**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




**ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      the
      fiscal year ended May 31, 2007




Commission
      File Number 0-31611




**AVVAA
      WORLD HEALTH CARE PRODUCTS, INC.**


(Exact
      name of registrant as specified in its charter)







**Nevada**
            **88-395714**(State
                or other jurisdictionof
              incorporationor
                organization)
            (I.R.S.
                Employer Identification No.)






**Box
      459, 1710 Shuswap Ave**


**Lumby,
      BC, Canada V0E 2G0**


(Address
      of principal executive offices) (Zip Code)




**(250)
      547-2048**


(Registrant’s
      telephone number, including area code)


PO
      Box
      335, 3018 Schaeffer Road


Falkland,
      BC Canada V0E 1W0


(Former
      name, former address and former fiscal year, if changed since last
      report)




Securities
                registered pursuant to Section 12(b) of the Act:
            None




Securities
                registered pursuant to Section 12(g) of the Act:
            Common
                Stock, $0.001 par value




Indicate
      by check mark whether the
      registrant (1) has filed all reports required to be filed by Section 13 or
      15(d)
      of the Securities Exchange Act of 1934 during the preceding 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. YesxNoo




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




Indicate
      by check mark whether the
      registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
      YesoNox








Revenues
                for year ended May 31, 2007:
            $95,577




Aggregate
      market value of the voting common stock held by non-affiliates of the registrant
      as of November 1, 2007, was: $300,000




Number
      of
      shares of the registrant’s common stock outstanding as of November 1, 2007 is:
      750,000,000




Transfer
                Agent for the Company is:
            Signature
                Stock Transfer, Inc.2301
                Ohio Drive, Suite 100Plano,
                Texas 75093

















**PART
      I**




**ITEM
      1.  DESCRIPTION OF
      BUSINESS**




GENERAL




We
      were incorporated on June 3, 1998, in the State of Nevada. We have yet to
      generate significant revenues and in accordance with SFAS #7, are considered
      a
      development stage company.




From
      inception to March 14, 2000, we were actively engaged in the acquisition and
      exploration of mineral properties containing gold, silver, copper, zinc and/or
      other mineral deposits. We operated our preliminary business as an exploration
      stage company with the intent to receive income from property sales, joint
      ventures or other business arrangements with larger companies, rather than
      developing and placing our properties into production on our own.




Pursuant
      to an Agreement and Plan of Merger (the “Acquisition Agreement”) effective
      September 12, 2000, we acquired 100% of all the issued and outstanding shares
      of
      common stock of Anmore Management Inc., a Delaware corporation, for $90,000
      and
      10,000 of our shares valued at a nominal $10. On May 22, 2002, we and Anmore
      Management Inc. agreed to reduce the cash settlement of the Acquisition
      Agreement to $40,000 from $90,000. The acquisition was approved by the Board
      of
      Directors and a majority of the shareholders of both Anmore Management Inc.
      and
      us on September 12, 2000. Upon effectiveness of the acquisition, we elected
      to
      become the successor issuer to Anmore Management Inc. for reporting purposes
      under the Securities Exchange Act of 1934 (“the Act”) and elect to report under
      the Act effective September 12, 2000. Anmore Management Inc. assumed the name
      Sierra Gigante Resources, Inc. Our officers and directors became the officers
      and directors of Anmore Management Inc. The $40,010 was treated, for accounting
      purposes, as a reduction of additional paid in capital and not as goodwill
      as
      the nature of the transaction was to allow us to report under the Act by way
      of
      reorganization.




On
      June
      28, 2002 (the “Effective Date”), pursuant to a Share Exchange and Share Purchase
      Agreement (“Share Exchange”) among us; 648311 B.C. Ltd. (“648311”), a British
      Columbia corporation and our wholly owned subsidiary; and Mind Your Own Skin
      Products, Inc., (“MYOSP”) a British Columbia corporation, 648311 acquired
      12,112,500 shares of MYOSP and we acquired 225,000 shares of MYOSP. The
      aggregate of 12,337,500 shares of MYOSP represented all of the issued and
      outstanding shares of MYOSP. In consideration for this transaction, the
      shareholders that transferred 12,112,500 shares to 648311, received 12,112,500
      exchangeable shares of 648311. At the time of closing of this transaction,
      we
      issued 12,112,500 of our shares to 648311. The exchangeable shares can be
      converted into an equivalent amount of our shares. The one shareholder that
      transferred 225,000 shares in MYOSP to us received 225,000 of our shares. Prior
      to this transaction, we had 2,708,879 shares issued and outstanding. After
      this
      transaction, we had 15,046,379 shares issued and outstanding.




On
      the
      Effective Date, Raymond Merry resigned as our President and Chief Executive
      Officer, but remained as our director until September 26, 2002 when James
      MacDonald replaced him. William G. Davenport resigned as our director. The
      following persons became members of our board of directors: John Farley, Charles
      Austin and Dr. Mark Alden. Mr. Farley also became President and Chief
      Executive Officer and Mr. Austin also became Chief Financial Officer and
      Secretary.






1




On
        April
        19, 2007, (the “ Effective Date”) Dr. Mark Alden, William Douglas Ernsberger,
        James MacDonald and James Haney resigned from the Board of
        Directors.  On April 19, 2007 Charles Austin resigned from the Board
        of Directors as well as from his positions of Chief Financial Officer and
        Chief
        Accounting Officer.




The
      Share
      Exchange was approved by the unanimous consent of the Board of Directors of
      Sierra Gigante, 648311 and MYOSP on June 28, 2002. At such time, we changed
      our
      name to AVVAA World Health Care Products, Inc.




On
      June
      28, 2002, pursuant to the terms of the MYOSP transaction, we completed a reverse
      split of our common stock on a 5 for 1 basis, such that every five shares of
      common stock issued and outstanding immediately prior to the reverse split
      was
      changed into one share of fully paid common stock.




BUSINESS
      PLAN




The
      Company is a global biotechnology company specializing in providing all natural,
      therapeutic skin care products. The Company intends to manage the manufacturing,
      distribution, marketing and sale of health-care products to the countries
      specified in its distribution agreement. The specified regions for which the
      Company has the exclusive distribution rights are as follows: North America,
      Central America, South America, India, South East Asia, West Indies, Greater
      Antilles, Australia, Africa, China and Great Britain. The Company’s mission is
      to provide to the public medically safe, natural, non-toxic health-care products
      and specifically products that treat skin abnormalities as well as enhance
      the
      natural clarity and texture of healthy skin. The Company has the exclusive
      distribution rights for patented European skin care products, which are
      scientifically developed to treat the symptoms of skin diseases including
      eczema, psoriasis and acne. The Company intends to manufacture and market
      over-the-counter the Neuroskin line of products through mass marketing food
      and
      drug channels initially in the United States. The three flagship core products
      of the Neuroskin lines are FDA compliant. The Company has developed a business
      plan and conducted research with respect to marketing the products.




On
      December 30, 2005, the Company and its subsidiary entered into a new
      distribution agreement with the German inventor of the patented Neuroskin line
      of skin care products, the inventor’s Company and two related German Companies.
      The German Companies have guaranteed and assumed the obligations of the German
      inventor to meet product supply demands. This agreement supersedes the Company’s
      License Agreements made with the German inventor and his company dated September
      1, 1999 and February 1, 2002.




Pursuant
      to the new distribution agreement the Company maintains its exclusive
      distribution rights to distribute the Neuroskin line of products in North
      America, Central America, South America, India, South East Asia, West Indies,
      Greater Antilles, Australia, Africa, China and Great Britain. The Neuroskin
      line
      of products is a patented, European line of skin care products used for the
      symptomatic treatment of diseases of the skin including eczema, psoriasis and
      acne. The patents and trademarks are owned by the German inventor and/or the
      German companies and are registered in various jurisdictions. The term of the
      new agreement is 15 years with an option to the Company to extend the term
      for a
      further 15 years. The prices for the supply of the Neuroskin products have
      been
      agreed to. There are no minimum purchase requirements, no sales targets and
      no
      royalties are payable.




Pursuant
      to the original License Agreements the Company paid the German inventor a
      royalty advance of $220,000. Under the original License Agreements these amounts
      were to be offset against future royalties due to the inventor or his company.
      Under the new distribution agreement no royalties are payable and these amounts
      are not recoverable and have therefore been written off.




To
      carry
      out our marketing strategies, we will concentrate on a strong relationship
      with
      consumer and channel customers to drive sales in the market areas of direct
      consumer, institutional, mainstream retail & specialty merchants, private
      brand and cosmetic companies, and health and natural food stores. The core
      products will be initially introduced throughout the United States, followed
      by
      the rest of the Americas. Contacting both pharmaceutical sales and marketing
      specialists, as well as manufacturing and distribution, companies has been
      ongoing.




Our
      major
      goal is to provide a better quality of life for our customers by relieving
      the
      severe and underlying pain caused by skin disorders while at the same time
      generating substantial returns for investors.






2








MATERIAL
      AGREEMENTS




Distribution
        Agreement




Pursuant
      to two separate License Agreements entered into on September 1, 1999 and
      February 1, 2002, the Company has been granted by the Inventor of certain
      products known as Neuroskin Spray for Psoriasis/Eczema, Neuroskin Spray for
      Acne
      Relief, Neuroskin Spray for Itch Relief, Nail Fit and Razor Rash the sole and
      exclusive right and license to manufacture, produce, package, distribute,
      market, promote, use and sell, among other things, certain human and animal
      skin
      care treatments and products. These products have received acknowledgement
      from
      the US Food and Drug Administration ("FDA") as compliant products for over
      the
      counter pharmaceuticals as well as cosmetics skin care products. Canadian DIN
      approvals for these products have been renewed and will be activated 30 days
      prior to initial sales in Canada. The license rights include all countries
      in
      the world with the exception of Germany, Switzerland, Austria, Netherlands,
      Belgium, Luxembourg and Lithuania.




The
      original registrant for the various approvals was the Inventor and licensor.
      During fiscal 2004, the various approvals were been transferred to reflect
      the
      Company as the manufacturer and owner. The inventor retains the licensing rights
      to the products.




The
      agreements provide for joint ownership of all applicable patents, pending
      patents, patent applications, trademarks, copyright, secret processes, formulae,
      technical data and other scientific and technical information that has been
      secured.




Pursuant
      to the original License Agreements the Company paid the Inventor royalty
      advances of $220,000. Under the original License Agreements these amounts were
      to be offset against future royalties due to the Inventor or his
      company.




On
      December 30, 2005, the Company entered into a new Distribution Agreement (the
      “Agreement”) with the Inventor of the patented Neuroskin line of skin care
      products, the Inventor’s company and two companies related to the Inventor.
      These companies have guaranteed and assumed the obligations of the Inventor
      to
      meet product supply demands. This Agreement supersedes the Company’s License
      Agreements made with the Inventor and his company dated September 1, 1999 and
      February 1, 2002.




Pursuant
      to the new Agreement, the Company maintains its exclusive distribution rights
      to
      distribute the Neuroskin line of products in North America, Central America,
      South America, India, South East Asia, West Indies, Greater Antilles, Australia,
      Africa, China and Great Britain. The Neuroskin line of products is a patented,
      European line of skin care products used for the symptomatic treatment of
      diseases of the skin including eczema, psoriasis and acne. The patents and
      trademarks are owned by the German inventor and/or the German companies and
      are
      registered in various jurisdictions. The term of the new Agreement is fifteen
      years with an option to the Company to extend the term for a further fifteen
      years. The prices for the supply of the Neuroskin products have been agreed
      to.
      There are no minimum purchase requirements, no sales targets and no royalties
      are payable.




Summit
      Laboratories, Inc.




This
      agreement was executed in February 2005. This agreement is for Summit to
      manufacture the Neuroskin Spray for Psoriasis/Eczema and Neuroskin Spray for
      Acne Relief product for us. The term of the agreement is for 2 years and will
      automatically renew for additional 2 year period unless either party provides
      notice of termination at least 30 days prior to termination of the
      term.




Natures
      Formulae Health Products Ltd.




This
      agreement was executed in September 2004. This agreement is for Natures Formulae
      to manufacture and bottle the Neuroskin Spray for Psoriasis/Eczema and Neuroskin
      Spray for Acne Relief product for us. It is a non-exclusive two year
      manufacturing agreement, which require a 50% deposit on all orders we place
      with
      them.






3






Crossfire
      Network, Inc.




This
      agreement was executed in January 2005. It provides for Crossfire to market
      and
      sell our products. The agreement is effective until February 2010. On February
      1, 2006, the Company entered into a new contract replacing the existing
      five-year agreement with a new one-year agreement. The new contract calls for
      six monthly payments of $20,000 per month recoverable against commissions of
      15%
      on sales generated. The Company can cancel the contract if sales are not booked
      from at least two of eight listed possible customers. On December 18, 2006
      the
      Company notified Crossfire Network, Inc. of its intention to terminate the
      contract effective January 31, 2007.








APRIL
      2005 FINANCING




On April 5, 2005, the Company completed Financing Agreements totalling
      $1,100,000. Under the agreements, the Company will issue up to $1,100,000 in
      convertible notes. The convertible notes bear interest at 8% and are due one
      year from issuance, and bear default interest at 15% thereafter. Any accrued
      interest is payable upon each conversion and on the due date. The notes are
      convertible into common shares of the Company. The conversion price is based
      on
      80% of the average of the three lowest closing prices of the Company’s stock for
      the thirty days prior to conversion; for a maximum of $0.20 per share; and
      a
      minimum of $0.08 per share for eight months after issuance and no minimum
      conversion price thereafter. The timing of the conversion is at the option
      of
      the holder.  The notes are secured by a grant of a general security
      interest in all of the Company’s assets both tangible and
      intangible.




(a)
      (i)  The Company is to issue four series of share purchase warrants as
      follows: Class A warrants equivalent to the number of shares issued on the
      convertible note exercisable at $0.20 per share; Class B warrants equivalent
      to
      75% of the number of shares issued on the convertible note exercisable at $0.25
      per share; Class C warrants equivalent to 75% of the number of shares issued
      on
      the convertible note exercisable at $0.30 per share; and Class D warrants
      equivalent to 50% of the number of shares issued on the convertible note
      exercisable at $0.45 per share. The warrants will expire five years after the
      date the warrants are issued and are callable by the Company when the market
      price is 200% of the exercise price.




(a)
      (ii)  On April 5, 2005, the Company received $660,000 under the terms
      of the convertible notes and is to receive the balance of $440,000 once the
      Company has filed an SB-2 Registration Statement (“SB-2”) with the United States
      Securities and Exchange Commission (“SEC”) that is declared effective (met and
      received). If the SB-2 is not declared effective within ninety days after April
      5, 2005, the Company must pay a penalty of 2% (subsequently amended to 5%)
      for
      each thirty-day period of the convertible notes remaining unconverted. The
      SB-2
      was declared effective in December 2005.




(a)
      (iii)  On April 5, 2005, the Company issued 4,125,000 Class A
      warrants, 3,093,750 Class B warrants, 3,093,750 Class C warrants, and 2,062,500
      Class D warrants pertaining to the $660,000 in convertible notes
      issued.




(a)
      (iv)  On March 30, 2006, the Company agreed to change the conversion
      terms of the convertible notes described above in Note 7 (a). The conversion
      price was changed from 80% to 50% of the average of the three lowest closing
      prices of the Company’s shares for the twenty trading days prior to
      conversion.




(a)
      (v)  There are specific provisions for use of proceeds and penalties
      should the Company vary more than 5% for each individual item specified on
      the
      use of proceeds. The Company is also committed to paying a due diligence fee
      of
      9% of the total convertible notes issued (50% or $49,500 of which was paid
      in
      cash and the other 50% was paid in the form of $49,500 in convertible notes
      with
      the same terms as above and without warrants).




(a) (vi)  On August 2, 2005, the Financing Agreements were amended and
      the Company issued an additional $140,000 in convertible notes. The terms and
      conditions of the original Financing Agreements were unchanged except that
      the
      maximum conversion price for the convertible notes was reduced from $0.20 to
      $0.16 per share and there is no minimum conversion price. The Company issued
      1,129,761 Class A warrants exercisable at $0.20 per share, 847,321 Class B
      warrants exercisable at $0.25 per share, 847,321 Class C warrants exercisable
      at
      $0.30 per share, and 564,881 Class D warrants exercisable at $0.45 per share,
      pertaining to the $140,000 in convertible notes issued. The warrants will expire
      five years after the date the warrants are issued and are callable by the
      Company when the market price is 200% of the exercise price.






4






(a) (vii)  On
      January 17, 2006, the Financing Agreements were completed and the Company
      received an additional $300,000.  The Company issued $493,200 of
      convertible notes for the additional funding of $300,000 and for liquidated
      damages amounting to $193,200 as outlined in Note 7 (a)(ii).  The
      Company issued 4,784,688 Class A warrants exercisable at $0.20 per share,
      3,588,516 Class B warrants exercisable at $0.25 per share, 3,588,516 Class
      C
      warrants exercisable at $0.30 per share, and 2,392,344 Class D warrants
      exercisable at $0.45 per share.




(a) (viii) The warrants are detachable from the convertible notes and have
      been
      accounted for separately in accordance with FAS 133 and EITF
      00-19.  The warrants do not meet the necessary qualifications for
      equity as outlined in EITF 00-19.  As a result, the warrants and
      conversion feature were classified as liabilities pursuant to FAS 133 at fair
      value with changes in fair value recorded in the consolidated statements of
      operations.




The
      Company classified the conversion features and warrants as derivative
      liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
      derivative liabilities (Refer to Notes 8 and 22) on the convertible notes equal
      to the fair value of the conversion feature and warrants of $3,689,435 and
      a
      discount on the notes of $1,342,700.  During the year ended May 31,
      2007, interest of $332,900 (May 31, 2006 – $449,174) has been accreted. At May
      31, 2006, $350,000 of the $1,342,700 convertible notes had been converted into
      common shares leaving outstanding principal of $992,700 with a carrying value
      of
      $659,800.  During the year ended May 31, 2007 an additional $267,063
      was converted into common shares leaving outstanding principal of $725,637
      with
      a carrying value of $725,637.




The
      Company agreed to file a post-effective amendment of the SB-2 filed with the
      SEC
      on or before February 28, 2006 to register an additional 4,081,691 shares of
      common stock assuming complete conversion pertaining to the $193,200 in
      liquidated damages as per the terms of the financing agreements. The additional
      4,081,691 were included in the SB-2 filed on May 19, 2006.







MARCH
      2006 FINANCING





On
      March
      30, 2006, the Company completed financing agreements for $2,000,000 with private
      investors (the “Investors”). The Company will issue to the Investors secured
      convertible notes totalling $2,000,000 with a 6% interest rate and a maturity
      of
      three years. The notes are convertible into shares of common stock at 50% of
      the
      average of the lowest three closing prices for the Company’s shares during the
      twenty trading days prior to conversion. The applicable conversion percentage
      changes to 55% if the SB-2 is filed on or before the Filing Date; and 60% if
      the
      SB-2 is declared effective by the Effectiveness Deadline. The convertible notes
      are secured by a lien on all of the Company’s assets pursuant to the Security
      Agreement and the Intellectual Property Security Agreement entered into with
      the
      Investors.




(b)
      (i)  Under the terms of these agreements, $700,000 was funded on the
      Closing Date, a further $600,000 was funded on the date an SB-2 Registration
      Statement (“SB-2”) was filed (pursuant to a Registration Rights Agreement) with
      the SEC, and $700,000 was funded on the date the SB-2 Registration Statement
      was
      declared effective by the SEC. Pursuant to the terms of a Registration Rights
      Agreement, the Company is required to register the shares underlying the
      convertible notes, as well as the shares to be issued pursuant to the warrants
      within forty-five days from the Closing Date and are required to have the SB-2
      declared effective within 120 days from the Closing Date. In the event that
      the
      SB-2 is not filed or declared effective within these time limits, the Company
      may be deemed in default under the agreements and subject to liquidated damages
      in the amount of 2% of the entire funding amount per month.






5






(b) (ii)  Pursuant to this financing transaction, the Company also
      granted the Investors the right to purchase an aggregate of 36,000,000 shares
      of
      common stock (the “Warrants”), of which Warrants to purchase 26,000,000 shares
      were issued on March 27, 2006 and Warrants to purchase 10,000,000 shares were
      issued on May 23, 2006. The Warrants are exercisable for a period of seven
      years
      from the dates of issuance at an exercise price of $0.16 per share.




(b)
      (iii)  On
      May
      30, 2006 the Company’s solicitors received a letter from the SEC indicating that
      the SEC would not be reviewing the SB-2 and indicating that the filing could
      not
      "go effective" until the Company had increased its Authorized Capital. On July
      26, 2006, the Company increased the authorized capital from 100,000,000 to
      750,000,000 shares.  The SB-2 was declared effective in October
      2006.




(b) (iv)  As
      at May
      31, 2007, the Company has issued callable secured convertible notes totalling
      $2,000,000. The Company received the first tranche of $700,000 on March 27,
      2006, the second tranche of $600,000 on May 23, 2006, and the third tranche
      of
      $700,000 on October 6, 2006. The warrants are detachable from the convertible
      notes and have been accounted for separately in accordance with FAS 133 and
      EITF
      00-19.  The warrants do not meet the necessary qualifications for
      equity as outlined in EITF 00-19.  As a result, the warrants and
      conversion feature were classified as liabilities pursuant to FAS 133 at fair
      value with changes in fair value recorded in the consolidated statements of
      operations.




The
      Company classified the conversion features and warrants as derivative
      liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
      derivative liabilities (Refer to Notes 8 and 22) on the convertible notes equal
      to the fair value of the conversion feature and warrants of $5,780,668 and
      a
      discount on the notes of $2,000,000.  The Company will record further
      interest expense over the term of the convertible notes of $1,916,239 resulting
      from the difference between the stated value and carrying value at the date
      of
      issuance. The carrying value of the convertible notes will be increased to
      the
      face value of the convertible notes of $2,000,000 at
      maturity.  Interest expense for the year ended May 31, 2007 on
      principal of $2,000,000 totalling $495,886 has been accreted (2006 - $45,893).
      During the year ended May 31, 2007, $172,409 was converted into common shares
      leaving outstanding principal of $1,827,591 with a carrying value of
      $625,651.







MARCH
      2007 FINANCING





On March 1, 2007, the Company completed financing agreements for $250,000 with
      private investors (the “Investors”). The Company issued to the investors
      callable secured convertible notes totalling $250,000 with a 6% interest rate,
      15% interest rate upon default and a maturity of three years (the “Notes”). The
      notes are convertible into shares of common stock at 50% of the average of
      the
      lowest three closing prices for the Company’s shares during the twenty trading
      days prior to conversion. The applicable conversion percentage changes to 55%
      if
      the SB-2 is filed within 45 days of the Closing Date; and 60% if the SB-2 is
      declared effective within 120 days from the Closing Date. The SB-2 has not
      been
      filed.  The Notes are secured with a secondary position on all of the
      Company's assets pursuant to the Security Agreement and the Intellectual
      Property Security Agreement entered into with the Investors.





In addition, the Company granted the Investors warrants with a seven-year
      maturity, to purchase 10 million shares of the Company’s common stock at an
      exercise price of $.002.  Pursuant to the terms of a Registration
      Rights Agreement, the Company is required to register the shares underlying
      the
      Notes, as well as the shares to be issued pursuant to the Warrant, for a total
      of 120 million shares, within 45 days from the Closing Date and is required
      to
      have the registration statement declared effective within 120 days from the
      Closing Date.  The underlying shares have not been registered and the
      Company has defaulted on the convertible notes.




There
      are
      liquidated damages or cash penalties payable to the warrant holder if the
      Company cannot register the shares underlying the warrants.  The
      Company must file an SB-2 to register the warrant shares within 45 days from
      the
      closing date and have the SB-2 declared effective within 120 days.  If
      the Company fails to file by the 45th day, there is a 2% penalty payable as
      of
      that date.  Then on the 30th day thereafter there is another 2%
      penalty, prorated if the default is cured during the 30 day
      period.  If the SB-2 is not declared effective by the 120th day, then
      on the 30th day after that day there is a 2% penalty and on each 30th day after
      that another 1% penalty, again prorated to a maximum of 6%.  The
      penalties commenced April 14, 2007 at 2% of $250,000 and continue at 2% per
      month for each month thereafter until the Convertible Notes mature in March
      2010. The maximum penalty payable is $15,000.  At May 31, 2007 the
      Company has recorded $7,500 in accrued liabilities for the 2% penalties that
      have accrued from April 14, 2007 to May 31, 2007.


