, in the aggregate, 16.5 million shares of our common stock. The senior notes are convertible, including
any accrued and unpaid interest, if any, into shares of our common stock, commencing on January 12, 2007, at an initial rate of $1.00 per share. See Liquidity and Capital ResourcesContractual Obligations. Pursuant to the
terms of the warrants, a holder is entitled to purchase shares of our common stock at an exercise price of $1.00 per share, on or after January 12, 2007 and on or prior to the close of business on January 12, 2012.

Business Overview

We are focused on the development,
distribution, marketing and sales of womens healthcare products relating to contraception, vaginal health, menopause management, fertility planning, obstetrics and personal care. Our products are designed to deliver a meaningful improvement in
healthcare management for women. Our goal is to provide healthcare solutions that address every stage of a womans reproductive life.

We distribute and sell our products over the counter, or OTC, to retail customers through drug
stores, grocery stores and other retail outlets. Certain of our products are also distributed for use by healthcare professionals at the point of care, or POC, through medical supply companies. Historically, we marketed and sold our products only in
the United States. Since acquiring Allendale on January 12, 2007, we also market and sell the Today®



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Sponge in the United States and Canada and are seeking to do so in Europe and in other countries worldwide. Our products are also available for purchase via
the Internet.

We currently market and sell our products under the brand names
Today®, Fem-V, MenoCheck® and MenocheckPro®. The
Today® Sponge is a non-hormonal contraceptive device that combines barrier and spermicidal methods to prevent conception. Fem-V is a non-invasive diagnostic test designed to assist
women in detecting and diagnosing the presence of elevated vaginal acidity, often indicating a vaginal infection. MenoCheck® and MenocheckPro® are in-home and in-office non-invasive diagnostic tests used to detect and diagnose the onset of menopause.

Existing Products

The Today® Sponge. In January 2007, in connection with our acquisition of Allendale, we acquired the rights to manufacture and sell the Today® Sponge. Made of
soft, disposable polyurethane foam, the Today® Sponge contains the widely-used spermicide nonoxynol-9. The Today® Sponge provides
contraceptive protection by killing sperm, blocking entry of sperm into the cervix and absorbing and trapping sperm. We believe that non-hormonal birth control products, including the Today® Sponge, condoms and other spermicides, are essential for women who cannot use or tolerate hormonal birth control products.

Since our acquisition of the Today®
Sponge, we have embarked upon our plans to re-launch this product to both consumers and healthcare professionals. Market research has recently revealed a high level of brand awareness of the Today® Sponge among consumers and healthcare professionals. Research also uncovered that physicians and other healthcare professionals are ready to recommend this once-popular non-hormonal contraceptive option to their
patients again.

We have focused a significant portion of our re-launch efforts on
the packaging and branding of the Today® Sponge. Consumer research confirmed a need to contemporize the products packaging and branding to meet the demands and expectations of
todays women. After extensive testing, with multiple package designs and concepts, we have developed and finalized new branding and packaging designs which we believe will increase the products impact on and appeal to todays women.

Having completed these efforts, in May 2007, we re-launched the Today® Sponge to healthcare professionals during the 55th Annual Meeting of the American College of Obstetrics and Gynecology. Healthcare professionals attending this meeting confirmed their interest
in recommending the Today® Sponge to women seeking an alternative to hormonal methods of contraception. In June 2007, we released our Today® Sponge product for sale for the first time since our acquisition of Allendale. We then initiated a consumer directed advertising campaign on July 31, 2007 featuring the unveiling of the new product packaging for
the Today® Sponge. This phase of our marketing effort included print advertising and Internet-based marketing, all supported by consumer and professional directed public relations
campaigns.

Fem-V. In the second quarter of 2006, we began to distribute and sell the Fem-V Vaginal Infection Test. This
product is a convenient, easy-to-use non-invasive self-test for women who believe their vaginal discharge to be abnormal and who suspect the presence of a vaginal infection. Fem-V has been developed in a convenient pantiliner design, with a
removable diagnostic test strip. This test is intended to give an initial indication regarding the potential causes of abnormal vaginal discharge and assists women in determining whether a doctor visit is required, or whether an OTC treatment may be
considered for the treatment of the symptoms.

MenoCheck® and MenocheckPro®.MenoCheck® and MenocheckPro® are in-home and in-office, respectively, non-invasive urine tests for use in detecting and diagnosing the onset of menopause. MenoCheck® is an OTC product that enables women to easily and accurately determine whether they have entered the menopausal stage of their lives. MenoCheck® functions in a manner similar to
the OTC pregnancy tests that are commonly used today. MenocheckPro®is an FDA-approved diagnostic for POC testing that enables physicians to quickly and accurately determine whether
their patients have entered menopause.



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New Business Development

The ongoing introduction of new products and the expansion of our product portfolio is a key strategic objective for us, and is considered critical to our
long-term success. We believe that, in order to be successful, we must develop, license or acquire additional products for sale through our various points of distribution. As a result, a substantial amount of management time and effort was expended
in 2006 and the first six months of 2007, and we anticipate will continue to be spent in the future, on new business development.

On January 12, 2007, we acquired Allendale, which owns the rights to manufacture and sell the
Today® Sponge. The Today® Sponge is the subject of an FDA-approved new drug application owned by Allendale and is manufactured in
a facility owned and operated by OSG Norwich Pharmaceuticals, Inc. Allendale owns all of the machinery and equipment used to make the Today® Sponge.

We also have entered into additional distribution agreements with respect to products we intend to develop and market in the future:



| |  |  | Bio Pad Ltd. We and Bio Pad Ltd., an early stage Israeli research and development company, have agreed to jointly develop a non-invasive fetal monitoring
medical device. We will be the exclusive distributor of this product in the United States, Canada and Mexico. We also hold a right of first offer in all other global geographic territories.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with this distribution agreement, on January 31, 2006, through Synova Pre-Natal, we acquired 25% of the issued and outstanding ordinary
shares of Bio Pad on a fully-diluted basis, excluding options to purchase up to 10% of Bio Pads ordinary shares that may be granted to employees of Bio Pad, for $2.63 million in cash. The cash purchase price was paid in several installments
into an escrow account, with the final installment of approximately $1.9 million paid into escrow on January 31, 2006 in connection with the closing of the share purchase. Amounts may be released from escrow to Bio Pad upon the completion of
specific milestones and otherwise as set forth in the terms of the share purchase agreement.

In March 2006, Synova Pre-Natal and Bio Pad
successfully completed the development and testing of a data logging system for use with the non-invasive fetal monitor. The data logging system is an integral part of the fetal monitors ability to collect and integrate data from multiple
sources, including ultrasound, and the completion of this system satisfied a necessary first step to the development and marketing of this product.



| |  |  | QuantRx Biomedical Corporation. Formerly known as A-Fem Medical Corporation, QuantRx, as an outsourced development partner, is developing certain products on
our behalf that we expect will allow us to expand our non-invasive diagnostic portfolio in the womens healthcare industry. QuantRx has access to proprietary technology and the manufacturing capacity to rapidly develop and efficiently produce
non-invasive diagnostic tests for both the OTC and POC distribution channels. In the third quarter of 2006, we entered into a distribution agreement with QuantRx giving us, for a period of approximately five years, the exclusive right to distribute,
market and sell an OTC product designed to treat and provide relief from hemorrhoids. Upon signing this agreement, we paid QuantRx a non-refundable cash fee of $500,000.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ovulation Tester, LLC. In the third quarter of 2006, we entered into a distribution agreement with Ovulation Tester, LLC to market and sell its ovulation
testing products.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There can be no assurance that we will be successful in selling any of the above products, or that we
will generate enough sales from the sale of these products to recover our significant investment of our resources in these relationships. Management expects to continue to expend a substantial amount of time and effort pursuing other opportunities
to obtain rights to sell products through our points of distribution. Also, the markets for these products are characterized by evolving industry and regulatory requirements which may result in product or technology obsolescence. There can be no
assurance that we can successfully identify new product opportunities and develop



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and bring new products and services to the market in a timely manner. Furthermore, we have had little historical operating background in this business, and
thus the likelihood that we may succeed at these efforts cannot presently be determined.

Management expects that it will pursue other
licensing or acquisition opportunities in the future as part of its business development efforts. There can be no assurance that we will be able to complete any such opportunities or that we will have the funds or other capital necessary to complete
any such acquisitions.

