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, 2004

                                       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. [ ]

State issuer's revenues for its most recent fiscal year: $11,729,777

The aggregate market value of the voting and non-voting common equity held by
non-affiliates as of September 14, 2004, was approximately $12,196,000.

The total number of shares of the issuer's common stock, $.001 par value,
outstanding on September 14, 2004, was 17,410,299.

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

<PAGE>

                           HERITAGE WORLDWIDE, INC.
                          ANNUAL REPORT ON FORM 10-KSB

                              Index to Form 10-KSB



                                     PART I

Item   1.  Description of Business........................................... 2
Item   2.  Description of Property........................................... 6
Item   3.  Legal Proceedings................................................. 6
Item   4.  Submission of Matters to a Vote of Security Holders............... 7


                                     PART II

Item   5.  Market for Common Equity, Related Stockholder Matters and
           Small Business Issuer Purchases of Equity Securities ............. 7
Item   6.  Management's Discussion and Analysis or Plan of Operation......... 8
Item   7.  Consolidated Financial Statements.................................18
              Historical Financial Statements
                 Independent Auditors Report.................................F 1
                 Reports of Independent Registered Accounting Firm...........F 2
                 Consolidated Balance Sheet..................................F 3
                 Consolidated Statements of Operations.......................F 4
                 Consolidated Statements of Changes in Shareholders' Deficit.F 5
                 Consolidated Statements of Cash Flows.......................F 6
                 Notes to Consolidated Financial Statements..................F 7
Item   8.  Changes In and Disagreements with Accountants on Accounting and
           Financial Disclosure..............................................19

Item  8A.  Controls and Procedures ..........................................19

Item  8B.  Other Information   ..............................................19


                                    PART III

Item   9.  Directors and Executive Officers of the Registrant................19
Item  10.  Executive Compensation............................................21
Item  11.  Security Ownership of Certain Beneficial Owners and Management
           and Related Stockholder Matters...................................22
Item  12.  Certain Relationships and Related Transactions....................23
Item  13.  Exhibits, List and Reports on Form 8-K............................23
Item  14.  Principal Accountant Fees and Services    ........................26

                                       i

<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, 2004 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.  During  2004,  the  Company  increased  its
ownership of PIP to 99.55%.

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 the third 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 45 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 in which we market our products. For
         example, we intend to re-enter the U.S. market as soon as we satisfy
         certain FDA requirements;
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.

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>

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 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.

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 have begun sales
of the implants in France and intend to expand sales throughout Europe.

In March 2004, our U.S. distributor agreed to undertake the regulatory process
for marketing approval of our saline-filled breast implant products in the U.S.
The Company expects that the distributor will complete the required filings by
December 2005. We believe that FDA approval may be granted within the next 2 to
3 years.

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, 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.

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.

                                       3

<PAGE>

COMPETITION AND MARKET

The number of breast augmentations reportedly performed in the U.S. during 2003
was 250,000, 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 Inamed Corp. Based on publicly available sales
figures, these two companies rank first and second, respectively, in global
sales of breast implants. We are currently ranked third. However, Mentor and
Inamed currently control the U.S. market, which represents about the majority of
the global market. We are currently ranked first in implant sales in Colombia
and France, and second in England and Spain. 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 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
(with the exception of the U.S.). 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.

Prior to its withdrawal from the U.S. market in 2000, the Company sold breast
implants in that market under a non-exclusive distribution agreement. In March
2004, the Company entered into an agreement with Medicor Ltd. ("Medicor") in
which the Company assigned its rights to market its breast implants in the U.S.
to Medicor. In exchange, Medicor agreed to obtain the required FDA approvals to
distribute such products by December 2005. Additionally, the Company will become
the exclusive manufacturer of the breast implants of Medicor in the U.S.

Two of our major customers accounted for 12.9% and 11.8% of our revenues during
2004, and 13.9% and 8.3% during 2003. 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. 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  have to have  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.

Medicor,  the company  responsible in securing the required FDA approval for the
marketing of the  Company's  breast  implants in the U.S.,  is in the process of
gathering all the critical  information  necessary to obtain such approval.  The
Company  expects  that a complete PMA  submission  will be filed with the FDA by
December 2005.

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
in December 2003 and for silicon-gelfree testicular prothesis 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 2004 and 2003, the Company incurred research and development
expenses of approximately $1.3 million and $1.2 million, 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, 2004, the Company had 113 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 2005. 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 38.5%. The Chairman and Chief Executive Officer of the
Company, Mr. Jean-Claude Mas, holds an interest of approximately 30.5% in the
real estate holding company. The rental expense associated with the French
facilities amounted to approximately $475,000 and $462,000 during 2004 and 2003,
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 2004 and 2003.

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, July 2003 and September 2003, separate but related
complaints were filed by Saul and Ruth Kwartin, Steven M. Kwartin, and Robert
and Nina Kwartin respectively, against PIP, our U.S. distributor III Acquisition
Corp Ltd, dba PIP America, Don McGhan and Jean-Claude Mas, our CEO and President
in the Circuit Court of Miami-Dade County, Florida. The plaintiffs in each of
these lawsuits are all members of one family who purport to be shareholders of
PIP/USA, Inc., a distributor of PIP, suing derivatively on its behalf in some
instances, 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.

In and around July 2003, Peggy Williams, Jessica Fischer Schnebel, Dawn Marie
Cooper, Miriam Furman, and Karen S. Witt separately filed complaints against
PIP/USA, Inc. in the Circuit Court of Cook County, Illinois, Chancery Division.
Counsel for Jessica Fischer Schnebel amended her class action complaint to
include each of these plaintiffs and the other complaints have been voluntarily
dismissed. The consolidated amended 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 third party
beneficiary status. Unspecified monetary damages, exemplary damages and
attorneys fees and costs are sought.

In June 2003, Salinas I. Landers filed a complaint against PIP in the Superior
Court of San Luis Obispo County California. Plaintiff purports to sue on her
behalf and on a potential class of persons allegedly similarly situated, for
unspecified monetary damages, exemplary damages, attorneys' fees and costs and
injunctive relief for alleged breach of express warranty, violations of
California's Song-Beverly Consumer Warranty Act and unfair Competition Law.

                                       6

<PAGE>

In January 2003, Marsha Dicken filed a class action suit against PIP/USA Inc. in
the District Court of Harris County, Texas for strict liability, breach of
express warranty, breach of implied warranties, violation of Section 402B of the
Restatement (Second) of Torts, negligence, misrepresentations, and violation of
Texas' Deceptive Trade Practices Act with respect to implant products.
Plaintiffs seek an unspecified amount in alleged compensatory damages,
additional statutory damages, interest, attorneys' fees and costs.

Though it is not yet possible to predict the outcome of any of the cases
described above, the Company has denied plaintiffs' allegations in the lawsuits
in which it has appeared, and is vigorously defending itself upon the merits of
each lawsuit and against any class certification.

Litigation, particularly product liability litigation, can be expensive and
disruptive to normal business operations and the results of complex legal
proceedings can be very difficult to predict. The Company presently believes it
or its subsidiaries have meritorious defenses in all lawsuits in which the
Company or any of its subsidiaries are defendants, subject to the subsidiaries'
continuing warranty obligations, which the subsidiaries intend to continue to
satisfy. While it is not possible to predict the outcome of these matters, we
believe that the costs associated with them will not have a material adverse
impact on the Company's business, results of operations or financial position.