At
        May
        31, 2007, the fair value of the warrants was $9,844 and the conversion feature
        was $463,514.  The fair value of the warrants and the conversion
        feature upon issuance of convertible notes on March 1, 2007 was $29,725 and
        $709,621, respectively.





INQUIRY
      FROM THE ORGANIZATION FORMERLY KNOWN AS THE NASD




On
      March
      23, 2005, we received an inquiry from the staff of the Market Regulation
      department of the organization formerly known as the NASD regarding our trading
      activity. The inquiry consisted of 13 questions about our outstanding contracts
      and business operations. We subsequently responded to the organization formerly
      known as the NASD inquiry with all required documentation. We have not received
      any further inquiries from the organization formerly known as the
      NASD.






6








EMPLOYEES




As
      of November 1, 2007 we have 2 full time employees, 4
      consultants under contract and 2 part time employees.   With the
      restructuring of the company we have laid off the balance of employees with
      the
      intention of re-hiring them as sales and revenues increase.  We have never
      had a work stoppage, and no employees are represented under collective
      bargaining agreements.  We consider our relations with current and past
      employees and consultants as good.  Our contract maufacturers, Summit Labs
      in Chicago and Natures Formulae in Kelowna, B.C. are capable of handling 25,000
      bottles per shift and Summit Labs can also facilitate packaging and shipping
      of
      25,000 bottles per day.





Our
      management team of employees and consultants combines 210 years of corporate
      management, and sales and marketing experience with a strong emphasis in
      financial accounting, pharmaceutical, and banking experience.  The medical
      research team is comprised of world-renowned medical professionals in the fields
      of dermatology,veterinary medicine and radiation oncology.







**ITEM
      2.  DESCRIPTION OF
      PROPERTY**




On
      August
      30, 2005, we completed the purchase of an office building at 1710 Shuswap Ave,
      Lumby, British Columbia, V0E 2G0, which will become the Company’s head office.
      The Company purchased the office building for $325,000 (Canadian dollars) and
      paid brokerage, loan and acceptance fees totaling $36,125 (Canadian dollars).
      The Company financed the purchase with mortgages totaling $350,000 (Canadian
      dollars) with a first mortgage of $211,250, (Canadian dollars) bearing interest
      at 9.95%, and a one-year term and a second mortgage of $138,750(Canadian
      dollars) for a one year term bearing interest of 15% per annum.





Subsequent
        to May 31, 2007, the mortgages were foreclosed.  The Company applied
        for and was granted a 6 month grace period to find another lender or sell
        the
        property. The property has been sold on October 31, 2007





**ITEM
      3.  LEGAL
      PROCEEDINGS**




The
      former Vice President of Sales and Marketing of the Company, Barbara Smith,
      wrongfully registered certain of the Company’s internet domain names in the name
      of a consulting company controlled by her called E-Clarity Consulting Inc.
      during the time she worked for the Company. The Company was able to recover
      registered ownership of some of its domain names but she refused to cooperate
      to
      hand over control of the balance to the Company. On September 30, 2005, the
      Company commenced legal proceedings in the Supreme Court of British Columbia
      against Barbara Smith and E-Clarity Consulting Inc. alleging that she breached
      her fiduciary and contractual duties to the Company on a number of grounds,
      including wrongfully registering the Company’s internet product property in such
      a manner and by failing to deliver them to the Company when requested to do
      so.
      On September 30, 2005, the Company obtained an interim Court Order requiring
      Barbara Smith and E-Clarity Consulting Inc. to deliver the internet property
      to
      the Company within two days of being served with the Court Order. She was served
      with the Court Order and complied with it. On October 17, 2005, the Company
      obtained a judgment against Barbara Smith and E-Clarity Consulting Inc. for
      damages to be assessed plus costs to be assessed. The Company has not since
      taken any steps in the proceedings to assess costs or damages.




In
      September 2005, the Company received an invoice from E-Clarity Consulting Inc.
      seeking payment of $240,137 with a threat to face legal proceedings if the
      amount was not paid. The Company denies the amount claimed is owed, has not
      paid
      any of the amount claimed, and intends to vigorously defend its position when
      required to do so. The Company has recorded an amount owing to Barbara Smith
      of
      $131,458 recorded in its books as at May 31, 2007. She has issued further
      invoices unilaterally adding further interest charges to the amount allegedly
      owing, but she has taken no steps in the Courts to attempt to collect it. The
      Company denies the obligation to pay the invoiced amount and interest as claimed
      by her.










7








Aside
      from rendering her invoices, Barbara Smith has not taken any steps in the
      existing legal proceedings nor has she initiated any other legal proceedings
      to
      advance her claims for payment from the Company. If she takes steps in legal
      proceedings to collect the amounts allegedly due, the Company will defend the
      claim and proceed to assess damages and costs in its legal proceedings and
      seek
      to set off those amounts from the amount, if any, which might be found by a
      court to be payable by the Company to her. If the Company’s damage claim against
      her exceeds the amount which may be payable to her, the Company plans to collect
      the excess of such damages and costs from Barbara Smith and E-Clarity Consulting
      Inc.




On
      May 9,
      2007, the former CFO of the Company commenced legal proceedings against the
      Company seeking judgement for unpaid services pursuant totalling $73,312 plus
      costs and on May 25, 2007 filed an application for summary
      judgement.  The Company retained counsel to defend against the action
      and in particular the application for judgment.  The Company is not taking
      issue with the amount claimed, but it is claiming that the former CFO
      should be precluded from taking the proceedings at this time and obtaining
      judgment because of an agreement between the Company’s executives initiated by
      himself whereby they all agreed to postpone payment of unpaid salaries and
      bonuses until the Company's finances improved to make the payments viable
      without threatening the Company's ability to advance its business
      interests.  The Company's counsel has served its own
      application dated July 6, 2007 to stay (or suspend) the prosecution of
      based on this agreement.  Both applications are currently pending.  No
      court date has been set for their hearing.  The amount claimed was
      accrued at May 13, 2007.




Other
      than noted above, there is no litigation pending or threatened by or against
      us.




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




On
      June
      26, 2006, the Company filed a Preliminary Form 14A with the SEC informing the
      shareholders of an Annual Meeting on July 26, 2006. Included in the resolutions
      for approval by the Shareholders was an Amendment to the Company bylaws to
      increase the Authorized Capital from 100,000,000 shares to 750,000,000 shares.
      Also included was a resolution for approval of the 2006 Stock Incentive Plan
      for
      a total of 10,000,000 shares of common stock to be issued to employees,
      directors, independent contractors agents or other eligible persons; to elect
      seven (7) directors to serve until the next annual meeting or until their
      successors are duly elected and qualified; to authorize the formation of an
      Audit Committee and a Compensation Committee and to ratify the members thereto;
      and to ratify the engagement of our new auditors,. On July 26, 2006, at the
      Annual Meeting of Shareholders, the shareholders approved all of the above
      actions.




**PART
      II**




**ITEM
      5.  MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS**




Our
      common stock is currently traded on the OTC Bulletin Board under the symbol
      “AVVW.” The following table sets forth the high and low bid prices for our
      common stock for the last three fiscal years (since the first fiscal quarter
      of
      the fiscal year June 1, 2002 through May 31, 2007).




**YEAR**
            **QUARTER**
            **HIGH**
            **LOW**2003-04
            Third(December
                1-February 28)
            0.51
            0.302004
            Fourth(March
                1-May 31)
            0.74
            0.252004
            First(June
                1-August 31)
            0.578
            0.222004
            Second(September
                1-November 30)
            0.39
            0.2352004-05
            Third(December
                1-February 28)
            0.31
            0.1452005
            Fourth(March
                1-May 31)
            0.25
            0.092005
            First(June
                1-August 31)
            0.19
            0.102005
            Second
                (September 1 – November 30)
            0.15
            0.0552005-06
            Third
                (December 1 – February 28)
            0.14
            0.0492006
            Fourth
                (March 1-May 31)
            0.058
            0.0282006
            First
                (June 1 – August 31)
            0.054
            0.0202006
            Second
                (September 1 – November 30)
            0.030
            0.0052006-07
            Third
                (December 1 – February 28)
            0.0084
            0.00212007
            Fourth
                (March 1 – May 31)
            0.0004
            0.00042007
            First
                (June 1 – August 31)
            0.0004
            0.00042007
            Second
                (September 1 – November 1)
            0.0004
            0.0004








8






As
      of
      November 1, 2007, in accordance with our transfer agent records, we had 160
      shareholders of record. Such shareholders of record held 750,000,000 shares
      of
      our common stock.




DIVIDENDS




We
      intend
      to retain future earnings to support our growth. Any payment of cash dividends
      in the future will be dependent upon: the amount of funds legally available;
      our
      earnings; financial condition; capital requirements; and other factors which
      our
      Board of Directors deems relevant.




**ITEM6.  
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
      OPERATIONS**




MANAGEMENT’S
      DISCUSSION




This
      report contains forward-looking statements. The words, “anticipate”, “believe”,
      expect”, “plan”, “intend”, “estimate”, “project”, “could”, “may”, “foresee”, and
      similar expressions are intended to identify forward-looking statements. Our
      actual results could differ materially from the results discussed in the
      forward-looking statements.




OVERVIEW




We
      were
      incorporated on June 3, 1998 in the State of Nevada. On June 28, 2002, we
      completed the acquisition of 100% of the common shares of Mind Your Own Skin
      Products Inc. (“MYOSP”), a company incorporated under the Company Act of the
      Province of British Columbia, Canada. The purchase transaction consisted of
      12,112,501 common shares, after a 1 new for 5 old reverse stock split of our
      issued common shares. This share issuance resulted in a reverse takeover of
      us
      by the shareholders of MYOSP. Certain directors and officers of MYOSP became
      our
      directors and officers. The financial statements included in this report are
      a
      continuation of MYOSP (date of inception March 25, 1999).




The
      Company is a global biotechnology company specializing in providing all natural,
      therapeutic skin care products. The Company intends to manage the manufacturing,
      distribution, marketing and sale of health-care products to the countries
      specified in its distribution agreement. The specified regions for which the
      Company has the exclusive distribution rights are as follows: North America,
      Central America, South America, India, South East Asia, West Indies, Greater
      Antilles, Australia, Africa, China and Great Britain. The Company’s mission is
      to provide to the public medically safe, natural, non-toxic health-care products
      and specifically products that treat skin abnormalities as well as enhance
      the
      natural clarity and texture of healthy skin. The Company has the exclusive
      distribution rights for patented European skin care products, which are
      scientifically developed to treat the symptoms of skin diseases including
      eczema, psoriasis and acne. The Company intends to manufacture and market
      over-the-counter the Neuroskin line of products through mass marketing food
      and
      drug channels initially in the United States. The three flagship core products
      of the Neuroskin lines are FDA compliant. The Company has developed a business
      plan and conducted research with respect to marketing the products.




On
      December 30, 2005, the Company and its subsidiary entered into a new
      distribution agreement with the German inventor of the patented Neuroskin line
      of skin care products, the inventor’s Company and two related German Companies.
      The German Companies have guaranteed and assumed the obligations of the German
      inventor to meet product supply demands. This agreement supersedes the Company’s
      License Agreements made with the German inventor and his company dated September
      1, 1999 and February 1, 2002.






9






Pursuant
      to the new distribution agreement the Company maintains its exclusive
      distribution rights to distribute the Neuroskin line of products in North
      America, Central America, South America, India, South East Asia, West Indies,
      Greater Antilles, Australia, Africa, China and Great Britain. The Neuroskin
      line
      of products is a patented, European line of skin care products used for the
      symptomatic treatment of diseases of the skin including eczema, psoriasis and
      acne. The patents and trademarks are owned by the German inventor and/or the
      German companies and are registered in various jurisdictions. The term of the
      new agreement is 15 years with an option to the Company to extend the term
      for a
      further 15 years. The prices for the supply of the Neuroskin products have
      been
      agreed to. There are no minimum purchase requirements, no sales targets and
      no
      royalties are payable.




Pursuant
      to the original License Agreements the Company paid the German inventor a
      royalty advance of $220,000. Under the original License Agreements these amounts
      were to be offset against future royalties due to the inventor or his company.
      Under the new distribution agreement no royalties are payable and these amounts
      are not recoverable and have therefore been written off.




We
      are
      considered a development stage company in accordance with Statement of Financial
      Accounting Standards (SFAS) No. 7. Our consolidated financial statements have
      been prepared in accordance with United States generally accepted accounting
      principles, on a going concern basis, which contemplates the realization of
      assets and the satisfaction of liabilities and commitments in the normal course
      of business. We commenced manufacturing operations and launched a consumer
      web
      site to generate Internet sales on December 1, 2004.






As
      of May
      31, 2007, we have a working capital deficit of $14,499,377 and have accumulated
      operating losses of $22,999,430 since our inception. Our continuation is
      dependent upon the continuing financial support of creditors and stockholders,
      obtaining long-term financing, generating significant revenue, and achieving
      profitability. These conditions raise substantial doubt about our ability to
      continue as a going concern. Our financial statements do not include any
      adjustments that might arise from this uncertainty.




Key
      trend
      and analytical points on the potential effects of known trends.




The
      Company’s management has studied trends in the aging population and the
      widespread problem of Skin Diseases. The emotional and social consequences
      of
      skin disease are often profound and life altering. “In cases where psoriasis
      plaques are visible, patients can suffer severe humiliation and depression;
      some
      even withdraw from society and become isolated. In one study, 75% of patients
      reported that psoriasis undermined their confidence. Another study reported
      that
      8% felt their life was not worth living”.   Dr. Iona Ginsburg,
      MD, Associate Clinical Professor of Psychiatry in Dermatology at New York’s
      Columbia-Presbyterian Medical Center, wrote in a 1995 journal article:
“Psoriasis is a disease that, in attacking the skin, attacks the very identity
      of the individual. Many patients have to deal on a daily basis with shame,
      guilt, anger and fear of being thought dirty and infectious by
      others”




o
      Seventeen million (17 million) Americans have acne (*The National Institute
      of
      Arthritis and Musculoskeletal and Skin Diseases).




o
      There
      are 7 million people living in the United States that are affected by some
      form
      of psoriasis. Approximately two hundred and fifty thousand new cases are
      reported each year. (*Well-Connected Report, 1999 Nidus Information Services
      Inc., June 1999).




o
“Skin
      problems are exceedingly common: 30% of Americans have dermatological conditions
      requiring a physician’s care. Moreover, the skin and its appendages (the hair
      and nails) play a paramount role in our psychological makeup.” (*Cecil Textbook
      of Medicine 20th edition, 1996).








10








11999
      Nidus Information Services, Inc. Well-Connected Report: Psoriasis. June
      1999




o
      Over 16
      million people living in the United States are affected by eczema (*The National
      Institute of Arthritis and Musculoskeletal and Skin Diseases).




o
      *Research by the National Psoriasis Association, the USA Dermatologist
      Association and other institutions indicate that close to $4 billion is spent
      on
      treatments for psoriasis, eczema, and acne per year.




o
“85%
      of
      the US population between ages 12-25 develop some form of acne.” (*FDA Consumer
      Report, “On the Teen Scene” section of WebMD Health).




o
      The
      psoriasis market is continuing to grow with the aging population and affects
      between 0.5% - 3% of the world’s population, (*Well-Connected Report, 1999 Nidus
      Information Services Inc., June 1999).




o
      *Forrester Research states in their article “B2B Healthcare Spending Shifting
      Online” (Jan. 2000), “Over-the-counter drugs, health and beauty aids will
      contribute $1.9 billion and $900 million, respectively, to the online retail
      category.”




o
      The
      market size for the health and natural food store market tops 9,245 stores
      in
      USA with sales reaching $14 billion in 2000. (*source:
      www.marketresearch.com)




Because
      of these growing trends the Company’s management has set site on these Primary
      Target Markets and Secondary Target Markets.





Primary




o
            Individuals
                suffering with psoriasis, eczema and acne and various other skin
                diseases;o
            Pharmacy
                Retail outlets;o
            Mainstream
                and Specialty Drug and Food Chain outlets; and Institutions - hospitals,
                clinics, prisons.




Secondary




o
            Private
                brand companies;o
            Cosmetic
                companies; ando
            Health
                and Natural Food Store Market.




In
      addition to the direct AVVAA employee’s, and to insure that AVVAA can sell
      through to the Primary and Secondary markets the following actions have been
      taken:




Crossfire
      Network Inc. was hired as a consultant / Independent Contractor in January
      of
      2005 for the sole purpose of assisting and executing the sales plan in
      conjunction with AVVAA. This contract was replaced with a new one year contract
      dated February 1, 2006 and signed by all parties on March 22, 2006. The contract
      calls for six monthly payments of $20,000 per month recoverable against
      commissions of 15%. The contract can be cancelled by the company if sales are
      not booked by at least two of eight listed possible customers. On December
      18,
      2006 the Company notified Crossfire Network, Inc. of its intention to terminate
      the contract effective January 31, 2007.





During
      the year ended May 31, 2007 the Company entered into a six-year agreement with
      a
      distributor for Indonesia.  The distributor is granted the right to
      use the Company trademarks and product names.  The agreement will
      automatically renew for further periods of three years unless either party
      provides notification within 90 days of expiration.








11







The  Company
      also entered into a consulting agreement for financial and marketing advice
      including the production of marketing materials and introductions to
      distributors, buyers and stores for the animal care line of
      products.  The term of the contract is dependent on completion of the
      agreed upon tasks which are expected to require nine months to complete. As
      payment, the Company is to provide 44,000,000 shares of common stock of the
      Company, immediately, or, as soon as a registration statement can be completed
      with the SEC.





During
      the year ended May 31, 2007 the Company completed an agreement for an
      advertising campaign and agreed to pay a fee for referrals not to exceed
      $20,000.  The agreement does not have a specific term but can be
      canceled by the Company on seven days notice.





During
      the year ended May 31, 2007, the Company entered into a consulting agreement
      for
      financial advisory services, marketing planning  and Strategic
      Planning advice. The term of the contract is for one year. The Company is to
      provide 20,000,000 shares of common stock of the Company as soon as a
      registration statement can be completed with the SEC. The shares are to be
      issued in three installments of 6 million 6,667,000 shares at the beginning
      of
      each three-month period.





PLAN
      OF
      OPERATIONS FOR THE NEXT TWELVE MONTHS




We
      are
      presently licensed to manufacture and distribute patented European skin care
      products, which were scientifically developed to treat the symptoms of skin
      diseases including eczema, psoriasis and acne. We intend to manufacture and
      market over-the-counter the Neuroskin line of products through direct to
      consumer sales followed by penetration into the food, drug and mass distribution
      channels in the United States. The three flagship core products of the Neuroskin
      lines are FDA compliant. We have developed a business plan and have conducted
      research with respect to marketing the products.




We
      will
      initially seek to generate sales and begin building brand awareness by
      aggressively marketing these products through the Internet. The Internet is
      only
      one element in the overall business strategy. An integrated approach will ensure
      cohesive efforts support both online and offline sales and marketing strategies.
      A comprehensive marketing plan has been developed.




Manufacturing
      operations commenced on December 1, 2004 at Natures Formulae manufacturing
      facility in Kelowna, British Columbia with the production of the three core
      products of the Neuroskin line. In addition, a consumer web site was launched
      on
      December 1, 2004, which can be viewed at http://www.help4skincare.com. This
      consumer-orientated information and product purchase web site was developed
      specifically to open a direct line to consumer sales channel.




On
      August
      30, 2005, the Company completed the purchase of a building and property in
      Lumby, British Columbia to serve as the head office.





During
      the year ended May 31, 2007, as part of a cost-cutting program, the Company’s
      senior management agreed to reduce salary and consulting fees by 65% for the
      period March 1, 2007 to May 31,2007. In addition, the Company’s office building
      was listed for sale.





RESULTS
      OF OPERATIONS FOR TWELVE MONTHS ENDED MAY 31, 2007 COMPARED TO THE TWELVE MONTHS
      ENDED MAY 31, 2006.




Manufacturing
      operations commenced at the end of November 30, 2004 and a consumer web site
      was
      launched in December 2004, to enable the commencement of sales through the
      Internet, and through fax and mail orders. An animal care product line was
      launched in May 2005.





The
        net
        loss in 2007 was $4,470,747 ($0.03 per share) compared to a net loss of
        $10,500,563 ($0.25 per share) in 2006, a decrease of $6,029,816. The primary
        cause of the decreased loss was the $5,085,013 gain on the change in fair
        value
        of derivative liabilities  relating to the convertible notes. In 2007,
        the Company recorded Sales of $95,577, compared to $18,657 in 2006. Cost
        of
        sales in 2007 were increased to $444,096 due to the impairment of inventory
        of
        337,237






12






LIQUIDITY
      AND CAPITAL RESOURCES




For
      the
      twelve months ended May 31, 2007, operations were primarily financed by the
      proceeds issue of Convertible Notes of $950,000, an increase in accounts payable
      and accrued liabilities of $5,253,564 and cash on hand at May 31, 2006.  As
      of May 31, 2007, we had an cash of  $8,571 and had a working capital
      deficit of 14,499,377. As of the year ending May 31, 2006, we had a working
      capital deficit of $12,447,778.






As
        of May 31, 2007 we have recorded an allowance for slow moving obsolete
        inventory of $ 337,237




May
                31,
              2007
              $
            May
                31,
              2006
              $
              Restateda)Convertible
                notes (“April 2005 Financing”) interest rate 15% per annum; due one year
                from issuance; convertible at 50% of the average three lowest closing
                prices of the Company’s common stock for the 20 days prior to
                conversion.
            725,637
            659,800b)Convertible
                notes  (“March 2006 Financing”) interest rate 15% per annum; due
                three years from issuance; convertible at 60% of the average three
                lowest
                closing prices of the Company’s common stock for the 20 days prior to
                conversion.
            625,651
            45,893c)Convertible
                notes  (“March 2007 Financing”) interest rate 15% per annum; due
                three years from issuance; convertible at 50% of the average three
                lowest
                closing prices of the Company’s common stock for the 20 days prior to
                conversion.
            20,757
            –Convertible
                notes
            1,372,045
            705,693




(a)
      *April 2005 Financing*




On
      April
      5, 2005, the Company completed Financing Agreements totalling $1,100,000. Under
      the agreements, the Company will issue up to $1,100,000 in convertible notes.
      The convertible notes bear interest at 8% and are due one year from issuance,
      and bear default interest at 15% thereafter. Any accrued interest is payable
      upon each conversion and on the due date. The notes are convertible into common
      shares of the Company. The conversion price is based on 80% of the average
      of
      the three lowest closing prices of the Company’s stock for the thirty days prior
      to conversion; for a maximum of $0.20 per share; and a minimum of $0.08 per
      share for eight months after issuance and no minimum conversion price
      thereafter. The timing of the conversion is at the option of the
      holder.  The notes are secured by a grant of a general security
      interest in all of the Company’s assets both tangible and
      intangible.




(a)
      (i)  The Company is to issue four series of share purchase warrants as
      follows: Class A warrants equivalent to the number of shares issued on the
      convertible note exercisable at $0.20 per share; Class B warrants equivalent
      to
      75% of the number of shares issued on the convertible note exercisable at $0.25
      per share; Class C warrants equivalent to 75% of the number of shares issued
      on
      the convertible note exercisable at $0.30 per share; and Class D warrants
      equivalent to 50% of the number of shares issued on the convertible note
      exercisable at $0.45 per share. The warrants will expire five years after the
      date the warrants are issued and are callable by the Company when the market
      price is 200% of the exercise price.








13








(a)
      (ii)  On April 5, 2005, the Company received $660,000 under the terms
      of the convertible notes and is to receive the balance of $440,000 once the
      Company has filed an SB-2 Registration Statement (“SB-2”) with the United States
      Securities and Exchange Commission (“SEC”) that is declared effective (met and
      received). If the SB-2 is not declared effective within ninety days after April
      5, 2005, the Company must pay a penalty of 2% (subsequently amended to 5%)
      for
      each thirty-day period of the convertible notes remaining unconverted. The
      SB-2
      was declared effective in December 2005.




