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


                         AMENDMENT NO. 2 TO 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, 2005

                         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 jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or organization)




                            Box 459, 1710 Shuswap Ave
                            Lumby,BC, Canada V0E 2G0
               (Address of principal executive offices) (Zip Code)

                                 (250) 379-2727
              (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. Yes |X| No |_|

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. Yes |_| No |X|

Revenues  for year ended May 31,  2005:  $13,021

Aggregate market value of the voting common stock held by  non-affiliates of the
registrant as of September 9, 2005, was: $5,017,099


<PAGE>
________________________________________________________________________________

Number of shares of the registrant's  common stock outstanding as of October 26,
2005 is: 35,665,572

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


EXPLANATION  OF  AMENDED  FILING:  THIS  FORM  10-KSB  IS BEING  AMENDED  IN THE
CONSOLIDATED  FINANCIAL  STATEMENTS TO REFLECT THE  RESTATEMENT AS PER AMENDMENT
NO. 2 TO THE 10-KSB FOR THE YEAR ENDED MAY 31, 2004.


================================================================================

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

                                    About Us

We were  incorporated on June 3, 1998, in the State of Nevada. We have generated
mineral  revenues to date,  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.

                                       I-1

<PAGE>

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.

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

We are a global  biotechnology  company  specializing  in providing all natural,
therapeutic  skin  care  products.   We  intend  to  manage  the  manufacturing,
distribution, marketing and sale of health-care products throughout the world.

Our  mission  is to provide to the public  medically  safe,  natural,  non-toxic
health-care  products.  Specifically,  products that treat skin abnormalities as
well as  enhance  the  natural  clarity  and  texture of  healthy  skin.  We are
presently  licensed to manufacture  and distribute  patented  European skin care
products  which  are  scientifically  developed  to treat the  symptoms  of skin
diseases  including  eczema,  psoriasis and acne. We intend to  manufacture  and
market  over-the-counter  Neuroskin line of products through mass marketing food
and drug channels in the United  States.  The four flagship core products of the
Neuroskin lines are FDA compliant,  meaning the Federal Drug  Administration has
reviewed and approved our formulations  and its' labeling.  There are no further
registration  requirements to be able to sell our products in the United States.
We have conducted research with respect to marketing the products.

Our flagship products are Neuroskin Spray,  Dermac and ItchX. These products are
registered FDA compliant products for over-the-counter  pharmaceutical sales and
also for cosmetic skin care sales.  These products are ready to be manufactured,
distributed and marketed  worldwide.  Two other FDA compliant  products Nail Fit
and Razor-Rash will be launched as complementary products.

Pursuant  to two  separate  license  agreements,  we have 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
US FDA approvals as compliant  products for over the counter  pharmaceuticals as
well as cosmetics skin care products.  Canadian DIN approvals for these products
are in the process of renewal.  The license  rights include all countries in the
world with the  exception of Germany,  Switzerland,  Austria,  The  Netherlands,
Belgium, Luxembourg and Lithuania.

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

                                       I-2
<PAGE>

Terms of the  license  agreements  call for total  advance  royalty  payments of
$220,000.  The licensor will be entitled to royalties on the sale of products by
us at a rate of  approximately  7% of sales. We have paid $220,000.  The term of
the agreements are for thirty years with automatic renewal rights.

The original registrant for the various approvals was the inventor,  Gerd Thorne
and licensor,  Stalwart United Participations  Limited. An amount of $10,000 was
paid to protect certain Canadian patent rights for the Neuroskin product.  These
costs will be amortized to operations once sales of Neuroskin products begin.

We intend to  globally  market,  manufacture  and  distribute  over-the-counter,
non-toxic,  all natural skin care products to control  specific  skin  disorders
including eczema,  psoriasis,  dermatitis,  acne and various other types of skin
conditions.

The initial launch of products will take place in the United States.  Markets in
Canada  and the rest of North  and  South  America,  and the  Caribbean  will be
launched in Years 4 and 5.

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 and the world.  Contacting  of 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.

On January 2, 2004,  we  completed  the October 15, 2003  agreement  (as amended
January 1, 2004) to purchase certain operational business assets of 5943609 B.C.
Ltd. (dba Mystic Mountain Body and Spa Products) ("Mystic"),  a company based in
British  Columbia,  Canada.  Mystic is a manufacturer  and seller of bath, skin,
body  and  aromatherapy  products.  The  assets  purchased  included  inventory,
property and  equipment,  including  all  intellectual  property and  intangible
assets of Mystic. In return, we issued two promissory notes totaling CAD$100,000
to the  owner of  Mystic  due on April  30,  2004.  Both  promissory  notes  are
non-interest  bearing and  unsecured.  Both  parties  decided to  terminate  the
agreement  but have not yet settled the terms.  We  wrote-off  all the assets we
acquired from Mystic totaling $79,520, as of May 31, 2004.

On December 22, 2003, we entered into a Letter of Commitment to participate in a
Joint Venture with First  Nations Band (the  "Band").  According to the terms of
the Agreement,  the Joint Venture was to be owned 51% by the Band and 49% by us.
We were to have  contributed  all the  property  and  equipment,  including  all
intellectual  property and intangible  assets,  and inventory of Mystic. We were
also to have provided 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
CAD$5,000,000 to be used to construct the  manufacturing  facility,  to purchase
manufacturing  equipment  and to fund  start up and  operating  costs.  The Band
contributed  CAD$50,000 on December 22, 2003 and made an  additional  advance of
CAD$52,000  on March 2, 2004 to help  develop the  business  plan and a start-up
plan.  The total  advances of  CAD$102,000  was  refundable  should the Band not
approve the start-up plan.  Upon  acceptance of the start-up plan, the remaining
CAD$4,898,000  was to be  advanced  according  to the  approved  schedule in the
start-up plan. The parties decided not to proceed with the Joint Venture, and to
date, the Company has repaid CAD$30,000, leaving a balance owed of CAD$72,000.

                                       I-3
<PAGE>


On July 23,  2004,  we entered  into a Stock  Purchase  Agreement  with  Seaside
Investments PLC, a private London  investment  company,  for the purchase by the
investment  company of  US$1,177,970  of our common shares at $.46 per share, in
exchange for shares of Seaside Investments PLC. Based on this, we issued Seaside
Investments PLC 2,677,500  shares of our common stock,  which is currently being
held in escrow. We entered into a "lock-up"  agreement with us pursuant to which
it  agreed  not to trade  the  AVVAA  shares  it  received  as a result  of this
transaction  for a period of one year from the closing date. The closing of this
transaction  is subject to certain  contingencies,  including the listing of the
investment  company shares on the London Stock  Exchange on or before  September
30,  2004.  To date,  this has not  occurred  and we  intend to  terminate  this
transaction  and request the return of the  2,677,500  shares  issued to Seaside
Investments PLC.

MATERIAL AGREEMENTS

License Agreements

In September  1999,  Mind Your Own Skin Products,  Inc. (which is our subsidiary
now) signed a license agreement with Stalwart United  Participations  Limited to
obtain a license for various human and animal skin care  products.  A subsequent
agreement  was signed in February  2002.  The  agreements  are for certain human
health care products, human skin care products,  animal health care products and
animal skin care products.. The original license fee was $110,000. The territory
granted is the  entire  world  except for  Germany,  Switzerland,  Austria,  The
Netherlands,  Belgium,  Luxembourg  and  Lithuania.  "Neuro  Skin" is the United
States trademark for our products.  It is registration number 2,235,063 with the
United States Patent and Trademark  office. In March 2005, our trademark counsel
filed certain declarations to maintain this trademark.

The Company is  obligated  to pay out 7% of sales to the  inventor on  marketing
goals of 2 million  dollars  in sales in year  one,  4  million  in year two,  6
million  in year 3, and 8 million  in year four from the start up date of Jan 1,
2005. To minimize the risk the Company has prepaid $220,000 in Royalty advances.

Summit Laboratories, Inc.

This  agreement was executed in February  2005.  This agreement is for Summit to
manufacture  the Neuroskin Spray and Dermac Acne 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 and dermac Acne product
for us. It is a  non-exclusive  manufacturing  agreement They will require a 50%
deposit on all orders we place with them. It is for a term of 2 years.

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.
Crossfire's  compensation is as follows:  (1) $10,000 per month on February 2005
and an additional $10,000 per month thereafter during the term of the agreement;
(ii)  1,900,000  shares  of our  common  stock;  (iii) if we  introduce  any new
products  into the market,  an  additional  400,000  shares;  and (iv) 15% gross
commission on the sales of our products.

APRIL 2005 FINANCING


                                       I-4
<PAGE>

On April 5, 2005, we completed a financing  agreement by signing a  subscription
agreement for a maximum of $1,100,000.  The initial closing was for financing of
$660,000 of the  $1,100,000 for which we issued a convertible  promissory  note.
The   initial   funding  was   undertaken   as   follows:   (i)  Alpha   Capital
Aktiengesellschaft  - $270,000;  Platinum  Partners  Value  Arbitrage  Fund LP -
$270,000; JM Investors,  LLC - $90,000;  Osher Capital Inc. - $30,000. Under the
subscription  agreement,  we  will  receive  the  remaining  $440,000  upon  the
effectiveness of our registration  statement,  and at that time, we will issue a
convertible  promissory note for that amount.  The note is convertible  into our
common shares over a  twelve-month  period on a formula  basis.  The  conversion
price is based on the average of the three lowest  closing  prices of our common
stock for the thirty days prior to  conversion.  The timing of the conversion is
at the option of the holder.  The lowest  conversion  price for the eight months
subsequent to April 5, 2005 is $0.08 per share. Thereafter,  there is no minimum
conversion  price.  The maximum  conversion price is $0.20. The investors in the
financing  shall  not be  entitled  to  convert  the  promissory  note  if  such
conversion  would  result in any investor  solely  owning more than 4.99% of our
outstanding shares of common stock. In addition,  we issued four series of share
purchase warrants.  The Class A Warrants are exercisable at $0.20 per share, the
Class B Warrants are  exercisable  at $0.25 per share,  the Class C Warrants are
exercisable  at $0.30 per share,  and the Class D Warrants  are  exercisable  at
$0.45 per share.  The warrants  expire in five years and are callable by us when
the market price is 200% of the exercise  price. We are committed to filing this
SB-2  Registration  Statement with the SEC. There are penalty  provisions for us
should  the  filing not become  effective  within 120 days.  There are  specific
provisions  for use of proceeds  and  penalties  should we vary more than 5% for
each individual item specified on the use of proceeds. We are committed to a due
diligence  fee of 9% and paying the legal  fees of the lender  relating  to this
transaction totaling $15,000.

NASD INQUIRY

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

EMPLOYEES

As of September  13,  2005,  we have eight  employees.  We have never had a work
stoppage,   and  no  employees  are  represented  under  collective   bargaining
agreements.  We consider our  relations  with our  employees to be good. We have
entered into employment contracts with our employees.

Our  management  team combines more than 80 years of corporate  management,  and
sales and marketing  experience  with 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 and radiation
oncology.

ITEM 2. DESCRIPTION OF PROPERTY

AVVAA's  corporate  office is  currently  located at the home of our  President,
Chief  Executive  Officer  and  Director,  John Farley at 3018  Schaeffer  Road,
Falkland,  British Columbia,  Canada.  Mr. Farley does not charge us any rent or
other fees for the use of this space.

As of December  2004,  our  administration  and sales office has been located at
Unit 4, 4602- 31st Street, Vernon, British Columbia, Canada. The office, meeting
facilities,  and  warehouse  consist  of 1,500  square  feet  lease at a rate of
approximately  $8.00  (USD) per  square  foot or $1,000  (USD)  per  month,  all
utilities and goods and services taxes included.

                                       I-5

<PAGE>

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).  A first mortgage of  $211,250(Canadian  dollars) the first
bearing  interest at 9.95% with a term of twelve months and a second mortgage of
$138,750(Canadian  dollars)  for a one year  term  bearing  interest  of 15% per
annum.

ITEM 3. LEGAL PROCEEDINGS

Barbara Smith, our former  Executive Vice President of Sales and Marketing,  had
improperly  registered  certain  domain  names in her name  instead of ours.  We
contacted legal counsel regarding this to try to obtain control over such domain
names  and  web  sites.  As of  today,  we  have  regained  editing  control  of
help4skincare.com  and  avvaa.com  domain  names and web sites.  The  registered
ownership of the domain names is still registered in her name, or her consulting
company's name,  e-Clarity Consulting Inc. Both domain names are due for renewal
in 2008 and control of such domain  names and web sites may be lost if ownership
is not given to us. In addition, the following domain names have been improperly
registered to either Ms. Smith or e-Clarity Consulting Inc.:help4animalcare.com,
help4skincare.com, help4psoriaris.com,help4animalskincare.com,  help4eczema.com,
help4dermatitis.com,  help4itchyskin.com,  dermaluster.com, dermalustre.com, and
sooaway.com.  Ms. Smith refuses to transfer the registered ownership and control
of these domain names to us. We have instructed  legal counsel to commence legal
proceedings  seeking  injunctive  and  other  relief,  recovery  of  full  legal
ownership and control of all domain names.  The legal  proceedings  have not yet
commenced.  Ms. Smith  stopped  coming to work in December  2004 and we took the
position that she quit. She made efforts for us to terminate her, but we did not
do so.  Through her legal  counsel,  she has threatened  legal  proceedings  for
unpaid deferred wages and unpaid benefits  provided in her agreement with us. In
April 2005, we gave Ms. Smith notice that her options had expired.