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, 2003                   High                        Low

First Quarter                               .15                        .15
Second Quarter                              .50                        .15
Third Quarter                              1.55                        .50
Fourth Quarter                             3.56                       1.05



Year Ended June 30, 2004                   High                        Low

First Quarter                              3.35                       1.50
Second Quarter                             5.24                       1.55
Third Quarter                              8.50                       2.80
Fourth Quarter                             4.75                       2.50

                                       7

<PAGE>

At September 14, 2004, the closing price for our common stock was $2.50.

At September 14, 2004, there were 17,410,299 shares of our common stock issued
and outstanding and 1,150,000 options issued or outstanding, which were granted
during July 2004. There are approximately 95 shareholders of record at September
14, 2004. 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.

During July 2004, our Board of Directors has adopted the 2004 Stock Option Plan
(the "Plan"). The Plan provides for the issuance of options to acquire up to
2,000,000 shares of our common stock. The Company intends to submit the Plan for
shareholders' approval during fiscal 2005.

Recent sales of unregistered securities

During April 2004, we issued $3,000,000 of 10% convertible debentures to a
United Kingdom investment trust. In consideration for the issuance of such
debentures, we received 1,595,745 ordinary shares of the United Kingdom
Investment Trust. We immediately sold these shares outside the U.S. for
approximately $1,420,000. In connection with this transaction, we have granted
the United Kingdom Investment Trust piggy-back registration rights with respect
to the common stock in which the debenture is convertible.

The  sale of the  aforementioned  securities  was an  exempt  transaction  under
Section 4(2) and Regulation S of the Securities Act because the  transaction did
not involve a public  offering and the securities  were offered and sold outside
the U.S. to non-U.S.  persons,  as defined in Regulation S. At the time of sale,
the persons who acquired these  securities were fully informed and advised about
matters  concerning  us,  including  our business,  financial  affairs and other
matters.  The persons  acquired  the  securities  for their own account or their
designee.

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

We ceased making sales in the U.S. market in May 2000, as a result of changes in
FDA regulations. At that time, the U.S. market represented approximately $4
million, or 40% of our revenues.  We are continuing our efforts to re-enter the
U.S. by conducting extensive clinical trials, which is a prerequisite to
securing FDA approval.

We are also in the process of developing new products. We have introduced a new
product line of breast implants which is based on titanium coating. 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. Critical

Accounting Policies and Estimates

A summary of significant accounting policies is provided in Note 1 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.

                                       8

<PAGE>

Stock-Based Compensation. We account for stock options issued to employees in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. We adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. We account for stock options and stock
issued to non-employees for goods or services in accordance with the fair value
method of SFAS 123.

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.

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, 2004, we had approximately $1 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, 2004, 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
$570,000 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

                                       9

<PAGE>

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.

Product replacements. We provide a product replacement and warranty 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>

                                                                                                       Increase/
                                              For the Year Ended                      (Decrease)      (Decrease)
                                                 June 30,                             2004 vs 2003    2004 vs 2003
                                            ------------------------------------------
                                                   2004                   2003               $              %
                                            -------------------     -------------------------------------------------
                                                                        Restated

<S>                                         <C>                     <C>                 <C>                    <C>
Revenues                                    $       11,729,777      $       8,470,931   $   3,258,846          38.5%

Cost of revenues                                     6,797,037              5,932,724         864,313          14.6%
                                            -------------------     -------------------------------------------------
     Gross margin                                    4,932,740              2,538,207       2,394,533          94.3%
                                            -------------------     -------------------------------------------------
Operating expenses:
  Selling, general and administrative                5,464,042              3,057,871       2,406,171          78.7%
  Allowance for doubtful accounts                    1,996,202                323,858       1,672,344         516.4%
  Write-down of obsolete inventory                     755,264                      -         755,264            NM
  Research and development                           1,283,420              1,157,464         125,956          10.9%
                                            -------------------     -------------------------------------------------
     Total operating expenses                        9,498,928              4,539,193       4,959,735         109.3%
                                            -------------------     -------------------------------------------------
Loss before other expenses and
     income taxes                                   (4,566,188)            (2,000,986)     (2,565,202)        128.2%
                                            -------------------     -------------------------------------------------
Other expenses:
  Other expense                                        (57,175)               (54,836)         (2,339)          4.3%
  Loss in equity investment                            (62,421)                     -         (62,421)           NM
  Interest expense                                    (339,633)              (138,187)       (201,446)        145.8%
                                            -------------------     -------------------------------------------------
     Total other expenses                             (459,229)              (193,023)       (266,206)        137.9%
                                            -------------------     -------------------------------------------------
Loss before provision for (benefit from)
    income taxes                                    (5,025,417)            (2,194,009)     (2,831,408)        129.1%

  (Provision for) benefit from income taxes           (572,348)               385,040        (957,388)       -248.6%
                                            -------------------     -------------------------------------------------
Loss before minority interest                       (5,597,765)            (1,808,969)     (3,788,796)        209.4%

Minority interest                                      (32,684)                     -         (32,684)           NM
                                            -------------------     -------------------------------------------------
Net loss                                    $       (5,630,449)     $      (1,808,969)  $  (3,821,480)        211.3%
                                            ===================     =================================================

</TABLE>


Year Ended June 30, 2004 Compared with Year Ended June 30, 2003

   Revenues

Revenues consist primarily of the sale of breast implants and other body support
products. Revenues in fiscal year 2004 increased by approximately $3.3 million
when compared to fiscal year 2003. The increase in revenues is primarily
attributable to increased volume of breast implants sold to new distributors in
countries other than France of $2.1 million as well as the introduction of
titanium-coated breast implants in fiscal year 2004.

   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 % of
revenues, decreased in fiscal year 2004 by 12% to 58%, when compared to fiscal
year 2003. The decrease of cost of revenues as % of revenues is primarily due to
increased sales resulting in higher productivity covering fixed manufacturing
costs.

   Gross Profit

Gross profit increased in fiscal year 2004 by approximately $2.4 million when
compared to fiscal year 2003. The increase is primarily attributable to
increased sales of breast implants offset by related costs associated with such
revenues as well as increased costs of materials used in the production of
titanium-coated breast implants.

   Selling and General Administrative Expenses

Selling, general and administrative expenses consist primarily of compensation
and related benefits of sales representatives which market our products as well
as general and administrative staff used to support our operations, as well as
facilities-related expenses and professional fees. Selling and general and
administrative expenses increased in fiscal year 2004 by approximately $2.4
million when compared to fiscal year 2003. The increase in selling, general and
administrative expenses is primarily due to increased professional fees required
to comply with requirements associated with being a publicly-traded company,
increased personnel costs associated with the growth in revenues as well as
increased provisions for litigation.

   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. Research and development expenses increased
in fiscal year 2004 by approximately $125,000 when compared to fiscal year 2003.
This increase was due to our commitment to develop new products and improve
existing lines of products.

                                       10

<PAGE>

   Bad Debts

Bad debts consist of provision of accounts receivables recorded during the year.
Bad debts increased in fiscal year 2004 by approximately $1.7 million, when
compared to fiscal year 2003. The increase in bad debts results primarily to our
exposure to a larger number of foreign distributors.

   Write-Down of Obsolete Inventory

Write-down of obsolete inventory consists of the value of inventory we have
deemed to be obsolete and not marketable. The write-down of obsolete inventory
increased in fiscal year 2004 by approximately $750,000 resulting from a change
in estimating obsolete inventory we have implemented in fiscal year 2004.