(a)
      (iii)  On April 5, 2005, the Company issued 4,125,000 Class A
      warrants, 3,093,750 Class B warrants, 3,093,750 Class C warrants, and 2,062,500
      Class D warrants pertaining to the $660,000 in convertible notes
      issued.




(a)
      (iv)  On March 30, 2006, the Company agreed to change the conversion
      terms of the convertible notes described above in Note 7 (a). The conversion
      price was changed from 80% to 50% of the average of the three lowest closing
      prices of the Company’s shares for the twenty trading days prior to
      conversion.




(a) (v)  There are specific provisions for use of proceeds and
      penalties should the Company vary more than 5% for each individual item
      specified on the use of proceeds. The Company is also committed to paying a
      due
      diligence fee of 9% of the total convertible notes issued (50% or $49,500 of
      which was paid in cash and the other 50% was paid in the form of $49,500 in
      convertible notes with the same terms as above and without
      warrants).




(a) (vi)  On August 2, 2005, the Financing Agreements were amended and
      the Company issued an additional $140,000 in convertible notes. The terms and
      conditions of the original Financing Agreements were unchanged except that
      the
      maximum conversion price for the convertible notes was reduced from $0.20 to
      $0.16 per share and there is no minimum conversion price. The Company issued
      1,129,761 Class A warrants exercisable at $0.20 per share, 847,321 Class B
      warrants exercisable at $0.25 per share, 847,321 Class C warrants exercisable
      at
      $0.30 per share, and 564,881 Class D warrants exercisable at $0.45 per share,
      pertaining to the $140,000 in convertible notes issued. The warrants will expire
      five years after the date the warrants are issued and are callable by the
      Company when the market price is 200% of the exercise price.




(a)
      (vii)  On January 17, 2006, the Financing Agreements were completed
      and the Company received an additional $300,000.  The Company issued
      $493,200 convertible notes for the additional funding of $300,000 and for
      liquidated damages amounting to $193,200 as outlined in Note 7
      (a)(ii).  The Company issued 4,784,688 Class A warrants exercisable at
      $0.20 per share, 3,588,516 Class B warrants exercisable at $0.25 per share,
      3,588,516 Class C warrants exercisable at $0.30 per share, and 2,392,344 Class
      D
      warrants exercisable at $0.45 per share.




(a) (viii) The warrants are detachable from the convertible notes and have
      been
      accounted for separately in accordance with FAS 133 and EITF
      00-19.  The warrants do not meet the necessary qualifications for
      equity as outlined in EITF 00-19.  As a result, the warrants and
      conversion feature were classified as liabilities pursuant to FAS 133 at fair
      value with changes in fair value recorded in the consolidated statements of
      operations.




The
      Company classified the conversion features and warrants as derivative
      liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
      derivative liabilities (Refer to Notes 8 and 22) on the convertible notes equal
      to the fair value of the conversion feature and warrants of $3,689,435 and
      a
      discount on the notes of $1,342,700.  During the year ended May 31,
      2007, interest of $332,900 (May 31, 2006 – $449,174) has been accreted. At May
      31, 2006, $350,000 of the $1,342,700 convertible notes had been converted into
      common shares leaving outstanding principal of $992,700 with a carrying value
      of
      $659,800.  During the year ended May 31, 2007 an additional $267,063
      was converted into common shares leaving outstanding principal of $725,637
      with
      a carrying value of $725,637.




The Company agreed to file a post-effective amendment of the SB-2 filed with
      the
      SEC on or before February 28, 2006 to register an additional 4,081,691 shares
      of
      common stock assuming complete conversion pertaining to the $193,200 in
      liquidated damages as per the terms of the financing agreements. The additional
      4,081,691 were included in the SB-2 filed on May 19, 2006.






14







(b) *March 2006 Financing*




On March 30, 2006, the Company completed financing agreements for $2,000,000
      with private investors (the “Investors”). The Company will issue to the
      Investors secured convertible notes totalling $2,000,000 with a 6% interest
      rate
      and a maturity of three years. The notes are convertible into shares of common
      stock at 50% of the average of the lowest three closing prices for the Company’s
      shares during the twenty trading days prior to conversion. The applicable
      conversion percentage changes to 55% if the SB-2 is filed on or before the
      Filing Date; and 60% if the SB-2 is declared effective by the Effectiveness
      Deadline. The convertible notes are secured by a lien on all of the Company’s
      assets pursuant to the Security Agreement and the Intellectual Property Security
      Agreement entered into with the Investors.




(b) (i)  Under the terms of these agreements, $700,000 was funded on
      the Closing Date, a further $600,000 was funded on the date an SB-2 Registration
      Statement (“SB-2”) was filed (pursuant to a Registration Rights Agreement) with
      the SEC, and $700,000 was funded on the date the SB-2 Registration Statement
      was
      declared effective by the SEC. Pursuant to the terms of a Registration Rights
      Agreement, the Company is required to register the shares underlying the
      convertible notes, as well as the shares to be issued pursuant to the warrants
      within forty-five days from the Closing Date and are required to have the SB-2
      declared effective within 120 days from the Closing Date. In the event that
      the
      SB-2 is not filed or declared effective within these time limits, the Company
      may be deemed in default under the agreements and subject to liquidated damages
      in the amount of 2% of the entire funding amount per month.




(b) (ii)  Pursuant to this financing transaction, the Company also
      granted the Investors the right to purchase an aggregate of 36,000,000 shares
      of
      common stock (the “Warrants”), of which Warrants to purchase 26,000,000 shares
      were issued on March 27, 2006 and Warrants to purchase 10,000,000 shares were
      issued on May 23, 2006. The Warrants are exercisable for a period of seven
      years
      from the dates of issuance at an exercise price of $0.16 per share.




(b) (iii)  On May 30, 2006 the Company’s solicitors received a letter
      from the SEC indicating that the SEC would not be reviewing the SB-2 and
      indicating that the filing could not "go effective" until the Company had
      increased its Authorized Capital. On July 26, 2006, the Company increase the
      authorized capital from 100,000,000 to 750,000,000 shares.  The SB-2
      was declared effective in October 2006.




(b) (iv)  As at May 31, 2007, the Company has issued callable secured
      convertible notes totalling $2,000,000. The Company received the first tranche
      of $700,000 on March 27, 2006, the second tranche of $600,000 on May 23, 2006,
      and the third tranche of $700,000 on October 6, 2006. The warrants are
      detachable from the convertible notes and have been accounted for separately
      in
      accordance with FAS 133 and EITF 00-19.  The warrants do not meet the
      necessary qualifications for equity as outlined in EITF 00-19.  As a
      result, the warrants and conversion feature were classified as liabilities
      pursuant to FAS 133 at fair value with changes in fair value recorded in the
      consolidated statements of operations.




The Company classified the conversion features and warrants as derivative
      liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
      derivative liabilities (Refer to Notes 8 and 22) on the convertible notes equal
      to the fair value of the conversion feature and warrants of $5,780,668 and
      a
      discount on the notes of $2,000,000.  The Company will record further
      interest expense over the term of the convertible notes of $1,916,239 resulting
      from the difference between the stated value and carrying value at the date
      of
      issuance. The carrying value of the convertible notes will be increased to
      the
      face value of the convertible notes of $2,000,000 at
      maturity.  Interest expense for the year ended May 31, 2007 on
      principal of $2,000,000 totalling $495,886 has been accreted (2006 - $45,893).
      During the year ended May 31, 2007, $172,409 was converted into common shares
      leaving outstanding principal of $1,827,591 with a carrying value of
      $625,651.






15






(c) *March 2007 Financing*




On March 1, 2007, the Company completed financing agreements for $250,000 with
      private investors (the “Investors”). The Company issued to the Investors
      callable secured convertible notes totalling $250,000 with a 6% interest rate,
      15% interest rate upon default and a maturity of three years (the “Notes”). The
      notes are convertible into shares of common stock at 50% of the average of
      the
      lowest three closing prices for the Company’s shares during the twenty trading
      days prior to conversion. The applicable conversion percentage changes to 55%
      if
      the SB-2 is filed within 45 days of the Closing Date; and 60% if the SB-2 is
      declared effective within 120 days from the Closing Date. The SB-2 has not
      been
      filed.  The Notes are secured with a secondary position on all of the
      Company's assets pursuant to the Security Agreement and the Intellectual
      Property Security Agreement entered into with the Investors. In addition, the
      Company granted the Investors warrants with a seven-year maturity, to purchase
      10,000,000 shares of the Company’s common stock at an exercise price of $0.002
      per share.  Pursuant to the terms of a Registration Rights Agreement,
      the Company is required to register the shares underlying the Notes, as well
      as
      the shares to be issued pursuant to the Warrant, for a total of 120 million
      shares, within 45 days from the Closing Date and is required to have the
      registration statement declared effective within 120 days from the Closing
      Date.  The underlying shares have not been registered and the Company
      has defaulted on the convertible notes.  The Company must make default
      payments at the borrower’s option in cash or stock.




(c)(i) The warrants are detachable from the convertible notes and have been
      accounted for separately in accordance with FAS 133 and EITF
      00-19.  The warrants do not meet the necessary qualifications for
      equity as outlined in EITF 00-19.  As a result, the warrants and
      conversion feature were classified as liabilities pursuant to FAS 133 at fair
      value with changes in fair value recorded in the consolidated statements of
      operations.




(c)(ii) There are liquidated damages or cash penalty payable to the warrant
      holder if the Company cannot register the shares underlying the
      warrants.  The Company must file an SB-2 to register the warrant
      shares within 45 days from the closing date and have the SB-2 declared effective
      within 120 days.  If the Company fails to file by the 45th day, there
      is a 2% penalty payable as of that date.  Then on the 30th day
      thereafter there is another 2% penalty, prorated if the default is cured during
      the 30 day period.  If the SB-2 is not declared effective by the 120th
      day, then on the 30th day after that day there is a 2% penalty and on each
      30th
      day after that another 1% penalty, again prorated to a maximum of
      6%.  The penalties commenced April 14, 2007 at 2% of $250,000 and
      continue at 2% per month for each month thereafter until the Convertible Notes
      mature in March 2010. The maximum penalty payable is $15,000.  At May
      31, 2007 the Company has recorded $7,500 in accrued liabilities for the 2%
      penalties that have accrued from April 14, 2007 to May 31, 2007.




(c)(iii) The Company evaluated the conversion feature under the guidance of
      FASB
      133, EITF 00-19 and EITF Issue No. 06-2 *“The Meaning of ‘Conventional
      Convertible Debt Instrument’ in Issue No. 00-19”*(“EITF 06-2”). Pursuant to
      FASB 133, the embedded conversion feature was separated from the host contract
      and the conversion feature was classified as liabilities pursuant to FAS 133
      at
      fair value with changes in fair value recorded in the consolidated statements
      of
      operations.




(c)(iv) At May 31, 2007, the fair value of the warrants was $9,844 and the
      conversion feature was $463,514.  The fair value of the warrants and
      the conversion feature upon issuance of convertible notes on March 1, 2007
      was
      $29,725 and $709,621, respectively.




(c)(v) For the year ended May 31, 2007, the Company recorded $20,757 as the
      accretion of interest expense on the convertible notes increasing the carrying
      value to $20,757 and $223,358 as unrealized losses arising from the change
      in
      the fair value of the warrants and the conversion feature.




(d) During the year ended May 31, 2007, interest of $223,629 was accrued on
      the
      convertible notes. During the year ended May 31, 2007, convertible notes with
      a
      principal amount of $439,472 and accrued interest of $18,817 were converted
      into
      350,647,906 shares of common stock.




(e) The Company incurred and deferred debt issue costs of $55,700 during the
      year ended May 31, 2007 for a total of $625,300 pertaining to convertible notes
      to be amortized over the related terms to maturity, of which $375,800 was paid
      by cash proceeds of financing arrangements, $49,500 incurred as described in
      Note 7(a)(v) and a further $200,000 was accrued for warrants to be issued as
      placement agent fees.  During the year ended May 31, 2007, $167,646
      (2006 - $166,037) has been charged to debt issue costs. At May 31, 2007 the
      balance remaining to be charged to operations totalled $267,905 (May 31, 2006-
      $379,852). The Company incurred financing costs of $28,000 in connection with
      the issuance of the Convertible Notes and warrants which is being deferred
      and
      amortized over the term of the Convertible Notes.  At May 31, 2007,
      $2,327 has been amortized.






16






(f)  At May 31, 2007, the Company recorded $4,900,000 in accrued
      liabilities representing the penalties relating to the convertible notes
      described in Notes 7(a)-(c)





SUBSEQUENT
      EVENTS





From
      June
      through September 2007, the Company received Notice of Conversion from the
      private investors in connection with the April 5, 2005, $1,100,000 financing.
      The Company issued  282,163,343 shares of its common stock upon the
      conversion of $67,894 in principal amount of the convertible debenture and
      $4,647 in interest.





From
      June
      through September 2007, the Company received Notice of Conversion from the
      private investors in connection with the March 30, 2006, $2,000,000 financing.
      The Company issued 36,541,011 shares of its common stock in return for the
      conversion of $11,582 in principal amount of the convertible
      debenture.





On
      July
      24, 2007, the Company completed financing agreements for $150,000 with private
      investors (the “Investors”). The Company issued to the Investors callable
      secured convertible notes totalling $150,000 with an 8% interest rate, 15%
      interest rate upon default and a maturity of three years (the “Notes”). The
      notes are convertible into shares of common stock at 50% of the average of
      the
      lowest three closing prices for the Company’s shares during the twenty trading
      days prior to conversion. The applicable conversion percentage changes to 55%
      if
      the SB-2 is filed within 30 days of the Closing Date; and 60% if the SB-2 is
      declared effective within 120 days from the Closing Date. The Notes are secured
      with a secondary position on all of the Company's assets pursuant to the
      Security Agreement and the Intellectual Property Security Agreement entered
      into
      with the Investors. In addition, the Company granted the Investors warrants
      with
      a seven-year maturity, to purchase 30 million shares of the Company’s common
      stock at an exercise price of $.001.  Pursuant to the terms of a
      Registration Rights Agreement, the Company is required to register the 2.25
      times the number of shares underlying the Notes, as well as the shares to be
      issued pursuant to the Warrant, within 45 days from the Closing Date and is
      required to have the registration statement declared effective within 120 days
      from the Closing Date.





Subsequent
      to May 31, 2007, the mortgages referred to in Note 10 were
      foreclosed.  The Company applied for and was granted a 6 month grace
      period to find another lender or sell the property.




Subsequent
      to May 31, 2007, the Company failed to register the 120 million shares
      underlying the Notes and Warrant referred to in Note 7(c) within 120 days of
      the
      closing date pursuant to the terms of the Registration Rights
      Agreement.  As a result the Company has defaulted on the Convertible
      Notes.




Subsequent
      to May 31, 2007, the Company entered into an agreement limiting the standard
      liquidated damages and penalties payable on the Company’s outstanding
      convertible notes referred to in Note 7(f) to $4,900,000.





CRITICAL
      ACCOUNTING POLICIES




We
      have
      chosen accounting policies that we believe are appropriate to accurately and
      fairly report our operating results and financial position, and apply those
      accounting policies in a consistent manner.




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires that management make estimates
      and assumptions. Assets, liabilities, revenue and expenses, and disclosure
      of
      contingent liabilities are affected by such estimates and assumptions. The
      most
      significant assumptions are employed in estimates used in determining values
      of
      inventories and intangible assets, as well as estimates used in applying the
      revenue recognition policy and in accounting for the convertible notes and
      related detachable warrants. We are subject to risks and uncertainties that
      may
      cause actual results to differ from those estimates, such as changes in the
      industry environment and competition.






17






We
      believe the following accounting policies are the most critical because they
      involve the most significant judgments and estimates used in the preparation
      of
      our consolidated financial statements.




Inventory.  Raw
      materials are
      recorded at the lower of average cost and replacement cost and finished goods
      are recorded at the lower of average cost and net realizable value. The Company
      provides inventory reserves for estimated obsolescence on unmarketable inventory
      equal to the difference between the cost of inventory and the estimated
      realizable value based on assumptions about future demand and market
      conditions.




Intangible
      assets and other long-lived assets. We review our property and intangible assets
      for possible impairment on an annual basis whenever events of circumstances
      indicate that the carrying amount of an asset may not be recoverable.
      Assumptions and estimates used in the evaluation of impairment may affect the
      carrying value of long-lived assets, which could result in impairment charges
      in
      future periods. Such assumptions include projections of future cash flows and,
      in some cases, the current fair value of the asset. In addition, our
      depreciation and amortization policies reflect judgment on the estimated useful
      lives of assets.




Revenue
      recognition. Revenue is recognized upon delivery of the product, when persuasive
      evidence of an arrangement exists, the price is fixed or determinable and
      collection is probable. This is generally at the time products are received
      by
      the customer. Until the Company can establish a history of returns, recognition
      of revenue will be deferred on sales to distributors who have right of return
      privileges until the return period expires. Once a reliable return history
      is
      established, such returns will be estimated using historical return rates.
      We
      have only recently begun selling products to retail customers through the
      Internet and have not developed a history of returns. Our retail customers
      are
      permitted to return our products for a refund. We have not to date, had any
      of
      our products returned. Once historical patterns are established, this will
      allow
      us to develop sales return allowances. At this time it will be necessary to
      reduce gross revenue for projected returns. To date we have not made any sales
      to distributors.




Derivative
      instruments and convertible debt. In the case of non-conventional convertible
      debt, the Company bifurcates its embedded derivative instruments and records
      them under the provisions of SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities” (“SFAS 133”), as amended, and EITF Issue No.
      00-19, “Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Company’s Own Stock” (“EITF
      00-19”).   The Company’s derivative financial instruments consist
      of embedded derivatives related to the non-conventional notes described in
      Note
      7.  These embedded derivatives include the conversion features and
      warrants issued.  The Company evaluates convertible notes with
      detachable warrants under the guidance of FASB 133, EITF 00-19 and EITF Issue
      No. 06-2 “The Meaning of ‘Conventional Convertible Debt Instrument’ in Issue No.
      00-19” (“EITF 06-2”). Pursuant to FASB 133, the embedded conversion features
      were separated from the host contract and the conversion features were
      classified as liabilities pursuant to FAS 133 at fair value with changes in
      fair
      value recorded as non-operating, non-cash income or expense at each reporting
      date.




**Item
      3.  Controls and Procedures**




(a)
      Evaluation of disclosure controls and procedures.




Our
      Chief Executive Officer maintain a
      system of disclosure controls and procedures that is designed to provide
      reasonable assurance that information, which is required to be disclosed, is
      recorded, processed, summarized, and communicated within the time periods
      specified in the Commission’s rules and forms. During the preparation of the May
      31, 2007 financial statements,the
      Company concluded that it was
      necessary to restate its financial results for the fiscal years ended May 31,
      2006 and 2005 and for the interim periods ended August 31, November 30, and
      February 28, during fiscal 2007 and 2006 to reflect additional non-operating
      gains and losses related to the classification of and accounting for convertible
      notes issued in fiscal 2006 and 2005.  The Company had previously
      recorded a beneficial conversion feature, valued the conversion features and
      detachable warrants at the intrinsic value and classified the convertible
      instruments as equity. After further review, the Company has determined that
      these instruments should have been classified as derivative liabilities pursuant
      to SFAS No. 133 and EITF No. 00-19.  The accounting treatment of
      derivative financial instruments requires that the Company record the
      derivatives and related warrants at their fair values as of the inception date
      of and at fair value as of each subsequent balance sheet date.  At the
      date of the conversion of each respective instrument or portion thereof, the
      corresponding derivative liability will be reclassified as
      equity.






18







The
      Company’s system of disclosure controls and procedures were augmented in
      September 2004, through the Company obtaining accounting advice from external
      advisors on technical GAAP issues. The Certifying Officers believe, based on
      controls in place at May 31, 2007, that the Company’s control procedures at May
      31, 2007 are effective.





b)
      Changes in internal controls




Our
        Certifying Officer have indicated that there were no changes in our internal
        controls or other factors that could affect such controls during the year
        ending
        May 31, 2007 and there were no such control actions taken during the year
        May
        31, 2007.







19




**ITEM
                7.**
            **FINANCIAL
                STATEMENTS**




AVVAA
          World Health Care Products, Inc.
 (A
          Development Stage Company)
    IndexReport
                    of Independent Registered Public Accounting Firm
                F-1Consolidated
                    Balance Sheets
                F-2Consolidated
                    Statements of Operations
                F-3Consolidated
                    Statements of Cash Flows
                F-4Consolidated
                    Statement of Stockholders’ Deficit
                F-5Notes
                    to the Consolidated Financial Statements
                F-6
  DAVIDSON&COMPANY
            LLP
 Chartered
            Accountants A Partnership
            of Incorporated
            Professionals
 
 **REPORT
          OF INDEPENDENT REGISTERED**
 **PUBLIC
          ACCOUNTING FIRM**
 
 
 To
          the
          Stockholders and the Board of Directors of
 Avvaa
          World Health Care Products, Inc.
 
 
 We
          have
          audited the accompanying consolidated balance sheets of Avvaa World Health
          Care
          Products, Inc. as at May 31, 2007 and 2006 and the related consolidated
          statements of operations, stockholders' deficit and cash flows for the
          years
          then ended and for the period from the date of inception on March 25, 1999
          to
          May 31, 2007.  These consolidated financial statements are the
          responsibility of the Company's management.  Our responsibility is to
          express an opinion on these financial statements based on our
          audits.
 
 We
          conducted our audits 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 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.  We believe that our audits provide a reasonable
          basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the financial position of the Company as at May
          31,
          2007 and 2006 and the results of its operations, stockholders’ deficit and cash
          flows for the years then ended and for the period from inception on March
          25,
          1999 to May 31, 2007 in conformity with generally accepted accounting principles
          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 1
          to the consolidated financial statements, the Company is dependent upon
          financing to continue operations, has suffered recurring losses from operations
          since inception, has a working capital deficit as of May 31, 2007, and
          has total
          liabilities that exceed its total assets.  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 discussed
          in Note 1.  The consolidated financial statements do not include any
          adjustments that might result from the outcome of this uncertainty.
 
 As
          discussed in Note 22 to the consolidated financial statements, the Company
          has
          restated its financial statements for the years ended May 31, 2006 and
          2005 to
          properly reflect the accounting for the convertible notes, related debt
          derivatives and warrants.
 