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

None.



                                       I-6
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On September 13, 2005 there were approximately 186 shareholders of record of our
common  stock.  Our  shares of  common  stock  are  currently  traded on the OTC
Electronic Bulletin Board under the symbol "AVVW."

The  reported  high and low bid prices for our common  stock are shown below for
each quarter since February 23, 2001. The quotations reflect inter-dealer prices
and do not include retail mark-ups, mark-downs or commissions. The prices do not
necessarily reflect actual transactions.


Period                                                 HIGH BID     LOW BID

2001



First Quarter from February 23, 2001                    .156         .05
Second Quarter                                           .18         .10
Third Quarter                                           1.40         .11
Fourth Quarter                                          1.25        .125


2002


First Quarter                                            .60         .10
Second Quarter                                           .90        .135
Third Quarter                                            .88         .36
Fourth Quarter                                           .70         .30

2003

First Quarter                                            .65         .28
Second Quarter                                           .50         .31
Third Quarter                                            .56         .34
Fourth Quarter                                           .51         .30

2004

First Quarter                                            .77         .32
Second Quarter                                           .64         .22
Third Quarter                                            .53         .25
Fourth Quarter                                           .38         .20



2005

First Quarter                                            .26         .13
Second Quarter                                           .19         .09
Third Quarter to September 13, 2005                      .18         .09


                                      II-1
<PAGE>

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.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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 registration
statement are a continuation of MYOSP (date of inception March 25, 1999).


We are a global  biotechnology  company  specializing  in providing all natural,
therapeutic  skin  care  products.   We  intend  to  manage  the  manufacturing,
distribution,  marketing and sale of health-care  products throughout the world.
Our  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.  We are
presently  licensed to manufacture and distribute  patented  Europeans skin care
products,  which are  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 mass marketing
food and drug channels in the United States. The three flagship core products of
the Neuroskin  lines are FDA  compliant.  We have  developed a business plan and
conducted research with respect to marketing the products.

In September  1999,  Mind Your Own Skin Products,  Inc. (which is our subsidiary
now) signed a license agreement with Stalwart United  Participations  Limited to
obtain a license for various human and animal skin care  products.  A subsequent
agreement  was signed in February  2002.  The  agreements  are for certain human
health care products, human skin care products,  animal health care products and
animal skin care products.. The original license fee was $110,000. The territory
granted is the  entire  world  except for  Germany,  Switzerland,  Austria,  The
Netherlands,  Belgium,  Luxembourg  and  Lithuania.  "Neuro  Skin" is the United
States trademark for our products.  It is registration number 2,235,063 with the
United States Patent and Trademark  office. In March 2005, our trademark counsel
filed certain declarations to maintain this trademark.

The Company is  obligated  to pay out 7% of sales to the  inventor on  marketing
goals of 2 million  dollars  in sales in year  one,  4  million  in year two,  6
million  in year 3, and 8 million  in year four from the start up date of Jan 1,
2005.  The Company has prepaid  $220,000 in royalty  advances as required by the
license agreement.



                                      II-2
<PAGE>

We are  considered a development  stage company in accordance  with Statement of
Financial  Accounting  Standards  (SFAS)  No. 7.  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. We commenced manufacturing  operations and launched a
consumer web site to generate Internet sales on December 1, 2004.

As of May 31, 2005, we have a working  capital  deficit of  $1,804,746  and have
accumulated operating losses of $7,174,639 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.  These  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.  Avvaa
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".  1 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).


-------------------------
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).



                                      II-3

<PAGE>

     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 AVVAA  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
     o    Institutions - hospitals, clinics, prisons.


Secondary

     o    Private brand companies;
     o    Cosmetic companies; and
     o    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:

     1)   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 AVVW.  Crossfire  Network
          personnel  and  associates  have a strong  track  record  of sales and
          marketing on a global basis that positions products on retail shelves,
          which will assist in accomplishing AVVW's sales targets in the Primary
          Markets. Additionally, Crossfire Network Inc. will place products with
          the Health and Natural Food Store Markets. Crossfire has the necessary
          associates and  reputation to accomplish  the AVVAA sales  objectives.
          One of Crossfire's  principal's is Jim Walgreen Jr., who of course has
          the Walgreen's  business  contacts,  but also will be  instrumental in
          placing the AVVAA products on other mass retail shelves.


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

                                      II-4

<PAGE>

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  in  November  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.

Restatement of May 31, 2004 Financial Statements

The Company has  restated its  consolidated  financial  statements  for the year
ended May 31, 2004. The Company is restating the financial statements to reflect
the  fair  value  of stock  options  granted  to  outside  consultants.  Amounts
previously  included in additional  common stock subscribed were reclassified to
common  stock and  additional  paid-in  capital as the shares  relating to these
amounts were issued and outstanding as at May 31, 2004.


There was no change to the basic and diluted net loss per share  resulting  from
the restatement.

In addition to the  restatements  noted above,  certain  other  revisions to the
financial   statement  note   disclosures  were  made  to  improve  the  overall
presentation of the Company's financial statements.




                                      II-5
<PAGE>

RESULTS OF OPERATIONS FOR YEAR ENDED MAY 31, 2005 ("2005")  COMPARED TO THE YEAR
ENDED MAY 31, 2004 ("2004")

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 2005 was $3,145,775 ($ 0.11 per share) compared to a net loss of
$2,306,783($0.11  per share) in 2004, an increase of $838,992.  Contributing  to
the  increase  losses is an  increase in  interest  expense of 315,331.  Of this
amount,  $213,941  relates to expensing  the intrinsic  value of the  beneficial
conversion  feature of the convertible debt issued on April 5, 2005, $68,436 was
for the  accretion  of the debt  discount,  and the balance is interest  expense
relates on the  convertible  note. In addition,  the  impairment  loss on assets
increased by $151,858,  as the company  fully  provided for the advance  royalty
deposits of  $220,000  and patent  protection  costs of  $11,378.  Research  and
development expenses increased by $113,742.  Selling, general and administrative
expenses  increased by $264,149,  is a result of our increased efforts to manage
the  manufacturing,  distribution,  marketing  and sale of health care  products
throughout the world.

Consulting  fees paid to management and to  consultants  for advice in obtaining
funding for us and for marketing assistance in 2005 totaled $538,696 compared to
$616,500 in 2004, a decrease of $77,804.

In 2005, stock-based compensation for services provided to us totaled $1,409,986
compared to $1,053,670 in 2004, an increase of $356,316  which was  attributable
to increased services for marketing assistance.

LIQUIDITY AND CAPITAL RESOURCES

During 2005,  operations  were  financed by the  following  material  sources of
funds;  proceeds from the issuance of common shares totaling $471,000,  proceeds
from the issuance of convertible  debentures of $660,000 and funds advanced from
related net of repayments to related parties of $316,023. These were the primary
contributors  to the  cash  used in our  operations  totaling  $  1,194,594.  In
addition,  cash  was  expended  on  costs  relating  to the  financing  totaling
$105,050.

As of May 31,  2005,  we had cash and cash  equivalents  of $ 112,995  and had a
working  capital  deficit of $ 1,804,746.

As of May 31, 2005 we had inventory,  consisting of raw materials  ($57,893) and
finished goods ($159,877).

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 on
April 5, 2006. Any accrued  interest is payable upon each  conversion and on the
due date.  The notes are  convertible  into common  shares of the Company over a
twelve-month  period. 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.  The timing of the  conversion  is at the option of the holder.  The
lowest  conversion  price for the eight  months  subsequent  to April 5, 2005 is
$0.08 per share. Thereafter, there is no minimum conversion price. The notes are
secured by a grant of a general security interest in all of the Company's assets
both tangible and intangible



                                      II-6
<PAGE>

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 on
April 5, 2006. Any accrued  interest is payable upon each  conversion and on the
due date.  The notes are  convertible  into common  shares of the Company over a
twelve-month  period. 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.  The timing of the  conversion  is at the option of the holder.  The
lowest  conversion  price for the eight  months  subsequent  to April 5, 2005 is
$0.08 per share. Thereafter, there is no minimum conversion price. The notes are
secured by a grant of a general security interest in all of the Company's assets
both  tangible  and  intangible  The  Company is to issue  four  series of share
purchase warrants assuming the complete  conversion of the notes issued on April
5, 2005 at a conversion  price  determined by dividing the convertible  notes by
the lesser of $0.16 or 80% of the volume  weighted  average  price of the common
stock for the thirty  trading days preceding  April 5, 2005 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 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.

The Company has 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 SEC that is declared effective.  If the
SB-2 is not  declared  effective  within  ninety days after  April 5, 2005,  the
Company must pay a penalty of 2% for each  thirty-day  period of the convertible
notes remaining unconverted and the purchase price of any shares issued upon the
conversion of the notes.

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  B  warrants
pertaining to the $660,000 in convertible notes issued.  The remaining  warrants
will be issued  upon the  receipt of the  additional  financing  of  $440,000 as
described above.

In  accordance  with EITF 00-27 and EITF 98-5 the proceeds of the issuance  have
been  allocated  among the  convertible  debt and the warrants  based upon their
relative  fair  values.  The fair value of the  12,375,000  warrants  issued was
determined  to be  $1,376,080 by using the  Black-Scholes  option  pricing model
assuming an expected life of 5 years, a risk-free  interest rate of 4.07% and an
expected  volatility of 111%.  The fair value of the  convertible  debt has been
determined to be $660,000.  As a result, the pro-rata fair value of the warrants
has been determined to be $446,059 and the debt $213,941. The intrinsic value of
the  beneficial  conversion  feature has been  determined  to be  $213,941.  The
intrinsic  value has been  expensed  as  interest  expense in the period and the
value of the warrants will be expensed over the period and accreted to the debt.
During  the period  $68,436  has been  accreted  to the debt and $8,101 has been
recorded as interest payable on the debt.

The Company paid deferred finance fees of $114,550 on this convertible financing
and accrued an  additional  amount of $50,000 in deferred  finance fees payable.
During the year ended May 31, 2005  $27,508 of the  deferred  finance  fees have
been  charged to interest  expense and the balance of $137,042  will be expensed
over the remaining term of the convertible debt.

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% of which is  payable in cash and the
other 50% will be payable in form of a  convertible  note with the same terms as
above) and the legal fees of the lenders relating to these agreements  totalling
$15,000.


                                      II-7
<PAGE>
On August 1, 2005 the  financing  agreement  was  amended  and the  Company  was
advanced  $140,000.  The terms and  conditions  of the  original  agreement  are
unchanged except that the maximum  conversion price for the convertible note was
reduced from $0.20 to $0.16 per share and there is no minimum  conversion price.
Should the  Company's  SB-2 filing with the SEC not become  effective  within 90
days of April 05, 2005 the penalty will be 5% for each 30 day delay,  instead of
the originally  agreed penalty of 2%. There are specific  provisions for the use
of  proceeds  if the  Company  varies by more than 5% for each  individual  item
specified  on the use of  proceeds.  The  Company  is  committed  to paying  the
lenders' legal fees with respect to the amendment of $3,000.


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. 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.  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 cost and replacement cost
and finished goods are recorded at the lower of cost and net  realizable  value.
The Company evaluates  inventory for estimated  obsolescence based on the length
of time the  inventory has been unsold and on  projections  of future demand and
market  conditions.  For those units in  inventory  that are so  identified,  we
estimate their net realizable value based on current  realization trends. If the
projected net realizable value is less than cost, on a product basis, we provide
a provision to reflect the lower value of that inventory.  We have only recently
produced  our  inventory  and  started the sales  process.  We have no record of
historical  returns. We believe we will be able to realize our projected margins
and recover our inventory costs;  however,  there is no assurance that this will
be the case.

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. Our estimate of future cash flows is critical to our ability to
recover the value of our intangible and other long-lived  assets. In particular,
our licensing  agreement has specific sales targets which we must meet under our
licensing agreement.  Should actual sales be lower than our projections there is
a  possibility  that  we  would  not  meet  the  requirements  of our  licensing
agreement.

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  or  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.

                                      II-8

<PAGE>

ITEM 7.      FINANCIAL STATEMENTS


AVVAA World Health Care Products, Inc.
(A Development Stage Company)

                                                                        Index


Report of Independent Registered Public Accounting Firm                  F-1

Consolidated Balance Sheets                                              F-2

Consolidated Statements of Operations                                    F-3

Consolidated Statements of Cash Flows                                    F-4

Consolidated Statement of Stockholders' Equity                           F-5

Notes to the Consolidated Financial Statements                           F-6


<PAGE>

            Report of Independent Registered Public Accounting Firm

To the Stockholders and 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. (A Development Stage Company) as of May 31, 2005 and
2004,  and the related  consolidated  statements of  operations,  cash flows and
stockholders'  equity for the period from March 25, 1999 (date of  inception) to
May 31,  2005 and the years  ended May 31,  2005 and  2004.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our 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
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing  the  accounting   principles  used  and   significant   estimates  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 presents
fairly, in all material  respects,  the financial position of AVVAA World Health
Care Products,  Inc., (A Development Stage Company) as of May 31, 2005 and 2004,
and  the  related  consolidated   statements  of  operations,   cash  flows  and
stockholders'  equity for the period from March 25, 1999 (date of  inception) to
May 31,  2005 and the years  ended May 31,  2005 and 2004,  in  conformity  with
generally accepted accounting principles used in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
consolidated financial statements,  the Company has losses from operations since
inception,  no source of revenues and a  significant  working  capital  deficit.
These factors raise substantial doubt about the Company's ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
discussed in Note 1. These consolidated  financial statements do not include any
adjustments, which might result from the outcome of this uncertainty.

