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

                                   FORM 10-KSB

                          [X] ANNUAL REPORT PURSUANT TO
                           SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the year ended June 30, 2007

                                       or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________

                        Commission file number: 000-28277

                            HERITAGE WORLDWIDE, INC.
                        ---------------------------------
                 (Name of Small Business Issuer in Its Charter)

                   Delaware                          13-4196258
       --------------------------------         --------------------
        (State or Other Jurisdiction of           (I.R.S. Employer
       Incorporation or Organization)            Identification No.)


             337 Avenue de Bruxelles La Seyne-Sur-Mer (France) 83507
 ------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                              (011) (33) 494-109810
                        ---------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:
        None

Securities registered under Section 12(g) of the Exchange Act:
        Common Stock, $.001 par value
        (Title of Class)

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 [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

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

Issuer's revenues for its most recent fiscal year: $15,416,113

The aggregate market value of the voting and non-voting common equity held by
non-affiliates as of December 10, 2007 was approximately $1,284,000.

The total number of shares of the issuer's common stock, $.001 par value,
outstanding on December 10, 2007, was 17,410,299.

Transitional Small Business Disclosure Format:  Yes |_| No |X|

<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


Certain statements in this Annual Report constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These include statements about anticipated
financial performance, future revenues or earnings, business prospects,
projected ventures, new products, anticipated market performance and similar
matters. The words "budgeted," "anticipate," "project," "estimate," "expect,"
"may," "believe," "potential" and similar statements are intended to be among
the statements that are forward-looking statements. Because such statements
reflect the reality of risk and uncertainty that is inherent in our business,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Some of these risks and uncertainties are related to
our current business situation and include, but are not limited to our lack of
sufficient revenues to cover operating expenses, our history of operating
losses, our need for additional financing for working capital purposes, the
uncertainty about our ability to continue as a going concern and dependence on
our current management team. Readers are cautioned not to place undue reliance
on these forward-looking statements, which are made as of the date this report
was filed with the Securities and Exchange Commission.

Readers are advised that we undertake no obligation to release publicly any
revisions to the forward-looking statements to reflect events or circumstances
after the date hereof or to reflect unanticipated events or development. To the
extent that the information presented in this Annual Report on Form 10-KSB for
the year ended June 30, 2007 discusses financial projections, information or
expectations about our products or markets, or otherwise makes statements about
future events, such statements are forward-looking. We are making these
forward-looking statements in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although we believe that the
expectations reflected in these forward-looking statements are based on
reasonable assumptions, there are a number of risks and uncertainties that could
cause actual results to differ materially from such forward-looking statements.
These risks and uncertainties are described, among other places in this Annual
Report, in "Management's Discussion and Analysis of Financial Condition or Plan
of Operation."

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

HISTORY

Heritage Worldwide, Inc. ("Heritage" or the "Company") was originally
incorporated in Louisiana in 1983 and changed its domicile to Delaware in the
third quarter of 2001.

Heritage entered into an Acquisition Agreement (the "Agreement") dated February
28, 2003 with Milo Finance, S.A. ("Milo"), a Luxembourg limited liability
entity. Milo was the principal shareholder of Poly Implants Protheses, S.A.
("PIP"), a French limited liability entity formed in 1991 that manufactures and
internationally distributes breast implants, body support products and other
implants. The transactions contemplated by the Agreement closed on March 1,
2003. Under the terms of the Agreement, the Company acquired 225,504 shares of
the capital stock of PIP from Milo, which represented approximately 99.3% of
PIP's outstanding capital stock. As of June 30, 2007, our ownership of PIP
amounts to 93.27%, following a financing in October 2004 in which Milo increased
its ownership of PIP.

As consideration for the PIP capital stock, Heritage issued to Milo a total of
13,741,667 shares of its common stock. After the closing of the acquisition,
Milo had direct and beneficial ownership and control of approximately 85% of the
outstanding common stock of the Company. The common stock was issued to Milo in
a private placement without registration under the Securities Act of 1933, as
amended (the "Securities Act.").

As one of the largest manufacturer of breast implants sold in the international
market and manufacturer of body support products, the Company intends to develop
and market other implants. The Company markets its products in approximately 65
countries worldwide. The Company previously sold certain breast implant products
in the U.S. market until May 2000, when due to changes in FDA regulations, the
Company withdrew its products. We intend to re-enter the U.S. market when we can
satisfy current FDA requirements relating to breast implants.

STRATEGY

Our strategy in growing our operations consists of the following four-prong
approach:

     o    Expanding the geographical markets, such as the People's Republic of
          China, in which we market our products.

     o    Developing and enhancing new products to meet the needs of existing
          and potential users, physicians and patients, such as developing
          different body support products;

     o    Developing and maintaining strategic technology relationships allowing
          us to improve existing product offerings and to develop new product
          lines; and

     o    Developing and maintaining our distribution channels, from which we
          can leverage the efforts of national, regional and local distributors
          in order to comply with the respective governmental regulations and to
          increase our knowledge of markets in which such distributors operate.

     o    Forming new subsidiaries in markets in which we do not have a strong
          distribution channel, such as Germany, Netherlands and Belgium. This
          would allow us to market our breast implants directly to surgeons and
          clinics in such countries.

PRODUCTS

Our principal products are breast implants. We develop, manufacture, and market
a diverse line of such implants, consisting of a variety of shapes, sizes, and
textures. Our primary breast implants consist of a silicone shell filled with
silicone gel. This shell may be produced with either a smooth or textured
surface. Our breast implants are available in many variations to meet customers'
preferences and needs. Our breast implants are sold for use in breast
augmentation for cosmetic reasons and for reconstructive surgery following a
mastectomy.


                                       2
<PAGE>

In 1993, we marketed the first saline pre-filled breast implants. Unlike
inflatable implants, they do not require additional manipulations during
surgery. Such manipulation can be a source of complications, such as infection,
leakage and deflation. Our saline pre-filled breast implants were successfully
sold in the U.S. market until May 15, 2000, when, due to a change in certain FDA
regulations, we withdrew from the U.S. market.

We were the first company to market hydrogel breast implants, which were
developed in response to claimed problems with silicone implants. We have not
yet distributed or sold hydrogel breast implants in the U.S. market.

In 2002, we produced the first asymmetric prostheses. Asymmetric protheses
consist of a set of two implants, each of which is designed for one side of the
chest, and is specially fitted to conform to the shape of the thorax. This
design alleviates the risks of rotation that exists in the case of so-called
anatomical prostheses.

In March 2003, we entered into an agreement with GFE Medizintechnik GmbH (" GFE
") located in Nuremberg Germany, a manufacturer of titanium-based coating for
medical devices. Under the terms of the agreement, we have obtained for six
years (a) the exclusive right to manufacture breast implants using the
titanium-based coating developed by GFE and (b) except for GFE, the worldwide
exclusive right to distribute such implants.

The GFE process allows the coating of the silicone based shell of a breast
implant with a titanium/silicone compound produced by a chemical reaction based
on nano-technology. The silicone shell of the breast implant is coated inside
and outside by 20 layers of the silicon/titanium compound, followed by another
30 layers of pure titanium. This process is also applied to the closing patch of
the implant. Using this technology, only the titanium coating of the new
implants will be in contact with the body of the recipient. Based on numerous
studies in the field of biology and dentistry, titanium is known for being one
of the most biocompatible materials available and reduces the risk associated
with rejection of implants.

In December 2003, we received CE Mark ("Conformite Europeene") approval from the
European Union certifying that our titanium-coated breast implants met the
applicable health, safety, and environmental requirements. We are completing the
planning phase of our European clinical trials and anticipate that we will
market such breast implants in the European Union within 24 months.

In March 2004, our U.S. distributor (Medicor, Inc. and/or III Acquisition Corp.)
agreed  to  sponsor  the  regulatory  process  for  marketing  approval  of  our
saline-filled  breast  implant  products in the U.S. The exclusive  distribution
agreement  provides  that the  distributor  will  submit a  Pre-Market  Approval
("PMA") to the FDA by  December  2005 and allow  Medicor to  distribute  all our
products in the US. The agreement terminates in 2014 and may be extended for two
five-year periods at Medicor's options.  The agreement may be terminated earlier
if either we or Medicor  compete  directly or indirectly in the US or if a party
breaches the terms of the  agreement.  Should  Medicor fail to timely secure the
FDA's  acceptance  of our  products,  Medicor  will  forgive  a debt we owe them
amounting to approximately $1 million.  Due to Medicor's  failure to comply with
its obligations under the agreement, the Company terminated the agreement in May
2007. In December 2007, we filed in the US Bankruptcy  Court for the District of
Delaware a proof of claim in excess of $28.7 million against our US distributor.


MANUFACTURING

We are an "ISO9001-2000" company. The International Organization of
Standardization ("ISO") created this designation to award to organizations that
design, develop, produce, install, and service products in accordance with ISO
quality control standards. Outside the U.S., ISO9001 is the international
standard for quality assurance and quality design requiring those entities that
seek such award to satisfy twenty sets of quality system criteria.

We are also certified as an ISO 13485 manufacturer. ISO 13485 standards are
analogous to ISO 9001 quality control standards but apply to manufacturing. All
PIP products are CE Mark labeled and certified, which allows them to be sold in
the European Community. Manufacturing is performed in accordance with the FDA's
Good Manufacturing Practices and the equivalent French standard, regulated by
the French Health Product Safety Agency ("AFSSAPS"), which is known as "BFP." We
are registered with ANVAR, a French agency that, based under certain criteria,
provides funding for those registered on terms that can be substantially more
favorable than those available in the marketplace.

                                       3
<PAGE>

Our pre-filled implants are manufactured by methods that are proprietary to us,
including, in the case of gel-filled implants, a French patent. We also hold a
U.S. and a European Community patent on certain of our breast implants.

COMPETITION AND MARKET

The number of breast augmentations reportedly performed in the U.S. during 2005
and 2006 was 300,000 and 400,000, respectively, which constitutes only a portion
of the worldwide market for breast implants. Our major international competitors
are two U.S. based public companies, Mentor Corp. and Allergan, Inc. Based on
publicly available sales figures, these two companies rank first and second,
respectively, in global sales of breast implants. Mentor and Allergan currently
control the U.S. market, which represents the majority of the global market. We
are currently ranked first in implant sales in Colombia, second in Spain, Great
Britain and Venezuela, and third in France. We also compete internationally with
Silimed, Eurosilicone, Nagor, Laboratories Sebbin and LPI. To our knowledge,
these companies tend to focus their sales efforts on their own respective
regional or local markets, rather than national or international markets.

Management believes that the principal factors permitting PIP products to
compete effectively are:

     o    pricing;
     o    high-quality manufacturing;
     o    product design and product consistency;
     o    knowledge of and sensitivity to market demands;
     o    regulatory and marketing knowledge of local markets through the
          selection of national and regional distributors;
     o    surgeons' familiarity with PIP's products and its brand names; and
     o    our ability to identify and develop products embodying new
          technologies.

DISTRIBUTION

We sell our products directly and indirectly through independent distributors
and sales representatives to surgeons and clinics in approximately 45 countries
The Company also employs telemarketing, which is designed to increase sales
through follow-up on leads, and the distribution of product information to
potential customers. The Company supplements its other marketing efforts with
appearances at trade shows, advertisements in trade journals, sales brochures,
and national media. In addition, the Company sponsors symposia and educational
programs to familiarize surgeons with the techniques and methods of using the
Company's products.

Two of our major customers accounted for 14% and 12% of our revenues during
2007, and 22% and 12% during 2006. We are trying to diversify our customer base
and introduce our products in new countries to minimize dependence on certain
customers.

GOVERNMENT REGULATION

All of our current products are medical devices intended for human use. For
example, in the U.S., implants such as those manufactured by PIP are subject to
regulations and approval by the FDA and state agencies. In certain other
countries, implants are subject to regulation and approval by their respective
health agencies. These regulations regulate the manufacturing, labeling, record
keeping, clinical testing, and marketing of such implants and most of our other
existing and future products. Seeking required approvals, and complying with
applicable laws and regulations on a continuing basis, requires the expenditure
of substantial resources. Depending on the jurisdiction, regulatory approval,
when and if obtained, may be limited in scope, which may significantly limit the
uses for which a particular product may be marketed. Approved products and their
manufacturers are subject to ongoing review, and discovery of previously unknown
problems with such a product may result in restrictions on its manufacture,
sale, or use, or require its withdrawal from the market.


                                       4
<PAGE>

Specifically, unless an exemption applies, each medical device that we may
market in the U.S. in the future will require 510(k) clearance or a
Pre-Marketing Approval ("PMA") in accordance with the Federal Food, Drug, and
Cosmetic Act. The FDA regulations issued pursuant to that Act set standards for
such products, require proof of safety and effectiveness prior to marketing,
require safety data and clinical protocol approval prior to evaluation in
humans, establish "good manufacturing practices," and permit detailed inspection
of manufacturing facilities. These regulations also require reporting of product
defects to the FDA and prohibit export from the U.S. of any product that does
not comply with FDA regulations, unless the product does comply with established
foreign regulations and, in addition, the FDA and the health agency of the
importing country determine that it is not contrary to public health.

FDA regulation divides medical devices into three classes. Breast implants are
now regulated as Class III medical devices. Class III devices are subject to the
most extensive regulation and in most cases require submission to the FDA of a
PMA application that includes information on the safety and effectiveness of the
device. Other products that we may market in the U.S. in the future may or may
not be regulated as Class III devices.

Until May 15, 2000, breast implants of PIP satisfied then-existing FDA
regulations. However, as a result of the concerns raised about silicone breast
implants, the FDA regulations were changed to require formal FDA approval of
implants under the PMA process. Although PIP has never manufactured or sold
silicone-filled breast implants and had initiated the required clinical study
for PMA approval of its breast implant products being distributed and sold in
the U.S. market, not enough data was available by the regulatory deadline to
obtain FDA approval at that time. As a result, on May 15, 2000, PIP breast
implants were removed from distribution in the U.S.

In July 2005, the FDA has approved, with some pre-conditions, a PMA application
to market silicone gel filled breast implants in the US from one of our
competitors, Mentor, Inc. In November 2006, mentor and Allergan were approved
for sales in the U.S. market. We are unable to determine whether FDA will
ultimately accept the distribution in the US of silicone gel-filled breast
implants by us or any of our competitors.

Our products are subject to regulation in the countries in which we currently
market those products and are likely to be subject to regulation in other
countries in which we may market them in the future. Products marketed in the
European Community must comply with the requirements of the European Medical
Device Directive, or MDD, and be CE-marked to show their acceptability in that
region. We have received CE approval for velvet microtexturized breast implants
and for silicon-gel free testicular prosthesis in December 2003.

Medical device laws and regulations similar to those described above are also in
effect in some of the other countries in which our products are sold. These
range from comprehensive device approval requirements for some or all of such
medical device products, to requests for product data or certifications. Failure
to comply with these regulatory standards and requirements in any jurisdiction
could significantly adversely affect our ability to market and sell our products
in those jurisdictions.

RESEARCH AND DEVELOPMENT

The Company focuses its research and development efforts on developing new
products and core technologies for its markets and further enhancing the
reliability, design, and consistency of its existing products. The Company
solicits extensive input concerning product development from surgeons,
distributors, and consumers.

During fiscal years 2007 and 2006, the Company incurred research and development
expenses of approximately $1.3 million and $1.5million, respectively. We own
three patents. We hold one patent in France for certain of our manufacturing
processes associated with the gel-filled implants, as well as one European
Community patent, and one U.S. patent for breast implants design. The French and
European patents are valid for 20 years while the U.S. patent is valid for 15
years.


                                       5
<PAGE>

EMPLOYEES AND HEALTH AND SAFETY/ENVIRONMENTAL REGULATIONS.

As of June 30, 2007, the Company had 126 total and full-time employees in active
service. We consider our relations with our employees to be satisfactory.

We recognize the importance of being environmentally responsible and the need to
provide a safe and healthy workplace for our employees by complying with all
applicable laws, rules, and regulations. During the past fiscal year, we have
received no citations, notices of violations or other censures from public
agencies regulating environmental compliance or our employees' health and
safety. We do not expect to make any significant capital expenditures to comply
with environmental, health, or safety regulations in fiscal 2008. We believe
that our current systems and processes are adequate for our current needs and
for the foreseeable future.

ITEM 2.  DESCRIPTION OF PROPERTY

We maintain our headquarters, offices and manufacturing facilities in la
Seyne-sur-Mer in southern France. This facility is approximately 33,000 square
feet. We rent such facilities from a real estate holding company in which we
hold an interest of 38.05%. Milo Finance, S.A. holds an interest of
approximately 46% in the real estate holding company. The rental expense
associated with the French facilities amounted to approximately $468,000 and
$407,000 during 2007 and 2006, respectively.

We also have office facilities of approximately 4,000 square feet in San
Sebastian, Spain, which we rent from an unaffiliated entity pursuant to a
short-term lease. These office facilities are used for our marketing and
distribution activities in Spain and Latin America. The rental expense
associated with the Spain facilities amounted to approximately $10,000 during
each of 2007 and 2006. We believe that such facilities are adequate for our
current activities and for the foreseeable future.

ITEM 3.         LEGAL PROCEEDINGS

Each of the following are legal proceedings that have been filed against the
Company:

In October 1999, June 2000 and July 2003, separate but related complaints were
filed by Saul Kwartin, Ruth Kwartin, Steven M. Kwartin, Robert Kwartin and Nina
Kwartin against our subsidiary Poly Implant Protheses, S.A. ("PIP"), III
Acquisition Corp. d/b/a PIP .America, PIP/USA, Inc., Jean-Claude Mas, our former
CEO, personally, and others, in the Circuit Court of Miami-Dade County, Florida.
Plaintiffs are all members of one family who purport to be shareholders of
PIP/USA, Inc., a distributor of PIP, suing derivatively on its behalf, and
individually, and seeking to rescind various transactions between PIP .America
and PIP, and seeking to impose liability against PIP and its co-defendants for
unspecified monetary damages arising out of alleged tortious and other purported
wrongful acts concerning alleged relationships between plaintiffs, PIP and the
other defendants.