 
 
 **"DAVIDSON
          & COMPANY LLP"**
 
 Vancouver,
                    Canada
                Chartered
                    AccountantsOctober
                    30, 2007
 A
            Member
            of***SC****INTERNATIONAL*
 1200
            -
            609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC,
            Canada, V7Y
            1G6
 Telephone
            (604) 687-0947  Fax (604) 687-6172
              F-1
    AVVAA
          World Health Care Products, Inc.
 (A
          Development Stage Company)
 Consolidated
          Balance Sheets
 (expressed
          in U.S. Dollars)
   May
                    31,
                
                
                May
                    31,2007
                  $
                
                
                2006
                  $
                  (Restated)AssetsCurrent
                    AssetsCash
                
                
                8,571
                
                
                
                627,163Accounts
                    receivable, net of allowance of $Nil (2006 $Nil)
                
                
                27,765
                
                
                
                12,026Inventory
                    (Note 3)
                
                
                –
                
                
                
                352,387Prepaid
                    expenses and deposits
                
                
                16,297
                
                
                
                8,103Total
                    Current Assets
                
                
                52,633
                
                
                
                999,679Property
                    and Equipment (Note 5)
                
                
                315,117
                
                
                
                328,410Website
                    Development Costs (Note 6)
                
                
                1,541
                
                
                
                4,458Deferred
                    Financing Fees (Notes 7(e))
                
                
                267,905
                
                
                
                379,852Total
                    Assets
                
                
                637,196
                
                
                
                1,712,399Liabilities
                    and Stockholders’ DeficitCurrent
                    LiabilitiesAccounts
                    payable
                
                
                746,114
                
                
                
                656,259Accrued
                    liabilities
                
                
                5,526,410
                
                
                
                362,701Convertible
                    notes, less unamortized discount of $1,431,183 and $1,587,007,
                    respectively (Note 7)
                
                
                1,372,045
                
                
                
                705,693Derivative
                    liabilities (Note 7 and 8)
                
                
                4,770,077
                
                
                
                9,700,523Due
                    to related parties (Note 9)
                
                
                1,601,439
                
                
                
                1,485,133Other
                    advances (Note 10)
                
                
                211,999
                
                
                
                219,399Mortgages
                    payable (Note 11)
                
                
                323,926
                
                
                
                317,749Total
                    Current Liabilities
                
                
                14,552,010
                
                
                
                13,447,457Commitments
                    and Contingencies (Notes 1, 16 and 17)Subsequent
                    Events (Note 21)Stockholders’
                    DeficitCommon
                    Stock – 750,000,000 and 100,000,000 shares authorized, respectively,
                    at
                    $0.001 par value; 416,618,146 issued and outstanding (2006 -
                    55,970,240)
                
                
                416,618
                
                
                
                55,971Additional
                    Paid-in Capital
                
                
                9,112,102
                
                
                
                7,739,062Deferred
                    Compensation (Note 12)
                
                
                (273,079
                )
                
                
                (854,035
                )Accumulated
                    Other Comprehensive Loss
                
                
                (171,025
                )
                
                
                (147,373
                )Deficit
                    Accumulated During the Development Stage
                
                
                (22,999,430
                )
                
                
                (18,528,683
                )Total
                    Stockholders’ Deficit
                
                
                (13,914,814
                )
                
                
                (11,735,058
                )Total
                    Liabilities and Stockholders’ Deficit
                
                
                637,196
                
                
                
                1,712,399
  (The
          Accompanying Notes are an Integral Part of these Consolidated Financial
          Statements)
   F-2
  AVVAA
          World Health Care Products, Inc.
 (A
          Development Stage Company)
 Consolidated
          Statements of Operations
 (expressed
          in U.S. Dollars)
  AccumulatedfromMarch
                    25, 1999(Date
                    of Inception)
                
                
                For
                    the Years Endedto
                    May 31,
                
                
                May
                    31,2007
                  $
                
                
                
                2007
                  $
                
                
                2006
                  $
                  (Restated)Sales
                
                
                136,664
                
                
                
                95,577
                
                
                
                18,657Cost
                    of Sales
                
                
                154,059
                
                
                
                106,859
                
                
                
                34,719Provision
                    for obsolete Inventory
                
                
                337,237
                
                
                
                337,237
                
                
                
                -Gross
                    Profit (Loss)
                
                
                (354,632
                )
                
                
                (348,519
                )
                
                
                (16,062
                )Operating
                    ExpensesDepreciation
                    and amortization
                
                
                71,919
                
                
                
                27,521
                
                
                
                25,932Impairment
                    loss on assets
                
                
                310,898
                
                
                
                –
                
                
                
                –Research
                    and development
                
                
                1,271,163
                
                
                
                157,151
                
                
                
                137,759Selling,
                    general and administrative
                
                
                10,614,965
                
                
                
                2,631,077
                
                
                
                2,457,097Total
                    Operating Expenses
                
                
                12,268,945
                
                
                
                2,815,749
                
                
                
                2,620,788Net
                    Loss from Operations
                
                
                (12,623,577
                )
                
                
                (3,164,268
                )
                
                
                (2,636,850
                )Debt
                    Issue Costs
                
                
                (357,395
                )
                
                
                (167,646
                )
                
                
                (166,037
                )Gain
                    on Settlement of Debt
                
                
                13,317
                
                
                
                –
                
                
                
                –Interest
                    Expense
                
                
                (2,719,284
                )
                
                
                (1,323,846
                )
                
                
                (1,232,180
                )Liquidated
                    damages
                
                
                (4,900,000
                )
                
                
                (4,900,000
                )
                
                
                –Other
                    Income
                
                
                17,828
                
                
                
                –
                
                
                
                –Unrealized
                    (Loss) Gain on Fair Value of Derivatives
                
                
                (2,430,319
                )
                
                
                5,085,013
                
                
                
                (6,465,496
                )Net
                    Loss
                
                
                (22,999,430
                )
                
                
                (4,470,747
                )
                
                
                (10,500,563
                )Other
                    Comprehensive lossForeign
                    currency translation loss
                
                
                (171,025
                )
                
                
                (23,652
                )
                
                
                (59,429
                )Comprehensive
                    Loss
                
                
                (23,170,455
                )
                
                
                (4,494,399
                )
                
                
                (10,559,992
                )Net
                    Loss Per Share – Basic and Diluted
                
                
                
                
                
                
                (0.03
                )
                
                
                (0.25
                )Weighted
                    Average Common Shares Outstanding
                
                
                
                
                
                
                136,646,448
                
                
                
                42,394,847
  (The
          Accompanying Notes are an Integral Part of these Consolidated Financial
          Statements)
   F-3
  AVVAA
          World Health Care Products, Inc.
 (A
          Development Stage Company)
 Consolidated
          Statements of Cash Flows
 (expressed
          in U.S. Dollars)
  Accumulated
                    from
                  March
                    25, 1999
                  (Date
                    of Inception)
                
                
                For
                    the Years Endedto
                    May 31,
                
                
                May
                    31,2007
                  $
                
                
                
                2007
                  $
                
                
                2006
                  $
                  (Restated)Operating
                    ActivitiesNet
                    loss
                
                
                (22,999,430
                )
                
                
                (4,470,747
                )
                
                
                (10,500,563
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activitiesAllowance
                    for obsolete inventory
                
                
                337,237
                
                
                
                337,237
                
                
                
                –Amortization
                    of deferred compensation and other
                  stock-based
                    compensation
                
                
                4,950,931
                
                
                
                1,144,685
                
                
                
                1,173,248Depreciation
                    and amortization
                
                
                71,919
                
                
                
                27,521
                
                
                
                25,932Gain
                    on settlement of debt
                
                
                (13,317
                )
                
                
                –
                
                
                
                –Impairment
                    loss on assets
                
                
                310,898
                
                
                
                –
                
                
                
                –Non-cash
                    interest and debt issue costs
                
                
                2,923,856
                
                
                
                1,439,458
                
                
                
                1,374,664Recapitalization
                    costs
                
                
                (115,730
                )
                
                
                –
                
                
                
                –Unrealized
                    loss (gain) on derivative liabilities
                
                
                2,430,319
                
                
                
                (5,085,013
                )
                
                
                6,465,496Changes
                    in non-cash working capital itemsAccounts
                    receivable
                
                
                (20,921
                )
                
                
                (10,167
                )
                
                
                (3,170
                )Inventory
                
                
                (191,352
                )
                
                
                4,212
                
                
                
                (97,794
                )Prepaid
                    expenses and deposits
                
                
                (8,418
                )
                
                
                (7,314
                )
                
                
                97,691Accounts
                    payable and accrued liabilities
                
                
                6,473,251
                
                
                
                5,277,876
                
                
                
                155,392Net
                    Cash Used In Operating Activities
                
                
                (5,850,757
                )
                
                
                (1,342,252
                )
                
                
                (1,309,104
                )Investing
                    ActivitiesWebsite
                    development costs
                
                
                (7,798
                )
                
                
                –
                
                
                
                –Patent
                    protection costs
                
                
                (11,378
                )
                
                
                –
                
                
                
                –Purchase
                    of property and equipment
                
                
                (51,588
                )
                
                
                (2,786
                )
                
                
                (15,047
                )Advance
                    royalty deposits
                
                
                (220,000
                )
                
                
                –
                
                
                
                –Net
                    Cash Used In Investing Activities
                
                
                (290,764
                )
                
                
                (2,786
                )
                
                
                (15,047
                )Financing
                    ActivitiesAdvances
                    from (repayment to) others
                
                
                202,385
                
                
                
                (9,010
                )
                
                
                –Advances
                    from related parties
                
                
                2,567,048
                
                
                
                100,939
                
                
                
                532,162Repayments
                    to related parties
                
                
                (773,609
                )
                
                
                –
                
                
                
                (210,951
                )Proceeds
                    from convertible notes
                
                
                3,400,250
                
                
                
                700,250
                
                
                
                1,740,000Debt
                    issue costs
                
                
                (367,018
                )
                
                
                (46,918
                )
                
                
                (215,050
                )Proceeds
                    from issuance of common stock
                
                
                1,235,637
                
                
                
                –
                
                
                
                –Net
                    Cash Provided by Financing Activities
                
                
                6,264,693
                
                
                
                745,261
                
                
                
                1,846,161Effect
                    of Exchange Rate Changes on Cash
                
                
                (114,601
                )
                
                
                (18,815
                )
                
                
                (7,842
                )Change
                    in Cash
                
                
                8,571
                
                
                
                (618,592
                )
                
                
                514,168Cash
                    – Beginning of Period
                
                
                –
                
                
                
                627,163
                
                
                
                112,995Cash
                    – End of Period
                
                
                8,571
                
                
                
                8,571
                
                
                
                627,163
  Supplementary
          cash flow information (Note 18)
  (The
          Accompanying Notes are an Integral Part of these Consolidated Financial
          Statements)
   F-4
   AVVAA
          World Health Care Products, Inc.
 A
          Development Stage Company)
 Consolidated
            Statement of Stockholders’ Deficit
 (expressed
          in U.S. Dollars)
  Common
                    Stock
                
                
                Additional
                  Common
                    Stock
                
                
                Additional
                  Paid-in
                
                
                Deferred
                
                
                Accumulated
                    Other Comprehensive
                
                
                Deficit
                    Accumulated During the
                  DevelopmentShares
                  #
                
                
                Amount
                  $
                
                
                Subscribed
                  $
                
                
                Capital
                  $
                
                
                Compensation
                  $
                
                
                Loss
                  $
                
                
                Stage
                  $
                
                
                Total
                  $Balance
                    – March 25, 1999  (Date of Inception)
                
                
                1
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Stock
                    issued for cash pursuant to a private placement
                
                
                10,125,000
                
                
                
                10,125
                
                
                
                –
                
                
                
                (1,500
                )
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                8,625Net
                    loss for the period
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Balance
                    – May 31, 1999
                
                
                10,125,001
                
                
                
                10,125
                
                
                
                –
                
                
                
                (1,500
                )
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                8,625Net
                    loss for the year
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (131,611
                )
                
                
                (131,611
                )Balance
                    – May 31, 2000
                
                
                10,125,001
                
                
                
                10,125
                
                
                
                –
                
                
                
                (1,500
                )
                
                
                –
                
                
                
                –
                
                
                
                (131,611
                )
                
                
                (122,986
                )Net
                    loss for the year
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (261,767
                )
                
                
                (261,767
                )Balance
                    – May 31, 2001
                
                
                10,125,001
                
                
                
                10,125
                
                
                
                –
                
                
                
                (1,500
                )
                
                
                –
                
                
                
                –
                
                
                
                (393,378
                )
                
                
                (384,753
                )Stock
                    issued for cash pursuant to a private placement
                
                
                1,537,500
                
                
                
                1,538
                
                
                
                –
                
                
                
                (257
                )
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                1,281Stock
                    issued pursuant to conversion of convertible debentures
                
                
                450,000
                
                
                
                450
                
                
                
                –
                
                
                
                299,550
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                300,000Net
                    loss for the year
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (509,095
                )
                
                
                (509,095
                )Balance
                    – May 31, 2002
                
                
                12,112,501
                
                
                
                12,113
                
                
                
                –
                
                
                
                297,793
                
                
                
                –
                
                
                
                –
                
                
                
                (902,473
                )
                
                
                (592,567
                )Re-capitalization
                    transactions – June 28, 2002: Shares of AVVAA World Health Care Products,
                    Inc. (formerly Sierra Gigante Resources Inc.)
                
                
                2,709,200
                
                
                
                2,709
                
                
                
                –
                
                
                
                (99,300
                )
                
                
                (19,118
                )
                
                
                –
                
                
                
                –
                
                
                
                (115,709
                )Shares
                    issued for services to be rendered
                
                
                2,590,000
                
                
                
                2,590
                
                
                
                –
                
                
                
                755,510
                
                
                
                (758,100
                )
                
                
                –
                
                
                
                –
                
                
                
                –Amortization
                    of deferred compensation
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                169,342
                
                
                
                –
                
                
                
                –
                
                
                
                169,342Common
                    stock to be issued
                
                
                –
                
                
                
                –
                
                
                
                181,198
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                181,198Foreign
                    currency translation adjustment
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (68,896
                )
                
                
                –
                
                
                
                (68,896
                )Net
                    loss for the year
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (819,608
                )
                
                
                (819,608
                )Balance
                    at May 31, 2003
                
                
                17,411,701
                
                
                
                17,412
                
                
                
                181,198
                
                
                
                954,003
                
                
                
                (607,876
                )
                
                
                (68,896
                )
                
                
                (1,722,081
                )
                
                
                (1,246,240
                )Shares
                    issued for cash
                
                
                2,776,131
                
                
                
                2,776
                
                
                
                (173,698
                )
                
                
                682,142
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                511,220Shares
                    issued to settle debt
                
                
                637,840
                
                
                
                638
                
                
                
                (7,500
                )
                
                
                211,372
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                204,510Shares
                    issued to settle related party debt
                
                
                390,000
                
                
                
                390
                
                
                
                –
                
                
                
                268,610
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                269,000Shares
                    issued for services
                
                
                1,450,000
                
                
                
                1,450
                
                
                
                –
                
                
                
                780,050
                
                
                
                (781,500
                )
                
                
                –
                
                
                
                –
                
                
                
                –Amortization
                    of deferred compensation
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                893,345
                
                
                
                –
                
                
                
                –
                
                
                
                893,345Value
                    of stock options granted
                
                
                
                
                
                
                –
                
                
                
                –
                
                
                
                75,825
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                75,825Share
                    subscriptions received
                
                
                –
                
                
                
                –
                
                
                
                70,000
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                70,000Shares
                    cancelled
                
                
                (210,000
                )
                
                
                (210
                )
                
                
                –
                
                
                
                210
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Foreign
                    currency translation adjustment
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                21,235
                
                
                
                –
                
                
                
                21,235Net
                    loss for the year
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (2,306,783
                )
                
                
                (2,306,783
                )Balance
                    at May 31, 2004
                
                
                22,455,672
                
                
                
                22,456
                
                
                
                70,000
                
                
                
                2,972,212
                
                
                
                (496,031
                )
                
                
                (47,661
                )
                
                
                (4,028,864
                )
                
                
                (1,507,888
                )Shares
                    issued for cash, subscriptions and consulting services
                
                
                2,200,000
                
                
                
                2,200
                
                
                
                (70,000
                )
                
                
                547,800
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                480,000Shares
                    issued to purchase inventory
                
                
                500,000
                
                
                
                500
                
                
                
                –
                
                
                
                119,500
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                120,000Shares
                    issued to settle debt
                
                
                1,213,500
                
                
                
                1,213
                
                
                
                –
                
                
                
                301,719
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                302,932Shares
                    issued to settle related party debt
                
                
                505,000
                
                
                
                505
                
                
                
                –
                
                
                
                80,295
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                80,800Shares
                    issued for services to be rendered
                
                
                8,920,700
                
                
                
                8,921
                
                
                
                –
                
                
                
                2,005,383
                
                
                
                (2,014,304
                )
                
                
                –
                
                
                
                –
                
                
                
                –Amortization
                    of deferred compensation
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                1,190,610
                
                
                
                –
                
                
                
                –
                
                
                
                1,190,610Value
                    of stock options granted
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                210,377
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                210,377Foreign
                    currency translation adjustment
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (40,283
                )
                
                
                –
                
                
                
                (40,283
                )Net
                    loss for the year (Restated)
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (3,999,256
                )
                
                
                (3,999,256
                )Balance
                    at May 31, 2005 (Restated)
                
                
                35,794,872
                
                
                
                35,795
                
                
                
                –
                
                
                
                6,237,286
                
                
                
                (1,319,725
                )
                
                
                (87,944
                )
                
                
                (8,028,120
                )
                
                
                (3,162,708
                )Shares
                    issued for services
                
                
                10,870,700
                
                
                
                10,871
                
                
                
                –
                
                
                
                684,213
                
                
                
                (662,500
                )
                
                
                –
                
                
                
                –
                
                
                
                32,584Stock
                    issued pursuant to conversion of convertible notes
                
                
                9,304,668
                
                
                
                9,305
                
                
                
                –
                
                
                
                397,087
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                406,392Value
                    of derivative liabilities relating to convertible notes converted
                    to
                    common stock
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                408,009
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                408,009Value
                    of stock options granted
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                12,467
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                12,467Amortization
                    of deferred compensation
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                1,128,190
                
                
                
                –
                
                
                
                –
                
                
                
                1,128,190Foreign
                    currency translation adjustment
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (59,429
                )
                
                
                –
                
                
                
                (59,429
                )Net
                    loss for the year (Restated)
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                (10,500,563
                )
                
                
                (10,500,563
                )Balance
                    at May 31, 2006 (Restated)
                
                
                55,970,240
                
                
                
                55,971
                
                
                
                –
                
                
                
                7,739,062
                
                
                
                (854,035
                )
                
                
                (147,373
                )
                
                
                (18,528,683
                )
                
                
                (11,735,058
                )
 (The
            Accompanying Notes are an Integral Part of these Consolidated Financial
            Statements)
    F-5
  AVVAA
          World Health Care Products, Inc.
 (A
          Development Stage Company)
 Notes
          to
          the Consolidated Financial Statements
 (expressed
          in U.S. dollars)
 May
          31,
          2007
  1.     Nature
          of Operations and Continuance of Business
  AVVAA
          World Health Care Products, Inc. (the "Company") was incorporated on June
          3,
          1998 in the State of Nevada.
  On
          June
          28, 2002 the Company completed the acquisition of 100% of the common shares
          of
          Mind Your Own Skin Products Inc. ("MYOSP"), a company incorporated under
          the
          Company Act of the Province of British Columbia, Canada. The purchase
          transaction consisted of 12,112,501 common shares, after a 1 new for 5
          old
          reverse stock split of the Company's issued common shares. This share issuance
          resulted in a reverse takeover of the Company by the shareholders of MYOSP.
          Certain directors and officers of MYOSP became directors and officers of
          the
          Company. The consolidated financial statements include the accounts of
          the
          Company since the reverse merger and the historical accounts of MYOSP since
          the
          date of its inception, March 25, 1999.
  The
          Company is a global biotechnology company specializing in providing all
          natural,
          therapeutic skin care products. The Company intends to manage the manufacturing,
          distribution, marketing and sale of health-care products to the countries
          specified in its distribution agreement. The specified regions for which
          the
          Company has the exclusive distribution rights are as follows: North America,
          Central America, South America, India, South East Asia, West Indies, Greater
          Antilles, Australia, Africa, China and Great Britain. The Company's mission
          is
          to provide to the public medically safe, natural, non-toxic health-care
          products
          and specifically products that treat skin abnormalities as well as enhance
          the
          natural clarity and texture of healthy skin. The Company has the exclusive
          distribution rights for patented European skin care products, which are
          scientifically developed to treat the symptoms of skin diseases including
          eczema, psoriasis and acne. The Company intends to manufacture and market
          over-the-counter the Neuroskin line of products through mass marketing
          food and
          drug channels initially in the United States. The three flagship core products
          of the Neuroskin lines are FDA compliant. The Company has developed a business
          plan and conducted research with respect to marketing the products.
 