Critical Accounting Policies and Estimates

We prepared our consolidated financial statements in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we
believe are reasonable based upon the information available. These estimates and assumptions that we believe 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 policies that we believe are the most critical
to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition.We sell our
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 SEC Staff Accounting Bulletin No. 104, Revenue Recognition, we
recognize revenue when:



| |  |  | persuasive evidence of a customer or distributor arrangement exists or acceptance occurs;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | a retailer, distributor or wholesaler receives the goods;
| | - |  | ---------------------------------------------------------



| |  |  | the price is fixed or determinable; and
| | - |  | ---------------------------------------



| |  |  | collectibility of the sales revenues is reasonably assured.
| | - |  | -----------------------------------------------------------

Subject to these criteria, except with respect to retailers, distributors or wholesalers that buy products from us on pay-on-scan terms and except as otherwise described below, we will generally recognize revenue at
the time our merchandise is received by the retailer, distributor or wholesaler.

We recognize revenue from pay-on-scan sales when we are
notified of the sales of goods by the retailer to its customer through weekly sales data.

Another exception to our general revenue
recognition policy stated above exists when we have entered into an arrangement with a retailer, wholesaler or distributor that has the right to return to us any product that was not sold or otherwise failed to meet the customers expectations.
Under these terms, the sale of product to the retail customer would be considered contingent upon the retail customers resale of the product to its customer. Therefore, the recognition of revenue upon actual shipment of product to such retail
customer is not permitted in accordance with SAB 104, and is deferred until the retail customers actual resale of the product. We are generally notified of sales by these retailers through a third partys publication of weekly sales data.

Based on the monitoring of sales activity and the reordering patterns of our major customers, we have established an allowance for
returned product. We have experienced returns in the normal course of business and expect to do so in future periods. We will continue to monitor sales activity and our customer ordering patterns to determine whether the return allowance amount is
reasonable in the future based upon actual and expected return activity.

Allowance for Doubtful Accounts.As amounts become
uncollectible, they will be charged to an allowance or operations in the period when a determination of uncollectibility is made. Any estimates of potentially uncollectible customer accounts receivable will be made based on an analysis of individual
customer and historical



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write-off experience. Our analysis includes the age of the receivable, creditworthiness of the customer and general economic conditions. We believe the
actual results of collection could be materially different from our estimates if historical trends do not reflect actual results or if economic conditions worsen.

Inventory and Product Return Allowance. Inventory consists of diagnostic medical devices, lubricants, vitamins, and contraceptive sponges which are stated at the lower of cost  determined by the first-in,
first-out method  or market. An allowance has been provided for expired product and product which will expire by November 2007.

We
have a formal policy for returns, solely for unsaleable product. We use a return allowance procedure to issue authorizations to retailers to destroy or return damaged or expired product. This ensures that we can effectively govern and oversee the
amounts and reasons for any return of unsaleable product. The method we use to determine return exposure for unsaleable product in a distribution channel consists of analyzing the orders from our customers to ensure that they correlate with the
product movement at the point of sale. In order to do this effectively, many different factors are considered, including:



| |  |  | Ex-factory sales analysis
| | - |  | -------------------------



| |  |  | We assess the size and frequency of the orders, by customer.
| | - |  | ------------------------------------------------------------



| |  |  | We verify that the size and frequency of the orders correlate with our current channel estimates.
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | Point-of-Sale Analysis
| | - |  | ----------------------



| |  |  | We receive actual sales information from our customers, either directly or indirectly.
| | - |  | --------------------------------------------------------------------------------------



| |  |  | We receive indirect customer sales information from two different data sources.
| | - |  | -------------------------------------------------------------------------------



| |  |  | Metric Analysis
| | - |  | ---------------



| |  |  | Using data obtained from similar customers, we are able to reasonably estimate point-of-sale levels at a retailer that does not report sales.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We use a metric, such as estimated units sold per store or retailer, upon which we base our estimates.
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | We validate these estimates with reports that we obtain from the retailer.
| | - |  | --------------------------------------------------------------------------



| |  |  | Business Planning
| | - |  | -----------------



| |  |  | Each year we establish a business plan for each customer, which includes sales estimates and cooperative advertising estimates.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | When we assess inventory levels, we also consider upcoming promotional activities and co-operative advertising initiatives, as these efforts may cause periodic
increases in sales.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For example, if a retailer is having a promotion to drive sales, we can reasonably expect based on prior experience that the retailer will order more product during
that period.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Similarly, historical evidence suggests that when we launch major marketing initiatives, we cause sales to rise at the point of sale.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As a result of these efforts, existing inventory for the channel would normally diminish, which would trigger an increase in order activity from channel customers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Impairment of Long-Lived Assets.
Beginning in fiscal year 2006, we began to evaluate our long-term investment, namely our interest in Bio Pad, for impairment on an annual basis and will perform evaluations for impairment more frequently if required. The impairment loss, if any, is
recognized in earnings and measured by the difference between the carrying amount of this investment and its fair value based on the best information available, including discounted cash flow analysis or other financial metrics that management
utilizes to help determine fair value. Judgments made by management related to the fair value of our long-term investments are affected by factors



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such as the ongoing financial performance of the investment and additional capital raises by the investee, as well as general changes in the economy.

We will periodically evaluate the recoverability of the carrying amount of all of our other long-lived assets (including property, plant
and equipment and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We will evaluate events or changes in circumstances based mostly on
actual historical operating results, but business plans, forecasts, general and industry trends, and anticipated cash flows are also considered. We will also continually evaluate the estimated useful lives of all long-lived assets and, when
warranted, revise such estimates based on current events.

Advertising Expenses. Advertising costs are expensed as incurred. In
accordance with Statement of Position 93-7, Reporting on Advertising Costs, prepaid advertising represents advertising, distribution and monitoring costs with respect to advertisements in various media that have not yet aired.

We treat temporary price reduction, or TPR, programs, merchandising fees, co-operative advertising and slotting expenses as a reduction to our gross
sales. We record the liability for TPR expenses when persuasive evidence exists that we and the customer or distributor have reached agreement and that an advertising action will result in an expense to us in the near future. The liability is
maintained until the customer takes the deduction against payments due. In addition, in accordance with Emerging Issues Task Force Issue No. 01-09, Accounting for Consideration Given by a Vendor to a Customer, if the TPR recorded is in
excess of gross sales for any retailer, the amount in excess will be recorded as a marketing expense.

EITF 01-09 requires that cash
consideration, including sales incentives, given by a vendor to a customer is presumed to be a reduction of the selling price and, therefore, should be characterized as a reduction to gross sales. This presumption is overcome and the consideration
would be characterized as an expense incurred if the vendor receives an identifiable benefit in exchange for the consideration and the fair value of that identifiable benefit can be reasonably estimated. Furthermore, under EITF 01-09, if the
consideration recorded is in excess of gross sales for any retailer, the amount in excess will be recorded as a marketing expense.

Stock-Based Compensation.On January 1, 2006, we adopted SFAS No. 123 (revised 2004), Share-Based Payment, or SFAS No. 123R, using the modified prospective method as permitted under SFAS No. 123R. Under
this transition method, compensation cost recognized during the first quarter of 2006 includes compensation cost for all share-based payments that were granted prior to, but not yet vested as of, December 31, 2005, based on the grant-date fair
value estimated in accordance with the provisions of SFAS No. 123R.

We presently use the following assumptions in determining the
grant date fair value of an award under the Black-Scholes options valuation model: no dividend yield, expected volatility of 64% (for options with a ten-year expected time to expiration) and 62% (for options with less than a ten-year expected time
to expiration), and a risk-free interest rate between 4.5% and 5.2%. In the future, however, we may be required to adjust these assumptions in accordance with SFAS No. 123R and generally accepted accounting principles.

Business Combinations.Acquisitions we enter into are accounted for using the purchase method of accounting. The purchase method requires our
management to make significant estimates. Management must determine the cost of the acquired entity based on the fair value of the consideration paid or the fair value of the net assets acquired, whichever is more clearly evident. This cost is then
allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. In addition, management, with the assistance of valuation professionals, must identify and estimate the fair values of intangible
assets that should be recognized as assets apart from goodwill. Where appropriate or required, management utilizes third-party appraisals to assist in estimating the fair value of tangible property, plant and equipment and intangible assets
acquired.

Goodwill and Other Intangible Assets.Goodwill and intangible assets acquired in a purchase business combination and
determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually. We are required to review our goodwill for impairment at least annually. Any future impairment will be recorded in the statement
of operations as goodwill impairment and will reduce our income from operations.We are also required to amortize intangible assets with estimable useful lives over their respective



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estimated useful lives to their estimated residual values, and we must review these assets for impairment. We will assess the value of these
intangible assets and record an impairment adjustment to their carrying value, if necessary.