Initially, two cases were filed: one in October of 1999 by Saul and Ruth Kwartin
and assigned Case No. 99-25227-CA-01 and one in June of 2000 by Steven Kwartin
and assigned Case No. 00-14665-CA-01. Case No. 99-25227 was voluntarily
dismissed by the Plaintiffs, who then unsuccessfully tried to withdraw their
dismissal. The Plaintiffs then appealed. In May of 2004, the appellate court
affirmed the trial court's Order approving the voluntary dismissal. A motion by
PIP/USA and Mr. Mas to recover their attorneys' fees is pending in the trial
court, as is a motion to disqualify the Plaintiffs' counsel in that lawsuit.
Case No. 00-14665-CA-01 by Steven Kwartin remains pending. In June of 2003,
Robert and Nina Kwartin commenced a lawsuit assigned Case No. 03-15006. That
lawsuit remains pending. In September of 2003, Saul and Ruth Kwartin filed
another lawsuit assigned Case No. 03-22537-CA-27, alleging similar claims to
those included in the dismissed case. Within a day or two of that lawsuit,
Steven Kwartin filed his second lawsuit assigned Case No. 03-22399-CA-15,
against Mr. Mas and Donald McGhan only. On December 22, 2005 four of the five
lawsuits were consolidated for pre-trial purposes. They are cases No.:
00-14665-CA-31, 03-15006-CA-31, 03-22399-CA-31 and 03-22537-CA-31, of those four
cases three were transferred to the Complex Business Litigation Section 40 by
Order dated December 29, 2006. The cases transferred were cases No.:
03-15006-CA-31, 03-22399-CA-31 and 0322537-CA-31.. A hearing on Defendants PIP
and Jean-Claude Mas' motion to disqualify Plaintiff's counsel was held on
September 11. The Court has not ruled yet.

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<PAGE>

In November of 2003, Jessica Fischer Schnebel and fifteen other women filed a
Second Amended Consolidated Class Action Complaint against PIP, PIP/USA, Inc.
and III Acquisition Corp. d/b/a PIP .America in the Circuit Court of Cook
County, Illinois. The Second Amended Consolidated Class Action Complaint
contains counts alleging product liability, breach of the implied warranties of
merchantability and fitness for a particular purpose, violation of the Illinois
Consumer Fraud Act and a contract claim alleging third-party beneficiary status.
Unspecified monetary damages, exemplary damages and attorneys fees and costs are
sought. Motions to dismiss filed by PIP and PIP .America remains pending and
discovery is underway. The plaintiffs have not sought to date to certify any
putative class. Our U.S. distributor has tendered this case to PIP, for defense
and indemnity pursuant to the distributor agreement. On June 7, 2006, Poly
Implant Protheses, S.A. filed a motion to dismiss third amended consolidated
class action Complaint. That motion remains pending. A Status conference is set
for December 6, 2007.

Heritage Worldwide, Inc. and PIP and other defendants were sued by Madeline
Sanchez in New York Supreme Court in July of 2004 for alleged product liability
and other related claims. Both Heritage Worldwide, Inc. and PIP deny any
liability to the Plaintiff and have answered the Complaint and asserted
affirmative defenses. Discovery is ongoing. PIP filed a motion for summary
judgment on December 11, 2006, which remains pending. Discovery has been
completed and no trial date has been set. PIP's motion for Summary Judgment has
been denied. A pre-trial conference is scheduled for September 27, 2007.

In April 2006, PIP was served with four product liability lawsuits in Texas
entitled Melissa Stoltz, et al. v. Poly Implant Protheses, S.A., et al., Case
No.: 2005CI18773, District Court of Bexar County, Texas; Lisa Anderson, et al.
v. Poly Implant Protheses, S.A. et al., Case No.: DC-05-12614, District Court of
Dallas County, Texas; Rose Healey, et al. v. Poly Implant Protheses, S.A. et
al., Case No.: 2005-65625, District Court of Harris County, Texas; Landa Joly et
al. v. Poly Implant Protheses, S.A. et al., Case No.: 05-11-63,596-B, District
Court of Victoria County, Texas. PIP has removed these lawsuits to federal court
and filed Answers and Affirmative Defenses. These cases were settled in July
2007.

On September 1, 2006, PIP was sued in federal court in Houston, Texas by eleven
individuals alleging product liability claims in that certain action entitled
Edwards, et al. v. PIP, et al. Case No, H-06-2817. This case was settled in or
about July, 2007.

On March 14, 2007, PIP was sued in federal court in Houston, Texas by eight
individuals alleging product liability claims in an action entitled Adams, et
al., v. PIP, et al. This case was settled in July 2007.

In May  2006,  the  Company  was  sued  in the  Nottingham  County  Court  by 28
plaintiffs  under the "The Consumer  Protection Act" of the United Kingdom.  The
plaintiffs  alleged that the envelope  surrounding  their implants,  obtained by
their respective  surgeons from PIP France, SA, was not resistant enough and the
filler could cause pain and inflammation  when they leak. The plaintiffs  allege
they  should be  reimbursed  approximately  $700,000 in costs and  damages.  The
Company is expecting to present expert reports to the  Notthingham  County Court
judge in December 2007.

In  December  2006,  The Company was sued in the London High Court by Ms Allison
Allvey  under the "The  Consumer  Protection  Act" of the  United  Kingdom.  The
plaintiff  alleged that the envelope  surrounding her implants,  obtained by her
surgeon from PIP France,  SA, was not resistant  enough.  The plaintiffs  allege
they  should be  reimbursed  approximately  $360,000 in costs and  damages.  The
Company is expecting to present expert reports to the London High Court judge in
December 2007.

Though it is not yet possible to predict the outcome of any of the cases
described above, the Company and its subsidiaries, as applicable, have denied
plaintiffs' allegations and are vigorously defending themselves upon the merits
of each lawsuit and against certification of any class in the Illinois Schnebel
lawsuit, which is the only remaining putative class action.

III Acquisition Corp. d/b/a PIP .America claims indemnification from PIP/USA,
Inc., Poly Implants Protheses, S.A., and Jean-Claude Mas, personally, from all
claims, including those asserted above. The Company believes the costs
associated with these matters will not have a material adverse impact on the
Company's business, results of operations or financial position. The Company has
recorded a provision of approximately $583,000 at June 30, 2007 in connection
with these matters.

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<PAGE>

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

None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on the
Over-the-Counter Bulletin Board operated by the National Association of
Securities Dealers, Inc.
Our shares are listed under the symbol "HWWI."
The following table sets forth, for the fiscal quarters indicated, the high and
low closing prices per share of our common stock as reported on the
Over-the-Counter Bulletin Board. The quotations reflect inter dealer prices,
without retail mark-up, mark-down or commissions and may not represent actual
transactions.
         Year Ended June 30, 2007            High                       Low

         First Quarter                       1.50                      0.30
         Second Quarter                      1.40                      0.45
         Third Quarter                       1.95                      0.53
         Fourth Quarter                      1.03                      0.40



         Year Ended June 30, 2006            High                       Low

         First Quarter                       1.07                      0.81
         Second Quarter                      0.95                      0.80
         Third Quarter                       0.99                      0.75
         Fourth Quarter                      0.75                      0.55

At September 21, 2007, there were 17,410,299 shares of our common stock issued
and outstanding and 725,000 options issued or outstanding. There are 78
shareholders of record at September 21, 2007. During the last two fiscal years,
no cash dividends have been declared on our common stock and management does not
anticipate that dividends will be paid in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION

Overview We are in the process of developing new products. We are introducing a
new product line of breast implants which is based on titanium coating through a
clinical study in Australia. We are completing the planning phase of our
European clinical trials and anticipate that we will market such breast implants
in the European Union within 24 months. We believe that the costs of monitoring
the clinical trials will cost approximately $500,000 over this period. We will
continue to invest in research and development to enhance and introduce new and
existing products. To meet these operational costs, we depend upon equity
financings, collaborations, and proceeds from short and long-term debt.

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<PAGE>

Critical Accounting Policies and Estimates

A summary of significant accounting policies is provided in Note 3 to our
consolidated financial statements included in this Form 10-KSB. Management
believes that the application of these policies on a consistent basis enables
the Company to provide useful and reliable financial information about the
Company's operating results and financial condition.

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

Stock-Based Compensation. Prior to January 1, 2006, the Company accounted for
its stock-based compensation plans under the recognition and measurement
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations, as permitted by SFAS No.
123, Accounting for Stock-Based Compensation. The Company did not recognize
compensation cost related to stock options granted to its employees and
non-employee directors that had an exercise price equal to or above the market
value of the underlying common stock on the date of grant in its condensed
consolidated statement of income prior to January 1, 2006. Effective January 1,
2006, the Company adopted the fair value recognition provisions of SFAS No.
123R, Share-Based Payment, and related interpretations using the
modified-prospective transition method. Under that method, compensation cost
recognized in the third quarter of 2006 includes (a) compensation cost for all
stock-based awards granted prior to, but not yet vested as of January 1, 2006
based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123 and (b) compensation cost for all stock-based awards
granted on or subsequent to January 1, 2006, based on the grant-date fair value
estimated in accordance with the provisions of SFAS No. 123R. Results for prior
periods have not been restated. Prior to the adoption of SFAS No. 123R, the
Company did not recognize any tax benefits from deductions resulting from the
exercise of stock options as operating cash flows in its statement of cash
flows, because no options have ever been exercised. SFAS No. 123R requires that
the portion of benefits resulting from tax deductions in excess of recognized
compensation (the "excess tax benefits") be presented as financing cash flows.

In November 2005, the FASB issued FASB Staff Position FAS123(R)-3, Transition
Election to Accounting for the Tax Effects of Share-Based Payment Awards, (the
"FSP"). This FSP requires an entity to follow either the transition guidance for
the additional-paid-in-capital pool as prescribed in SFAS No. 123R or the
alternative transition method as described in the FSP. An entity that adopts
SFAS No. 123R using the modified prospective method may make a one-time election
to adopt the transition method described in this FSP. An entity may take up to
one year from the later of its initial adoption of SFAS No. 123R or the
effective date of this FSP to evaluate its available transition alternatives and
make its one-time election. This FSP became effective in November 2005. The
Company is still evaluating whether it will adopt the alternative method for
calculating its additional-paid-in-capital pool described in the FSP.

Revenues. We recognize product revenue, net of estimated sales discounts and
returns and allowances, in accordance with Staff Accounting Bulletin No. 104,
"Revenue Recognition in Financial Statements" and SFAS No. 48 "Revenue
Recognition When Right of Return Exists." These statements established that
revenue can be recognized when persuasive evidence of an arrangement exists, the
product has been shipped, all significant contractual obligations have been
satisfied, the fee is fixed or determinable and collection is reasonably
assured.

As of June 30, 2007, we did not have any outstanding bill and hold arrangements.
From time to time, we entered into such bill and hold arrangements if they meet
the following criteria for revenue recognition:

     o    The risks of ownership passed to the buyer;

     o    The customer made a fixed commitment to purchase the breast implants,
          in writing;

     o    The buyer, not us, requested that the transaction be on a bill and
          hold basis. The buyer had a substantial business purpose for ordering
          the goods on a bill and hold basis-primarily its on lack of
          warehousing space;

     o    There is a fixed schedule for delivery of the goods. The date for
          delivery are reasonable and are consistent with the buyer's business
          purpose;

                                       9
<PAGE>

     o    We did not retain any specific performance obligations such that the
          earning process is not complete;

     o    The ordered breast implants were segregated from our inventory and
          were not subject to being used to fill other orders;

     o    The breast implants were complete and ready for shipment;

     o    The date by which we expect payment was not modified and we have not
          modified our normal billing and credit terms for this buyer;

     o    Our past experiences with and pattern of bill and hold transactions;

     o    The buyer has the expected risk of loss in the event of a decline in
          the market value of the breast implants;

     o    Our custodial risks are insurable and insured;

     o    The business reasons for the bill and hold have not introduced a
          contingency to the buyer's commitment.

Accounts receivables and related allowance for doubtful accounts. Accounts
receivable are reported at net realizable value. We have established an
allowance for doubtful accounts based upon factors pertaining to the credit risk
of specific customers, historical trends, and other information. Delinquent
accounts are written-off when it is determined that the amounts are
uncollectible.

Inventories. Inventories are stated at the lower of cost or market, cost
determined by the first-in, first-out (FIFO) method. The Company writes down its
inventory for estimated obsolescence or unmarketable inventory equal to the
difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions

Goodwill. At June 30, 2007, we had approximately $1.2 million in indefinite
lived goodwill related to our acquisition of our subsidiary in Spain. We
evaluate goodwill based on the future contributing margins of such subsidiary.
We use judgment in assessing goodwill for impairment. Goodwill is reviewed for
impairment annually, or sooner if events or changes in circumstances indicate
that the carrying amount could exceed fair value. Fair values are based on
discounted cash flows using a discount rate determined by our management to be
consistent with industry discount rates and the risks inherent in our current
business model. In accordance with SFAS No. 142, we completed the required
impairment tests of goodwill at the date of adoption and annually as required.
There were no impairment charges recorded as a result of the adoption of SFAS
No. 142 or annual impairment tests. Due to uncertain market conditions and
potential changes in our strategy and product portfolio, it is possible that the
forecasts we use to support our goodwill could change in the future, which could
result in non-cash charges that would adversely affect our results of operations
and financial condition.

Deferred Tax Assets. We are required to estimate our income taxes in each of the
jurisdictions in which we operate as part of the process of preparing our
consolidated financial statements. At June 30, 2007, the Company has no net
deferred tax assets. SFAS No. 109, Accounting for Income Taxes, requires a
valuation allowance to reduce the deferred tax assets reported if, based on the
weight of the evidence, it is not more likely than not that some portion or all
of the deferred tax assets will be realized. Management reviews deferred tax
assets periodically for recoverability and makes estimates and judgments
regarding the expected geographic sources of taxable income, gains from
investments, as well as tax planning strategies in assessing the need for a
valuation allowance. We determined that a valuation allowance of approximately
$1,640,000 relating to foreign tax net operating loss carryovers was necessary
to reduce our deferred tax assets to the amount that will more likely than not
be realized. If the estimates and assumptions used in our determination change
in the future, we could be required to revise our estimates of the valuation
allowances against our deferred tax assets and adjust our provisions for
additional income taxes. In the ordinary course of global business, there are
transactions for which the ultimate tax outcome is uncertain, thus judgment is
required in determining the worldwide provision for income taxes. We provide for
income taxes on transactions based on our estimate of the probable liability. We
adjust our provision as appropriate for changes that impact our underlying
judgments. Changes that impact provision estimates include such items as
jurisdictional interpretations on tax filing positions based on the results of
tax audits and general tax authority rulings. Due to the evolving nature of tax
rules combined with the large number of jurisdictions in which we operate, it is
possible that our estimates of our tax liability and the realization of our
deferred tax assets could change in the future, which may result in additional
tax liabilities and adversely affect our results of operations, financial
condition and cash flows.

                                       10
<PAGE>

Product replacements. We provide a product replacement program on our products.
Management estimated the amount of potential future product replacement claims
based on statistical analysis. Expected future obligations are determined based
on the history of product shipments and claims and are discounted to a current
value. Changes to actual claims and interest rates could have a material impact
on the statistical calculation which could materially impact the Company's
reported expenses and results of operations.

Results of Operations

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                    For the year ended              Increase/          Increase/
                                                         June 30,                   (Decrease)        (Decrease)
                                           -------------------------------------   2007 vs 2006      2007 vs 2006
                                                 2007                2006                 $                %
                                           -----------------   ----------------- ------------------ --------------
                                             (Unaudited)         (Unaudited)
<S>                                            <C>                 <C>                   <C>                 <C>
Revenues                                       $ 15,416,133        $ 15,269,330          $ 146,803           1.0%

Cost of revenues                                  7,382,750           6,818,343            564,407           8.3%
                                           -----------------   ----------------- ------------------ --------------

     Gross margin                                 8,033,383           8,450,987           (417,604)         -4.9%
                                           -----------------   ----------------- ------------------ --------------

Operating expenses:
  Selling, general and administrative             8,453,885           5,663,352          2,790,533          49.3%
  Research and development                        1,264,044           1,519,312           (255,268)        -16.8%
                                           -----------------   ----------------- ------------------ --------------

     Total operating expenses                     9,717,929           7,182,664          2,535,265          35.3%
                                           -----------------   ----------------- ------------------ --------------

Loss before other expenses and
Operating (loss) income                          (1,684,546)          1,268,323         (2,952,869)       -232.8%
                                           -----------------   ----------------- ------------------ --------------

Other expenses:
 Gain in equity investment                           48,979              44,520              4,459          10.0%
  Interest expense-related party                   (172,699)           (251,115)            78,416         -31.2%
  Interest expense                                 (431,162)           (388,769)           (42,393)         10.9%
                                           -----------------   ----------------- ------------------ --------------

     Total other expenses                          (554,882)           (595,364)            40,482          -6.8%
                                           -----------------   ----------------- ------------------ --------------


(Loss) income before minority interest           (2,239,428)            672,959         (2,912,387)      NM

Minority interest                                    72,777             (66,046)           138,823        -210.2%
                                           -----------------   ----------------- ------------------ --------------

Net (loss) income                              $ (2,166,651)          $ 606,913        $(2,773,564)      NM
                                           =================   ================= ================== ==============

NM: not meaningful
</TABLE>

Year Ended June 30, 2007 Compared with Year Ended June 30, 2006

   Revenues

Revenues consist primarily of the sale of breast implants and other body support
products. The increase in revenues is primarily attributable to increased volume
of breast implants sold to existing distributors offset by a decrease in the
average price of breast implants.

   Cost of Revenues

Cost of revenues consists primarily of materials and direct labor expenses
associated with the production of breast implants. Costs of revenues, as a
percentage of revenues, increased from 45% to 48% in fiscal 2007, primarily due
to an increase in provision for obsolescence of the inventory of approximately
$543,000 in fiscal 2007.

   Gross Profit

The decrease in gross profit in fiscal 2007 when compared to fiscal 2006 is
primarily attributable to an increase in the provision for obsolescence of the
inventory of approximately $543,000 in fiscal 2007.

                                       11
<PAGE>
   Selling and General Administrative Expenses

Selling, general and administrative expenses consist primarily of compensation
and related benefits of sales representatives which market our products and
general and administrative staff used to support our operations, as well as
facilities-related expenses and professional fees. The increase in selling,
general and administrative expenses is primarily due a decrease in the allowance
for doubtful accounts of approximately $550,000 when compared to fiscal 2006, an
increase of approximately $300,000 in fiscal 2007 in the expenses associated
with the recognition of the fair value of options, due to the death of our
former Chief Executive Officer, in 2007 a decrease in the U.S. foreign exchange
rate of approximately 7% when compared to the Euro while a significant portion
of our selling and general administrative expenses are incurred in Euro,
increase in depreciation of approximately $220,000 and increased legal fees
associated with the lawsuits filed in the US and increased marketing expenses
associated with marketing our products in a larger number of countries
worldwide.