 The
          Company is considered a development stage company in accordance with Statement
          of Financial Accounting Standards (SFAS) No. 7 “*Accounting and Reporting by
          Development Stage Enterprises*”. These consolidated financial statements
          have been prepared in accordance with United States generally accepted
          accounting principles, on a going concern basis, which contemplates the
          realization of assets and the satisfaction of liabilities and commitments
          in the
          normal course of business. As at May 31, 2007, the Company has not recognized
          significant revenue, has a working capital deficit of $14,499,377 and has
          accumulated operating losses of $22,999,430 since its inception. The
          continuation of the Company is dependent upon the continuing financial
          support
          of creditors and stockholders and obtaining short-term and long-term financing,
          generating significant revenue and achieving profitability. These conditions
          raise substantial doubt about the Company's ability to continue as a going
          concern. These financial statements do not include any adjustments that
          might
          arise from this uncertainty.
  2.           
          Summary of Significant Accounting Principles
  (a)
                Basis
                    of Presentation
  These
          consolidated financial statements have been prepared in accordance with
          accounting principles generally accepted in the United States and are expressed
          in United States dollars.
  (b)
                Principles
                    of Consolidation
  These
          consolidated financial statements include the accounts of the Company and
          its
          wholly owned subsidiaries, Mind Your Own Skin Products Inc., AVVAA World
          Health
          Care Products (Canada) Ltd. and 648311 B.C. Ltd. All inter-company accounts
          and
          transactions have been eliminated.
  (c)
                Use
                    of Estimates
  The
          preparation of financial statements in accordance with accounting principles
          generally accepted in the United States requires management to make estimates
          and assumptions that affect the reported amounts of assets and liabilities
          at
          the date of the financial statements, and the reported amounts of revenues
          and
          expenses during the reporting periods. Actual results could differ from
          management’s best estimates as additional information becomes available in the
          future.
    F-6
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  2.           
          Summary of Significant Accounting Principles (continued)
  (d)
                Year
                    End
  The
          Company’s fiscal year end is May 31.
  (e)
                Cash
                    and Cash Equivalents
  The
          Company considers all highly liquid instruments with a maturity of three
          months
          or less at the time of issuance to be cash equivalents.
  (f)
                Accounts
                    Receivable
  Trade
          and
          other accounts receivable are reported at face value less any provisions
          for
          uncollectible accounts considered necessary. Accounts receivable primarily
          includes goods and services tax receivable and trade receivables from customers.
          The Company estimates doubtful accounts on an item-by-item basis and includes
          over aged accounts as part of allowance for doubtful accounts, which are
          generally ones that are ninety days or greater overdue.
  (g)
                Concentration
                    of Credit Risk
 Financial
          instruments, which potentially subject the Company to concentration of
          credit
          risk include cash and accounts receivable. The Company maintains cash in
          bank
          accounts that, at times, may exceed federally insured limits. The Company
          has
          not experienced any losses in such accounts and believes it is not exposed
          to
          any significant risks on its cash in bank accounts.
  (h)
                Inventory
 Raw
          materials are recorded at the lower of average cost and replacement cost
          and
          finished goods are recorded at the lower of average cost and net realizable
          value. The Company provides inventory reserves for estimated obsolescence
          on
          unmarketable inventory equal to the difference between the cost of inventory
          and
          the estimated realizable value based on assumptions about future demand
          and
          market conditions.
  (i)
                Property
                    and Equipment
  Property
          and equipment is recorded at cost and depreciated using the straight-line
          method. The annual depreciation rates in years are as follows:
  Building
                20Computer
                    equipment
                3Moulds
                3Office
                    equipment
                3
  (j)
                Website
                    Development Costs
  The
          Company recognizes the costs associated with developing a website in accordance
          with the American Institute of Certified Public Accountants Statement of
          Position No. 98-1, *“Accounting for the Costs of Computer Software Developed
          or Obtained for Internal Use”* and the guidance pursuant to the Emerging
          Issues Task Force (EITF) No. 00-2, *“Accounting for Website Development
          Costs”*.
  Costs
          associated with the website consist primarily of software purchased from
          a third
          party. The Company is capitalizing costs of computer software obtained
          for
          internal use in web design and network operations. These capitalized costs
          are
          being amortized based on their estimated useful life over three years.
          Payroll
          and related costs are not capitalized, as the amounts principally relate
          to
          maintenance. Internal costs related to the development of website content
          are
          expensed as incurred.
  (k)
                Research
                    and Development
  Research
          and development costs are charged to operations when incurred and are included
          in operating expenses. The amounts charged for the year ended May 31, 2007
          and
          2006 were $157,151 and $137,759 respectively.
    F-7
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
   2.           
          Summary of Significant Accounting Principles (continued)
  (l)
                Long-lived
                    Assets
  In
          accordance with SFAS No. 144, *“Accounting for the Impairment or Disposal of
          Long-lived Assets”*, the carrying value of intangible assets and other
          long-lived assets is reviewed on a regular basis for the existence of facts
          or
          circumstances that may suggest impairment. The Company recognizes impairment
          losses when the sum of the expected undiscounted future cash flows is less
          than
          the carrying amount of the asset. Impairment losses, if any, are measured
          as the
          excess of the carrying amount of the asset over its estimated fair
          value.
  (m)
                Foreign
                    Currency Translation
  The
          Company’s functional and reporting currency is the U.S. dollar. The functional
          currency of one of the Company’s wholly owned Canadian subsidiaries is the
          Canadian dollar. Foreign currency transactions and balances are translated
          in
          accordance with SFAS, No. 52 *“Foreign Currency Translation”*.
          Transactions undertaken in a currency other than the U.S. dollar are remeasured
          into U.S. dollars using exchange rates at the date of the transaction.
          Gains and
          losses arising on remeasurement or settlement of foreign currency denominated
          transactions or balances are included in the determination of income. Assets
          and
          liabilities of the Company’s wholly owned subsidiaries are translated into U.S.
          dollars using the period end exchange rate. Revenue and expenses are translated
          using average exchange rates. Translation gains (losses) are recorded in
          accumulated other comprehensive income (loss) as a component of stockholders’
equity (deficit). Foreign currency transaction gains and losses are included
          in
          current operations. The Company has not, to the date of these financial
          statements, entered into derivative instruments to offset the impact of
          foreign
          currency fluctuations.
  (n)
                Deferred
                    Financing Costs
  In
          accordance with the Accounting Principles Board Opinion 21 *“Interest on
          Receivables and Payables”,* the Company recognizes debt issue costs on the
          balance sheet as deferred charges, and amortizes the balance over the term
          of
          the related debt. The Company follows the guidance in EITF 95-13
*“Classification of Debt Issue Costs in the Statement of Cash Flows”* and
          classifies cash payments for debt issue costs as a financing
          activity.
  (o)
                Revenue
                    Recognition
  Revenue
          is derived from the sale of personal care products sold directly to retailers
          or
          indirectly through distributors. The Company follows the provisions of
          the SEC
          Staff Accounting Bulletin No. 104, *“Revenue Recognition”*. Revenue from
          the sale of products is only recognized upon delivery of the product, when
          persuasive evidence of an arrangement exists, the price is fixed or determinable
          and collection is probable. If collection is not considered probable, revenue
          will be recognized when the fee is collected. Until the Company can establish
          a
          history of returns, recognition of revenue will be deferred on sales to
          distributors having right of return privileges until the return period
          expires.
          Once a reliable return history is established, such returns will be estimated
          using historical return rates.
  In
          accordance with EITF No. 00-10, *“Accounting for Shipping and Handling Fees
          and Costs”*, freight and handling charges billed to customers are recorded
          as revenue while the corresponding freight and handling costs are recorded
          as
          cost of sales.
  (p)
                Comprehensive
                    Loss
  SFAS
          No.
          130, *“Reporting Comprehensive Income,”* establishes standards for the
          reporting and display of comprehensive loss and its components in the financial
          statements. The Company’s accumulated other comprehensive loss consists of the
          accumulated foreign currency translation adjustments.
    F-8
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  2.           
          Summary of Significant Accounting Principles (continued)
  (q)
                Basic
                    and Diluted Net Income (Loss) per
                    Share
  The
            Company computes net income (loss) per share in accordance with SFAS
            No. 128,
            "*Earnings per Share*" (SFAS 128). SFAS 128 requires presentation of both
            basic and diluted earnings per share (EPS) on the face of the income
            statement.
            Basic EPS is computed by dividing net income (loss) available to common
            shareholders (numerator) by the weighted average number of common shares
            outstanding (denominator) during the period. Diluted EPS gives effect
            to all
            dilutive potential common shares outstanding during the period including
            stock
            options, using the treasury stock method, and convertible notes, using
            the
            if-converted method. In computing diluted EPS, the average stock price
            for the
            period is used in determining the number of shares assumed to be purchased
            from
            the exercise of stock options or warrants. Diluted EPS excludes all dilutive
            potential common shares if their effect is anti-dilutive. Outstanding
            options of
            14,450,000 and 5,200,000 for the years ended May 31, 2007 and 2006,
            respectively, have been excluded from the above calculations as they
            would be
            anti-dilutive. Outstanding warrants for the years ended May 31, 2007
            and 2006
            were 76,318,348 and 66,318,348 warrants, respectively, and shares issuable
            on
            the conversion of convertible notes have also been excluded from the
            above
            calculations as they would be anti-dilutive.
  (r)
                Financial
                    Instruments
  The
            fair
            values of cash, accounts receivable, accounts payable, accrued liabilities,
            convertible notes, mortgages payable, due to related parties and other
            advances
            were estimated to approximate their carrying values due to the immediate
            or
            short-term maturity of these financial instruments. The Company’s operations are
            in Canada and virtually all of its assets and liabilities are giving
            rise to
            significant exposure to market risks from changes in foreign currency
            rates. The
            financial risk is the risk to the Company’s operations that arise from
            fluctuations in foreign exchange rates and the degree of volatility of
            these
            rates. Currently, the Company does not use derivative instruments to
            reduce its
            exposure to foreign currency risk.
  (s)
                Derivative
                    Liabilities
  In
          the
          case of non-conventional convertible debt, the Company bifurcates its embedded
          derivative instruments and records them under the provisions of SFAS No.
          133,
*“Accounting for Derivative Instruments and Hedging Activities”* (“SFAS
          133”), as amended, and EITF Issue No. 00-19, *“Accounting for Derivative
          Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own
          Stock” (*“EITF 00-19”*)*.   The Company’s derivative
          financial instruments consist of warrant derivatives and embedded derivatives
          related to the non-conventional notes described in Note 7.  The
          accounting treatment of derivative financial instruments requires that
          the
          Company record the derivatives at their fair values on the date of the
          agreement
          and at each subsequent balance sheet date.  Any change in fair value
          will be recorded as non-operating, non-cash income or expense at each reporting
          date.
  (t)
                Income
                    Taxes
  Potential
          benefits of income tax losses are not recognized in the accounts until
          realization is more likely than not. The Company has adopted SFAS No. 109
          “*Accounting for Income Taxes*” as of its inception. Pursuant to SFAS No.
          109 the Company is required to compute tax asset benefits for net operating
          losses carried forward. The potential benefits of net operating losses
          have not
          been recognized in these financial statements because the Company cannot
          be
          assured it is more likely than not it will utilize the net operating losses
          carried forward in future years.
   F-9
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  2.           
          Summary of Significant Accounting Principles (continued)
  (u)
                Stock-based
                    Compensation
  The
          Company records stock based compensation in accordance with SFAS 123(R),
          *“Share-Based Payments,”* which requires the measurement and recognition
          of compensation expense, based on estimated fair values, for all share-based
          awards, made to employees and directors, including stock options. In
          March 2005, the Securities and Exchange Commission issued SAB 107 relating
          to SFAS 123(R). The Company applied the provisions of SAB 107 in its adoption
          of
          SFAS 123(R).
  SFAS
          123(R) requires companies to estimate the fair value of share-based awards
          on
          the date of grant using an option-pricing model. The Company uses the
          Black-Scholes option-pricing model as its method of determining fair value.
          This
          model is affected by the Company’s stock price as well as assumptions regarding
          a number of subjective variables. These subjective variables include, but
          are
          not limited to the Company’s expected stock price volatility over the term of
          the awards, and actual and projected employee stock option exercise behaviors.
          The value of the portion of the award that is ultimately expected to vest
          is
          recognized as an expense in the consolidated statement of operations over
          the
          requisite service period.
  Shares
          issued for non-cash consideration were valued (1) based on the fair value
          of the
          services and/or goods provided when these amounts were more readily determinable
          than the value of the shares at the date of issue; and (2) based on the
          fair
          market value of the shares at the date of issue when their value was more
          readily determinable than the value of the services provided.
  No
          tax
          benefits were attributed to stock-based compensation expense because a
          full
          valuation allowance was maintained for all net deferred tax assets.
  (v)
                Reclassifications
  Certain
          reclassifications have been made to the prior year’s financial statements to
          conform to the current period’s presentation.
  (w)
                Recent
                    Accounting Pronouncements
  In
          February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
          No.
          159, “The Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement No. 115”.  This statement
          permits entities to choose to measure many financial instruments and certain
          other items at fair value. Most of the provisions of SFAS No. 159 apply
          only to
          entities that elect the fair value option. However, the amendment to SFAS
          No.
          115 “Accounting for Certain Investments in Debt and Equity Securities” applies
          to all entities with available-for-sale and trading securities. SFAS No.
          159 is
          effective as of the beginning of an entity’s first fiscal year that begins after
          November 15, 2007. Early adoption is permitted as of the beginning of a
          fiscal
          year that begins on or before November 15, 2007, provided the entity also
          elects
          to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption
          of this statement is not expected to have a material effect on the Company's
          financial statements.
  In
          September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
          Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
          the effects of prior year uncorrected misstatements should be considered
          when
          quantifying misstatements in current year financial statements. SAB No.
          108
          requires companies to quantify misstatements using a balance sheet and
          income
          statement approach and to evaluate whether either approach results in
          quantifying an error that is material in light of relevant quantitative
          an
          qualitative factors. SAB No. 108 is effective for periods ending after
          November
          15, 2006. The Company is currently evaluating the impact of adopting SAB
          No. 108
          but does not expect that it will have a material effect on its financial
          statements
   F-10
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
   2.           
          Summary of Significant Accounting Principles (continued)
  (w)
                Recent
                    Accounting Pronouncements
                    (continued)
  In
          September 2006, the FASB issued SFAS No. 158, *“Employers’ Accounting for
          Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB
          Statements No. 87, 88, 106, and 132(R)”.* This statement requires employers
          to recognize the overfunded or underfunded status of a defined benefit
          postretirement plan (other than a multiemployer plan) as an asset or liability
          in its statement of financial position and to recognize changes in that
          funded
          status in the year in which the changes occur through comprehensive income
          of a
          business entity or changes in unrestricted net assets of a not-for-profit
          organization.  This statement also requires an employer to measure the
          funded status of a plan as of the date of its year-end statement of financial
          position, with limited exceptions. The provisions of SFAS No. 158 are effective
          for employers with publicly traded equity securities as of the end of the
          fiscal
          year ending after December 15, 2006. The adoption of this statement is
          not
          expected to have a material effect on the Company's future reported financial
          position or results of operations.
  In
          September 2006, the FASB issued SFAS No. 157, *“Fair Value
          Measurements”.* The objective of SFAS 157 is to increase consistency and
          comparability in fair value measurements and to expand disclosures about
          fair
          value measurements.  SFAS 157 defines fair value, establishes a
          framework for measuring fair value in generally accepted accounting principles,
          and expands disclosures about fair value measurements. SFAS 157 applies
          under
          other accounting pronouncements that require or permit fair value measurements
          and does not require any new fair value measurements. The provisions of
          SFAS No.
          157 are effective for fair value measurements made in fiscal years beginning
          after November 15, 2007. The adoption of this statement is not expected
          to have
          a material effect on the Company's future reported financial position or
          results
          of operations.
  3.           
          Inventory
  May
                    31,
                  2007
                
                
                
                
                
                May
                    31,
                  2006Net
                    Carrying
                  Value
                
                
                
                
                
                Net
                    Carrying
                  Value$
                
                
                
                $Raw
                    materials
                
                
                157,326
                
                
                
                
                
                
                
                162,447Finished
                    goods
                
                
                179,911
                
                
                
                
                
                
                
                189,940Allowance
                    for slow moving/obsolete inventory
                
                
                (337,237
                )
                
                
                
                
                
                
                ––
                
                
                
                
                
                
                
                352,387
 
 4.    
          Distribution Agreement
  Pursuant
          to two separate License Agreements entered into in September 1999 and February
          2002, the Company has been granted by the Inventor of certain products
          known as
          Neuroskin, Nail Fit, Razor Rash, Dermac and Itch-X, the sole and exclusive
          right
          and license to manufacture, produce, package, distribute, market, promote,
          use
          and sell, among other things, certain human and animal skin care treatments
          and
          products. These products have received acknowledgement from the US Food
          and Drug
          Administration (“FDA”) as compliant products for over the counter
          pharmaceuticals as well as cosmetics skin care products. Canadian DIN approvals
          for these products have been renewed and will be activated 30 days prior
          to
          initial sales in Canada. The license rights include all countries in the
          world
          with the exception of Germany, Switzerland, Austria, Netherlands, Belgium,
          Luxembourg and Lithuania.
  The
          original registrant for the various approvals was the Inventor and licensor.
          During fiscal 2004, the various approvals were transferred to reflect the
          Company as the manufacturer and owner. The Inventor retains the licensing
          rights
          to the products.
  The
          agreements provide for joint ownership of all applicable patents, pending
          patents, patent applications, trademarks, copyright, secret processes,
          formulae,
          technical data and other scientific and technical information that has
          been
          secured.
   F-11
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
   4.    
          Distribution Agreement (continued)
  Pursuant
          to the original License Agreements the Company paid the Inventor royalty
          advances of $220,000 (written off in full during the year ended May 31,
          2005).
          Under the original License Agreements these amounts were to be offset against
          future royalties due to the Inventor or his company.
  On
          December 30, 2005, the Company entered into a new Distribution Agreement
          (the
“Agreement”) with the Inventor of the patented Neuroskin line of skin care
          products, the Inventor’s company and two companies related to the Inventor.
          These companies have guaranteed and assumed the obligations of the Inventor
          to
          meet product supply demands. This Agreement supersedes the Company’s License
          Agreements made with the Inventor and his company in September 1999 and
          February
          2002.
  Pursuant
          to the new Agreement, the Company maintains its exclusive distribution
          rights to
          distribute the Neuroskin line of products in North America, Central America,
          South America, India, South East Asia, West Indies, Greater Antilles, Australia,
          Africa, China and Great Britain. The Neuroskin line of products is a patented,
          European line of skin care products used for the symptomatic treatment
          of
          diseases of the skin including psoriasis and acne. The patents and trademarks
          are owned by the Inventor and/or his companies and are registered in various
          jurisdictions. The term of the new Agreement is fifteen years with an option
          to
          the Company to extend the term for a further fifteen years. The prices
          for the
          supply of the Neuroskin products have been agreed to. There are no minimum
          purchase requirements, no sales targets and no royalties are
          payable.
  5.           
          Property and Equipment
  May
                    31, 2007
                
                
                
                
                
                May
                    31, 2006Cost
                
                
                
                
                
                Accumulated
                    Depreciation
                
                
                
                
                
                Net
                    Carrying
                  Value
                
                
                
                
                
                Net
                    Carrying
                  Value$
                
                
                
                
                
                
                $
                
                
                
                
                
                
                $
                
                
                
                $Land
                
                
                24,833
                
                
                
                
                
                
                
                –
                
                
                
                
                
                
                
                24,833
                
                
                
                
                
                
                
                24,114Building
                
                
                311,005
                
                
                
                
                
                
                
                27,213
                
                
                
                
                
                
                
                283,792
                
                
                
                
                
                
                
                290,673Computer
                    equipment
                
                
                17,168
                
                
                
                
                
                
                
                16,288
                
                
                
                
                
                
                
                880
                
                
                
                
                
                
                
                6,545Moulds
                
                
                8,087
                
                
                
                
                
                
                
                5,391
                
                
                
                
                
                
                
                2,696
                
                
                
                
                
                
                
                5,235Office
                    equipment
                
                
                5,797
                
                
                
                
                
                
                
                2,881
                
                
                
                
                
                
                
                2,916
                
                
                
                
                
                
                
                1,843366,890
                
                
                
                
                
                
                
                51,773
                
                
                
                
                
                
                
                315,117
                
                
                
                
                
                
                
                328,410
 
 6.           
          Website Development Costs
 
 May
                    31,
                  2007
                
                
                
                
                
                May
                    31,
                  2006Cost
                
                
                
                
                
                Accumulated
                    Amortization
                
                
                
                
                
                Net
                    Carrying
                  Value
                
                
                
                
                
                Net
                    Carrying
                  Value$
                
                
                
                
                
                
                $
                
                
                
                
                
                
                $
                
                
                
                $Website
                    development costs
                
                
                9,151
                
                
                
                
                
                
                
                7,610
                
                
                
                
                
                
                
                1,541
                
                
                
                
                
                
                
                4,458
   F-12
 AVVAA
            World Health Care Products, Inc.
 (A
            Development Stage Company)
 Notes
            to
            the Consolidated Financial Statements
 (expressed
            in U.S. dollars)
 May
            31,
            2007
  7.    
          Convertible Notes
 