   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 increased in
fiscal year 2004 by approximately $200,000. The increase in interest expense is
primarily due to the amortization of debt discount associated with the issuance
of convertible debentures issued in fiscal year 2004. No such convertible
debentures were issued in fiscal year 2003.

   Provision for Income Tax

The provision for income tax consists of a valuation allowance for deferred tax
assets. Our provision for income tax increased in fiscal year 2004 by
approximately $580,000 when compared to an income tax benefit of approximately
$390,000 in fiscal year 2003. We have not recognized income tax benefits in
fiscal year 2004 and will continue to provide for valuation allowances for our
deferred tax assets until we believe that it is more likely than not that we
will realize such benefits.

Liquidity and Capital Resources

During fiscal year 2004, we have used approximately $2.3 million in our
operating activities, of which approximately $1.3 million was due to an increase
in our accounts receivables due to our increased sales. Additionally, we have
incurred approximately $300,000 in capital expenditures. We have funded our use
of cash from operating activities and investing activities by issuing
convertible debentures and shares of common stock which generated net proceeds
of approximately $2.4 million and $1.2 million, respectively. We have used a
portion of such proceeds to reduce our lines of credit by $1.2 million during
fiscal year 2004.

During fiscal year 2003, we generated cash flows from operating activities of
approximately $600,000. We have funded our operations in 2003 by decreasing our
accounts receivable by $700,000, increasing accounts payable by approximately
$500,000, and reducing inventory by approximately $370,000. Our cash generated
from operating activities funded our additional investment in SCI Lucas of
$241,000 and funded capital expenditures of approximately $450,000. We also
increased our line of credit by approximately $320,000 which repaid long-term
debt of approximately $300,000.

Going Concern

As reflected in the accompanying consolidated financial statements, in fiscal
year 2004, we had an accumulated deficit of approximately $5.1 million, and had
cash used in operations of $2.3 million. Our ability to continue as a going
concern is dependent on our ability to achieve profitable operations, positive
cash flows from operations, and additional equity and/or debt financing to pay
off outstanding debt obligations and unpaid payroll taxes. Management has
reduced the number of employees in its French operation during 2004.
Additionally, the Company is considering completing other financing transactions
in the future, depending on its needs and market conditions. Furthermore, the
Company intends to resume its U.S. marketing operations upon approval from the
FDA.

                                       11

<PAGE>

New Accounting Pronouncements

We do not believe that recently issued, but not yet effective accounting
pronouncements if currently adopted would have a material effect on our
financial statements.

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 careful 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 $540,000 at June 30, 2004. 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.

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.

                                       12

<PAGE>

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.


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.

                                       13

<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 increasingly
complex and 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 2005, 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. In the U.S., 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.

                                       14

<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 and Medicor to market breast  implants.  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.

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.

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 by 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.

                                       15

<PAGE>

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 68.4% 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.

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:

                                       16

<PAGE>

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.

IF WE DETERMINE  THAT ANY OF OUR GOODWILL OR INTANGIBLE  ASSETS IS IMPAIRED,  WE
WOULD BE REQUIRED TO 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,
2004,  we had  approximately  $1 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

                                       17


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 Chief Executive Officer and Chief Financial Officer, 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.

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.

                                       18

<PAGE>

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

Bernard Morieul was the independent certifying accountant for Heritage
Worldwide, Inc. (the "Company") for the fiscal years ended June 30, 2002 and
2003.

On March 15, 2004, Bernard Morieul declined to stand for reappointment as the
Company's certifying accountant. Subsequently we engaged Sherb & Co., LLP, 805
Third Avenue, New York, NY 10022 as our certifying accountant for the fiscal
year ended June 30, 2004. The appointment of Sherb & Co., LLP was approved by
our board of directors.

The reports of Bernard  Morieul on the Company's  financial  statements  for the
fiscal  years  ended June 30,  2002 and 2003,  contained  no adverse  opinion or
disclaimer of opinion,  nor was either  qualified or modified as to uncertainty,
audit scope or accounting principle.

ITEM 8A. CONTROLS AND PROCEDURES

Our chief executive officer and our chief financial officer (the "Certifying
Officers") are responsible for establishing and maintaining disclosure controls
and procedures for our Company. Such officers have concluded (based upon their
evaluations of these controls and procedures as of the end of the period covered
by this report) that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in this report is
accumulated and communicated to management, including the Certifying Officers as
appropriate, to allow timely decisions regarding required disclosure.

The Certifying Officers have also indicated that there were no significant
changes in our internal controls over financial reporting or other factors that
could significantly affect such controls subsequent to the date of their
evaluation, and there were no significant deficiencies and material weaknesses.

Our management, including the Certifying Officers, does not expect that our
disclosure controls or our internal controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls is also based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Because of these inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.

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                65          Chairman of the Board of Directors,
                                           Chief Executive Officer and Secretary

                                       19

<PAGE>

Alain Sereyjol Garros          63          Director


Claude Couty                   52          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.

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

Mr. Mas was elected Chairman of the Board of Directors in April 2003. Mr. Mas
also serves as Chief Executive Officer and Secretary of the Company. Mr. Mas had
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.

Alain Sereyjol Garros, Director

Mr. Sereyjol has been a director since March 2003. Mr. Sereyjol is a finance
professional with extensive experience and is certified as an Administrator of
Finance in Luxembourg. Since 1998, Mr. Sereyjol has served as the Chairman of
Graham Turner, S.A., an investment holding company. Mr. Sereyjol is also a
member of the boards of directors of Groupement Financier de Developpement,
S.A., Soparfinanz, S.A., Immo Finanz, S.A., Graham Turner Trust Services, S.A.,
and Graham Turner Ltd.

Claude Couty, 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.

Management Changes

In January 2004, Jean-Claude Mas resigned as our Chief Financial Officer.
Effective January 2004, the Company appointed Claude Couty as our Chief
Financial Officer.

In March 2004, Mr. Fabrice Viguier, who has been a Director since October 2002
and has been instrumental during the transition period following the merger, has
resigned, as his services were no longer required.

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 expect to complete the recruiting of directors during fiscal year 2005.

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 is attached to this Form 10-KSB. 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.

                                       20

<PAGE>

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.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the 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 2004
timely filed such reports, with the exception of:

Alain Garros Sereyjol, Fabrice Viguier and Jean-Claude Mas did not timely file
their report of initial ownership on Form 3.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth in summary form the compensation earned or
received by the Company's Chief Executive Officer. No other executive officer of
the Company earned or received in excess of $100,000 during the past three
fiscal years.


                                           Annual Compensation

                                                                      All Other
Name and Position                    Year      Salary       Bonus    Compenation

Jean-Claude Mas                      2004   $  110,570    $    --    $    --
Chairman, Chief Executive Officer    2003      110,000         --
and President (1)


-----------------------------
(1) Mr. Mas became the Chairman, Chief Executive Officer and President in April
2003.


Executive Employment Agreements

Mr. Mas does not have a written employment agreement. His annual compensation is
set by the Board of Directors of PIP, which is reviewed in December of each year
for the next calendar year. In December 2003, the Board of Directors has
approved an annual salary of approximately $110,000 for Mr. Mas as well as the
use of an automobile for business purposes.

Mr. Couty's employment agreement, provides for, among other things, an annual
salary of $127,286 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 thirty-six months of his average
compensation if employed more than two years.

                                       21

<PAGE>

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.


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.

     Other Arrangements

During fiscal year 2004, no director of the Company received any form of
compensation from the Company.