   Research and Development

Research and development expenses primarily consist of compensation and related
benefits of personnel associated with the development and introduction of
existing and future product lines. The decrease in research and development
expenses in fiscal 2007 when compared to fiscal 2006 is primarily due to a
decrease in salaries and related benefits due to lower numbers of personnel
dedicated to the development and expansion of product offerings.

   Interest Expense

Interest expense consists primarily of amortization of debt discount associated
with the issuance of convertible debentures and interest expense associated with
our lines of credit and other long-term debt. Interest expense together with the
interest expense-related party, in fiscal 2007 is at levels comparable to those
incurred during fiscal 2006.

Liquidity and Capital Resources

During fiscal 2007, we used approximately $693,000 in cash flows from operating
activities. Our net loss for fiscal 2007 amounted to approximately $2.2 million,
adjusted for amortization of debt discount of approximately $481,000,
depreciation of approximately $870,000, a decrease in provision for doubtful
accounts of approximately $219,000, and increased provisions of returns of
approximately $404,000. Additionally, our accounts receivable increased by
approximately $77,000 due to increased revenues, our inventories increased by
approximately $672,000 from higher level of inventories to meet the growing
demand of our products, and our accounts payable and accrued expenses increased
by approximately $349,000 due to our higher level of expenses commensurate with
our increased revenues.

During fiscal 2007, our cash flows from operating activities funded capital
expenditures of approximately $551,000. Additionally, we repaid approximately
$504,000 of our debt using proceeds from new debt and increased lines of credit
of approximately $109,000 and $1.0 million, respectively.

During fiscal 2006, we generated approximately $275,000 in cash flows from
operating activities primarily from our profitable operations. Our net income
for fiscal 2006 amounted to approximately $607,000, adjusted for amortization of
debt discount of approximately $482,000, depreciation of approximately $658,000,
a decrease in provision for doubtful accounts of approximately $764,000, and
increased provisions of returns of approximately $201,000. Additionally, our
accounts receivable increased by approximately $1.7 million due to increased
revenues, our inventories increased by approximately $360,000 from higher level
of inventories to meet the growing demand of our products, and our accounts
payable and accrued expenses increased by approximately $452,000 due to our
higher level of expenses commensurate with our increased revenues.

During fiscal 2006, our cash flows from operating activities funded capital
expenditures of approximately $204,000. Additionally, we repaid approximately
$268,000 of our debt using proceeds from new debt of approximately $521,000. We
also made an advance of approximately $73,000 to SCI Lucas, an entity in which
we have a minority interest.

Going Concern

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company used cash of
$692,508 for their operating activities during fiscal 2007. These conditions
raise substantial doubt about its ability to continue as a going concern.

As a result, our current operations are not an adequate source of cash to fund
future operations. Our ability to continue as a going concern is dependent upon
our ability to obtain the necessary financing to meet our obligations and repay
our liabilities when they become due and to generate profitable operations in
the future. We plan to continue to increase our revenues and provide for our

                                       12
<PAGE>
capital requirements through our lines of credit, however, we have no firm
commitments from any third party to provide such revenues or this financing and
we cannot assure you we will be successful in obtaining such commitments as
needed. There are no assurances that we will have sufficient funds to execute
our business plan, pay our obligations as they become due or generate positive
operating results.

New Accounting Pronouncements

In September 2006, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. Earlier
application is permitted provided that the reporting entity has not yet issued
financial statements for that fiscal year. Management believes that, for the
foreseeable future, this Statement will have no impact on the financial
statements of the Company once adopted.

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, ("FIN 48"), entitled, "Accounting for Uncertainty in
Income Taxes - an Interpretation of FASB Statement No. 109". Concurrently, FASB
issued a FASB staff position (FSP) relating to income taxes, (FSP) No. FAS 13-2,
"Accounting for a Change or Projected Change in the Timing of Cash Flows
Relating to Income Taxes Generated by a Leveraged Lease Transaction." FASB's
summary of FIN 48 notes that differences between tax positions recognized in the
financial statements and tax positions taken in the tax return (referred to
commonly as "book" vs. "tax") will generally result in: (a) an increase in a
liability for income taxes payable or a reduction of an income tax refund
receivable, (b) a reduction in a deferred tax asset or an increase in a deferred
tax liability, or (c) both of the above. FIN 48 requires the affirmative
evaluation that it is more likely than not, based on the technical merits of a
tax position, that an enterprise is entitled to economic benefits resulting from
positions taken in income tax returns. Further, if a tax position does not meet
the more-likely-than-not recognition threshold, the benefit of that position is
not recognized in the financial statements. Additionally, FIN 48 establishes
guidance for "derecognition" of previously recognized deferred tax items, and
sets forth disclosure requirements. The effective date of FIN 48 is for fiscal
years beginning after December 15, 2006. We do not believe that, for the
foreseeable future, FIN 48, once adopted, will have a significant impact on our
financial position, operating results, or cash flows.

In February 2007, the FASB issued FASB Statement No. 159 "The Fair Value Option
for Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115". This Statement permits entities to choose to measure many
financial instruments and certain other items 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. This Statement is expected to expand the use of fair value
measurement, which is consistent with the FASB's long-term measurement
objectives for accounting for financial instruments. This Statement applies to
all entities, including not-for-profit organizations. Most of the provisions of
this Statement apply only to entities that elect the fair value option. The fair
value option:

      o  May be applied instrument by instrument, with a few exceptions, such as
         investments otherwise accounted for by the equity method
      o  Is irrevocable (unless a new election date occurs)
      o  Is applied only to entire instruments and not to portions of
         instruments.

This Statement is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, "Fair
Value Measurements". No entity is permitted to apply this Statement
retrospectively to fiscal years preceding the effective date unless the entity
chooses early adoption. The choice to adopt early should be made after issuance
of this Statement but within 120 days of the beginning of the fiscal year of
adoption, provided the entity has not yet issued financial statements, including
required notes to those financial statements, for any interim period of the
fiscal year of adoption. This Statement permits application to eligible items
existing at the effective date (or early adoption date). However, the amendment
to FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," applies to all entities with available-for-sale and trading
securities. Some requirements apply differently to entities that do not report
net income. The following are eligible items for the measurement option
established by this Statement:

                                       13
<PAGE>

     1.  Recognized financial assets and financial liabilities except:

     a)   An investment in a subsidiary that the entity is required to
          consolidate;

     b)   An interest in a variable interest entity that the entity is required
          to consolidate;

     c)   Employers' and plans' obligations (or assets representing net
          overfunded positions) for pension benefits, other postretirement
          benefits (including health care and life insurance benefits),
          postemployment benefits, employee stock option and stock purchase
          plans, and other forms of deferred compensation arrangements, as
          defined in FASB Statements No. 35, "Accounting and Reporting by
          Defined Benefit Pension Plans", No. 87, "Employers' Accounting for
          Pensions", No. 106, "Employers' Accounting for Postretirement Benefits
          Other Than Pensions", No. 112, "Employers' Accounting for
          Postemployment Benefits", No. 123 (revised December 2004),
          "Share-Based Payment", No. 43, "Accounting for Compensated Absences",
          No. 146, "Accounting for Costs Associated with Exit or Disposal
          Activities", and No. 158, "Employers' Accounting for Defined Benefit
          Pension and Other Postretirement Plans", and APB Opinion No. 12,
          "Omnibus Opinion--1967";

     d)   Financial assets and financial liabilities recognized under leases as
          defined in FASB Statement No. 13, "Accounting for Leases" (This
          exception does not apply to a guarantee of a third-party lease
          obligation or a contingent obligation arising from a cancelled
          lease.);

     e)   Deposit liabilities, withdrawable on demand, of banks, savings and
          loan associations, credit unions, and other similar depository
          institutions;

     f)   Financial instruments that are, in whole or in part, classified by the
          issuer as a component of shareholder's equity (including "temporary
          equity"). An example is a convertible debt security with a
          noncontingent beneficial conversion feature.

     2.   Firm commitments that would otherwise not be recognized at inception
          and that involve only financial instruments;

     3.  Nonfinancial insurance contracts and warranties that the insurer can
         settle by paying a third party to provide those goods or services; and

     4.  Host financial instruments resulting from separation of an embedded
         nonfinancial derivative instrument from a nonfinancial hybrid
         instrument.

The fair value option established by this Statement permits all entities to
choose to measure eligible items at fair value at specified election dates. A
business entity shall report unrealized gains and losses on items for which the
fair value option has been elected in earnings (or another performance indicator
if the business entity does not report earnings) at each subsequent reporting
date. A not-for-profit organization shall report unrealized gains and losses in
its statement of activities or similar statement.

Certain risk factors which may impact our business, results of operations and
financial condition

IF WE ARE UNABLE TO AVOID SIGNIFICANT PRODUCT LIABILITY CLAIMS OR PRODUCT
RECALLS, WE MAY BE FORCED TO PAY SUBSTANTIAL DAMAGE AWARDS AND OTHER EXPENSES
THAT COULD EXCEED OUR ACCRUALS AND INSURANCE COVERAGE.

 We conduct our product development, manufacturing, marketing, service and
support activities with regard for the consequences to patients. As with any
body support manufacturer, however, we are often exposed to product liability
claims and product recalls, some of which may have a negative impact on our
business. To incur the substantial costs and expenses as a result of such claims
and recalls, we maintain product liability insurance policies that collectively
carry a policy limit of $1 million worldwide except in the United States and
Canada and reserves that amounted to 153,000at June 30, 2007 At present, we have
no third-party liability insurance in the U.S. and Canada and no risk-shifting
liability insurance to protect us from the costs of claims for damages due to
the use or recall of our products under certain circumstances and for specific
amounts. If a product liability claim or class action suit is brought against us
for uninsured liabilities in excess of our insurance coverage and reserves, our
business will likely suffer. Other breast implant manufacturers that suffered
such claims in the past have been forced to cease operations or even to declare
bankruptcy. In addition to product liability claims, we may in the future need
to recall or issue field corrections related to our products due to
manufacturing or design deficiencies, labeling errors, or other safety or
regulatory reasons. This recall of products may expose us to additional product
liability claims.

                                       14
<PAGE>

IF WE ARE UNABLE TO INCREASE OUR REVENUES OR FIND ADEQUATE SOURCE OF FINANCING
FOR OUR OPERATIONS, WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company used cash of
$692,508 for their operating activities during fiscal 2007. These conditions
raise substantial doubt about its ability to continue as a going concern.

As a result, our current operations are not an adequate source of cash to fund
future operations. Our ability to continue as a going concern is dependent upon
our ability to obtain the necessary financing to meet our obligations and repay
our liabilities when they become due and to generate profitable operations in
the future. We plan to continue to increase our revenues and provide for our
capital requirements through our lines of credit, however, we have no firm
commitments from any third party to provide such revenues or this financing and
we cannot assure you we will be successful in obtaining such commitments as
needed. There are no assurances that we will have sufficient funds to execute
our business plan, pay our obligations as they become due or generate positive
operating results.

THE SUCCESS OF OUR BUSINESS IS SUBSTANTIALLY DEPENDENT ON THE SALES OF BREAST
IMPLANTS

We anticipate that sales of breast implants will continue to play a significant
role in our revenues for the foreseeable future. Declines in demand of our
breast implants could occur as a result of changes in government regulations;
new competitive product release and enhancements to existing products; price
competition; technological changes and the inability to maintain our technology
relationships; and negative publicity that our products are unsafe. In addition,
because the majority of breast augmentation and reconstruction are elective
procedures, they are not typically covered by insurance. As a result, adverse
changes in the economy may cause consumers to reassess their spending choices
and reduce the demand for cosmetic surgery. If our customers do not continue to
purchase our breast implants as a result of these and other factors, our
revenues, results of operations, and cash flows from operations would be
adversely affected.

IF WE ARE UNABLE TO CONTINUE TO DEVELOP AND MARKET NEW PRODUCTS AND
TECHNOLOGIES, WE MAY EXPERIENCE A DECREASE IN DEMAND FOR OUR PRODUCTS OR OUR
PRODUCTS COULD BECOME OBSOLETE.

The body support industry is highly competitive
and is subject to significant and rapid technological change. We believe that
our ability to respond quickly to consumer needs or advances in medical
technologies, without compromising product quality, is crucial to our success.
We are continually engaged in product development and improvement programs to
maintain and improve our competitive position. We cannot, however, guarantee
that we will be successful in enhancing existing products or developing new
products or technologies that will timely achieve regulatory approval.

There is also a risk that our products may not gain market acceptance among
physicians, patients and the medical community generally. The degree of market
acceptance of any medical device or other product that we develop will depend on
a number of factors, including demonstrated clinical efficacy and safety,
cost-effectiveness, potential advantages over alternative products, and our
marketing and distribution capabilities. Physicians will not recommend our
products until clinical data or other factors demonstrate their safety and
efficacy compared to other competing products. Even if the clinical safety and
efficacy of using our products is established, physicians may elect not to
recommend using them for any number of other reasons, including whether our
products best meet the perceived particular needs of the individual patient.


                                       15
<PAGE>

Our products compete with a number of other products manufactured by major
medical device companies, and may also compete with new products currently under
development by others. If our new products do not achieve significant market
acceptance, or if our current products are not able to continue competing
successfully in the changing market, our revenues, income from operations and
cash flows from operations may not grow as much as expected or may even decline.

IF CLINICAL TRIALS FOR OUR PRODUCTS ARE UNSUCCESSFUL OR DELAYED, WE WILL BE
UNABLE TO MEET OUR ANTICIPATED DEVELOPMENT AND COMMERCIALIZATION TIMELINES, AND
OUR BUSINESS PROSPECTS WILL SUFFER.

Before obtaining regulatory approvals for the commercial sale of any products,
we must demonstrate through pre-clinical testing and clinical trials that our
products are safe and effective for use in humans. Conducting clinical trials is
a lengthy, time-consuming and expensive process. Completion of clinical trials
may take several years or more. Our commencement and rate of completion of
clinical trials may be delayed by many factors, including:

         o lack of efficacy during the clinical trials;
         o unforeseen safety issues;
         o slower than expected patient recruitment for clinical trials;
         o inability to follow patients after treatment in clinical trials;
         o inconsistencies between early clinical trial results and results
           obtained in later clinical trials; and
         o varying interpretations of data generated by clinical trials.

The results from pre-clinical testing and early clinical trials are often not
predictive of results obtained in later clinical trials. A number of new
products have shown promising results in clinical trials, but subsequently
failed to establish sufficient safety and efficacy data to obtain necessary
regulatory approvals. Data obtained from pre-clinical and clinical activities
are susceptible to varying interpretations, which may delay, limit or prevent
regulatory approval. Any delays in, or termination of, our clinical trials will
materially and adversely affect our development and commercialization timelines,
increase our development costs and harm our financial results and commercial
prospects.

WE ARE SUBJECT TO SUBSTANTIAL GOVERNMENT REGULATION, WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR BUSINESS.

The production and marketing of our products and our ongoing research and
development, pre-clinical testing and clinical trial activities are subject to
extensive regulation and review by numerous governmental authorities both in the
U.S. and abroad. Most of the products we develop must undergo an extensive
regulatory approval process before they can be marketed. This process makes it
longer, harder and more costly to bring our products to market, and we cannot
guarantee that any of our products will be approved, or, once approved, not
recalled. The pre-marketing approval process can be particularly expensive,
uncertain and lengthy, and a number of devices for which FDA approval has been
sought by other companies have never been approved for marketing. In addition to
these approval procedures, extensive regulations also govern marketing,
manufacturing, distribution, labeling, and record-keeping procedures. If we do
not comply with applicable regulatory requirements, such violations could result
in warning letters, non-approval, suspensions of regulatory approvals, civil
penalties and criminal fines, product seizures and recalls, operating
restrictions, injunctions, and criminal prosecution.

                                       16
<PAGE>

Delays in or rejection of any government entity, including the FDA, of our new
products may also adversely affect our business. Such delays or rejection may be
encountered due to, among other reasons, government or regulatory changes in
policy during the period of product development in each jurisdiction. For
example, in the U.S., there has been a continuing trend of more stringent FDA
oversight in product clearance and enforcement activities, causing medical
device manufacturers to experience longer approval cycles, more uncertainty,
greater risk, and higher expenses. Internationally, there is a risk that we may
not be successful in meeting the quality standards or other certification
requirements. Even if regulatory approval of a product is granted, this approval
may entail limitations on uses for which the product may be labeled and
promoted. It is possible, for example, that we may not receive proper local
regulatory approval to market our current products for broader or different
applications or to market updated products that represent extensions of our
basic technology. In addition, we may not receive French export approval to
export our products in the future, and countries to which products are to be
exported may not approve them for import.

Our manufacturing facilities are also subject to continual governmental review
and inspection. French regulations related to manufacturing are complex and our
manufacturing facilities are subject to frequent scrutiny. A governmental
authority may challenge our compliance with applicable national, regional,
local, and foreign regulations. In addition, any discovery of previously unknown
problems with one of our products or facilities may result in restrictions on
the product or the facility, including withdrawal of the product from the market
or other enforcement actions.

From time to time, regulatory proposals are introduced that could alter the
review and approval process relating to medical devices. It is possible that the
FDA or other governmental authorities will issue additional regulations further
restricting the sale of our present or proposed products. Any change in
regulations that govern the review and approval process relating to our current
and future products could make it more difficult and costly to obtain approval
for new products, or to produce, market, and distribute existing products.

Our products compete with a number of other medical products manufactured by
major companies, and may also compete with new products currently under
development by others. On January 8, 2004 the FDA released new Draft Guidance
for Saline, Silicone Gel, and Alternative Breast Implants. This new guidance has
additional requirements from the FDA's prior guidance dated February 2003. We
intend to complete our application to the FDA for the pre-market approval of our
saline-filled implants for breast augmentation, reconstruction and revision
during fiscal 2007 using this new guidance. Any additional changes in FDA
guidance may further delay or may otherwise adversely affect our application or
our review or approval by the FDA. A delay, denial, or "not approvable" response
by the FDA would have a material adverse affect on our commercialization
timelines and competitive position. If our competitors gain regulatory approvals
before us in the U.S. or in any other geographical locations, our revenues,
income from operations and cash flows from operations, may not grow as
anticipated and may even decline.

HEALTHCARE REFORM LEGISLATION COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

If any national healthcare reform or other legislation or regulations are passed
that imposes limits on the number or type of medical procedures that may be
performed or that has the effect of restricting a physician's ability to select
specific products for use in patient procedures, such changes could have a
material adverse effect on the demand for our products. For example, in the U.S.
and elsewhere, there have been, and we expect that there will continue to be, a
number of federal and state legislative and regulatory proposals to implement
greater governmental control over the healthcare industry. These proposals
create uncertainty as to our ability to obtain the regulatory authority
approvals required for us to sell our products in the largest market. In a
number of foreign markets, the pricing and profitability of healthcare products
are subject to governmental influence or control. In addition, legislation or
regulations that impose restrictions on the price that may be charged for
healthcare products or medical devices may adversely affect our revenues, income
from operations and cash flows from operations.

IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS RELATED
TO OUR PRODUCTS OR TECHNOLOGIES, OR WE INFRINGE UPON THE INTELLECTUAL PROPERTY
RIGHTS OF OTHERS, WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE
OUR PRODUCTS AND MAINTAIN PROFITABILITY.

                                       17
<PAGE>

Our success depends in part on our ability to obtain patents or rights to
patents, protect trade secrets, operate without infringing upon the proprietary
rights of others, and prevent others from infringing on our patents, trademarks
and other intellectual property rights. We will be able to protect our
intellectual property from unauthorized use by third parties only to the extent
that it is covered by valid and enforceable patents, trademarks and licenses.
Patent protection generally involves complex legal and factual questions and,
therefore, enforceability of patent rights cannot be predicted with certainty.
Patents, if issued, may be challenged, invalidated or circumvented. Thus, any
patents that we own or license from others may not provide adequate protection
against competitors and further, our technologies may infringe on the patents of
third parties. Moreover, the laws of certain foreign countries do not protect
our intellectual property rights to the same extent as do the laws of the U.S.
or the European Community. In the event of an infringement or violation, we may
face litigation, become subject to damages, and may be prevented from selling
existing products and pursuing product development or commercialization.

In addition to patents and trademarks, we rely on trade secrets and proprietary
know-how. We seek protection of these rights, in part, through confidentiality
and proprietary information agreements. These agreements may not provide
meaningful protection or adequate remedies for violation of our rights in the
event of unauthorized use or disclosure of confidential and proprietary
information. Failure to protect our proprietary rights could seriously impair
our competitive position.

IF OUR COLLABORATIVE PARTNERS DO NOT PERFORM, WE WILL BE UNABLE TO DEVELOP AND
MARKET PRODUCTS AS ANTICIPATED.

We have entered into collaborative arrangements with third parties, such as GFE
to develop certain products in Europe. We cannot assure you that these
collaborations will produce successful products or marketing efforts. If we fail
to maintain our existing collaborative arrangements or fail to enter into
additional collaborative arrangements, the number of products and markets from
which we could receive future revenues would decline.

Our dependence on collaborative arrangements with third parties subjects us to a
number of risks. These collaborative arrangements may not be on terms favorable
to us. Agreements with collaborative partners typically allow partners
significant discretion in electing whether or not to pursue any of the planned
activities. We cannot control the amount and timing of resources our
collaborative partners may devote to products based on the collaboration, and
our partners may choose to pursue alternative products. Our partners may not
perform their obligations as expected. Business combinations, significant
changes in a collaborative partner's business strategy, or its access to
financial resources may adversely affect a partner's willingness or ability to
complete its obligations under the arrangement. Moreover, we could become
involved in disputes with our partners, which could lead to delays or
termination of the collaborations and time-consuming and expensive litigation or
arbitration. Even if we fulfill our obligations under a collaborative agreement,
our partner can terminate the agreement under certain circumstances. If any
collaborative partner were to terminate or breach our agreement with it, or
otherwise fail to complete its obligations in a timely manner, our chances of
successfully commercializing products would be materially and adversely
affected.

IF WE FAIL TO PREVAIL IN A CLAIM THAT WE OWE OUR FORMER U.S. DISTRIBUTOR MORE
THAN $1.7 MILLION, IT MAY ADVERSELY IMPAIR OUR FINANCIAL POSITION, NET INCOME
AND CASH FLOWS.

We are  disputing  an  unsubstantiated  claim  that we owe  Medicor,  our former
Distributor in the US, more than $4.8 million. We have recorded an amount due to
Medicor of $1.7 million.  While we believe that this claim is without merit,  we
cannot assure you that we will prevail if this matter is arbitrated.  If we fail
to prevail in this matter,  we could owe an  additional  $3.1 million to Medicor
and it may adversely impact our financial  position,  net income and cash flows.
On June 29,  2007,  Medicor,  together  with  seven of its  subsidiaries,  filed
voluntary  petitions for relief under Chapter 11 of the United States Bankruptcy
Code in the United  States  Bankruptcy  Court for the District of  Delaware.  In
December 2007, we filed in the US Bankruptcy  Court for the District of Delaware
a proof of claim in excess of $28.7 million against our US distributor.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR CERTAIN PRODUCTS AND RAW
MATERIALS AND THE LOSS OF ANY SUPPLIER COULD ADVERSELY AFFECT OUR ABILITY TO
MANUFACTURE MANY OF OUR PRODUCTS.

                                       18
<PAGE>

We  currently  rely on a single  supplier  for  titanium-based  coating  for our
products,  used primarily in the  manufacturing of breast  implants.  We rely on
this  supplier to provide us with such coating on our  products.  Our  agreement
terminates in 2009. If we cannot maintain the  relationship  with this supplier,
we may have to discontinue the manufacturing of certain  products.  Furthermore,
we  would  have  to  substitute  the  raw  materials   currently  utilized  with
alternative  raw materials which may be of lesser quality and provided at higher
cost to us. The termination of this relationship or any disruption in the supply
of these materials could have a material adverse effect on our revenues,  income
from operations and cash flows from operations.

OUR INTERNATIONAL BUSINESS EXPOSES US TO A NUMBER OF RISKS.

We conduct all our marketing, manufacturing, and research and development
outside of the U.S. More than 85% of our sales are derived from international
operations outside of France, where our main operations are conducted.
Accordingly, any material decrease in foreign sales would have a material
adverse effect on our overall sales and profitability. Most of our international
sales are denominated in Euros. Depreciation or devaluation of the local
currencies of countries where we sell our products may result in our products
becoming more expensive in local currency terms, thus reducing demand.
Furthermore, all our operating activities are located outside of the U.S.
Therefore, substantially all of our operating expenses are denominated in
currencies other than the U.S. dollar. We cannot guarantee that we will not
experience unfavorable currency fluctuation effects in future periods, which
could have an adverse effect on our operating results. Our operations and
financial results also may be significantly affected by other international
factors, including:

     o    foreign government regulation of body support products; o product
          liability, intellectual property and other claims;

     o    new export license requirements;

     o    political or economic instability in our target markets;

     o    trade restrictions;

     o    changes in tax laws and tariffs; o inadequate protection of
          intellectual property rights in some countries;

     o    managing foreign distributors and staffing;

     o    managing foreign subsidiaries; and

     o    competition.

If these risks actually materialize, our revenues, results of operations and
cash flows from operations may decrease.

WE RELY ON INDIRECT DISTRIBUTION CHANNELS AND MAJOR DISTRIBUTORS THAT WE DO NOT
CONTROL.

We rely significantly on independent distributors to market and distribute our
products. We do not control our distributors. Additionally, our distributors are
not obligated to buy our products and could also represent other lines of
products. Some of our distributors maintain inventories of our products for
resale to physicians. If distributors reduce their inventory of our products,
our business could be adversely affected. Further, we could maintain
individually significant accounts receivable balances with certain distributors.
The financial condition of our distributors could deteriorate and distributors
could significantly delay or default on their payment obligations. Any
significant delays or defaults could have a material adverse effect on our
revenues, income from operations and cash flows from operations.

IF OUR USE OF HAZARDOUS MATERIALS RESULTS IN CONTAMINATION OR INJURY, WE COULD
SUFFER SIGNIFICANT FINANCIAL LOSS.

Our manufacturing and research activities involve the controlled use of
hazardous materials. We cannot eliminate the risk of accidental contamination or
injury from these materials. In the event of an accident or environmental
discharge, we may be held liable for any resulting damages, which may exceed our
financial resources. We currently do not carry insurance specifically for
hazardous material claims. We may be required to incur significant costs to
comply with environmental laws and regulations, which may change from time to
time. To date, we have not been the subject of any environmental investigation
by governmental authorities.


                                       19
<PAGE>

OUR STOCK PRICE HAS
BEEN VOLATILE AND OUR TRADING VOLUME HAS HISTORICALLY BEEN LOWER THAN THAT OF
MANY PUBLICLY-TRADED COMPANIES.

Historically, the market price of our common
stock has from time to time experienced price fluctuations, some of which are
unrelated to our operating performance and beyond our control. These factors
include:

     o    availability of shares offered for sale;

     o    quarter-to-quarter variations in our operating results;

     o    the results of testing, technological innovations, or new commercial
          products by us or our competitors;

     o    governmental actions, regulations, rules, and orders;

     o    general conditions in the healthcare, medical device, or plastic
          surgery industries;

     o    changes in earnings estimates by securities analysts;

     o    developments and litigation concerning patents or other intellectual
          property rights;

     o    litigation or public concern about the safety of our products; and

     o    general economic factors, such as foreign exchanges rates.

Historically, our common stock has also had a low trading volume, and likely
will continue to have a low trading volume in the future. We cannot guarantee
that an active public market for our common stock will develop and be sustained.
Additionally, we have not always timely filed our quarterly and annual reports,
which resulted in our common stock being temporarily delisted from trading on
the Over-The-Counter Bulletin Board interruptions in the trading of our stock.
This low volume may contribute to the volatility of the market price of our
common stock. It is likely that the market price of our common stock will
continue to fluctuate significantly in the future.

OUR REPORTED EARNINGS PER SHARE MAY BE MORE VOLATILE BECAUSE OF THE CONTINGENT
CONVERSION PROVISION OF OUR DEBENTURES.

Holders of our 1% and 10% convertible debentures are entitled to convert the
notes into our common stock during any fiscal quarter prior to October 9, 2008
and March 25, 2009, respectively. In addition, certain holders are entitled to
anti-dilution protection. Until the notes are converted, the shares underlying
the notes are not included in the calculation of our basic or diluted earnings
per share. Should a contingency be met, diluted earnings per share would be
expected to decrease as a result of the inclusion of the underlying shares in
the diluted earnings per share calculation. Additionally, the per share
conversion price for the convertible debentures are based on the lesser of a
fixed price percentage of the average of our lowest closing prices for certain
periods. Thus, volatility, low volume of trades and lower stock prices could
cause further dilution to our existing and future shareholders.

FUTURE CHANGES IN FINANCIAL ACCOUNTING STANDARDS MAY CAUSE ADVERSE UNEXPECTED
REVENUE OR EXPENSE FLUCTUATIONS AND AFFECT OUR REPORTED RESULTS OF OPERATIONS.

A change in accounting standards could have a significant effect on our reported
results and may even affect our reporting of transactions completed before the
change is effective. Any changes requiring that we record compensation expense
in the statement of operations for employee stock options as an example using
the fair value method could have a significant negative effect on our reported
results. New pronouncements and varying interpretations of pronouncements have
occurred and may occur in the future. Changes to existing rules or the
questioning of current practices may adversely affect our reported financial
results and the manner in which we conduct our business.

                                       20
<PAGE>

IF WE DETERMINE THAT ANY OF OUR GOODWILL OR INTANGIBLE ASSETS IS IMPAIRED, WE
WOULD BE REQUIRED TO RECORD A CHARGE TO EARNINGS, WHICH COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

We have a significant amount of goodwill and other intangible assets, primarily
as a result of the acquisition of our Spain operations. In July 2001, we adopted
SFAS No. 141, Business Combinations, and in January 2002, we adopted SFAS No.
142, Goodwill and Other Intangible Assets. As a result, we no longer amortize
goodwill and intangible assets that are deemed to have indefinite lives. We
periodically evaluate our intangible assets, for impairment. As of June 30,
2007, we had approximately $1.2 million of goodwill. We review for impairment
annually, or sooner if events or changes in circumstances indicate that the
carrying amount could exceed fair value. Fair values are based on discounted
cash flows using a discount rate determined by our management to be consistent
with industry discount rates and the risks inherent in our current business
model. Due to uncertain market conditions and potential changes in our strategy
and product portfolio, it is possible that the forecasts we use to support our
goodwill could change in the future, which could result in non-cash charges that
would adversely affect our results of operations and financial condition.

IF WE FAIL TO MANAGE OUR OPERATIONS OR FAIL TO CONTINUE TO EFFECTIVELY CONTROL
EXPENSES, OUR REVENUES, RESUTS OF OPERATIONS AND CASH FLOW FROM OPERATIONS COULD
DECREASE.

The scope of our operations, the number of
our employees and the geographic area of our operations have varied and may grow
rapidly. In addition, we acquired a company in Spain in 2002. This growth and
the assimilation of acquired operations and their employees could continue to
place a significant strain on our managerial, operational and financial
resources. To manage our growth, if any, effectively, we need to continue to
implement and improve additional management and financial systems and controls.
We may not be able to manage the current scope of our operations or future
growth effectively and still exploit market opportunities for our products in a
timely and cost-effective way. Our future operating results could also depend on
our ability to manage an expanding product line, marketing and sales.

WE COULD CHANGE OUR MARKETING PROGRAMS, WHICH COULD NEGATIVELY IMPACT THE TIMING
OF OUR RECOGNITION OF REVENUES.

We continually re-evaluate our marketing programs, including specific pricing
models, delivery methods, and terms and conditions, to effectively market our
current and future products and services. We may implement new marketing
programs, including offering specified and unspecified enhancements to our
current and future products. Such changes could result in deferring revenues
over a future period as opposed to upon the initial shipment of the product.
Changes to our marketing programs, including the timing of the release of
enhancements, discounts and other factors, could impact the timing of the
recognition of revenue for our products and could adversely affect our operating
results and financial condition.

IF WE LOSE KEY PERSONNEL, CANNOT INTEGRATE NEWLY HIRED PERSONNEL, OR CANNOT HIRE
ENOUGH QUALIFIED EMPLOYEES, OUR ABILITY TO MANAGE OUR BUSINESS COULD BE
ADVERSELY AFFECTED.

Our success depends, in large part, upon the services of a number of key
employees, such as our Chairman of the Board of Directors and Chief Financial
Officer and General Manager, Mr. Mas and Mr. Couty, respectively. The effective
management of our growth, if any, depends upon our ability to retain highly
skilled technical, managerial, finance and marketing personnel. The loss of the
services of key personnel might significantly delay or prevent the achievement
of our development and strategic objectives. We do not maintain key person life
insurance on any of our employees, and none of our employees is under any
obligation to continue providing services to us.

                                       21
<PAGE>

We must continue to attract key
personnel to develop new products, product enhancements and technologies.
Competition for highly skilled employees in our industry is high, and we cannot
be certain that we will be successful in recruiting or retaining such personnel.
We also believe that our success depends to a significant extent on the ability
of our key personnel to operate effectively, both individually and as a group.
If we are unable to identify, hire and integrate new employees in a timely and
cost-effective manner, our ability to develop future enhancements and features
to our existing or future products as well as expand to new markets could be
delayed. Any delays could have a material adverse effect on our business,
results of operations and financial condition.

ITEM 7. FINANCIAL STATEMENTS

Response to this item is submitted as a separate section of this report
immediately following the signature page.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

ITEM 8A. CONTROLS AND PROCEDURES

Our principal executive officer and our principal financial officer evaluated
the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report. Based on this evaluation,
our principal executive officer and our principal financial officer have
concluded that our controls and procedures are effective in providing reasonable
assurance that the information required to be disclosed in this report has been
recorded, processed, summarized and reported as of the end of the period covered
by this report.

During the period covered by this report, there have not been any significant
changes in our internal controls or, to our knowledge, in other factors that
could significantly affect our internal controls.

ITEM 8B. OTHER INFORMATION.

None

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The table below shows certain information about each of our directors and
executive officers:

Name                      Age             Position

Jean-Claude Mas           68         Chief Executive Officer, Chairman
                                     of the Board of Directors

Claude Couty              55         Director, Chief Financial Officer
                                     and General Manager

Under the Company's By-Laws, each director of the Company is elected at the
annual meeting of stockholders and serves until his or her successor is duly
elected and qualified. Each executive officer is elected or appointed by the
directors and serves at the discretion of the Board of Directors.

                                       22
<PAGE>

Jean Claude Mas, Chief Executive Officer and Chairman of the Board of Directors

Mr. Mas was elected Chairman of the Board of Directors in April 2003. Mr. Mas
also served as our Chief Executive Officer through October 2004. Mr. Mas has
been the Chairman of PIP, and its wholly owned subsidiary PIP Espagne, since
1998. Mr. Mas has extensive experience operating a company in the breast implant
business. Mr. Mas was appointed to the position of Chief Executive Officer of
our Company in March 2007.

Claude Couty, Director, Chief Financial Officer and General Manager

Mr. Couty was appointed to the position of Chief Financial Officer and General
Manager in January 2004. Mr. Couty has extensive experience in advising
multinational publicly traded companies on operational, financial, and tax
matters. Prior to that, Mr. Couty served as Chief Financial Officer of European
Casinos, a large European casino owner and operator from 1998 to September 2003.
Mr. Couty was appointed to the position of Director of our Company in March
2007.

Management Changes

On January 27, 2007, Alain Sereyjol Garros passed away. He was a member of the
Board of Directors (the "Board") of Heritage Worldwide, Inc. (the "Company")
from March 2003 until his death and the Company's Chief Executive Officer from
October 2004 until his death.

In order to fill the vacancy on the Board of Directors resulting for Mr.
Sereyjol's death, Claude Couty, age 55, was appointed to the Board on March 8,
2007. Mr. Couty will continue to serve as the Chief Financial Officer and
General Manager of the Company. Mr. Couty has been the Chief Financial Officer
and the General Manager of the Company since January 2004. From 1998 to
September 2003, Mr. Couty served as Chief Financial Officer of Compagnie
Europeenne De Casinos, a European casino owner and operator.

As a result of Mr. Sereyjol's death, Jean-Claude Mas, age 67, was appointed
Chief Executive Officer of the Company on March 9, 2007. Mr. Mas will continue
to serve as the Chairman of the Board of the Company. Mr. Mas has been a member
of the Board since March 2003, has been Chairman of the Board since April 2003,
and was the Chief Executive Officer of the Company from April 2003 through
October 2004. Mr. Mas has been the Chairman of Poly Implants Protheses, S.A., a
French limited liability entity, and its wholly owned subsidiary PIP Espagne,
since 1998.