 May
                    31,
                  2007
                  $
                May
                    31,
                  2006
                  $
                  Restateda)Convertible
                    notes (“April 2005 Financing”) interest rate 15% per annum; due one year
                    from issuance; convertible at 50% of the average three lowest
                    closing
                    prices of the Company’s common stock for the 20 days prior to
                    conversion.
                725,637
                659,800b)Convertible
                    notes  (“March 2006 Financing”) interest rate 15% per annum; due
                    three years from issuance; convertible at 60% of the average
                    three lowest
                    closing prices of the Company’s common stock for the 20 days prior to
                    conversion.
                625,651
                45,893c)Convertible
                    notes  (“March 2007 Financing”) interest rate 15% per annum; due
                    three years from issuance; convertible at 50% of the average
                    three lowest
                    closing prices of the Company’s common stock for the 20 days prior to
                    conversion.
                20,757
                –Convertible
                    notes
                1,372,045
                705,693
  (a)
          *April 2005 Financing*
  On
          April
          5, 2005, the Company completed Financing Agreements totalling $1,100,000.
          Under
          the agreements, the Company will issue up to $1,100,000 in convertible
          notes.
          The convertible notes bear interest at 8% and are due one year from issuance,
          and bear default interest at 15% thereafter. Any accrued interest is payable
          upon each conversion and on the due date. The notes are convertible into
          common
          shares of the Company. The conversion price is based on 80% of the average
          of
          the three lowest closing prices of the Company’s stock for the thirty days prior
          to conversion; for a maximum of $0.20 per share; and a minimum of $0.08
          per
          share for eight months after issuance and no minimum conversion price
          thereafter. The timing of the conversion is at the option of the
          holder.  The notes are secured by a grant of a general security
          interest in all of the Company’s assets both tangible and
          intangible.
  (a)
          (i)  The Company is to issue four series of share purchase warrants as
          follows: Class A warrants equivalent to the number of shares issued on
          the
          convertible note exercisable at $0.20 per share; Class B warrants equivalent
          to
          75% of the number of shares issued on the convertible note exercisable
          at $0.25
          per share; Class C warrants equivalent to 75% of the number of shares issued
          on
          the convertible note exercisable at $0.30 per share; and Class D warrants
          equivalent to 50% of the number of shares issued on the convertible note
          exercisable at $0.45 per share. The warrants will expire five years after
          the
          date the warrants are issued and are callable by the Company when the market
          price is 200% of the exercise price.
  (a)
          (ii)  On April 5, 2005, the Company received $660,000 under the terms
          of the convertible notes and is to receive the balance of $440,000 once
          the
          Company has filed an SB-2 Registration Statement (“SB-2”) with the United States
          Securities and Exchange Commission (“SEC”) that is declared effective (met and
          received). If the SB-2 is not declared effective within ninety days after
          April
          5, 2005, the Company must pay a penalty of 2% (subsequently amended to
          5%) for
          each thirty-day period of the convertible notes remaining unconverted.
          The SB-2
          was declared effective in December 2005.
  (a)
          (iii)  On April 5, 2005, the Company issued 4,125,000 Class A
          warrants, 3,093,750 Class B warrants, 3,093,750 Class C warrants, and 2,062,500
          Class D warrants pertaining to the $660,000 in convertible notes
          issued.
  (a)
          (iv)  On March 30, 2006, the Company agreed to change the conversion
          terms of the convertible notes described above in Note 7 (a). The conversion
          price was changed from 80% to 50% of the average of the three lowest closing
          prices of the Company’s shares for the twenty trading days prior to
          conversion.
   F-13
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 7.      Convertible
          Notes (continued)
  (a)
          (v)  There are specific provisions for use of proceeds and penalties
          should the Company vary more than 5% for each individual item specified
          on the
          use of proceeds. The Company is also committed to paying a due diligence
          fee of
          9% of the total convertible notes issued (50% or $49,500 of which was paid
          in
          cash and the other 50% was paid in the form of $49,500 in convertible notes
          with
          the same terms as above and without warrants).
  (a)
          (vi)  On August 2, 2005, the Financing Agreements were amended and the
          Company issued an additional $140,000 in convertible notes. The terms and
          conditions of the original Financing Agreements were unchanged except that
          the
          maximum conversion price for the convertible notes was reduced from $0.20
          to
          $0.16 per share and there is no minimum conversion price. The Company issued
          1,129,761 Class A warrants exercisable at $0.20 per share, 847,321 Class
          B
          warrants exercisable at $0.25 per share, 847,321 Class C warrants exercisable
          at
          $0.30 per share, and 564,881 Class D warrants exercisable at $0.45 per
          share,
          pertaining to the $140,000 in convertible notes issued. The warrants will
          expire
          five years after the date the warrants are issued and are callable by the
          Company when the market price is 200% of the exercise price.
  (a)
          (vii)  On January 17, 2006, the Financing Agreements were completed
          and the Company received an additional $300,000.  The Company issued
          $493,200 of convertible notes for the additional funding of $300,000 and
          for
          liquidated damages amounting to $193,200 as outlined in Note 7
          (a)(ii).  The Company issued 4,784,688 Class A warrants exercisable at
          $0.20 per share, 3,588,516 Class B warrants exercisable at $0.25 per share,
          3,588,516 Class C warrants exercisable at $0.30 per share, and 2,392,344
          Class D
          warrants exercisable at $0.45 per share.
  (a)
          (viii) The warrants are detachable from the convertible notes and have
          been
          accounted for separately in accordance with FAS 133 and EITF
          00-19.  The warrants do not meet the necessary qualifications for
          equity as outlined in EITF 00-19.  As a result, the warrants and
          conversion feature were classified as liabilities pursuant to FAS 133 at
          fair
          value with changes in fair value recorded in the consolidated statements
          of
          operations.
  The
          Company classified the conversion features and warrants as derivative
          liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
          derivative liabilities (Refer to Notes 8 and 22) on the convertible notes
          equal
          to the fair value of the conversion feature and warrants of $3,689,435
          and a
          discount on the notes of $1,342,700.  During the year ended May 31,
          2007, interest of $332,900 (May 31, 2006 – $449,174) has been accreted. At May
          31, 2006, $350,000 of the $1,342,700 convertible notes had been converted
          into
          common shares leaving outstanding principal of $992,700 with a carrying
          value of
          $659,800.  During the year ended May 31, 2007 an additional $267,063
          was converted into common shares leaving outstanding principal of $725,637
          with
          a carrying value of $725,637.
  The
          Company agreed to file a post-effective amendment of the SB-2 filed with
          the SEC
          on or before February 28, 2006 to register an additional 4,081,691 shares
          of
          common stock assuming complete conversion pertaining to the $193,200 in
          liquidated damages as per the terms of the financing agreements. The additional
          4,081,691 were included in the SB-2 filed on May 19, 2006.
  (b)
          *March 2006 Financing*
  On
          March
          30, 2006, the Company completed financing agreements for $2,000,000 with
          private
          investors (the “Investors”). The Company will issue to the Investors secured
          convertible notes totalling $2,000,000 with a 6% interest rate and a maturity
          of
          three years. The notes are convertible into shares of common stock at 50%
          of the
          average of the lowest three closing prices for the Company’s shares during the
          twenty trading days prior to conversion. The applicable conversion percentage
          changes to 55% if the SB-2 is filed on or before the Filing Date; and 60%
          if the
          SB-2 is declared effective by the Effectiveness Deadline. The convertible
          notes
          are secured by a lien on all of the Company’s assets pursuant to the Security
          Agreement and the Intellectual Property Security Agreement entered into
          with the
          Investors.
   F-14
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  7.     
          Convertible Notes (continued)
  (b)
          (i)  Under the terms of these agreements, $700,000 was funded on the
          Closing Date, a further $600,000 was funded on the date an SB-2 Registration
          Statement (“SB-2”) was filed (pursuant to a Registration Rights Agreement) with
          the SEC, and $700,000 was funded on the date the SB-2 Registration Statement
          was
          declared effective by the SEC. Pursuant to the terms of a Registration
          Rights
          Agreement, the Company is required to register the shares underlying the
          convertible notes, as well as the shares to be issued pursuant to the warrants
          within forty-five days from the Closing Date and are required to have the
          SB-2
          declared effective within 120 days from the Closing Date. In the event
          that the
          SB-2 is not filed or declared effective within these time limits, the Company
          may be deemed in default under the agreements and subject to liquidated
          damages
          in the amount of 2% of the entire funding amount per month.
  (b)
          (ii)  Pursuant to this financing transaction, the Company also granted
          the Investors the right to purchase an aggregate of 36,000,000 shares of
          common
          stock (the “Warrants”), of which Warrants to purchase 26,000,000 shares were
          issued on March 27, 2006 and Warrants to purchase 10,000,000 shares were
          issued
          on May 23, 2006. The Warrants are exercisable for a period of seven years
          from
          the dates of issuance at an exercise price of $0.16 per share.
  (b)
          (iii)  On May 30, 2006 the Company’s solicitors received a letter from
          the SEC indicating that the SEC would not be reviewing the SB-2 and indicating
          that the filing could not "go effective" until the Company had increased
          its
          Authorized Capital. On July 26, 2006, the Company increased the authorized
          capital from 100,000,000 to 750,000,000 shares.  The SB-2 was declared
          effective in October 2006.
  (b)
          (iv)  As at May 31, 2007, the Company has issued callable secured
          convertible notes totalling $2,000,000. The Company received the first
          tranche
          of $700,000 on March 27, 2006, the second tranche of $600,000 on May 23,
          2006,
          and the third tranche of $700,000 on October 6, 2006. The warrants are
          detachable from the convertible notes and have been accounted for separately
          in
          accordance with FAS 133 and EITF 00-19.  The warrants do not meet the
          necessary qualifications for equity as outlined in EITF 00-19.  As a
          result, the warrants and conversion feature were classified as liabilities
          pursuant to FAS 133 at fair value with changes in fair value recorded in
          the
          consolidated statements of operations.
  The
          Company classified the conversion features and warrants as derivative
          liabilities pursuant to SFAS 133 and EITF 00-19.  The Company recorded
          derivative liabilities (Refer to Notes 8 and 22) on the convertible notes
          equal
          to the fair value of the conversion feature and warrants of $5,780,668
          and a
          discount on the notes of $2,000,000.  The Company will record further
          interest expense over the term of the convertible notes of $1,916,239 resulting
          from the difference between the stated value and carrying value at the
          date of
          issuance. The carrying value of the convertible notes will be increased
          to the
          face value of the convertible notes of $2,000,000 at
          maturity.  Interest expense for the year ended May 31, 2007 on
          principal of $2,000,000 totalling $495,886 has been accreted (2006 - $45,893).
          During the year ended May 31, 2007, $172,409 was converted into common
          shares
          leaving outstanding principal of $1,827,591 with a carrying value of
          $625,651.
  (c)
          *March 2007 Financing*
  On
          March
          1, 2007, the Company completed financing agreements for $250,000 with private
          investors (the “Investors”). The Company issued to the Investors callable
          secured convertible notes totalling $250,000 with a 6% interest rate, 15%
          interest rate upon default and a maturity of three years (the “Notes”). The
          notes are convertible into shares of common stock at 50% of the average
          of the
          lowest three closing prices for the Company’s shares during the twenty trading
          days prior to conversion. The applicable conversion percentage changes
          to 55% if
          the SB-2 is filed within 45 days of the Closing Date; and 60% if the SB-2
          is
          declared effective within 120 days from the Closing Date. The SB-2 has
          not been
          filed.  The Notes are secured with a secondary position on all of the
          Company's assets pursuant to the Security Agreement and the Intellectual
          Property Security Agreement entered into with the Investors. In addition,
          the
          Company granted the Investors warrants with a seven-year maturity, to purchase
          10,000,000 shares of the Company’s common stock at an exercise price of $0.002
          per share.  Pursuant to the terms of a Registration Rights Agreement,
          the Company is required to register the shares underlying the Notes, as
          well as
          the shares to be issued pursuant to the Warrant, for a total of 120 million
          shares, within 45 days from the Closing Date and is required to have the
          registration statement declared effective within 120 days from the Closing
          Date.  The underlying shares have not been registered and the Company
          has defaulted on the convertible notes.  The Company must make default
          payments at the borrower’s option in cash or stock.
   F-15
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 7.      Convertible
          Notes (continued)
  (c)(i)
          The warrants are detachable from the convertible notes and have been accounted
          for separately in accordance with FAS 133 and EITF 00-19.  The
          warrants do not meet the necessary qualifications for equity as outlined
          in EITF
          00-19.  As a result, the warrants and conversion feature were
          classified as liabilities pursuant to FAS 133 at fair value with changes
          in fair
          value recorded in the consolidated statements of operations.
  (c)(ii)
          There are liquidated damages or cash penalties payable to the warrant holder
          if
          the Company cannot register the shares underlying the warrants.  The
          Company must file an SB-2 to register the warrant shares within 45 days
          from the
          closing date and have the SB-2 declared effective within 120 days.  If
          the Company fails to file by the 45th day, there is a 2% penalty payable
          as of
          that date.  Then on the 30th day thereafter there is another 2%
          penalty, prorated if the default is cured during the 30 day
          period.  If the SB-2 is not declared effective by the 120th day, then
          on the 30th day after that day there is a 2% penalty and on each 30th day
          after
          that another 1% penalty, again prorated to a maximum of 6%.  The
          penalties commenced April 14, 2007 at 2% of $250,000 and continue at 2%
          per
          month for each month thereafter until the Convertible Notes mature in March
          2010. The maximum penalty payable is $15,000.  At May 31, 2007 the
          Company has recorded $7,500 in accrued liabilities for the 2% penalties
          that
          have accrued from April 14, 2007 to May 31, 2007.
  (c)(iii)
          The Company evaluated the conversion feature under the guidance of FASB
          133,
          EITF 00-19 and EITF Issue No. 06-2 *“The Meaning of ‘Conventional Convertible
          Debt Instrument’ in Issue No. 00-19”*(“EITF 06-2”). Pursuant to FASB 133,
          the embedded conversion feature was separated from the host contract and
          the
          conversion feature was classified as liabilities pursuant to FAS 133 at
          fair
          value with changes in fair value recorded in the consolidated statements
          of
          operations.
  (c)(iv)
          At May 31, 2007, the fair value of the warrants was $9,844 and the conversion
          feature was $463,514.  The fair value of the warrants and the
          conversion feature upon issuance of convertible notes on March 1, 2007
          was
          $29,725 and $709,621, respectively.
  (c)(v)
          For the year ended May 31, 2007, the Company recorded $20,757 as the accretion
          of interest expense on the convertible notes increasing the carrying value
          to
          $20,757 and $223,358 as unrealized losses arising from the change in the
          fair
          value of the warrants and the conversion feature.
  (d)
          During the year ended May 31, 2007, interest of $223,629 was accrued on
          the
          convertible notes. During the year ended May 31, 2007, convertible notes
          with a
          principal amount of $439,472 and accrued interest of $18,817 were converted
          into
          350,647,906 shares of common stock.
  (e)
          The
          Company incurred and deferred debt issue costs of $55,700 during the year
          ended
          May 31, 2007 for a total of $625,300 pertaining to convertible notes to
          be
          amortized over the related terms to maturity, of which $375,800 was paid
          by cash
          proceeds of financing arrangements, $49,500 incurred as described in Note
          7(a)(v) and a further $200,000 was accrued for warrants to be issued as
          placement agent fees.  During the year ended May 31, 2007, $167,646
          (2006 - $166,037) has been charged to debt issue costs. At May 31, 2007
          the
          balance remaining to be charged to operations totalled $267,905 (May 31,
          2006-
          $379,852). The Company incurred financing costs of $28,000 in connection
          with
          the issuance of the Convertible Notes and warrants which is being deferred
          and
          amortized over the term of the Convertible Notes.  At May 31, 2007,
          $2,327 has been amortized.
  (f)  At
          May 31, 2007, the Company recorded $4,900,000 in accrued liabilities
          representing the penalties relating to the convertible notes described
          in Notes
          7(a)-(c).
   F-16
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 8.     Derivatives
  The
          Company evaluated the application of SFAS 133 and EITF 00-19 for the convertible
          notes issued to investors as outlined in Note 7. Based on the guidance
          in SFAS
          133 and EITF 00-19, The Company concluded all of these instruments were
          required
          to be accounted for as derivatives. SFAS 133 and EITF 00-19 require the
          Company
          to bifurcate and separately account for the conversion features of the
          notes as
          embedded derivatives. Pursuant to SFAS 133, the Company bifurcated the
          conversion feature from the notes because the economic characteristics
          and risks
          of the conversion features were determined to not be clearly and closely
          related
          to the economic characteristics and risks of the debentures. In addition,
          the
          number of shares issuable pursuant to the conversion features was variable
          and
          the Company determined that the conversion features met the attributes
          of a
          liability and therefore recorded the fair value of the conversion features
          as
          current liabilities. The Company is required to record the fair value of
          the
          conversion features on its balance sheet at fair value with changes in
          the
          values of these derivatives reflected in the statement of
          operations.  These derivative liabilities were not previously
          classified as such in the Company's historical financial statements. In
          order to
          reflect these changes, the Company has restated its financial statements
          for the
          years ended May 31, 2006 and 2005 as described in Note 22.
  The
          impact of the application of SFAS 133 and EITF 00-19 on the balance sheet
          as of
          May 31, 2006 and the impact on the balance sheet and statements of operations
          as
          of May 31, 2005 are as follows:
  May
                    31, 2006
                  Restated
                  $
                
                
                May
                    31,2005
                  Restated
                  $Derivative
                    liabilities
                
                
                9,700,523
                
                
                
                1,709,836
 
  The
          Company uses the Black Scholes valuation model for calculation of the fair
          value
          of derivative liabilities. The company uses volatility rates based upon
          the
          closing stock price of its common stock. The Company uses a risk free interest
          rate which is the U.S. Treasury bill rate for securities with a maturity
          that
          approximates the estimated expected life of a derivative. The Company uses
          the
          closing market price of the common stock on the date of issuance of a derivative
          or at the end of a quarter when a derivative is valued at fair value. The
          volatility has ranged from 147% to 209% during the years ending May 31,
          2007 and
          2006. The following table shows the weighted average volatility, risk free
          rate
          and market price used in the calculation of the call value for the notes
          at
          issuance date and for the years ended May 31, 2007 and 2006.
  Volatility
                
                
                Risk
                    Free
                  Rate
                
                
                Dividend
                    Yield
                
                
                Term
                    in
                  YearsAt
                    Issuance Date for:April
                    2005 Financing
                
                
                192
                %
                
                
                4.10
                %
                
                
                –
                
                
                
                1March
                    2006 Financing
                
                
                169
                %
                
                
                4.66
                %
                
                
                –
                
                
                
                3March
                    2007 Financing
                
                
                187
                %
                
                
                4.42
                %
                
                
                –
                
                
                
                3Average
                    rates at Year End:May
                    31, 2007
                
                
                191
                %
                
                
                4.76
                %
                
                
                –
                
                
                
                2.75May
                    31, 2006
                
                
                169
                %
                
                
                4.91
                %
                
                
                –
                
                
                
                3
    F-17
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 8.    
          Derivatives (continued)
  The
          following table shows the weighted average volatility, risk free rate and
          market
          price used in the calculation of the Black Scholes detachable warrants
          at
          issuance date and for the years ended May 31, 2007 and 2006.
  Volatility
                
                
                Risk
                    Free
                  Rate
                
                
                Dividend
                    Yield
                
                
                Term
                    in
                  YearsAt
                    Issuance Date for:April
                    2005 Financing
                
                
                111
                %
                
                
                4.07
                %
                
                
                –
                
                
                
                5.00March
                    2006 Financing
                
                
                164
                %
                
                
                4.75
                %
                
                
                –
                
                
                
                7.00March
                    2007 Financing
                
                
                187
                %
                
                
                4.42
                %
                
                
                –
                
                
                
                7.00Average
                    rates at Year End:May
                    31, 2007
                
                
                199
                %
                
                
                4.73
                %
                
                
                –
                
                
                
                5.06May
                    31, 2006
                
                
                163
                %
                
                
                4.69
                %
                
                
                –
                
                
                
                5.76
 
  During
          the year ended May 31, 2007, the Company recorded a gain on derivatives
          of
          $5,085,013 (2006 – loss of $6,465,496 as restated) equal to the difference in
          the fair value of the derivatives at May 31, 2007 (2006) and the date of
          issuance. During the year ended May 31, 2007, the Company reclassified
          $711,668
          (2006 - $408,009 as restated) of derivative liabilities to additional paid
          in
          capital upon the conversion of convertible notes.
 
 9.           
          Related Party Balances/Transactions
  May
                      31,
                    2007
                    $
                  
                  May
                      31,
                    2006
                    $(a)
                  Balances(i)
                  Shield-Tech
                      Products Inc.
                  522,909
                  
                  507,765(ii)
                  Directors
                      and/or officers, current and former
                  1,020,408
                  
                  920,930(iii)
                  Due
                      to former officer
                  58,122
                  
                  56,4381,601,439
                  
                  1,485,133(b)
                  Transactions(i)
                  Shield-Tech
                      Products Inc., a company in which the President of the Company
                      has a
                      significant influence on, conducted research and incurred development
                      expenditures on the Company’s behalf. The advances are without interest,
                      unsecured and due on demand.(ii)
                  The
                      advances from directors and/or officers are without interest,
                      unsecured,
                      and due on demand.(iii)
                  The
                      remaining amount owing to a former officer in connection with
                      the failed
                      acquisition of 5943609 B.C. Ltd. (dba Mystic Mountain Body
                      and Spa
                      Products) (“Mystic”) in fiscal 2004 are secured by promissory notes,
                      non-interest bearing and due on demand. The Company and Mystic
                      decided to
                      terminate the acquisition agreement in fiscal 2004 but have
                      not yet
                      settled the terms.(iv)
                  Eight
                      directors/officers were paid/accrued $340,500 for the year
                      ended May 31,
                      2007 (2006 – $459,588) for consulting services rendered.
    F-18
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  10.           
          Other Advances
  (a)
                The
                    Company received advances from a non-related party totalling
                    $114,000 to
                    assist in research and development. The advances are due on demand,
                    unsecured and until May 31, 2005, accrued interest at prime plus
                    1% per
                    annum. As at May 31, 2005, $40,033 of interest had been accrued
                    on these
                    advances and included in other advances. Subsequent to May 31,
                    2005, the
                    amount is non-interest bearing.
  (b)
                  On
                        December 22, 2003, the Company entered into a Letter of Commitment
                        to
                        participate in a Joint Venture with a First Nations Band
                        (the “Band”). The
                        Joint Venture was to be 51% owned by the Band and 49% by
                        the Company. The
                        Company was to contribute all the property and equipment,
                        including all
                        intellectual property and intangible assets, and inventory
                        of Mystic. The
                        Company was also to provide its management expertise to supervise
                        the
                        construction of a manufacturing facility on the Band’s land, purchase and
                        install suitable equipment, and prepare a business plan.
                        The band was to
                        contribute a total of Cdn$5,000,000 to be used to construct
                        the
                        manufacturing facility, to purchase manufacturing equipment
                        and to fund
                        start up and operating costs. In fiscal 2004 the Company
                        received
                        Cdn$102,000 from the Band to assist the Company in developing
                        a business
                        and start-up plan for the Joint Venture. The advance was
                        non-interest
                        bearing, unsecured and repayable only if the Band did not
                        approve the
                        start-up plan. The Company and the Band have decided not
                        to proceed with
                        the Joint Venture and the Company will repay the promissory
                        note to the
                        Band. On July 27, 2004, the Band demanded repayment and interest
                        at the
                        rate of 12% per annum began accruing on the outstanding balance
                        on August
                        10, 2004. During fiscal 2005, the Company repaid Cdn$30,000
                        and during the
                        year ended May 31, 2007, the Company repaid Cdn$10,000, leaving
                        a balance
                        of $57,966 (Cdn$62,000) remaining as at May 31, 2007 (2006
                        -
                        $65,366).
 11.            
          Mortgages Payable
  May
                    31,
                  2007
                  $
                
                May
                    31,
                  2006
                  $Mortgage
                    payable (Cdn$250,000) secured by a first charge on the land and
                    building
                    with additional security provided by the President of the Company
                    and his
                    spouse, interest is 9% per annum compounded monthly, payable
                    interest only
                    in monthly installments of Cdn$1,825, and maturing on February
                    28,
                    2008
                213,711
                
                191,785Mortgage
                    payable (Cdn$140,846) secured by a second charge on the land
                    and building
                    with additional security provided by the President of the Company
                    and his
                    spouse, interest is 18% per annum compounded monthly, payable
                    interest
                    only in monthly installments of Cdn$2,112, and maturing on February
                    1,
                    2008
                110,215
                
                125,964323,926
                
                317,749
  12.           
          Common Stock
  (a) Authorized
            Shares
 On
          July
          26, 2006, at the Annual Meeting of Shareholders, the shareholders approved
          the
          increase in the Company’s authorized common shares from 100,000,000 to
          750,000,000, with no change in par value.
  (b) Non-cash
          Consideration
  Shares
          issued for non-cash consideration were valued (1) based on the fair value
          of the
          services and/or goods provided when these amounts were more readily determinable
          than the value of the shares at the date of issue; and (2) based on the
          fair
          market value of the shares at the date of issue when their value was more
          readily determinable than the value of the services provided.
  During
            the year ended May 31, 2007, the Company issued 350,647,906 shares of
            common
            stock pursuant to the conversion of $439,472 in convertible notes payable
            and
            $18,817 in accrued interest as described in Note 7(d).
   F-19
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 12.          
          Common Stock (continued)
  On
          December 20, 2004, the Company issued 800,000 common shares having an aggregate
          fair value of $200,000 for consulting services to be rendered. During the
          year
          ended May 31, 2007, the Company charged to operations compensation expense
          of
          $40,000 (2006 - $40,000) leaving a balance of $42,247 (2006 - $82,247)
          in
          deferred compensation at May 31, 2007.
  On
          October 10, 2006, the Company issued 10,000,000 shares of common stock
          at a
          value of $300,000 pursuant to a consulting agreement entered into on May
          1, 2006
          as described in Note 16(e).
  On
          January 1, 2006, the Company issued 8,500,000 shares of common stock to
          various
          consultants at a fair value of $595,000 for services to be rendered over
          one
          year. The Company charged to operations compensation expense of $347,083
          (2006 -
          $247,917) for the year ending May 31, 2007.
  On
          January 1, 2006, the Company issued 500,000 shares of common stock to a
          consultant at a fair value of $35,000 for services to be rendered over
          one year.
          The Company charged to operations compensation expense of $20,417 (2006
          -
          $20,417) for the year ending May 31, 2007.
  On
          February 16, 2006, the Company issued 2,000,000 shares of common stock
          to a
          consultant at a fair value of $120,000 for services to be rendered over
          one
          year. The Company charged to operations compensation expense of $86,056
          (2006 -
          $33,945) for the year ending May 31, 2007.
  On
          January 20, 2005, the Company issued 1,900,000 common shares to be recorded
          at
          an aggregate fair value of $437,000 to a consultant for services to be
          rendered
          over a five year period. During the year ended May 31, 2007 the Company
          charged
          to operations compensation expense of $87,400 (2006 - $87,400) leaving
          a balance
          of $230,832 (2006 - $318,232) in deferred compensation that will be charged
          to
          operations over the remainder of the term.
  During
          the fiscal year ended May 31, 2006, the Company issued 9,304,668 shares
          of
          common stock pursuant to the conversion of $350,000 in convertible notes
          payable
          and $56,392 in accrued interest..
  On
          September 26, 2005, the Company cancelled 250,000 shares of common stock
          that
          had been issued in error for consulting fees with a fair value of $87,500.
          The
          Company credited deferred compensation expense of $87,500 for the year
          ending
          May 31, 2006.
  During
          the year ended May 31, 2006, the Company issued 120,700 shares of common
          stock
          to a consultant at a fair value of $32,584 for services rendered in a prior
          year. The Company charged to operations compensation expense of $32,584
          for the
          year ending May 31, 2006.
 
 13.          
          Stock Options
 
 On
          November 23, 2005, the Board of Directors granted 900,000 stock options
          from the
          2004 and 2005 Stock Option Plans to employees and non-employees pursuant
          to the
          above at a grant date fair value of $0.065 per option. The Company charged
          stock-based compensation expense of $12,467 for non-employees to
          operations.
  On
          April
          4, 2006 the Company's Board of Directors approved a 2006 Stock Incentive
          Plan
          for a total of 10,000,000 shares of common stock to be issued to employees,
          directors, independent contractors agents or other eligible
          persons.  The exercise price shall be 100% of the Fair Market Value
          per common share for all eligible participants on the Grant Date.  The
          Board approved the issue of 7,350,000 options to eligible
          participants.  The term of the options is for five years from the
          grant date.  These options could not be issued and the Stock Incentive
          Plan registered with the SEC until it was approved by the Company's
          shareholders, which was done with a resolution at the Annual Meeting on
          July 26,
          2006, (the Grant Date).
  On
          July
          26, 2006, the Board of Directors approved the additional award of 1,550,000
          options to acquire shares to eligible participants in the 2006 Stock Incentive
          Plan. The term of these options is for five years and they will expire
          on July
          26, 2011. The exercise price is 100% of the fair market value on the Grant
          Date,
          July 26, 2006.
   F-20
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  13. Stock
          Options
          (continued)
  On
          September 26, 2006 and October 13, 2006, the Board of Directors granted
          stock
          options of 100,000 and 250,000, respectively, to two consultants.  The
          exercise prices are at 100% of the fair market value per common share on
          the
          corresponding grant dates.  The term of the options is for five years
          expiring on September 25, 2011 and October 12, 2011, respectively.
  A
          summary
          of the changes in the Company’s stock options is presented below:
  Year
                    Ended
                  May
                    31, 2007
                
                
                Year
                    Ended
                  May
                    31, 2006Number
                
                
                Weighted
                    Average Exercise
                  Price
                  $
                
                
                Number
                
                
                Weighted
                    Average Exercise
                  Price
                  $Balance,
                    beginning of year
                
                
                5,200,000
                
                
                
                0.22
                
                
                
                4,300,000
                
                
                
                0.25Granted
                
                
                9,250,000
                
                
                
                0.03
                
                
                
                900,000
                
                
                
                0.07Exercised
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Forfeited/Expired
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Balance,
                    end of year
                
                
                14,450,000
                
                
                
                0.09
                
                
                
                5,200,000
                
                
                
                0.22
 
  Additional
          information regarding stock options outstanding as at May 31, 2007 is as
          follows:
  Outstanding
                
                
                ExercisableExercise
                    prices
                  $
                
                
                Number
                    of
                  options
                
                
                Weighted
                  average
                  remaining
                  contractual
                  life
                    (years)
                
                
                Weighted
                  average
                  exercise
                    price
                  $
                
                
                Number
                    of
                  options
                
                
                Weighted
                  average
                  exercise
                    price
                  $0.00
                    – 0.07
                
                
                
                10,150,000
                
                
                
                4.00
                
                
                
                0.03
                
                
                
                10,150,000
                
                
                
                0.030.08
                    – 0.15
                
                
                
                1,400,000
                
                
                
                3.77
                
                
                
                0.15
                
                
                
                1,400,000
                
                
                
                0.150.16
                    – 0.30
                
                
                
                1,600,000
                
                
                
                2.07
                
                
                
                0.28
                
                
                
                1,600,000
                
                
                
                0.280.31
                    – 0.45
                
                
                
                1,300,000
                
                
                
                2.78
                
                
                
                0.33
                
                
                
                1,300,000
                
                
                
                0.3314,450,000
                
                
                
                3.74
                
                
                
                0.09
                
                
                
                14,450,000
                
                
                