Compensation Committee Interlocks and Insider Participation

The Company has not established a compensation committee. During fiscal year
2004, no executive officer of the Company served as a member of the board of
directors or compensation committee (or other board committee performing
equivalent functions) of any other entity that had an executive officer serving
as a member of the Company's Board of Directors.

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
September 14, 2004, 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) the Chief
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 on September 14, 2004.

<TABLE>
<CAPTION>

5% Shareholders, Directors and        Number of        Number of Shares        Total Number of        Percent of Class
Chief Executive Officer               Outstanding      Subject to Options,     Shares Beneficially
                                      Shares           Warrants or Other       Owned
                                                       Rights

<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              6.9%
Jean-Claude Mas                               --                      --                     --                 *
Alain Sereyjol Garros                 13,054,584 (3)                  --             13,054,584             74.9%
All directors and executive officers  13,054,584                      --             13,054,584             74.9%
as a group (3 persons)
  --------------------------------
*      Less than 1%.

</TABLE>

(1)    Based on the Schedule 13D filed with the Securities and Exchange
       Commission on March 11, 2003. The address of Milo Finance, S.A. is 2 rue
       Jean Engling, LX 1510, Luxembourg.

(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.

                                       22

<PAGE>

(3)    Based on the Schedule 13D filed with the Securities and Exchange
       Commission on March 11, 2003. Mr. Sereyjol is the indirect beneficial
       owner of these shares through his ownership of Graham Turner Ltd., an
       investment holding company.

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.

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 options to purchase 1,150,000 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.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company leases its headquarters, offices, and manufacturing facility from a
real estate holding company, SCI Lucas, in which it holds an interest of 38.05%
pursuant to the lease agreement. Our Chief Executive Officer, Mr. Mas, holds an
interest of approximately 31% in SCI Lucas. Each lease expires in November 2009.
The leases are renewable automatically unless the Company cancels the leases six
months prior to the renewal date. The Company paid rent to SCI Lucas of
approximately $478,000 and incurred rental expense of approximately $380,000 in
2004. At June 30, 2004, the Company owed SCI Lucas approximately $88,000, which
is included in the Company's accounts payable and accrued expenses. This amount
owed to SCI Lucas does not bear interest and is payable on demand.

Milo Finance, a controlling shareholder, loaned the Company approximately
$610,000 for company-related expenses. The Company has not repaid the loan to
date.

Mr. Mas has loaned the Company approximately $195,000 for company-related
expenses. The Company repaid Mr. Mas approximately $184,000 during 2004. The
remaining payable to Mr. Mas at June 30, 2004 is approximately $11,000.

All amounts owed to Milo Finance and Mr. Mas are non-interest bearing and are
due upon demand.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8 K

(a)(1) Financial Statements and Financial Statement Schedule.

                                       23

<PAGE>

    FINANCIAL STATEMENTS                                                  PAGE

     Independent Auditor's Report . . . . . . . . . . . . . . . . . . . .. F 1

     Reports of Independent Registered Accounting Firm  . . . . . . . . .. F 2

     Consolidated Balance Sheet as of June 30, 2004  . . . .. . . . . . .. F 3

     Consolidated Statements of Operations for the years
     ended June 30, 2004, and 2003  . . . . . . . . . . . . . . . . . . .. F 4

     Consolidated Statement of Stockholders' Equity and
     Comprehensive Income for the years ended
     June 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . . . . .. F 5

     Consolidated Statements of Cash Flows for the years
     ended June 30,  2004 and 2003  . . . . . . . . . . . . . . . . . . .. F 6

     Notes to Consolidated Financial Statements   .  . . . .  . . . . . .. F 7

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.

                                       24

<PAGE>

        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.
        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 herewith.
        10.14*                 6.75% Revolving Promissory Note dated March 30,
                               2004 between Poly Implants Protheses, S.A. and
                               III Acquisition Corp.  Filed herewith.
        10.15**                Employment Contract dated October 2, 2003 between
                               Poly Implants Protheses, S.A. and Mr. Claude
                               Couty.  Filed herewith
        14                     Code of Business Conduct and Ethics. Filed
                               herewith.
        16                     Letter dated October 1, 2004 from Mr. Morieul to
                               the Commission. Filed herewith.
        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.
---------------------------------------

                                       25

<PAGE>

*        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.


(b) Reports on Form 8-K.

None.

ITEM 14.  PRINCIPAL ACCOUNTANT AND SERVICES

The firm Sherb & Co., independent auditor, has audited our financial statements
for the year ended June 30, 2004. The Board of Directors has appointed Sherb &
Co. to serve as our independent auditors for the 2004 year-end audit and to
review our quarterly financial reports for filing with the Securities and
Exchange Commission during fiscal year 2005.

The following table shows the fees paid or accrued by us for the audit and other
services provided by Sherb & Co. for fiscal year 2004 and Mr. Bernard Morieul
for fiscal year 2003.

                                           2004                   2003

Audit Fees(1)                    $            47,504    $            23,005
Audit-Related Fees                                --    $                --
Tax Fees                                          --    $                --
All Other Fees                                    --                     --
                                 ====================   ====================
Total                            $            47,504    $            23,005
                                 ====================   ====================

(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. Sherb
& Co. did not perform any non-audit services during fiscal year 2004.


                                       26

<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 the 4th day of October 2004.

                                               HERITAGE WORLDWIDE, INC.

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


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            Chairman, Chief Executive      October 4, 2004
-------------------            Officer and President
Jean Claude Mas


/s/ Claude Couty               Chief Financial Officer and    October 4, 2004
----------------               General Manager
Claude Couty


/s/  Alain Sereyjol Garros     Director                       October 4, 2004
--------------------------
Alain Sereyjol Garros



                                       27


 <PAGE>

                          Independent Auditor's Report


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

I have audited the accompanying consolidated balance sheet of Heritage Worldwide
and Subsidiaries (the "Company") at June 30, 2003, and the related consolidated
statements of operations, stockholders' equity and comprehensive income, and
cash flows for the year ended June 30, 2003. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. 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. I believe that my audit provides a reasonable basis for
my opinion.

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Heritage Worldwide, Inc. and Subsidiaries at June 30, 2003 and the consolidated
results of their operations and their consolidated cash flows for the year ended
June 30, 2003 in conformity with accounting principles generally accepted in the
United States of America.

/s/ Bernard Morieul
Bernard Morieul
Commissaire aux comptes


Marseille, France
October 30, 2003




                                      -F1-

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors
Heritage Worldwide, Inc.
La Seyne-Sur-Mer, France

We have audited the accompanying consolidated balance sheet of Heritage
Worldwide, Inc. and Subsidiaries as of June 30, 2004 and the related
consolidated statement of operations, stockholders' equity and other
comprehensive income and cash flows for the year ended June 30, 2004. 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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Heritage Worldwide, Inc. and Subsidiaries, as of June 30, 2004, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 15 to
the consolidated financial statements, the Company had net losses and cash used
in operations of $5,630,449 and $2,261,198, respectively, for the year ended
June 30, 2004. These matters raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regards to these matters
are also described in Note 15. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



                                                    /s/Sherb & Company, LLP
                                                    Certified Public Accountants

New York, New York
September 24, 2004


                                      -F2-

<PAGE>


                   HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                                 June 30,2004



                                    ASSETS
Current Assets:
  Cash                                                         $      168,748
  Accounts receivable, net of an allowance for
   doubtful accounts of $ 2,334,395                                 3,340,609
  Inventories                                                       2,749,017
  Prepaid expenses and other current assets                           755,748
                                                               ---------------