Committees

We do not have an audit committee or a compensation committee. We intend to form
such committees once we have selected directors who shall meet the independence
requirements and audit committee financial expert requirements under applicable
Securities and Exchange Commission rules and regulations. We are developing the
criteria we will use in identifying, attracting, and retaining such directors.
We are unable to determine when and if we will complete the recruiting of new
directors during fiscal year 2007.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to
its directors, officers and employees. A copy of the Code of Business Conduct
and Ethics was attached as an exhibit to the Company's Form 10-KSB for the
fiscal year ended June 30, 2004. If the Company grants any waiver from a
provision of this Code, the Company will disclose the nature of such waiver in a
Current Report on Form 8-K.

CERTAIN LEGAL PROCEEDINGS

To the knowledge of the Company, there are no material proceedings to which any
director, executive officer or beneficial owner of more than 5% of any class of
voting securities of the Company, with the exception of certain legal
proceedings against Mr. Mas as discussed in Legal Proceedings under Item 3.
Additionally, to the knowledge of the Company, no affiliate of any such
director, executive officer or security holder is a party adverse to the Company
or has a material interest adverse to the Company.

                                       23
<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To our  knowledge  and  based  on our  review  of the  various  filings  made by
directors,  executive  officers and 10% or greater  shareholders of the Company,
all persons  required to file  Section  16(a)  reports  during  fiscal year 2007
timely filed such  reports,  except Mr.  Jean-Claude  Mas,  the Chief  Executive
Officer and Chairman of the Board of  Directors,  failed to timely file a Form 3
disclosing his indirect beneficial  ownership of 13,741,667 shares of our common
stock through his control of Milo Finance, S.A.


ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation paid to the
Company's Chief Executive Officer and Chief Financial Officer during our fiscal
year ended June 30, 2007. No other executive officer of the Company earned or
received in excess of $100,000 during the past three fiscal years.




                                 Fiscal
Name and Principal Position        Year    Salary         Bonus      Total
--------------------------------------------------------------------------------
Jean-Claude Mas,                   2007   $ 313,070        -0-      $ 313,070
Chairman of the Board,
Chief Executive Officer
 and Secretary (1)

Claude Couty, Chief                2007   $ 213,289        -0-      $ 213,289
 Financial Officer and
General Manager

Alan Sereyjol-Garros, former       2007       -0-          -0-          -0-
Chief Executive Officer (2)

Philippe Koubbis (3)               2007    $ 58,053     $ 50,432    $ 108,485

Patricia Peysson (3)               2007    $ 63,193     $ 42,248    $ 105,441

_____________________________
(1) Mr. Mas became the Chairman, Chief Executive Officer and President in April
2003. Mr Mas resigned as Chief Executive Officer in October 2004 and was
replaced by Mr. Sereyjol-Garros.

(2) Mr.  Garros  passed away in January 2007 and Mr. Mas was  appointed  Chief
Executive Officer in March 2007.

(3) Koubbis and Peysson are sales agents and are not executive officers of the
Company.

                                       24
<PAGE>

Executive Employment Agreements

Mr. Sereyjol-Garros and Mr. Mas do not have written employment agreement. Mr.
Mas receives compensation from one of our subsidiaries, PIP France, at the
discretion of PIP France's board of directors. Mr. Mas' compensation is based on
several factors, including its efforts in developing new and existing
relationships outside of France, among other things..

Mr. Couty's employment agreement, provides for, among other things, an annual
salary of approximately $164,000 and the use of an automobile for business
purposes. Upon termination without cause, and except for gross negligence or
retirement, Mr. Couty would be entitled to severance payments of 40% of his
salary compensation during the prior year. If Mr. Couty is terminated upon a
restructuring or a change in control of the Company, Mr. Couty shall receive
severance payments that shall not be lower than twelve months of his average
compensation if employed between one and two years and 36 months of his average
compensation if employed more than two years.

Currently, the Company does not maintain a pension plan, profit sharing or other
retirement plan. The Company may adopt one or more of such plans in the future.



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


The following table provides information concerning unexercised options, stock
that has not vested and equity incentive plan awards for each named executive
officer outstanding as of December 31, 2006:


                                   OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
<TABLE>
<CAPTION>

                                OPTION AWARDS                                       STOCK AWARDS
               --------------------------------------------------------- -----------------------------------------

                                                                                                            Equity
                                                                                                         Incentive
                                                                                                Equity        Plan
                                                                                             Incentive     Awards:
                                                                                    Market        Plan      Market
                                                                           Number    Value     Awards:          or
                                                       Equity                  of       of      Number      Payout
                                                    Incentive              Shares   Shares          of    Value of
                                                         Plan                  or       or    Unearned    Unearned
                                                      Awards:               Units    Units     Shares,     Shares,
                      Number of      Number of      Number of                  of       of    Units or    Units or
                     Securities     Securities     Securities               Stock    Stock       Other       Other
                     Underlying     Underlying     Underlying                That     That      Rights      Rights
                    Unexercised    Unexercised    Unexercised    Option      Have     Have        that        That
                        Options        Options       Unearned  Exercise       Not      Not    Have Not    Have Not
                      /warrants      /warrants
Name                      (#)           (#)           Options     Price  Expiration Vested Vested Vested  Vested
                    Exercisable    Unexercisable        (#)        ($)      Date      (#)    ($)     (#)    (#)
(a)                      (b)            (c)             (d)        (e)       (f)      (g)    (h)     (i)    (j)
-------------       -----------    -------------   -----------  -------- ---------- ------ ------ ------  --------
<S>                   <C>                <C>             <C>       <C>    <C>  <C>     <C>    <C>    <C>     <C>
Jean-Claude Mas       400,000           -0-             -0-        2.20   7/12/14     -0-    -0-    -0-     -0-
Claude Couty          300,000           -0-             -0-        2.20   7/12/14     -0-    -0-    -0-     -0-
</TABLE>
                                       25
<PAGE>

Compensation of Directors

     Standard Arrangements

The Company does not currently pay its directors for attending meetings of the
Board of Directors. The Company currently has no standard arrangement in place
pursuant to which directors of the Company would be compensated for any services
provided as a director or for potential committee participation or special
assignments. The Company may adopt a director compensation arrangement in the
future.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table and footnotes sets forth certain information known to the
Company with respect to the beneficial ownership of its common stock as of
December 10, 2007, by (i) each person known by the Company to be the beneficial
owner of more than 5% of the Company's outstanding common stock, (ii) named
executive officers and the Named Executive Officer, (iii) the Company's
directors, and (iv) all of the Company's current directors and executive
officers as a group.

Except as otherwise indicated, each person has sole investment and voting power
(or shares that power with his or her spouse) over the shares listed in the
table. The percentage ownership of each person listed in the table was
calculated using the total number of shares outstanding at December 10, 2007.

<TABLE>
<CAPTION>

                                                    Number of Shares
                                                    Subject to Options,     Total Number of
                             Number of              Warrants or Other       Shares Beneficially
Name of Beneficial Owner     Outstanding Shares     Rights                  Owned                   Percent of Class
-------------------------   --------------------   ---------------------   ---------------------   ------------------
<S>                               <C>                       <C>                   <C>                     <C>
Milo Finance, S.A. (1)          13,741,667                   -                  13,741,667               78.9%
MediCor Ltd. (2)                 1,212,500                   -                   1,212,500                7.0%
Jean-Claude Mas (1)             13,741,667                400,000               14,141,667               79.4%
Claude Couty                          -                   300,000                 300,000                 1.7%
All directors and               14,954,167                700,000               15,654167                88.1%
executive officers
as a group (2 persons)
______________________
*      Less than 1%.
</TABLE>

(1)  M. Mas is the sole beneficial owner of Milo Finance S.A. and has sole
     voting and dispositive power over the shares of common stock held by Milo
     Finance, S.A.

(2)  Based on the Schedule 13G filed with the Securities and Exchange Commission
     on February 17, 2004. The address of MediCor Ltd. is 4560 S. Decatur Blvd.,
     Suite 300, Las Vegas, Nevada 89103.

EQUITY COMPENSATION PLAN INFORMATION

In July 2004, the Board of Directors adopted the Heritage Worldwide, Inc. 2004
Stock Option Plan (the "2004 Plan"). The Company intends to attract and retain
employees and valuable contractors by allowing them an additional incentive to
promote the financial success of the Company.


                                       26
<PAGE>

The 2004 Plan allows for the grant of both incentive stock options and
nonstatutory stock options. The 2004 Plan may be administered, interpreted and
constructed by the Board of Directors or a compensation committee. The maximum
number of shares of common stock which may be issued pursuant to options granted
under the 2004 Plan may not exceed 2,000,000 shares. During 2005, the Company
issued options to purchase 1,125,000 shares of common stock. If any options
granted under the 2004 Plan expires or terminates without having been exercised
or ceased to be exercisable, such options will be available again under the 2004
Plan. All employees of the Company and its subsidiaries are eligible to receive
incentive stock options and nonstatutory stock options. Non-employee directors
and outside consultants who provided bona-fide services not in connection with
the offer or sale of securities in a capital raising transaction are eligible to
receive nonstatutory stock options. Incentive stock options may not be granted
below their fair market value at the time of grant or, if to an individual who
beneficially owns more than 10% of the total combined voting power of all stock
classes of the Company or a subsidiary, the option price may not be less than
110% of the fair value of the common stock at the time of grant. The expiration
date of an incentive stock option may not be longer than ten years from the date
of grant. Option holders, or their representatives, may exercise their vested
options up to three months after their employment termination or one year after
their death or permanent and total disability. The 2004 Plan provides for
adjustments upon changes in capitalization.

Equity Compensation Plan Information
<TABLE>
<CAPTION>

Heritage Worldwide Inc.             Number of securities      Weighted-average       Number of securities
2004 Stock Option Plan              to be issued upon         exercise price of      remaining available for
                                    exercise of outstanding   outstanding options,   future issuance under
                                    options, warrants,        warrants, and rights   equity compensation
                                    and rights                                       plans ( excluding
                                                                                     securities reflected in
                                                                                     column (a))

                                          (a)                        (b)                     (c)
<S>                                    <C>                          <C>                     <C>
Equity compensation plans
approved by security holders               -                          -                        -
Equity compensation plans not
approved by security holders           1,275,000                    $2.14                   725,000
                                       ---------                    -----                  --------
Total                                  1,275,000                    $2.14                   725,000
                                       ---------                    =====                  ========
</TABLE>


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We lease our headquarters, offices, and manufacturing facility from a real
estate holding company, SCI Lucas, in which we holds an interest of 38.05%
pursuant to the lease agreement. Milo Finance, S.A. holds an interest of
approximately 46% in SCI Lucas. Each lease expires in November 2009. The leases
are renewable automatically unless we cancel the leases six months prior to the
renewal date. We paid rent and incurred rental expense to SCI Lucas of
approximately $468,000 and $407,000 during fiscal 2007 and 2006 respectively.

At June 30, 2006 the Company had a non-interest bearing advance of approximately
$73,000 owed by SCI Lucas, which was repaid in fiscal 2007.

Milo Finance advanced approximately $160,000 to us during 2006. Milo Finance had
previously advanced to the Company approximately $610,000 prior to July 1, 2004.
Milo Finance contributed these advances of approximately $770,000 as an infusion
of capital in one of the Company's subsidiaries during 2006. This capital
infusion is accounted far as minority interest in the accompanying balance
sheet.


                                       27
<PAGE>

ITEM 13. EXHIBITS.

(a)(1) Financial Statements and Financial Statement Schedule.
All financial statement schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.

(a)(2) Exhibits:

        Exhibit No.            Description
        -----------            -------------------------------------------------
        2.1                    Agreement and Plan of Reorganization between
                               Heritage Productions, Inc. and Heritage
                               Worldwide, Inc. dated May 18, 2001.  Filed with
                               the SEC as Exhibit C to the Company's Definitive
                               Information Statement on Schedule 14C on June 21,
                               2001 and incorporated herein by reference.
        2.2                    Acquisition Agreement between Heritage Worldwide,
                               Inc., Poly Implants Protheses, S.A. and Milo
                               Finance, S.A. dated February 28, 2003.  Filed
                               with the SEC as Exhibit 2.1 to the Company's
                               Current Report on Form 8-K on March 13, 2003
                               and incorporated herein by reference.
        2.3                    Agreement and Plan of Merger dated as of October
                               9, 2003 between Heritage Worldwide, Inc., PIP
                               Acquisition II, Inc. and OS MXM, Inc.  Filed with
                               the SEC as Exhibit 2.3 to the Company's Annual
                               Report on Form 10-KSB on November 12, 2003
                               and incorporated herein by reference.
        3.1                    Certificate of Incorporation of the Company.
                               Filed with the SEC as Exhibit A to the Company's
                               Definitive Information Statement on Schedule 14C
                               on June 21, 2001 and incorporated herein by
                               reference.
        3.2                    By-Laws of the Company, as amended.  Filed with
                               the SEC as Exhibit B to the Company's Definitive
                               Information Statement on Schedule 14C on June 21,
                               2001 and incorporated herein by reference.
        10.1                   Stockholders' Agreement dated March 1, 2003
                               between Heritage Worldwide, Inc., GEM Global
                               Yield Fund, certain restricted stockholders and
                               Milo Finance, S.A. Filed with the SEC as Exhibit
                               10.1 to the Company's Current Report on Form 8-K
                               on March 13, 2003 and incorporated herein by
                               reference.
        10.2                   Registration Rights Agreement dated March 1, 2003
                               Heritage Worldwide, Inc. and GEM Global Yield
                               Fund.  Filed with the SEC as Exhibit 10.2 to the
                               Company's Current Report on Form 8-K on March 13,
                               2003 and incorporated herein by reference.
        10.3                   Form of Advisor Warrants dated March 1, 2003.
                               Filed with the SEC as Exhibit 10.4 to the
                               Company's Current Report on Form 8-K on March 13,
                               2003 and incorporated herein by reference.
        10.4                   Warrant Escrow Agreement dated March 1, 2003
                               between GEM Global Yield Fund, Heritage
                               Worldwide, Inc., Milo Finance, S.A. and Morrison
                               Cohen Singer & Weinstein, LLP. Filed with the SEC
                               as Exhibit 10.3 to the Company's Current Report
                               on Form 8-K on March 13, 2003 and incorporated
                               herein by reference.
        10.5                   Restricted Stock Escrow Agreement dated March 1,
                               2003 between GEM Global Yield Fund, Heritage
                               Worldwide, Inc., Milo Finance, S.A. and Kaplan
                               Gottbetter & Levenson, LLP. Filed with the SEC as
                               Exhibit 10.5 to the Company's Current Report on
                               Form 8-K on March 13, 2003 and incorporated
                               herein by reference.
        10.6                   Convertible Debenture Purchase Agreement dated
                               October 9, 2003 between OS MXM, Inc. and the
                               purchasers named therein.  Filed with the SEC as
                               Exhibit 10.6 to the Company's Annual Report on
                               Form 10-KSB on November 12, 2003 and incorporated
                               herein by reference.
        10.7                   Convertible Debenture issued to HEM Mutual
                               Assurance, LLC in principal amount of $498,750.
                               Filed with the SEC as Exhibit 10.7 to the
                               Company's Annual Report on Form 10-KSB on
                               November 12, 2003 and incorporated herein by
                               reference.

                                       28
<PAGE>

        10.8                   Convertible Debenture issued to HEM Mutual
                               Assurance, LLC in principal amount of $1,250.
                               Filed with the SEC as Exhibit 10.8 to the
                               Company's Annual Report on Form 10-KSB on
                               November 12, 2003 and incorporated herein by
                               reference.
        10.9                   Convertible Debenture issued to HEM Mutual
                               Assurance, LLC in principal amount of $500,000.
                               Filed with the SEC as Exhibit 10.9 to the
                               Company's Annual
                               Report on Form 10-KSB on November 12, 2003 and
                               incorporated herein by reference.
        10.10                  Senior Convertible Debenture Purchase Agreement
                               dated March 26, 2004 between Heritage Worldwide,
                               Inc. and the purchasers named therein. Filed with
                               the SEC as Exhibit 10.3 to the Company's
                               Quarterly Report on Form 10-QSB on May 28, 2004
                               and incorporated herein by reference.
        10.11                  Senior Convertible Debenture issued to Armadillo
                               Investments, Plc. in principal amount of
                               $3,000,000. Filed with the SEC as Exhibit 10.4 to
                               the Company's Quarterly Report on Form 10-QSB on
                               May 28, 2004 and incorporated herein by
                               reference.
        10.12                  Registration Rights Agreement dated March 26,
                               2004 between Heritage Worldwide, Inc. and
                               Armadillo Investments, Plc. Filed with the SEC as
                               Exhibit 10.4 to the Company's Quarterly Report on
                               Form 10-QSB on May 28, 2004 and incorporated
                               herein by reference.
        10.13*                 Amended and Restated Non-Exclusive Distribution
                               Agreement dated March 30, 2004 between Poly
                               Implants Protheses, S.A. and III Acquisition
                               Corp. Filed with the SEC as Exhibit 10.13 to the
                               Company's Annual Report on Form 10-KSB for the
                               fiscal year ending June 30, 2004 and incorporated
                               herein by reference.
        10.14*                 6.75% Revolving Promissory Note dated March 30,
                               2004 between Poly Implants Protheses, S.A. and
                               III Acquisition Corp.  Filed with the SEC as
                               Exhibit 10.14 to the Company's Annual Report on
                               Form 10-KSB for the fiscal year ending June 30,
                               2004 and incorporated herein by reference.
        10.15**                Employment Contract dated October 2, 2003 between
                               Poly Implants Protheses, S.A. and Mr. Claude
                               Couty. Filed with the SEC as Exhibit 10.15 to the
                               Company's Annual Report on Form 10-KSB for the
                               fiscal year ending June 30, 2004 and incorporated
                               herein by reference.
        14                     Code of Business Conduct and Ethics. Filed with
                               the SEC as Exhibit 10.15 to the Company's Annual
                               Report on Form 10-KSB for the fiscal year ending
                               June 30, 2004 and incorporated herein by
                               reference
        21                     List of Subsidiaries. Filed herewith.
        31.1                   Certification of Chief Executive Officer pursuant
                               to Section 302 of the Sarbanes-Oxley Act of 2002.
                               Filed herewith.
        31.2                   Certification of Chief Financial Officer pursuant
                               to Section 302 of the Sarbanes-Oxley Act of 2002.
                               Filed herewith.
        32                     Certifications pursuant to 18 U.S.C. Section
                               1350.  Filed herewith.
_______________________________________

*        Certain confidential information contained in the document has been
         omitted and filed separately with the Securities and Exchange
         Commission pursuant to Rule 406 of the Securities Act of 1933, as
         amended, or Rule 24b-2 promulgated under the Securities and Exchange
         Act of 1934, as amended.