Derivative Financial Instruments. In
accordance with EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock, and related accounting pronouncements, warrants with a cash-out feature and embedded
conversion features with a reset option are recognized as liabilities. These warrants will be adjusted to fair value at each reporting date. The embedded derivative relating to the conversion feature was valued at its intrinsic value on the date
issued, and will be adjusted to its fair value if a reset event occurs. The embedded conversion option previously accounted for as a liability will be reclassified to equity upon expiration or conversion. Any unamortized discount related to the
bifurcated financial instruments will be recognized as interest expense.

In accordance with EITF Issue No. 06-7, Issuers
Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133, the embedded conversion option previously accounted for
as a liability will be reclassified to equity upon expiration or conversion of the convertible debt. Any unamortized discount related to the bifurcated financial instruments will be recognized as interest expense.

Results of Operations  Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006

Net Sales. The following table sets forth information regarding our total gross and net sales for the three months ended June 30, 2007 and
2006 categorized by customer type and on an aggregate basis.

Gross and Net Sales by Customer Type



|                                |  |                                    |         |             |   |        
|------------------------------- |  | ---------------------------------- | ------- | ----------- | - | -------
|                                |  | For the Three Months EndedJune 30,
|                                |  | 2007                               |         | 2006       
|                                |  | (unaudited)                        |         | (unaudited)
|OTC Sales:                      |  |                                    |         |             |   |        
|Gross OTC sales                 |  | $                                  | 489,399 |             | $ | 87,854 
|Less:                           |  |                                    |         |             |   |        
|Damages and other returns       |  |                                    | 54,427  |             |   | 20,655 
|Co-operative advertising        |  |                                    | 173,108 |             |   | 14,404 
|Coupons, rebates and promotions |  |                                    | 5,478   |             |   | 186    
|                                |  |                                    |         |             |   |        
|Net OTC sales                   |  | $                                  | 256,386 |             | $ | 52,609 
|                                |  |                                    |         |             |   |        
|POC Sales:                      |  |                                    |         |             |   |        
|Gross POC sales                 |  | $                                  | 1,800   |             | $ | 17,360 
|Less:                           |  |                                    |         |             |   |        
|Damages and other returns       |  |                                    |        |             |   | 159    
|                                |  |                                    |         |             |   |        
|Net POC sales                   |  | $                                  | 1,800   |             | $ | 17,201 
|                                |  |                                    |         |             |   |        
|Total Sales:                    |  |                                    |         |             |   |        
|Gross sales                     |  | $                                  | 491,199 |             | $ | 105,214
|Net sales                       |  | $                                  | 258,186 |             | $ | 69,810 

Net sales consist of product sales, net of
product returns, costs associated with TPRs and co-operative advertising expenses. Net sales increased by $188,811, or 271%, to $258,621 for the three months ended June 30, 2007, from $69,810 for the three months ended June 30, 2006. This
increase was largely attributable to the effect of the acquisition of Allendale in accounting for the sales associated with the Today® Sponge. Also, as shown above, for the three months
ended June 30, 2007, we incurred an additional $33,772 in damages and other returns as compared to the three months ended June 30, 2006, which resulted from MenoCheck® returns due
to one retailers decision not to carry this product category for 2007. Finally, our co-operative advertising expenses as a percentage



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of gross sales increased from 13.7% for the three months ended June 30, 2006, to 35.2% for the three months ended June 30, 2007, meaning that in
2007 we spent a larger proportion of each gross sales dollar on these advertising expenses as compared to 2006.

Our net sales from the
three months ended June 30, 2007 to the same period in 2006 distinguished by customer type were as follows:

OTC. Net OTC sales increased by $204,212, or 388%, to $256,821 for
the three months ended June 30, 2007, from $52,609 for the three months ended June 30, 2006. The increase resulted primarily from increasing gross sales related to product sales of the Today® Sponge. Gross OTC sales increased by $401,980 from the three month period in 2006 largely due to the effect of the acquisition of Allendale and accounting for the sales of the Today® Sponge.

POC. Net POC sales decreased by $15,401, or 89.5%, to $1,800 for the
three months ended June 30, 2007, from $17,201 for the three months ended June 30, 2006.

Cost of Net Sales. Cost of net sales increased by $621,368, or 1,609%, to $659,985 for the three months ended June 30, 2007, from $38,617 for the three months ended June 30, 2006. Cost of net sales as
a percentage of net sales increased to 256% for the three months ended June 30, 2007, from 55.0% for the three months ended June 30, 2006. The increase in cost of net sales both from period to period and as a percentage of net sales was
the result of costs associated with a higher co-operative advertising expense associated with gross sales of approximately $162,000, one-time production set up and testing costs of approximately $124,000, increased reserves for allowance and returns
resulting from damaged, obsolete or expired product of approximately $190,000, and the increased amount of freight, warehouse handling and repackaging fees of approximately $93,000, in relation to one-time repackagings of Today® Sponge six-count and twelve-count product inventory into three-count product inventory, all of which were treated as period costs, due to their unique nature, and not capitalized.

Selling and Marketing Expenses. Selling and marketing expenses decreased by $180,075, or
16.6%, to $904,069 for the three months ended June 30, 2007, from $1,084,144 for the three months ended June 30, 2006. The decrease in selling and marketing expenses from period to period reflected a nominal decrease in
(i) advertising initiatives directed at our MenoCheck® and Fem-V products and (ii) in our public relations activities.

Personnel Expenses. Personnel expenses represent salaries, wages and other costs associated with our employees (other than our directors), and
these expenses increased by $58,226, or 11.8%, to $552,854 for the three months ended June 30, 2007, from $494,628 for the three months ended June 30, 2006. This increase in personnel expenses resulted primarily from our increase in our
headcount to eleven full-time employees and one part-time employee at June 30, 2007, as compared to eight full-time employees at June 30, 2006. Our headcount increased as a result of the hiring of our Executive Vice President, Sales and
Marketing, as well as other key personnel in the marketing department. Our increase in personnel expenses from period to period was offset by a decrease in stock-based compensation expense by $104,808, or 53.3%, to $91,804 from $196,612 for the
three months ended June 30, 2006.

General and Administrative Expenses. General and administrative expenses increased $902,830,
or 146%, to $1,520,782 for the three months ended June 30, 2007, from $617,952 for the three months ended June 30, 2006. The increase in general and administrative expenses resulted primarily from (i) an increase in professional,
legal and accounting expenses associated with the acquisition and integration of Allendale and our preparation of SEC filings and three registration statements during the three months ended June 30, 2007; (ii) an increase in amortization
and depreciation expenses recorded as general and administrative expense; (iii) greater operating and administrative costs associated with our increased headcount; (iv) the payment of penalties incurred under certain of our registration
rights agreements; (v) restricted stock awards granted to directors; and (vi) an increase in product liability insurance costs.

Operating Loss.Our operating loss increased by $1,213,973, or 56.1%, to $3,379,504 for the three months ended June 30, 2007, from $2,165,531 for the three months ended June 30, 2006. This increase in our operating loss was
primarily due to an increase in the general and administrative expenses discussed above, offset by a decrease in sales and marketing expenditures during the second quarter of 2007.



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Interest Income. Interest income increased by $24,364 to $25,436 for the three months ended
June 30, 2007, from $1,072 for the three months ended June 30, 2006. The increase in interest income from period to period was due primarily to the increase in interest income we received by maintaining an increased bank balance as a
result of our receipt of the net proceeds from our January 2007 $15.0 million senior note offering.

Interest Expense. Interest
expense increased $392,921 to $393,371 for the three months ended June 30, 2007, from $450 for the three months ended June 30, 2006. This increase in interest expense resulted primarily from the accrual of interest on our senior notes as
well as the assumption and payment of outstanding indebtedness assumed in connection with the acquisition of Allendale.

Other
Expenses. Other expenses increased to $607,818, due primarily to the loss on the Radiant settlement of approximately $430,000 and the amortization of deferred financing costs of $170,000. There were no expenses classified under this line item in
the year prior period.

Unrealized Gain on Market Value of Warrants. We earned revenue, recorded as an unrealized gain on the
mark to market adjustment of the value of the Companys warrants, of $1,496,550 in connection with the sale in our January 12, 2007 senior note offering of warrants to purchase up to 16.5 million shares of our common
stock. If we enter into a fundamental transaction or a change in control, the holders of these warrants have the right to elect to receive cash equal to the value of the warrants, as determined in accordance with the Black-Scholes option pricing
formula. In addition, a warrant to purchase up to 357,750 shares of our common stock issued to the placement agent at the closing of this offering gives the placement agent the right to elect to receive cash equal to the value of the warrant, as
determined in accordance with the Black-Scholes option pricing formula, upon a change of control involving the Company. Accordingly, all of these warrants have been classified as liabilities, which will be adjusted to fair value, or marked to
market, for each reporting period. The adjustments of these warrants to their fair value as of June 30, 2007 resulted in an unrealized gain of $52,946 for the three months ended June 30, 2007.