     Total current assets                                           7,014,122

Property and equipment, net of accumulated
 depreciation of $3,041,032                                         1,765,241
Goodwill                                                              990,991
Investment in SCI Lucas                                               441,474
Other assets                                                          225,976
                                                               ---------------

     Total assets                                              $   10,437,804
                                                               ===============


                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Lines of credit                                             $       900,783
  Accounts payable and accrued expenses                              4,352,047
  Current portion of long term debt                                    172,182
  Due to related parties                                               628,865
  Warranty reserve                                                     281,962
                                                               ----------------

     Total current liabilities                                       6,335,839

Convertible debentures and related accrued interest
 payable, net of discount of $2,410,126                              1,609,481
Long term debt, net of current portion                                 434,255
                                                               ----------------


     Total liabilities                                               8,379,575
                                                               ----------------

Minority interest                                                       32,684
                                                               ----------------


Stockholders' Equity:
  Common stock; $.001 par value, 50,000,000 shares authorized,
    40,160,299 issued and 17,410,299 outstanding                        17,411
  Additional paid in capital                                         5,686,193
  Subscriptions receivable                                             (14,518)
  Accumulated other comprehensive income                             1,418,448
  Accumulated deficit                                               (5,081,989)
                                                               ----------------


     Total stockholders equity                                       2,025,545
                                                               ----------------


     Total liabilities and stockholders equity                 $    10,437,804
                                                               ================





               See Notes to Consolidated Financial Statements.
                                     -F3-

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS




                                                For the Year Ended
                                                       June 30,
                                           -----------------------------
                                               2004           2003
                                           -------------  --------------
                                                            Restated

Revenues                                   $ 11,729,777     $ 8,470,931

Cost of revenues                              6,797,037       5,932,724
                                           -------------  --------------
     Gross profit                             4,932,740       2,538,207
                                           -------------  --------------
Operating expenses:
  Selling, general and administrative         5,464,042       3,057,871
  Bad debts                                   1,996,202         323,858
  Write-down of obsolete inventory              755,264               -
  Research and development                    1,283,420       1,157,464
                                           -------------  --------------
     Total operating expenses                 9,498,928       4,539,193
                                           -------------  --------------
Loss before other expenses and
     income taxes                            (4,566,188)     (2,000,986)
                                           -------------  --------------
Other expenses:
  Other expense                                 (57,175)        (54,836)
  Loss in equity investment                     (62,421)              -
  Interest expense                             (339,633)       (138,187)
                                           -------------  --------------
     Total other expenses                      (459,229)       (193,023)
                                           -------------  --------------

Loss before (provision for) benefit from
    income taxes                             (5,025,417)     (2,194,009)

  (Provision for) benefit from income taxes    (572,348)        385,040
                                           -------------  --------------


Loss before minority interest                (5,597,765)     (1,808,969)

Minority interest                               (32,684)              -
                                           -------------  --------------

Net loss                                     (5,630,449)     (1,808,969)

Other comprehensive income, net of taxes
  Foreign currency translation adjustment        38,657       1,611,675
                                           -------------  --------------
     Comprehensive loss                    $ (5,591,792)     $ (197,294)
                                           =============  ==============
Basic net loss per common share                 $ (0.32)        $ (0.12)
                                           =============  ==============

Basic weighted average common
shares outstanding                           17,382,399      14,541,393
                                           =============  ==============


                 See Notes to Consolidated Financial Statements.
                                      -F4-

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003


<TABLE>
<CAPTION>
                                                                                                                Accumulated
                                                                                    Additional                    Other
                                                               Shares     Common      Paid-In     Subscriptions Comprehensive
                                                                           Stock      Capital     Receivable       Income
                                                           ------------------------------------------------------------------
<S>             <C>                                            <C>         <C>       <C>          <C>           <C>
Balance at July 1, 2002                                        13,741,667  $ 13,742  $   (13,742) $     -       $ (231,884)
Issuance of common stock, per merger agreement                  2,425,000     2,425    3,252,688        -                -
Foreign currency translation adjustments                                -         -            -        -        1,611,675
Net loss                                                                -         -            -        -                -
Issuance of shares of common stock at $1 per share                 30,000        30       29,970        -                -
                                                           ------------------------------------------------------------------
Balance at June 30, 2003                                       16,196,667    16,197    3,268,916        -        1,379,791

Issuance of share of common stock for services July 2003           60,000        60      104,940        -                -
Issuance of share of common stock for services March 2004          35,000        35      113,715        -                -
Sale of shares of common stock at $1 per share                     66,000        66       65,934  (28,000)               -
Payment of subscriptions of common stock                                -         -            -   13,482                -
Exchange of shares with an investment trust                     1,052,632     1,053    1,132,688        -                -
Beneficial conversion feature of convertible debentures                 -         -    1,000,000        -                -
Net loss                                                                -         -            -        -                -
Foreign currency translation adjustments                                -         -            -                    38,657
                                                           ------------------------------------------------------------------
Balance at June 30, 2004                                       17,410,299  $ 17,411  $ 5,686,193  $(14,518)     $ 1,418,448
                                                           ============== ===================================================

                 See Notes to Consolidated Financial Statements.
                                      -F5-

<PAGE>

                    HERITAGE WORDWIDE, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME
               FOR THE YEARS ENDED JUNE 30, 2004 AND 2003

                                                                Restated
                                                               Accumulated
                                                                Deficit        Total
                                                           ----------------------------
Balance at July 1, 2002                                    $ 2,357,429     $ 2,125,545
Issuance of common stock, per merger agreement                       -       3,255,113
Foreign currency translation adjustments                             -       1,611,675
Net loss                                                    (1,808,969)     (1,808,969)
Issuance of shares of common stock at $1 per share                   -          30,000
                                                           ----------------------------
Balance at June 30, 2003                                       548,460       5,213,364

Issuance of share of common stock for services July 2003             -         105,000
Issuance of share of common stock for services March 2004            -         113,750
Sale of shares of common stock at $1 per share                       -          38,000
Payment of subscriptions of common stock                             -          13,482
Exchange of shares with an investment trust                          -       1,133,741
Beneficial conversion feature of convertible debentures              -       1,000,000
Net loss                                                    (5,630,449)     (5,630,449)
Foreign currency translation adjustments                             -          38,657
                                                           ----------------------------
Balance at June 30, 2004                                   $ (5,081,989)   $ 2,025,545
                                                           ============================

</TABLE>

                 See Notes to Consolidated Financial Statements.
                                      -F5-

<PAGE>

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



                                                         Year Ended
                                                          June 30,
                                                ---------------------------
                                                   2004           2003
                                                ------------  -------------
                                                                Restated
Cash flows from operating activities:
Net loss                                        $ (5,630,449) $ (1,808,969)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
   Interest expense related to debenture
    discount                                        170,507              -
   Depreciation and amortization                    842,699        656,969
   Stock-based compensation                         218,750              -
   Provision for doubtful accounts                1,996,202        323,858
   Provision for obsolete inventories               755,264              -
   Deferred income tax                              572,348       (385,040)
  Loss on equity investment                          62,421              -
   Minority interest                                 32,684              -
Change in operating assets and liabilities:
   Accounts receivable                           (1,264,925)       701,871
   Inventories                                      205,565        365,336
   Prepaid expenses and other current assets        (64,765)         4,184
  Other assets                                      (31,274)             -
  Accrued interest on convertible debentures         19,603              -
   Provision for customer warranty                  143,128        224,567
   Accounts payable and accrued expenses           (288,956)       519,041
                                                ------------  -------------