As discussed in Note 16 to the consolidated  financial  statements,  the Company
has restated the financial statements for the year ended May 31, 2004 to reflect
the  fair  value  of  stock  options  granted  to  outside  consultants  and the
correction of previously recorded share issuances.

/s/ "Manning Elliott"
----------------------
Chartered Accountants

Vancouver, Canada

September 9, 2005, except for Note 16 as to which the date is October 21, 2005

                                       F-1
<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. Dollars)
<TABLE>
<CAPTION>


                                                                                      May 31,            May 31,
                                                                                      2005                2004
                                                                                        $                  $
                                                                                                      (Restated -
                                                                                                      See Note 16)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                 <C>
Assets

Current Assets
   Cash                                                                                  112,995            42,787
   Accounts receivable                                                                     7,584                 -
   Inventory (Note 3)                                                                    217,770                 -
   Prepaid expenses and deposits                                                          98,795                 -
-------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                                     437,144            42,787

Patent Protection Costs (Note 4)                                                               -            11,378

Advance Royalty Deposits (Note 4)                                                              -           220,000

Property and Equipment (Note 5)                                                           18,170             8,246

Website Development Costs (Note 6)                                                         6,511                 -

Deferred Financing Fees (Note 7)                                                         130,838                 -
-------------------------------------------------------------------------------------------------------------------
Total Assets                                                                             592,663           282,411
-------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Deficit

Current Liabilities

   Accounts payable                                                                      524,942           610,331
   Accrued liabilities                                                                    78,841            99,490
   Convertible notes, less unamortized discount of $377,623 (Note 7)                     331,877                 -
   Due to related parties (Note 8)                                                     1,094,835           859,612
   Other advances (Note 9)                                                               211,395           220,866
-------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                              2,241,890         1,790,299
-------------------------------------------------------------------------------------------------------------------

Commitments (Note 13)
Subsequent Events (Note 15)

Stockholders' Deficit

Common Stock (Note 10) - 100,000,000 shares authorized
at $0.001 par value; 35,794,872  and 22,455,672 issued
and outstanding, respectively                                                             35,795            22,456

Additional Common Stock Subscribed                                                             -            70,000

Additional Paid-in Capital                                                             6,897,286         2,972,212

Deferred Compensation (Note 10)                                                       (1,319,725)         (496,031)

Accumulated Other Comprehensive Loss                                                     (87,944)          (47,661)

Deficit Accumulated During the Development Stage                                      (7,174,639)       (4,028,864)
-------------------------------------------------------------------------------------------------------------------
Total Stockholders' Deficit                                                           (1,649,227)       (1,507,888)
-------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit                                              592,663           282,411
===================================================================================================================


        (The Accompanying Notes are an Integral Part of these Consolidated Financial Statements)
</TABLE>


                                       F-2
<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. Dollars)
<TABLE>
<CAPTION>

                                                                  Accumulated
                                                                      from
                                                                 March 25, 1999
                                                              (Date of Inception)                             Year Ended
                                                                   to May 31,            May 31,
                                                                      2005               2005                    2004
                                                                       $                   $                      $
                                                                                                              Restated -
                                                                                                             See Note 16)
-------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                      <C>                      <C>
Sales                                                            22,430                   13,021                   9,409

Cost of Sales                                                    12,481                    6,277                   6,204
-------------------------------------------------------------------------------------------------------------------------
Gross Profit                                                      9,949                    6,744                   3,205
-------------------------------------------------------------------------------------------------------------------------

Operating Expenses

     Depreciation                                                18,466                   10,982                   6,098
     Impairment loss on assets                                  310,898                  231,378                  79,520
     Research and development (1)                               976,253                  269,432                 155,690
     Selling, general and administrative (1)                  5,526,791                2,324,389               2,060,240
-------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                      6,632,408                2,836,181               2,301,548
-------------------------------------------------------------------------------------------------------------------------

Net Loss from Operations                                     (6,822,459)              (2,829,437)             (2,298,343)

Debt Issue Costs                                                (23,712)                 (23,712)                       -
Interest Expense                                               (359,613)                (323,771)                 (8,440)
Gain on Settlement of Debt                                       13,317                   13,317                       -
Other Income                                                     17,828                   17,828                       -
-------------------------------------------------------------------------------------------------------------------------
Net Loss for the Period                                      (7,174,639)              (3,145,775)             (2,306,783)

Other Comprehensive Income (Loss)
     Foreign currency translation gain (loss)                   (87,944)                 (40,283)                 21,235
-------------------------------------------------------------------------------------------------------------------------
Comprehensive Loss                                           (7,262,583)              (3,186,058)             (2,126,508)
-------------------------------------------------------------------------------------------------------------------------
Basic and Diluted Net Loss Per Share                                                       (0.11)                  (0.11)
-------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares Outstanding                                            27,477,000              20,156,000
-------------------------------------------------------------------------------------------------------------------------

(1) Stock-based compensation is included in the following:
   Selling, general and administrative                        2,576,998                1,353,986               1,053,670
   Research and development                                      56,000                   56,000                       -
-------------------------------------------------------------------------------------------------------------------------
                                                              2,632,998                1,409,986               1,053,670
-------------------------------------------------------------------------------------------------------------------------

            (The Accompanying Notes are an Integral Part of these Consolidated Financial Statements)
</TABLE>

                                       F-3


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. Dollars)
<TABLE>
<CAPTION>

                                                                           Accumulated from
                                                                            March 25, 1999
                                                                         (Date of Inception)     Year Ended
                                                                             to May 31,            May 31,       2004
                                                                                2005               2005            $
                                                                                 $                   $        Restated - see
                                                                                                              ( Note 16)
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                <C>            <C>
Operating Activities
   Net loss for the period                                                    (7,174,639)      (3,145,775)     (2,306,783)
   Adjustments to reconcile net loss to net cash used in operating
      activities
     Amortization of deferred compensation and other
             stock-based compensation                                           2,632,998        1,409,986       1,053,670
     Depreciation                                                                  18,466           10,982           6,098
     Gain on settlement of debt                                                  (13,317)         (13,317)               -
     Impairment loss on assets                                                    310,898          231,378          79,520
     Non-cash interest and debt issue costs                                       306,089          306,089               -
     Recapitalization costs                                                      (115,730)               -               -
   Changes in operating assets and liabilities
     Accounts receivable                                                           (7,584)          (7,584)              -
     Inventory                                                                    (97,770)         (97,770)              -
     Prepaid expenses and deposits                                                (98,795)         (98,795)              -
     Accounts payable and accrued liabilities                                   1,039,983          210,212         248,657
---------------------------------------------------------------------------------------------------------------------------
Net Cash Used In Operating Activities                                          (3,199,401)      (1,194,594)       (918,838)
---------------------------------------------------------------------------------------------------------------------------
Investing Activities
   Website development costs                                                       (7,798)          (7,798)              -
   Patent protection costs                                                        (11,378)               -          (1,378)
   Purchase of property and equipment                                             (33,755)         (19,619)              -
   Advance royalty deposits                                                      (220,000)               -         (25,000)
---------------------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities                                            (272,931)         (27,417)        (26,378)
---------------------------------------------------------------------------------------------------------------------------
Financing Activities
   Advances from (repayment to) others                                            211,395          (9,471)          80,920
   Advances from related parties                                                1,933,947          546,430         561,832
   Repayments to related parties                                                 (562,658)        (230,407)       (261,494)
   Proceeds from convertible notes                                                960,000          660,000               -
   Debt issue costs                                                             (105,050)        (105,050)               -
   Proceeds from issuance of common stock                                       1,235,637          471,000         581,220
---------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                                       3,673,271        1,332,502         962,478
---------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash                                           (87,944)         (40,283)         21,235
---------------------------------------------------------------------------------------------------------------------------
Change in Cash                                                                    112,995           70,208          38,497
---------------------------------------------------------------------------------------------------------------------------
Cash - Beginning of Period                                                              -           42,787           4,290
Cash - End of Period                                                              112,995          112,995          42,787
---------------------------------------------------------------------------------------------------------------------------
Non-cash Investing and Financing Activities
   Advance royalty deposits payable                                                25,000                -          25,000
   Shares issued to settle debt                                                   507,442          302,932         204,510
   Shares issued for convertible debenture conversions                            300,000                -               -
   Shares issued to purchase inventory                                            120,000          120,000               -
   Promissory notes issued to acquire assets                                       73,346                -          73,346
   Shares issued for consulting fees and services                               2,795,804        2,014,304         781,500
   Shares issued to settle related party debt                                     349,800           80,800         269,000
---------------------------------------------------------------------------------------------------------------------------

Supplemental Disclosures
   Interest paid                                                                        -                -               -
   Income taxes paid                                                                    -                -               -

         (The Accompanying Notes are an Integral Part of these Consolidated Financial Statements)
</TABLE>


                                       F-4

<PAGE>


AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
(expressed in U.S. Dollars)
(Restated - see Note 16)
<TABLE>
<CAPTION>


                                                                  Additional   Additional             Accumulated Other
                                  Common Stock       Common Stock   Paid-in      Deferred    Comprehensive   Accumulated
                                  Shares     Amount   Subscribed    Capital    Compensation      Loss           Deficit      Total
                                    #          $          $             $           $              $               $           $
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>        <C>          <C>         <C>         <C>             <C>          <C>           <C>
Balance - March 25, 1999
 (Date of Inception)                      1                       -           -         -             -              -           -
Stock issued for cash pursuant
 to a private placement          10,125,000    10,125           -    (1,500)            -              -             -       8,625
Net loss for the period                   -         -           -         -             -              -             -           -
-----------------------------------------------------------------------------------------------------------------------------------
Balance - May 31, 1999           10,125,001    10,125           -    (1,500)            -              -             -       8,625
Net 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)            -              -             -       1,281
Stock issued pursuant to
 conversion of convertible
 debentures                         450,000       450           -   299,550             -              -             -     300,000
Net 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              -             -     169,342
Common stock to be issued                 -         -     181,198         -             -              -             -     181,198
Foreign 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             -              -             -     511,220
Shares issued to settle debt        637,840       638     (7,500)   211,372             -              -             -     204,510
Shares issued to settle
 related party debt                 390,000       390           -   268,610             -              -             -     269,000
Shares issued for services        1,450,000     1,450           -   780,050      (781,500)             -             -           -
Amortization of deferred
 compensation                             -         -           -         -       893,345              -             -     893,345
Value of stock options granted                      -           -    75,825             -              -             -      75,825
Share subscriptions received              -         -      70,000         -             -              -             -      70,000
Shares cancelled                   (210,000)     (210)          -       210             -              -             -           -
Foreign currency translation
 adjustment                               -         -           -         -             -         21,235             -      21,235
Net 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             -              -             -     480,000
Shares issued to purchase
 inventory                          500,000       500           -   119,500             -              -             -     120,000
Shares issued to settle debt      1,213,500     1,213           -   301,719             -              -             -     302,932
Share issued to settle related
 party debt                         505,000       505           -    80,295             -              -             -      80,800
Shares issued for services
 to be rendered                   8,920,700     8,921           - 2,005,383    (2,014,304)             -             -           -
Amortization of deferred
 compensation                             -         -           -         -     1,190,610              -             -   1,190,610
Value of stock options
 granted                                  -         -           -   210,377             -              -             -     210,377
Value of beneficial
   conversion feature
   related to the
   convertible notes                      -         -           -   213,941             -              -             -     213,941
Value of warrants issued                  -         -           -   446,059             -              -             -     446,059
Foreign currency
 translation adjustment                   -         -           -         -             -        (40,283)            -     (40,283)
Net loss for the year                     -         -           -         -             -              -    (3,145,775) (3,145,775)
-----------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 2005          35,794,872    35,795           - 6,897,286    (1,319,725)       (87,944)   (7,174,639) (1,649,227)
-----------------------------------------------------------------------------------------------------------------------------------

                       (The Accompanying Notes are an Integral Part of these Consolidated Financial Statements)
</TABLE>


                                       F-5



<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



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 8Your 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
     throughout  the world.  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 is presently  licensed to
     manufacture and distribute 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 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.  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,
     2005, the Company has not  recognized  significant  revenue,  has a working
     capital  deficit of  $1,804,746  and has  accumulated  operating  losses of
     $7,174,639  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 Accounting


          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., AVVAAA World Health Care Products (Canada) Ltd., and 648311 B.C.
          Ltd. All inter-company accounts and transactions have been eliminated.

     (c)  Year End

          The Company's fiscal year end is May 31.

                                       F-6


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (d) 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.  (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) 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.

     (g) Property and Equipment

          Property and equipment is recorded at cost.  Depreciation  of computer
          equipment  and moulds is  computed on a  straight-line  basis using an
          estimated useful life of three years.