                0.09
  14.           
          Stock-based Compensation
  During
          the year ended May 31, 2007, the Company recognized stock-based compensation
          of
          $263,730 The weighted average fair value of options granted during the
          year
          ended May 31, 2007 is $0.03 per option (2006 – $0.06).  During the
          years ended May 31, 2007 and 2006, the fair value of the options granted
          was
          measured at the grant date using the Black-Scholes option pricing model
          with the
          following weighted average assumptions:
  Year
                    Ended
                  May
                    31,
                  2007
                
                
                Year
                    Ended
                  May
                    31,
                  2006Expected
                    dividend yield
                
                
                0
                %
                
                
                0
                %Risk-free
                    interest rate
                
                
                4.88
                %
                
                
                4.37
                %Expected
                    volatility
                
                
                302
                %
                
                
                179
                %Expected
                    option life (in years)
                
                
                5
                
                
                
                5Expected
                    forfeiture rate
                
                
                4
                %
                
                
                0
                %
   F-21
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 15.           Stock
          Purchase Warrants
  A
          summary of the changes in the
          Company’s stock purchase warrants is presented below:
  Year
                    Ended
                  May
                    31,
                  2007
                
                
                Year
                    Ended
                  May
                    31,
                  2006Number
                
                
                Weighted
                    Average Exercise
                  Price
                
                
                Number
                
                
                Weighted
                    Average Exercise
                  Price$
                
                
                
                $Balance,
                    beginning of year
                
                
                66,318,348
                
                
                
                0.22
                
                
                
                18,005,471
                
                
                
                0.25Granted
                
                
                10,000,000
                
                
                
                0.02
                
                
                
                53,743,348
                
                
                
                0.20Exercised
                
                
                –
                
                
                
                –
                
                
                
                –
                
                
                
                –Forfeited/Expired
                
                
                –
                
                
                
                –
                
                
                
                (5,430,471
                )
                
                
                0.42Balance,
                    end of year
                
                
                76,318,348
                
                
                
                0.19
                
                
                
                66,318,348
                
                
                
                0.22
  As
          at May
          31, 2007, the following share purchase warrants were outstanding:
  Number
                    of Warrants
                
                
                Exercise
                    Price
                  $
                
                Expiry
                    Date200,000
                
                
                
                0.38
                
                July
                    29, 2007 (expired subsequently)4,125,000
                
                
                
                0.20
                
                April
                    5, 20103,093,750
                
                
                
                0.25
                
                April
                    5, 20103,093,750
                
                
                
                0.30
                
                April
                    5, 20102,062,500
                
                
                
                0.45
                
                April
                    5, 20101,129,761
                
                
                
                0.20
                
                August
                    2, 2010847,321
                
                
                
                0.25
                
                August
                    2, 2010847,321
                
                
                
                0.30
                
                August
                    2, 2010564,881
                
                
                
                0.45
                
                August
                    2, 20104,784,688
                
                
                
                0.20
                
                January
                    17, 20113,588,516
                
                
                
                0.25
                
                January
                    17, 20113,588,516
                
                
                
                0.30
                
                January
                    17, 20112,392,344
                
                
                
                0.45
                
                January
                    17, 201126,000,000
                
                
                
                0.16
                
                March
                    27, 201310,000,000
                
                
                
                0.16
                
                May
                    23, 201310,000,000
                
                
                
                0.002
                
                March
                    1, 201376,318,348
 
 16.           Commitments
  (a)
                On
                    July 23, 2004, the Company entered into a Stock Purchase Agreement
                    with
                    Seaside Investments PLC (“Seaside”), a private London investment company,
                    for the purchase by Seaside of $1,177,970 of the Company’s common shares
                    at $0.46 per share, in exchange for shares of Seaside. At that
                    time,
                    Seaside entered into a “lock-up” agreement with the Company pursuant to
                    which it has agreed not to trade the Company’s shares for a period of one
                    year from the closing date. The Company agreed to file a registration
                    statement with the SEC allowing the public resale of the common
                    shares by
                    Seaside, commencing at the expiration of the “lock-up” period. Seaside was
                    to issue its shares to the Company equivalent to $1,177,970 as
                    full
                    payment for the Company’s shares. Thirty percent of Seaside’s shares were
                    to be held in escrow for one year following their issuance and
                    in the
                    event the per share market price of the Company’s common stock at such
                    time was less than the per share value of the Company’s stock at the time
                    of the closing, Seaside was to be entitled to receive out of
                    escrow a
                    percentage of the shares equal to the percentage of such decline.
                    The
                    remaining shares held in escrow were to be released to the Company
                    at such
                    time.
   F-22
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  16.           Commitments
          (continued)
  The
          closing of this transaction was subject to certain contingencies, including
          the
          listing of Seaside shares on the London Stock Exchange on or before September
          30, 2004 (extended to March 31, 2005).
  The
          Company delivered 2,677,500 shares to its legal counsel to be held in escrow
          pending closing of this transaction at which time these shares were to
          be
          recorded as issued common shares. As the transaction did not close, on
          September
          20, 2005 the Company terminated the agreement and intends to cancel the
          2,677,500 shares.
  (b)
                On
                    January 20, 2005, the Company entered into a five-year agreement
                    with a
                    company for marketing and distribution services. Pursuant to
                    the
                    agreement, the Company issued 1,900,000 common shares at a fair
                    value of
                    $437,000.  Of this amount, $87,400 (2005 - $31,368) was expensed
                    at May 31, 2006 leaving a deferred compensation balance of $318,232
                    at
                    year end. On February 1, 2006, the Company entered into a new
                    contract
                    with a company for marketing and distribution services to replace
                    the
                    existing five-year agreement with a new one year agreement. The
                    new
                    contract calls for six monthly payments of $20,000 per month
                    recoverable
                    against commissions of 15% on sales generated. The contract can
                    be
                    cancelled by the Company if sales are not booked from at least
                    two of
                    eight listed possible customers. On August 15, 2006, the contract
                    was
                    amended and the Company agreed to make two additional payments
                    of $20,000
                    per month.  The Company terminated the contract effective
                    January 31, 2007.
  (c)
                On
                    January 17, 2006, The Company entered into a two year agreement
                    with the a
                    sales director of the Company for a base salary of $90,000 per
                    year and up
                    to an additional $250,000 under various bonus
                    clauses.
  (d)
                On
                    February 16, 2006, the Company entered into a structuring agreement
                    relating to placement agent services rendered in connection with
                    the
                    $2,000,000 financing agreement, as discussed in Note 7(e). The
                    Company
                    agreed to pay $100,000 in cash (paid), and to issue warrants
                    worth
                    $200,000. As at May 31, 2007, $200,000 has been accrued for structuring
                    fees incurred.
  (e)
                On
                    May 1, 2006, the Company entered into a consulting agreement
                    and agreed to
                    issue 10,000,000 shares valued at $300,000 for services to be
                    rendered
                    over a 12 month period (issued).
  (f)
                On
                    May 19, 2006 the Company filed the required SB-2 with the SEC
                    to register
                    291,510,271 common shares which are required in connection with
                    the
                    Company’s financing agreements and a consulting agreement. These common
                    shares are issuable in connection with: the conversion of convertible
                    notes, the exercise of warrants relating to convertible notes
                    (including
                    liquidated damages) and placement agent services pursuant to
                    a
                    subscription agreement dated April 5, 2005, and a consulting
                    agreement
                    dated May 1, 2006.
  (g)
                On
                    November 20, 2006 the Company completed a vendor agreement with
                    Home
                    Shopping Group (HSG) whereby, HSG shall promote and sell the
                    Company’s
                    product. The term of the agreement is for two years.  HSG will
                    feature the Company’s product in an e-mail sent to 500,000 e-mail
                    addresses, will include a hyperlink to HSG’s web site and produce at its
                    sole cost and expense a 60 second direct response commercial.
                    The
                    commercial aired in two designated markets for combined total
                    of 100
                    times. The Company paid a fee of $17,700 offset by a purchase
                    order of
                    $3,150.
  (h)
                On
                    June 12, 2006 the Company entered into an agreement with an advertising
                    agency, committing to expenditures totaling $176,500 over a 60
                    day period
                    for advertising in magazines and agency commissions. During the
                    year ended
                    May 31, 2007, the Company paid $99,034 under this
                    agreement.
    F-23
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 16.           Commitments
          (continued)
  (i)
                On
                    September 1, 2006 the Company reached an agreement with a distributor
                    for
                    it’s Neuroskin for Psoriasis product.  The Company is committed
                    to support a media advertising program with an initial cost of
                    $22,000 and
                    $2,500 per week for four weeks.  If the distributor reaches
                    agreed-upon sales targets in the test area, the distributor will
                    be
                    granted exclusivity for Spanish-language sales programs in the
                    United
                    States.  The term of the agreement is from September 1, 2006 to
                    August 31, 2007 with automatic annual renewals, providing both
                    parties
                    have met the terms of the agreement.  Either party can terminate
                    the agreement on 30 days notice. During the year ended May 31,
                    2007, the
                    Company paid $32,000 pursuant to the agreement.  On November 15,
                    2006, the Company entered into a distributor agreement to replace
                    the
                    existing agreement.  The new agreement is effective for an
                    initial term of one year and will be automatically renewed subject
                    to
                    certain conditions notwithstanding a 30 days written notice of
                    termination
                    by either party.
  (j)
                On
                    September 1, 2006 the Company reached an agreement with an adviser
                    for
                    it’s animal care line of products.  The adviser is to receive a
                    1% commission on the first $250,000 in sales of animal care products,
                    reducing to 0.5% commission, thereafter.  The term of the
                    agreement is from September 1, 2006 to September 30, 2007 with
                    automatic
                    renewals, provided both parties have met the terms of the
                    agreement.  Either party can terminate the agreement on 30 days
                    notice.
  (k)
                In
                    March 2007, the Company entered into a six-year agreement with
                    a
                    distributor in Indonesia.  The distributor is granted the right
                    to use the Company trademarks and product names.  The agreement
                    will automatically renew for further periods of four years unless
                    either
                    party provides notification within 30 days of
                    expiration.
  (l)
                In
                    March 2007, the Company completed an agreement for an advertising
                    campaign
                    and agreed to pay a fee for referrals not to exceed
                    $20,000.  The agreement does not have a specific term but can be
                    cancelled by the Company on five days
                    notice.
  (m)
                In
                    March 2007, the Company entered into a consulting agreement for
                    financial
                    and marketing advice including the production of marketing materials
                    and
                    introductions to distributors, buyers and stores for the animal
                    care line
                    of products.  Then term of the contract is dependent on
                    completion of the agreed upon tasks which are expected to require
                    nine
                    months to complete.  As payment, the Company is to provide 44
                    million shares of common stock of the Company, immediately, or
                    as soon as
                    a registration statement can be completed with the SEC. As at
                    May 31,
                    2007, no shares have been issued and the Company has accrued
                    $40,986.
  (n)
                In
                    March 2007, the Company entered into a consulting agreement for
                    financial
                    advisory services, marketing planning and strategic planning
                    advice. The
                    term of the contract is for one year. As consideration, the Company
                    is to
                    issue in three instalments for a total of 20 million shares of
                    common
                    stock of the Company as soon as a registration statement can
                    be completed
                    with the SEC.  As at May 31, 2007 no shares have been issued and
                    the Company has accrued $6,685.
  (o)
                In
                    March 2007, the Company entered into a consulting agreement for
                    one year
                    of strategic advice and corporate planning in consideration for
                    $80,000 or
                    the issuance of 40 million shares of common stock. As at May
                    31, 2007 no
                    shares have been issued and the Company has accrued
                    $15,343.
   F-24
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 17.  
          Contingent Liability and Legal Proceedings
  The
          former Vice President of Sales and Marketing (former Vice President) of
          the
          Company, wrongfully registered certain of the Company’s internet domain names in
          the name of a consulting company controlled by her called E-Clarity Consulting
          Inc. during the time she worked for the Company. The Company was able to
          recover
          registered ownership of some of its domain names but she refused to cooperate
          to
          hand over control of the balance to the Company. On September 30, 2005,
          the
          Company commenced legal proceedings in the Supreme Court of British Columbia
          against the former Vice President and E-Clarity Consulting Inc. alleging
          that
          she breached her fiduciary and contractual duties to the Company on a number
          of
          grounds, including wrongfully registering the Company’s internet product
          property in such a manner and by failing to deliver them to the Company
          when
          requested to do so. On September 30, 2005, the Company obtained an interim
          Court
          Order requiring the former Vice President and E-Clarity Consulting Inc.
          to
          deliver the internet property to the Company within two days of being served
          with the Court Order. She was served with the Court Order and complied
          with it.
          On October 17, 2005, the Company obtained a judgment against the former
          Vice
          President and E-Clarity Consulting Inc. for damages to be assessed plus
          costs to
          be assessed. The Company has not since taken any steps in the proceedings
          to
          assess costs or damages.
  In
          September 2005, the Company received an invoice from E-Clarity Consulting
          Inc.
          seeking payment of $240,137 with a threat to face legal proceedings if
          the
          amount was not paid. The Company denies the amount claimed is owed, has
          not paid
          any of the amount claimed, and intends to vigorously defend its position
          when
          required to do so. The Company has recorded an amount owing to the former
          Vice
          President of $131,458 recorded in its books as at May 31 2007. She has
          issued
          further invoices unilaterally adding further interest charges to the amount
          allegedly owing, but she has taken no steps in the Courts to attempt to
          collect
          it. The Company denies the obligation to pay the invoiced amount and interest
          as
          claimed by her. Aside from rendering her invoices, the former Vice President
          has
          not taken any steps in the existing legal proceedings nor has she initiated
          any
          other legal proceedings to advance her claims for payment from the Company.
          If
          she takes steps in legal proceedings to collect the amounts allegedly due,
          the
          Company will defend the claim and proceed to assess damages and costs in
          its
          legal proceedings and seek to set off those amounts from the amount, if
          any,
          which might be found by a court to be payable by the Company to her. If
          the
          Company’s damage claim against her exceeds the amount which may be payable to
          her, the Company plans to collect the excess of such damages and costs from
          the
          former Vice President and E-Clarity Consulting Inc.
 On
            May 9,
            2007, the former CFO of the Company commenced legal proceedings against
            the
            Company seeking judgement for unpaid services totalling $73,312 plus
            costs and
            on May 25, 2007 filed an application for summary judgement.  The
            Company retained counsel to defend against the action and in particular
            the
            application for judgment.  The Company is not taking issue with the amount
            claimed, but it is claiming that the former CFO should be precluded from
            taking the proceedings at this time and obtaining judgment because of
            an
            agreement between the Company’s executives initiated by himself whereby they all
            agreed to postpone payment of unpaid salaries and bonuses until the Company's
            finances improved to make the payments viable without threatening the
            Company's
            ability to advance its business interests. The Company's counsel has served
            its own application dated July 6, 2007 to stay (or suspend) the prosecution
            of based on this agreement.  Both applications are currently pending. 
No court date has been set for the hearing.  The amount claimed is
            included in accrued liabilities at May 31, 2007.
  
 F-25
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 18.  
          Supplementary Cash Flow Information
  Accumulated
                      from March 25, 1999 (date
                    of
                      inception) toMay
                      31,
                  
                  
                  For
                      the Year ended May 31,$
                  2007
                  
                  
                  $
                  2007
                  
                  
                  2006
                    Restated
                    $Non-cash
                      Investing and Financing ActivitiesAdvance
                      royalty deposits payable
                  
                  
                  25,000
                  
                  
                  
                  –
                  
                  
                  
                  –Deferred
                      financing fees payable
                  
                  
                  200,000
                  
                  
                  
                  –
                  
                  
                  
                  406,392Mortgage
                      proceeds to acquire land and building
                  
                  
                  294,836
                  
                  
                  
                  –
                  
                  
                  
                  294,836Promissory
                      notes issued to acquire assets
                  
                  
                  73,346
                  
                  
                  
                  –
                  
                  
                  
                  –Shares
                      issued to settle debt
                  
                  
                  507,442
                  
                  
                  
                  –
                  
                  
                  
                  –Shares
                      issued for consulting fees and services
                  
                  
                  3,790,888
                  
                  
                  
                  300,000
                  
                  
                  
                  695,084Shares
                      issued to purchase inventory
                  
                  
                  120,000
                  
                  
                  
                  –
                  
                  
                  
                  –Shares
                      issued to settle related party debt
                  
                  
                  349,800
                  
                  
                  
                  –
                  
                  
                  
                  –Unrealized
                      loss (gain) on
                      derivative liabilities
                  
                  
                  2,430,315
                  
                  
                  
                  (5,085,013
                  )
                  
                  
                  6,465,496Shares
                      issued for conversion of notes payable and accrued
                      interest
                  
                  
                  1,164,680
                  
                  
                  
                  9
                  
                  
                  
                  200,000Supplemental
                      DisclosuresInterest
                      paid
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –Income
                      taxes paid
                  
                  
                  –
                  
                  
                  
                  –
                  
                  
                  
                  –
  19.
                Income
                    Taxes
  A
          reconciliation of income taxes at statutory rates is as follows:
  2007
                  
                  
                  2006$
                  
                  
                  
                  Restated
                    $Loss
                      for the year
                  
                  
                  (4,470,747
                  )
                  
                  
                  (10,500,563
                  )Income
                      taxes at statutory rates
                  
                  
                  (1,540,000
                  )
                  
                  
                  (3,612,000
                  )Stock-based
                      compensation
                  
                  
                  394,000
                  
                  
                  
                  404,000Accretion
                      of convertible debt discount
                  
                  
                  496,000
                  
                  
                  
                  317,000Unrealized
                      gains on derivative liability
                  
                  
                  (1,752,000
                  )
                  
                  
                  2,222,000Unrecognized
                      benefit of operating losses
                  
                  
                  2,402,000
                  
                  
                  
                  669,000Total
                      income taxes
                  
                  
                  –
                  
                  
                  
                  –
  The
          significant components of the Company’s future income tax assets are as
          follows:
  2007
                  
                  
                  2006$
                  
                  
                  
                  Restated
                    $Future
                      Income tax asset:Operating
                      loss carryforwards
                  
                  
                  3,433,000
                  
                  
                  
                  2,722,000Valuation
                      allowance
                  
                  
                  (3,433,000
                  )
                  
                  
                  (2,722,000
                  )Net
                      deferred tax asset
                  
                  
                  –
                  
                  
                  
                  –
  In
          assessing the realizability of deferred tax assets, management considers
          whether
          it is more likely than not that some portion or all of the deferred tax
          assets
          will not be realized. The ultimate realization of deferred tax assets is
          dependent upon the generation of future taxable income during the periods
          in
          which those temporary differences become deductible. Management considers
          the
          scheduled reversal of deferred tax liabilities, projected future taxable
          income,
          and tax planning strategies in making this assessment. The amount of the
          deferred tax asset considered realizable could change materially in the
          near
          term based on future taxable income during the carry forward
          period.
   F-26
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  19.   
            Income
            Taxes (continued)
 The
          Company has approximately $9,954,000 of net operating loss carry forwards
          available for US income tax purposes to reduce taxable income of future
          years.
          These net operating loss carry forwards expire through to 2026. In addition,
          the
          Company has approximately $4,966,000 of non-capital losses available for
          Canadian income tax purposes to reduce taxable income of future
          years.  These net operating loss carryforwards expire through to
          2026.
  20.  
          Segmented Information
  The
          Company reports in one reportable operating segment, which is the provision
          of
          skin products. The Company operates primarily from Lumby, British Columbia,
          Canada.
 
 21.   Subsequent
          Events
  (a)
                From
                    June through September 2007, the Company received Notice of Conversion
                    from the private investors in connection with the April 5, 2005,
                    $1,100,000 financing. The Company issued  282,163,343 shares of
                    its common stock upon the conversion of $67,894 in principal
                    amount of the
                    convertible debenture and $4,647 in
                    interest
  (b)
                From
                    June through September 2007, the Company received Notice of Conversion
                    from the private investors in connection with the March 30, 2006,
                    $2,000,000 financing. The Company issued 36,541,011 shares of
                    its common
                    stock in return for the conversion of $11,582 in principal amount
                    of the
                    convertible debenture.
  (c)
                On
                    July 24, 2007, the Company completed financing agreements for
                    $150,000
                    with private investors (the “Investors”). The Company issued to the
                    Investors callable secured convertible notes totalling $150,000
                    with an 8%
                    interest rate, 15% interest rate upon default and a maturity
                    of three
                    years (the “Notes”). The notes are convertible into shares of common stock
                    at 50% of the average of the lowest three closing prices for
                    the Company’s
                    shares during the twenty trading days prior to conversion. The
                    applicable
                    conversion percentage changes to 55% if the SB-2 is filed within
                    30 days
                    of the Closing Date; and 60% if the SB-2 is declared effective
                    within 120
                    days from the Closing Date. The Notes are secured with a secondary
                    position on all of the Company's assets pursuant to the Security
                    Agreement
                    and the Intellectual Property Security Agreement entered into
                    with the
                    Investors. In addition, the Company granted the Investors warrants
                    with a
                    seven-year maturity, to purchase 30 million shares of the Company’s common
                    stock at an exercise price of $.001.  Pursuant to the terms of a
                    Registration Rights Agreement, the Company is required to register
                    the
                    2.25 times the number of shares underlying the Notes, as well
                    as the
                    shares to be issued pursuant to the Warrant, within 45 days from
                    the
                    Closing Date and is required to have the registration statement
                    declared
                    effective within 120 days from the Closing
                    Date.
  (d)
                Subsequent
                    to May 31, 2007, the mortgages referred to in Note 11 were
                    foreclosed.  The Company applied for and was granted a 6 month
                    grace period to find another lender or sell the
                    property.
  (e)
                Subsequent
                    to May 31, 2007, the Company failed to register the 120 million
                    shares
                    underlying the Notes and Warrant referred to in Note 7(c) within
                    120 days
                    of the closing date pursuant to the terms of the Registration
                    Rights
                    Agreement.  As a result the Company has defaulted on the
                    Convertible Notes.
  (f)
                Subsequent
                    to May 31, 2007, the Company entered into certain agreements
                    limiting the
                    standard liquidated damages and penalties payable on the Company’s
                    outstanding convertible notes referred to in Note
                    7(f).
    F-27
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 22.  
          Restatement
  During
          the preparation of its May 31, 2007 consolidated financial statements,
          the
          Company concluded that it was necessary to restate its financial results
          for the
          fiscal years ended May 31, 2006 and 2005 and for the interim periods ended
          August 31, November 30, and February 28, during fiscal 2007 and 2006 to
          reflect
          additional non-operating gains and losses related to the classification
          of and
          accounting for convertible notes issued in fiscal 2006 and 2005.  The
          Company had previously recorded a beneficial conversion feature, valued
          the
          conversion features and detachable warrants at the intrinsic value and
          classified the convertible instruments as equity. After further review,
          the
          Company has determined that these instruments should have been classified
          as
          derivative liabilities pursuant to SFAS No. 133 and EITF No.
          00-19.  The accounting treatment of derivative financial instruments
          requires that the Company record the derivatives and related warrants at
          their
          fair values as of the inception date of and at fair value as of each subsequent
          balance sheet date.  At the date of the conversion of each respective
          instrument or portion thereof, the corresponding derivative liability will
          be
          reclassified as equity.
  The
          Company intends to restate its financial results for the fiscal years ended
          May
          31, 2006 and 2005 and for the interim periods ended August 31, November
          30, and
          February 28, during fiscal 2007 and 2006 to reflect additional non-operating
          gains and losses related additional penalties relating to convertible notes
          outstanding.
  The
          accompanying consolidated financial statements for the years ended May
          31, 2006
          and 2005 have been restated to effect the changes described
          above.  The impact of the adjustments related to the classification of
          and accounting for the conversion features for the years ended May 31,
          2006 and
          2005 are summarized below:
 
 May
                    31, 2006
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                May
                    31, 2006
                  As
                    Restated
                  $Consolidated
                    Balance SheetDerivative
                    liabilities
                
                
                –
                
                
                
                1,709,836
                
                (a)5,694,835
                
                (b)2,703,861
                
                (c)(408,009
                )
                (d)
                
                
                9,700,523Additional Paid-In Capital
                
                
                9,924,253
                
                
                
                408,009
                
                (d)(660,000
                )
                (a)(1,933,200
                )
                (e)
                
                
                7,739,062Deficit Accumulated During the Development Stage
                
                
                (11,013,351
                )
                
                
                (1,049,836
                )
                (a)(6,465,496
                )
                (f)
                
                
                (18,528,683
                )
  (a)
                To
                    record effects of May 31, 2005
                    restatements.
  (b)
                To
                    record fair value of derivative liabilities upon issuance of
                    convertible
                    notes.
  (c)
                To
                    record change in fair value of convertible
                    notes.
  (d)
                To
                    reclassify portion of derivative liabilities relating to debt
                    converted to
                    equity.
  (e)
                To
                    reduce additional paid-in capital for reversal of intrinsic value
                    of
                    beneficial conversion feature and detachable
                    warrants.
  (f)
                To
                    reflect aggregate effect of income statement
                    adjustments.
    F-28
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
  22.           
          Restatement (continued)
 
 May
                    31, 2005
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                May
                    31, 2005
                  As
                    Restated
                  $Consolidated
                    Balance SheetDerivative
                    liabilities
                
                
                –
                
                
                
                2,033,566
                
                (a)(323,730
                )
                (b)
                
                
                1,709,836Additional Paid-In Capital
                
                
                6,897,286
                
                
                
                (660,000
                )
                (c)
                
                
                6,237,286Deficit Accumulated During the Development Stage
                
                
                (6,978,284
                )
                
                
                (1,049,836
                )
                (d)
                
                
                (8,028,120
                )
  (a)
                To
                    record fair value of derivative liabilities upon issuance of
                    convertible
                    notes.
  (b)
                To
                    record change in fair value of convertible
                    notes.
  (c)
                To
                    reduce additional paid-in capital for reversal of intrinsic value
                    of
                    beneficial conversion feature and detachable
                    warrants.
  (d)
                To
                    reflect aggregate effect of income statement
                    adjustments.
  