Net cash (used in) provided by operating
 activities                                      (2,261,198)       601,817
                                                ------------  -------------
Cash flows from investing activities:
   Proceeds from sale of property and equipment           -          7,904
  Additional investment in SCI Lucas                      -       (241,000)
   Purchases of property and equipment             (299,274)      (452,687)
                                                ------------  -------------
Net cash used in investing activities              (299,274)      (685,783)
                                                ------------  -------------
Cash flows from financing activities:
   (Decrease) increase in lines of credit        (1,191,212)       319,280
   Proceeds from long term debt                     178,417         73,713
   Repayment of long term debt                     (275,683)      (301,964)
   Proceeds from convertible debentures           2,413,006              -
  Payment of deferred financing costs               (70,651)             -
   Proceeds from sale of common stock             1,185,223         30,000
   Increase (decrease) in due to stockholders       481,834        (23,606)
                                                ------------  -------------
Net cash provided by financing activities         2,720,934         97,423
                                                ------------  -------------
Effect of exchange rate changes on cash             (98,778)        27,887
                                                ------------  -------------
Increase in cash                                     61,684         41,344

Cash, beginning of year                             107,064         65,720
                                                ------------  -------------
Cash, end of period                             $   168,748   $    107,064
                                                ============  =============
Supplemental disclosures of cash flow
information:

     Cash paid during the year for interest     $   138,902   $    140,375
                                                ============  =============
     Cash paid during the year for taxes        $         -   $          -
                                                ============  =============

Non-Cash Investing and Financing Activities:

Beneficial feature of convertible debentures,
 increasing additional paid-in capital and
 decreasing convertible debentures              $ 1,000,000   $          -
                                                ============  =============



                 See Notes to Consolidated Financial Statements.
                                      -F6-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004


NOTE 1 - NATURE OF BUSINESS AND ACQUISITION

Heritage Worldwide, Inc. (the "Company") is 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 and Spanish subsidiaries for the years ended
June 30, 2004 and 2003, respectively and OS from October 14, 2003 through June
30, 2004. The results of operations of Heritage Worldwide, Inc. are reflected in
the accompanying financial statements for the period from March 1, 2003, the
date of the reverse merger with its French and Spanish subsidiaries through June
30, 2004. The Stock Purchase Agreement has been accounted for as a reverse
acquisition under the purchase method for business acquisitions. Accordingly,
the combination of the two companies is recorded as a recapitalization of
Heritage, pursuant to which Poly Implant Protheses is treated as the continuing
entity. All material intercompany 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 approximately 38%. 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 intercompany accounts and transactions between the
Company and SCI Lucas have been eliminated.

NOTE 3 - RESTATEMENT OF FINANCIAL STATEMENTS

As part of its review of its financial statements and underlying assumptions,
management uncovered in September 2004 that it had inappropriately accounted for
its inventory since June 30, 2002. As part of its valuation of inventory, it has
imputed an erroneous direct labor rate to its inventory which resulted in an
overstatement of its inventory by approximately $2,600,000 and $1,480,000 as of
June 30, 2003 and 2002 respectively. Additionally, management has incorrectly
accounted for this error in its financial statements for the period ended
December 31, 2003 and March 31, 2004, as a change in estimate in 2004 while it
should have accounted for it as a correction of an error in the appropriate
prior periods. The correction of this error results in the reduction of
inventory and a corresponding reduction in shareholders' equity of approximately
$2.6 million and $1.5 million as of June 30, 2003 and 2002, respectively.
Additionally, the correction of this error results in an increase in cost of
good sold and a corresponding increase in net loss of approximately $1.1 million
and $1.5 million during 2003 and 2002, respectively. Accordingly, the Company
will restate its 2003 and 2002 annual financial statements as well as its
interim financial statements from September 30, 2002 through March 31, 2004.


NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

In preparing financial statements in conformity with accounting principals
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

                                      -F7-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

during the periods include the allowance for doubtful accounts, evaluation of
obsolete inventory, the useful life of long-term assets, such as property, plant
and equipment and goodwill, and the accrual of warranty and product liability
reserve.

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, 2004, the allowance for doubtful accounts was
approximately $2.3 million.

Revenue recognition

The Company recognizes 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.

Stock options

The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. We adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to non-employees for goods or services in accordance with the
fair value method of SFAS 123.

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, 2004, the exchange rate for the Euros (EUR) was $1.1927
U.S. for 1.00 EUR.

The functional currency of the Company's French 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.

                                      -F8-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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. The Company wrote-down its inventory by
approximately $750,000 during 2004.

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.

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." The new standards require that all business combinations
initiated after June 30, 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, 2004 results from its 2002 acquisition of its
Spain subsidiary. Management has established that based on future cash flows
generated from its Spain's operations, the Company's goodwill at June 30, 2004
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, 2004, the Company believes that there has been no impairment
of its long-lived assets.

                                      -F9-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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."

Advertising

Advertising costs are expensed as incurred and included in selling general and
administrative expenses in the accompanying consolidated statements of
operations. The Company incurred advertising expenses of approximately $39,800
and $38,400 during 2004, and 2003, respectively.

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
does not have any common stock  equivalents at June 30, 2004.  Dilutive earnings
per  share are not  presented  for both  years  shown as it is the same as basic
income per share.

                                      -F10-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 4 - 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, 2004 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,
2004 based upon terms available for companies under similar arrangements.

New Accounting Pronouncements

Management does not believe that recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying financial statements.

Product Warranties

The Company provides a product replacement and warranty program on its products.
The Company provides an accrual for the estimated cost of product warranties 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. Two of the Company's customers accounted for approximately
20%, and 17%, respectively, of its net accounts receivable, at June 30, 2004. No
other customers accounted for more than 10% of its net accounts receivables.

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
substantially all 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.

                                      -F11-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Customers Concentration Risk

Two of the Company's customers accounted for 12.9% and 11.8% of its revenues,
respectively, during 2004, as well as 13.9% and 8.3% of its revenues,
respectively, during 2003. The Company minimizes its concentration risk
associated with customers by diversifying its customer base and introducing its
products in new countries.

Significant Fourth-Quarter Adjustment

In the fourth quarter of 2004, the Company increased its allowance for doubtful
accounts by approximately $935,000. Management deemed this increase necessary to
align the carrying value of its net accounts receivable with current market
conditions considering that a larger portion of its customers are outside of
France.

Reclassifications

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


NOTE 5 - INVENTORIES

Inventories at June 30, 2004 consists of the following:

Finished goods                                       $   1,750,283
Work-in-process                                            751,629
Raw materials                                              247,105
                                                     -------------
                                                     $   2,749,017
                                                     =============

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment and related accumulated depreciation at June 30, 2004
consist of the following:



Tenant improvements                                 $  2,748,125
Machinery and equipment                                1,181,963
Office equipment                                         280,926
Transportation equipment                                 241,927
Other                                                    353,332
                                                    ------------
                                                       4,806,273
Accumulated depreciation                             (3,041,032)
                                                    ------------
Property and equipment, net                         $  1,765,241
                                                    ============

Depreciation expense amounted to approximately $840,000 and $660,000 during 2004
and 2003, respectively.