     (h) Website Development Costs

          The Company  recognizes the costs associated with developing a website
          in  accordance  with  the  American   Institute  of  Certified  Public
          Accountants   ("AICPA")   Statement  of  Position  ("SOP")  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. (i) 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.

                                       F-7



<PAGE>
AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (j)  Foreign Currency Translation


          The functional currency of the Company's Canadian  subsidiaries is the
          Canadian dollar.  The financial  statements of these  subsidiaries are
          translated  to United States  dollars in  accordance  with SFAS No. 52
          "Foreign Currency  Translation" using period-end rates of exchange for
          assets and liabilities, and weighted average rates of exchange for the
          year  for  revenues  and  expenses.  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.  (k)
          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 the 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. (l) 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 Staff Accounting  Bulletin No. 104; "Revenue
          Recognition  in  Financial  Statements".  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  Emerging  Issues Task Force  ("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.

     (m)  Comprehensive Income

          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.  (n) 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  preferred  stock,
          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.

                                       F-8




<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (o)  Financial Instruments


          The  fair  values  of cash,  accounts  receivable,  accounts  payable,
          accrued  liabilities,  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.

     (p)  Income Taxes

          The Company  utilizes the liability  method of  accounting  for income
          taxes as set forth in SFAS No.  109,  "Accounting  for Income  Taxes".
          Under the liability method, deferred taxes are determined based on the
          temporary differences between the financial statement and tax bases of
          assets and liabilities using enacted tax rates. A valuation  allowance
          is recorded  when it is more likely than not that some of the deferred
          tax assets will not be realized.

     (q)  Stock-based Compensation

          The Company accounts for stock-based  awards using the intrinsic value
          method of accounting in accordance  with Accounting  Principles  Board
          Opinion No. 25,  "Accounting  for Stock Issued to Employees" (APB 25).
          Under the intrinsic value method of accounting,  compensation  expense
          is recognized if the exercise  price of the Company's  employee  stock
          options is less than the market price of the  underlying  common stock
          on the  date of  grant.  Stock-based  compensation  for  employees  is
          recognized  on a  straight-line  basis over the vesting  period of the
          individual options.

          Stock-based awards for non-employees are accounted for under Statement
          of Financial Accounting Standards No. 123, "Accounting for Stock-Based
          Compensation," (SFAS 123), which establishes a fair value based method
          of  accounting  for  stock-based  awards and  recognizes  compensation
          expense  based on the fair  value of the stock  award or fair value of
          the  goods  and  services   received,   whichever  is  more   reliably
          measurable.  Under the provisions of SFAS 123, companies that elect to
          account for  stock-based  awards in accordance  with the provisions of
          APB 25 are required to disclose  the pro forma net income  (loss) that
          would have  resulted from the use of the fair value based method under
          SFAS  123.  During  the  year,  the  Company  recognized   stock-based
          compensation of $1,409,986 (2004 - $1,053,670) in accordance with SFAS
          123. Of this  amount,  $210,377  was  recognized  as the fair value of
          stock  options  granted to  non-employees  (2004 - $75,825)  while the
          remaining amount of $1,199,609 (2004 - $977,845)  represented the fair
          value of shares issued for consulting  services  rendered by employees
          and non-employees.

          The Company has adopted the  disclosure  requirements  of Statement of
          Financial  Accounting  Standards No. 148,  "Accounting for Stock-Based
          Compensation  --  Transition  and  Disclosure  an  Amendment  of  FASB
          Statement  No. 123",  to require more  prominent  disclosures  in both
          annual  and  interim  financial  statements  regarding  the  method of
          accounting for stock-based employee compensation and the effect of the
          method used on reported results.

                                       F-9


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (q)  Stock-based Compensation (continued)

          The fair value of the options granted during the year (no options were
          granted in the comparable period) was measured at the grant date using
          the  Black-Scholes  option  pricing model with the following  weighted
          average assumptions:
<TABLE>
<CAPTION>

                                                         Year Ended                Year Ended
                                                          May 31,                    May 31,
                                                            2005                      2004
                                                             $                          $

<S>                                                          <C>                          <C>
         Expected dividend yield                             0%                           0%
         Risk-free interest rate                          3.90%                        3.85%
         Expected volatility                               114%                         123%
         Expected option life (in years)                     5                            1
</TABLE>


          Had the Company  determined  compensation cost based on the fair value
          at the date of grant  for its  employee  stock  options,  the net loss
          would have  increased by $731,908 for the year ended May 31, 2005. The
          stock options granted to employees vested immediately upon grant.

          The following table illustrates the effect on net loss per share as if
          the fair value method had been applied to all grants of stock options:
<TABLE>
<CAPTION>

                                                                                                      Year Ended
                                                                                                         May 31,
                                                                                          2005                              2004
                                                                                            $                                 $

<S>                                                                                        <C>                              <C>
         Net loss - as reported                                                         (3,145,775)                      (2,306,783)
         Add: Stock-based compensation expense included in net loss -
           as reported                                                                     257,562                                -
         Deduct: Stock-based compensation expense determined under
           fair value method                                                              (989,470)                                -
         ---------------------------------------------------------------------------------------------------------------------------

         Net loss - pro forma                                                           (3,877,683)                      (2,306,783)
         ---------------------------------------------------------------------------------------------------------------------------

         Net loss per share (basic and diluted) - as reported                                (0.11)                           (0.11)
         Net loss per share (basic and diluted) - pro forma                                  (0.14)                           (0.11)

</TABLE>


                                      F-10


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (r)  Recent Accounting Pronouncements

          In December 2004, the Financial  Accounting  Standards  Board ("FASB")
          issued SFAS No. 123  (Revised  2004) ("SFAS No.  123R"),  "Share-Based
          Payment." SFAS No. 123R requires that the  compensation  cost relating
          to  share-based  payment   transactions  be  recognized  in  financial
          statements.  That cost will be measured based on the fair value of the
          equity or liability  instruments  issued. SFAS No. 123R represents the
          culmination of a two-year effort to respond to requests from investors
          and many others that the FASB improve the accounting  for  share-based
          payment  arrangements  with  employees.  The  scope of SFAS  No.  123R
          includes  a  wide  range  of  share-based  compensation   arrangements
          including  share options,  restricted  share plans,  performance-based
          awards,  share appreciation rights, and employee share purchase plans.
          SFAS No. 123R  replaces  SFAS No.  123,  "Accounting  for  Stock-Based
          Compensation",  and  supersedes  APB Opinion No. 25,  "Accounting  for
          Stock  Issued to  Employees".  SFAS No. 123, as  originally  issued in
          1995,   established  as  preferable  a   fair-value-based   method  of
          accounting  for  share-based  payment   transactions  with  employees.
          However, that statement permitted entities the option of continuing to
          apply the guidance in APB Opinion No. 25, as long as the  footnotes to
          the financial statements disclosed what net income would have been had
          the  preferable  fair-value-based  method  been used.  Although  those
          disclosures helped to mitigate the problems associated with accounting
          under APB Opinion No. 25, many  investors and other users of financial
          statements believed that the failure to include employee  compensation
          costs   in   the   income   statement   impaired   the   transparency,
          comparability,   and  credibility  of  financial  statements.   Public
          entities that file as small business issuers will be required to apply
          Statement  123R in the first interim or annual  reporting  period that
          begins after  December 15, 2005.  The Company is currently  evaluating
          the  impact on the  Company's  results  of  operations  and  financial
          position.

          In  December  2004,  the FASB  issued  SFAS  No.  153,  "Exchanges  of
          Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No. 153
          is the  result of a broader  effort by the FASB to  improve  financial
          reporting by eliminating differences between GAAP in the United States
          and GAAP developed by the  International  Accounting  Standards  Board
          (IASB).  As part of this  effort,  the FASB  and the  IASB  identified
          opportunities to improve  financial  reporting by eliminating  certain
          narrow differences between their existing accounting  standards.  SFAS
          No.  153 amends  APB  Opinion  No.  29,  "Accounting  for  Nonmonetary
          Transactions",  that was issued in 1973. The  amendments  made by SFAS
          No.  153 are based on the  principle  that  exchanges  of  nonmonetary
          assets  should  be  measured  based  on the fair  value of the  assets
          exchanged.  Further, the amendments eliminate the narrow exception for
          nonmonetary exchanges of similar productive assets and replace it with
          a broader  exception for exchanges of  nonmonetary  assets that do not
          have "commercial substance."  Previously,  APB Opinion No. 29 required
          that the  accounting  for an  exchange  of a  productive  asset  for a
          similar  productive  asset or an  equivalent  interest  in the same or
          similar productive asset should be based on the recorded amount of the
          asset  relinquished.  The  provisions in SFAS No.153 are effective for
          nonmonetary  asset  exchanges  occurring in fiscal  periods  beginning
          after June 15, 2005. Early application is permitted and companies must
          apply the  standard  prospectively.  The  effect of  adoption  of this
          standard is not  expected to have a material  impact on the  Company's
          results of operations or financial position.

                                      F-11



<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



2.   Summary of Significant Accounting Principles (continued)

     (r)  Recent Accounting Pronouncements (continued)


          In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - An
          Amendment of ARB No. 43,  Chapter 4". SFAS No. 151 amends the guidance
          in ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
          accounting  for abnormal  amounts of idle facility  expense,  freight,
          handling costs, and wasted material (spoilage). Paragraph 5 of ARB No.
          43, Chapter 4, previously  stated that "... under some  circumstances,
          items  such as  idle  facility  expense,  excessive  spoilage,  double
          freight,  and  rehandling  costs  may  be so  abnormal  as to  require
          treatment as current  period  charges...".  SFAS No. 151 requires that
          those items be  recognized  as  current-period  charges  regardless of
          whether they meet the criterion of "so  abnormal."  In addition,  SFAS
          No. 151 requires that allocation of fixed production  overheads to the
          costs of conversion be based on the normal  capacity of the production
          facilities. The provisions of SFAS No. 151 are effective for inventory
          costs  incurred  during  fiscal years  beginning  after June 15, 2005.
          Earlier  application is permitted for inventory  costs incurred during
          fiscal years  beginning  after the date this  standard is issued.  The
          provisions of SFAS No. 151 must be applied prospectively. The adoption
          of this  standard  is not  expected  to have a material  effect on the
          Company's results of operations or financial position.

          The FASB  has  also  issued  SFAS  No.  152,  but it will not have any
          relationship   to  the  operations  of  the  Company.   Therefore,   a
          description  and its impact on the Company's  operations and financial
          position have not been disclosed.

          In March 2005, the SEC staff issued Staff Accounting  Bulletin No. 107
          ("SAB 107") to give guidance on the  implementation  of SFAS No. 123R.
          The Company will  consider SAB 107 during the  implementation  of SFAS
          No. 123R.

     (s)  Reclassifications

          Certain reclassifications have been made to the prior year's financial
          statements to conform to the current period's presentation.


3.   Inventory
<TABLE>
<CAPTION>
                                                                        May 31,                   May 31,
                                                                         2005                      2004
                                                                     Net Carrying              Net Carrying
                                                                          Value                     Value
                                                                            $                         $

<S>                                                                        <C>                      <C>
     Raw materials                                                         57,893                         -
     Finished goods                                                       159,877                         -
     -------------------------------------------------------------------------------------------------------

                                                                          217,770                         -
     -------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-12



<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



4.   Advance Royalty Deposits and Related License Agreements

     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,  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 approval 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 have 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.

     Terms of the license  agreements call for total advance royalty payments of
     $220,000,  which have been paid in full.  The licensor  will be entitled to
     royalties on the sale of products by the Company at a rate of approximately
     7% of sales. The term of the agreements are for thirty years with automatic
     renewal rights.  During the year the Company recorded an impairment loss of
     $220,000 due to the  uncertainty  about expected future cash flows from the
     sales of products.

     A total amount of $11,378 has been paid to protect certain  Canadian patent
     rights for the Neuroskin  product.  During the year the Company recorded an
     impairment  loss of $11,378 due to the  uncertainty  about expected  future
     cash flows from the sales of products.


5.   Property and Equipment
<TABLE>
<CAPTION>

                                                                                                       May 31,              May 31,
                                                                                                        2005                 2004
                                                                                 Accumulated        Net Carrying       Net Carrying
                                                                Cost             Depreciation            Value             Value
                                                                  $                   $                    $                 $

<S>                                                            <C>                   <C>                <C>                  <C>
     Computer equipment                                        17,168                4,957              12,211                    -
     Moulds                                                    14,136               10,602               3,534                8,246
     Office equipment                                           2,425                    -               2,425                    -
     -------------------------------------------------------------------------------------------------------------------------------

                                                               33,729               15,559              18,170                8,246
     -------------------------------------------------------------------------------------------------------------------------------



6.   Website Development Costs

                                                                                                         May 31,          May 31,
                                                                                                          2005             2004
                                                                                  Accumulated        Net Carrying     Net Carrying
                                                                  Cost            Depreciation            Value            Value
                                                                   $                   $                   $                $

     Website development costs                                   7,798               1,287               6,511                -
     -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

7.   Convertible Notes

                                      F-13



<PAGE>


AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



     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 on
     April 5, 2006. Any accrued  interest is payable upon each conversion and on
     the due date. The notes are  convertible  into common shares of the Company
     over a twelve-month  period.  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.  The timing of the  conversion  is at the
     option of the  holder.  The lowest  conversion  price for the eight  months
     subsequent  to April 5, 2005 is $0.08 per  share.  Thereafter,  there is no
     minimum conversion price.