In future periods, the mark to market adjustment to the liability represented by these warrants will require us to recognize income or
expense, as applicable, to the extent that the fair value is increased or decreased from period to period. The fair value of these warrants will be determined, in significant part, by reference to the market price for our common stock. Thus,
generally speaking, increases in our common stock price from period to period will likely cause an increase in the fair value of the warrants, and thus a corresponding recognition of expense; decreases in our common stock price will likely cause the
fair value of the warrants to decrease, resulting in the recognition of income. Since we cannot predict increases or decreases in our stock price over time, we are unable to presently determine the value of these warrants for future periods.
However, given that our stock price tends to be volatile, it can be expected that the amount of income or expense we may be required to recognize with respect to these warrants may vary substantially from period to period.

Equity in Loss of Unconsolidated Affiliate. On January 31, 2006, we acquired a 25% interest in Bio Pad. Under the equity method of
accounting, we are required to recognize a pro rata portion of the income or loss that is ultimately recognized by Bio Pad as an item of income or expense, respectively, on our statement of operations. As a result, we recognized an expense of
$164,508 for the three months ended June 30, 2007, which represented 25% of Bio Pads loss for the three months ended June 30, 2007 of $117,795, along with amortization of its intangible assets. This expense increased by $30,653, or
22.9%, to $164,508 for the three months ended June 30, 2007 from $133,855 for the three months ended June 30, 2006 due to an increase in the loss recognized by Bio Pad from period to period.

Net Loss. Our net loss increased by $671,505, or 29.2%, to $2,970,269 for the three months ended June 30, 2007, from $2,298,764 for the three
months ended June 30, 2006. This increase occurred primarily as a result of an increase in the cost of net sales, increase in general and administrative expenses, an increase in the accrued interest in relation to the senior notes, an increase
in our operating loss from period to period, loss associated with the Radiant settlement, an increase in expense associated with our investment in Bio Pad, representing our pro rata portion of Bio Pads losses for the three months ended
June 30, 2007, offset by the unrealized gain on market value of warrants.



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Results of Operations  Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Net Sales. The following table sets forth information regarding our total gross and net sales for the six months ended June 30,
2007 and 2006 categorized by customer type and on an aggregate basis.

Gross and Net Sales by Customer Type



|                                |  |                                  |           |             |   |        
|------------------------------- |  | -------------------------------- | --------- | ----------- | - | -------
|                                |  | For the Six Months EndedJune 30,
|                                |  | 2007                             |           | 2006       
|                                |  | (unaudited)                      |           | (unaudited)
|OTC Sales:                      |  |                                  |           |             |   |        
|Gross OTC sales                 |  | $                                | 978,282   |             | $ | 181,058
|Less:                           |  |                                  |           |             |   |        
|Damages and other returns       |  |                                  | 102,340   |             |   | 48,734 
|Co-operative advertising        |  |                                  | 309,338   |             |   | 48,755 
|Coupons, rebates and promotions |  |                                  | 18,004    |             |   | 952    
|                                |  |                                  |           |             |   |        
|Net OTC sales                   |  | $                                | 548,600   |             | $ | 82,617 
|                                |  |                                  |           |             |   |        
|POC Sales:                      |  |                                  |           |             |   |        
|Gross POC sales                 |  | $                                | 24,600    |             | $ | 32,755 
|Less:                           |  |                                  |           |             |   |        
|Damages and other returns       |  |                                  | 300       |             |   | 609    
|                                |  |                                  |           |             |   |        
|Net POC sales                   |  | $                                | 24,300    |             | $ | 32,146 
|                                |  |                                  |           |             |   |        
|Total Sales:                    |  |                                  |           |             |   |        
|Gross sales                     |  | $                                | 1,002,882 |             | $ | 213,813
|Net sales                       |  | $                                | 572,900   |             | $ | 114,763

Net sales consist of product sales, net of
product returns, costs associated with TPRs and co-operative advertising expenses. Net sales increased by $458,137, or 399%, to $572,900 for the six months ended June 30, 2007, from $114,763 for the six months ended June 30, 2006. This
increase was largely attributable to the effect of the acquisition of Allendale in accounting for the sales associated with the Today® Sponge. Also, as shown above, for the six months ended
June 30, 2007, we incurred an additional $53,606 in damages and other returns as compared to the six months ended June 30, 2006, which resulted from MenoCheck® returns due to one
retailers decision not to carry this product category for 2007. Finally, our co-operative advertising expenses as a percentage of gross sales increased to 30.8% for the six months ended June 30, 2007, from 22.8% for the six months ended
June 30, 2006, meaning that in 2007 we spent a larger proportion of each gross sales dollar on these advertising expenses as compared to 2006.

Our net sales from the six months ended June 30, 2007 to the same period in 2006 distinguished by customer type were as follows:

OTC. Net OTC sales increased by $465,983, or 564%, to $548,600 for the six
months ended June 30, 2007, from $82,617 for the six months ended June 30, 2006. The increase resulted primarily from increasing gross sales related to product sales of the Today®
Sponge. Gross OTC sales increased by $797,224 from the six month period in 2006 largely due to the effect of the acquisition of Allendale and accounting for the sales of the Today® Sponge.

POC. Net POC sales decreased by $7,846, or 24.4%, to $24,300 for the six months ended June 30, 2007, from
$32,146 for the six months ended June 30, 2006.

Cost of Net Sales. Cost of net sales increased by $798,034, or 1,260%, to
$861,390 for the six months ended June 30, 2007, from $63,356 for the six months ended June 30, 2006. Cost of net sales as a percentage of net



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sales increased to 150.4% for the six months ended June 30, 2007, from 55.2% for the six months ended June 30, 2006. The increase in cost of net
sales both from period to period and as a percentage of net sales was the result of costs associated with a higher co-operative advertising expense associated with gross sales of approximately $279,000, one-time production set up and testing costs
of approximately $124,000, increased reserves for allowance and returns resulting from damaged, obsolete or expired product of approximately $87,000, and the increased amount of freight, warehouse handling and repackaging fees of approximately
$158,000, in relation to one-time repackagings of Today® Sponge six-count and twelve-count product inventory into three-count product inventory, all of which were treated as period costs,
due to their unique nature, and not capitalized.

Selling and Marketing
Expenses. Selling and marketing expenses decreased by $814,754, or 38.0%, to $1,329,819 for the six months ended June 30, 2007, from $2,144,573 for the six months ended June 30, 2006. The decrease in selling and marketing expenses from
period to period reflected a decrease in radio advertising initiatives directed at the MenoCheck® product and advertising for our Fem-V product, as well as lower public and investor
relations expenditures.

Personnel Expenses. Personnel expenses represent salaries, wages and other costs associated with our
employees (other than our directors), and these expenses increased by $74,786, or 7.72%, to $1,043,373 for the six months ended June 30, 2007, from $968,587 for the six months ended June 30, 2006. This increase in personnel expenses
resulted primarily from our increase in our headcount to eleven full-time employees and one part-time employee at June 30, 2007, as compared to eight full-time employees at June 30, 2006. Our headcount increased as a result of the hiring
of our Executive Vice President, Sales and Marketing, as well as other key personnel in the marketing department. Our increase in personnel expenses from period to period was offset by a decrease in stock-based compensation expense by $169,942, or
47.2%, to $190,079 from $360,021 for the six months ended June 30, 2006.

General and Administrative Expenses. General and
administrative expenses increased $1,702,002, or 176%, to $2,670,523 for the six months ended June 30, 2007, from $968,521 for the six months ended June 30, 2006. The increase in general and administrative expenses resulted primarily from
(i) an increase in professional, legal and accounting expenses associated with the acquisition and integration of Allendale and our preparation during the six months ended June 30, 2007 of three resale registration statements; (ii) an
increase in amortization and depreciation expenses recorded as general and administrative expense; (iii) greater operating and administrative costs associated with our increased headcount; (iv) the payment of penalties incurred under
certain of our registration rights agreements; (v) restricted stock awards granted to directors; and (v) an increase in product liability insurance costs.

Operating Loss.Our operating loss increased by $1,301,931, or 32.3%, to $5,332,205 for the six months ended June 30, 2007, from $4,030,274 for the six months ended June 30, 2006. This increase in our
operating loss was primarily due to an increase in the general and administrative expenses discussed above, offset by a decrease in sales and marketing expenditures during the second quarter of 2007.