                                      -F12-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 7 - INVESTMENTS

At June 30, 2004 the Company has an approximate 38% investment in SCI Lucas, a
related French real estate company, including the approximate additional 8%
purchased in the year ended June 30, 2003 for approximately $241,000. The equity
in income of the investee amounted to $62,000 and $0 for the year ended June 30,
2004 and 2003, 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 six months prior
to the renewal date.

At June 30, 2004 the Company owed SCI Lucas approximately $88,000, relating to
amounts due for rent, which is included in accounts payable and accrued
expenses. The Company paid rent to SCI Lucas of approximately $478,000 and
incurred rental expense of approximately $380,000 in 2004. The Company's
remaining obligation of $88,000 at June 30, 2004 does not bear interest and is
payable on demand.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at June 30, 2004 consist of the following:

Vendors payable                                    $  1,409,300
Accounts payable to U.S. distributor                    875,437
Compensation payable and related accrued benefits     1,005,081
Provision for litigations                               541,154
Other                                                   521,075
                                                   ------------
                                                   $  4,352,047
                                                   ============

NOTE 9 - LONG TERM DEBT

The Company's long term debt consists of various notes payable with outstanding
principal amounts ranging from approximately $1,000 to $190,000, with interest
rates ranging from 4.25% to 9.95% per year and due dates between November 2004
and May 2007. 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.

Long-term debt consists of the following at June 30, 2004:

                           Notes Payable                            $  463,880
                           ANVAR Advances                              142,557
                                                                    ----------
                                                                       606,437
                           Less:  Current Portion                     (172,182)
                                                                    ----------
                           Long term debt, net of current portion   $  434,255
                                                                    ==========

                                      -F13-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 9 - LONG TERM DEBT (continued)
The aggregate maturities of long-term debt at June 30, 2004 are as follows:

        June  30,
        ---------
          2005                    $      172,182
          2006                           244,901
          2007                            96,779
          2008                            92,575
                                  --------------
                                  $      606,437
                                  ==============

NOTE 10 - 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, 2004 are as follows:


Deferred tax assets:
Net operating loss carryforward   $      2,421,817
Other                                      139,414
Less valuation allowance               ( 2,561,231)
                                  -----------------
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 $ 2,561,231 at June 30,
2004 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 2004 and
2003 was approximately $2,560,000 and $0, respectively.

At June 30, 2004, the Company had net operating loss carryforwards amounting to
approximately $0.6 million and $5.9 million for U.S. and French tax purposes,
respectively, that expire in various amounts from 2020 through 2023 in the U.S.
and never expire in France.

The federal statutory tax rate reconciled to the effective tax rate for 2003 and
2003, respectively, is as follows:

                                                        2004              2003
                                                       ------            ------
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   5.0               5.0
Change in valuation allowance                          (40.0)            (40.0)
                                                       ------            ------
Effective tax rate                                       0.0%              0.0%
                                                       ======            ======

                                      -F14-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 11 - EQUITY TRANSACTIONS

During August 2003, we issued 38,000 shares of our common stock to three
employees. We have received proceeds of $38,000 in connection with this
transaction.

During  September  2003,  we issued  28,000  shares of our common stock to eight
employees.  We have  received  proceeds  of  $13,482  in  connection  with  this
transaction and we will receive $14,518 from such employees within a year.

During July 2003, we issued 60,000 shares of common stock to our legal counsel
and two individuals for services rendered. The shares issued in connection with
this transaction were valued at $105,000, which is the fair value of the shares
on the date of the issuance, and the Company recorded non-cash consulting
expenses of $105,000.

During November 2003, we issued 1,052,632 shares of its common stock to a United
Kingdom investment trust in exchange for 1,988,668 shares of the investment
trust. We have immediately sold these shares of the investment trust for
approximately $1,134,000.

During March 2004,  we issued in aggregate  35,000 shares of common stock to our
legal counsel and a U.S.  individual for legal and investment  advisory services
rendered.  The shares issued in connection with this  transaction were valued at
$113,750, which is the fair value of the shares on the date of the issuance, and
the Company recorded non-cash consulting expenses of $113,750.

NOTE 12 - CONVERTIBLE DEBENTURES

On October 9, 2003, OS entered into a convertible debentures purchase agreement
(the "Agreement") to sell $1,000,000 of 1% convertible debentures due on October
9, 2008. Interest accrues from the date of the transactions 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 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. As part of the Agreement, OS is required to maintain a
common stock escrow account with 10,000,000 shares of common stock. As part of
the merger the Company assumed all the obligations and responsibilities of the
Agreement. The Company received $500,000 during December 2003 and the remaining
$500,000 on January 9, 2004.

The convertible debentures 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 2004, the amortization of the debt discount amounted to approximately
$123,000 and has been included in interest expense in the accompanying
consolidated financial statements.

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 to the closing
bid price for a share of Common Stock on such date on the OTC Bulletin Board, as

                                      -F15-

<PAGE>

                   HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 12 - CONVERTIBLE DEBENTURES (continued)

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 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 2004, the
amortization of the debt discount amounted to approximately $50,000 and has been
included in interest expense in the accompanying financial statements.

NOTE 13- COMMITMENTS

The Company has entered into various noncancellable operating leases for its
corporate offices, manufacturing and distribution facilities. These leases all
expire within 6 years. Rental expense was approximately $390,000 and $472,000
during 2004 and 2003, respectively, inclusive of leases for facilities owned by
related parties, which amounted to approximately $380,000 and $370,000, during
2004 and 2003, respectively.

At June 30, 2004 total minimum rentals under operating leases with remaining
noncancellable lease terms of more than one year were as follows:

       Year Ending
       June 30,
       -----------
          2005                  $  472,300
          2006                     430,100
          2007                     381,800
          2008                     371,000
          2009                     356,900
                                ----------
                                $2,012,100
                                ==========


                                      -F16-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in one single market, breast implants and analyzes its
revenues derived from two geographic locations: France and the rest of the
world. The Company did not have revenues from the U.S. during 2004 and 2003.
Information about the Company's sales in different geographic locations for the
years ended June 30, 2004 and 2003 is shown below pursuant to the provisions of
SFAS No. 131, "Disclosures about segments of an Enterprise and Related
Information."

                                                   Year ended June 30,
                                                2004                2003
                                           -------------        ------------
France                                     $   3,701,731        $ 2,533,000
Outside of France                              8,028,046          5,937,931
                                           -------------        ------------
                                           $  11,729,777        $ 8,470,931
                                           =============        ============

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

NOTE 15 - LEGAL CONTINGENCIES

In October 1999, June 2000 and July 2003, separate but related complaints were
filed by Saul and Ruth Kwartin, Steven M. Kwartin, and Robert and Nina Kwartin
respectively, and various other unnamed plaintiffs, against Poly Implant
Protheses, S.A. ("PIP"), our subsidiary, our U.S. distributor Medicor Ltd, Jean
Claude Mas, our CEO and President, personally and others, in the Circuit Court
of Miami-Dade County, Florida.

Initially, two cases were filed in October 1999, Case No. 99-25227-CA-01 and
Case No. 00-14665-CA-01. Of the two, Case No. 99-25227 was dismissed. The same
plaintiffs then, in June 2000, filed Case No. 0322537-CA-27, alleging similar
claims to those included in the dismissed case. In June 2003, another member of
the same family filed Case No. 03-15006-CA-09, again alleging similar claims,
but on their own behalf. 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 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.