     The notes are secured by a grant of a general  security  interest in all of
     the Company's assets both tangible and intangible.

     The Company is to issue four series of share purchase warrants assuming the
     complete  conversion  of the notes  issued on April 5, 2005 at a conversion
     price  determined by dividing the convertible  notes by the lesser of $0.16
     or 80% of the volume  weighted  average  price of the common  stock for the
     thirty  trading days preceding  April 5, 2005 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  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.

     The Company has 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  SEC  that  is  declared
     effective.  If the SB-2 is not declared  effective within ninety days after
     April 5, 2005,  the  Company  must pay a penalty of 2% for each  thirty-day
     period of the  convertible  notes  remaining  unconverted  and the purchase
     price of any shares issued upon the conversion of the notes.

     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 B
     warrants  pertaining  to the  $660,000 in  convertible  notes  issued.  The
     remaining  warrants  will be  issued  upon the  receipt  of the  additional
     financing of $440,000 as described above.

     In accordance with EITF 98-5  "Accounting  for Convertible  Securities with
     Beneficial  Conversion  Features  or  Contingently   Adjustable  Conversion
     Ratios",  the Company  recognized  the  intrinsic  value of the  beneficial
     conversion feature of $213,941 as additional paid-in capital.  In addition,
     in  accordance  with EITF 00-27  "Application  of Issue No. 98-5 to Certain
     Convertible  Instruments",  the  Company  has  allocated  the  proceeds  of
     issuance between the convertible notes and the detachable warrants based on
     their relative fair values.  Accordingly,  the Company  recognized the fair
     value of the detachable warrants of $446,059 as additional paid-in capital.
     The  fair  value of the  warrants  issued  were  determined  by  using  the
     Black-Scholes option pricing model assuming an expected life of five years,
     a risk free interest rate of 4.07%, an expected  volatility of 111%, and an
     expected  dividend  yield of 0%. The Company will record  further  interest
     expense over the term of the convertible  notes of $446,059  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 $660,000 at maturity.  To May 31, 2005,  accrued interest
     of $8,100 has been included in accrued liabilities, and interest expense of
     $68,436 has been accreted  increasing the carrying value of the convertible
     notes to $282,377.


                                      F-14


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



7.   Convertible Notes (continued)

     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 the legal fees of the lenders relating to
     these agreements  totalling $15,000 (paid).  For the $49,500 in convertible
     notes,  the  Company  recognized  the  intrinsic  value  of the  beneficial
     conversion feature of $18,000 as additional paid-in capital and a charge to
     interest expense.

     The  Company  incurred  debt  issue  costs of  $154,550  relating  to these
     convertible  notes.  During  the year  ended May 31,  2005  $23,712  of the
     deferred  financing  fees have been  charged  to debt  issue  costs and the
     balance  of  $130,838  will be  expensed  over  the  remaining  term of the
     convertible debt.


8.   Related Party Balances and Transactions
<TABLE>
<CAPTION>
                                                                                                       May 31,
                                                                                                         2005        May 31, 2004
                                                                                                          $                $

     (a)          Balances

<S>                         <C>                                                                            <C>              <C>
              (i)            Shield-Tech Products Inc.                                                     445,588          410,227
              (ii)           Directors and/or officers                                                     599,719          396,453
              (iii)          Due to former officer                                                          49,528           52,932
     -------------------------------------------------------------------------------------------------------------------------------

                                                                                                         1,094,835          859,612
     -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (i)  Shield-Tech  Products Inc., a company under common control,  conducted
          research  and  incurred  development  expenditures  on  the  Company's
          behalf. The advances are without interest,  unsecured and there are no
          agreed repayment terms.

     (ii) The  advances   from   directors   and/or   officers  are   unsecured,
          non-interest bearing, and due on demand.

     (iii)On January  2, 2004,  the  Company  completed  the  October  15,  2003
          agreement (as amended January 1, 2004) to purchase certain operational
          business assets of 5943609 B.C. Ltd. (dba Mystic Mountain Body and Spa
          Products) ("Mystic"), a company based in British Columbia,  Canada and
          owned by a former  officer  of the  Company.  In return,  the  Company
          issued two  promissory  notes  totalling  CAD$100,000  to the owner of
          Mystic. Both promissory notes are non-interest  bearing and unsecured.
          The Company and Mystic decided to terminate the agreement but have not
          yet settled the terms.  As at May 31, 2004,  the Company wrote off all
          the assets it acquired from Mystic totalling $79,520.

     (b)  Transactions

          Six  directors/officers  were paid/accrued $599,719 for the year ended
          May 31, 2005 (2004 - $640,000) for consulting services rendered.


                                      F-15


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



9.   Other Advances

     (a)  The Company  received  advances  from a  non-related  party  totalling
          $114,000 to assist in  research  and  development.  The  advances  are
          currently payable,  is unsecured and accrues interest at prime plus 1%
          per annum.  Interest of $7,980 was  accrued and charged to  operations
          for the year ended May 31, 2005, (2004 - $6,107).  As of May 31, 2005,
          $40,033 of interest has been accrued on these advances and is included
          in other advances.  (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  CAD$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
          CAD$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.  During the year ended May 31,  2005 the
          Company repaid  CAD$30,000 of the Band's  advances,  leaving a balance
          owing at May 31, 2005 of $57,362  (CAD$72,000).  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.


10.  Common Stock

     (a)  Authorized Shares


          On May 1, 2004, the Board and the  stockholders  approved an amendment
          to the Company's  Articles of  Incorporation to increase the number of
          authorized shares of common stock from 25,000,000 to 100,000,000, with
          no change in par value.  (b) Private  Placements  (i) On December  15,
          2004,  the  Company  issued  2,200,000  units  at  $0.25  per unit for
          proceeds of the $541,000 ($70,000 was received as at May 31, 2004) and
          for $9,000 for consulting  services rendered.  Each unit consists that
          of one common  share of the  company  and one  non-transferable  share
          purchase warrant. Each warrant may be exercised within one year of the
          date of issuance to the purchaser at a price of $0.45 per share.  (ii)
          In fiscal 2004, the Company issued  3,230,471  units at $0.25 per unit
          for proceeds of $684,918 in cash and $122,585 in debt settlement. Each
          unit   consisted   of  one  common   share  of  the  Company  and  one
          non-transferable  share purchase warrant.  Each warrant is exercisable
          within two years of the date of issuance to the  purchaser  at a price
          of $0.45 per share during the first twelve  months and $0.40 per share
          for the remaining twelve months. (c) 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.

                                      F-16


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



10.  Common Stock (continued)

     (c) Non-cash Consideration (continued)


     On June 1, 2003,  the Company  issued 100,000 shares of common stock to two
     employees.  These shares were issued at an aggregate  fair value of $40,000
     for services to be rendered over a two-year period.  The Company charged to
     operations  compensation  expense of $20,000  for the period  ended May 31,
     2004 and  recorded  deferred  compensation  of $20,000  that was charged to
     operations during the year.

     On August 1, 2003,  the Company issued 250,000 shares of common stock to an
     officer.  These shares were issued at an  aggregate  fair value of $120,000
     for services to be rendered over a two-year period.  The Company charged to
     operations  compensation  expense of $50,000  for the period  ended May 31,
     2004 and  recorded  deferred  compensation  of $70,000  that was charged to
     operations during the year.

     On January 2, 2004 the Company issued  200,000 shares to an officer.  These
     shares were  issued at a fair value of $96,000 for  services to be rendered
     over a two-year  period.  The Company  charged to  operations  compensation
     expense of $20,000 for the period ended May 31, 2004 and recorded  deferred
     compensation of $76,000 that was charged to operations during the year.

     On February 15, 2004 the Company  issued 300,000 shares of common stock for
     consulting services. These shares were issued at an aggregate fair value of
     $129,000 for services to be rendered over a three-month  period,  which was
     charged to operations in fiscal 2004.

     On March 9, 2004,  the Company  issued  300,000  shares of common stock for
     consulting services. These shares were issued at an aggregate fair value of
     $219,000 for services  rendered  which was charged to  operations in fiscal
     2004.

     On March 10, 2004,  the Company  issued  100,000 shares of common stock for
     consulting services. These shares were issued at an aggregate fair value of
     $70,500 for  services to be rendered  over a one-year  period.  The Company
     charged to operations  compensation expense of $17,500 for the period ended
     May 31, 2004 and recorded deferred compensation of $52,500 that was charged
     to operations during the year.

     On March 18, 2004,  the Company  issued  50,000  shares of common stock for
     consulting services. These shares were issued at an aggregate fair value of
     $35,500 for services  rendered  which was charged to  operations  in fiscal
     2004.

     On May 7, 2004,  the Company  entered into an  agreement  to issue  300,000
     shares of common stock for consulting services. These shares were issued on
     June 10,  2004 at an  aggregate  fair value of $87,000  for  services to be
     rendered  over a  three  month  period.  The  Company  charged  $14,500  to
     operations  during the period  ended May 31,  2004  which was  included  in
     accrued   liabilities  as  at  May  31,  2004.   $72,500  was  recorded  as
     compensation expense during the year.

     On May 14, 2004,  the Company  entered  into an agreement to issue  250,000
     shares of common stock for consulting services. These shares were issued on
     June 29, 2004 at an aggregate  fair value of $70,000 for services  rendered
     which was  charged to  operations  in fiscal  2004 and  included in accrued
     liabilities as at May 31, 2004.

     On June 10, 2004 the Company issued 76,000 shares of common stock to settle
     debt of $22,040.

     On June 30, 2004,  the Company  issued 80,000 shares of common stock having
     an aggregate fair value of $24,800 for  consulting  services  rendered.  Of
     this amount,  $17,293 was used to settle debt and the remaining  $7,507 was
     charged to operations during the year ended May 31, 2005.

                                      F-17


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



10.  Common Stock (continued)

     (c)  Non-cash Consideration (continued)


          On July 15, 2004,  the Company  issued  400,000 shares of common stock
          having an aggregate fair value of $184,000 for consulting  services to
          be  rendered  over a  two-year  period.  During the year ended May 31,
          2005,  the  Company  charged  to  operations  compensation  expense of
          $80,658 and recorded  deferred  compensation  expense of $103,342 that
          will be charged to operations over the remainder of the term.

          On July 28, 2004,  the Company  issued  250,000 shares of common stock
          having an  aggregate  fair value of $117,500 for  consulting  services
          rendered.  The amount was charged to operations  during the year ended
          May 31, 2005.

          On September  23, 2004,  the Company  issued  30,000  shares of common
          stock having an aggregate fair value of $8,700 to settle debt.

          On October 8, 2004,  the Company issued 500,000 shares of common stock
          having an aggregate fair value of $120,000 for inventory purchased.

          On October 22, 2004, the Company issued 300,000 shares of common stock
          for consulting services. The shares were recorded at an aggregate fair
          value of  $93,000  for  services  to be  rendered  over a  three-month
          period. The amount was charged to operations during the year ended May
          31, 2005.

          On  November  18,  2004,  the  Company  issued  200,000  shares  at an
          aggregate   fair  value  of  $56,000  for  research  and   development
          consulting  services  rendered.  The amount was charged to  operations
          during the year ended May 31, 2005.

          On November 18, 2004,  the Company  issued  30,000 common shares at an
          aggregate fair value of $8,400 for the payment of travel expenses.

          On November 24, 2004,  the Company  issued 120,700 common shares at an
          aggregate fair value of $33,796 for consulting services rendered.  The
          amount was charged to operations during the year ended May 31, 2005.

          On December 1, 2004,  the Company issued 20,000 shares of common stock
          having an  aggregate  fair  value of $5,600  for  consulting  services
          rendered.  Of this  amount,  $3,412  was used to  settle  debt and the
          remaining $2,188 has been recorded as a loss on debt settlement.

          On December 16, 2004,  the Company  issued  950,000  common shares for
          consulting services to be rendered over a four-year period. The shares
          were recorded at an aggregate  fair market value of $218,500.  For the
          year  ended  May  31,  2005,   the  Company   charged  to   operations
          compensation expense of $24,843 and recorded deferred  compensation of
          $193,657 that will be charged to operations  over the remainder of the
          term.

          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, 2005, the Company  charged to
          operations  compensation  expense of  $77,753  and  recorded  deferred
          compensation  of $122,247 that will be charged to operations  over the
          remainder of the term.

          On January 10, 2005,  the Company  issued  600,000 common shares at an
          aggregate  fair  value  of  $150,000  for  consulting  services  to be
          rendered.  During the year ended May 31, 2005, the Company  charged to
          operations  compensation  expense of  $57,945  and  recorded  deferred
          compensation  of $92,055 that will be charged to  operations  over the
          remainder of the term.

                                      F-18


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



10.  Common Stock (continued)

     (c)  Non-cash Consideration (continued)


          On January 20, 2005, the Company issued 100,000 shares at an aggregate
          fair value of $23,000 for consulting services rendered. The amount was
          charged to operations during the year ended May 31, 2005.

          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, 2005 the Company charged to operations compensation expense of
          $31,368 and recorded  deferred  compensation  of $405,632 that will be
          charged to operations over the remainder of the term.