Interest Income. Interest income increased by $83,610 to $86,731 for the six months ended June 30, 2007, from $3,121 for the six months ended
June 30, 2006. The increase in interest income from period to period was due primarily to the increase in interest income we received by maintaining an increased bank balance as a result of our receipt of the net proceeds from our January 2007
$15.0 million senior note offering.

Interest Expense. Interest expense increased $668,757 to $756,344 for the six months
ended June 30, 2007, from $87,587 for the six months ended June 30, 2006. This increase in interest expense resulted primarily from the accrual of interest on our senior notes as well as the assumption and payment of outstanding
indebtedness assumed in connection with the acquisition of Allendale.

Other Expenses. Other expenses increased by $611,398, due
primarily to the loss on the Radiant settlement of approximately $430,000 and the amortization of deferred financing costs of $170,000 and miscellaneous other expenses of approximately $11,000.

Unrealized Loss on Market Value of Warrants. We incurred an expense $547,557, which consisted of an unrealized loss on market value of warrants,
of $600,503 in connection with the sale in our January 12, 2007 senior note offering of warrants to purchase up to 16.5 million shares of our common stock. If we enter into a fundamental



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transaction or a change in control, the holders of these warrants have the right to elect to receive cash equal to the value of the warrants, as determined
in accordance with the Black-Scholes option pricing formula. In addition, a warrant to purchase up to 357,750 shares of our common stock issued to the placement agent at the closing of this offering gives the placement agent the right to elect to
receive cash equal to the value of the warrant, as determined in accordance with the Black-Scholes option pricing formula, upon a change of control involving the Company. Accordingly, all of these warrants have been classified as liabilities, which
will be adjusted to fair value, or marked to market, for each reporting period. The adjustments of these warrants to their fair value as of June 30, 2007, resulted in an unrealized gain of $52,946 for the six months ended
June 30, 2007.

Equity in Loss of Unconsolidated Affiliate. On January 31, 2006, we acquired a 25% interest in Bio Pad.
Under the equity method of accounting, we are required to recognize a pro rata portion of the income or loss that is ultimately recognized by Bio Pad as an item of income or expense, respectively, on our statement of operations. As a result, we
recognized an expense of $295,661 for the six months ended June 30, 2007, which represented 25% of Bio Pads loss for the six months ended June 30, 2007 of $202,235, along with amortization of its intangible assets. This expense
increased by $49,542, or 20.1%, to $295,661 for the six months ended June 30, 2007 from $246,119 for the six months ended June 30, 2006 due to an increase in the loss recognized by Bio Pad from period to period.

Benefit for Income Taxes.A decrease of $600,000 was made to the opening valuation allowance due to the inclusion of Allendale in our consolidated
tax filings. As a result, we received an income tax benefit of $600,000 for the six months ended June 30, 2007.

Net Loss. Our
net loss increased by $2,495,575, or 57.3%, to $6,856,434 for the six months ended June 30, 2007, from $4,360,859 for the six months ended June 30, 2006. This increase occurred primarily as a result of an increase in the cost of net sales,
increase in general and administrative expenses, an increase in the accrued interest in relation to the senior notes, an increase in our operating loss from period to period, loss associated with the Radiant settlement, an increase in our operating
loss from period to period, and the recognition of an increase in expense associated with our investment in Bio Pad, representing our pro rata portion of Bio Pads losses for the six months ended June 30, 2007, offset by an income tax
benefit received in connection with the acquisition of Allendale.

Liquidity and Capital Resources

Cash on Hand.As of June 30, 2007, we had $977,379 in cash on hand compared to $72,605 cash on hand as of December 31, 2006. Of the
$977,379 cash on hand as of June 30, 2007, however, $73,811 was restricted because it served as collateral for certain of our indebtedness and a letter of credit issued in connection with the lease of our principal executive offices. The
increase in cash on hand resulted primarily from cash provided by the net proceeds of our January 2007 $15.0 million senior note offering, offset by repayment of indebtedness and cash used in our operating and investing activities.

Cash Used in Operating Activities.Our operating activities used $9,774,027 in cash for the six months ended June 30, 2007, as compared to
$2,199,784 in cash used in our operating activities for the six months ended June 30, 2006. This differential was primarily attributable to the payment of approximately $5.2 million in liabilities and accrued expenses associated with the
Allendale acquisition and an increase in our net loss from period to period, offset by:



| |  |  | a non-cash expense of $547,557 recognized on the mark to market adjustment to the liability of warrants issued in connection with our January 2007
senior note offering;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in depreciation and amortization expense of, in the aggregate, $1,313,034 from period to period, relating primarily to the required amortization and
depreciation of intangible and other assets we acquired in connection with the Allendale merger, and the amortization of deferred financing costs associated with our 2007 senior note offering;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an aggregate non-cash expense of $476,619 recognized for stock-based compensation and the issuance of common stock for services rendered; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the recognition of $295,661 representing our equity in the loss of Bio Pad on our financial statements during the six months ended June 30, 2007.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Cash Used in Investing Activities.For the six months ended June 30, 2007, we used cash of
$452,000 in our investing activities, which included $367,642 paid for professional and consulting fees related to the Allendale acquisition, and $128,676 in purchases of new property and equipment.

Cash Provided by Financing Activities. Financing activities provided cash of $11,129,595 for the six months ended June 30, 2007, compared to
$4,013,126 in cash provided for the six months ended June 30, 2006. The increase in cash from our financing activities occurred primarily because we issued, during the six months ended June 30, 2007, $15.0 million in senior notes and
related common stock purchase warrants and received approximately $13.3 million in net proceeds. During the six months ended June 30, 2007, we used a portion of the net proceeds from our senior note offering to repay in full $287,934 of
principal and interest outstanding under our line of credit and $1,565,688 of principal and interest outstanding under our convertible bridge notes.

Capital Resources. As of June 30, 2007, our working capital deficit was $3,996,462, which was a decrease in this deficit of $886,479 from a working capital deficit of $4,882,941 as of December 31,
2006. This decrease in working capital deficit is primarily a result of the cash received from the senior note offering we completed in the first quarter of 2007. See Contractual Obligations below.

Plan of Operations.Since we have not yet generated sufficient revenues from operations to meet our operating expenses, we have historically
financed our operations primarily through issuances of equity and the proceeds of our debt instruments, including to pay consulting, placement agent and similar fees. As a result of our senior note offering completed in January 2007 and described
above, we believe we presently have sufficient available capital to fund our anticipated operations through August 2007, although we cannot assure you that the net proceeds from this offering will be sufficient to operate and grow our business as we
intend during such time period without needing to obtain additional sources of capital.

In our Annual Report on Form 10-KSB filed with the
SEC in February 2007, we originally estimated that our existing cash and capital resources would be sufficient to meet our operating and capital needs until the first quarter of 2008. During the latter part of the first quarter of 2007, we concluded
a detailed review and analysis of our business plan and our estimated capital needs following the integration of Allendale. Based on an update to this review and analysis, we now estimate that our existing cash and capital resources will be
sufficient to meet our operating and capital needs until August 2007.

In the past, we have sought to meet our cash needs by obtaining
equity or debt financing. We expect that we will need to obtain additional equity or debt financing to meet our liquidity requirements beyond the end of August 2007. We believe that we will be able to raise additional capital as needed to support
our continued operations, and since January 1, 2006, we have raised approximately $20.7 million in proceeds from sales of our securities, after deducting cash placement agent fees incurred but excluding other applicable offering expenses and
costs. However, there can be no assurance that the proceeds from capital transactions will continue to be available, that even if available we will be able to close such transactions, that our net sales will increase sufficiently to meet our ongoing
cash needs or that a sufficient amount of our securities can or will be sold. The terms of our senior notes and other financing instruments and agreements also significantly limit our ability to sell equity or incur debt without the consent of the
holders of the senior notes and certain of our other securities, and we cannot assure you that we will be able to repay or refinance the senior notes or obtain the consent of the holders of the senior notes or our other securities, if necessary, to
obtain additional capital should we need or want to do so.

While we believe we will be able to obtain future financing on terms acceptable
to us, if we are not successful in obtaining permanent equity or debt financing, we will need to expend significant efforts to find other sources of capital to meet our ongoing operating and business expenses. We are also focusing on opportunities
to increase our net sales while seeking to manage our operating expenses in an attempt to preserve as much as practical our available cash resources and improve working capital. If we are unable to raise sufficient capital resources on terms
acceptable to us or at all, our business, results of operations, liquidity and financial condition would be materially and adversely harmed.