 Year
                    Ended
                  May
                    31, 2006
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                Year
                    Ended
                  May
                    31, 2006
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsUnrealized
                    loss on fair value of derivatives
                
                
                –
                
                
                
                (6,465,496
                )
                (a)
                
                
                (6,465,496
                )Net
                    loss for the year
                
                
                (4,035,067
                )
                
                
                (6,465,496
                )
                (b)
                
                
                (10,500,563
                )Comprehensive
                    loss
                
                
                (4,094,496
                )
                
                
                (6,465,496
                )
                (b)
                
                
                (10,559,992
                )Net
                    Loss Per Share – Basic and Diluted
                
                
                (0.10
                )
                
                
                
                
                
                
                
                (0.25
                )
  (a)
                To
                    record loss on derivatives based upon fair values at May 31,
                    2006.
  (b)
                To
                    reflect impact of loss on derivatives on restated net loss and
                    restated
                    comprehensive loss.
    F-29
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 22.
          Restatement (continued)
 
  Year
                    Ended
                  May
                    31, 2005
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                Year
                    Ended
                  May
                    31, 2005
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsUnrealized
                    loss on fair value of derivatives
                
                
                –
                
                
                
                (1,049,836
                )
                (a)
                
                
                (1,049,836
                )Net
                    loss for the year
                
                
                (2,949,420
                )
                
                
                (1,049,836
                )
                (b)
                
                
                (3,999,256
                )Comprehensive
                    loss
                
                
                (2,989,703
                )
                
                
                (1,049,836
                )
                (b)
                
                
                (4,039,539
                )Net
                    Loss Per Share – Basic and Diluted
                
                
                (0.11
                )
                
                
                
                
                
                
                
                (0.15
                )
  (a)
                To
                    record loss on derivatives based upon fair values at May 31,
                    2005.
  (b)
                  To
                        reflect impact of loss on derivatives on restated net loss
                        and restated
                        comprehensive loss.
 Accumulated
                    from March 25, 1999
                  (Date
                    of Inception) to
                  May
                    31, 2006
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                Accumulated
                    from March 25, 1999
                  (Date
                    of Inception) to
                  May
                    31, 2006
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsUnrealized
                    loss on fair value of derivatives
                
                
                –
                
                
                
                (1,049,836
                )
                (a)(6,465,495
                )
                (b)
                
                
                (7,515,332
                )Net
                    loss for the period
                
                
                (11,013,351
                )
                
                
                (7,515,332
                )
                (c)
                
                
                (18,528,683
                )Comprehensive
                    loss
                
                
                (11,160,724
                )
                
                
                (7,515,332
                )
                (c)
                
                
                (18,676,056
                )
  (a)
                To
                    record loss on derivatives based upon fair values at May 31,
                    2005.
  (b)
                To
                    record loss on derivatives based upon fair values at May 31,
                    2006.
  (c)
                To
                    reflect cumulative impact of loss on derivatives on restated
                    net loss and
                    restated comprehensive loss.
    F-30
 AVVAA
              World Health Care Products, Inc.
 (A
              Development Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (expressed
              in U.S. dollars)
 May
              31,
              2007
 22.
          Restatement (continued)
 
 Accumulated
                    from March 25, 1999
                  (Date
                    of Inception) to
                  May
                    31, 2005
                  As
                    Reported
                  $
                
                
                Adjustment
                  $
                
                
                
                Accumulated
                    from March 25, 1999
                  (Date
                    of Inception) to
                  May
                    31, 2005
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsUnrealized
                    loss on fair value of derivatives
                
                
                –
                
                
                
                (1,049,836
                )
                (a)
                
                
                (1,049,836
                )Net
                    loss for the period
                
                
                (6,978,284
                )
                
                
                (1,049,836
                )
                (b)
                
                
                (8,028,120
                )Comprehensive
                    loss
                
                
                (7,066,228
                )
                
                
                (1,049,836
                )
                (b)
                
                
                (8,116,064
                )
  (a)
                To
                    record loss on derivatives based upon fair values at May 31,
                    2005.
  (b)
                  To
                        reflect impact of loss on derivatives on restated net loss
                        and restated
                        comprehensive loss.
  
 F-31






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





The
      accounting firm, Davidson & Co. audited our financial statements for the
      fiscal year ended May 31, 2007.  We have had no disagreements with our
      accounts on accounting and/or financial disclosure.




**ITEM
      8A. CONTROLS AND
      PROCEDURES**




(a)
      Evaluation of disclosure controls and procedures.




Our
        Chief
        Executive Officer maintain a system of disclosure controls and procedures
        that
        is designed to provide reasonable assurance that information, which is required
        to be disclosed, is recorded, processed, summarized, and communicated to
        management and shareholders on a timely basis. The Certifying Officer have
        concluded that the disclosure controls and procedures are effective as amended
        at the “reasonable assurance” level. Under the supervision and with the
        participation of management, as of November 1, 2007 the Certifying Officer
        evaluated the effectiveness of the design and operation of our disclosure
        controls and procedures in place which were designed to ensure that information
        required to be disclosed by us, including our consolidated subsidiaries,
        in
        reports that we file or submit under the Exchange Act is (i) recorded,
        processed, summarized and reported on a timely basis in accordance with
        applicable Commission rules and regulation; and (ii) accumulated and
        communicated to our management, including our Certifying Officer and other
        persons that perform similar functions, if any, to allow us to make timely
        decisions regarding required disclosure in our periodic
        filings.




(b)
      Changes in internal controls




Our
        Certifying Officer have indicated that there were no changes in our internal
        controls or other factors that could affect such controls during the year
        ending
        May 31, 2007 and there were no such control actions taken during the year
        ending
        May 31, 2007.





**ITEM
      8B. OTHER INFORMATION**





None.









20








**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS,
      PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION
      16(a) OF THE EXCHANGE ACT**




Our
        director and officer are set forth below. The director hold office for their
        respective term and until their successors are duly elected and qualified.
        Vacancies in the existing Board are filled by a majority vote of the remaining
        directors. The officer serve at the will of the Board of
        Directors.




**Name**
            **Age**
            **Position**John
                Farley
            64
            Chief
                Executive Officer and Director





Set
      forth below is certain biographical information regarding our
      executive officers and directors:




JOHN
      FARLEY has been our President, Chief Executive Officer and a member of our
      Board
      of Directors since June 28, 2002. Since November 1995, he has been the President
      of Mind Your Own Skin Products, Inc. also located in British Columbia, Canada.
      Since such time he has also been President and Chief Executive Officer of
      Shield- Tech Products Inc., an environmental products company which
      Mr. Farley founded. In December 2000, he resigned as officer of Shield-Tech
      Products, Inc. to work full time for Mind Your Own Skin Products, Inc.
      Mr. Farley has undertaken training courses in public speaking skills,
      financial analysis, marketing, negotiating, management and labor
      relations.




From
      September 1963 to 1995, Mr. Farley worked for Petro-Canada Marketing, an
      international petroleum corporation. Between 1963 and 1972, Mr. Farley was
      employed in several capacities at Petro-Canada Marketing as a Sales Trainee
      up
      to a Senior Marketing Representative for all markets in Northern Manitoba.
      From
      1973 to 1989, he was employed at Petro-Canada Marketing in the following
      capacities: Manager, Planning Advisor, Merchandising Advisor, Forestry Account
      Executive. From 1989 to 1995, he was the Senior Forestry Account Executive
      for
      Western Canada and manager of Bunker (heavy fuel) sales out of the Western
      Canadian Refineries. As the Senior Forestry Account Executive, he was
      responsible for the sales and distribution to all major forestry companies
      in
      Western Canada. Mr. Farley was also a Lubricant Technical Sales and
      Marketing Consultant for the United Stated markets from June 1996 to June 1998.
      He brings experience in planning, distribution, retailing, merchandising and
      contract negotiation.




CERTAIN
      LEGAL PROCEEDINGS




No
      director, nominee for director, or executive officer of the Company has appeared
      as a party in any legal proceeding material to an evaluation of his ability
      or
      integrity during the past five years.




COMPLIANCE
      WITH SECTION 16(A) OF THE EXCHANGE ACT




We
      have
      not filed a Form 5 for the year ending May 31, 2007.




CODE
      OF
      ETHICS




The
        Company has adopted a Code of Ethics applicable to its Chief Executive. This
        Code of Ethics is filed herewith as an exhibit.




**ITEM
      10.  EXECUTIVE
      COMPENSATION**




Compensation
      of Executive Officers






21






Summary
      Compensation Table. The following information relates to compensation received
      by our officers in fiscal year ending May 31, 2007, 2006, and 2005 whose salary
      and compensation exceeded $100,000. In fiscal year ending May 31, 2005, John
      Farley, our President, Chief Executive Officer and director received $102,000
      in
      compensation. In fiscal year ending May 31, 2006, John Farley, our Chief
      Executive Officer and Chairman of the Board received $102,000 in compensation.
      In fiscal year ending May 31, 2007, John Farley, our Chief Executive Officer
      and
      Chairman of the Board received $84,750 in compensation.





**SUMMARY
      COMPENSATION TABLE**




**Annual
                Compensation**
            
            
            **Long-Term
                Compensation****Name
                and Principal Position**
            **Year**
            
            **Salary**
            
            
            **Bonus**
            
            
            **Other
                Annual Compensation**
            
            
            **Restricted
                Stock Award(s)**
            
            
            **Securities
                Underlying Options**John
                Farley
            2007
            
            $
            84,750
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            2,500,000Chairman
                of the Board and former CEO
            2006
            
            $
            102,000
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            2,500,0002005
            
            $
            102,000
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            250,000





Option
      Grants Table. The following table sets forth information concerning individual
      grants of stock options to purchase our common stock made to the executive
      officer named in the Summary Compensation Table during fiscal year ended May
      31,
      2007.




**OPTIONS
      GRANTS IN PRESENT FISCAL YEAR**


**(Commencing
      June 1, 2004)**


**(Individual
      Grants)**




Name
            Number
                of securities underlying options
              granted
                (#)
            Percent
                of total
              options
                granted to
              employees
                in last fiscal year
            Exercise
                or
              base
                Price
              ($/Share)
            Expiration
                DateJohn
                Farley(1)
            1,200,000
                (4)
            46.15%
            (5)
            June
                24, 2009John
                Farley (2)
            250,000
            9.62%
            (6)
            March
                6, 2010John
                Farley(3)
            2,500,000(7)
            25%
            (6)
            April
                3, 2011Chuck
                Austin (1)
            300,000
            11.54%
            (6)
            June
                24, 2009Chuck
                Austin (2)
            250,000
            9.62%
            (6)
            March
                6, 2010Chuck
                Austin (3)
            500,000
            5%
            (6)
            April
                3, 2011







(1)
            Options
                issued from the 2004 Stock Option Plan.(2)
            Options
                issued from the 2005 Stock Option Plan.(3)
            Options
                issued from the 2006 Stock Option Plan.(4)
            Includes
                200,000 options issued to Lorie Campbell-Farley, John’s wife and an
                employee.(5)
            The
                exercise price for 1,000,000 options granted to John Farley is 110%
                of the
                fair market value of our common stock on the grant date. The other
                200,000
                options granted to Lorie Campbell-Farley is 100% of the fair market
                value
                of our common stock on the grant date.(6)
            The
                exercise price for the options granted is 100% of the fair market
                value of
                our common stock on the grant date.(7)
            Includes
                500,000 options issued to Lorie Campbell-Farley, John’s wife and an
                employee.






22






**AGGREGATED
      OPTION EXERCISES IN PRESENT FISCAL YEAR AND**


**FISCAL
      YEAR-END OPTION VALUES**




Aggregated
      Option Exercises and Fiscal Year-End Option Value Table. The following table
      sets forth certain information regarding stock options exercised during fiscal
      year ending May 31, 2007, by the executive officer named in the Summary
      Compensation Table.




Name
            Shares
                acquired on exercise (#)
            Value
                realized ($)
            Number
                of Securities Underlying Unexercised Options at Fiscal
              Year-End(#)
              
              Exercisable/
                Unexercisable
            Value
                of Unexercised In-the-Money Options at Fiscal
              Year-End($)(1)
              
              Exercisable/
                UnexercisableJack Farley (1)
            None
            None
            4,050,000
                / 4,050,000
            $Nil
                / $Nil





(1)
            Includes
                500,000 options issued to Lorie Campbell-Farley, John’s wife and an
                employee.






**Employment
      Contracts**




We
      presently have employment agreements with our officers. The summary of such
      employment agreements is as follows:




John
      Farley: Effective May 1, 2003, we entered into an agreement with Mr. Farley
      to act as our President and Chief Executive Officer. On January 17 th, 2006
      Mr. Farley agreed to a larger role by accepting the role of Chairman and
      Chief Executive Officer. His compensation is as follows: (i) Salary: $102,000
      per year. At the end of the initial year, our Compensation Committee will review
      the salary amount and determine whether to recommend a salary increase; (ii)
      Bonus: discretionary 10% bonus based on salary which is at the sole option
      of
      us; (iii) stock options: based on our stock option plan for the year of
      employment, Mr. Farley shall receive 71% of the total shares issued under
      our stock option plan; (iv) automobile provided with a value between Cdn$40,000
      to Cdn$50,000. Mr. Farley can terminate the agreement upon 3 months prior
      notice to us. We can terminate Mr. Farley’s agreement, with or without
      cause. If this happens in the first 18 months of employment, we owe him 2 years
      salary; if this happens after 18 months, we owe him an amount increasing equally
      each month until we reach $2,000,000.





Compensation
      of Directors




Directors
      are permitted to receive fixed fees and other compensation for their services
      as
      directors. The Board of Directors has the authority to fix the compensation
      of
      directors. No amounts have been paid to, or accrued to, directors in such
      capacity.




**ITEM
      11.  SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT**




The
      following table sets forth certain information derived from the named person,
      or
      from the transfer agent, concerning the ownership of common stock as of
      September 13, 2006, of (i) each person who is known to us to be the beneficial
      owner of more than 5 percent of the common stock; (ii) all directors and
      executive officers; and (iii) directors and executive officers as a
      group:






23






Name
                and Address of
              Beneficial
                Owner
            Amount
                and Nature of
              Beneficial
                Ownership
            Percent
                of
              Class
                (1)
            Percent
                of
              Class(3)John
                Farley
            4,317,000(2)
            6.55%Box
                459, 1710 Shuswap Ave,
            8,867,000(4)
            
            1.8%Lumby,
                BC, Canada V0E 2G0Officers
                and Directors as a Group (4)
            6,652,000
            10.1%15,086,500
            
            20.3%




•
-
                Less than 1%




(1)
            Based
                on 750,000,000 shares issued and outstanding as of November 1,
                2007(2)
            Includes
                610,000 shares held by Lorie Campbell-Farley, Mr. Farley’s
                wife.(3)
            Based
                on 74,301,354 shares issued and outstanding assuming the inclusion
                of
                8,434,500 shares issuable upon exercise of options granted in our
                2004,
                2005, and 2006 Stock Option Plans are exercised and
                issued.(4)
            Includes
                3,550,000 shares underlying options issued to John Farley and 1,000,000
                options issued to Lorie Campbell-Farley. In addition, 300,000 shares
                owned
                by Mr. Farley, included in this amount, are being held as security
                by a
                third party against a share loan.







**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED PARTY
      TRANSACTIONS AND DIRECTOR INDEPENDENCE**




There
      are
      no related party transactions, or any other transactions or relationships
      required to be disclosed pursuant to Item 404 of Regulation S-B apart from
      the
      following:




Related
      Party Advances and
      Transactions





May
                31,
              2007
              $
            
            May
                31,
              2006
              $(a)
            Balances(i)
            Shield-Tech
                Products Inc.
            522,909
            
            507,765(ii)
            Directors
                and/or officers
            1,020,408
            
            920,930(iii)
            Due
                to former officer
            58,122
            
            56,4381,601,439
            
            1,485,133




(b)
            Transactions(i)
            Shield-Tech
                Products Inc., a company in which the President of the Company has
                a
                significant influence on, conducted research and incurred development
                expenditures on the Company’s behalf. The advances are without interest,
                unsecured and due on demand.(ii)
            The
                advances from directors and/or officers are unsecured, non-interest
                bearing, and due on demand.(iii)
            The
                remaining amount owing to a former officer in connection with the
                failed
                acquisition of 5943609 B.C. Ltd. (dba Mystic Mountain Body and Spa
                Products) (“Mystic”) in fiscal 2004 are secured by promissory notes,
                non-interest bearing and due on demand. The Company and Mystic decided
                to
                terminate the acquisition agreement in fiscal 2004 but have not yet
                settled the terms.(iv)
            Six
                directors/officers were paid/accrued $340,500 for the year ended
                May 31,
                2006 (2005 – $459,588) for consulting services
                rendered.






24






None
      of
      the directors, executive officers nor any member of the immediate family of
      any
      director or executive officer has been indebted to us since its inception.
      We
      have not and do not intend to enter into any additional transactions with our
      management or any nominees for such positions. We have not and do not intend
      to
      enter into any transactions with our beneficial owners.





Our
      management is involved in other business activities and may, in the future
      become involved in other business opportunities. If a specific business
      opportunity becomes available, such persons may face a conflict in selecting
      between our business and their other business interests. We have not and do
      not
      intend in the future to formulate a policy for the resolution of such
      conflicts.




**DIRECTOR
      INDEPENDENCE**




Our
      common stock is quoted on the OTC Bulletin Board interdealer quotation system,
      which does not have director independence requirements. Under NASDAQ Rule
      4200(a)(15), a director is not considered to be independent if he or she is
      also
      an executive officer or employee of the corporation. Our sole director, John
      S.
      Farley, is also our Chief Executive Officer, President and Treasurer. As a
      result, we do not have any independent directors.




As
      a
      result of our limited operating history and limited resources, our management
      believes that we will have difficulty in attracting independent directors.
      In
      addition, we would be likely be required to obtain directors and officers
      insurance coverage in order to attract and retain independent directors. Our
      management believes that the costs associated with maintaining such insurance
      is
      prohibitive at this time.










25









**PART
      IV**




**ITEM
      13. EXHIBITS AND REPORTS ON FORM
      8-K**


(a)


1.
        Financial statements; see index to financial statement and schedules under
        Item
        7 herein.


2.
        Financial statement schedules; see index to financial statements and schedules
        under Item 7 herein.
  3.
        Exhibits:




The
      following exhibits are filed with this Form 10-KSB and are identified by the
      numbers indicated: see index to exhibits immediately following financial
      statements and schedules of this report.




3.1
            Articles
                of Incorporation and Amendments(1)3.2
            By-Laws
                (1)4.1
            2005
                Stock Option Plan (1)4.2
            2004
                Stock Option Plan (1)10.1
            Subscription
                Agreement for $1,100,000 Financing (1)10.2
            Form
                of Convertible Note (1)10.3
            Form
                of Class A Common Stock Purchase Warrant (1)10.4
            Form
                of Class B Common Stock Purchase Warrant (1)10.5
            Form
                of Class C Common Stock Purchase Warrant (1)10.6
            Form
                of Class D Common Stock Purchase Warrant (1)10.7
            John
                Farley Employment Agreement (1)10.8
            Crossfire
                Network, Inc. Agreement (1)10.9
            Summit
                Laboratories, Inc. Agreement(1)10.10
            Natures
                Formulae Health Products Ltd. Agreement(1)10.11
            License
                Agreement between Stalwart United Participations Limited and Mind
                Your Own
                Skin Products Inc. dated September 20, 1999.
                (2)10.12
            License
                Agreement between Stalwart United Participations Limited and Mind
                Your Own
                Skin Products Inc. dated February 1, 2002.
                (2)10.13
            Promissory
                Note to Shield-Tech Products, Inc. (2)10.14
            Modification
                and Amendment Agreement(3)10.15
            Subscription
                Agreement for $2,000,000 Financing (4)10.16
            Form
                of Convertible Note (4)10.17
            Form
                of Warrant (4)10.18
            Consulting
                Agreement with National Financial Communications Corp.
                (4)






(1)
      Filed
      with the initial Form SB-2 Registration Statement on May 5, 2005 (SEC File
      No.
      333-124667).


(2)
      Filed
      with Amendment No. 1 to Form SB-2 Registration Statement on June 22, 2005 (SEC
      File No. 333-124667).


(3)
      Filed
      with Amendment No. 2 to Form SB-2 Registration Statement on September 20, 2005
      (SEC File No. 333-124667).


(4)
      Filed
      with Form SB-2 Registration Statement on May 19, 2006 (SEC File No.
      333-134321).




(b)
      Reports on Form 8-K




On
      April 23, 2007, we filed a Form 8-K disclosing the
      resignations of Dr. Mark Alden, William Douglas Ernsberger, James MacDonald
      and
      James Haney from the Board of Directors.  On April 23, 2007, we also
      disclosed on Form 8-K the resignation of Charles Austin from the Board of
      Directors as well as from his positions of Chief Financial Officer and Chief
      Accounting Officer.






26




On
      November 1, 2007, we filed a Form 8-K disclosing that financial statements
      for
      the fiscal years 2005 and 2006 should no longer be relied upon as said financial
      statements need to be restated to reflect additional non-operating gains and
      losses related to the classification of and accounting for convertible notes
      issued in fiscal 2006 and 2005.




**ITEM
      14.  PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**




Audit
      Fees




For
      the
      Company's fiscal years ended May 31, 2007 and 2006, we were billed $90,000
      and
      $99,800 for professional services rendered for the audit of our financial
      statements, respectively.




Tax
      Fees




For
      the
      Company's fiscal years ended May 31, 2007 and 2006, we were billed $0 and $0
      for
      professional services rendered for tax compliance, tax advice, and tax planning,
      respectively.




All
      Other
      Fees




The
      Company did not incur any other fees related to services rendered by our
      principal accountant for the fiscal year ended May 31, 2007.




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned thereunto duly authorized.











**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, there unto duly authorized.




AVVAA
                WORLD HEALTH CARE PRODUCTS, INC.




By:
            */
                s/John
                Farley*JOHN
                FARLEYCHIEF
                EXECUTIVE OFFICERAND
                CHAIRMAN OF THE BOARD OF DIRECTORS






Dated:
            November
                1, 2007




Pursuant
      to the requirements of the Securities Exchange Act of 1934, 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/
                JOHN FARLEY*
              JOHN
                FARLEY
            Chief
                Executive Officer, Chief Executive Officer, Principal Accounting
                Officer
                and Chairman of the Board Directors
            November
                1, 2007




27