          On February 3, 2005 the Company  issued  372,500 common shares for the
          settlement of debt in the amount of $74,668. The aggregate fair market
          value of $59,600 has been applied to reduce the  outstanding  debt and
          the remaining balance $15,068 recorded as a gain on debt settlement.

          On February 8, 2005, the Company issued 100,000 common shares to three
          employees at an aggregate fair market value $15,000 for services to be
          rendered.  For the year ended May 31,  2005,  the  Company  charged to
          operations   compensation   expense   $9,231  and  recorded   deferred
          compensation  of $5,769  that will be charged to  operations  over the
          remainder of the term.

          On March 1, 2005, the Company issued  2,500,000 shares at an aggregate
          fair  market  value of  $375,000 to a  consultant  for  services to be
          rendered  over a  twelve-month  period.  During the year ended May 31,
          2005 the Company charged to operations compensation expense of $94,521
          and recorded deferred compensation of $280,479 that will be charged to
          operations over the remainder of the term.

          On March 1,  2005 the  Company  issued  100,000  common  shares  to be
          recorded at an aggregate fair value of $16,000 to settle total debt of
          $15,000.  The  remaining  $1,000 has been  recorded  as a loss on debt
          settlement.

          On March 3, 2005,  the Company  issued  1,010,000  common shares to be
          recorded  at  an  aggregate   fair  value  of  $161,600  to  officers,
          directors,  employees  and a  consultant  to be applied  against  debt
          outstanding.   Debts  totaling  $166,762  were  settled  for  $161,600
          resulting in a gain of $5,162.

          On March 15, 2005,  the Company  issued  150,000  common  shares to be
          recorded at an aggregate  fair value of $34,500  legal  services to be
          rendered.  During the year ended May 31, 2005, the Company  charged to
          operations  compensation  expense  of  $2,456  and  recorded  deferred
          compensation  of $32,044 that will be charged to  operations  when the
          services have been performed. (d) Stock Purchase Agreement

          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 or a period of one year from the closing date.

                                      F-19


<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



10.  Common Stock (continued)

     (d)  Stock Purchase Agreement (continued)


          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.

          The closing of this  transaction is 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 has delivered  2,677,500 shares to its legal counsel to be
          held in escrow pending closing of this transaction at which time these
          shares will be recorded as issued common  shares.  As the  transaction
          has not closed to date the Company intends to terminate this agreement
          and request the return of the 2,677,500 shares.


11.  Stock Options

     On December 2, 2002,  the Company filed a Form S-8  Registration  Statement
     with the U.S.  Securities  and Exchange  Commission  to register  1,450,000
     shares of common stock  pursuant to the Company's  2002 Benefit  Plan.  The
     determination  of those  eligible to received  options under this plan, and
     the amount,  type,  price and timing of each stock option and the terms and
     conditions  shall rest at the sole  discretion  of the  Company's  Board of
     Directors.

     On June 25, 2004, the Company filed a Form S-8 Registration  Statement with
     the U.S. Securities and Exchange Commission to register 3,000,000 shares of
     common  stock  pursuant  to the  Company's  2004  Stock  Option  Plan.  The
     determination  of those  eligible to received  options under this plan, and
     the amount,  type,  price and timing of each stock option and the terms and
     conditions  shall rest at the sole  discretion  of the  Company's  Board of
     Directors.  The option price is set at a minimum of 100% of the fair market
     value of the common stock at the date of issue, except in the case of a 10%
     stockholder, where the option price is set at a minimum of 110% of the fair
     market value. The term of the options,  once granted, is not to exceed five
     years.

     On March 7, 2005,  the Board of  Directors  approved  the 2005 Stock Option
     Plan for a maximum of 2,000,000  shares,  to be issued when  required  from
     authorized  and unissued  common  stock of the Company.  The purpose of the
     plan is to provide the opportunity for eligible employees,  consultants and
     members of the Board of Directors to increase their proprietary interest in
     the Company and as an  incentive  for them to remain in the services of the
     Company.  The option  price is set at the fair  market  value of the common
     stock at the date of issue. The term of the options,  once granted,  is not
     to exceed five years.

     During the year, the Company  granted a total of 4,500,000 stock options to
     employees  and  non-employees  pursuant to the above at a weighted  average
     grant date fair value of $0.21 per option. The Company charged  stock-based
     compensation  expense  of  $210,377  to  operations  for  non-employees  in
     accordance with SFAS 123 during the year.

                                      F-20



<PAGE>


AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



11.      Stock Options (continued)

     A summary of the changes in the Company's stock options is presented below:
<TABLE>
<CAPTION>

                                                                                   May 31, 2005                        May 31, 2004
                                                                                    Weighted                        Weighted Average
                                                                                 Average Exercise                         Exercise
                                                                                      Price                                 Price
                                                                     Number                               Number
                                                                                        $                                     $

<S>                                                                 <C>                <C>                <C>                 <C>
           Balance, beginning of year                               225,000            0.87                    -                -
           Granted                                                4,500,000            0.25              225,000             0.87
           Exercised                                                      -               -                    -                -
           Forfeited/Expired                                      (425,000)            0.59                    -                -
           -----------------------------------------------------------------------------------------------------------------------

           Balance, end of year                                   4,300,000            0.25              225,000             0.87
           -----------------------------------------------------------------------------------------------------------------------


     Additional information regarding stock options outstanding as at May 31,
2005 is as follows:

                                                        Outstanding                                   Exercisable
                                    -----------------------------------------------------  -----------------------------------
                Exercise prices        Number of              Weighted
                                                               average                             Weighted           Weighted
                                                             remaining          average           Number of            average
                                                            contractual      exercise price         shares          exercise price
                       $                     shares        life (years)              $                                    $

                     0.15                  1,400,000              1.48              0.05           1,400,000             0.05
                     0.28                  1,600,000              1.45              0.10           1,600,000             0.10
                     0.31                  1,000,000              0.90              0.07           1,000,000             0.07
                     0.38                    200,000              0.10              0.02             200,000             0.02
                     0.42                    100,000              0.09              0.01             100,000             0.01
                                    -----------------------------------------------------  -----------------------------------

                                           4,300,000              4.02              0.25           4,300,000             0.25
                                    -----------------------------------------------------  -----------------------------------


12.  Stock Purchase Warrants

     A  summary  of the  changes  in the  Company  stock  purchase  warrants  is
     presented below:

                                                                                 May 31, 2005                        May 31, 2004
                                                                               Weighted Average                    Weighted Average
                                                                                    Exercise                             Exercise
                                                                                     Price                                Price
                                                                     Number                                Number
                                                                                        $                                    $

     Balance, beginning of year                                     3,230,471           0.40                     -             -
     Granted                                                       14,775,000           0.30             3,230,471          0.40
     Exercised                                                              -              -                     -             -
     Forfeited/Expired                                                      -              -                     -             -
     -------------------------------------------------------------------------------------------------------------------------------

     Balance, end of year                                          18,005,471           0.25             3,230,471          0.40
     -------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-21



<PAGE>

AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



12.  Stock Purchase Warrants (continued)

     As at May 31, 2005, the following share purchase warrants were outstanding:

            Number of     Exercise
             Warrants       Price                         Expiry Date

               3,230,471    0.40     August 19, 2005 (expired subsequently)
               2,200,000    0.45     December 15, 2005
                 200,000    0.38     July 29, 2007
               4,125,000    0.20     April 10, 2010
               3,093,750    0.25     April 10, 2010
               3,093,750    0.30     April 10, 2010
               2,062,500    0.45     April 10, 2010
          ----------------------------------------------------------------------

              18,005,471
          ----------------------------------------------------------------------



13.  Commitments

     (a)  In November 2004, the Company entered into a consulting  agreement for
          marketing and public relations  services for $2,500 a month commencing
          in  December  2004.  In  addition,  the  Company  is to issue  244,000
          restricted  common  shares  for each  three  months  of  service.  The
          consultant  has not performed the agreed  services and the Company has
          not made any payments or issued any common shares to the consultant.

     (b)  On December 20, 2004 the Company  entered into a consulting  agreement
          and agreed to pay a 5% commission on sales to customers  introduced by
          the  consultant.  In addition,  the Company will issue 200,000  common
          shares  for each  new  product  marketed  by the  consultant.  The new
          products are not to exceed one for every two months.

     (c)  On January 10, 2005, the Company  entered into a consulting  agreement
          and  agreed  to  pay a 2%  sales  commission  on  sales  to  customers
          introduced  by the  consultant.  In  addition,  the Company will issue
          150,000 common shares for each new product marketed by the consultant.
          The Company will also to pay a 5% commission on sales generated by the
          new products in year one dropping by 1% per year to a commission of 1%
          in year five.  The consultant can also earn a 7.5% finder's fee on any
          financing raised for the Company.

     (d)  On January 20, 2005,  the Company  entered into a five-year  agreement
          with a company for marketing and distribution services. The Company is
          to issue 1,900,000  common shares for the first year. The Company will
          pay a retainer fee of $10,000 plus  $10,000 per month.  The  marketing
          company  will  earn  a  15%  commission  on  sales  generated  in  its
          distribution  channels.  The Company will issue 400,000  common shares
          for each new product  marketed by the marketing  company.  The Company
          issued  1,900,000  common  shares on April 4,  2005 for a fair  market
          value of $418,000,  of this amount  $151,693  were expensed at May 31,
          2005 and the balance amortized over the next 8 months.

     (e)  On  February  8, 2005,  the  Company  approved  the  issuance of stock
          options to a  consultant  to  purchase  100,000  common  shares of the
          Company  at  $0.20  per  share  once  the  first  sale  to a  customer
          introduced to the Company by the  consultant has been  completed.  The
          options  will expire five years from the date of issue.  In  addition,
          the consultant will receive a commission of 2% on sales  introduced to
          the Company.

                                      F-22



<PAGE>


AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



14.  Income Taxes

     The tax  effects of the  significant  temporary  differences,  which  would
     comprise tax assets at May 31, 2005 and 2004, are as follows:
<TABLE>
<CAPTION>


                                                                                                      2005                  2004
                                                                                                       $                      $

<S>                                                                                                   <C>                   <C>
     Deferred tax asset:

        Operating loss carryforward                                                                 2,052,000             1,528,000

     Valuation allowance                                                                           (2,052,000)           (1,528,000)
     -------------------------------------------------------------------------------------------------------------------------------

     Net deferred tax asset                                                                                 -                     -
     -------------------------------------------------------------------------------------------------------------------------------
</TABLE>


     In assessing the realiability 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.

     The  Company  has  approximately  $1,040,000  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 in years
     ranging  from 2019 to 2024.  In  addition,  the Company  has  approximately
     CAD$3,842,000  of  non-capital  losses  available  for Canadian  income tax
     purposes to reduce taxable income of future years.


15.  Subsequent Events

     (a)  On  August 1,  2005 the  financing  agreements  were  amended  and the
          Company  was  advanced  $140,000.  The  terms  and  conditions  of the
          original  agreement are 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. Also the penalty for
          the delay in the Company's SB-2 filing with the SEC becoming effective
          within 90 days of April 5, 2005 has been  increased  to 5% for each 30
          day period. The Company is committed to paying the lenders' legal fees
          with respect to the amendment of $3,000.

     (b)  On August 30,  2005 the  Company  completed  the  purchase of land and
          building in Lumby,  British  Columbia,  Canada,  which will become the
          Company's  head office for  CAD$325,000.  The Company paid  brokerage,
          loan and acceptance fees totalling  CAD$36,125.  The Company  financed
          the purchase with mortgages totalling CAD$350,000. A first mortgage of
          CAD$211,250  bearing  interest  at 9.95% with a term of one year and a
          second mortgage of CAD$138,750 for a one year term bearing interest of
          15% per annum.  The  President of the Company and his spouse  provided
          additional security for both mortgages.

                                      F-23



<PAGE>


AVVAA World Health Care Products, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
May 31, 2005 and 2004



16.  Restatement

     The Company has restated its consolidated financial statements for the year
     ended May 31, 2004.  The Company is restating the  financial  statements to
     reflect the fair value of stock options granted to outside consultants.  In
     addition,  previously recorded stock-based compensation and share issuances
     were reversed and  liabilities  were  reinstated as it was determined  that
     these shares were not physically issued as at May 31, 2004.
<TABLE>
<CAPTION>


                                                                                    May 31, 2004                       May 31, 2004
                                                                               Previously Reported   Adjustment        As Restated
                                                                                         $               $                 $

<S>                                                                                      <C>            <C>               <C>
      Balance Sheet
        Accounts payable                                                               588,291           22,040             610,331
        Accrued liabilities                                                             14,990           84,500              99,490
        Common stock                                                                    23,082             (626)             22,456
        Additional paid-in capital                                                   3,150,626         (178,414)          2,972,212
        Deferred compensation                                                         (568,531)          72,500            (496,031)

                                                                                  As Originally
                                                                                   Reported

        Deficit accumulated during the development stage                            (3,953,039)         (75,825)         (4,028,864)


                                                                                 Year Ended                              Year Ended
                                                                                  May 31, 2004                         May 31, 2004
                                                                              Originally Reported    Adjustment         As Restated
                                                                                        $                   $                 $

      Statement of Operations
        General and administrative
           Stock-based compensation                                                    977,845           75,825           1,053,670

      Net loss for the year                                                         (2,230,958)         (75,825)         (2,306,783)

</TABLE>

     There was no change to the basic and diluted  net loss per share  resulting
     from the restatement.