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The successful growth and operation of our business is also dependent upon our ability to do any or all
of the following:



| |  |  | identify new product offerings to complement and expand our current and projected future business;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | manage or control working capital requirements by reducing advertising, selling, marketing, and general and administrative expenses;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | optimize the marketing and development of our existing product offerings through less capital intensive channels;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | rationalization of existing product lines concerning capital allocation based on contribution and return on capital;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | develop new and enhance existing relationships with product retailers and other points of distribution for our products; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | seek potential acquisitions of mature product lines that could be expected to generate positive cash flow for us upon acquisition, assuming appropriate financing
structures are available on acceptable terms in order to effect such acquisitions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Contractual Obligations. On
January 12, 2007, as a condition to the Allendale merger, we completed the offering of our 6.5% senior convertible promissory notes due January 12, 2012 in the original principal amount of $15.0 million and related warrants to purchase, in
the aggregate, up to 16.5 million shares of our common stock. The senior notes bear interest at a rate of 6.5% per year, although the terms of the senior notes permit us to elect to pay this interest in kind by increasing the
principal amount of the notes by the amount of interest, which increased principal amount would continue to accrue interest each quarter on a compounded basis. As of June 30, 2007, we have made an election to pay all outstanding interest
in kind over the life of the notes. As of June 30, 2007, a total of $15 million in principal and $446,625 in accrued but unpaid interest were outstanding under these senior notes.

Principal outstanding under the senior notes, including any accrued and unpaid interest, are initially and immediately convertible into shares of our
common stock at a rate of $1.00 per share, subject to full ratchet anti-dilution adjustments. Our obligations under the senior notes are unsecured but are backed by subsidiary guarantees pursuant to the terms of a guarantee agreement. So
long as the senior notes are outstanding, we are required to comply with a number of negative, affirmative and financial covenants, many of which place significant constraints on our ability to raise capital and take other actions we may deem
necessary or desirable. The senior notes require us to have earnings before interest, taxes, depreciation and amortization, or EBITDA, as defined by the terms of the senior notes, in the following amounts for each of the 12-month periods specified
below:



|                                 |  |               |               |  
|-------------------------------- |  | ------------- | ------------- | -
|12-month period ended            |  | Target EBITDA |              
|December 31, 2007                |  |               | ($2.8 million | )
|March 31, 2008                   |  |               | ($2.0 million | )
|June 30, 2008                    |  |               | zero          |  
|September 30, 2008               |  | $             | 1 million     |  
|December 31, 2008                |  | $             | 2 million     |  
|March 31, 2009                   |  | $             | 3 million     |  
|June 30, 2009                    |  | $             | 4 million     |  
|September 30, 2009               |  | $             | 5 million     |  
|December 31, 2009 and thereafter |  | $             | 6.5 million   |  

An event of default under a senior note is deemed to occur if, among other things, there is:



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| |  |  | any default in the payment of the principal, interest or liquidated damages under the senior note when such amounts become due and payable;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any default in making any other cash payment required under the senior notes or any agreement or document relating to the senior note offering;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the failure to observe or perform any other covenant, condition or agreement contained in the senior note offering documents;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | the occurrence of a change in control involving the Company;
| | - |  | ------------------------------------------------------------



| |  |  | the occurrence of an event of default under any other senior note;
| | - |  | ------------------------------------------------------------------



| |  |  | a lien, other than permitted liens, against any of our properties;
| | - |  | ------------------------------------------------------------------



| |  |  | any prepayment of any other senior note or other of our indebtedness, except:
| | - |  | -----------------------------------------------------------------------------



| |  |  | where the same prepayment terms are offered to all other holders of the senior notes; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | in compliance with the other prepayment requirements of the senior note;
| | - |  | ------------------------------------------------------------------------



| |  |  | the bankruptcy of us or our subsidiaries;
| | - |  | -----------------------------------------



| |  |  | a judgment or judgments against us for the payment of money amounting to more than $50,000 in the aggregate, or any action taken by a judgment creditor to attach or
levy upon our or our subsidiaries assets to enforce such judgment or judgments;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any senior note offering document that ceases, for any reason, to be in effect, or a statement made in writing by us to that effect, or a disavowal of any of our
obligations under these documents;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a removal of our common stock from trading in any eligible market, including the OTC Bulletin Board, for a period of three trading days;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the failure of a registration statement covering the resale of shares of our common stock underlying the senior notes and the warrants to be effective and available
for use for more than 30 trading days during the effectiveness period of the registration statement; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the failure to reach and satisfy the EBITDA targets set forth above.
| | - |  | --------------------------------------------------------------------

As of June 30, 2007, we were in compliance with all covenants and other obligations under the terms of our senior notes, and, as of such date, no event of default existed.

The holders of the senior notes may require us to redeem the notes:



| |  |  | for at least 102% of the stated principal amount, plus accrued but unpaid interest, upon an event of default;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | for 115% of such stated principal amount, plus accrued but unpaid interest, during the 30 trading days after we release our 2007 and 2008 financial information,
unless our stock is trading above specified price and volume levels and we can satisfy other conditions; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for at least 125% of such stated principal amount, plus accrued but unpaid interest, in the event of a change in control.
| | - |  | -------------------------------------------------------------------------------------------------------------------------



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We lease office space under a lease that expires on November 30, 2011. Future minimum annual rent
obligations as of June 30, 2007 were as follows:



|      |  |                             |        
|----- |  | --------------------------- | -------
|Year  |  | Minimum AnnualLease Payment
|2007  |  | $                           | 93,485 
|2008  |  |                             | 95,829 
|2009  |  |                             | 97,993 
|2010  |  |                             | 100,157
|2011  |  |                             | 93,629 
|      |  |                             |        
|Total |  | $                           | 434,531
|      |  |                             |        

In June 2006, we engaged a firm to provide us with investor and public relations services. The
agreement is terminable by either party at any time. We agreed to pay this firm a monthly fee of $17,500 in cash, which was decreased in March 2007 to $12,500 per month as a result of a reduction in services provided to us by this firm.
Additionally, upon execution of the agreement, we agreed to issue 200,000 shares of common stock to the firm, of which 100,000 shares vested on the six-month anniversary of the agreement and the remaining 100,000 shares vested on the 12-month
anniversary of the agreement. We issued these shares on June 27, 2007. For the six months ended June 30, 2007, we accrued an expense of $140,000 in connection with these shares. This agreement was terminated as of July 31, 2007.

Under the terms of registration rights agreements that we entered into with investors purchasing units in our unit offerings between
October 2005 and May 2006, we were required to file and obtain the effectiveness of a resale registration statement by stated deadlines. This registration statement serves to register the shares of common stock, and shares of common stock underlying
warrants, each sold as part of the units. If, among other things, we do not meet these deadlines, upon the occurrence of a default, we are required to pay each investor a penalty of 1% of the purchase price of registrable securities then owned by
the investor, and a penalty of 1.5% of the purchase price of registrable securities then owned by the investor for each month thereafter that the default continues. We may elect to pay these penalties in cash or in shares of our common stock valued
at 85% of the average of the ten-day trading price of our common stock ending on the date the registration statement is declared effective by the SEC. The registration statement covered by these agreements was filed with the SEC and declared
effective on April 4, 2007. For the six months ended June 30, 2007, we incurred and accrued an expense of $855,730 as a result of these penalties. In May 2007, we issued to these investors an aggregate of 1,004,349 shares of common stock
representing payment of these penalties in full.

As of June 30, 2007, other than as set forth in this Quarterly Report, we had no
other material commitments or obligations.

Off-Balance Sheet Items.We had no off-balance sheet items as of June 30, 2007.

Risk Factors

An investment in our
securities is very speculative and involves a high degree of risk, including, but not limited to, the risks described below and in the other risk factors included in Exhibit 99.1 to this Quarterly Report, all of which are incorporated by reference
in this section. Investors should carefully consider all such risk factors, together with the other information contained in this Quarterly Report, before deciding whether to invest or purchase any of our securities. Our business, results of
operations and financial condition could be materially and adversely harmed by the occurrence of one or more of the circumstances described below. In that case, the market price or value of our securities could decline and you could lose all or a
part of your investment.

Failure to comply with covenants in our existing or future financing agreements, or in other agreements related to the sale
of the senior notes, could result in a default under the senior notes, which could jeopardize our ability to satisfy our obligations under the senior notes and harm our business.