Peggy Williams v. PIP/USA,  Inc., Case No. 03 CH 9654, Jessica Fischer Schnebel,
et al. v.  PIP/USA,  Inc.,  Case No.  03CH07239,  Dawn Marie  Cooper,  et al. v.
PIP/USA, Inc., Case No. 03CH11316,  Miriam Furman, et al. v. PIP/USA, Inc., Case
No.  03CH10832 and Karen S. Witt, et al. v. PIP/USA,  Inc.,  Case No.  03CH12928
were filed in the Circuit Court of Cook County, Illinois,  Chancery Division, in
or around July 2003.  Counsel for Jessica Fischer  Schnebel,  et al. v. PIP/USA,
Inc.,  Case  No.  03CH07239  amended  her  class  action  complaint  to  include
plaintiffs  from  the  other  four  cases,  and  each  of the  others  has  been
voluntarily dismissed.

The consolidated amended 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 third-party
beneficiary status. Unspecified monetary damages, exemplary damages and
attorneys fees and costs are sought. A motion seeking to dismiss all counts but
the third-party beneficiary claim has been filed and a ruling is expected soon.
Our U.S. distributor has tendered this case to PIP, for defense and indemnity
pursuant to the distributor agreement.

                                      -F17-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 15 - LEGAL CONTINGENCIES (continued)

Salinas I. Landers, et al. v. Poly Implants Protheses, S.A., et al., Case No. CV
030377 was filed in June 2003 in the Superior Court of San Luis Obispo County,
California. Plaintiffs purport to sue on behalf of themselves and an alleged
class of persons allegedly similarly situated for unspecific monetary damages,
exemplary damages, attorneys' fees and costs and injunctive relief for alleged
breach of express warranty and alleged violations of California's Song-Beverly
Consumer Warranty Act and Unfair Competition Law. Our distributor filed a
demurrer to the action, which was denied by the Court. Our distributor has now
filed an answer to the complaint. PIP has also filed an answer to the complaint,
and written discovery is in the initial stages. A case management hearing
occurred on May 5, 2004, at which time the court scheduled a date to hear
arguments for and against class certification. Our distributor has tendered this
case to Poly Implant Prostheses, S.A., for defense and indemnity pursuant to the
distributor agreement.

Marsha Dicken, et al. v. PIP/USA, Inc., et al., Case No. 2003-05588, was filed
in January 2003 in the District Court of Harris County, Texas. Plaintiffs
purport to sue on behalf of themselves and an alleged class of persons allegedly
similarly situated for alleged strict liability, breach of express warranty,
breach of implied warranties, violation of Section 402B of the Restatement
(Second) of Torts, negligence, misrepresentations, and violation of Texas'
Deceptive Trade Practices Act with respect to implant products. Plaintiffs seek
an unspecified amount in alleged compensatory damages, additional statutory
damages, interest, attorneys' fees and costs. The lawsuit is in the discovery
phase and no hearing has been held, or order entered, concerning class
certification. Our distributor has filed motions seeking to dismiss certain
claims in a summary judgment proceeding. The court has scheduled a pretrial
conference to be held in June 2004, and has specified that a trial date will be
set shortly thereafter.

PIP.America has tendered this case to Poly Implant Prostheses, S.A., for defense
and indemnity.

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. All three purported
class action cases above include two distinctly different types of claims. The
first of these arise from products sold by PIP/USA, Inc. This company sold
implants manufactured by Poly Implants Protheses, S.A. prior to PIP.America's
entry into the U.S. market, which occurred in late 1999. The next claims arise
from products sold by PIP.America and warranted by PIP.America. With respect to
claims arising from products sold by PIP.America, PIP.America is administering
and fulfilling its obligations to its customers in the ordinary course of
business, and for which it has taken appropriate reserves.

Other than certain of its own warranty claims that it is administering,
PIP.America is indemnified by PIP/USA, Inc., Poly Implants Protheses, S.A., and
Poly Implants Protheses, S.A.'s President, Jean Claude Mas, personally, from all
claims, including those asserted above. As a result, 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 $540,000 at June 30, 2004 in
connection with these matters.

The Company and its subsidiaries have been and will continue to be periodically
named as a defendant in other lawsuits in the normal course of business,
including product liability and product warranty claims. Litigation,
particularly product liability litigation, can be expensive and disruptive to
normal business operations and the results of complex legal proceedings can be
very difficult to predict. Claims against the Company or its subsidiaries have
been and are periodically reviewed with counsel in the ordinary course of
business. The Company presently believes it or its subsidiaries have meritorious
defenses in all lawsuits in which the Company or any of its subsidiaries are

                                      -F18-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 15 - LEGAL CONTINGENCIES (continued)

defendants,  subject to the subsidiaries' continuing warranty obligations, which
the  subsidiaries  intend to continue to  satisfy.  While it is not  possible to
predict the outcome of these matters,  we believe that the costs associated with
them will not have a material adverse impact on the Company's business,  results
of operations or financial position.

NOTE 16 - GOING CONCERN CONSIDERATIONS

As reflected in the accompanying consolidated financial statements, the Company
has an accumulated deficit of approximately $5.1 million, and has cash used in
operations of approximately $2.3 million during 2004. The ability of the Company
to continue as a going concern is dependent on achieving profitable operations,
its ability to generate positive cash flows from operations, and the obtaining
of additional equity and/or debt financing to pay off outstanding debt
obligations and unpaid payroll taxes. There can be no assurance that the
Company's efforts will be successful. The consolidated financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern. No estimate has been made should management's plan
be unsuccessful.

NOTE 17 - LINES OF CREDIT

The Company entered into lines of credit agreements with two financial
institutions up to the aggregate amount of approximately $1,430,000. The Company
has used approximately $900,000 under such lines of credit at June 30, 2004. The
lines of credit bear interest at the EURIBOR rate plus 0.50% (2.516% at June 30,
2004). The outstanding principal balance plus any interest is payable on demand
and is secured by accounts receivables of approximately $600,000, inventories of
approximately $1.1 million, and a personal guarantee of the Company's Chief
Executive Officer of approximately $240,000.

Effective March 31, 2004, concurrent with an amended distribution agreement, the
Company issued to Medicor a revolving promissory note to finance Medicor's and
the Company's administration of product warranty and product warranty related
claims. The note bears interest at the rate of 6.75%. The principal amount under
the note as of June 30, 2004 was $0. The promissory note is unsecured.

NOTE 18 - SUBSEQUENT EVENT

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 1,150,000 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

                                      -F19-

<PAGE>

                    HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 18 - SUBSEQUENT EVENT (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.

NOTE 19 - RELATED PARTY TRANSACTIONS

The Company owed to one of the Company's shareholders approximately $65,000 at
June 30, 2003. The shareholder has paid expenses amounting to approximately
$545,000 on behalf of the Company during 2004. The Company has not repaid the
shareholder during 2004 and the remaining payable to the shareholder at June 30,
2004 amounts to approximately $610,000.


The Company owed  its chief executive officer approximately $123,000 at June 30,
2003. The Chief Executive Officer has paid expenses amounting to approximately
$72,000 on behalf of the Company during 2004. The Company has repaid its chief
executive officer approximately $184,000 during 2004 and the remaining payable
to the chief executive officer at June 30, 2004 amounts to approximately
$11,000.

The Company owes other minority shareholders of one of the Company's
subsidiaries approximately $7,000 at June 30, 2003. The Company has not repaid
the other minority shareholders during 2004 and the remaining payable to other
minority shareholders at June 30, 2004 amounts to approximately $7,000.

All amounts owed to the shareholders of the Company's subsidiary and its chief
executive officer are non-interest bearing and are due upon demand.

                                      -F20-