     In addition to the restatements noted above, certain other revisions to the
     financial  statement  note  disclosures  were made to improve  the  overall
     presentation of the Company's financial statements.


                                      F-24

<PAGE>

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

ITEM 8A. CONTROLS AND PROCEDURES

Our Chief  Executive  Officer  and Chief  Financial  Officer  (collectively  the
"Certifying  Officers")  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
preparation  of the February 28, 2005  financial  statements,  it was discovered
that the fair value of certain  stock  options  granted to outside  consultants,
while properly disclosed in the notes to the financial statements,  had not been
expensed  in the May 31, 2004  financial  statements,  as required by  generally
accepted  accounting  principles  ("GAAP").  All of the  options  were  properly
recorded,  processed,  summarized and communicated to management.  The error did
not occur as a result of any breach of  disclosure  controls  but  rather,  as a
result of incorrect  application of GAAP to the accounting for consultant  stock
options.  The required  amended  financial  statements were filed in the amended
Form 10-KSB for the year ended May 31, 2004.

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, 2005, that the Company's control  procedures at May
31 2005 are effective.

Changes in internal controls

In July 2005,  additional  controls and procedures were implemented with respect
to stock  options  granted and common shares issued as approved by the Company's
Board of  Directors.  A separate  control  log is  maintained  by the  Company's
Administrative  Accounting Assistant.  This log is independently reviewed by the
Company's  Controller  and  Chief  Accounting  Officer.  These  procedures  were
executed  in July  2005  and  carried  out  retroactively  to June 1,  2003.  No
additional errors were detected.


<PAGE>

                                    PART III

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

Our  directors and officers are set forth below.  The directors  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 officers serve at the will of the Board of Directors.


Name                    Age       Position
----------------------- -------   ----------------------------------------------



Jack Farley               62      President, Chief Executive Officer and
                                  Director



Charles Austin            68      Chief Financial Officer, Chief Accounting
                                  Officer, Secretary and Director



Dr. Mark Alden            53      Director



James MacDonald           68      Director

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 was 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.


                                      III-2
<PAGE>

CHARLES AUSTIN has been our Chief Financial  Officer,  Secretary and a member of
our Board of Directors since June 28, 2002. He was recently  appointed our Chief
Accounting  Officer.  Mr. Austin was the Chief Financial  Officer and Manager of
Development and Planning of Mind Your Own Skin Products,  Inc. In such capacity,
he assisted the company's  President in preparing  business  plans and operating
budgets and prepared long range  financial  projections  and facility  plans. He
also  completed  all required  financial  statements  and  conducted  the annual
strategic planning meeting with the company's executive team.

From 1999 to 2000,  he worked  as a  consultant  for  various  British  Columbia
businesses.  He conducted assessment of businesses and profitability improvement
checkups and  identified  and  reported  areas for profit  improvement.  He also
assisted these  companies in the  development of business plans and assisting in
the implementation of related action plans.

From 1997 to 1999,  he was the managing  director of  Triathlon  Canada where he
facilitated in the development and  implementation  of a strategic plan entitled
"Towards  2000 and Beyond." He also  participated  in the  development  of prize
winning  marketing  materials and had extensive  involvement in the fund raising
and communications program.

From 1970 to 1996, he was a Senior Audit  Partner for Ernst & Young.  Mr. Austin
provided audit, accounting,  taxation,  information systems and general business
advice to a wide range of clients  including many public companies  ranging from
start-ups to  multi-nationals.  Some of his clients included:  Luscar,  Echo Bay
Mines, ZCL Manufacturing, Falconbridge and Inventronics. He was also a member of
Ernst & Young's  National Audit Policy and  Accounting  Policy  Committees.  Mr.
Austin  received  his  Bachelor of  Business  Administration  (honors)  from the
University of Western Ontario in 1961 and became a chartered accountant in 1964.

DR. MARK ALDEN has been a member of our Board of Directors  since June 28, 2002.
Dr. Alden has been  associated  with Mind Your Own Skin  Products,  Inc. for the
last 7 years and has  worked  on  applications  of Mind Your Own Skin  Products,
Inc.'s products. He is in the process of commencing clinical trials that include
effective burn treatment.

Since  August  2000,  he has been  the  Clinical  Service  Chief  and  Assistant
Professor  at the Medical  College of  Pennsylvania-Hahnemann  University.  From
February  1999 to August  2000,  he was the Chairman of the  Radiation  Oncology
Department  at the  Wilkes-Barre  General  Hospital.  From April 1997 to January
1999, he was the medical director of the TriCounty  Regional Cancer Center (Holy
Redeemer Hospital and Warminster General Hospital) in Southampton, Pennsylvania.
From  December  1995 to April 1997,  he was  employed  at the St. Mary  Regional
Cancer Center in Langhorne,  Pennsylvania.  From January 1993 to December  1995,
Dr.  Alden was an  Assistant  Professor  and  Instructor  at the  Department  of
Radiation  Oncology  and  Nuclear  Medicine at the Thomas  Jefferson  University
Hospital.

Dr. Alden received his Associate Arts Degree in 1973 from the Academy of the New
Church  College in Bryn Athyn,  Pennsylvania.  He received  his Bachelor of Arts
Degree from Penn State  University  in 1975.  In 1979, he received his Master of
Divinity  from the Academy of the New Church  Theological  School in Bryn Athyn,
Pennsylvania.  He received  his Doctor of  Medicine  in 1988 from the  Jefferson
Medical Hospital in Philadelphia, Pennsylvania and his General Surgery PGYI from
Abington  Memorial  Hospital  in 1989.  He was a  resident  and a fellow  in the
Department  of  Radiation  Oncology  and Nuclear  Medicine  at Thomas  Jefferson
University  Hospital from 1989 to 1992.  He is licensed to practice  medicine in
Pennsylvania,  New Jersey  and  Indiana  and was Board  Certified  in  Radiation
Oncology in 1994.


                                      III-2
<PAGE>

JAMES  MACDONALD  became our  director on September  26, 2002.  He has a 38 year
career in Canadian and international banking and finance. In 2003, he retired as
a senior executive in Monex  International,  Inc., a privately operated offshore
finance company, based in Burlington, Ontario, Canada. He previously worked as a
commercial   credit   analyst  for  the  Canadian   Imperial  Bank  of  Commerce
headquartered in Toronto,  Ontario,  Canada. He started working for them in 1954
until his  retirement in May 1992.  His  portfolio  included the support of over
1,500  lending  accounts  with more than $100 million in loan  requirements.  In
1978, he was an Honor graduate of the University of Toronto and York University,
located in  Ontario,  Canada.  Recently,  from 1998  through  2002,  he was Vice
President  -  Commercial  Finance  for  Monex   International,   Inc.  based  in
Burlington, Ontario, Canada.

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, 2005.

CODE OF ETHICS

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

ITEM 10. EXECUTIVE COMPENSATION

Compensation of Executive Officers

Summary  Compensation  Table. The following  information relates to compensation
received by our  officers in fiscal year  ending May 31,  2005,  2004,  and 2003
whose salary and compensation  exceeded $100,000.  In fiscal year ending May 31,
2003, John Farley, our President,  Chief Executive Officer and director received
$103,138.29 in compensation.  This was all in the form of cash salary. In fiscal
year ending May 31, 2004, John Farley,  our President,  Chief Executive  Officer
and director  received  $102,000 in compensation.  In fiscal year ending May 31,
2005, John Farley, our President,  Chief Executive Officer and director received
$102,000 in compensation.
<TABLE>
<CAPTION>

                                                  SUMMARY COMPENSATION TABLE


                              Annual Compensation                         Long-Term Compensation
                              -------------------                         -----------------------


Name and Principal                                              Other Annual    Restricted        Securities Underlying
Position                     Year         Salary       Bonus   Compensation    Stock Award(s)            Options
-------------------------  ------------  ----------    ------  --------------  --------------  -----------------------
<S>                            <C>           <C>        <C>         <C>           <C>                    <C>

John Farley                  2005          $102,000      0           0              0                    0

President and CEO            2004          $102,000      0           0              0                    0

                             2003          $103,138      0           0              0                    0



Chuck Austin                 2005           $90,000      0           0              0                    0

Secretary and CFO            2004           $90,000      0           0              0                    0

                             2003           $74,957      0           0              0                    0
</TABLE>


                                      III-3

<PAGE>
Option  Grants  Table.  The following  table sets forth  information  concerning
individual  grants of stock  options to  purchase  our common  stock made to the
executive  officers named in the Summary  Compensation  Table during fiscal year
ended May 31, 2005.
<TABLE>
<CAPTION>

                      OPTIONS GRANTS IN PRESENT FISCAL YEAR
                            (Commencing June 1, 2004)
                               (Individual Grants)




                          Number of           Percent of total
                         securities           options granted to
                      underlying options      employees in last      Exercise or base
Name                    guranted (#)          fiscal year            Price ($/Share)        Expiration Date
--------------        ------------------     --------------------   -------------------    ----------------
<S>                          <C>                <C>                      <C>                      <C>
John Farley (1)           1,200,000 (3)         46.15%                   (4)                June 24, 2009

John Farley (2)             250,000              9.62%                   (5)                March 6, 2010

Chuck Austin(1)             300,000             11.54%                   (5)                June 24, 2009

Chuck Austin(2)             250,000              9.62%                   (5)                March 6, 2010
</TABLE>


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


               AGGREGATED OPTION EXERCISES IN LAST 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, 2005, by the executive  officers  named in the
Summary Compensation Table.
<TABLE>
<CAPTION>


                                                                    Number of Securities      Value of Unexercised
                                                                   Underlying Unexercised    In-the-Money Options at
Name                   Shares acquired on    Value realized ($)       Options at Fiscal           Fiscal Year-
                          exercise (#)                                   Year-End(#)                End($)(1)
                                                                         -----------                ---------

                                                                 Exercisable/ Unexercisable       Exercisable/
                                                                                                  Unexercisable

<S>                           <C>                    <C>                      <C>                     <C>

 None
</TABLE>



                                      III-4

<PAGE>

Employment Agreements.

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.  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

Charles  Austin:  Effective May 1, 2003,  we entered into an agreement  with Mr.
Farley to act as our Chief  Financial  Officer  (and it  originally  stated  our
Manager of Planning and Development; we appointed Mr. Austin our Secretary). His
compensation  is as  follows:  (i) Salary:  $90,000 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
bonus, at the sole option of us; (iii) stock options:  in the sole discretion of
the  Compensation  Committee;  (iv)  automobile  provided  with a value  between
Cdn$40,000 to Cdn$50,000. On a one time basis, we paid Mr. Austin 250,000 of our
shares. Mr. Austin can terminate the agreement upon 6 months prior notice to us.
We can terminate Mr. Austin'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 $750,000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table sets forth as of  September  13,  2005,  information  with
respect to the beneficial ownership of our common stock by (i) each person known
by us to own beneficially 5% or more of such stock,  (ii) each Director who owns
our common stock, and (iii) all Directors and Officers as a group, together with
their percentage of beneficial  holdings of our outstanding shares. We currently
have a total of 38,593,072 shares issued and outstanding.
<TABLE>
<CAPTION>

Name and Address of                       Amount and Nature of        Percent of      Percent of
Beneficial Owner                          Beneficial Ownership        Class (1)       Class (3)
----------------                          --------------------        ---------       ---------
<S>                                            <C>                       <C>              <C>
John Farley                                  5,490,000 (2)              14.23%
P.O. Box 335, 3018 Schaeffer Road            6,940,000 (4)                               6.93%
Falkland, BC, Canada V0E 1W0

Charles Austin                                 597,500                   1.55%
P.O. Box 335, 3018 Schaeffer Road            1,147,500 (5)                               1.15%
Falkland, BC, Canada V0E 1W0


                                      III-5



<PAGE>
Dr. Mark Alden                                 524,500                                   1.36%
P.O. Box 335, 3018 Schaeffer Road              974,500 (6)                                 *
Falkland, BC, Canada V0E 1W0

James MacDonald                                 40,000 (9)              *
P.O. Box 335, 3018 Schaeffer Road              490,000 (7)                                 *
Falkland, BC, Canada V0E 1W0

Seaside Investments PLC (17)                 2,550,000 (8)               6.61%
c/o Gottbetter & Partners LLP
468 Madison Avenue
New York, New York 10022                                                                 2.55%

Alpha Capital Aktiengesellschaft(13)        23,437,500 (10)                             23.39%

Platinum Partners Value Arbitrage Fund      23,437,500 (10)                             23.39%
LP(14)

JM Investors, LLC(15)                        7,812,500 (11)                              7.80%

Osher Capital Inc.(16)                       2,604,167 (12)                              2.60%

Officers and Directors as a Group (4)        6,652,000                                  17.24%

                                             9,552,000                                   9.53%

</TABLE>

   * - Less than 1%



     (1)  Based on 38,593,072  shares issued and outstanding as of September 13,
          2005.
     (2)  Includes 2,850,000 shares held by Lorie Campbell-Farley,  Mr. Farley's
          wife. 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.
     (3)  Based on  100,184,739  shares  issued  and  outstanding  assuming  the
          inclusion of all the shares  registered in our registration  statement
          (57,291,667) are issued and 4,300,000 shares issuable upon exercise of
          options  granted in our 2004 and 2005 Stock Option Plans are exercised
          and issued.
    (4)   Includes 1,250,000 shares underlying options issued to John Farley and
          200,000 options issued to Lorie Campbell-Farley.
    (5)   Includes 550,000 shares underlying options issued to Charles Austin.
    (6)   Includes 450,000 shares underlying options issued to Dr. Mark Alden.
    (7)   Includes 450,000 shares underlying options issued to James MacDonald.
    (8)   We intend to cancel our  agreement  with Seaside  Investments  PLC and
          cancel such shares.
    (9)   Includes 40,000 shares held by Louise MacDonald, Mr. McDonald's wife.
    (10)  Consists of the  following  shares:  8,437,500  shares of common stock
          issuable  in  connection  with the  conversion  of  promissory  notes;
          5,000,000  shares of common  stock  issuable  in  connection  with the
          exercise of the Class A  Warrants;  3,750,000  shares of common  stock
          issuable  in  connection  with the  exercise  of the Class B Warrants;
          3,750,000  shares of common  stock  issuable  in  connection  with the
          exercise of the Class C Warrants; and 2,500,000 shares of common stock
          issuable in connection with the exercise of the Class D Warrants.