**       Indicates a management contract or compensatory plan.


                                       29
<PAGE>


ITEM 14.  PRINCIPAL ACCOUNTANT AND SERVICES

The firm Sherb & Co., independent auditor, has audited our financial statements
for the years ended June 30, 2006 and 2007. The Board of Directors has appointed
Sherb & Co. to serve as our independent auditors since 2004 and to review our
quarterly financial reports for filing with the Securities and Exchange
Commission during fiscal year 2006 and 2007. The following table shows the fees
paid or accrued by us for the audit and other services provided by Sherb & Co.
for fiscal year 2006 and 2007.

                                         2007                2006
                                    ----------------    ----------------
Audit Fees (1)                      $       102,500     $        95,000
Audit-Related Fees                                -                   -
Tax Fees                                          -                   -
All Other Fees                                1,335               2,100
                                    ----------------    ----------------
Total                               $       103,835     $        97,100
                                    ================    ================

(1) Audit fees represent fees for professional services provided in connection
with the audit of our annual financial statements and review of our quarterly
financial statements and audit services provided in connection with other
statutory or regulatory filings.


         Pre-Approval of Non-Audit Services

The Company does not currently have an audit committee in place and thus,
management must obtain the specific prior approval of the Board of Directors for
each engagement of the independent auditor to perform any non-audit services
that exceed any pre-approved amounts determined by the Board of Directors.


                                       30
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on December 11, 2007.


                                    HERITAGE WORLDWIDE, INC.

                                   By:  /s/ Jean-Claude Mas
                                        ----------------------------------------
                                   Name:    Jean-Claude Mas
                                   Title:   Chief Executive Officer and Chairman


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature                   Title                                  Date

/s/ Jean Claude Mas         Chief Executive Officer         December 11, 2007
-------------------         and Chairman of the Board
Jean Claude Mas


/s/ Claude Couty            Director, Chief Financial       December 11, 2007
-------------------         Officer and General Manager
Claude Couty




                                       31
<PAGE>


                            HERITAGE WORLDWIDE, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm.....................F-2

Balance Sheet...............................................................F-3

Statements of Operations....................................................F-4

Statement of Stockholders' Equity (Deficit).................................F-5

Statements of Cash Flows....................................................F-6

Notes to Financial Statements.......................................F-7 to F-27

<PAGE>

To the Stockholders and Board of Directors of Heritage Worldwide Inc. and
Subsidiaries


We have audited the accompanying consolidated balance sheet of Heritage
Worldwide, Inc. and Subsidiaries as of June 30, 2007 and 2006 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.


We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Heritage Worldwide,
Inc. and Subsidiaries as of June 30, 2007 and 2006 and the results of their
operations and their cash flows for the years then ended, in conformity with U.
S. generally accepted accounting principles.


The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred
significant losses and has a working capital deficiency as more fully described
in Note 3. These issues among others raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

                                                   /s/ Sherb & Co., LLP
                                               ---------------------------------
                                                       Sherb & Co., LLP


New York, New York
September 18, 2007

<PAGE>
                  HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                                June 30, 2007


                                    ASSETS
<TABLE>
<CAPTION>

Current Assets:
<S>                                                               <C>
  Cash                                                            $       200,058
  Accounts receivable, net of an allowance for doubtful accounts
    of $ 274,216 and allowance for product returns of $594,614          7,405,965
  Inventories, net of allowance for obsolescence of $531,040            4,237,549
  Prepaid expenses and other current assets                               813,456
                                                                   ---------------
     Total current assets                                              12,657,028

Property and equipment, net of accumulated depreciation
 of $3,879,590                                                          1,898,382
Goodwill                                                                1,178,368
Investment in SCI Lucas                                                   673,176
Other assets                                                              114,151
                                                                   ---------------
     Total assets                                                  $   16,521,105
                                                                   ===============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Lines of credit                                                  $    2,158,274
  Accounts payable and accrued expenses                                 5,779,808
  Current portion of capitalized lease obligations                        217,640
  Current portion of long term debt                                       288,984
  Reserve for product replacements                                        152,673
                                                                   ---------------
     Total current liabilities                                          8,597,379

Convertible debentures, net of discount of $694,954                     2,305,046
Convertible debentures and related accrued interest payable,
  net of discount of $73,456-related party                                962,585
Capitalized lease obligations, net of current portion                     347,131
Long term debt, net of current portion                                    498,789
                                                                   ---------------
     Total liabilities                                                 12,710,930
                                                                   ---------------
Minority interest                                                         869,479
                                                                   ---------------
Stockholders' Equity:
  Common stock; $.001 par value, 50,000,000 shares authorized,
    18,160,299 issued and 17,410,299 outstanding                           17,411
  Additional paid-in capital                                            6,185,235
  Accumulated other comprehensive income                                2,498,293
  Accumulated deficit                                                  (5,760,243)
                                                                   ---------------
     Total stockholders' equity                                         2,940,696
                                                                   ---------------
     Total liabilities and stockholders' equity                    $   16,521,105
                                                                   ===============
</TABLE>


                 See Notes to Consolidated Financial Statements.

                                      -F3-
<PAGE>

                HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS



                                                  For the year ended
                                                        June 30,
                                             ------------------------------
                                                 2007            2006
                                             --------------  --------------
Revenues                                     $  15,416,133   $  15,269,330

Cost of revenues                                 7,382,750       6,818,343
                                             --------------  --------------

     Gross profit                                8,033,383       8,450,987
                                             --------------  --------------

Operating expenses:
  Selling, general and administrative            8,453,885       5,663,352
  Research and development                       1,264,044       1,519,312
                                             --------------  --------------

     Total operating expenses                    9,717,929       7,182,664
                                             --------------  --------------


Operating (loss) income                         (1,684,546)      1,268,323
                                             --------------  --------------

Other expenses:
  Gain in equity investment                         48,979          44,520
  Interest expense-related party                  (172,699)       (251,115)
  Interest expense                                (431,162)       (388,769)
                                             --------------  --------------

     Total other expenses                         (554,882)       (595,364)
                                             --------------  --------------


(Loss) Income before minority interest          (2,239,428)        672,959

Minority interest                                   72,777         (66,046)
                                             --------------  --------------

Net (loss) income                               (2,166,651)        606,913

Other comprehensive income, net of taxes
  Foreign currency translation adjustment          666,312         284,579
                                             --------------  --------------

     Comprehensive (loss) income             $  (1,500,339)  $     891,492
                                             ==============  ==============

Basic net income(loss) per common share      $       (0.12)  $        0.03
                                             ==============  ==============

Basic weighted average common
shares outstanding                              17,410,299      17,410,299
                                             ==============  ==============

Diluted net loss per share                   $       (0.12)  $        0.03
                                             ==============  ==============

Diluted weighted average common shares
 outstanding                                    17,410,299      17,421,643
                                             ==============  ==============



                 See Notes to Consolidated Financial Statements.

                                      -F4-
<PAGE>

<TABLE>
<CAPTION>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME (LOSS)
                   FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

                                                                                      Accumulated
                                                                      Additional         Other
                                                           Common     Paid-In        Comprehensive    Accumulated
                                             Shares         Stock     Capital           Income         Deficit         Total
                                         --------------- ------------ ------------- ---------------- -------------- -------------
<S>             <C>                          <C>              <C>        <C>              <C>            <C>            <C>

Balance at July 1, 2005                      17,410,299  $    17,411  $  5,686,193  $     1,547,402  $ (4,200,505)  $  3,050,501

Fair value of options issued                          -            -       124,375                -              -       124,375
Net income                                            -            -             -                -       606,913        606,913
Foreign currency translation adjustments              -            -             -          284,579              -       284,579
                                         --------------- ------------ ------------- ---------------- -------------- -------------
Balance at June 30, 2006                     17,410,299       17,411     5,810,568        1,831,981     (3,593,592)    4,066,368

Fair value of options issued                          -            -       374,667                -              -       374,667
Net income                                            -            -             -                -     (2,166,651)   (2,166,651)
Foreign currency translation adjustments              -            -             -          666,312              -       666,312
                                         --------------- ------------ ------------- ---------------- -------------- -------------
Balance at June 30, 2006                     17,410,299  $    17,411  $  6,185,235  $     2,498,293  $  (5,760,243) $  2,940,696
                                         =============== ============ ============= ================ ============== =============
</TABLE>


                 See Notes to Consolidated Financial Statements.

                                      -F5-
<PAGE>

                  HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                          For the year
                                                           ended June 30,
                                                  -----------------------------
                                                      2007            2006
                                                  --------------  -------------
Cash flows from operating activities:
Net income (loss)                                  $ (2,166,651)     $ 606,913
Adjustments to reconcile net income loss to net
 cash used in operating activities:
   Interest expense related to debenture discount       481,293        482,543
   Depreciation and amortization                        870,147        657,701
   Fair value of options                                374,667        124,375
   Provision for doubtful accounts                     (218,867)      (763,835)
   Provision for returns                                404,108        201,523
   Provision for obsolescence- inventory                542,864              -
   Gain on equity investment                            (48,979)       (44,520)
   Minority interest                                    (72,777)        66,046
Change in operating assets and liabilities:
   Accounts receivable                                  (76,809)    (1,697,142)
   Inventories                                         (671,885)      (359,480)
   Prepaid expenses and other current assets              2,014              -
   Other assets                                         (37,388)       351,404
   Provision for product replacements                  (430,703)        85,731
   Accrued interest on convertible debentures             7,480        111,935
   Accounts payable and accrued expenses                348,978        452,231
                                                  --------------  -------------

Net cash (used in) provided by operating
 activities                                            (692,508)       275,425
                                                  --------------  -------------
Cash flows from investing activity:

   Purchases of property and equipment                 (551,288)      (204,172)
                                                  --------------  -------------

Net cash used in investing activities                  (551,288)      (204,172)
                                                  --------------  -------------

Cash flows from financing activities:
   Increase in lines of credit                        1,005,802         31,575
   Proceeds from long term debt                         109,319        521,601
   Repayment of long term debt                         (275,728)      (143,786)
   Repayment of capitalized lease obligations          (228,149)      (124,239)
   Increase (decrease) in due to related parties         73,634       (123,928)
                                                  --------------  -------------

Net cash provided by financing activities               684,878        161,223
                                                  --------------  -------------

Effect of exchange rate changes on cash                  63,467         21,050
                                                  --------------  -------------

(Decrease) increase in cash                            (495,451)       253,526

Cash, beginning of fiscal year                          695,509        441,983
                                                  --------------  -------------

Cash, end of fiscal year                          $     200,058   $    695,509
                                                  ==============  =============

Supplemental disclosures of cash flow information:
     Cash paid during the period for interest     $      97,464   $    103,054
                                                  ==============  =============

     Cash paid during the period for taxes        $           -   $          -
                                                  ==============  =============

Non-Cash Investing and Financing Activities:
  Acquisition of property and equipment financed
  with capitalized lease obligations              $           -   $     855,228
                                                  ==============  =============


                 See Notes to Consolidated Financial Statements.

                                      -F6-
<PAGE>


                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 1 - NATURE OF BUSINESS AND ACQUISITION

Heritage Worldwide, Inc. (the "Company") was incorporated in the State of
Delaware in 2001. The Company and its subsidiaries develop, manufacture, and
market breast and other body implants and body support products worldwide. The
Company maintains its production facility and headquarters in the Toulon
metropolitan area in Southern France. It also has a distribution facility in
Spain.

NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying consolidated financial statements present the results of
operations of the Company's French ("PIP France"), Spanish ("PIP Spain"), and US
("OS") subsidiaries for the years ended June 30, 2007 and 2006. All material
inter-company accounts and transactions between the Company and its subsidiaries
have been eliminated in consolidation.

The accompanying consolidated financial statements include the results of
operations of SCI Lucas, a real estate holding company, in which the Company
holds an interest of 38.05%. SCI Lucas owns the production facility and
headquarters in which the Company operates in Southern France. The results of
operations of SCI Lucas are accounted for using the equity method of accounting.
All material inter-company accounts and transactions between the Company and SCI
Lucas have been eliminated.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company used cash of
$692,508 for their operating activities during fiscal 2007. These conditions
raise substantial doubt about its ability to continue as a going concern.

As a result, our current operations are not an adequate source of cash to fund
future operations. Our ability to continue as a going concern is dependent upon
our ability to obtain the necessary financing to meet our obligations and repay
our liabilities when they become due and to generate profitable operations in
the future. We plan to continue to increase our revenues and provide for our
capital requirements through our lines of credit, however, we have no firm
commitments from any third party to provide such revenues or this financing and
we cannot assure you we will be successful in obtaining such commitments as
needed. There are no assurances that we will have sufficient funds to execute
our business plan, pay our obligations as they become due or generate positive
operating results.

                                      -F7-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of estimates

In preparing financial statements in conformity with accounting principles
generally accepted in the United States, management is required to make
estimates and assumptions that affect 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 reporting
period. Actual results will differ from those estimates. Significant estimates
during the periods include the allowance for doubtful accounts, allowance for
product returns, evaluation of obsolete inventory, the useful life of long-term
assets, such as property, plant and equipment and goodwill, and the accrual of
product replacement reserve.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.

Accounts receivable

Accounts receivable are reported at net realizable value. The Company has
established an allowance for doubtful accounts based upon factors pertaining to
the credit risk of specific customers, historical trends, and other information.
Delinquent accounts are written-off when it is determined that the amounts are
uncollectible. At June 30, 2007, the allowance for doubtful accounts was
approximately $274,000. Additionally, the Company has established an allowance
for product returns based upon factors pertaining to historical trends,
including, among other things, recent and historical return rates for both
specific products and distributors, the impact of any new product releases in a
new jurisdiction and projected economic conditions. At June 30, 2007, the
allowance for product returns was approximately $595,000.

Revenue recognition

The Company recognizes product revenue, net of estimated sales discounts and
provisions for returns, in accordance with Staff Accounting Bulletin No. 104,
"Revenue Recognition in Financial Statements" and SFAS No. 48 "Revenue
Recognition When Right of Return Exists." These statements established that
revenue can be recognized when persuasive evidence of an arrangement exists, the
product has been shipped, all significant contractual obligations have been
satisfied, the fee is fixed or determinable and collection is reasonably
assured.

From time to time, the Company enters in bill and hold arrangements. No bill and
hold arrangements were outstanding at June 30, 2007. Bill and hold arrangements
would have to meet the following criteria for revenue recognition:

     o    The risks of ownership passed to the buyer;

     o    The customer made a fixed commitment to purchase the breast implants,
          in writing;

                                      -F8-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     o    The buyer, not the Company, requested that the transaction be on a
          bill and hold basis. The buyer had a substantial business purpose for
          ordering the goods on a bill and hold basis-primarily its on lack of
          warehousing space;

     o    There is a fixed schedule for delivery of the goods. The dates for
          delivery are reasonable and are consistent with the buyer's business
          purpose;

     o    The Company did not retain any specific performance obligations such
          that the earning process is not complete;

     o    The ordered breast implants were segregated from the Company's
          inventory and were not subject to being used to fill other orders;

     o    The breast implants were complete and ready for shipment.

     o    The date by which the Company expect payment was not modified and the
          Company has not modified its normal billing and credit terms for this
          buyer;

     o    The Company's past experiences with and pattern of bill and hold
          transactions;

     o    The buyer has the expected risk of loss in the event of a decline in
          the market value of the breast implants;

     o    The Company's custodial risks are insurable and insured; and

     o    The business reasons for the bill and hold have not introduced a
          contingency to the buyer's commitment.

Stock options

Prior to January 1, 2006, the Company accounted for its stock-based compensation
plans under the recognition and measurement provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations, as permitted by SFAS No. 123, Accounting for
Stock-Based Compensation. The Company did not recognize compensation cost
related to stock options granted to its employees and non-employee directors
that had an exercise price equal to or above the market value of the underlying
common stock on the date of grant in its condensed consolidated statement of
income prior to January 1, 2006. Effective January 1, 2006, the Company adopted
the fair value recognition provisions of SFAS No. 123R, Share-Based Payment, and
related interpretations using the modified-prospective transition method. Under
that method, compensation cost recognized in the first quarter of 2006 includes
(a) compensation cost for all stock-based awards granted prior to, but not yet
vested as of January 1, 2006 based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123 and (b) compensation
cost for all stock-based awards granted on or subsequent to January 1, 2006,
based on the grant-date fair value estimated in accordance with the provisions
of SFAS No. 123R. Results for prior periods have not been restated. Prior to the
adoption of SFAS No. 123R, the Company never recognized tax benefits from
deductions resulting from the exercise of stock options because no options have
ever been recognized.


                                     -F9-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Pro Forma Information Under SFAS No. 123 for Periods Prior to January 1, 2006
The following table illustrates the effect on net earnings and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock-based awards for the year ended June 30, 2007 and 2006:

<TABLE>
<CAPTION>

                                                               Year ended             Year ended
                                                               June 30,               June 30,
                                                               2007                   2006
                                                               --------------         ------------
Net income (loss):
<S>                                                            <C>                    <C>
As reported                                                    $ (2,166,651)          $  606,913
Add: Total stock-based employee compensation included
in net income as reported, net of related tax effects                  -                    -
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of related tax effects                                 -                (123,813)
                                                               --------------         ------------

Pro forma                                                      $ (2,166,651)          $  483,100
                                                               ==============         ============

Basic earnings per share:
As reported                                                    $   (0.12)             $   0.03
                                                               ==============         ============

Pro forma                                                      $   (0.12)             $   0.03
                                                               ==============         ============

Diluted earnings per share:
As reported                                                    $   (0.12)             $   0.03
                                                               ==============         ============

Pro forma                                                      $   (0.12)             $   0.03
                                                               ==============         ============
</TABLE>

For purposes of the pro forma calculations, the fair value of each option was
estimated on the date of the grant using the Black-Scholes option-pricing model,
assuming no expected dividends, and the following assumptions: expected
volatility rate: 44%, risk-free interest rate: 3.7%, expected term: 3 years

At the date of the issuance of the options, the Company's common stock was
publicly-traded for less than 18 months and it was thinly-traded. Accordingly,
the Company estimated the expected volatility factor based upon the expected
volatility of similar publicly-traded companies. The approximate risk free
interest rate was based on the implied yield available on U.S. Treasury constant
maturities issues with remaining terms equivalent to the Company's expected
term. The expected term of the Company's stock options was based on the expected
term of services of the individuals who received the options.

                                     -F10-
<PAGE>

                   HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

As of June 30, 2007, the unrecognized compensation costs related to non-vested
awards amounted to approximately $89,000, which will be recognized over the next
14 months.

The Company recognized a compensation expense of approximately $375,000 and
$124,000 during the fiscal year ending June 30, 2007 and 2006, respectively, in
connection with all options outstanding.