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Various risks, uncertainties and events beyond our control could affect our ability to comply with the
covenants and financial tests required by the senior notes. Failure to comply with any of the covenants in our existing or future financing agreements, or in other agreements related to the senior notes, could result in a default under the senior
notes. For example, we do not currently believe that we will be able to comply with the covenant in the senior notes that requires us to attain a specified amount of EBITDA for specified periods beginning on or after December 31, 2007. If we
are unable to comply with this covenant or are unable to obtain a consent or waiver to any such covenant violation, an event of default under the senior notes will occur. A default would permit the lenders to accelerate the maturity of the debt
under these agreements. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations under the senior notes. In addition, the limitations imposed by the senior notes on our ability to incur
additional debt and to take other actions might significantly impair our ability to obtain other financing.

Our debt contains prepayment
or acceleration rights at the election of the holders upon a covenant default or change of control. It is possible that we would be unable to fulfill all of these obligations when and as due.

We may be unable to purchase the senior notes upon certain events of default or at the option of holders of the senior notes upon certain events.

Holders of the senior notes may require us to purchase all or any portion of the outstanding principal amount of such holders
senior notes at a premium to the stated principal amount following certain events of default set forth in the senior notes, including, but not limited to, the failure to make payments with respect to the senior notes when they become due and
payable, the failure to perform obligations under other material debt agreements, the occurrence of a change of control, the failure to perform obligations under the agreements and documents governing the senior notes, any bankruptcy of us or our
subsidiaries and our failure to reach and satisfy certain financial targets set forth in the senior notes. The holders also have the option to require us to repurchase the senior notes at a premium to the stated principal amount under certain
circumstances. The first such right generally occurs after we release financial information for our 2007 fiscal year. We may be unable to repurchase senior notes when and if required. If we are unable to repurchase the senior notes, this would
constitute an event of default under the agreement and instruments governing the senior notes.

Variability in the quality, of raw and other materials used to manufacture and package the Today® Sponge, as well as increases in fuel and energy costs, could adversely
affect our business.

Polyurethane foam and nonoxynol-9 are the primary raw
materials that are used to manufacture our Today® Sponge contraceptive product. We also use other materials to produce and package this product for sale to the public. If we experience
variability in the quality of raw and other materials used to manufacture and package the Today® Sponge, it will slow our ability to manufacture this product and produce sufficient
quantities of the Today® Sponge for distribution and sale. If our manufacturer cannot obtain raw, packaging and other materials from FDA-qualified sources for the production of the
Today® Sponge, we may not be able to distribute and sell the product in sufficient quantities or at all. This would have a material adverse effect on our business and financial results.

Interruptions of supplies from our key raw materials suppliers may affect our results of operations and financial performance.

Interruptions of supplies of raw materials from our key suppliers, including as a result of quality concerns, catastrophes, natural disasters or
terrorist activities, could disrupt our production or impact our ability to increase production and sales. We purchase from third parties all of our raw material supplies. Any unanticipated problems with our raw material suppliers could have a
material adverse effect on our business. Additionally, we use a limited number of FDA-qualified sources for these raw materials. We do not have long-term or volume purchase agreements with these suppliers, and thus we may have limited options in the
short-term for alternative supply if these suppliers fail to continue the supply of material or components for any reason, including their business failure, inability to obtain raw materials or financial difficulties. Moreover, identifying and
accessing alternative sources of raw materials may increase our costs.



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Delays and interruptions in the manufacturing process for
our Today® Sponge contraceptive product may hinder productivity, may negatively affect our net sales and may result in increased costs.

As of January 2007, a significant part of our business strategy is to generate net sales through
the manufacture and sale of our Today® Sponge contraceptive product. As part of the integration of our acquisition of Allendale, we began to allocate our financial and managerial resources
to restarting the manufacturing process of this product. In June 2007, this restart was completed and we began to release our Today® Sponge product for sale.

Our ability to generate net sales from the distribution and sale of this product is dependent upon
the continued capability and efficiency of this manufacturing process. Delays and interruptions in this process may slow or halt the manufacture of this product, which would hinder or curtail entirely our ability to distribute this product to our
retailers and other customers. Moreover, delays or other manufacturing problems may cause us to incur additional expenses. In the event we are unable to implement measures improving the manufacturing techniques and processes associated with the
Today® Sponge, these processes may not operate at desired efficiency or productivity levels and we may incur increased costs to manufacture this product.

Manufacturing productivity increases are related in part to factory utilization rates. Because the
Today® Sponge is manufactured for us by a third party, we have little control over these utilization rates. Failure to operate manufacturing processes appropriately to meet demand for our
Today® Sponge product may harm our business and results of operations.

Our products have
limited shelf lives, and returns due to product expiration could have a negative effect on our net sales and results of operations.

Our products have limited shelf lives and are manufactured and distributed with expiration dates. Retailers to whom we sell our products have the right to return expired or soon to be expired product to us. We account for returns in our
results of operations by establishing an allowance for expired product and product that will expire within 120 days from the end of the year. This allowance is recorded as a deduction against our gross sales in the period in which the allowance was
created, which has the effect of decreasing net sales as reported on our financial statements. We periodically assess our allowances for product returns, and if our analysis shows a higher amount of product returns, we would increase our allowance,
thereby decreasing net sales. Our results of operations could also be negatively affected to the extent that actual returns exceed our established allowance during a fiscal period. Moreover, an excessive amount of expired product at a retailer would
cause such retailers inventory levels of that product to decrease. Any failure to maintain appropriate inventory levels with respect to a retailer could result in a loss of sales and damage to our reputation with retailers and their customers,
which in turn could harm our business, results of operations and financial condition.

In the future, we may elect to discontinue products or product
lines which could result in returns, asset write-offs and shutdown costs. We may also be required to engage in product recalls which would reduce our cash flow and earnings.

Discontinuing products or product lines may cause us to suffer adverse consequences in the future to the extent the products do not meet expectations or
no longer satisfy consumer demand. Product returns, write-offs or shutdown costs as a result of discontinuing a product or product line would reduce cash flow and net sales. Product efficacy or safety concerns could result in product recalls or
declining sales, which also would reduce our cash flow and net sales.

Providing price concessions or trade terms that are acceptable to our retailer
customers, or the failure to do so, could adversely affect our sales and profitability.

Consumer products are subject to
significant price competition and an increasingly competitive environment among retailers, and these products in recent years have been characterized by price deflation. Many of our trade customers, particularly our high-volume retail store
customers, have increasingly sought to obtain pricing concessions or better trade terms. From time to time, we may need to reduce the prices for some of our products, either through temporary price reduction, or TPR, programs, or permanently, in
order to respond to competitive and customer pressures and to attract or maintain market share. We also may be required to recognize



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increased amounts of merchandising fees, co-operative advertising costs, slotting expenses and other similar merchandising-related expenses, all of which are
treated under generally accepted accounting principles either as a deduction from gross sales or as a marketing expense, depending on the circumstances. These expenses, and any actions we may take to respond to these pressures, could harm our net
sales, profit margins and overall profitability. In addition, if our product sales volumes fail to grow sufficiently to offset any reduction in margins or increases in expenses, our results of operations would suffer. Further, if we are unable to
distribute our products on terms that are acceptable to our retailer customers, these retailers could reduce purchases of our products and increase purchases of products from our competitors, which would harm our profitability and results of
operations.

Reductions in inventory by our trade customers, including as a result of consolidations in the retail industry, could adversely affect
sales in periods during which the reduction results in reduced orders for our products.

From time to time, our retailer customers
have reduced inventory levels to manage their working capital requirements. Inventory may also be reduced due to product returns. Any reduction in the inventory levels of our products by one or more of our retailer customers could harm our operating
results for the financial periods affected by the reductions. In particular, continued consolidation within the retail industry could potentially reduce inventory levels of our products maintained by our retail customers, which could adversely
affect our results of operations for the financial periods affected by the reductions.

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes. FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprises financial statements in accordance with SFAS No. 109,
Accounting for Income Taxes. Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. We have adopted FIN 48 as of January 1, 2007,
and the provisions of FIN 48 will be applied to all tax positions under SFAS No. 109 after initial adoption. The cumulative effect of applying the provisions of this interpretation will be reported as an adjustment to the opening balance of
retained earnings for that fiscal year. The adoption of FIN 48 did not require an adjustment to our consolidated financial statements.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting
from the application of SFAS No. 157 relate to the definition of fair value, the methods used to measure fair value and the expanded disclosures about fair value measurement. SFAS No. 157 is effective for fiscal years after
November 15, 2007 and interim periods within those fiscal years. We do not believe that the adoption of the provisions of SFAS No. 157 will materially impact our financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159
permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and will become effective for beginning with the first quarter of 2008. We have not yet determined the impact of the adoption of SFAS No. 159 on its financial statements and footnote disclosures.



|Item 3. | Controls and Procedures.
|------- | ------------------------

Our management, with the
participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15a-15(e), as of June 30, 2007.
Based upon the June 30, 2007 disclosure controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide a reasonable level of assurance that
information required to be disclosed in the reports we file,



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furnish or submit under the Exchange Act is recorded, processed, summarized and reported within the specified time periods in the SECs rules and forms.
Our officers have concluded that our disclosure controls and procedures were also effective to provide a reasonable level of assurance that information required to be disclosed in the reports that we file, furnish or submit under the Exchange Act is
accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure, all in accordance with Exchange Act Rules 13a-15(e) and 15d-15(e).