                                      III-6

<PAGE>

     (11) Consists of the  following  shares:  2,812,500  shares of common stock
          issuable  in  connection  with the  conversion  of  promissory  notes;
          1,666,667  shares of common  stock  issuable  in  connection  with the
          exercise of the Class A  Warrants;  1,250,000  shares of common  stock
          issuable  in  connection  with the  exercise  of the Class B Warrants;
          1,250,000  shares of common  stock  issuable  in  connection  with the
          exercise of the Class C Warrants;  and 833,333  shares of common stock
          issuable in connection with the exercise of the Class D Warrants.
     (12) Consists  of the  following  shares:  937,500  shares of common  stock
          issuable  in  connection  with the  conversion  of  promissory  notes;
          555,555  shares  of  common  stock  issuable  in  connection  with the
          exercise  of the Class A  Warrants;  416,667  shares  of common  stock
          issuable  in  connection  with the  exercise  of the Class B Warrants;
          416,667  shares  of  common  stock  issuable  in  connection  with the
          exercise of the Class C Warrants;  and 277,778  shares of common stock
          issuable in connection with the exercise of the Class D Warrants.
     (13) Konrad  Ackerman and Ranier Posch,  are  representatives  of, and have
          investment control of, Alpha Capital Aktiengesellschaft.
     (14) Mark Nordlicht is a representative  of, and has investment control of,
          Platinum Partners Value Arbitrage Fund LP.
     (15) Jeff Rubin is a representative  of, and has investment  control of, JM
          Investors, LLC.
     (16) Yisroel Kluger is a representative  of, and has investment control of,
          Osher Capital Inc.
     (17) Harry Pearl is a  representative  of, and has  investment  control of,
          Seaside Investments, PLC.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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:

Our operations center is currently  located at the home of our President,  Chief
Financial  Officer and Director,  Jack Farley at 3018 Schaeffer Road,  Falkland,
B.C. Canada. Mr. Farley does not charge us any fees for the use of this space.

Related Party Advances and Transactions
<TABLE>
<CAPTION>

                                                                                   May 31, 2005     May 31, 2004
                                                                                    (audited)         (audited)
(a)      Advances                                                                      $                 $
<S>                                                                                    <C>               <C>


         (i) Shield-Tech Products Inc.                                              445,588            410,277

         (ii) Directors and/or officers and former officer                          649,247            449,335
                                                                                ------------       ------------

                                                                                $ 1,094,835        $   859,612
                                                                                ------------       ------------
</TABLE>

                                      III-7
<PAGE>



     (i)  Shield-Tech  Products Inc. conducted research and incurred development
          expenditures  on  our  behalf.  The  advances  are  without  interest,
          unsecured  and there are no agreed  repayment  terms.  At the time the
          advances   were  made,   Jack  Farley  was  the  President  and  Lorie
          Campbell-Farley  was the General Manager of Shield-Tech  Products Inc.
          Jack Farley  resigned from his position as President of Shield-Tech on
          June 5, 2002. Jack Farley and Lorie Campbell-Farley continue to hold a
          minority shareholder interest in Shield-Tech.



     (ii) The  amounts  due to  directors  and/or  officers  represent  deferred
          salary, and the amount due to a former officer are unsecured,  without
          fixed repayment terms and are non-interest bearing. These amounts have
          been  accrued  to the  following  officers  and  directors  and former
          officer:

          Mark Alden                                   $    125,650
          Jim Haney                                    $    125,650
          Lorie Campbell-Farley                        $     61,423
          Gander Investment (1)                        $     84,189
          Chuck Austin                                 $     71,349
          Barbara Smith(2)                             $    131,458
          Former officer                               $     49,528

          (1)  Gander Investment is controlled equally by Lorie  Campbell-Farley
               and Jack Farley.

          (2)  Barbara  Smith  is  our  former   Vice-President   of  Sales  and
               Marketing.




(b)  Transactions

     Six  directors/officers  were paid $559,719 for the year ended May 31, 2005
     (2004 - $640,000) for consulting services rendered.  The total amount owing
     to these  directors/officers  as of May 31, 2005 is  $599,719.  The balance
     owing, to  directors/officers  has been increased by $28,800 advanced to us
     by our President.

     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.

                                      III-8

 <PAGE>


                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following documents are filed as part of this report:

     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  Certificate of Incorporation, as amended (1)

     3.2  Bylaws, as amended (1)

     14   Code of Ethics

(1)  Incorporated  by  reference  to the  Registrant's  Form  8-K12G3,  filed on
September 22, 2000 (SEC File No. 000-31611). (b) Reports on Form 8-K

     None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

For the  Company's  fiscal  years  ended May 31,  2005 and 2004,  we were billed
$19,810 and  $29,500 for  professional  services  rendered  for the audit of our
financial statements, respectively.

Tax Fees

For the  Company's  fiscal years ended May 31, 2005 and 2004,  we were billed $0
and $2,800 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, 2005.

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.

                                      IV-1
<PAGE>

                                   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/ Jack Farley
                                          ----------------
                                          JACK FARLEY
                                          PRESIDENT, CHIEF EXECUTIVE OFFICER
                                          AND DIRECTOR


Dated:   December 9, 2005

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.
<TABLE>
<CAPTION>



SIGNATURE                TITLE                                            DATE
<S>                                    <C>                              <C>
/S/ JOHN FARLEY          President, Chief Executive Officer and    December 9, 2005
---------------          Director
JOHN FARLEY



/S/ CHARLES AUSTIN       Secretary, Chief Financial Officer,       December 9, 2005
------------------       Chief Accounting Officer, and Director
CHARLES AUSTIN



/S/ DR. MARK ALDEN       Director                                  December 9, 2005
------------------
DR. MARK ALDEN



/S/ JAMES MACDONALD      Director                                  December 9, 2005
-------------------
JAMES MACDONALD

</TABLE>


                                      IV-2


<PAGE>

                     AVVAA WORLD HEALTH CARE PRODUCTS, INC.
                                 CODE OF ETHICS

Introduction

     AVVAA World Health Care  Products,  Inc. (the  "Company")  has adopted this
Code of Ethics for its senior financial management to promote honest and ethical
conduct  and to deter  wrongdoing.  This Code  applies  to the  Company's  Chief
Executive  Officer and any Chief Financial  Officer,  treasurer,  controller and
other  senior  financial  officer  that  the  Company  may  hire  in the  future
(collectively,  "Financial  Managers").  These individuals hold an important and
elevated role in our corporate  governance in that they are uniquely capable and
empowered to ensure that all stakeholders' interests are appropriately balanced,
protected and preserved.

Code of Ethics

     Financial  Managers  shall  adhere  to and  advocate  to the  best of their
knowledge and ability the following  principles and  responsibilities  governing
their professional and ethical conduct:

1. Act  honestly  and  ethically,  including  the ethical  handling of actual or
apparent conflicts of interest between personal and professional relationships.

     The Company's reputation depends on honesty and integrity.  At the Company,
we are committed to always doing the right thing. As in all other aspects of our
business, we expect our Financial Managers to adhere to the highest standards of
honesty and integrity.

     As part of this Code, Financial Managers are also expected to keep accurate
books and  records.  Keeping  accurate  books and records is not only about good
corporate  citizenship,  but it is also required by law. The Company is a public
company and  required to comply with a complex set of rules and  regulations  of
the Securities and Exchange  Commission  ("SEC").  It is of utmost importance to
the Company that all transactions  and entries in its financial,  accounting and
other  records be accurate  and  complete so that the  integrity of the Company'
business  reputation,  financial statements and regulatory filings is preserved.
If you are ever tempted or asked to make a representation - either in a document
or in oral communication - that is other than fully accurate, do not do it. This
applies to each and every detail of our business. It applies with equal force in
circumstances  where one might believe that the  consequences  of the inaccuracy
would be harmless.

     Financial   Managers   should  also  avoid   situations  that  involve  any
investment,  interest or association that interferes,  might interfere, or might
appear to  interfere,  with the  Financial  Manager's  exercise  of  independent
judgment in the  Company's  best  interests.  A conflict  of  interest  may also
present  itself  indirectly,   for  example,  through  the  Financial  Manager's
investment  or  involvement  in another  company,  which does  business with the
Company. Financial Managers must disclose all potential conflicts of interest to
their  immediate  supervisor.  Those  Financial  Managers who are also executive
officers of the Company must disclose potential conflicts of interest to the CEO
and the Board of Directors.

2. Provide full, fair, accurate, timely and understandable disclosure in reports
and  documents  that the Company files with, or submits to, the SEC and in other
public communications the Company makes.

 <PAGE>


     The Company files annual reports with the SEC. These annual reports contain
detailed  financial and other  information  regarding  the  Company's  business,
operations and financial condition,  including our audited financial statements.
The  Company  also files  with the SEC  quarterly  reports,  which  include  its
unaudited  quarterly  financial  statements,  together  with other  reports  and
information.  The  disclosures  contained in all reports and documents  that the
Company  files  with the SEC,  or makes  public  by other  means  (such as press
releases), must be full, fair, accurate, timely and understandable.

     The applicable laws require that the Company  maintain an overall system of
disclosure  controls and procedures that are adequate to meet its obligations to
disclose such information.  the Company's disclosure controls and procedures are
designed to ensure that  information  required to be disclosed by the Company to
the SEC are recorded,  processed,  summarized and reported. Also, our disclosure
controls and procedures must ensure that financial and non-financial information
required to be disclosed by us is accumulated and  communicated to the Company's
management,  including  our  principal  executive  and  financial  officers,  as
appropriate to allow timely decisions regarding required  disclosure.  Financial
Managers are expected to comply with the Company's system of disclosure controls
and procedures.

     The  applicable  laws  also  require  that the  Company  maintain  internal
controls and procedures for financial reporting,  designed to provide reasonable
assurances  that the  Company  financial  statements  are  fairly  presented  in
conformity with generally accepted accounting principles. Financial Managers are
expected to comply with the Company's system of internal controls and procedures
for financial reporting.

     Annually,  our independent outside auditors engage in an examination of our
books and  records to  complete  the  annual  audit of the  Company's  financial
statements.  This  audit  is  in  addition  to  our  internal  audit  functions.
Quarterly,  our independent  auditors review our books and records in connection
with SEC  filings.  Our  Financial  Managers,  just  like  everyone  else in the
Company,  are  prohibited  from  indirectly  or  directly  taking  any action to
fraudulently influence, coerce, manipulate or mislead the Company's auditors for
the purpose of rendering our financial statements  misleading.  In addition, all
Financial  Managers  have the  responsibility  to assure that  complete and full
information  is provided to our  internal  and  external  auditors and that they
receive assistance and cooperation in the performance of their duties.

3. Comply with rules and  regulations  of federal,  state,  provincial and local
governments,  and other  appropriate  private  and public  regulatory  agencies,
including the SEC.

     Financial  Managers  are  expected  to comply  with both the letter and the
spirit of all applicable  governmental laws, rules and regulations that apply to
the Company  and its  businesses.  This also means that a  Financial  Manager is
expected to seek assistance when unsure about how a particular law applies.

Violations of this Code

     All Financial  Managers are accountable to the Company for their individual
adherence  to this Code.  A failure to observe the terms of this Code may result
in disciplinary  action,  up to and including  termination of employment.  It is
also  important  to note  that  violations  of this  Code  may  also  constitute
violations  of law and may  result  in civil and  criminal  action  against  the
Company,  the Financial  Manager or other Company  personnel.  Any such civil or
criminal  action may result in a wide variety of penalties or sanctions that are
adverse  to the  Company,  the  Financial  Manager or other  Company  personnel,
including jail time, financial penalties,  restatements of previous disclosures,
disgorgement  of profits or bonuses,  and cease and desist  orders which can bar
the Company or the Financial Manager involved from certain business activities.
<PAGE>

Waivers

    Any waiver of this Code will be promptly disclosed to the public in the
manner required by law. Requests for waivers must be made in writing to the
Board of Directors prior to the occurrence of the violation of the Code.

Reporting Violations

    Financial Managers must promptly report observed violations of this Code to
the Chair of the Company's Board of Directors.