Foreign currency translation

For foreign operations with the local currency as the functional currency,
assets and liabilities are translated from the local currencies into U.S.
dollars at the exchange rate prevailing at the balance sheet date. Revenues,
expenses and cash flows are translated at the average exchange rate for the
period to approximate translation at the exchange rate prevailing at the dates
those elements are recognized in the financial statements. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining comprehensive
loss. As of June 30, 2007, the exchange rate for the Euros (EUR) was $1.35 U.S.
for 1.00 EUR.

The functional currency of the Company's French and Spanish subsidiaries is the
local currency. The financial statements of the subsidiary are translated to
U.S. dollars using period-end rates of exchange for assets and liabilities, and
the average rate of exchange for the period for revenues, costs, and expenses.
Net gains and losses resulting from foreign exchange transactions are included
in the consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost or market, cost determined by the
first-in, first-out (FIFO) method. The Company writes down its inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory and the estimated market value based upon assumptions
about future demand and market conditions. The Company writes down inventory
during the period in which such products are no longer marketable in any of
their markets due to governmental regulations as well as inventory which matures
within the next three months of the measurement date.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is recorded on the straight-line basis over the
estimated useful lives of the assets, which range from three to ten years.
Amortization of leasehold improvements and capital leases is recorded over the
shorter of the straight-line basis over the estimated useful life or the lease
term of the asset. Normal maintenance and repairs of property and equipment are
expensed as incurred while renewals, betterments and major repairs that
materially extend the useful life of property and equipment are capitalized.
Upon retirement or disposition of property and equipment, the asset and related
accumulated depreciation or amortization is removed from the accounts and any
resulting gain or loss is charged to operations.

                                     -F11-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Goodwill

Goodwill represents the excess of costs over fair value of assets of businesses
acquired. In June 2001, the Financial Accounting Standards Board ("FASB")
approved the issuance of Statement of Financial Accounting Standards ("SFAS")
No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets." These standards require that all business combinations
initiated after December 31, 2001 be accounted for using the purchase method. In
addition, all intangible assets acquired that are obtained through contractual
or legal right, or are capable of being separately sold, transferred, licensed,
rented or exchanged shall be recognized as an asset apart from goodwill.
Goodwill and intangibles with indefinite lives will no longer be subject to
amortization, but will be subject to at least an annual assessment for
impairment by applying a fair value based test.

The Company's goodwill at June 30, 2007 results from its 2002 acquisition of its
Spain subsidiary. Management has established that based on future cash flows
generated from its Spanish operations, the Company's goodwill at June 30, 2007
is not impaired.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recovered. In such circumstances, the Company will estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future outflows expected to be necessary to
obtain those inflows. If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the asset, the
Company will recognize an impairment loss to adjust to the fair value of the
asset. At June 30, 2007, the Company believes that there has been no impairment
of its long-lived assets.

Investment

The Company's investment is reported on the equity method of accounting. Under
this method the initial investment is recorded at cost. Subsequently, the
investment is increased or decreased to reflect the Company's share of income,
losses and dividends paid.

Income Taxes

The Company uses the liability method for income taxes as required by SFAS No.
109 "Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax basis of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Valuation allowances are established when
it is more likely than not that the deferred tax assets will not be realized.

                                     -F12-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Shipping and Handling Costs

Shipping and handling costs are included in cost of revenues in accordance with
guidance established by the Emerging Issues Task Force, issue No. 00-10,
"Accounting for Shipping and Handling Costs."

Research and Development

Research and development costs are charged to operations as incurred and
consists primarily of salaries and related benefits, raw materials and supplies.

Income (Loss) per Share

The Company presents basic income (loss) per share and, if appropriate, diluted
earnings per share in accordance with the provisions of SFAS No. 128 "Earnings
per Share" ("SFAS 128").

Under SFAS 128, basic net income (loss) per share is computed by dividing the
net income (loss) for the year by the weighted average number of common shares
outstanding during the year. Diluted net income per share is computed by
dividing the net income for the year by the weighted average number of common
shares and common share equivalents outstanding during the year. The Company has
725,000 options outstanding at June 30, 2007. Additionally, the Company may have
to issue up to 2,220,512 shares upon conversion of certain convertible
debentures. All common stock equivalents outstanding during fiscal 2007 are
antidilutive.

                                                     2007                2006
Numerator:
Net income (loss)                               ($ 2,166,651)        $  606,913
                                                =============        ===========
Denominator:
Denominator for basic earnings per share-
Weighted average shares outstanding               17,410,299         17,410,299
Effect of dilutive employee stock options             -                  10,175
Denominator for diluted earnings per share-
Weighted average shares outstanding               17,410,299         17,421,643

Basic earnings per share                               $0.12              $0.03
                                                       =====              ======
Diluted earnings per share                             $0.12              $0.03
                                                       =====              ======

                                     -F13-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash, accounts
receivable, lines of credit and accounts payable and accrued expenses
approximate fair value at June 30, 2007 because of the relatively short maturity
of the instruments. The carrying value of capitalized lease obligations,
long-term debt, and convertible debentures approximate fair value at June 30,
2007 based upon terms available for companies under similar arrangements.

New Accounting Pronouncements

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering
the Effects of Prior Year Misstatements when quantifying Misstatements in
Current Year Financial Statements ("SAB 108"). SAB 108 requires companies to
evaluate the materiality of identified unadjusted errors on each financial
statement and related financial statement disclosure using both the rollover
approach and the iron curtain approach, as those terms are defined in SAB 108.
The rollover approach quantifies misstatements based on the amount of the error
in the current year financial statement, whereas the iron curtain approach
quantifies misstatements based on the effects of correcting the misstatement
existing in the balance sheet at the end of the current year, irrespective of
the misstatement's year(s) of origin. Financial statements would require
adjustment when either approach results in quantifying a misstatement that is
material. Correcting prior year financial statements for immaterial errors would
not require previously filed reports to be amended. If a Company determines that
an adjustment to prior year financial statements is required upon adoption of
SAB 108 and does not elect to restate its previous financial statements, then it
must recognize the cumulative effect of applying SAB 108 in fiscal 2006
beginning balances of the affected assets and liabilities with a corresponding
adjustment to the fiscal 2006 opening balance in retained earnings. SAB 108 is
effective for interim periods of the first fiscal year ending after November 15,
2006. The adoption of SAB 108 did not have an impact on the Company's
consolidated financial statements.

In September 2006, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. Earlier
application is permitted provided that the reporting entity has not yet issued
financial statements for that fiscal year. Management believes that, for the
foreseeable future, this Statement will have no impact on the financial
statements of the Company once adopted.

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, ("FIN 48"), entitled, "Accounting for Uncertainty in

                                     -F14-
<PAGE>

                   HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Income Taxes - an Interpretation of FASB Statement No. 109". Concurrently, FASB
issued a FASB staff position (FSP) relating to income taxes, (FSP) No. FAS 13-2,
"Accounting for a Change or Projected Change in the Timing of Cash Flows
Relating to Income Taxes Generated by a Leveraged Lease Transaction." FASB's
summary of FIN 48 notes that differences between tax positions recognized in the
financial statements and tax positions taken in the tax return (referred to
commonly as "book" vs. "tax") will generally result in: (a) an increase in a
liability for income taxes payable or a reduction of an income tax refund
receivable, (b) a reduction in a deferred tax asset or an increase in a deferred
tax liability, or (c) both of the above. FIN 48 requires the affirmative
evaluation that it is more likely than not, based on the technical merits of a
tax position, that an enterprise is entitled to economic benefits resulting from
positions taken in income tax returns. Further, if a tax position does not meet
the more-likely-than-not recognition threshold, the benefit of that position is
not recognized in the financial statements. Additionally, FIN 48 establishes
guidance for "derecognition" of previously recognized deferred tax items, and
sets forth disclosure requirements. The effective date of FIN 48 is for fiscal
years beginning after December 15, 2006. The Company does not believe that, for
the foreseeable future, FIN 48, once adopted, will have a significant impact on
its financial position, operating results, or cash flows.

In February 2007, the FASB issued FASB Statement No. 159 "The Fair Value Option
for Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115". This Statement permits entities to choose to measure many
financial instruments and certain other items 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. This Statement is expected to expand the use of fair value
measurement, which is consistent with the FASB's long-term measurement
objectives for accounting for financial instruments. This Statement applies to
all entities, including not-for-profit organizations. Most of the provisions of
this Statement apply only to entities that elect the fair value option.

However, the amendment to FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," applies to all entities with
available-for-sale and trading securities. Some requirements apply differently
to entities that do not report net income. The following are eligible items for
the measurement option established by this Statement:

     1. Recognized financial assets and financial liabilities except:

          a)   An investment in a subsidiary that the entity is required to
               consolidate;

          b)   An interest in a variable interest entity that the entity is
               required to consolidate;

          c)   Employers' and plans' obligations (or assets representing net
               overfunded positions) for pension benefits, other postretirement
               benefits (including health care and life insurance benefits),
               postemployment benefits, employee stock option and stock purchase
               plans, and other forms of deferred compensation arrangements, as
               defined in FASB Statements No. 35, "Accounting and Reporting by
               Defined Benefit Pension Plans", No. 87, "Employers' Accounting
               for Pensions", No. 106, "Employers' Accounting for Postretirement
               Benefits Other Than Pensions", No. 112, "Employers' Accounting
               for Postemployment

                                     -F15-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

               Benefits", No. 123 (revised December 2004), "Share-Based
               Payment", No. 43, "Accounting for Compensated Absences", No. 146,
               "Accounting for Costs Associated with Exit or Disposal
               Activities", and No. 158, "Employers' Accounting for Defined
               Benefit Pension and Other Postretirement Plans", and APB Opinion
               No. 12, "Omnibus Opinion--1967";

          d)   Financial assets and financial liabilities recognized under
               leases as defined in FASB Statement No. 13, "Accounting for
               Leases" (This exception does not apply to a guarantee of a
               third-party lease obligation or a contingent obligation arising
               from a cancelled lease.);

          e)   Deposit liabilities, withdrawable on demand, of banks, savings
               and loan associations, credit unions, and other similar
               depository institutions;

          f)   Financial instruments that are, in whole or in part, classified
               by the issuer as a component of shareholder's equity (including
               "temporary equity"). An example is a convertible debt security
               with a noncontingent beneficial conversion feature.

     2. Firm commitments that would otherwise not be recognized at inception and
     that involve only financial instruments;

     3. Nonfinancial insurance contracts and warranties that the insurer can
     settle by paying a third party to provide those goods or services; and

     4. Host financial instruments resulting from separation of an embedded
     nonfinancial derivative instrument from a nonfinancial hybrid instrument.

The fair value option established by this Statement permits all entities to
choose to measure eligible items at fair value at specified election dates. A
business entity shall report unrealized gains and losses on items for which the
fair value option has been elected in earnings (or another performance indicator
if the business entity does not report earnings) at each subsequent reporting
date. A not-for-profit organization shall report unrealized gains and losses in
its statement of activities or similar statement.

The fair value option:

     o   May be applied instrument by instrument, with a few exceptions, such as
         investments otherwise accounted for by the equity method
     o   Is irrevocable (unless a new election date occurs)
     o   Is applied only to entire instruments and not to portions of
         instruments.

This Statement is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, "Fair
Value Measurements". No entity is permitted to apply this Statement
retrospectively to fiscal years preceding the effective date unless the entity
chooses early adoption. The choice to adopt early should be made after issuance
of this Statement but within 120 days of the beginning of the fiscal year of
adoption, provided the entity has not yet issued financial statements, including
required notes to those financial statements, for any interim period of the
fiscal year of adoption. This Statement permits application to eligible items

                                     -F16-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

existing at the effective date (or early adoption date).

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.

Provision for returns

In the normal course of business, the Company does not provide stock-balancing
or price protection rights to its distributors; however, on a non-recurring
basis, it has historically accepted product returns. The Company estimates its
provision for product returns to amount to approximately $595,000 at June 30,
2007. Management establishes provisions for estimated returns concurrently with
the recognition of revenue. The provisions are established based upon
consideration of a variety of factors, including, among other things, recent and
historical return rates for both specific distributors and projected economic
conditions.

Provision for Product Replacements

The Company provides a product replacement program on its products. The Company
provides an accrual for the estimated cost of product replacement and product
liability claims at the time revenue is recognized. Such accruals are based on
estimates, which are based on relevant factors such as historical experience,
the warranty period, estimated replacement costs, identified product quality
issues and are discounted to a current value. Management estimated the amount of
potential future product replacement claims based on statistical analysis.
Changes to actual claims and interest rates could have a material impact on the
statistical calculation which could materially impact the Company's reported
expenses and results of operations.

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash and
cash equivalents and accounts receivable. The Company maintains accounts with
French financial institutions, which at times exceeds the insured French
statutory limit of approximately $150,000. The Company minimizes its credit
risks associated with cash by periodically evaluating the credit quality of its
primary financial institutions. The Company's accounts receivables are due from
surgeons in France and from distributors in all other countries in which it
markets its products. The Company does not require collateral to secure its
accounts receivables. However, the Company regularly insures a proportion of its
accounts receivable through a financial institution.

At June 30, 2007, the financial institution insured approximately $2.6 million
of the Company's accounts receivables. Two of the Company's customers accounted
for approximately 19% and 10%, respectively, of its gross accounts receivable at
June 30, 2007. No other customers accounted for more than 10% of its net
accounts receivables.

                                     -F17-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Product Concentration Risk

Substantially all of the Company's revenues derive from the sale of breast
implants.

Supplier Concentration Risk

One of the Company's suppliers procures titanium which is used as coating in
certain of the Company's breast implants. The agreement with this supplier
terminates in 2009. The Company cannot guarantee that it will be able to renew
such agreement on acceptable terms, or if unable to renew the agreement, that it
will secure the procurement of such titanium from other suppliers on similar
terms, if at all.

Customers Concentration Risk

Two of the Company's customers accounted for 14% and 12%, respectively, of its
revenues during fiscal 2007. Two of the Company's customers accounted for 22%
and 12% of its revenues, respectively, during fiscal 2006.

Reclassifications

Certain items in the prior years' consolidated financial statements have been
reclassified to conform to the current year presentation.

NOTE 4 - INVENTORIES

Inventories at June 30, 2007 consist of the following:

Finished goods                                        $ 3,060,738
Work-in-process                                         1,261,310
Raw materials                                             446,541
                                                      ------------
                                                        4,768,589
Provision for obsolescence                               (531,040)
                                                      ------------
                                                      $ 4,237,549
                                                      ============

                                     -F18-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007


NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment and related accumulated depreciation at June 30, 2007
consist of the following:


Tenant improvements                                  $   122,375
Machinery and equipment                                5,016,193
Office equipment                                         248,275
Transportation equipment                                 164,954
Software                                                 226,175
                                                      -----------
                                                       5,777,972
Accumulated depreciation                              (3,879,590)
                                                      -----------
Property and equipment, net                           $1,898,382
                                                      ===========

Depreciation expense amounted to approximately $870,000 and $658,000 during 2007
and 2006, respectively.

NOTE 6 - INVESTMENTS

At June 30, 2007, the Company has a 38.05% investment in SCI Lucas, a related
French real estate company. The equity in income of the investee amounted to
approximately $49,000 and $44,000 during fiscal 2007 and 2006, respectively. SCI
Lucas leases its facilities to the Company, which is the sole tenant. The leases
expire in November 2009. The leases are renewable automatically unless the
Company cancels the leases nine months prior to the renewal date.

During fiscal 2007, SCI Lucas reimbursed a non-interest bearing advance of
approximately $74,000 to the Company. The Company incurred rental expense and
paid rent to SCI Lucas in amounts aggregating approximately $468,000 and
$407,000 during fiscal 2007 and 2006, respectively.

NOTE 7 - LONG TERM DEBT

The Company's long term debt consists of various notes payable with outstanding
principal amounts ranging from approximately $60,000 to $320,000, with variable
interest rates, based on the EURIBOR plus 1.6% to 2.5%, ranging from 5.3% to
6.4% per year at June 30, 2007, with due dates between April 2010 and December
2012. In addition, the Company has received non-interest bearing advances from
ANVAR, an agency of the French government, which finances or subsidizes certain
research and development projects. If the research does not result in a
commercially feasible product and certain other conditions are met, the Company
will not have to repay some or all of the advances. The Company is currently
unable to determine whether the research associated with the advance will result
in a commercially feasible product and does not anticipate knowing the outcome
of such research efforts in the foreseeable future. Accordingly, the Company
includes the advances in the long-term portion of its debt.

                                     -F19-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 7 - LONG TERM DEBT  (continued)
Long-term debt consists of the following at June 30, 2007

                                       Notes Payable    $          679,665
                                      ANVAR Advances               108,108
                                                                 ----------
                                                                   787,773
                              Less:  Current Portion             ( 288,984)
                                                                 ----------
              Long term debt, net of current portion             $ 498,789
                                                                 ==========

The aggregate maturities of long-term debt at June 30, 2007 are as follows:

        June  30,
        ---------
          2008                $  288,984
          2009                   184,703
          2010                   181,019
          2011                    82,542
          2012 and thereafter     50,525
                              ----------
                              $  787,773
                              ==========

NOTE 8 - CONVERTIBLE DEBENTURES

On October 9, 2003, OSMXM "OS", Inc., one of the Company's subsidiaries, entered
into a convertible debentures purchase agreement (the "Agreement") with HEM
Mutual Assurance, LLC ("HEM") to sell $1,000,000 of 1% convertible debentures
due on October 9, 2008. Interest accrues from the date of the transaction and is
payable in cash or common stock, at the option of the debenture holder. In the
event of default, as defined in the Agreement, interest shall accrue at 15% per
annum. The conversion price for one convertible debenture amounting to $498,750
shall be the lesser of (a) $1.25 or (b) 100% of the average three lowest closing
bid prices during the last forty trading days immediately preceding the
conversion. The conversion price for one convertible debenture amounting to
$500,000 shall be the lesser of (a) $1.56 or (b) 100% of the average three
lowest closing bid prices during the last forty trading days immediately
preceding the conversion. The conversion price for one convertible debenture
amounting to $1,250 is $0.001. As part of the Agreement, OS is required to
maintain a common stock escrow account with 10,000,000 unrestricted,
free-trading shares of common stock. As part of the Company's merger with OS on
October 9, 2003, the Company assumed all the obligations and responsibilities of
the Agreement. In return for issuing the debentures to HEM, the Company received
$500,000 in December 2003 and the remaining $500,000 on January 9, 2004.