There has been no change in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during
the quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by management override of the controls.

PART II  OTHER
INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

As reported in our Quarterly
Report on Form 10-QSB for the quarter ended March 31, 2007, we succeeded as a party in interest to a legal proceeding filed by Allendale on May 5, 2006 in the U.S. District Court for the Southern District of New York in a matter captioned
Allendale Pharmaceuticals, Inc. v. Radiant Technologies, Inc.as a result of our acquisition of Allendale. In this lawsuit, Allendale asserted, among other things, that Radiant breached its obligations to Allendale under an exclusive
distribution agreement entered into in March 2004. Radiant had sought counterclaims against Allendale seeking compensatory and consequential damages. In February 2007, Radiant, who was also a stockholder of Allendale prior to the merger, also
notified us of its intent to exercise appraisal rights with respect to the merger.

On May 31, 2007, we and Radiant signed a
settlement agreement to resolve fully and completely all past, present and future matters, controversies, claims and disputes between and among the parties. Under the terms of the settlement agreement, without any party admitting or conceding any
responsibility, liability or wrongdoing on the part of any party:



| |  |  | The parties agreed to a general and mutual release of each other for all past, present and future claims between the parties.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | Radiant transferred to us all accounts receivable outstanding as of April 25, 2007 with retailers associated with
the sale of our Today® brand products, which receivables totaled approximately $779,000 as reflected on Radiants books. Radiant also agreed to promptly transfer to us any monies
collected by Radiant on the transferred receivables.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We paid Radiant $100,000 in cash and the three former principal stockholders of Allendale transferred 1,000,000 shares of common stock previously issued to them in
connection with the Allendale merger, which shares had been held in escrow to satisfy their indemnification obligations to us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Allendale agreed to indemnify Radiant for any product liability, product defect, recall, retailer credit, return allowances or other similar claims brought by
retail customers against Radiant in connection with the accounts receivable being transferred, other than claims arising out of Radiants negligence,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | reckless or willful misconduct or claims that Radiant has or should have knowledge of as of the date of the settlement agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | The parties dismissed with prejudice all claims raised in the lawsuit.
| | - |  | ----------------------------------------------------------------------



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Listed below are sales of unregistered securities effected by the Company during the first quarter of 2007, except for issuances previously reported on Form 8-K.



| |  |  | On April 2, 2007, we issued options to purchase in the aggregate 16,000 shares of our common stock to two of our employees. These options have an exercise
price of $0.91 per share and vest in full on the first anniversary of the date of grant.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On April 3, 2007, we issued 138,296 shares of our common stock in the form of a grant of restricted stock under the Synova Healthcare Group, Inc. 2005 Equity
Incentive Plan to four of our then non-employee directors. However, on June 25, 2007, one director resigned prior to the vesting of her 34,574 shares, which shares are to be cancelled and the award forfeited.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On May 27, 2007, we issued an aggregate of 1,004,349 shares of our common stock to investors in our October 2005 and January 2006 unit offerings pursuant to
the penalty provisions of the registration rights agreements we entered into with such investors. No consideration was received from the investors for such shares.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On June 27, 2007, we issued 200,000 shares of our common stock to an investor relations firm in exchange for services rendered by this firm pursuant to our
obligation to issue such shares under a June 12, 2006 agreement.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that these offers and sales were exempt
from registration under Section 4(2) of the Securities Act and/or Rule 506 thereunder because the subject securities were sold to a limited group of persons, each of whom was believed to have been (i) either an accredited investor or a
sophisticated investor at the time of the sale and had a pre-existing business or personal relationship with us, our management or a placement agent engaged by us, and (ii) purchasing the securities for investment without a view to resale or
further distribution. Restrictive legends stating that the securities may not be offered and sold in the United States absent registration under the Securities Act or an applicable exemption therefrom were placed on certificates evidencing the
securities and/or agreements relating thereto. We believe no form of general solicitation or general advertising was made in connection with the offer or sale of these securities.



|Item 6. | Exhibits.
|------- | ---------



|            |  |                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                          
|10.1        |  | First Amendment to Distribution Agreement, dated December 22, 2005, between Synova Healthcare, Inc. and Common Sense Ltd., effective as of April 25, 2007.                                                                                           
|            | 
|10.2        |  | Confidential Settlement Agreement and Mutual General Release, dated May 31, 2007, by and between Allendale Pharmaceuticals, Inc., Todays Womencare Company, Synova Healthcare Group, Inc., Radiant
Technologies, Inc. and Pathfinder Management, Inc.
|            | 
|10.3        |  | Form of Restricted Stock Award Agreement, dated as of April 3, 2007, by and between Synova Healthcare Group, Inc. and the participant signatory thereto.                                                                                             
|            | 
|31.1        |  | Chief Executive Officer Certification Pursuant to Exchange Act Rule 13d-14(a) and Rule 15d-14(a).                                                                                                                                                    
|            | 
|31.2        |  | Chief Financial Officer Certification Pursuant to Exchange Act Rule 13d-14(a) and Rule 15d-14(a).                                                                                                                                                    
|            | 
|32.1        |  | Section 1350 Certification of the Chief Executive Officer.                                                                                                                                                                                           



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|            |  |                                                           
|----------- |  | ----------------------------------------------------------
|Exhibit No. |  | Description                                               
|32.2        |  | Section 1350 Certification of the Chief Financial Officer.
|            | 
|99.1        |  | Additional Risk Factors                                   



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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.



|                      |  |  |  |                       |  |                                                                    |  |                                     
|--------------------- |  |  |  | --------------------- |  | ------------------------------------------------------------------ |  | ------------------------------------
|                      |  |  |  |                       |  | SYNOVA HEALTHCARE GROUP, INC.                                     
|                      |  |  |  |                      
|                      |  |  |  |                       |  | By:                                                                |  | /s/ Stephen E. King                 
|                      |  |  |  |                       |  |                                                                    |  | Stephen E. King                     
|                      |  |  |  |                       |  |                                                                    |  | Chairman and Chief Executive Officer
|                      |  | 
|Date: August 14, 2007 |  |  |  | /s/ Stephen E. King  
|                      |  |  |  |                       |  | Stephen E. King                                                   
|                      |  |  |  |                       |  | Chairman and Chief Executive Officer (Principal Executive Officer)
|                      |  | 
|Date: August 14, 2007 |  |  |  | /s/ Robert L. Edwards
|                      |  |  |  |                       |  | Robert L. Edwards                                                 
|                      |  |  |  |                       |  | Chief Financial Officer (Principal Financial
Officer)             



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                          
|10.1        |  | First Amendment to Distribution Agreement, dated December 22, 2005, between Synova Healthcare, Inc. and Common Sense Ltd., effective as of April 25, 2007.                                                                                           
|            | 
|10.2        |  | Confidential Settlement Agreement and Mutual General Release, dated May 31, 2007, by and between Allendale Pharmaceuticals, Inc., Todays Womencare Company, Synova Healthcare Group, Inc., Radiant
Technologies, Inc. and Pathfinder Management, Inc.
|            | 
|10.3        |  | Form of Restricted Stock Award Agreement, dated as of April 3, 2007, by and between Synova Healthcare Group, Inc. and the participant signatory thereto.                                                                                             
|            | 
|31.1        |  | Chief Executive Officer Certification Pursuant to Exchange Act Rule 13d-14(a) and Rule 15d-14(a).                                                                                                                                                    
|            | 
|31.2        |  | Chief Financial Officer Certification Pursuant to Exchange Act Rule 13d-14(a) and Rule 15d-14(a).                                                                                                                                                    
|            | 
|32.1        |  | Section 1350 Certification of the Chief Executive Officer.                                                                                                                                                                                           
|            | 
|32.2        |  | Section 1350 Certification of the Chief Financial Officer.                                                                                                                                                                                           
|            | 
|99.1        |  | Additional Risk Factors                                                                                                                                                                                                                              



E-1