                                     -F20-
<PAGE>

                   HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 8 - CONVERTIBLE DEBENTURES (continued)

On September 9, 2005, Eurofortune Holding, S.A. ("Eurofortune"), an entity
affiliated with the Company's former chief executive officer purchased three
convertible debentures from HEM. Simultaneously, Eurofortune exchanged the three
debentures for two convertible debentures issued by the Company each having an
aggregate principal amount of $500,000. The outstanding principal amount and
accrued interest at the rate of 1% per annum of the debentures is due and
payable on October 9, 2008. The conversion prices of the debentures are fixed at
$1.25 and $1.56. Additionally, the 10 million unrestricted free-trading shares
of the Company's common stock held in escrow were returned to the treasury.

The convertible debentures initially issued to HEM contain an imbedded
beneficial conversion feature since the fair market value of the common stock
exceeds the most beneficial exercise price on the debenture issuance date. The
value was computed as $1,000,000, which will be amortized over the respective
term of the debentures. During fiscal 2007 and 2006, the amortization of the
debt discount amounted to approximately $152,000 and $205,000, respectively, and
has been included in interest expense in the accompanying consolidated financial
statements. Accrued interest associated with the convertible debentures amounted
to approximately $36,000 at June 30, 2007.

In April 2004, the Company sold its Senior Convertible Debenture (the
"Debenture") in the face amount of $3,000,000 to Armadillo Investments, PLC. In
consideration for the Debenture, the Company received 1,595,745 ordinary shares
of Armadillo Investments. The Company immediately sold these shares for
approximately $1,420,000. The Debenture does not bear interest. In the event of
default, as defined under the Debenture. The Debenture accrues interest at the
rate of 10% per annum. The Debenture matures on March 25, 2009. The Debenture is
convertible into our common stock at a conversion price per share of (a) four
dollars ($4.00) (the "Fixed Conversion Price") or (b) eighty percent (80%) of
the lowest closing bid price for the Common Stock in the ten (10) business days
preceding the date of conversion, but in no event less than fifty percent (50%)
of the Fixed Conversion Price (the "Floating Conversion Price").

For purposes of determining the closing bid price on any day, reference shall be
the closing bid price for a share of Common Stock on such date on the OTC
Bulletin Board, as reported on Bloomberg, L.P. (or similar organization or
agency succeeding to its functions of reporting prices). The Company granted
piggyback registration rights with respect to the common stock into which the
Debenture is convertible. The Company is required to maintain in escrow 750,000
shares of common stock upon conversion of the Debenture.

The difference between the face amount of the Debenture and the proceeds
generated from the shares received in exchange of the Debentures amounted to
approximately $1,580,000 and has been recorded as a debt discount. Such debt
discount is amortized over the term of the Debenture. During fiscal 2007 and
2006, the amortization of the debt discount amounted to approximately $329,000
and $278,000, respectively, and has been included in interest expense in the
accompanying financial statements.

                                     -F21-
<PAGE>


                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 9 - INCOME TAXES -

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the net deferred taxes at June 30, 2007 are as follows:

Deferred tax assets:
Net operating loss carryforward           $      1,820,000
Allowance for product returns and
bad debt                                           340,000
Allowance for obsolete inventory                   175,000
Unrecognized revenues                              315,000
Other                                              (10,000)
Less valuation allowance                       ( 2,640,000)
                                          -----------------
Total net deferred tax assets:            $              -
                                          =================

SFAS No. 109 requires a valuation allowance, if any, to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Management has determined that a valuation allowance of $ 2,640,000 at June 30,
2007 is necessary to reduce the deferred tax assets to the amount that will more
likely than not be realized. The change in the valuation allowance for 2007 and
2006 was approximately $434,000 and $10,000, respectively.

At June 30, 2007, the Company had net operating loss carryforwards amounting to
approximately $0.8 million and $4.7 million for U.S. and French tax purposes,
respectively, that expire in various amounts from 2021 through 2026 in the U.S.
and never expire in France.

The federal statutory tax rate reconciled to the effective tax rate for 2007 and
2006, respectively, is as follows:

                                                        2007               2006
                                                       ------             ------
Tax at U.S statutory rate:                              35.0%              35.0%
State tax rate, net of federal benefits                  0.0                0.0
Foreign tax rate  in excess of U.S. statutory
 tax rate                                                0.0                0.0
Change in valuation allowance                          (35.0)             (35.0)
                                                       ------             ------
Effective tax rate                                       0.0%               0.0%
                                                       ======             ======
NOTE 10 - LINES OF CREDIT

The Company entered into lines of credit agreements with two financial
institutions up to the aggregate amount of approximately $5.0 million. The
Company has used approximately $2.2 million under such lines of credit at June
30, 2007. The lines of credit bear interest at the EURIBOR rate plus 2.0% to
3.7% at June 30, 2007. The outstanding principal balance plus any interest is
payable on demand and is secured by accounts receivables of approximately $7.4
million and inventories of approximately $4.2 million.

                                     -F22-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 10 - LINES OF CREDIT (continued)

Effective March 31, 2004, concurrent with an amended distribution agreement, the
Company issued to a distributor a revolving promissory note for certain sums to
come due to Medicor based on Medicor's and the manufacturer's administration of
product replacement claims. The note bears interest at the rate of 6.75% per
annum. The principal amount under the note as of June 30, 2007 was $0. The
distribution is presently under bankruptcy proceedings. During August 2007, the
distribution claimed that the Company owes $4.8 million under the promissory
note. The Company disputes that it presently owes the distributor the $4.8
million claimed to be due under the amended distribution agreement and has
sought substantiation for such amount by requesting information from the
distributor. To date, the distributor has not provided the information
requested. The Company has notified the distributor that it is in default under
the amended distribution agreement and has terminated such agreement in May
2007.

In this regard, the Company will be seeking information from the distributor to
determine whether the distributor has acted in compliance with its obligations
under the amended distribution agreement.

The Company believes that it has incurred significant damages in excess of the
$4.8 million claimed to be due to the distributor because of the distributor's
breach of its obligations under the amended distribution agreement. The Company
has provided for a provision for such claims aggregating $1.7 million at June
30, 2007, as reflected in accounts payable and accrued expenses in the
accompanying balance sheet.

NOTE 11 - STOCK OPTIONS

In July 2004, the Board of Directors adopted the Heritage Worldwide, Inc. 2004
Stock Option Plan (the "2004 Plan"). The Company intends to attract and retain
employees and valuable contractors by allowing them an additional incentive to
promote the financial success of the Company.

The 2004 Plan allows for the grant of both incentive stock options and
nonstatutory stock options. The 2004 Plan may be administered, interpreted and
constructed by the Board of Directors or a compensation committee. The maximum
number of shares of common stock which may be issued pursuant to options granted
under the 2004 Plan may not exceed 2,000,000 shares. During July 2004, the
Company issued 1,175,000 options. If any options granted under the 2004 Plan
expires or terminates without having been exercised or ceased to be exercisable,
such options will be available again under the 2004 Plan. All employees of the
Company and its subsidiaries are eligible to receive incentive stock options and
nonstatutory stock options. Non-employee directors and outside consultants who
provided bona-fide services not in connection with the offer or sale of
securities in a capital raising transaction are eligible to receive nonstatutory
stock options. Incentive stock options may not be granted below their fair
market value at the time of grant or, if to an individual who beneficially owns
more than 10% of the total combined voting power of all stock classes of the
Company or a subsidiary, the option price may not be less than 110% of the fair
value of the common stock at the time of grant. The expiration date of an

                                     -F23-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 11 - STOCK OPTIONS (continued)

incentive stock option may not be longer than ten years from the date of grant.
Option holders, or their representatives, may exercise their vested options up
to three months after their employment termination or one year after their death
or permanent and total disability. The 2004 Plan provides for adjustments upon
changes in capitalization.

A summary of the activity during 2007 and 2006 of the Company's stock option
plan is presented below:

<TABLE>
<CAPTION>

                                                         Weighted
                                                     Average Exercise   Weighted Average    Aggregate
                                         Options          Price         Contractual Terms   Intrinsic Value
                                        ----------- ------------------ ------------------- -----------------
<S>                                      <C>              <C>                  <C>             <C>
Outstanding at July 1, 2005              1,175,000  $     2.16

Granted                                       -            -
Exercised                                     -            -
Expired                                    (50,000) $     2.20
Outstanding at June 30, 2006             1,125,000  $     2.16                 8.02        $   952,000

Granted                                       -
Exercised                                     -
Expired                                       -
Canceled                                  (400,000) $     2.20
Outstanding at June 30, 2007               725,000  $     2.14

Vested and exercisable at June 30, 2006       -     $      -                    -          $      -
Vested and exercisable at June 30, 2007       -     $      -                    -          $      -
</TABLE>

The weighted average remaining contractual life and weighted average exercise
price of options outstanding at June 30, 2007 for selected exercise price
ranges, is as follows:

<TABLE>
<CAPTION>

---------------------------- -------------------------- -------------------------- --------------------------
 Range of exercise prices        Number of options          Weighted average           Weighted average
                                                          remaining contractual         exercised price
                                                                  term
---------------------------- -------------------------- -------------------------- --------------------------
<S>       <C>                         <C>                         <C>                       <C>
          $ 0.55                      25,000                      7.75                      $ 0.55
---------------------------- -------------------------- -------------------------- --------------------------
          $ 2.20                      700,000                     7.00                      $ 2.20
---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>

                                     -F24-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 12 - CAPITALIZED LEASE OBLIGATIONS

The Company leases certain machinery, computer equipment and transportation
equipment under various capital leases expiring between July 2008 and April
2011. The leases provide for monthly payments ranging between $1,434 and $14,050
at an implicit interest rate of 5% per annum. The assets and liabilities under
the capital lease are recorded at lease inception at the lower of the present
value of the minimum lease payments or the fair market value of the related
assets. The asset is depreciated over its estimated useful life. The schedule of
future minimum payments under capital lease is as follows:

Years Ending
   June 30,
     2008 ..................................            $ 238,804
     2009 ..................................              200,988
     2010 ..................................              110,340
     2011 ..................................               69,558
                                                        ----------
                                                          619,690
Less: imputed interest .....................            (  54,919)
                                                        ----------
                                                          564,771
Less: current portion ......................             (217,640)
                                                        ----------
Long-term portion                                       $ 347,131
                                                        ==========

NOTE 13 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in one single segment, breast implants and analyzes its
revenues as derived from two geographic locations: France and the rest of the
world. The Company did not have revenues from the U.S. during fiscal 2007 and
2006. Information about the Company's sales in different geographic locations
for fiscal, 2007 and 2006 is shown below pursuant to the provisions of SFAS No.
131, "Disclosures about segments of an Enterprise and Related Information."

                                      Fiscal                      Fiscal
                                       2007                        2006
                                  -------------               --------------
France                            $  1,538,454                $   2,750,598
Outside of France                   13,877,679                   12,518,732
                                  -------------               --------------
                                  $ 15,416,133                $  15,269,330
                                  =============               ==============

Substantially all of the identifiable operating assets and liabilities of the
Company are within France.


                                     -F25-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 14 - LEGAL CONTINGENCIES

In October 1999, June 2000 and July 2003, separate but related complaints were
filed by Saul Kwartin, Ruth Kwartin, Steven M. Kwartin, Robert Kwartin and Nina
Kwartin against our subsidiary Poly Implant Protheses, S.A. ("PIP"), III
Acquisition Corp. d/b/a PIP .America, PIP/USA, Inc., Jean-Claude Mas, our former
CEO, personally, and others, in the Circuit Court of Miami-Dade County, Florida.
Plaintiffs are all members of one family who purport to be shareholders of
PIP/USA, Inc., a distributor of PIP, suing derivatively on its behalf, and
individually, and seeking to rescind various transactions between PIP .America
and PIP, and seeking to impose liability against PIP and its co-defendants for
unspecified monetary damages arising out of alleged tortious and other purported
wrongful acts concerning alleged relationships between plaintiffs, PIP and the
other defendants.

Initially, two cases were filed: one in October of 1999 by Saul and Ruth Kwartin
and assigned Case No. 99-25227-CA-01 and one in June of 2000 by Steven Kwartin
and assigned Case No. 00-14665-CA-01. Case No. 99-25227 was voluntarily
dismissed by the Plaintiffs, who then unsuccessfully tried to withdraw their
dismissal. The Plaintiffs then appealed. In May of 2004, the appellate court
affirmed the trial court's Order approving the voluntary dismissal. A motion by
PIP/USA and Mr. Mas to recover their attorneys' fees is pending in the trial
court, as is a motion to disqualify the Plaintiffs' counsel in that lawsuit.
Case No. 00-14665-CA-01 by Steven Kwartin remains pending. In June of 2003,
Robert and Nina Kwartin commenced a lawsuit assigned Case No. 03-15006. That
lawsuit remains pending. In September of 2003, Saul and Ruth Kwartin filed
another lawsuit assigned Case No. 03-22537-CA-27, alleging similar claims to
those included in the dismissed case. Within a day or two of that lawsuit,
Steven Kwartin filed his second lawsuit assigned Case No. 03-22399-CA-15,
against Mr. Mas and Donald McGhan only. On December 22, 2005 four of the five
lawsuits were consolidated for pre-trial purposes. They are cases No.:
00-14665-CA-31, 03-15006-CA-31, 03-22399-CA-31 and 03-22537-CA-31, of those four
cases three were transferred to the Complex Business Litigation Section 40 by
Order dated December 29, 2006. The cases transferred were cases No.:
03-15006-CA-31, 03-22399-CA-31 and 0322537-CA-31.. A hearing on Defendants PIP
and Jean-Claude Mas' motion to disqualify Plaintiff's counsel was held on
September 11. The Court has not ruled yet.

In November of 2003, Jessica Fischer Schnebel and fifteen other women filed a
Second Amended Consolidated Class Action Complaint against PIP, PIP/USA, Inc.
and III Acquisition Corp. d/b/a PIP .America in the Circuit Court of Cook
County, Illinois. The Second Amended Consolidated Class Action Complaint
contains counts alleging product liability, breach of the implied warranties of
merchantability and fitness for a particular purpose, violation of the Illinois
Consumer Fraud Act and a contract claim alleging third-party beneficiary status.
Unspecified monetary damages, exemplary damages and attorneys fees and costs are
sought. Motions to dismiss filed by PIP and PIP .America remains pending and
discovery is underway. The plaintiffs have not sought to date to certify any
putative class. Our U.S. distributor has tendered this case to PIP, for defense
and indemnity pursuant to the distributor agreement. On June 7, 2006, Poly
Implant Protheses, S.A. filed a motion to dismiss third amended consolidated
class action Complaint. That motion remains pending. A Status conference is set
for December 6, 2007 at 11:00a.m.

                                     -F26-
<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2007

NOTE 14 - LEGAL CONTINGENCIES (continued)

Heritage Worldwide, Inc. and PIP and other defendants were sued by Madeline
Sanchez in New York Supreme Court in July of 2004 for alleged product liability
and other related claims. Both Heritage Worldwide, Inc. and PIP deny any
liability to the Plaintiff and have answered the Complaint and asserted
affirmative defenses. Discovery is ongoing. PIP filed a motion for summary
judgment on December 11, 2006, which remains pending. Discovery has been
completed and no trial date has been set. PIP's motion for Summary Judgment has
been denied. A pre-trial conference is scheduled for September 27, 2007.In April
2006, PIP was served with four product liability lawsuits in Texas entitled
Melissa Stoltz, et al. v. Poly Implant Protheses, S.A., et al., Case No.:
2005CI18773, District Court of Bexar County, Texas; Lisa Anderson, et al. v.
Poly Implant Protheses, S.A. et al., Case No.: DC-05-12614, District Court of
Dallas County, Texas; Rose Healey, et al. v. Poly Implant Protheses, S.A. et
al., Case No.: 2005-65625, District Court of Harris County, Texas; Landa Joly et
al. v. Poly Implant Protheses, S.A. et al., Case No.: 05-11-63,596-B, District
Court of Victoria County, Texas. PIP has removed these lawsuits to federal court
and filed Answers and Affirmative Defenses. PIP denied all liability. Discovery
is ongoing. These cases were settled in or about July 2007.

On September 1, 2006, PIP was sued in federal court in Houston, Texas by eleven
individuals alleging product liability claims in that certain action entitled
Edwards, et al. v. PIP, et al. Case No, H-06-2817. This case was settled in or
about July, 2007.

On March 14, 2007, PIP was sued in federal court in Houston, Texas by eight
individuals alleging product liability claims in an action entitled Adams, et
al., v. PIP, et al. PIP has not been served. This case was settled in or about
July, 2007.

In May  2006,  the  Company  was  sued  in the  Nottingham  County  Court  by 28
plaintiffs  under the "The Consumer  Protection Act" of the United Kingdom.  The
plaintiffs  alleged that the envelope  surrounding  their implants,  obtained by
their respective  surgeons from PIP France, SA, was not resistant enough and the
filler could cause pain and inflammation  when they leak. The plaintiffs  allege
they  should be  reimbursed  approximately  $700,000 in costs and  damages.  The
Company is expecting to present expert reports to the  Notthingham  County Court
judge in December 2007.

In  December  2006,  The Company was sued in the London High Court by Ms Allison
Allvey  under the "The  Consumer  Protection  Act" of the  United  Kingdom.  The
plaintiff  alleged that the envelope  surrounding her implants,  obtained by her
surgeon from PIP France,  SA, was not resistant  enough.  The plaintiffs  allege
they  should be  reimbursed  approximately  $360,000 in costs and  damages.  The
Company is expecting to present expert reports to the London High Court judge in
December 2007.

Though it is not yet possible to predict the outcome of any of the cases
described above, the Company and its subsidiaries, as applicable, have denied
plaintiffs' allegations and are vigorously defending themselves upon the merits
of each lawsuit and against certification of any class in the Illinois Schnebel
lawsuit, which is the only remaining putative class action.

III Acquisition Corp. d/b/a PIP .America claims indemnification from PIP/USA,
Inc., Poly Implants Protheses, S.A., and Jean-Claude Mas, personally, from all
claims, including those asserted above. The Company believes the costs
associated with these matters will not have a material adverse impact on the
Company's business, results of operations or financial position. The Company has
recorded a provision of approximately $520,000 at June 30, 2006 in connection
with these matters.

NOTE 15 - OTHER RELATED PARTY TRANSACTIONS

One of the Company's shareholder advanced approximately $160,000 to the Company
during 2006. This shareholder had previously advanced to the Company
approximately $610,000 prior to July 1, 2004. The shareholder contributed these
advances of approximately $770,000 as an infusion of capital in one of the
Company's subsidiaries during 2006. This capital infusion is accounted far as
minority interest in the accompanying balance sheet.


                                     -F27-